diff --git a/instack_undercloud/undercloud.py b/instack_undercloud/undercloud.py
index 07a9939b8..5f43056a5 100644
--- a/instack_undercloud/undercloud.py
+++ b/instack_undercloud/undercloud.py
@@ -38,6 +38,7 @@ from keystoneauth1 import exceptions as ks_exceptions
 from keystoneclient import discover
 import keystoneauth1.identity.generic as ks_auth
 from mistralclient.api import client as mistralclient
+from mistralclient.api import base as mistralclient_exc
 from novaclient import client as novaclient
 from novaclient import exceptions
 import os_client_config
@@ -1768,7 +1769,7 @@ def _create_mistral_config_environment(instack_env, mistral):
     env_name = 'tripleo.undercloud-config'
     try:
         env_data = mistral.environments.get(env_name).variables
-    except ks_exceptions.NotFound:
+    except (ks_exceptions.NotFound, mistralclient_exc.APIException):
         # If the environment is not created, we need to
         # create it with the information in config_data
         mistral.environments.create(
diff --git a/releasenotes/notes/fix-mistral-error-handling-58010a43f53ded5e.yaml b/releasenotes/notes/fix-mistral-error-handling-58010a43f53ded5e.yaml
new file mode 100644
index 000000000..3e90c29a8
--- /dev/null
+++ b/releasenotes/notes/fix-mistral-error-handling-58010a43f53ded5e.yaml
@@ -0,0 +1,6 @@
+---
+fixes:
+  - |
+    Fixed an incompatability with mistralclient 3.2.0, where a different
+    exception type was raised and thus not handled during the undercloud
+    install post config. See #1749186