diff --git a/lib/dialects/mssql/schema/mssql-tablecompiler.js b/lib/dialects/mssql/schema/mssql-tablecompiler.js
index 3c5bc9db0f..c4470954b5 100644
--- a/lib/dialects/mssql/schema/mssql-tablecompiler.js
+++ b/lib/dialects/mssql/schema/mssql-tablecompiler.js
@@ -279,13 +279,14 @@ class TableCompiler_MSSQL extends TableCompiler {
    * Create a unique index.
    *
    * @param {string | string[]} columns
-   * @param {string | {indexName: undefined | string, deferrable?: 'not deferrable'|'deferred'|'immediate' }} indexName
+   * @param {string | {indexName: undefined | string, deferrable?: 'not deferrable'|'deferred'|'immediate', useConstraint?: true|false }} indexName
    */
   unique(columns, indexName) {
     /** @type {string | undefined} */
     let deferrable;
+    let useConstraint = false;
     if (isObject(indexName)) {
-      ({ indexName, deferrable } = indexName);
+      ({ indexName, deferrable, useConstraint } = indexName);
     }
     if (deferrable && deferrable !== 'not deferrable') {
       this.client.logger.warn(
@@ -304,13 +305,23 @@ class TableCompiler_MSSQL extends TableCompiler {
       .map((column) => this.formatter.columnize(column) + ' IS NOT NULL')
       .join(' AND ');
 
-    // make unique constraint that allows null https://stackoverflow.com/a/767702/360060
-    // to be more or less compatible with other DBs (if any of the columns is NULL then "duplicates" are allowed)
-    this.pushQuery(
-      `CREATE UNIQUE INDEX ${indexName} ON ${this.tableName()} (${this.formatter.columnize(
-        columns
-      )}) WHERE ${whereAllTheColumnsAreNotNull}`
-    );
+    if (useConstraint) {
+      // mssql supports unique indexes and unique constraints.
+      // unique indexes cannot be used with foreign key relationships hence unique constraints are used instead.
+      this.pushQuery(
+        `ALTER TABLE ${this.tableName()} ADD CONSTRAINT ${indexName} UNIQUE (${this.formatter.columnize(
+          columns
+        )})`
+      );
+    } else {
+      // make unique constraint that allows null https://stackoverflow.com/a/767702/360060
+      // to be more or less compatible with other DBs (if any of the columns is NULL then "duplicates" are allowed)
+      this.pushQuery(
+        `CREATE UNIQUE INDEX ${indexName} ON ${this.tableName()} (${this.formatter.columnize(
+          columns
+        )}) WHERE ${whereAllTheColumnsAreNotNull}`
+      );
+    }
   }
 
   // Compile a drop index command.
diff --git a/test/integration2/dialects/mssql.spec.js b/test/integration2/dialects/mssql.spec.js
index 934d40e413..25c488d42a 100644
--- a/test/integration2/dialects/mssql.spec.js
+++ b/test/integration2/dialects/mssql.spec.js
@@ -170,7 +170,7 @@ describe('MSSQL dialect', () => {
           });
         });
 
-        describe('unique table constraint with options object', () => {
+        describe('unique table index with options object', () => {
           const tableName = 'test_unique_index_options';
           before(async () => {
             await knex.schema.createTable(tableName, function () {
@@ -188,7 +188,39 @@ describe('MSSQL dialect', () => {
             await knex.schema.alterTable(tableName, function () {
               this.unique(['x', 'y'], { indexName });
             });
-            expect(
+            await expect(
+              knex
+                .insert([
+                  { x: 1, y: 1 },
+                  { x: 1, y: 1 },
+                ])
+                .into(tableName)
+            ).to.eventually.be.rejectedWith(new RegExp(indexName));
+          });
+        });
+
+        describe('unique table constraint with options object', () => {
+          const tableName = 'test_unique_constraint_options';
+          before(async () => {
+            await knex.schema.createTable(tableName, function () {
+              this.integer('x').notNull();
+              this.integer('y').notNull();
+            });
+          });
+
+          after(async () => {
+            await knex.schema.dropTable(tableName);
+          });
+
+          it('accepts indexName and constraint in options object', async () => {
+            const indexName = `UK_${tableName}_x_y`;
+            await knex.schema.alterTable(tableName, function () {
+              this.unique(['x', 'y'], {
+                indexName: indexName,
+                useConstraint: true,
+              });
+            });
+            await expect(
               knex
                 .insert([
                   { x: 1, y: 1 },
diff --git a/test/unit/schema-builder/mssql.js b/test/unit/schema-builder/mssql.js
index 709ff44114..b635bd1ccb 100644
--- a/test/unit/schema-builder/mssql.js
+++ b/test/unit/schema-builder/mssql.js
@@ -570,6 +570,20 @@ describe('MSSQL SchemaBuilder', function () {
     );
   });
 
+  it('test adding unique constraint', function () {
+    tableSql = client
+      .schemaBuilder()
+      .table('users', function () {
+        this.unique('foo', { indexName: 'bar', useConstraint: true });
+      })
+      .toSQL();
+
+    equal(1, tableSql.length);
+    expect(tableSql[0].sql).to.equal(
+      'ALTER TABLE [users] ADD CONSTRAINT [bar] UNIQUE ([foo])'
+    );
+  });
+
   it('test adding index', function () {
     tableSql = client
       .schemaBuilder()
diff --git a/types/index.d.ts b/types/index.d.ts
index 53bd9f7c6e..183aac1bee 100644
--- a/types/index.d.ts
+++ b/types/index.d.ts
@@ -2075,7 +2075,7 @@ export declare namespace Knex {
     ): TableBuilder;
     setNullable(column: string): TableBuilder;
     dropNullable(column: string): TableBuilder;
-    unique(columnNames: readonly (string | Raw)[], options?: Readonly<{indexName?: string, storageEngineIndexType?: string, deferrable?: deferrableType}>): TableBuilder;
+    unique(columnNames: readonly (string | Raw)[], options?: Readonly<{indexName?: string, storageEngineIndexType?: string, deferrable?: deferrableType, useConstraint?: boolean}>): TableBuilder;
     /** @deprecated */
     unique(columnNames: readonly (string | Raw)[], indexName?: string): TableBuilder;
     foreign(column: string, foreignKeyName?: string): ForeignConstraintBuilder;