diff --git a/apps/sim/blocks/utils.test.ts b/apps/sim/blocks/utils.test.ts
new file mode 100644
index 0000000000..0e147a3c7f
--- /dev/null
+++ b/apps/sim/blocks/utils.test.ts
@@ -0,0 +1,267 @@
+/**
+ * @vitest-environment node
+ */
+import { beforeEach, describe, expect, it, vi } from 'vitest'
+
+const { mockIsHosted, mockIsAzureConfigured, mockIsOllamaConfigured } = vi.hoisted(() => ({
+  mockIsHosted: { value: false },
+  mockIsAzureConfigured: { value: false },
+  mockIsOllamaConfigured: { value: false },
+}))
+
+const {
+  mockGetHostedModels,
+  mockGetProviderModels,
+  mockGetProviderIcon,
+  mockGetBaseModelProviders,
+} = vi.hoisted(() => ({
+  mockGetHostedModels: vi.fn(() => []),
+  mockGetProviderModels: vi.fn(() => []),
+  mockGetProviderIcon: vi.fn(() => null),
+  mockGetBaseModelProviders: vi.fn(() => ({})),
+}))
+
+const { mockProviders } = vi.hoisted(() => ({
+  mockProviders: {
+    value: {
+      base: { models: [] as string[], isLoading: false },
+      ollama: { models: [] as string[], isLoading: false },
+      vllm: { models: [] as string[], isLoading: false },
+      openrouter: { models: [] as string[], isLoading: false },
+      fireworks: { models: [] as string[], isLoading: false },
+    },
+  },
+}))
+
+vi.mock('@/lib/core/config/feature-flags', () => ({
+  get isHosted() {
+    return mockIsHosted.value
+  },
+  get isAzureConfigured() {
+    return mockIsAzureConfigured.value
+  },
+  get isOllamaConfigured() {
+    return mockIsOllamaConfigured.value
+  },
+}))
+
+vi.mock('@/providers/models', () => ({
+  getHostedModels: mockGetHostedModels,
+  getProviderModels: mockGetProviderModels,
+  getProviderIcon: mockGetProviderIcon,
+  getBaseModelProviders: mockGetBaseModelProviders,
+}))
+
+vi.mock('@/stores/providers/store', () => ({
+  useProvidersStore: {
+    getState: () => ({
+      get providers() {
+        return mockProviders.value
+      },
+    }),
+  },
+}))
+
+vi.mock('@/lib/oauth/utils', () => ({
+  getScopesForService: vi.fn(() => []),
+}))
+
+import { getApiKeyCondition } from '@/blocks/utils'
+
+const BASE_CLOUD_MODELS: Record<string, string> = {
+  'gpt-4o': 'openai',
+  'claude-sonnet-4-5': 'anthropic',
+  'gemini-2.5-pro': 'google',
+  'mistral-large-latest': 'mistral',
+}
+
+describe('getApiKeyCondition / shouldRequireApiKeyForModel', () => {
+  const evaluateCondition = (model: string): boolean => {
+    const conditionFn = getApiKeyCondition()
+    const condition = conditionFn({ model })
+    if ('not' in condition && condition.not) return false
+    if (condition.value === '__no_model_selected__') return false
+    return true
+  }
+
+  beforeEach(() => {
+    vi.clearAllMocks()
+    mockIsHosted.value = false
+    mockIsAzureConfigured.value = false
+    mockIsOllamaConfigured.value = false
+    mockProviders.value = {
+      base: { models: [], isLoading: false },
+      ollama: { models: [], isLoading: false },
+      vllm: { models: [], isLoading: false },
+      openrouter: { models: [], isLoading: false },
+      fireworks: { models: [], isLoading: false },
+    }
+    mockGetHostedModels.mockReturnValue([])
+    mockGetProviderModels.mockReturnValue([])
+    mockGetBaseModelProviders.mockReturnValue({})
+  })
+
+  describe('empty or missing model', () => {
+    it('does not require API key when model is empty', () => {
+      expect(evaluateCondition('')).toBe(false)
+    })
+
+    it('does not require API key when model is whitespace', () => {
+      expect(evaluateCondition('   ')).toBe(false)
+    })
+  })
+
+  describe('hosted models', () => {
+    it('does not require API key for hosted models on hosted platform', () => {
+      mockIsHosted.value = true
