diff --git a/litellm/proxy/client/cli/README.md b/litellm/proxy/client/cli/README.md
index 3ddce35b53d..47355f328dd 100644
--- a/litellm/proxy/client/cli/README.md
+++ b/litellm/proxy/client/cli/README.md
@@ -489,7 +489,7 @@ lite codex exec "summarize the repo"
 
 Each command resolves your LiteLLM key (logging in via SSO when none is stored and you are at a terminal; otherwise it expects `LITELLM_PROXY_API_KEY` or `--api-key`), checks the key against the proxy so bad credentials fail immediately instead of deep inside the agent, exports the environment variables the agent reads, then replaces itself with the agent process.
 
-The right variables are picked per agent. Claude Code gets `ANTHROPIC_BASE_URL` (the proxy root, so it appends `/v1/messages`) and `ANTHROPIC_AUTH_TOKEN`, with any stray `ANTHROPIC_API_KEY` cleared so the proxy token wins, and `ENABLE_TOOL_SEARCH=true` (unless you already set it) so Claude Code keeps tool search on even though the base URL is a proxy rather than a first-party Anthropic host. Codex and OpenCode get `OPENAI_BASE_URL` (the proxy plus `/v1`) and `OPENAI_API_KEY`. Codex ignores `OPENAI_BASE_URL`, so it is additionally pointed at the proxy through a custom provider passed as `-c` config overrides (HTTP/SSE Responses transport, since the proxy does not speak the Responses WebSocket protocol).
+The right variables are picked per agent. Claude Code gets `ANTHROPIC_BASE_URL` (the proxy root, so it appends `/v1/messages`) and `ANTHROPIC_AUTH_TOKEN`, with any stray `ANTHROPIC_API_KEY` cleared so the proxy token wins, and `ENABLE_TOOL_SEARCH=true` (unless you already set it) so Claude Code keeps tool search on even though the base URL is a proxy rather than a first-party Anthropic host. It also gets `CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY=1` (again unless you already set it) so Claude Code v2.1.129+ fills its `/model` picker from the proxy's `/v1/models`; Claude Code only lists entries whose id contains `claude` or `anthropic`, and older versions ignore the variable. Export it as `0` to turn discovery off. Codex and OpenCode get `OPENAI_BASE_URL` (the proxy plus `/v1`) and `OPENAI_API_KEY`. Codex ignores `OPENAI_BASE_URL`, so it is additionally pointed at the proxy through a custom provider passed as `-c` config overrides (HTTP/SSE Responses transport, since the proxy does not speak the Responses WebSocket protocol).
 
 Options (these belong to the wrapper, so put them before the agent's own flags):
 
@@ -505,7 +505,7 @@ The credential is short-lived by design (default 24h, configurable via `LITELLM_
 
 ### Route Every Claude Code Session Through the Proxy
 
-`lite claude` wraps a single invocation, but `lite up` goes further: it patches `~/.claude/settings.json`, Claude Code's own config file, so that every Claude Code session started afterward -- from any terminal, launched normally with just `claude`, no wrapper needed -- routes through your LiteLLM proxy. It sets `env.ANTHROPIC_BASE_URL` to the proxy URL, `env.ENABLE_TOOL_SEARCH` to `true` when that key is missing, and `apiKeyHelper` to a `lite auth print-token` invocation, drops any stray static `ANTHROPIC_API_KEY` so the helper-issued token wins, and leaves every other setting in the file untouched. It backs up the original file before patching it.
+`lite claude` wraps a single invocation, but `lite up` goes further: it patches `~/.claude/settings.json`, Claude Code's own config file, so that every Claude Code session started afterward -- from any terminal, launched normally with just `claude`, no wrapper needed -- routes through your LiteLLM proxy. It sets `env.ANTHROPIC_BASE_URL` to the proxy URL, `env.ENABLE_TOOL_SEARCH` to `true` and `env.CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY` to `1` when those keys are missing, and `apiKeyHelper` to a `lite auth print-token` invocation, drops any stray static `ANTHROPIC_API_KEY` so the helper-issued token wins, and leaves every other setting in the file untouched. It backs up the original file before patching it.
 
 Two things need to already be true: you've run `lite login` (or `lite login --pkce`, whose key the helper renews on its own), since the apiKeyHelper depends on that stored token, and the proxy is already reachable, since `lite up` does not start one for you.
 
