diff --git a/containers/api-proxy/server.js b/containers/api-proxy/server.js
index 76a83b47d..e409bdebb 100644
--- a/containers/api-proxy/server.js
+++ b/containers/api-proxy/server.js
@@ -64,10 +64,48 @@ const ANTHROPIC_API_KEY = (process.env.ANTHROPIC_API_KEY || '').trim() || undefi
 const COPILOT_GITHUB_TOKEN = (process.env.COPILOT_GITHUB_TOKEN || '').trim() || undefined;
 const GEMINI_API_KEY = (process.env.GEMINI_API_KEY || '').trim() || undefined;
 
+/**
+ * Normalizes an API target value to a bare hostname.
+ * Accepts either a hostname or a full URL and extracts only the hostname,
+ * discarding any scheme, path, query, fragment, credentials, or port.
+ * Path configuration must be provided separately via the existing
+ * *_API_BASE_PATH environment variables.
+ *
+ * @param {string|undefined} value - Raw env var value
+ * @returns {string|undefined} Bare hostname, or undefined if input is falsy
+ */
+function normalizeApiTarget(value) {
+  if (!value) return value;
+
+  const trimmed = value.trim();
+  if (!trimmed) return undefined;
+
+  const candidate = /^[a-zA-Z][a-zA-Z\d+\-.]*:\/\//.test(trimmed)
+    ? trimmed
+    : `https://${trimmed}`;
+
+  try {
+    const parsed = new URL(candidate);
+
+    if (parsed.pathname !== '/' || parsed.search || parsed.hash || parsed.username || parsed.password || parsed.port) {
+      console.warn(
+        `Ignoring unsupported API target URL components in ${sanitizeForLog(trimmed)}; ` +
+        'configure path prefixes via the corresponding *_API_BASE_PATH environment variable.'
+      );
+    }
+
+    return parsed.hostname || undefined;
+  } catch (err) {
+    console.warn(`Invalid API target ${sanitizeForLog(trimmed)}; expected a hostname (e.g. 'api.example.com') or URL`);
+    return undefined;
+  }
+}
+
 // Configurable API target hosts (supports custom endpoints / internal LLM routers)
-const OPENAI_API_TARGET = process.env.OPENAI_API_TARGET || 'api.openai.com';
-const ANTHROPIC_API_TARGET = process.env.ANTHROPIC_API_TARGET || 'api.anthropic.com';
-const GEMINI_API_TARGET = process.env.GEMINI_API_TARGET || 'generativelanguage.googleapis.com';
+// Values are normalized to bare hostnames — buildUpstreamPath() prepends https://
+const OPENAI_API_TARGET = normalizeApiTarget(process.env.OPENAI_API_TARGET) || 'api.openai.com';
+const ANTHROPIC_API_TARGET = normalizeApiTarget(process.env.ANTHROPIC_API_TARGET) || 'api.anthropic.com';
+const GEMINI_API_TARGET = normalizeApiTarget(process.env.GEMINI_API_TARGET) || 'generativelanguage.googleapis.com';
 
 /**
  * Normalizes a base path for use as a URL path prefix.
@@ -123,7 +161,7 @@ const GEMINI_API_BASE_PATH = normalizeBasePath(process.env.GEMINI_API_BASE_PATH)
 // Priority: COPILOT_API_TARGET env var > auto-derive from GITHUB_SERVER_URL > default
 function deriveCopilotApiTarget() {
   if (process.env.COPILOT_API_TARGET) {
-    return process.env.COPILOT_API_TARGET;
+    return normalizeApiTarget(process.env.COPILOT_API_TARGET);
   }
   // Auto-derive from GITHUB_SERVER_URL:
   // - GitHub Enterprise Cloud (*.ghe.com): Copilot inference/models/MCP are served at
@@ -932,4 +970,4 @@ if (require.main === module) {
 }
 
