diff --git a/src/api/providers/azure.ts b/src/api/providers/azure.ts
index b10d4c78d7..2438bd31c0 100644
--- a/src/api/providers/azure.ts
+++ b/src/api/providers/azure.ts
@@ -35,11 +35,15 @@ export class AzureHandler extends BaseProvider implements SingleCompletionHandle
 		this.options = options
 
 		// Create the Azure provider using AI SDK
-		// The @ai-sdk/azure package uses resourceName-based routing
+		// The @ai-sdk/azure package uses resourceName-based routing.
+		// useDeploymentBasedUrls produces the universally compatible
+		// /deployments/{id}/{path} URL shape that works on both classic
+		// Azure OpenAI resources and newer AI Foundry resources.
 		this.provider = createAzure({
 			resourceName: options.azureResourceName ?? "",
 			apiKey: options.azureApiKey, // Optional — Azure supports managed identity / Entra ID auth
 			apiVersion: options.azureApiVersion ?? azureOpenAiDefaultApiVersion,
+			useDeploymentBasedUrls: true,
 			headers: DEFAULT_HEADERS,
 		})
 	}
diff --git a/src/package.json b/src/package.json
index 89bacc099c..56591eedec 100644
--- a/src/package.json
+++ b/src/package.json
@@ -451,7 +451,7 @@
 	},
 	"dependencies": {
 		"@ai-sdk/amazon-bedrock": "^4.0.50",
-		"@ai-sdk/azure": "^2.0.6",
+		"@ai-sdk/azure": "^3.0.26",
 		"@ai-sdk/baseten": "^1.0.31",
 		"@ai-sdk/cerebras": "^1.0.0",
 		"@ai-sdk/deepseek": "^2.0.14",