diff --git a/azurelinuxagent/ga/exthandlers.py b/azurelinuxagent/ga/exthandlers.py
index 91285cf9..024c7f55 100644
--- a/azurelinuxagent/ga/exthandlers.py
+++ b/azurelinuxagent/ga/exthandlers.py
@@ -56,6 +56,7 @@ from azurelinuxagent.common.version import AGENT_NAME, CURRENT_VERSION
 # HandlerEnvironment.json schema version
 HANDLER_ENVIRONMENT_VERSION = 1.0
 
+EXTENSION_STATUS_ERROR = 'error'
 VALID_EXTENSION_STATUS = ['transitioning', 'error', 'success', 'warning']
 
 VALID_HANDLER_STATUS = ['Ready', 'NotReady', "Installing", "Unresponsive"]
@@ -107,14 +108,15 @@ def parse_ext_status(ext_status, data):
     validate_has_key(data, 'status', 'status')
     status_data = data['status']
     validate_has_key(status_data, 'status', 'status/status')
-    
-    validate_in_range(status_data['status'], VALID_EXTENSION_STATUS,
-                      'status/status')
+
+    status = status_data['status']
+    if status not in VALID_EXTENSION_STATUS:
+        status = EXTENSION_STATUS_ERROR
 
     applied_time = status_data.get('configurationAppliedTime')
     ext_status.configurationAppliedTime = applied_time
     ext_status.operation = status_data.get('operation')
-    ext_status.status = status_data.get('status')
+    ext_status.status = status
     ext_status.code = status_data.get('code', 0)
     formatted_message = status_data.get('formattedMessage')
     ext_status.message = parse_formatted_message(formatted_message)

Extension install failures timeout
The Windows GA reports a status which allows a fast failure, however the Linux GA just reports 'Not ready' which essentially waits for a CRP timeout. We should investigate if there is a substatus we are missing to allow a fast failure. 
diff --git a/tests/ga/test_exthandlers.py b/tests/ga/test_exthandlers.py
new file mode 100644
index 00000000..248750b1
--- /dev/null
+++ b/tests/ga/test_exthandlers.py
@@ -0,0 +1,74 @@
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the Apache License.
+import json
+
+from azurelinuxagent.common.protocol.restapi import ExtensionStatus
+from azurelinuxagent.ga.exthandlers import parse_ext_status
+from tests.tools import *
+
+
+class TestExtHandlers(AgentTestCase):
+    def test_parse_extension_status00(self):
+        """
+        Parse a status report for a successful execution of an extension.
+        """
+
+        s = '''[{
+    "status": {
+      "status": "success",
+      "formattedMessage": {
+        "lang": "en-US",
+        "message": "Command is finished."
+      },
+      "operation": "Daemon",
+      "code": "0",
+      "name": "Microsoft.OSTCExtensions.CustomScriptForLinux"
+    },
+    "version": "1.0",
+    "timestampUTC": "2018-04-20T21:20:24Z"
+  }
+]'''
+        ext_status = ExtensionStatus(seq_no=0)
+        parse_ext_status(ext_status, json.loads(s))
+
+        self.assertEqual('0', ext_status.code)
+        self.assertEqual(None, ext_status.configurationAppliedTime)
+        self.assertEqual('Command is finished.', ext_status.message)
+        self.assertEqual('Daemon', ext_status.operation)
+        self.assertEqual('success', ext_status.status)
+        self.assertEqual(0, ext_status.sequenceNumber)
+        self.assertEqual(0, len(ext_status.substatusList))
+
+    def test_parse_extension_status01(self):
+        """
+        Parse a status report for a failed execution of an extension.
+
+        The extension returned a bad status/status of failed.
+        The agent should handle this gracefully, and convert all unknown
+        status/status values into an error.
+        """
+
+        s = '''[{
+    "status": {
+      "status": "failed",
+      "formattedMessage": {
+        "lang": "en-US",
+        "message": "Enable failed: Failed with error: commandToExecute is empty or invalid ..."
+      },
+      "operation": "Enable",
+      "code": "0",
+      "name": "Microsoft.OSTCExtensions.CustomScriptForLinux"
+    },
+    "version": "1.0",
+    "timestampUTC": "2018-04-20T20:50:22Z"
+}]'''
+        ext_status = ExtensionStatus(seq_no=0)
+        parse_ext_status(ext_status, json.loads(s))
+
+        self.assertEqual('0', ext_status.code)
+        self.assertEqual(None, ext_status.configurationAppliedTime)
+        self.assertEqual('Enable failed: Failed with error: commandToExecute is empty or invalid ...', ext_status.message)
+        self.assertEqual('Enable', ext_status.operation)
+        self.assertEqual('error', ext_status.status)
+        self.assertEqual(0, ext_status.sequenceNumber)
+        self.assertEqual(0, len(ext_status.substatusList))

