diff --git a/.changelog/20977.txt b/.changelog/20977.txt
new file mode 100644
index 0000000000..06cfb68c0f
--- /dev/null
+++ b/.changelog/20977.txt
@@ -0,0 +1,3 @@
+```release-note:bug
+server: fix Ent snapshot restore on CE when CE downgrade is enabled
+```
diff --git a/agent/consul/fsm/fsm.go b/agent/consul/fsm/fsm.go
index 7449858af2..f4e2e94fb6 100644
--- a/agent/consul/fsm/fsm.go
+++ b/agent/consul/fsm/fsm.go
@@ -196,7 +196,7 @@ func (c *FSM) Apply(log *raft.Log) interface{} {
 		return nil
 	}
 	if structs.CEDowngrade && msgType >= 64 {
-		c.logger.Warn("ignoring enterprise message, for downgrading to oss", "type", msgType)
+		c.logger.Warn("ignoring enterprise message as part of downgrade to CE", "type", msgType)
 		return nil
 	}
 	panic(fmt.Errorf("failed to apply request: %#v", buf))
@@ -268,8 +268,9 @@ func (c *FSM) Restore(old io.ReadCloser) error {
 			}
 		default:
 			if structs.CEDowngrade && msg >= 64 {
-				c.logger.Warn("ignoring enterprise message , for downgrading to oss", "type", msg)
-				return nil
+				c.logger.Warn("ignoring enterprise message as part of downgrade to CE", "type", msg)
+				var ignore interface{}
+				return dec.Decode(&ignore)
 			} else if msg >= 64 {
 				return fmt.Errorf("msg type <%d> is a Consul Enterprise log entry. Consul CE cannot restore it", msg)
 			} else {
diff --git a/agent/consul/fsm/snapshot_ce_test.go b/agent/consul/fsm/snapshot_ce_test.go
index 70ab2000fa..01d4e23079 100644
--- a/agent/consul/fsm/snapshot_ce_test.go
+++ b/agent/consul/fsm/snapshot_ce_test.go
@@ -15,6 +15,7 @@ import (
 
 	"github.com/hashicorp/consul/agent/consul/state"
 	"github.com/hashicorp/consul/agent/structs"
+	"github.com/hashicorp/consul/lib/stringslice"
 	"github.com/hashicorp/consul/sdk/testutil"
 )
 
@@ -60,3 +61,101 @@ func TestRestoreFromEnterprise(t *testing.T) {
 	require.EqualError(t, fsm.Restore(sink), "msg type <65> is a Consul Enterprise log entry. Consul CE cannot restore it")
 	sink.Cancel()
 }
+
+func TestRestoreFromEnterprise_CEDowngrade(t *testing.T) {
+	logger := testutil.Logger(t)
+
+	handle := &testRaftHandle{}
+	storageBackend := newStorageBackend(t, handle)
+	handle.apply = func(buf []byte) (any, error) { return storageBackend.Apply(buf, 123), nil }
+
+	fsm := NewFromDeps(Deps{
+		Logger: logger,
+		NewStateStore: func() *state.Store {
+			return state.NewStateStore(nil)
+		},
+		StorageBackend: storageBackend,
+	})
+
+	// To verify if a proper message is displayed when Consul CE tries to
+	//  unsuccessfully restore entries from a Consul Ent snapshot.
+	buf := bytes.NewBuffer(nil)
+	sink := &MockSink{buf, false}
+
+	type EntMock struct {
+		ID   int
+		Type string
+	}
+
+	entMockEntry := EntMock{
+		ID:   65,
+		Type: "A Consul Ent Log Type",
+	}
+
+	// Create one entry to exercise the Go struct marshaller, and one to exercise the
+	// Binary Marshaller interface. This verifies that regardless of whether the struct gets
+	// encoded as a msgpack byte string (binary marshaller) or msgpack map (other struct),
+	// it will still be skipped over correctly.
+	registerEntry := structs.RegisterRequest{
+		Datacenter: "dc1",
+		Node:       "foo",
+		Address:    "127.0.0.1",
+		Service: &structs.NodeService{
+			ID:      "db",
+			Service: "db",
+			Tags:    []string{"primary"},
+			Port:    8000,
+		},
+	}
+	proxyDefaultsEntry := &structs.ConfigEntryRequest{
+		Op: structs.ConfigEntryUpsert,
+		Entry: &structs.ProxyConfigEntry{
+			Kind: structs.ProxyDefaults,
+			Name: "global",
+			Config: map[string]interface{}{
+				"foo": "bar",
+			},
+			EnterpriseMeta: *structs.DefaultEnterpriseMetaInDefaultPartition(),
+		},
+	}
+
+	// Write the header and records.
+	header := SnapshotHeader{
+		LastIndex: 0,
+	}
+	encoder := codec.NewEncoder(sink, structs.MsgpackHandle)
+	encoder.Encode(&header)
+	sink.Write([]byte{byte(structs.MessageType(entMockEntry.ID))})
+	encoder.Encode(entMockEntry)
+	sink.Write([]byte{byte(structs.RegisterRequestType)})
+	encoder.Encode(registerEntry)
+	sink.Write([]byte{byte(structs.ConfigEntryRequestType)})
+	encoder.Encode(proxyDefaultsEntry)
+
+	defer func() {
+		structs.CEDowngrade = false
+	}()
+	structs.CEDowngrade = true
+
+	require.NoError(t, fsm.Restore(sink), "failed to decode Ent snapshot to CE")
+
+	// Verify the register request
+	_, nodes, err := fsm.state.Nodes(nil, nil, "")
+	require.NoError(t, err)
+	require.Len(t, nodes, 1, "incorrect number of nodes: %v", nodes)
+	require.Equal(t, "foo", nodes[0].Node)
+	require.Equal(t, "dc1", nodes[0].Datacenter)
+	require.Equal(t, "127.0.0.1", nodes[0].Address)
+	_, fooSrv, err := fsm.state.NodeServices(nil, "foo", nil, "")
+	require.NoError(t, err)
+	require.Len(t, fooSrv.Services, 1)
+	require.Contains(t, fooSrv.Services["db"].Tags, "primary")
+	require.True(t, stringslice.Contains(fooSrv.Services["db"].Tags, "primary"))
+	require.Equal(t, 8000, fooSrv.Services["db"].Port)
+
+	// Verify the proxy defaults request
+	_, configEntry, err := fsm.state.ConfigEntry(nil, structs.ProxyDefaults, "global", structs.DefaultEnterpriseMetaInDefaultPartition())
+	require.NoError(t, err)
+	configEntry.SetHash(proxyDefaultsEntry.Entry.GetHash())
+	require.Equal(t, proxyDefaultsEntry.Entry, configEntry)
+}