diff --git a/CHANGELOG.md b/CHANGELOG.md
index a9374919ac3..27e80e5c39b 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -60,6 +60,7 @@ Docs: https://docs.openclaw.ai
 - macOS/voice wake: stop crashing wake-word command extraction when speech segment ranges come from a different transcript instance.
 - Discord/allowlists: honor raw `guild_id` when hydrated guild objects are missing so allowlisted channels and threads like `#maintainers` no longer get false-dropped before channel allowlist checks.
 - macOS/runtime locator: require Node >=22.16.0 during macOS runtime discovery so the app no longer accepts Node versions that the main runtime guard rejects later. Thanks @sumleo.
+- Agents/custom providers: preserve blank API keys for loopback OpenAI-compatible custom providers by clearing the synthetic Authorization header at runtime, while keeping explicit apiKey and oauth/token config from silently downgrading into fake bearer auth. (#45631) Thanks @xinhuagu.
 
 ## 2026.3.12
 
diff --git a/src/agents/model-auth-markers.ts b/src/agents/model-auth-markers.ts
index e888f06d0c5..8a890d3a694 100644
--- a/src/agents/model-auth-markers.ts
+++ b/src/agents/model-auth-markers.ts
@@ -4,6 +4,7 @@ import { listKnownProviderEnvApiKeyNames } from "./model-auth-env-vars.js";
 export const MINIMAX_OAUTH_MARKER = "minimax-oauth";
 export const QWEN_OAUTH_MARKER = "qwen-oauth";
 export const OLLAMA_LOCAL_AUTH_MARKER = "ollama-local";
+export const CUSTOM_LOCAL_AUTH_MARKER = "custom-local";
 export const NON_ENV_SECRETREF_MARKER = "secretref-managed"; // pragma: allowlist secret
 export const SECRETREF_ENV_HEADER_MARKER_PREFIX = "secretref-env:"; // pragma: allowlist secret
 
@@ -71,6 +72,7 @@ export function isNonSecretApiKeyMarker(
     trimmed === MINIMAX_OAUTH_MARKER ||
     trimmed === QWEN_OAUTH_MARKER ||
     trimmed === OLLAMA_LOCAL_AUTH_MARKER ||
+    trimmed === CUSTOM_LOCAL_AUTH_MARKER ||
     trimmed === NON_ENV_SECRETREF_MARKER ||
     isAwsSdkAuthMarker(trimmed);
   if (isKnownMarker) {
diff --git a/src/agents/model-auth.test.ts b/src/agents/model-auth.test.ts
index 2deaeb7dbf6..de8f0f1b752 100644
--- a/src/agents/model-auth.test.ts
+++ b/src/agents/model-auth.test.ts
@@ -1,9 +1,12 @@
-import { describe, expect, it } from "vitest";
+import { streamSimpleOpenAICompletions, type Model } from "@mariozechner/pi-ai";
+import { afterEach, describe, expect, it, vi } from "vitest";
 import type { AuthProfileStore } from "./auth-profiles.js";
-import { NON_ENV_SECRETREF_MARKER } from "./model-auth-markers.js";
+import { CUSTOM_LOCAL_AUTH_MARKER, NON_ENV_SECRETREF_MARKER } from "./model-auth-markers.js";
 import {
+  applyLocalNoAuthHeaderOverride,
   hasUsableCustomProviderApiKey,
   requireApiKey,
+  resolveApiKeyForProvider,
   resolveAwsSdkEnvVarName,
   resolveModelAuthMode,
   resolveUsableCustomProviderApiKey,
@@ -223,3 +226,334 @@ describe("resolveUsableCustomProviderApiKey", () => {
     }
   });
 });
+
+describe("resolveApiKeyForProvider – synthetic local auth for custom providers", () => {
+  it("synthesizes a local auth marker for custom providers with a local baseUrl and no apiKey", async () => {
+    const auth = await resolveApiKeyForProvider({
+      provider: "custom-127-0-0-1-8080",
+      cfg: {
+        models: {
+          providers: {
+            "custom-127-0-0-1-8080": {
+              baseUrl: "http://127.0.0.1:8080/v1",
+              api: "openai-completions",
+              models: [
+                {
+                  id: "qwen-3.5",
+                  name: "Qwen 3.5",
+                  reasoning: false,
+                  input: ["text"],
+                  cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+                  contextWindow: 8192,
+                  maxTokens: 4096,
+                },
+              ],
+            },
+          },
+        },
+      },
+    });
+    expect(auth.apiKey).toBe(CUSTOM_LOCAL_AUTH_MARKER);
+    expect(auth.source).toContain("synthetic local key");
+  });
+
+  it("synthesizes a local auth marker for localhost custom providers", async () => {
+    const auth = await resolveApiKeyForProvider({
