diff --git a/sdk/packages/core/src/services/llms/provider-defaults.test.ts b/sdk/packages/core/src/services/llms/provider-defaults.test.ts
index 1436116750..2f1e2293c1 100644
--- a/sdk/packages/core/src/services/llms/provider-defaults.test.ts
+++ b/sdk/packages/core/src/services/llms/provider-defaults.test.ts
@@ -309,6 +309,47 @@ describe("resolveProviderConfig", () => {
 		expect(resolved?.knownModels?.["gpt-5.4"]).toBeUndefined();
 	});
 
+	it("returns an empty authoritative LiteLLM model list without auth", async () => {
+		const fetchMock = vi.fn();
+		vi.stubGlobal("fetch", fetchMock);
+
+		const resolved = await resolveProviderConfig(
+			"litellm",
+			{ failOnError: true, cacheTtlMs: 0 },
+			{
+				providerId: "litellm",
+				modelId: "",
+				baseUrl: "http://localhost:4000/v1/",
+			},
+		);
+
+		expect(fetchMock).not.toHaveBeenCalled();
+		expect(resolved?.knownModels).toEqual({});
+		expect(resolved?.knownModels?.["gpt-5.4"]).toBeUndefined();
+	});
+
+	it("does not fall back to bundled LiteLLM models when private model fetch fails non-strictly", async () => {
+		const fetchMock = vi.fn(
+			async () => new Response('{"error":"unauthorized"}', { status: 401 }),
+		);
+		vi.stubGlobal("fetch", fetchMock);
+
+		const resolved = await resolveProviderConfig(
+			"litellm",
+			{ failOnError: false, cacheTtlMs: 0 },
+			{
+				providerId: "litellm",
+				modelId: "",
+				apiKey: "litellm-key",
+				baseUrl: "http://localhost:4000",
+			},
+		);
+
+		expect(fetchMock).toHaveBeenCalled();
+		expect(resolved?.knownModels).toEqual({});
+		expect(resolved?.knownModels?.["gpt-5.4"]).toBeUndefined();
+	});
+
 	it("reports attempted path, auth header, status, and body for LiteLLM model fetch failures", async () => {
 		const fetchMock = vi.fn(
 			async () => new Response('{"error":"unauthorized"}', { status: 401 }),
diff --git a/sdk/packages/core/src/services/llms/provider-defaults.ts b/sdk/packages/core/src/services/llms/provider-defaults.ts
index ad0360183e..7293c4fee4 100644
--- a/sdk/packages/core/src/services/llms/provider-defaults.ts
+++ b/sdk/packages/core/src/services/llms/provider-defaults.ts
@@ -149,6 +149,10 @@ async function mergeKnownModels(
 	publicModels: Record<string, ModelInfo> = {},
 	userKnownModels: Record<string, ModelInfo> = {},
 ): Promise<Record<string, ModelInfo>> {
+	if (providerId === "litellm") {
+		return Llms.sortModelsByReleaseDate(privateModels);
+	}
+
 	const generatedProviderModels = await loadGeneratedProviderModels();
 	const generatedKeys = Llms.resolveProviderModelCatalogKeys(providerId);
 	const generated = Object.assign(
@@ -171,16 +175,6 @@ async function mergeKnownModels(
 			...userKnownModels,
 		});
 	}
-	// LiteLLM model access is configured by the user's proxy. When the proxy
-	// returns a private model list, treat it as the authoritative allowlist so
-	// the picker does not show bundled OpenAI-compatible catalog entries that the
-	// proxy may not actually expose.
-	if (providerId === "litellm" && Object.keys(privateModels).length > 0) {
-		return Llms.sortModelsByReleaseDate({
-			...privateModels,
-			...userKnownModels,
-		});
-	}
 	if (providerId === "openai-codex") {
 		return Llms.sortModelsByReleaseDate({
 			...defaultKnownModels,
@@ -937,6 +931,12 @@ export async function resolveProviderConfig(
 		if (modelCatalog?.failOnError) {
 			throw error;
 		}
+		if (providerId === "litellm") {
+			return {
+				...defaults,
+				knownModels: {},
+			};
+		}
 		return defaults;
 	}
 }
diff --git a/sdk/packages/core/src/services/providers/local-provider-service.test.ts b/sdk/packages/core/src/services/providers/local-provider-service.test.ts
index 662a4d4cfb..f6d085cf82 100644
--- a/sdk/packages/core/src/services/providers/local-provider-service.test.ts
+++ b/sdk/packages/core/src/services/providers/local-provider-service.test.ts
@@ -598,7 +598,7 @@ describe("addLocalProvider – capabilities", () => {
 		expect(models[0].supportsReasoning).toBeFalsy();
 	});
 
-	it("merges LiteLLM private models into the provider model listing when auth is configured", async () => {
+	it("uses LiteLLM private models as the authoritative provider model listing when auth is configured", async () => {
 		manager.saveProviderSettings(
 			{
 				provider: "litellm",
@@ -632,8 +632,11 @@ describe("addLocalProvider – capabilities", () => {
 			manager.getProviderConfig("litellm"),
 		);
 
-		expect(models.map((model) => model.id)).toContain("private-proxy-model");
-		expect(models.map((model) => model.id)).toContain("openai/gpt-4o-mini");
+		expect(models.map((model) => model.id).sort()).toEqual([
+			"openai/gpt-4o-mini",
+			"private-proxy-model",
+		]);
+		expect(models.map((model) => model.id)).not.toContain("gpt-5.4");
 		expect(
 			models.find((model) => model.id === "private-proxy-model"),
 		).toMatchObject({
@@ -641,6 +644,27 @@ describe("addLocalProvider – capabilities", () => {
 			supportsReasoning: true,
 		});
 	});
+
+	it("uses an empty LiteLLM model list when no private model list is fetched", async () => {
+		manager.saveProviderSettings(
+			{
+				provider: "litellm",
+				baseUrl: "http://localhost:4010",
+				model: "gpt-4o",
+			},
+			{ setLastUsed: false },
+		);
+		const fetchMock = vi.fn();
+		vi.stubGlobal("fetch", fetchMock);
+
+		const { models } = await getLocalProviderModels(
+			"litellm",
+			manager.getProviderConfig("litellm"),
+		);
+
+		expect(fetchMock).not.toHaveBeenCalled();
+		expect(models).toEqual([]);
+	});
 });
 
 // ===========================================================================
diff --git a/sdk/packages/core/src/services/providers/local-provider-service.ts b/sdk/packages/core/src/services/providers/local-provider-service.ts
index 86d4c4b732..981134023a 100644
--- a/sdk/packages/core/src/services/providers/local-provider-service.ts
+++ b/sdk/packages/core/src/services/providers/local-provider-service.ts
@@ -136,6 +136,10 @@ async function resolveProviderModelMap(
 		config,
 	);
 
+	if (providerId === "litellm" && resolved?.knownModels) {
+		return resolved.knownModels;
+	}
+
 	return resolved?.knownModels
 		? {
 				...registeredModels,