diff --git a/internal/bootstrap/input.go b/internal/bootstrap/input.go
index aec08c3..5a2a549 100644
--- a/internal/bootstrap/input.go
+++ b/internal/bootstrap/input.go
@@ -93,13 +93,11 @@ func resolveInput(opts Options) (*resolvedInput, error) {
 
 func ensureProviderSetup(cwd string, settings config.Resolved, nonTTY bool) (config.Resolved, string, error) {
 	configExists := config.GlobalConfigExists() || config.ProjectConfigExists(cwd)
-	if configExists {
-		if hasConfiguredProviderCredentials(settings, settings.Provider) {
-			return settings, "", nil
-		}
-		return settings, "", fmt.Errorf("configuration error: settings.provider=%q is missing or not configured in settings.json", settings.Provider)
+	if configExists && hasConfiguredProviderCredentials(settings, settings.Provider) {
+		return settings, "", nil
 	}
 
+	// Even with a config file, try env var fallback when api_key is empty.
 	apiKey, _ := settings.ProviderCredentials(settings.Provider)
 	if apiKey != "" {
 		return settings, envHintFor(settings), nil
@@ -112,6 +110,10 @@ func ensureProviderSetup(cwd string, settings config.Resolved, nonTTY bool) (con
 		return settings, fmt.Sprintf("Using %s from environment", envKey), nil
 	}
 
+	if configExists {
+		return settings, "", fmt.Errorf("configuration error: settings.provider=%q is missing or not configured in settings.json", settings.Provider)
+	}
+
 	if nonTTY {
 		return settings, "", fmt.Errorf("api key not set; set %s or configure providers in %s",
 			config.ProviderEnvKey(settings.Provider), filepath.Join(config.UserConfigDir(), "settings.json"))
diff --git a/internal/config/settings.go b/internal/config/settings.go
index e606e4d..958d056 100644
--- a/internal/config/settings.go
+++ b/internal/config/settings.go
@@ -120,11 +120,17 @@ var providerEnvVars = map[string]struct{ key, base string }{
 
 // ProviderCredentials returns API key and base URL for the given provider.
 // It checks the providers map first, then falls back to standard environment variables.
+// Config base URL is preserved even when the API key comes from the environment.
 func (r Resolved) ProviderCredentials(prov string) (apiKey, baseURL string) {
-	if pc, ok := r.Providers[prov]; ok && pc.APIKey != "" {
+	pc, hasConfig := r.Providers[prov]
+	if hasConfig && pc.APIKey != "" {
 		return pc.APIKey, pc.BaseURL
 	}
-	return EnvCredentials(prov)
+	apiKey, baseURL = EnvCredentials(prov)
+	if hasConfig && baseURL == "" {
+		baseURL = pc.BaseURL
+	}
+	return apiKey, baseURL
 }
 
 // ProviderEnvKey returns the standard environment variable name for a provider's API key.