+      mockGetHostedModels.mockReturnValue(['gpt-4o', 'claude-sonnet-4-5'])
+      expect(evaluateCondition('gpt-4o')).toBe(false)
+      expect(evaluateCondition('claude-sonnet-4-5')).toBe(false)
+    })
+
+    it('requires API key for non-hosted models on hosted platform', () => {
+      mockIsHosted.value = true
+      mockGetHostedModels.mockReturnValue(['gpt-4o'])
+      expect(evaluateCondition('claude-sonnet-4-5')).toBe(true)
+    })
+  })
+
+  describe('Vertex AI models', () => {
+    it('does not require API key for vertex/ prefixed models', () => {
+      expect(evaluateCondition('vertex/gemini-2.5-pro')).toBe(false)
+    })
+  })
+
+  describe('Bedrock models', () => {
+    it('does not require API key for bedrock/ prefixed models', () => {
+      expect(evaluateCondition('bedrock/anthropic.claude-v2')).toBe(false)
+    })
+  })
+
+  describe('Azure models', () => {
+    it('does not require API key for azure/ models when Azure is configured', () => {
+      mockIsAzureConfigured.value = true
+      expect(evaluateCondition('azure/gpt-4o')).toBe(false)
+      expect(evaluateCondition('azure-openai/gpt-4o')).toBe(false)
+      expect(evaluateCondition('azure-anthropic/claude-sonnet-4-5')).toBe(false)
+    })
+
+    it('requires API key for azure/ models when Azure is not configured', () => {
+      mockIsAzureConfigured.value = false
+      expect(evaluateCondition('azure/gpt-4o')).toBe(true)
+    })
+  })
+
+  describe('vLLM models', () => {
+    it('does not require API key for vllm/ prefixed models', () => {
+      expect(evaluateCondition('vllm/my-model')).toBe(false)
+      expect(evaluateCondition('vllm/llama-3-70b')).toBe(false)
+    })
+  })
+
+  describe('provider store lookup (client-side)', () => {
+    it('does not require API key when model is in the Ollama store bucket', () => {
+      mockProviders.value.ollama.models = ['llama3:latest', 'mistral:latest']
+      expect(evaluateCondition('llama3:latest')).toBe(false)
+      expect(evaluateCondition('mistral:latest')).toBe(false)
+    })
+
+    it('requires API key when model is in the base store bucket', () => {
+      mockProviders.value.base.models = ['gpt-4o', 'claude-sonnet-4-5']
+      expect(evaluateCondition('gpt-4o')).toBe(true)
+      expect(evaluateCondition('claude-sonnet-4-5')).toBe(true)
+    })
+
+    it('does not require API key when model is in the vLLM store bucket', () => {
+      mockProviders.value.vllm.models = ['my-custom-model']
+      expect(evaluateCondition('my-custom-model')).toBe(false)
+    })
+
+    it('requires API key when model is in the fireworks store bucket', () => {
+      mockProviders.value.fireworks.models = ['fireworks/llama-3']
+      expect(evaluateCondition('fireworks/llama-3')).toBe(true)
+    })
+
+    it('requires API key when model is in the openrouter store bucket', () => {
+      mockProviders.value.openrouter.models = ['openrouter/anthropic/claude']
+      expect(evaluateCondition('openrouter/anthropic/claude')).toBe(true)
+    })
+
+    it('is case-insensitive for store lookup', () => {
+      mockProviders.value.ollama.models = ['Llama3:Latest']
+      expect(evaluateCondition('llama3:latest')).toBe(false)
+    })
+  })
+
+  describe('Ollama — OLLAMA_URL env var (server-safe)', () => {
+    it('does not require API key for unknown models when OLLAMA_URL is set', () => {
+      mockIsOllamaConfigured.value = true
+      expect(evaluateCondition('llama3:latest')).toBe(false)
+      expect(evaluateCondition('phi3:latest')).toBe(false)
+      expect(evaluateCondition('gemma2:latest')).toBe(false)
+      expect(evaluateCondition('deepseek-coder:latest')).toBe(false)
+    })
+