+      provider: "my-local",
+      cfg: {
+        models: {
+          providers: {
+            "my-local": {
+              baseUrl: "http://localhost:11434/v1",
+              api: "openai-completions",
+              models: [
+                {
+                  id: "llama3",
+                  name: "Llama 3",
+                  reasoning: false,
+                  input: ["text"],
+                  cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+                  contextWindow: 8192,
+                  maxTokens: 4096,
+                },
+              ],
+            },
+          },
+        },
+      },
+    });
+    expect(auth.apiKey).toBe(CUSTOM_LOCAL_AUTH_MARKER);
+  });
+
+  it("synthesizes a local auth marker for IPv6 loopback (::1)", async () => {
+    const auth = await resolveApiKeyForProvider({
+      provider: "my-ipv6",
+      cfg: {
+        models: {
+          providers: {
+            "my-ipv6": {
+              baseUrl: "http://[::1]:8080/v1",
+              api: "openai-completions",
+              models: [
+                {
+                  id: "llama3",
+                  name: "Llama 3",
+                  reasoning: false,
+                  input: ["text"],
+                  cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+                  contextWindow: 8192,
+                  maxTokens: 4096,
+                },
+              ],
+            },
+          },
+        },
+      },
+    });
+    expect(auth.apiKey).toBe(CUSTOM_LOCAL_AUTH_MARKER);
+  });
+
+  it("synthesizes a local auth marker for 0.0.0.0", async () => {
+    const auth = await resolveApiKeyForProvider({
+      provider: "my-wildcard",
+      cfg: {
+        models: {
+          providers: {
+            "my-wildcard": {
+              baseUrl: "http://0.0.0.0:11434/v1",
+              api: "openai-completions",
+              models: [
+                {
+                  id: "qwen",
+                  name: "Qwen",
+                  reasoning: false,
+                  input: ["text"],
+                  cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+                  contextWindow: 8192,
+                  maxTokens: 4096,
+                },
+              ],
+            },
+          },
+        },
+      },
+    });
+    expect(auth.apiKey).toBe(CUSTOM_LOCAL_AUTH_MARKER);
+  });
+
+  it("synthesizes a local auth marker for IPv4-mapped IPv6 (::ffff:127.0.0.1)", async () => {
+    const auth = await resolveApiKeyForProvider({
+      provider: "my-mapped",
+      cfg: {
+        models: {
+          providers: {
+            "my-mapped": {
+              baseUrl: "http://[::ffff:127.0.0.1]:8080/v1",
+              api: "openai-completions",
+              models: [
+                {
+                  id: "llama3",
+                  name: "Llama 3",
+                  reasoning: false,
+                  input: ["text"],
+                  cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+                  contextWindow: 8192,
+                  maxTokens: 4096,
+                },
+              ],
+            },
+          },
+        },
+      },
+    });
+    expect(auth.apiKey).toBe(CUSTOM_LOCAL_AUTH_MARKER);
+  });
+
+  it("does not synthesize auth for remote custom providers without apiKey", async () => {
+    await expect(
+      resolveApiKeyForProvider({
+        provider: "my-remote",
+        cfg: {
+          models: {
+            providers: {
+              "my-remote": {
+                baseUrl: "https://api.example.com/v1",
+                api: "openai-completions",
+                models: [
+                  {
+                    id: "gpt-5",
+                    name: "GPT-5",
+                    reasoning: false,
+                    input: ["text"],
+                    cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+                    contextWindow: 8192,
+                    maxTokens: 4096,
+                  },
+                ],
+              },
+            },
+          },
+        },
+      }),
+    ).rejects.toThrow("No API key found");
+  });
+
