diff --git a/src/material/schematics/ng-add/theming/theming.ts b/src/material/schematics/ng-add/theming/theming.ts
index ed9263dfd49a..7486d1b61114 100644
--- a/src/material/schematics/ng-add/theming/theming.ts
+++ b/src/material/schematics/ng-add/theming/theming.ts
@@ -30,7 +30,16 @@ const defaultCustomThemeFilename = 'custom-theme.scss';
 /** Add pre-built styles to the main project style file. */
 export function addThemeToAppStyles(options: Schema): Rule {
   return (host: Tree, context: SchematicContext) => {
-    const palettes = options.theme || 'azure-blue';
+    let palettes = options.theme || 'azure-blue';
+
+    // For a long time, theme param could be "custom" which meant to add a custom theme. This option
+    // was removed since we always add a custom theme, and we expect this option to be the
+    // user's preferred palettes. However it's possible that users will have hardcoded CLI commands
+    // that pass "--theme custom" and we can gracefully handle this by assuming azure-blue.
+    if (palettes === 'custom') {
+      palettes = 'azure-blue';
+    }
+
     return insertCustomTheme(palettes, options.project, host, context.logger);
   };
 }