+    it('does not require API key for Ollama models that match cloud provider regex patterns', () => {
+      mockIsOllamaConfigured.value = true
+      expect(evaluateCondition('mistral:latest')).toBe(false)
+      expect(evaluateCondition('mistral')).toBe(false)
+      expect(evaluateCondition('mistral-nemo')).toBe(false)
+      expect(evaluateCondition('gpt2')).toBe(false)
+    })
+
+    it('requires API key for known cloud models even when OLLAMA_URL is set', () => {
+      mockIsOllamaConfigured.value = true
+      mockGetBaseModelProviders.mockReturnValue(BASE_CLOUD_MODELS)
+      expect(evaluateCondition('gpt-4o')).toBe(true)
+      expect(evaluateCondition('claude-sonnet-4-5')).toBe(true)
+      expect(evaluateCondition('gemini-2.5-pro')).toBe(true)
+      expect(evaluateCondition('mistral-large-latest')).toBe(true)
+    })
+
+    it('requires API key for slash-prefixed cloud models when OLLAMA_URL is set', () => {
+      mockIsOllamaConfigured.value = true
+      expect(evaluateCondition('azure/gpt-4o')).toBe(true)
+      expect(evaluateCondition('fireworks/llama-3')).toBe(true)
+      expect(evaluateCondition('openrouter/anthropic/claude')).toBe(true)
+      expect(evaluateCondition('groq/llama-3')).toBe(true)
+    })
+  })
+
+  describe('cloud provider models that need API key', () => {
+    it('requires API key for standard cloud models on hosted platform', () => {
+      mockIsHosted.value = true
+      mockGetHostedModels.mockReturnValue([])
+      expect(evaluateCondition('gpt-4o')).toBe(true)
+      expect(evaluateCondition('claude-sonnet-4-5')).toBe(true)
+      expect(evaluateCondition('gemini-2.5-pro')).toBe(true)
+      expect(evaluateCondition('mistral-large-latest')).toBe(true)
+    })
+
+    it('requires API key for prefixed cloud models on hosted platform', () => {
+      mockIsHosted.value = true
+      expect(evaluateCondition('fireworks/llama-3')).toBe(true)
+      expect(evaluateCondition('openrouter/anthropic/claude')).toBe(true)
+      expect(evaluateCondition('groq/llama-3')).toBe(true)
+      expect(evaluateCondition('cerebras/gpt-oss-120b')).toBe(true)
+    })
+
+    it('requires API key for prefixed cloud models on self-hosted', () => {
+      mockIsHosted.value = false
+      expect(evaluateCondition('fireworks/llama-3')).toBe(true)
+      expect(evaluateCondition('openrouter/anthropic/claude')).toBe(true)
+      expect(evaluateCondition('groq/llama-3')).toBe(true)
+      expect(evaluateCondition('cerebras/gpt-oss-120b')).toBe(true)
+    })
+  })
+
+  describe('self-hosted without OLLAMA_URL', () => {
+    it('requires API key for any model (Ollama models cannot appear without OLLAMA_URL)', () => {
+      mockIsHosted.value = false
+      mockIsOllamaConfigured.value = false
+      expect(evaluateCondition('llama3:latest')).toBe(true)
+      expect(evaluateCondition('mistral:latest')).toBe(true)
+      expect(evaluateCondition('gpt-4o')).toBe(true)
+    })
+  })
+})
diff --git a/apps/sim/blocks/utils.ts b/apps/sim/blocks/utils.ts
index f1f05efc56..a31bd10c72 100644
--- a/apps/sim/blocks/utils.ts
+++ b/apps/sim/blocks/utils.ts
@@ -1,9 +1,9 @@
-import { isAzureConfigured, isHosted } from '@/lib/core/config/feature-flags'
+import { isAzureConfigured, isHosted, isOllamaConfigured } from '@/lib/core/config/feature-flags'
 import { getScopesForService } from '@/lib/oauth/utils'
 import type { BlockOutput, OutputFieldDefinition, SubBlockConfig } from '@/blocks/types'
 import {
+  getBaseModelProviders,
   getHostedModels,
-  getProviderFromModel,
   getProviderIcon,
   getProviderModels,
 } from '@/providers/models'
@@ -100,11 +100,15 @@ export function resolveOutputType(
   return resolvedOutputs
 }
 
