diff --git a/crates/uv/src/commands/tool/install.rs b/crates/uv/src/commands/tool/install.rs
index d63d8d63d..8c7e6634c 100644
--- a/crates/uv/src/commands/tool/install.rs
+++ b/crates/uv/src/commands/tool/install.rs
@@ -24,7 +24,7 @@ use uv_requirements::RequirementsSpecification;
 use uv_tool::{entrypoint_paths, find_executable_directory, InstalledTools, Tool, ToolEntrypoint};
 use uv_warnings::warn_user_once;
 
-use crate::commands::project::update_environment;
+use crate::commands::project::{resolve_environment, sync_environment, update_environment};
 use crate::commands::tool::common::resolve_requirements;
 use crate::commands::{ExitStatus, SharedState};
 use crate::printer::Printer;
@@ -195,33 +195,62 @@ pub(crate) async fn install(
     // entrypoints (without `--force`).
     let reinstall_entry_points = existing_tool_receipt.is_some();
 
+    // Resolve the requirements.
+    let state = SharedState::default();
+    let spec = RequirementsSpecification::from_requirements(requirements.clone());
+
     // TODO(zanieb): Build the environment in the cache directory then copy into the tool directory.
     // This lets us confirm the environment is valid before removing an existing install. However,
     // entrypoints always contain an absolute path to the relevant Python interpreter, which would
     // be invalidated by moving the environment.
     let environment = if let Some(environment) = existing_environment {
-        environment
+        update_environment(
+            environment,
+            spec,
+            &settings,
+            &state,
+            preview,
+            connectivity,
+            concurrency,
+            native_tls,
+            cache,
+            printer,
+        )
+        .await?
     } else {
-        // TODO(charlie): Resolve, then create the environment, then install. This ensures that
-        // we don't nuke the environment if the resolution fails.
-        installed_tools.create_environment(&from.name, interpreter)?
-    };
+        // If we're creating a new environment, ensure that we can resolve the requirements prior
+        // to removing any existing tools.
+        let resolution = resolve_environment(
+            &interpreter,
+            spec,
+            settings.as_ref().into(),
+            &state,
+            preview,
+            connectivity,
+            concurrency,
+            native_tls,
+            cache,
+            printer,
+        )
+        .await?;
 
-    // Install the ephemeral requirements.
-    let spec = RequirementsSpecification::from_requirements(requirements.clone());
-    let environment = update_environment(
-        environment,
-        spec,
-        &settings,
-        &state,
-        preview,
-        connectivity,
-        concurrency,
-        native_tls,
-        cache,
-        printer,
-    )
-    .await?;
+        let environment = installed_tools.create_environment(&from.name, interpreter)?;
+
+        // Sync the environment with the resolved requirements.
+        sync_environment(
+            environment,
+            &resolution.into(),
+            settings.as_ref().into(),
+            &state,
+            preview,
+            connectivity,
+            concurrency,
+            native_tls,
+            cache,
+            printer,
+        )
+        .await?
+    };
 
     let site_packages = SitePackages::from_environment(&environment)?;
     let installed = site_packages.get_packages(&from.name);
diff --git a/crates/uv/tests/tool_install.rs b/crates/uv/tests/tool_install.rs
index 1aa11a258..7e0261dd2 100644
--- a/crates/uv/tests/tool_install.rs
+++ b/crates/uv/tests/tool_install.rs
@@ -1398,3 +1398,67 @@ fn tool_install_python_request() {
     Installed: black, blackd
     "###);
 }
+
+/// Test preserving a tool environment when new but incompatible requirements are requested.
+#[test]
+fn tool_install_preserve_environment() {
+    let context = TestContext::new("3.12")
+        .with_filtered_counts()
+        .with_filtered_exe_suffix();
+    let tool_dir = context.temp_dir.child("tools");
+    let bin_dir = context.temp_dir.child("bin");
+
+    // Install `black`.
+    uv_snapshot!(context.filters(), context.tool_install()
+        .arg("black==24.1.1")
+        .env("UV_TOOL_DIR", tool_dir.as_os_str())
+        .env("XDG_BIN_HOME", bin_dir.as_os_str()), @r###"
+    success: true
+    exit_code: 0
+    ----- stdout -----
+
+    ----- stderr -----
+    warning: `uv tool install` is experimental and may change without warning.
+    Resolved [N] packages in [TIME]
+    Prepared [N] packages in [TIME]
+    Installed [N] packages in [TIME]
+     + black==24.1.1
+     + click==8.1.7
+     + mypy-extensions==1.0.0
+     + packaging==24.0
+     + pathspec==0.12.1
+     + platformdirs==4.2.0
+    Installed: black, blackd
+    "###);
+
+    // Install `black`, but with an incompatible requirement.
+    uv_snapshot!(context.filters(), context.tool_install()
+        .arg("black==24.1.1")
+        .arg("--with")
+        .arg("packaging==0.0.1")
+        .env("UV_TOOL_DIR", tool_dir.as_os_str())
+        .env("XDG_BIN_HOME", bin_dir.as_os_str()), @r###"
+    success: false
+    exit_code: 2
+    ----- stdout -----
+
+    ----- stderr -----
+    warning: `uv tool install` is experimental and may change without warning.
+    error: Because black==24.1.1 depends on packaging>=22.0 and you require black==24.1.1, we can conclude that you require packaging>=22.0.
+    And because you require packaging==0.0.1, we can conclude that the requirements are unsatisfiable.
+    "###);
+
+    // Install `black`. The tool should already be installed, since we didn't remove the environment.
+    uv_snapshot!(context.filters(), context.tool_install()
+        .arg("black==24.1.1")
+        .env("UV_TOOL_DIR", tool_dir.as_os_str())
+        .env("XDG_BIN_HOME", bin_dir.as_os_str()), @r###"
+    success: false
+    exit_code: 1
+    ----- stdout -----
+
+    ----- stderr -----
+    warning: `uv tool install` is experimental and may change without warning.
+    Tool `black==24.1.1` is already installed
+    "###);
+}