+  it("does not synthesize local auth when apiKey is explicitly configured but unresolved", async () => {
+    const previous = process.env.OPENAI_API_KEY;
+    delete process.env.OPENAI_API_KEY;
+    try {
+      await expect(
+        resolveApiKeyForProvider({
+          provider: "custom",
+          cfg: {
+            models: {
+              providers: {
+                custom: {
+                  baseUrl: "http://127.0.0.1:8080/v1",
+                  api: "openai-completions",
+                  apiKey: "OPENAI_API_KEY",
+                  models: [
+                    {
+                      id: "llama3",
+                      name: "Llama 3",
+                      reasoning: false,
+                      input: ["text"],
+                      cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+                      contextWindow: 8192,
+                      maxTokens: 4096,
+                    },
+                  ],
+                },
+              },
+            },
+          },
+        }),
+      ).rejects.toThrow('No API key found for provider "custom"');
+    } finally {
+      if (previous === undefined) {
+        delete process.env.OPENAI_API_KEY;
+      } else {
+        process.env.OPENAI_API_KEY = previous;
+      }
+    }
+  });
+
+  it("does not synthesize local auth when auth mode explicitly requires oauth", async () => {
+    await expect(
+      resolveApiKeyForProvider({
+        provider: "custom",
+        cfg: {
+          models: {
+            providers: {
+              custom: {
+                baseUrl: "http://127.0.0.1:8080/v1",
+                api: "openai-completions",
+                auth: "oauth",
+                models: [
+                  {
+                    id: "llama3",
+                    name: "Llama 3",
+                    reasoning: false,
+                    input: ["text"],
+                    cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+                    contextWindow: 8192,
+                    maxTokens: 4096,
+                  },
+                ],
+              },
+            },
+          },
+        },
+      }),
+    ).rejects.toThrow('No API key found for provider "custom"');
+  });
+
+  it("keeps built-in aws-sdk fallback for local baseUrl overrides", async () => {
+    const auth = await resolveApiKeyForProvider({
+      provider: "amazon-bedrock",
+      cfg: {
+        models: {
+          providers: {
+            "amazon-bedrock": {
+              baseUrl: "http://127.0.0.1:8080/v1",
+              models: [],
+            },
+          },
+        },
+      },
+    });
+
+    expect(auth.mode).toBe("aws-sdk");
+    expect(auth.apiKey).toBeUndefined();
+  });
+});
+
+describe("applyLocalNoAuthHeaderOverride", () => {
+  const originalFetch = globalThis.fetch;
+
+  afterEach(() => {
+    globalThis.fetch = originalFetch;
+    vi.restoreAllMocks();
+  });
+
+  it("clears Authorization for synthetic local OpenAI-compatible auth markers", async () => {
+    let capturedAuthorization: string | null | undefined;
+    let capturedXTest: string | null | undefined;
+    let resolveRequest: (() => void) | undefined;
+    const requestSeen = new Promise<void>((resolve) => {
+      resolveRequest = resolve;
+    });
+    globalThis.fetch = vi.fn(async (_input, init) => {
+      const headers = new Headers(init?.headers);
+      capturedAuthorization = headers.get("Authorization");
+      capturedXTest = headers.get("X-Test");
+      resolveRequest?.();
+      return new Response(JSON.stringify({ error: { message: "unauthorized" } }), {
+        status: 401,
+        headers: { "content-type": "application/json" },
+      });
+    }) as typeof fetch;
+
+    const model = applyLocalNoAuthHeaderOverride(
+      {
+        id: "local-llm",
+        name: "local-llm",
+        api: "openai-completions",
+        provider: "custom",
+        baseUrl: "http://127.0.0.1:8080/v1",
+        reasoning: false,
+        input: ["text"],
+        cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+        contextWindow: 8192,
+        maxTokens: 4096,
+        headers: { "X-Test": "1" },