-/**
- * Helper to get current Ollama models from store
- */
-const getCurrentOllamaModels = () => {
-  return useProvidersStore.getState().providers.ollama.models
+function getProviderFromStore(model: string): string | null {
+  const { providers } = useProvidersStore.getState()
+  const normalized = model.toLowerCase()
+  for (const [key, state] of Object.entries(providers)) {
+    if (state.models.some((m: string) => m.toLowerCase() === normalized)) {
+      return key
+    }
+  }
+  return null
 }
 
 function buildModelVisibilityCondition(model: string, shouldShow: boolean) {
@@ -119,16 +123,14 @@ function shouldRequireApiKeyForModel(model: string): boolean {
   const normalizedModel = model.trim().toLowerCase()
   if (!normalizedModel) return false
 
-  const hostedModels = getHostedModels()
-  const isHostedModel = hostedModels.some(
-    (hostedModel) => hostedModel.toLowerCase() === normalizedModel
-  )
-  if (isHosted && isHostedModel) return false
+  if (isHosted) {
+    const hostedModels = getHostedModels()
+    if (hostedModels.some((m) => m.toLowerCase() === normalizedModel)) return false
+  }
 
   if (normalizedModel.startsWith('vertex/') || normalizedModel.startsWith('bedrock/')) {
     return false
   }
-
   if (
     isAzureConfigured &&
     (normalizedModel.startsWith('azure/') ||
@@ -138,30 +140,18 @@ function shouldRequireApiKeyForModel(model: string): boolean {
   ) {
     return false
   }
-
   if (normalizedModel.startsWith('vllm/')) {
     return false
   }
 
-  const currentOllamaModels = getCurrentOllamaModels()
-  if (currentOllamaModels.some((ollamaModel) => ollamaModel.toLowerCase() === normalizedModel)) {
-    return false
-  }
+  const storeProvider = getProviderFromStore(normalizedModel)
+  if (storeProvider === 'ollama' || storeProvider === 'vllm') return false
+  if (storeProvider) return true
 
-  if (!isHosted) {
-    try {
-      const providerId = getProviderFromModel(model)
-      if (
-        providerId === 'ollama' ||
-        providerId === 'vllm' ||
-        providerId === 'vertex' ||
-        providerId === 'bedrock'
-      ) {
-        return false
-      }
-    } catch {
-      // If model resolution fails, fall through and require an API key.
-    }
+  if (isOllamaConfigured) {
+    if (normalizedModel.includes('/')) return true
+    if (normalizedModel in getBaseModelProviders()) return true
+    return false
   }
 
   return true
diff --git a/apps/sim/lib/core/config/feature-flags.ts b/apps/sim/lib/core/config/feature-flags.ts
index b688924afe..7aeb4c3307 100644
--- a/apps/sim/lib/core/config/feature-flags.ts
+++ b/apps/sim/lib/core/config/feature-flags.ts
@@ -122,6 +122,14 @@ export const isInboxEnabled = isTruthy(env.INBOX_ENABLED)
  */
 export const isE2bEnabled = isTruthy(env.E2B_ENABLED)
 
+/**
+ * Whether Ollama is configured (OLLAMA_URL is set).
+ * When true, models that are not in the static cloud model list and have no
+ * slash-prefixed provider namespace are assumed to be Ollama models
+ * and do not require an API key.
+ */
+export const isOllamaConfigured = Boolean(env.OLLAMA_URL)
+
 /**
  * Whether Azure OpenAI / Azure Anthropic credentials are pre-configured at the server level
  * (via AZURE_OPENAI_ENDPOINT, AZURE_OPENAI_API_KEY, AZURE_ANTHROPIC_ENDPOINT, etc.).