@@ -529,7 +529,7 @@ Cursor is not supported: it has no equivalent file-based config to hot-patch thi
 lite --base-url https://your-proxy.example.com login --config-claude
 ```
 
-It writes the same settings `lite up` does, `env.ANTHROPIC_BASE_URL`, `env.ENABLE_TOOL_SEARCH`, and `apiKeyHelper`, but persistently: there is no backup, nothing to restore, and no foreground process to keep alive. Every other key in `~/.claude/settings.json` is preserved, the file is created if it does not exist, and it is written atomically with owner-only permissions. Plain `lite login` is unchanged; nothing happens to your Claude Code config unless you pass the flag.
+It writes the same settings `lite up` does, `env.ANTHROPIC_BASE_URL`, `env.ENABLE_TOOL_SEARCH`, `env.CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY`, and `apiKeyHelper`, but persistently: there is no backup, nothing to restore, and no foreground process to keep alive. Every other key in `~/.claude/settings.json` is preserved, the file is created if it does not exist, and it is written atomically with owner-only permissions. Plain `lite login` is unchanged; nothing happens to your Claude Code config unless you pass the flag.
 
 Because the credential is reached through `apiKeyHelper` rather than copied into the file, a later `lite login` refreshes it with no further action: Claude Code re-runs the helper on every request and picks up whatever token the most recent login stored. Nothing secret is written to `settings.json`.
 
diff --git a/litellm/proxy/client/cli/commands/agents.py b/litellm/proxy/client/cli/commands/agents.py
index c591cbabee1..baa21996c7e 100644
--- a/litellm/proxy/client/cli/commands/agents.py
+++ b/litellm/proxy/client/cli/commands/agents.py
@@ -16,6 +16,8 @@ ANTHROPIC_AUTH_TOKEN_ENV: Final = "ANTHROPIC_AUTH_TOKEN"
 ANTHROPIC_API_KEY_ENV: Final = "ANTHROPIC_API_KEY"
 ENABLE_TOOL_SEARCH_ENV: Final = "ENABLE_TOOL_SEARCH"
 ENABLE_TOOL_SEARCH_VALUE: Final = "true"
+ENABLE_GATEWAY_MODEL_DISCOVERY_ENV: Final = "CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY"
+ENABLE_GATEWAY_MODEL_DISCOVERY_VALUE: Final = "1"
 OPENAI_BASE_URL_ENV: Final = "OPENAI_BASE_URL"
 OPENAI_API_KEY_ENV: Final = "OPENAI_API_KEY"
 
@@ -67,7 +69,9 @@ def build_agent_env(
     Anthropic key cannot win over the bearer token we set. ENABLE_TOOL_SEARCH
     defaults to true because Claude Code turns tool search off when
     ANTHROPIC_BASE_URL is not a first-party Anthropic host; a value already in
-    the environment is left alone.
+    the environment is left alone. CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY
+    defaults to 1 so Claude Code (v2.1.129+) fills its /model picker from the
+    proxy's /v1/models; likewise left alone when already set.
     """
     env: Final = dict(base_env)
     root: Final = base_url.rstrip("/")
@@ -77,6 +81,8 @@ def build_agent_env(
         env.pop(ANTHROPIC_API_KEY_ENV, None)
         if ENABLE_TOOL_SEARCH_ENV not in env:
             env[ENABLE_TOOL_SEARCH_ENV] = ENABLE_TOOL_SEARCH_VALUE
+        if ENABLE_GATEWAY_MODEL_DISCOVERY_ENV not in env:
+            env[ENABLE_GATEWAY_MODEL_DISCOVERY_ENV] = ENABLE_GATEWAY_MODEL_DISCOVERY_VALUE
     if PROFILE_OPENAI in profiles:
         env[OPENAI_BASE_URL_ENV] = root + "/v1"
         env[OPENAI_API_KEY_ENV] = api_key
diff --git a/litellm/proxy/client/cli/commands/claude_settings.py b/litellm/proxy/client/cli/commands/claude_settings.py
index 46af641636e..5e3ce95f088 100644
--- a/litellm/proxy/client/cli/commands/claude_settings.py
+++ b/litellm/proxy/client/cli/commands/claude_settings.py
@@ -26,6 +26,8 @@ ANTHROPIC_BASE_URL_KEY: Final = "ANTHROPIC_BASE_URL"
 ANTHROPIC_API_KEY_KEY: Final = "ANTHROPIC_API_KEY"
 ENABLE_TOOL_SEARCH_KEY: Final = "ENABLE_TOOL_SEARCH"
 ENABLE_TOOL_SEARCH_VALUE: Final = "true"
+ENABLE_GATEWAY_MODEL_DISCOVERY_KEY: Final = "CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY"
+ENABLE_GATEWAY_MODEL_DISCOVERY_VALUE: Final = "1"
 
 CLAUDE_SETTINGS_PATH: Final = Path.home() / ".claude" / "settings.json"
 BACKUP_PATH: Final = Path.home() / ".litellm" / "claude_settings_backup.json"
@@ -77,13 +79,16 @@ def merge_claude_settings(
     stray env.ANTHROPIC_API_KEY is dropped so it cannot outrank the helper-issued
     token (same reasoning as build_agent_env in agents.py). ENABLE_TOOL_SEARCH