+      } as Model<"openai-completions">,
+      {
+        apiKey: CUSTOM_LOCAL_AUTH_MARKER,
+        source: "models.providers.custom (synthetic local key)",
+        mode: "api-key",
+      },
+    );
+
+    streamSimpleOpenAICompletions(
+      model,
+      {
+        messages: [
+          {
+            role: "user",
+            content: "hello",
+            timestamp: Date.now(),
+          },
+        ],
+      },
+      {
+        apiKey: CUSTOM_LOCAL_AUTH_MARKER,
+      },
+    );
+
+    await requestSeen;
+
+    expect(capturedAuthorization).toBeNull();
+    expect(capturedXTest).toBe("1");
+  });
+});
diff --git a/src/agents/model-auth.ts b/src/agents/model-auth.ts
index ffc7c1e2e9d..fb3abd1571e 100644
--- a/src/agents/model-auth.ts
+++ b/src/agents/model-auth.ts
@@ -3,6 +3,7 @@ import { type Api, getEnvApiKey, type Model } from "@mariozechner/pi-ai";
 import { formatCliCommand } from "../cli/command-format.js";
 import type { OpenClawConfig } from "../config/config.js";
 import type { ModelProviderAuthMode, ModelProviderConfig } from "../config/types.js";
+import { coerceSecretRef } from "../config/types.secrets.js";
 import { getShellEnvAppliedKeys } from "../infra/shell-env.js";
 import { createSubsystemLogger } from "../logging/subsystem.js";
 import {
@@ -19,6 +20,7 @@ import {
 } from "./auth-profiles.js";
 import { PROVIDER_ENV_API_KEY_CANDIDATES } from "./model-auth-env-vars.js";
 import {
+  CUSTOM_LOCAL_AUTH_MARKER,
   isKnownEnvApiKeyMarker,
   isNonSecretApiKeyMarker,
   OLLAMA_LOCAL_AUTH_MARKER,
@@ -119,15 +121,44 @@ function resolveProviderAuthOverride(
   return undefined;
 }
 
+function isLocalBaseUrl(baseUrl: string): boolean {
+  try {
+    const host = new URL(baseUrl).hostname.toLowerCase();
+    return (
+      host === "localhost" ||
+      host === "127.0.0.1" ||
+      host === "0.0.0.0" ||
+      host === "[::1]" ||
+      host === "[::ffff:7f00:1]" ||
+      host === "[::ffff:127.0.0.1]"
+    );
+  } catch {
+    return false;
+  }
+}
+
+function hasExplicitProviderApiKeyConfig(providerConfig: ModelProviderConfig): boolean {
+  return (
+    normalizeOptionalSecretInput(providerConfig.apiKey) !== undefined ||
+    coerceSecretRef(providerConfig.apiKey) !== null
+  );
+}
+
+function isCustomLocalProviderConfig(providerConfig: ModelProviderConfig): boolean {
+  return (
+    typeof providerConfig.baseUrl === "string" &&
+    providerConfig.baseUrl.trim().length > 0 &&
+    typeof providerConfig.api === "string" &&
+    providerConfig.api.trim().length > 0 &&
+    Array.isArray(providerConfig.models) &&
+    providerConfig.models.length > 0
+  );
+}
+
 function resolveSyntheticLocalProviderAuth(params: {
   cfg: OpenClawConfig | undefined;
   provider: string;
 }): ResolvedProviderAuth | null {
-  const normalizedProvider = normalizeProviderId(params.provider);
-  if (normalizedProvider !== "ollama") {
-    return null;
-  }
-
   const providerConfig = resolveProviderConfig(params.cfg, params.provider);
   if (!providerConfig) {
     return null;
@@ -141,11 +172,38 @@ function resolveSyntheticLocalProviderAuth(params: {
     return null;
   }
 
-  return {
-    apiKey: OLLAMA_LOCAL_AUTH_MARKER,
-    source: "models.providers.ollama (synthetic local key)",
-    mode: "api-key",
-  };
+  const normalizedProvider = normalizeProviderId(params.provider);
+  if (normalizedProvider === "ollama") {
+    return {
+      apiKey: OLLAMA_LOCAL_AUTH_MARKER,
+      source: "models.providers.ollama (synthetic local key)",
+      mode: "api-key",
+    };
+  }
+
+  const authOverride = resolveProviderAuthOverride(params.cfg, params.provider);
+  if (authOverride && authOverride !== "api-key") {
+    return null;
+  }
+  if (!isCustomLocalProviderConfig(providerConfig)) {
+    return null;
+  }
+  if (hasExplicitProviderApiKeyConfig(providerConfig)) {
+    return null;
+  }
+
+  // Custom providers pointing at a local server (e.g. llama.cpp, vLLM, LocalAI)
+  // typically don't require auth. Synthesize a local key so the auth resolver
+  // doesn't reject them when the user left the API key blank during onboarding.
