diff --git a/src/client/Microsoft.Identity.Client/ManagedIdentity/AzureArcManagedIdentitySource.cs b/src/client/Microsoft.Identity.Client/ManagedIdentity/AzureArcManagedIdentitySource.cs
index 2b6babecf9..1565413ff7 100644
--- a/src/client/Microsoft.Identity.Client/ManagedIdentity/AzureArcManagedIdentitySource.cs
+++ b/src/client/Microsoft.Identity.Client/ManagedIdentity/AzureArcManagedIdentitySource.cs
@@ -29,7 +29,16 @@ internal class AzureArcManagedIdentitySource : AbstractManagedIdentity
 
         public static AbstractManagedIdentity Create(RequestContext requestContext)
         {
-            string identityEndpoint = EnvironmentVariables.IdentityEndpoint;
+            string identityEndpoint;
+                
+            if (EnvironmentVariables.IdentityEndpoint == null)
+            {
+                identityEndpoint = "http://127.0.0.1:40342/metadata/identity/oauth2/token";
+                requestContext.Logger.Info(() => "[Managed Identity] Azure Arc was detected through file based detection but the environment variables were not found. Defaulting to known azure arc endpoint.");
+            } else
+            {
+                identityEndpoint = EnvironmentVariables.IdentityEndpoint;
+            }
 
             requestContext.Logger.Info(() => "[Managed Identity] Azure Arc managed identity is available.");
 
diff --git a/src/client/Microsoft.Identity.Client/ManagedIdentity/ManagedIdentityClient.cs b/src/client/Microsoft.Identity.Client/ManagedIdentity/ManagedIdentityClient.cs
index 7df4f81723..2dc27fdc9b 100644
--- a/src/client/Microsoft.Identity.Client/ManagedIdentity/ManagedIdentityClient.cs
+++ b/src/client/Microsoft.Identity.Client/ManagedIdentity/ManagedIdentityClient.cs
@@ -6,6 +6,9 @@
 using System.Threading;
 using Microsoft.Identity.Client.Internal;
 using Microsoft.Identity.Client.ApiConfig.Parameters;
+using Microsoft.Identity.Client.PlatformsCommon.Shared;
+using System.IO;
+using Microsoft.Identity.Client.Core;
 
 namespace Microsoft.Identity.Client.ManagedIdentity
 {
@@ -15,6 +18,8 @@ namespace Microsoft.Identity.Client.ManagedIdentity
     /// </summary>
     internal class ManagedIdentityClient
     {
+        private const string WindowsHimdsFilePath = "%Programfiles%\\AzureConnectedMachineAgent\\himds.exe";
+        private const string LinuxHimdsFilePath = "/opt/azcmagent/bin/himds";
         private readonly AbstractManagedIdentity _identitySource;
 
         public ManagedIdentityClient(RequestContext requestContext)
@@ -33,7 +38,7 @@ internal Task<ManagedIdentityResponse> SendTokenRequestForManagedIdentityAsync(A
         // This method tries to create managed identity source for different sources, if none is created then defaults to IMDS.
         private static AbstractManagedIdentity SelectManagedIdentitySource(RequestContext requestContext)
         {
-            return GetManagedIdentitySource() switch
+            return GetManagedIdentitySource(requestContext.Logger) switch
             {
                 ManagedIdentitySource.ServiceFabric => ServiceFabricManagedIdentitySource.Create(requestContext),
                 ManagedIdentitySource.AppService => AppServiceManagedIdentitySource.Create(requestContext),
@@ -46,7 +51,7 @@ private static AbstractManagedIdentity SelectManagedIdentitySource(RequestContex
         // Detect managed identity source based on the availability of environment variables.
         // The result of this method is not cached because reading environment variables is cheap. 
         // This method is perf sensitive any changes should be benchmarked.
-        internal static ManagedIdentitySource GetManagedIdentitySource()
+        internal static ManagedIdentitySource GetManagedIdentitySource(ILoggerAdapter logger = null)
         {
             string identityEndpoint = EnvironmentVariables.IdentityEndpoint;
             string identityHeader = EnvironmentVariables.IdentityHeader;
@@ -72,7 +77,7 @@ internal static ManagedIdentitySource GetManagedIdentitySource()
             {
                 return ManagedIdentitySource.CloudShell;
             }
-            else if (!string.IsNullOrEmpty(identityEndpoint) && !string.IsNullOrEmpty(imdsEndpoint))
+            else if (ValidateAzureArcEnvironment(identityEndpoint, imdsEndpoint, logger))
             {
                 return ManagedIdentitySource.AzureArc;
             }
@@ -81,5 +86,33 @@ internal static ManagedIdentitySource GetManagedIdentitySource()
                 return ManagedIdentitySource.DefaultToImds;
             }
         }
+
+        // Method to return true if a file exists and is not empty to validate the Azure arc environment.
+        private static bool ValidateAzureArcEnvironment(string identityEndpoint, string imdsEndpoint, ILoggerAdapter logger)
+        {
+            if (!string.IsNullOrEmpty(identityEndpoint) && !string.IsNullOrEmpty(imdsEndpoint))
+            {
+                logger?.Verbose(() => "[Managed Identity] Azure Arc managed identity is available through environment variables.");
+                return true;
+            }
+
+            if (DesktopOsHelper.IsWindows() && File.Exists(Environment.ExpandEnvironmentVariables(WindowsHimdsFilePath)))
+            {
+                logger?.Verbose(() => "[Managed Identity] Azure Arc managed identity is available through file detection.");
+                return true;
+            }
+            else if (DesktopOsHelper.IsLinux() && File.Exists(LinuxHimdsFilePath))
+            {
+                logger?.Verbose(() => "[Managed Identity] Azure Arc managed identity is available through file detection.");
+                return true;
+            } 
+            else
+            {
+                logger?.Warning("[Managed Identity] Azure Arc managed identity cannot be configured on a platform other than Windows and Linux.");
+            }
+            
+            logger?.Verbose(() => "[Managed Identity] Azure Arc managed identity is not available.");
+            return false;
+        }
     }
 }