 // Export for testing
-module.exports = { deriveCopilotApiTarget, normalizeBasePath, buildUpstreamPath, proxyWebSocket };
+module.exports = { normalizeApiTarget, deriveCopilotApiTarget, normalizeBasePath, buildUpstreamPath, proxyWebSocket };
diff --git a/containers/api-proxy/server.test.js b/containers/api-proxy/server.test.js
index cd0c8ebe0..657d404c9 100644
--- a/containers/api-proxy/server.test.js
+++ b/containers/api-proxy/server.test.js
@@ -5,7 +5,46 @@
 const http = require('http');
 const tls = require('tls');
 const { EventEmitter } = require('events');
-const { deriveCopilotApiTarget, normalizeBasePath, buildUpstreamPath, proxyWebSocket } = require('./server');
+const { normalizeApiTarget, deriveCopilotApiTarget, normalizeBasePath, buildUpstreamPath, proxyWebSocket } = require('./server');
+
+describe('normalizeApiTarget', () => {
+  it('should strip https:// prefix', () => {
+    expect(normalizeApiTarget('https://my-gateway.example.com')).toBe('my-gateway.example.com');
+  });
+
+  it('should strip http:// prefix', () => {
+    expect(normalizeApiTarget('http://my-gateway.example.com')).toBe('my-gateway.example.com');
+  });
+
+  it('should preserve bare hostname', () => {
+    expect(normalizeApiTarget('api.openai.com')).toBe('api.openai.com');
+  });
+
+  it('should normalize a URL with a path to just the hostname', () => {
+    expect(normalizeApiTarget('https://my-gateway.example.com/some-path')).toBe('my-gateway.example.com');
+  });
+
+  it('should trim whitespace', () => {
+    expect(normalizeApiTarget('  https://api.openai.com  ')).toBe('api.openai.com');
+  });
+
+  it('should return undefined for falsy input', () => {
+    expect(normalizeApiTarget(undefined)).toBeUndefined();
+    expect(normalizeApiTarget('')).toBe('');
+  });
+
+  it('should not strip scheme-like substrings in the middle', () => {
+    expect(normalizeApiTarget('api.https.example.com')).toBe('api.https.example.com');
+  });
+
+  it('should discard port from URL', () => {
+    expect(normalizeApiTarget('https://my-gateway.example.com:8443')).toBe('my-gateway.example.com');
+  });
+
+  it('should discard query and fragment from URL', () => {
+    expect(normalizeApiTarget('https://my-gateway.example.com/path?key=val#frag')).toBe('my-gateway.example.com');
+  });
+});
 
 describe('deriveCopilotApiTarget', () => {
   let originalEnv;
@@ -268,6 +307,25 @@ describe('buildUpstreamPath', () => {
         .toBe('/serving-endpoints/v1/chat/completions');
     });
   });
+
+  describe('with normalized API target (gh-aw#25137 regression)', () => {
+    it('should produce correct path when target was already normalized', () => {
+      // normalizeApiTarget('https://my-gateway.example.com/some-path')
+      // returns 'my-gateway.example.com' (hostname only)
+      const target = 'my-gateway.example.com';
+      expect(buildUpstreamPath('/v1/messages', target, ''))
+        .toBe('/v1/messages');
+    });
+
+    it('should produce wrong hostname if scheme is NOT stripped (demonstrating the bug)', () => {
+      // Without normalizeApiTarget, the scheme-prefixed value causes
+      // new URL() to parse 'https' as the hostname instead of the real host
+      const badTarget = 'https://my-gateway.example.com';
+      const targetUrl = new URL('/v1/messages', `https://${badTarget}`);
+      // Node parses this as hostname='https', not 'my-gateway.example.com'
+      expect(targetUrl.hostname).not.toBe('my-gateway.example.com');
+    });
+  });
 });
 
 // ── Helpers for proxyWebSocket tests ──────────────────────────────────────────
diff --git a/src/docker-manager.test.ts b/src/docker-manager.test.ts
index 29b7284e6..08fdbdabd 100644
--- a/src/docker-manager.test.ts
+++ b/src/docker-manager.test.ts
@@ -1,4 +1,4 @@
-import { generateDockerCompose, subnetsOverlap, writeConfigs, startContainers, stopContainers, fastKillAgentContainer, isAgentExternallyKilled, resetAgentExternallyKilled, AGENT_CONTAINER_NAME, cleanup, runAgentCommand, validateIdNotInSystemRange, getSafeHostUid, getSafeHostGid, getRealUserHome, extractGhHostFromServerUrl, readGitHubPathEntries, mergeGitHubPathEntries, readEnvFile, MIN_REGULAR_UID, ACT_PRESET_BASE_IMAGE } from './docker-manager';
+import { generateDockerCompose, subnetsOverlap, writeConfigs, startContainers, stopContainers, fastKillAgentContainer, isAgentExternallyKilled, resetAgentExternallyKilled, AGENT_CONTAINER_NAME, cleanup, runAgentCommand, validateIdNotInSystemRange, getSafeHostUid, getSafeHostGid, getRealUserHome, extractGhHostFromServerUrl, readGitHubPathEntries, mergeGitHubPathEntries, readEnvFile, MIN_REGULAR_UID, ACT_PRESET_BASE_IMAGE, stripScheme } from './docker-manager';
 import { WrapperConfig } from './types';
 import * as fs from 'fs';
 import * as path from 'path';
@@ -295,6 +295,28 @@ describe('docker-manager', () => {
     });
   });
 
+  describe('stripScheme', () => {
+    it('should strip https:// prefix', () => {
+      expect(stripScheme('https://my-gateway.example.com')).toBe('my-gateway.example.com');
+    });
+
+    it('should strip http:// prefix', () => {
+      expect(stripScheme('http://my-gateway.example.com')).toBe('my-gateway.example.com');
+    });
+
+    it('should preserve bare hostname', () => {
+      expect(stripScheme('api.openai.com')).toBe('api.openai.com');
+    });
+
+    it('should normalize URL with path to hostname only', () => {
+      expect(stripScheme('https://my-gateway.example.com/some-path')).toBe('my-gateway.example.com');
+    });
+
+    it('should not strip scheme-like substrings in the middle', () => {
+      expect(stripScheme('api.https.example.com')).toBe('api.https.example.com');
+    });
+  });
+
   describe('generateDockerCompose', () => {
     const mockConfig: WrapperConfig = {
       allowedDomains: ['github.com', 'npmjs.org'],
@@ -2380,6 +2402,22 @@ describe('docker-manager', () => {
         expect(env.ANTHROPIC_API_TARGET).toBe('custom.anthropic-router.internal');
       });
 
