diff --git a/litellm/proxy/auth/user_api_key_auth.py b/litellm/proxy/auth/user_api_key_auth.py
index a1abed202a2..0087ac97610 100644
--- a/litellm/proxy/auth/user_api_key_auth.py
+++ b/litellm/proxy/auth/user_api_key_auth.py
@@ -184,7 +184,7 @@ from litellm.router_utils.fallback_event_handlers import (
     fallbacks_disabled_for_request,
     get_fallback_model_group_for_lookup_groups,
 )
-from litellm.secret_managers.main import get_secret_bool
+from litellm.secret_managers.main import get_secret_bool, get_secret_str, normalize_nonempty_secret_str
 from litellm.types.services import ServiceTypes
 
 try:
@@ -2737,6 +2737,18 @@ async def user_api_key_auth_builder(
         if (
             prisma_client is None
         ):  # if both master key + user key submitted, and user key != master key, and no db connected, raise an error
+            if normalize_nonempty_secret_str(get_secret_str("DATABASE_URL")) is None:
+                # No DB configured: an auth error, so allow_requests_on_db_unavailable can't fail open
+                raise ProxyException(
+                    message=(
+                        "Authentication Error, Invalid proxy server token passed. Token does not match "
+                        "the configured master key, and no database is configured to look up virtual keys. "
+                        "Set DATABASE_URL to enable virtual keys."
+                    ),
+                    type=ProxyErrorTypes.auth_error,
+                    code=status.HTTP_401_UNAUTHORIZED,
+                    param=None,
+                )
             raise ProxyException(
                 message="No connected db.",
                 type=ProxyErrorTypes.no_db_connection,
diff --git a/litellm/proxy/proxy_server.py b/litellm/proxy/proxy_server.py
index 689a5f38416..dbf6d17b150 100644
--- a/litellm/proxy/proxy_server.py
+++ b/litellm/proxy/proxy_server.py
@@ -12073,7 +12073,7 @@ class ProxyStartupEvent:
         """
         connected_client: PrismaClient | None = None
         try:
-            if database_url is None:
+            if database_url is None or not database_url.strip():
                 return None
 
             prisma_client = PrismaClient(database_url=database_url, proxy_logging_obj=proxy_logging_obj)
diff --git a/tests/unit/proxy/auth/test_user_api_key_auth.py b/tests/unit/proxy/auth/test_user_api_key_auth.py
index 3660019cc2c..a2823f71d76 100644
--- a/tests/unit/proxy/auth/test_user_api_key_auth.py
+++ b/tests/unit/proxy/auth/test_user_api_key_auth.py
@@ -476,9 +476,9 @@ def test_is_api_route_allowed(route, user_role, expected_result):
 
 
 @pytest.mark.asyncio
-async def test_auth_not_connected_to_db():
+async def test_auth_not_connected_to_db(monkeypatch: pytest.MonkeyPatch):
     """
-    ensure requests don't fail when `prisma_client` = None
+    ensure requests don't fail when `prisma_client` = None but a database is configured
     """
     from fastapi import Request
     from starlette.datastructures import URL
@@ -486,6 +486,7 @@ async def test_auth_not_connected_to_db():
     from litellm.proxy.auth.user_api_key_auth import user_api_key_auth
     from litellm.proxy.proxy_server import hash_token, user_api_key_cache
 
+    monkeypatch.setenv("DATABASE_URL", "postgresql://unreachable.invalid:5432/litellm")
     user_key = "sk-98765678"
 
     setattr(litellm.proxy.proxy_server, "user_api_key_cache", user_api_key_cache)
@@ -506,6 +507,46 @@ async def test_auth_not_connected_to_db():
     assert valid_token.token == "failed-to-connect-to-db"
 