+  if (providerConfig.baseUrl && isLocalBaseUrl(providerConfig.baseUrl)) {
+    return {
+      apiKey: CUSTOM_LOCAL_AUTH_MARKER,
+      source: `models.providers.${params.provider} (synthetic local key)`,
+      mode: "api-key",
+    };
+  }
+
+  return null;
 }
 
 function resolveEnvSourceLabel(params: {
@@ -439,3 +497,25 @@ export function requireApiKey(auth: ResolvedProviderAuth, provider: string): str
   }
   throw new Error(`No API key resolved for provider "${provider}" (auth mode: ${auth.mode}).`);
 }
+
+export function applyLocalNoAuthHeaderOverride<T extends Model<Api>>(
+  model: T,
+  auth: ResolvedProviderAuth | null | undefined,
+): T {
+  if (auth?.apiKey !== CUSTOM_LOCAL_AUTH_MARKER || model.api !== "openai-completions") {
+    return model;
+  }
+
+  // OpenAI's SDK always generates Authorization from apiKey. Keep the non-secret
+  // placeholder so construction succeeds, then clear the header at request build
+  // time for local servers that intentionally do not require auth.
+  const headers = {
+    ...model.headers,
+    Authorization: null,
+  } as unknown as Record<string, string>;
+
+  return {
+    ...model,
+    headers,
+  };
+}
diff --git a/src/agents/pi-embedded-runner/compact.ts b/src/agents/pi-embedded-runner/compact.ts
index b465ea7dc9c..8c490e113d4 100644
--- a/src/agents/pi-embedded-runner/compact.ts
+++ b/src/agents/pi-embedded-runner/compact.ts
@@ -41,7 +41,11 @@ import { formatUserTime, resolveUserTimeFormat, resolveUserTimezone } from "../d
 import { DEFAULT_CONTEXT_TOKENS, DEFAULT_MODEL, DEFAULT_PROVIDER } from "../defaults.js";
 import { resolveOpenClawDocsPath } from "../docs-path.js";
 import { resolveMemorySearchConfig } from "../memory-search.js";
-import { getApiKeyForModel, resolveModelAuthMode } from "../model-auth.js";
+import {
+  applyLocalNoAuthHeaderOverride,
+  getApiKeyForModel,
+  resolveModelAuthMode,
+} from "../model-auth.js";
 import { supportsModelTools } from "../model-tool-support.js";
 import { ensureOpenClawModelsJson } from "../models-config.js";
 import { createConfiguredOllamaStreamFn } from "../ollama-stream.js";
@@ -429,8 +433,9 @@ export async function compactEmbeddedPiSessionDirect(
     const reason = error ?? `Unknown model: ${provider}/${modelId}`;
     return fail(reason);
   }
+  let apiKeyInfo: Awaited<ReturnType<typeof getApiKeyForModel>> | null = null;
   try {
-    const apiKeyInfo = await getApiKeyForModel({
+    apiKeyInfo = await getApiKeyForModel({
       model,
       cfg: params.config,
       profileId: authProfileId,
@@ -518,10 +523,12 @@ export async function compactEmbeddedPiSessionDirect(
       modelContextWindow: model.contextWindow,
       defaultTokens: DEFAULT_CONTEXT_TOKENS,
     });
-    const effectiveModel =
+    const effectiveModel = applyLocalNoAuthHeaderOverride(
       ctxInfo.tokens < (model.contextWindow ?? Infinity)
         ? { ...model, contextWindow: ctxInfo.tokens }
-        : model;
+        : model,
+      apiKeyInfo,
+    );
 
     const runAbortController = new AbortController();
     const toolsRaw = createOpenClawCodingTools({
diff --git a/src/agents/pi-embedded-runner/run.ts b/src/agents/pi-embedded-runner/run.ts
index dce7ff919d4..1839a9df1bb 100644
--- a/src/agents/pi-embedded-runner/run.ts
+++ b/src/agents/pi-embedded-runner/run.ts
@@ -30,6 +30,7 @@ import {
 import { DEFAULT_CONTEXT_TOKENS, DEFAULT_MODEL, DEFAULT_PROVIDER } from "../defaults.js";
 import { FailoverError, resolveFailoverStatus } from "../failover-error.js";
 import {
+  applyLocalNoAuthHeaderOverride,
   ensureAuthProfileStore,
   getApiKeyForModel,
   resolveAuthProfileOrder,
@@ -884,7 +885,7 @@ export async function runEmbeddedPiAgent(
             disableTools: params.disableTools,
             provider,
             modelId,
-            model: effectiveModel,
+            model: applyLocalNoAuthHeaderOverride(effectiveModel, apiKeyInfo),
             authProfileId: lastProfileId,
             authProfileIdSource: lockedProfileId ? "user" : "auto",
             authStorage,