diff --git a/litellm/proxy/proxy_server.py b/litellm/proxy/proxy_server.py
index d83e3500ebe..563ac7e41bf 100644
--- a/litellm/proxy/proxy_server.py
+++ b/litellm/proxy/proxy_server.py
@@ -12267,11 +12267,24 @@ async def update_config(  # noqa: PLR0915
         updated_settings = prisma_client.jsonify_object(updated_settings)
         for k, v in updated_settings.items():
             if k == "router_settings":
+                # Merge with existing DB value instead of full replacement,
+                # so that keys not included in the update (e.g. fallbacks)
+                # are preserved.
+                existing_record = (
+                    await prisma_client.db.litellm_config.find_first(
+                        where={"param_name": k}
+                    )
+                )
+                merged_value = v
+                if existing_record is not None and isinstance(
+                    existing_record.param_value, dict
+                ):
+                    merged_value = {**existing_record.param_value, **v}
                 await prisma_client.db.litellm_config.upsert(
                     where={"param_name": k},
                     data={
-                        "create": {"param_name": k, "param_value": v},
-                        "update": {"param_value": v},
+                        "create": {"param_name": k, "param_value": merged_value},
+                        "update": {"param_value": merged_value},
                     },
                 )
 
diff --git a/tests/proxy_unit_tests/test_proxy_server.py b/tests/proxy_unit_tests/test_proxy_server.py
index 047193055d8..95cc57b0a31 100644
--- a/tests/proxy_unit_tests/test_proxy_server.py
+++ b/tests/proxy_unit_tests/test_proxy_server.py
@@ -2803,6 +2803,74 @@ async def test_update_config_success_callback_normalization():
     assert "langfuse" in callbacks
 
 
+@pytest.mark.asyncio
+async def test_update_config_merges_existing_router_settings():
+    import litellm.proxy.proxy_server as proxy_server
+    from litellm.proxy._types import ConfigYAML, LitellmUserRoles, UserAPIKeyAuth
+
+    mock_prisma_client = MagicMock()
+    mock_prisma_client.jsonify_object = lambda value: value
+
+    existing_router_settings = {
+        "fallbacks": [{"gpt-4": ["gpt-4o-mini"]}],
+        "routing_strategy": "simple-shuffle",
+    }
+    mock_db_record = MagicMock()
+    mock_db_record.param_value = existing_router_settings
+
+    mock_prisma_client.db.litellm_config.find_first = AsyncMock(
+        return_value=mock_db_record
+    )
+    mock_prisma_client.db.litellm_config.upsert = AsyncMock()
+
+    class MockProxyConfig:
+        def __init__(self):
+            self.saved_config = None
+
+        async def get_config(self):
+            return {}
+
+        async def save_config(self, new_config: dict):
+            self.saved_config = new_config
+
+        async def add_deployment(self, prisma_client=None, proxy_logging_obj=None):
+            return None
+
+    admin_user = UserAPIKeyAuth(
+        user_role=LitellmUserRoles.PROXY_ADMIN, api_key="sk-test"
+    )
+    config_update = ConfigYAML(
+        router_settings={"routing_strategy": "latency-based-routing"}
+    )
+
+    with patch("litellm.proxy.proxy_server.prisma_client", mock_prisma_client), patch(
+        "litellm.proxy.proxy_server.proxy_config", MockProxyConfig()
+    ), patch("litellm.proxy.proxy_server.store_model_in_db", True):
+        await proxy_server.update_config(config_update, user_api_key_dict=admin_user)
+
+    mock_prisma_client.db.litellm_config.find_first.assert_awaited_once_with(
+        where={"param_name": "router_settings"}
+    )
+    mock_prisma_client.db.litellm_config.upsert.assert_awaited_once_with(
+        where={"param_name": "router_settings"},
+        data={
+            "create": {
+                "param_name": "router_settings",
+                "param_value": {
+                    "fallbacks": [{"gpt-4": ["gpt-4o-mini"]}],
+                    "routing_strategy": "latency-based-routing",
+                },
+            },
+            "update": {
+                "param_value": {
+                    "fallbacks": [{"gpt-4": ["gpt-4o-mini"]}],
+                    "routing_strategy": "latency-based-routing",
+                }
+            },
+        },
+    )
+
+
 @pytest.mark.parametrize(
     "data",
     [