 
+@pytest.mark.asyncio
+@pytest.mark.parametrize("allow_requests_on_db_unavailable", [True, False])
+@pytest.mark.parametrize("database_url", [None, "", "   "])
+async def test_auth_no_db_configured_rejects_non_master_key(
+    allow_requests_on_db_unavailable: bool, database_url: str | None, monkeypatch: pytest.MonkeyPatch
+):
+    """
+    With no database configured (DATABASE_URL unset or empty), a key that isn't the master key is an
+    auth error (401), and allow_requests_on_db_unavailable must not fail open: there is no outage to ride out.
+    """
+    from fastapi import Request
+    from starlette.datastructures import URL
+
+    from litellm.proxy._types import ProxyErrorTypes, ProxyException
+    from litellm.proxy.auth.user_api_key_auth import user_api_key_auth
+    from litellm.proxy.proxy_server import user_api_key_cache
+
+    if database_url is None:
+        monkeypatch.delenv("DATABASE_URL", raising=False)
+    else:
+        monkeypatch.setenv("DATABASE_URL", database_url)
+    setattr(litellm.proxy.proxy_server, "user_api_key_cache", user_api_key_cache)
+    setattr(litellm.proxy.proxy_server, "master_key", MASTER_KEY)
+    setattr(litellm.proxy.proxy_server, "prisma_client", None)
+    setattr(
+        litellm.proxy.proxy_server,
+        "general_settings",
+        {"allow_requests_on_db_unavailable": allow_requests_on_db_unavailable},
+    )
+
+    request = Request(scope={"type": "http", "method": "POST", "path": "/chat/completions", "headers": []})
+    request._url = URL(url="/chat/completions")
+
+    with pytest.raises(ProxyException) as exc_info:
+        await user_api_key_auth(request=request, api_key="Bearer sk-not-the-master-key")
+
+    assert exc_info.value.type == ProxyErrorTypes.auth_error
+    assert exc_info.value.code == "401"
+
+
 def _assert_api_key_from_custom_header(headers, custom_header_name, expected_api_key):
     verbose_proxy_logger.setLevel(logging.DEBUG)
     request = MagicMock(spec=Request)
diff --git a/tests/unit/proxy/auth/test_user_api_key_auth_request_flow.py b/tests/unit/proxy/auth/test_user_api_key_auth_request_flow.py
index 4cdd7fefd28..ef5631c5353 100644
--- a/tests/unit/proxy/auth/test_user_api_key_auth_request_flow.py
+++ b/tests/unit/proxy/auth/test_user_api_key_auth_request_flow.py
@@ -12502,10 +12502,11 @@ async def test_lens_oauth2_validates_identity_without_inference_user_field(
     [("/lens", False, True), ("/lens/traces", True, False), ("/lens-other", True, True)],
 )
 async def test_lens_oauth2_dispatch_preserves_opt_in_premium_and_route_boundary(
-    route: str, enabled: bool, premium: bool
+    route: str, enabled: bool, premium: bool, monkeypatch: pytest.MonkeyPatch
 ) -> None:
     from starlette.requests import Request
 
+    monkeypatch.delenv("DATABASE_URL", raising=False)
     request: Final = Request({"type": "http", "method": "GET", "path": route, "headers": [], "query_string": b""})
     with (
         patch("litellm.proxy.proxy_server.general_settings", {"enable_oauth2_auth": enabled}),
@@ -12522,8 +12523,8 @@ async def test_lens_oauth2_dispatch_preserves_opt_in_premium_and_route_boundary(
         assert error.value.code == "403"
         assert "premium" in error.value.message.lower()
     else:
-        assert error.value.code == "400"
-        assert "No connected db" in error.value.message
+        assert error.value.code == "401"
+        assert "no database is configured" in error.value.message
 
 
 @pytest.mark.asyncio
diff --git a/tests/unit/proxy/test_proxy_server_endpoints_and_startup.py b/tests/unit/proxy/test_proxy_server_endpoints_and_startup.py
index 0dbf3451c3b..d61a24cfb7d 100644
--- a/tests/unit/proxy/test_proxy_server_endpoints_and_startup.py
+++ b/tests/unit/proxy/test_proxy_server_endpoints_and_startup.py
@@ -14105,6 +14105,25 @@ async def test_setup_prisma_client_retains_connected_client_when_startup_health_
     assert result is mock_client
 
 
+@pytest.mark.asyncio
+@pytest.mark.parametrize("database_url", ["", "   "])
+async def test_setup_prisma_client_treats_an_empty_database_url_as_unset(database_url):
+    """An empty DATABASE_URL (e.g. from ``${DATABASE_URL:-}``) can never connect, so no client is
+    created. Otherwise auth sees a configured-but-unreachable DB and allow_requests_on_db_unavailable
+    fails open for any key."""
+    from litellm.proxy.proxy_server import ProxyStartupEvent
+
+    mock_client = _mock_startup_prisma_client()
+    with patch.object(proxy_server_module, "PrismaClient", return_value=mock_client):
+        result = await ProxyStartupEvent._setup_prisma_client(
+            database_url=database_url,
+            proxy_logging_obj=MagicMock(),
+            user_api_key_cache=DualCache(),
+        )
+
+    assert result is None
+
+
 @pytest.mark.asyncio
 async def test_setup_prisma_client_arms_health_watchdog_before_startup_health_check(
     monkeypatch,