diff --git a/common/changes/@microsoft/rush/feng-set-ignore-compatibility-db-true-when-installation_2022-08-08-05-48.json b/common/changes/@microsoft/rush/feng-set-ignore-compatibility-db-true-when-installation_2022-08-08-05-48.json
new file mode 100644
index 0000000000..55e329704f
--- /dev/null
+++ b/common/changes/@microsoft/rush/feng-set-ignore-compatibility-db-true-when-installation_2022-08-08-05-48.json
@@ -0,0 +1,10 @@
+{
+  "changes": [
+    {
+      "packageName": "@microsoft/rush",
+      "comment": "rush install/update should always set `config.ignoreCompatibilityDb` and print warning if the rush.json pnpmVersion specifies a version affected by this problem.",
+      "type": "none"
+    }
+  ],
+  "packageName": "@microsoft/rush"
+}
\ No newline at end of file
diff --git a/libraries/rush-lib/src/logic/base/BaseInstallManager.ts b/libraries/rush-lib/src/logic/base/BaseInstallManager.ts
index 0f1e3c3d5f..2881f5493d 100644
--- a/libraries/rush-lib/src/logic/base/BaseInstallManager.ts
+++ b/libraries/rush-lib/src/logic/base/BaseInstallManager.ts
@@ -40,6 +40,11 @@ import { WebClient, WebClientResponse } from '../../utilities/WebClient';
 import { SetupPackageRegistry } from '../setup/SetupPackageRegistry';
 import { PnpmfileConfiguration } from '../pnpm/PnpmfileConfiguration';
 
+/**
+ * Pnpm don't support --ignore-compatibility-db, so use --config.ignoreCompatibilityDb for now.
+ */
+export const pnpmIgnoreCompatibilityDbParameter: string = '--config.ignoreCompatibilityDb';
+
 export interface IInstallManagerOptions {
   /**
    * Whether the global "--debug" flag was specified.
@@ -610,9 +615,9 @@ export abstract class BaseInstallManager {
       }
       if (
         semver.gte(this._rushConfiguration.packageManagerToolVersion, '7.9.0') ||
-        semver.gte(this._rushConfiguration.packageManagerToolVersion, '6.34.0')
+        semver.satisfies(this._rushConfiguration.packageManagerToolVersion, '^6.34.0')
       ) {
-        args.push('--ignore-compatibility-db');
+        args.push(pnpmIgnoreCompatibilityDbParameter);
       }
     } else if (this._rushConfiguration.packageManager === 'yarn') {
       args.push('--link-folder', 'yarn-link');
diff --git a/libraries/rush-lib/src/logic/test/BaseInstallManager.test.ts b/libraries/rush-lib/src/logic/test/BaseInstallManager.test.ts
index 1f3bdf11e7..cf1898a676 100644
--- a/libraries/rush-lib/src/logic/test/BaseInstallManager.test.ts
+++ b/libraries/rush-lib/src/logic/test/BaseInstallManager.test.ts
@@ -4,7 +4,11 @@ import * as path from 'path';
 import { ConsoleTerminalProvider } from '@rushstack/node-core-library';
 
 import { PurgeManager } from '../PurgeManager';
-import { BaseInstallManager, IInstallManagerOptions } from '../base/BaseInstallManager';
+import {
+  BaseInstallManager,
+  IInstallManagerOptions,
+  pnpmIgnoreCompatibilityDbParameter
+} from '../base/BaseInstallManager';
 
 import { RushConfiguration } from '../../api/RushConfiguration';
 import { RushGlobalFolder } from '../../api/RushGlobalFolder';
@@ -77,19 +81,20 @@ describe('BaseInstallManager Test', () => {
 
     const argsPnpmV6: string[] = [];
     fakeBaseInstallManager6.pushConfigurationArgs(argsPnpmV6, options);
-
+    expect(argsPnpmV6).not.toContain(pnpmIgnoreCompatibilityDbParameter);
     expect(mockWrite.mock.calls[0][0]).toContain(
       "Warning: Your rush.json specifies a pnpmVersion with a known issue that may cause unintended version selections. It's recommended to upgrade to PNPM >=6.34.0 or >=7.9.0. For details see: https://rushjs.io/link/pnpm-issue-5132"
     );
 
     const argsPnpmV7: string[] = [];
     fakeBaseInstallManager7.pushConfigurationArgs(argsPnpmV7, options);
+    expect(argsPnpmV7).not.toContain(pnpmIgnoreCompatibilityDbParameter);
     expect(mockWrite.mock.calls[0][0]).toContain(
       "Warning: Your rush.json specifies a pnpmVersion with a known issue that may cause unintended version selections. It's recommended to upgrade to PNPM >=6.34.0 or >=7.9.0. For details see: https://rushjs.io/link/pnpm-issue-5132"
     );
   });
 
-  it('pnpm version gte 6.34.0 || gte 7.9.0 should add --ignore-compatibility-db', () => {
+  it(`pnpm version ^6.34.0 || gte 7.9.0 should add ${pnpmIgnoreCompatibilityDbParameter}`, () => {
     const rushJsonFile: string = path.resolve(__dirname, 'ignoreCompatibilityDb/rush3.json');
     const rushConfiguration: RushConfiguration = RushConfiguration.loadFromConfigurationFile(rushJsonFile);
     const purgeManager: typeof PurgeManager.prototype = new PurgeManager(rushConfiguration, rushGlobalFolder);
@@ -102,14 +107,12 @@ describe('BaseInstallManager Test', () => {
       options
     );
 
-    const expected = ['--ignore-compatibility-db'];
-
     const mockWrite = jest.fn();
     jest.spyOn(ConsoleTerminalProvider.prototype, 'write').mockImplementation(mockWrite);
 
     const args: string[] = [];
     fakeBaseInstallManager.pushConfigurationArgs(args, options);
-    expect(args).toEqual(expect.arrayContaining(expected));
+    expect(args).toContain(pnpmIgnoreCompatibilityDbParameter);
 
     if (mockWrite.mock.calls.length) {
       expect(mockWrite.mock.calls[0][0]).not.toContain(