diff --git a/litellm/constants.py b/litellm/constants.py
index b1a0021bcc6..a25aac293fd 100644
--- a/litellm/constants.py
+++ b/litellm/constants.py
@@ -183,6 +183,11 @@ RUNWAYML_POLLING_TIMEOUT = int(
 ########## Networking constants ##############################################################
 _DEFAULT_TTL_FOR_HTTPX_CLIENTS = 3600  # 1 hour, re-use the same httpx client for 1 hour
 
+# Team-scoped model overrides feature flag
+LITELLM_TEAM_MODEL_OVERRIDES: bool = (
+    os.getenv("LITELLM_TEAM_MODEL_OVERRIDES", "false").lower() == "true"
+)
+
 # Aiohttp connection pooling - prevents memory leaks from unbounded connection growth
 # Set to 0 for unlimited (not recommended for production)
 AIOHTTP_CONNECTOR_LIMIT = int(os.getenv("AIOHTTP_CONNECTOR_LIMIT", 300))
diff --git a/litellm/proxy/auth/auth_checks.py b/litellm/proxy/auth/auth_checks.py
index a82a1849194..a8955f46d15 100644
--- a/litellm/proxy/auth/auth_checks.py
+++ b/litellm/proxy/auth/auth_checks.py
@@ -65,7 +65,7 @@ from litellm.utils import get_utc_datetime
 
 from .auth_checks_organization import organization_role_based_access_check
 from .auth_utils import get_model_from_request
-from litellm.proxy.management_endpoints.common_utils import _is_team_model_overrides_enabled
+from litellm.constants import LITELLM_TEAM_MODEL_OVERRIDES
 
 if TYPE_CHECKING:
     from opentelemetry.trace import Span as _Span
@@ -2581,15 +2581,22 @@ async def can_team_access_model(
     2. If not allowed natively, falls back to access_group_ids on the team
     """
     models_to_check: List[str] = team_object.models if team_object else []
-    if _is_team_model_overrides_enabled() and valid_token:
+    if LITELLM_TEAM_MODEL_OVERRIDES and valid_token:
         # Compute effective models: team defaults + per-user overrides
         effective_models = compute_effective_team_models(
             team_default_models=valid_token.team_default_models,
             team_member_models=valid_token.team_member_models,
         )
 
-        # If effective_models is empty, and feature is enabled, deny access
-        if len(effective_models) == 0:
+        if effective_models:
+            models_to_check = effective_models
+        elif team_object and team_object.models:
+            # Fallback: effective models empty but team has models configured.
+            # Graceful degradation prevents misconfiguration cliff when feature
+            # is enabled without populating default_models.
+            models_to_check = team_object.models
+        else:
+            # Both effective models and team.models are empty — deny access
             raise ProxyException(
                 message=f"Team not allowed to access model. No models available for user in this team. Model={model}.",
                 type=ProxyErrorTypes.team_model_access_denied,
@@ -2597,8 +2604,6 @@ async def can_team_access_model(
                 code=status.HTTP_403_FORBIDDEN,
             )
 
-        models_to_check = effective_models
-
     try:
         return _can_object_call_model(
             model=model,
diff --git a/litellm/proxy/management_endpoints/common_utils.py b/litellm/proxy/management_endpoints/common_utils.py
index 45d3e795bab..03043c5e79d 100644
--- a/litellm/proxy/management_endpoints/common_utils.py
+++ b/litellm/proxy/management_endpoints/common_utils.py
@@ -1,4 +1,3 @@
-import os
 from typing import TYPE_CHECKING, Any, Dict, List, Optional, Union
 
 from litellm._logging import verbose_proxy_logger
@@ -448,4 +447,6 @@ def _update_metadata_fields(updated_kv: dict) -> None:
 
 
 def _is_team_model_overrides_enabled() -> bool:
-    return os.getenv("LITELLM_TEAM_MODEL_OVERRIDES", "false").lower() == "true"
+    from litellm.constants import LITELLM_TEAM_MODEL_OVERRIDES
+
+    return LITELLM_TEAM_MODEL_OVERRIDES
diff --git a/litellm/proxy/management_endpoints/key_management_endpoints.py b/litellm/proxy/management_endpoints/key_management_endpoints.py
index 166e5ee9a3d..f7ccf0fc202 100644
--- a/litellm/proxy/management_endpoints/key_management_endpoints.py
+++ b/litellm/proxy/management_endpoints/key_management_endpoints.py
@@ -925,14 +925,17 @@ async def _validate_key_models_against_effective_team_models(
         team_member_models=member_models,
     )
 
-    # 3. Step 6b: If effective models are empty, deny access (empty list != all access)
+    # 3. Fallback: if effective models empty but team has models, use team.models
     if not effective_models:
-        raise HTTPException(
-            status_code=403,
-            detail={
-                "error": f"No models available for User={user_id} in Team={team_id}. Admins must set 'default_models' on the team or per-user 'models' overrides."
-            },
-        )
+        if team_table.models:
+            effective_models = team_table.models
+        else:
+            raise HTTPException(
+                status_code=403,
+                detail={
+                    "error": f"No models available for User={user_id} in Team={team_id}. Admins must set 'default_models' on the team or per-user 'models' overrides."
+                },
+            )
 
     # 4. Step 6b: If data.models is empty, default to effective models
     if not data.models: