diff --git a/cms/djangoapps/contentstore/views/tests/test_import_export.py b/cms/djangoapps/contentstore/views/tests/test_import_export.py
index 38e0388b7c..8cbd11c40c 100644
--- a/cms/djangoapps/contentstore/views/tests/test_import_export.py
+++ b/cms/djangoapps/contentstore/views/tests/test_import_export.py
@@ -2,6 +2,7 @@
 Unit tests for course import and export
 """
 import copy
+import itertools
 import json
 import logging
 import os
@@ -15,6 +16,7 @@ from uuid import uuid4
 
 import ddt
 import lxml
+from bson import ObjectId
 from django.conf import settings
 from django.contrib.auth import get_user_model
 from django.core.exceptions import SuspiciousOperation
@@ -1076,7 +1078,7 @@ class TestCourseExportImport(LibraryTestCase):
         self.source_course = CourseFactory.create(default_store=ModuleStoreEnum.Type.split)
         self.addCleanup(shutil.rmtree, self.export_dir, ignore_errors=True)
 
-    def _setup_source_course_with_library_content(self, publish=False):
+    def _setup_source_course_with_library_content(self, publish=False, version=None):
         """
         Sets up course with library content.
         """
@@ -1095,7 +1097,9 @@ class TestCourseExportImport(LibraryTestCase):
             parent_location=sequential.location,
             display_name='Test Unit'
         )
-        lc_block = self._add_library_content_block(vertical, self.lib_key, publish_item=publish)
+        lc_block = self._add_library_content_block(
+            vertical, self.lib_key, publish_item=publish, other_settings=dict(source_library_version=version)
+        )
         self._refresh_children(lc_block)
 
     def get_lib_content_block_children(self, block_location):
@@ -1134,13 +1138,18 @@ class TestCourseExportImport(LibraryTestCase):
         dest_child = self.store.get_item(dest_child_location)
         self.assertEqual(source_child.display_name, dest_child.display_name)
 
-    @ddt.data(True, False)
-    def test_library_content_on_course_export_import(self, publish_item):
+    @ddt.data(*itertools.product([False, True], repeat=2))
+    @ddt.unpack
+    def test_library_content_on_course_export_import(self, publish_item, generate_version):
         """
         Verify that library contents in destination and source courses are same after importing
         the source course into destination course.
+
+        If a library with the specified version does not exist in the modulestore, the import should not fail.
         """
-        self._setup_source_course_with_library_content(publish=publish_item)
+        self._setup_source_course_with_library_content(
+            publish=publish_item, version=str(ObjectId()) if generate_version else None
+        )
 
         # Create a course to import source course.
         dest_course = CourseFactory.create(default_store=ModuleStoreEnum.Type.split)
diff --git a/common/lib/xmodule/xmodule/modulestore/xml_importer.py b/common/lib/xmodule/xmodule/modulestore/xml_importer.py
index 6e7e612f52..a45cb7df5f 100644
--- a/common/lib/xmodule/xmodule/modulestore/xml_importer.py
+++ b/common/lib/xmodule/xmodule/modulestore/xml_importer.py
@@ -897,16 +897,20 @@ def _update_and_import_module(
             if lib_content_block_already_published:
                 return block
 
-            # Update library content block's children on draft branch
-            with store.branch_setting(branch_setting=ModuleStoreEnum.Branch.draft_preferred):
-                LibraryToolsService(store, user_id).update_children(
-                    block,
-                    version=block.source_library_version,
-                )
-
-            # Publish it if importing the course for branch setting published_only.
-            if store.get_branch_setting() == ModuleStoreEnum.Branch.published_only:
-                store.publish(block.location, user_id)
+            try:
+                # Update library content block's children on draft branch
+                with store.branch_setting(branch_setting=ModuleStoreEnum.Branch.draft_preferred):
+                    LibraryToolsService(store, user_id).update_children(
+                        block,
+                        version=block.source_library_version,
+                    )
+            except ValueError as err:
+                # The specified library version does not exist.
+                log.error(err)
+            else:
+                # Publish it if importing the course for branch setting published_only.
+                if store.get_branch_setting() == ModuleStoreEnum.Branch.published_only:
+                    store.publish(block.location, user_id)
 
     return block