pip install -e .
parse_log_pytest
pytest
pyasn1 nose nose-cov pytest
3.4
pytest --no-header -rA --tb=line --color=no -p no:cacheprovider -W ignore::DeprecationWarning
attrs @ file:///opt/conda/conda-bld/attrs_1642510447205/work
certifi==2021.5.30
cov-core==1.15.0
coverage==6.2
importlib-metadata @ file:///tmp/build/80754af9/importlib-metadata_1631916693255/work
iniconfig @ file:///home/linux1/recipes/ci/iniconfig_1610983019677/work
more-itertools @ file:///tmp/build/80754af9/more-itertools_1637733554872/work
nose==1.3.7
nose-cov==1.6
packaging @ file:///tmp/build/80754af9/packaging_1637314298585/work
pluggy @ file:///tmp/build/80754af9/pluggy_1615976315926/work
py @ file:///opt/conda/conda-bld/py_1644396412707/work
pyasn1==0.5.1
pyparsing @ file:///tmp/build/80754af9/pyparsing_1635766073266/work
pytest==6.2.4
toml @ file:///tmp/build/80754af9/toml_1616166611790/work
typing_extensions @ file:///opt/conda/conda-bld/typing_extensions_1647553014482/work
-e git+https://github.com/Azure/WALinuxAgent.git@d1f9e05b9eaa63997108ebf3de261bf9dca7a25d#egg=WALinuxAgent
zipp @ file:///tmp/build/80754af9/zipp_1633618647012/work

name: WALinuxAgent
channels:
  - defaults
  - https://repo.anaconda.com/pkgs/main
  - https://repo.anaconda.com/pkgs/r
  - conda-forge
dependencies:
  - _libgcc_mutex=0.1=main
  - _openmp_mutex=5.1=1_gnu
  - attrs=21.4.0=pyhd3eb1b0_0
  - ca-certificates=2025.2.25=h06a4308_0
  - certifi=2021.5.30=py36h06a4308_0
  - importlib-metadata=4.8.1=py36h06a4308_0
  - importlib_metadata=4.8.1=hd3eb1b0_0
  - iniconfig=1.1.1=pyhd3eb1b0_0
  - ld_impl_linux-64=2.40=h12ee557_0
  - libffi=3.3=he6710b0_2
  - libgcc-ng=11.2.0=h1234567_1
  - libgomp=11.2.0=h1234567_1
  - libstdcxx-ng=11.2.0=h1234567_1
  - more-itertools=8.12.0=pyhd3eb1b0_0
  - ncurses=6.4=h6a678d5_0
  - openssl=1.1.1w=h7f8727e_0
  - packaging=21.3=pyhd3eb1b0_0
  - pip=21.2.2=py36h06a4308_0
  - pluggy=0.13.1=py36h06a4308_0
  - py=1.11.0=pyhd3eb1b0_0
  - pyparsing=3.0.4=pyhd3eb1b0_0
  - pytest=6.2.4=py36h06a4308_2
  - python=3.6.13=h12debd9_1
  - readline=8.2=h5eee18b_0
  - setuptools=58.0.4=py36h06a4308_0
  - sqlite=3.45.3=h5eee18b_0
  - tk=8.6.14=h39e8969_0
  - toml=0.10.2=pyhd3eb1b0_0
  - typing_extensions=4.1.1=pyh06a4308_0
  - wheel=0.37.1=pyhd3eb1b0_0
  - xz=5.6.4=h5eee18b_1
  - zipp=3.6.0=pyhd3eb1b0_0
  - zlib=1.2.13=h5eee18b_1
  - pip:
      - cov-core==1.15.0
      - coverage==6.2
      - nose==1.3.7
      - nose-cov==1.6
      - pyasn1==0.5.1
prefix: /opt/conda/envs/WALinuxAgent

tests/ga/test_exthandlers.py::TestExtHandlers::test_parse_extension_status01
tests/ga/test_exthandlers.py::TestExtHandlers::test_parse_extension_status00
azurelinuxagent/ga/exthandlers.py
azurelinuxagent/ga/exthandlers.py