diff --git a/litellm/proxy/proxy_cli.py b/litellm/proxy/proxy_cli.py
index 9451114a223..4a5b0930645 100644
--- a/litellm/proxy/proxy_cli.py
+++ b/litellm/proxy/proxy_cli.py
@@ -1,5 +1,6 @@
 # ruff: noqa: T201
 import importlib
+import importlib.util
 import json
 import os
 import random
@@ -239,6 +240,15 @@ class ProxyInitializationHelpers:
         ignore `reload_includes`."""
         from litellm._logging import verbose_proxy_logger
 
+        if importlib.util.find_spec("watchfiles") is None:
+            verbose_proxy_logger.warning(
+                "LiteLLM --reload: watchfiles is not installed, so uvicorn falls back "
+                "to its StatReload poller. StatReload stat-scans every *.py under the "
+                "current directory several times a second (high CPU) and ignores "
+                "reload_includes, so --config YAML and .env edits will not trigger "
+                "reloads. Install it with `pip install 'litellm[proxy]'`."
+            )
+
         uvicorn_args.update(ProxyInitializationHelpers._get_reload_options(config_path))
         os.environ["LITELLM_DEV_ENV_HOT_RELOAD"] = "True"
         verbose_proxy_logger.warning(
diff --git a/tests/test_litellm/proxy/test_proxy_cli.py b/tests/test_litellm/proxy/test_proxy_cli.py
index 5301316295c..e8ac199e5bb 100644
--- a/tests/test_litellm/proxy/test_proxy_cli.py
+++ b/tests/test_litellm/proxy/test_proxy_cli.py
@@ -167,7 +167,10 @@ class TestProxyInitializationHelpers:
     def test_reload_uses_watchfiles_reloader(self):
         from uvicorn.supervisors import ChangeReload
 
-        assert ChangeReload.__name__ == "WatchFilesReload"
+        assert ChangeReload.__name__ == "WatchFilesReload", (
+            "uvicorn fell back to StatReload; watchfiles must ship with the proxy "
+            "extra so --reload selects the event-driven WatchFilesReload"
+        )
 
     def test_reload_includes_match_config_and_env_under_watchfiles(
         self, tmp_path, monkeypatch
@@ -217,6 +220,27 @@ class TestProxyInitializationHelpers:
 
         assert "config.yaml" in uvicorn_args["reload_includes"]
 
+    def test_configure_dev_reload_warns_when_watchfiles_missing(
+        self, tmp_path, monkeypatch
+    ):
+        config_file = tmp_path / "config.yaml"
+        config_file.write_text("model_list: []\n")
+        monkeypatch.chdir(tmp_path)
+
+        uvicorn_args: dict = {}
+        with (
+            patch(
+                "litellm.proxy.proxy_cli.importlib.util.find_spec", return_value=None
+            ),
+            patch("litellm._logging.verbose_proxy_logger.warning") as mock_warning,
+        ):
+            ProxyInitializationHelpers._configure_dev_reload(
+                uvicorn_args, str(config_file)
+            )
+
+        warnings = [call.args[0].lower() for call in mock_warning.call_args_list]
+        assert any("watchfiles" in text for text in warnings)
+
     def test_dev_env_hot_reload_enabled_reads_flag(self, monkeypatch):
         import litellm