+      it('should strip https:// scheme from API target values (gh-aw#25137)', () => {
+        const configWithProxy = {
+          ...mockConfig,
+          enableApiProxy: true,
+          anthropicApiKey: 'sk-ant-test-key',
+          anthropicApiTarget: 'https://my-gateway.example.com',
+          openaiApiKey: 'sk-openai-test',
+          openaiApiTarget: 'https://openai-router.internal',
+        };
+        const result = generateDockerCompose(configWithProxy, mockNetworkConfigWithProxy);
+        const proxy = result.services['api-proxy'];
+        const env = proxy.environment as Record<string, string>;
+        expect(env.ANTHROPIC_API_TARGET).toBe('my-gateway.example.com');
+        expect(env.OPENAI_API_TARGET).toBe('openai-router.internal');
+      });
+
       it('should not set ANTHROPIC_API_TARGET in api-proxy when anthropicApiTarget is not provided', () => {
         const configWithProxy = { ...mockConfig, enableApiProxy: true, anthropicApiKey: 'sk-ant-test-key' };
         const result = generateDockerCompose(configWithProxy, mockNetworkConfigWithProxy);
diff --git a/src/docker-manager.ts b/src/docker-manager.ts
index 837e71909..f4c3f7050 100644
--- a/src/docker-manager.ts
+++ b/src/docker-manager.ts
@@ -372,6 +372,29 @@ export interface SslConfig {
   sslDbPath: string;
 }
 
+/**
+ * Normalizes an API target value to a bare hostname.
+ * API target values should be bare hostnames (e.g., "api.openai.com"), but
+ * may arrive with a scheme or path when set via GitHub Actions expressions
+ * that are resolved at runtime (see github/gh-aw#25137).
+ * Discards any scheme, path, query, fragment, credentials, or port —
+ * path prefixes must use the separate *_API_BASE_PATH settings.
+ */
+export function stripScheme(value: string): string {
+  const trimmed = value.trim();
+  if (!trimmed) return trimmed;
+
+  const candidate = /^[a-zA-Z][a-zA-Z\d+\-.]*:\/\//.test(trimmed)
+    ? trimmed
+    : `https://${trimmed}`;
+
+  try {
+    return new URL(candidate).hostname || trimmed;
+  } catch {
+    return trimmed;
+  }
+}
+
 /**
  * Generates Docker Compose configuration
  * Note: Uses external network 'awf-net' created by host-iptables setup
@@ -1456,12 +1479,15 @@ export function generateDockerCompose(
         ...(config.copilotGithubToken && { COPILOT_GITHUB_TOKEN: config.copilotGithubToken }),
         ...(config.geminiApiKey && { GEMINI_API_KEY: config.geminiApiKey }),
         // Configurable API targets (for GHES/GHEC / custom endpoints)
-        ...(config.copilotApiTarget && { COPILOT_API_TARGET: config.copilotApiTarget }),
-        ...(config.openaiApiTarget && { OPENAI_API_TARGET: config.openaiApiTarget }),
+        // Strip any scheme prefix — server.js also normalizes defensively, but
+        // stripping here prevents a scheme-prefixed hostname from reaching the
+        // container at all (belt-and-suspenders for gh-aw#25137).
+        ...(config.copilotApiTarget && { COPILOT_API_TARGET: stripScheme(config.copilotApiTarget) }),
+        ...(config.openaiApiTarget && { OPENAI_API_TARGET: stripScheme(config.openaiApiTarget) }),
         ...(config.openaiApiBasePath && { OPENAI_API_BASE_PATH: config.openaiApiBasePath }),
-        ...(config.anthropicApiTarget && { ANTHROPIC_API_TARGET: config.anthropicApiTarget }),
+        ...(config.anthropicApiTarget && { ANTHROPIC_API_TARGET: stripScheme(config.anthropicApiTarget) }),
         ...(config.anthropicApiBasePath && { ANTHROPIC_API_BASE_PATH: config.anthropicApiBasePath }),
-        ...(config.geminiApiTarget && { GEMINI_API_TARGET: config.geminiApiTarget }),
+        ...(config.geminiApiTarget && { GEMINI_API_TARGET: stripScheme(config.geminiApiTarget) }),
         ...(config.geminiApiBasePath && { GEMINI_API_BASE_PATH: config.geminiApiBasePath }),
         // Forward GITHUB_SERVER_URL so api-proxy can auto-derive enterprise endpoints
         ...(process.env.GITHUB_SERVER_URL && { GITHUB_SERVER_URL: process.env.GITHUB_SERVER_URL }),