Troubleshooting Guide: SQL Server Error 2358 — XML Schema Derivation Conflict

Why This Error Happens

This error occurs when SQL Server’s XML Schema Collection parser encounters a complexType definition that simultaneously declares a base attribute (via restriction or extension) and contains an embedded (anonymous) type definition within the same derivation element. SQL Server 2025’s XML parser does not support this dual-declaration pattern, as it creates ambiguity in how the schema should resolve type inheritance. This typically surfaces when importing third-party XSD files, migrating schema collections from an older SQL Server version, or when a schema was hand-edited and introduced a malformed derivation block.

Step-by-Step Resolution Guide

Step 1: Identify the Offending Schema File and Location

Review the full error message — it includes a Location: '%ls' path pointing to the exact XSD file or XML Schema Collection object causing the conflict.
Run the following query to locate the schema collection in question:

  SELECT name, schema_id, xml_schema_namespace 
  FROM sys.xml_schema_collections 
  WHERE name LIKE '%YourSchemaName%';

Export the raw schema definition for inspection:

  SELECT xml_schema_namespace(N'dbo', N'YourSchemaCollectionName');

Step 2: Correct the Malformed Complex Type Definition

Open the exported XSD in a text editor and search for <xs:complexContent> or <xs:simpleContent> elements that contain both a base="..." attribute and a nested <xs:sequence>, <xs:choice>, or <xs:all> block defined directly alongside it.
Separate the derivation logic: either use the base attribute with restriction/extension referencing an already-defined named type, OR define the embedded type anonymously — never both within the same node.
Example fix — change this invalid structure:

  <xs:complexType name="Invalid">
    <xs:complexContent>
      <xs:extension base="BaseType">
        <xs:complexType>
          <xs:sequence>...</xs:sequence>
        </xs:complexType>
      </xs:extension>
    </xs:complexContent>
  </xs:complexType>

to a valid single-level derivation referencing a named type instead of nesting an embedded one.

Step 3: Re-register the XML Schema Collection

Drop the broken schema collection (if already partially registered):

  DROP XML SCHEMA COLLECTION dbo.YourSchemaCollectionName;

Re-create it using the corrected XSD file:

  CREATE XML SCHEMA COLLECTION dbo.YourSchemaCollectionName 
  AS N'<paste corrected XSD content here>';

Confirm there are no residual references in dependent tables or XML columns that still point to the old, invalid schema version.

Step 4: Validate Third-Party or Legacy Schema Sources

If the XSD originated from an external vendor or legacy system, check for an updated schema version compatible with SQL Server 2025’s stricter XML parser.
Run the corrected file through an independent XSD validator (such as xmllint --schema on Windows via WSL, or Visual Studio’s XML Schema Designer) before re-importing into SQL Server.

Alternative or Verification Steps

Verify the fix by re-running the original CREATE XML SCHEMA COLLECTION statement and confirming it completes without Error 2358, then test any dependent stored procedures or XML column constraints that reference the schema.
If re-authoring the schema isn’t feasible, use sp_xml_schema_validate or a staging environment on a prior-compatible SQL Server version to pre-process and simplify the schema before migrating it to SQL Server 2025.