     defaults to true because Claude Code turns tool search off when
-    ANTHROPIC_BASE_URL is not a first-party Anthropic host; an existing value is
-    left alone. Every other key is preserved untouched.
+    ANTHROPIC_BASE_URL is not a first-party Anthropic host, and
+    CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY defaults to 1 so the /model picker
+    is filled from the proxy's /v1/models; existing values of both are left
+    alone. Every other key is preserved untouched.
     """
     raw_env: Final = settings.get(ENV_KEY, {})
     base_env: Final = raw_env if isinstance(raw_env, dict) else {}
     env: Final = {
         ENABLE_TOOL_SEARCH_KEY: ENABLE_TOOL_SEARCH_VALUE,
+        ENABLE_GATEWAY_MODEL_DISCOVERY_KEY: ENABLE_GATEWAY_MODEL_DISCOVERY_VALUE,
         **{key: value for key, value in base_env.items() if key != ANTHROPIC_API_KEY_KEY},
         ANTHROPIC_BASE_URL_KEY: base_url.rstrip("/"),
     }
@@ -156,6 +161,8 @@ __all__ = (
     "AUTOROUTE_BACKUP_PATH",
     "BACKUP_PATH",
     "CLAUDE_SETTINGS_PATH",
+    "ENABLE_GATEWAY_MODEL_DISCOVERY_KEY",
+    "ENABLE_GATEWAY_MODEL_DISCOVERY_VALUE",
     "ENABLE_TOOL_SEARCH_KEY",
     "ENABLE_TOOL_SEARCH_VALUE",
     "ENV_KEY",
diff --git a/tests/test_litellm/proxy/client/cli/test_agents.py b/tests/test_litellm/proxy/client/cli/test_agents.py
index 0191dad3d94..62b94e948be 100644
--- a/tests/test_litellm/proxy/client/cli/test_agents.py
+++ b/tests/test_litellm/proxy/client/cli/test_agents.py
@@ -78,9 +78,19 @@ class TestBuildAgentEnv:
         assert env["ANTHROPIC_BASE_URL"] == "http://localhost:4000"
         assert env["ANTHROPIC_AUTH_TOKEN"] == "sk-key"
         assert env["ENABLE_TOOL_SEARCH"] == "true"
+        assert env["CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY"] == "1"
         assert "OPENAI_BASE_URL" not in env
         assert "OPENAI_API_KEY" not in env
 
+    def test_anthropic_profile_preserves_existing_gateway_model_discovery(self):
+        env = build_agent_env(
+            {"CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY": "0"},
+            "http://localhost:4000",
+            "sk-key",
+            frozenset({"anthropic"}),
+        )
+        assert env["CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY"] == "0"
+
     def test_anthropic_profile_preserves_existing_tool_search(self):
         env = build_agent_env(
             {"ENABLE_TOOL_SEARCH": "false"},
@@ -107,6 +117,7 @@ class TestBuildAgentEnv:
         assert env["OPENAI_API_KEY"] == "sk-key"
         assert "ANTHROPIC_BASE_URL" not in env
         assert "ENABLE_TOOL_SEARCH" not in env
+        assert "CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY" not in env
 
     def test_both_profiles_set_everything(self):
         env = build_agent_env(
diff --git a/tests/test_litellm/proxy/client/cli/test_up_commands.py b/tests/test_litellm/proxy/client/cli/test_up_commands.py
index c78bdfa75b1..aead1764b0e 100644
--- a/tests/test_litellm/proxy/client/cli/test_up_commands.py
+++ b/tests/test_litellm/proxy/client/cli/test_up_commands.py
@@ -56,8 +56,14 @@ class TestMergeClaudeSettings:
         merged = merge_claude_settings(settings, "http://localhost:4000/", "new-helper")
         assert merged["env"]["ANTHROPIC_BASE_URL"] == "http://localhost:4000"
         assert merged["env"]["ENABLE_TOOL_SEARCH"] == "true"
+        assert merged["env"]["CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY"] == "1"
         assert merged["apiKeyHelper"] == "new-helper"
 
+    def test_preserves_existing_gateway_model_discovery(self):
+        settings = {"env": {"CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY": "0"}}
+        merged = merge_claude_settings(settings, "http://localhost:4000", "helper")
+        assert merged["env"]["CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY"] == "0"
+
     def test_preserves_existing_tool_search(self):
         settings = {"env": {"ENABLE_TOOL_SEARCH": "false"}}
         merged = merge_claude_settings(settings, "http://localhost:4000", "helper")
@@ -73,6 +79,7 @@ class TestMergeClaudeSettings:
         assert merged["env"] == {
             "ANTHROPIC_BASE_URL": "http://localhost:4000",
             "ENABLE_TOOL_SEARCH": "true",
+            "CLAUDE_CODE_ENABLE_GATEWAY_MODEL_DISCOVERY": "1",
         }
         assert merged["apiKeyHelper"] == "helper"