diff --git a/studio/backend/routes/data_recipe/jobs.py b/studio/backend/routes/data_recipe/jobs.py
index 1d5eceee03..00546b47a4 100644
--- a/studio/backend/routes/data_recipe/jobs.py
+++ b/studio/backend/routes/data_recipe/jobs.py
@@ -5,7 +5,9 @@
 
 from __future__ import annotations
 
+from datetime import timedelta
 from typing import Any
+from urllib.parse import urlparse
 
 from fastapi import APIRouter, HTTPException, Query, Request
 from fastapi.responses import JSONResponse, StreamingResponse
@@ -26,6 +28,161 @@
 router = APIRouter()
 
 
+def _resolve_local_v1_endpoint(request: Request) -> str:
+    """Return the loopback /v1 URL for the actual backend listen port.
+
+    Resolution order:
+      1. ``app.state.server_port`` - explicitly published by run.py after
+         the uvicorn server has bound. This is the most reliable source
+         because it survives reverse proxies, TLS terminators and tunnels.
+      2. ``request.scope["server"]`` - the real (host, port) tuple uvicorn
+         sets when the request is dispatched. Used when Studio is started
+         outside ``run_server`` (e.g. ``uvicorn studio.backend.main:app``).
+      3. ``request.base_url`` parsed - last resort for test fixtures that
+         do not route through a live uvicorn server.
+    """
+    port: Any = getattr(request.app.state, "server_port", None)
+    if not isinstance(port, int) or port <= 0:
+        server = request.scope.get("server")
+        if (
+            isinstance(server, tuple)
+            and len(server) >= 2
+            and isinstance(server[1], int)
+            and server[1] > 0
+        ):
+            port = server[1]
+        else:
+            parsed = urlparse(str(request.base_url))
+            port = parsed.port if parsed.port is not None else 8888
+    return f"http://127.0.0.1:{int(port)}/v1"
+
+
+def _used_llm_model_aliases(recipe: dict[str, Any]) -> set[str]:
+    """Return the set of model_aliases that are actually referenced by an
+    LLM column. Used to narrow the "Chat model loaded" gate so that orphan
+    model_config nodes on the canvas do not block unrelated recipe runs.
+
+    The ``llm-`` prefix matches the existing convention in
+    ``core/data_recipe/service.py::_recipe_has_llm_columns`` and covers all
+    LLM column types emitted by the frontend (llm-text, llm-code,
+    llm-structured, llm-judge).
+    """
+    aliases: set[str] = set()
+    for column in recipe.get("columns", []):
+        if not isinstance(column, dict):
+            continue
+        column_type = column.get("column_type")
+        if not isinstance(column_type, str) or not column_type.startswith("llm-"):
+            continue
+        alias = column.get("model_alias")
+        if isinstance(alias, str) and alias:
+            aliases.add(alias)
+    return aliases
+
+
+def _inject_local_providers(recipe: dict[str, Any], request: Request) -> None:
+    """
+    Mutate recipe dict in-place: for any provider with is_local=True,
+    generate a JWT and fill in the endpoint pointing at this server.
+    """
+    providers = recipe.get("model_providers")
+    if not providers:
+        return
+
+    # Collect local providers and pop is_local from ALL dicts unconditionally.
+    # Strict `is True` guard so malformed payloads (is_local: 1,
+    # is_local: "true") do not accidentally trigger the loopback rewrite.
+    local_indices: list[int] = []
+    for i, provider in enumerate(providers):
+        if not isinstance(provider, dict):
+            continue
+        is_local = provider.pop("is_local", None)
+        if is_local is True:
+            local_indices.append(i)
+
+    if not local_indices:
+        return
+
+    endpoint = _resolve_local_v1_endpoint(request)
+
+    # Only gate on model-loaded if a local provider is actually reachable
+    # from an LLM column through a model_config. Orphan model_config nodes
+    # that reference a local provider but that no LLM column uses should
+    # not block runs; the recipe would never call /v1 for them.
+    local_names = {
+        providers[i].get("name") for i in local_indices if providers[i].get("name")
+    }
+    used_aliases = _used_llm_model_aliases(recipe)
+    referenced_providers = {
+        mc.get("provider")
+        for mc in recipe.get("model_configs", [])
+        if (
+            isinstance(mc, dict)
+            and mc.get("provider")
+            and mc.get("alias") in used_aliases
+        )
+    }
+
+    token = ""
+    if local_names & referenced_providers:
+        # Verify a model is loaded.
+        # NOTE: This is a point-in-time check (TOCTOU). The model could be unloaded
+        # or swapped after this check but before the recipe subprocess calls /v1.
+        # The inference endpoint returns a clear 400 in that case.
+        #
+        # Imports are deferred to avoid circular dependencies with inference modules.
+        from routes.inference import get_llama_cpp_backend
+        from core.inference import get_inference_backend
+
+        llama = get_llama_cpp_backend()
+        model_loaded = llama.is_loaded
+        if not model_loaded:
+            backend = get_inference_backend()
+            model_loaded = bool(backend.active_model_name)
+        if not model_loaded:
+            raise ValueError(
+                "No model loaded in Chat. Load a model first, then run the recipe."
+            )
+
+        from auth.authentication import (
+            create_access_token,
+        )  # deferred: avoids circular import
+
+        # Uses the "unsloth" admin subject. If the user changes their password,
+        # the JWT secret rotates and this token becomes invalid mid-run.
+        # Acceptable for v1 - recipes typically finish well within one session.
+        token = create_access_token(
+            subject = "unsloth",
+            expires_delta = timedelta(hours = 24),
+        )
+
+    # Defensively strip any stale "external"-only fields the frontend may
+    # have left on the dict (extra_headers/extra_body/api_key_env). The UI
+    # hides these inputs in local mode but the payload builder still serializes
+    # them, so a previously external provider that flipped to local can carry
+    # invalid JSON or rogue auth headers into the local /v1 call.
+    for i in local_indices:
+        providers[i]["endpoint"] = endpoint
+        providers[i]["api_key"] = token
+        providers[i]["provider_type"] = "openai"
+        providers[i].pop("api_key_env", None)
+        providers[i].pop("extra_headers", None)
+        providers[i].pop("extra_body", None)
+
+    # Force skip_health_check on any model_config that references a local
+    # provider. The local /v1/models endpoint only lists the real loaded
+    # model (e.g. "unsloth/llama-3.2-1b") and not the placeholder "local"
+    # that the recipe sends as the model id, so data_designer's pre-flight
+    # health check would otherwise fail before the first completion call.
+    # The backend route ignores the model id field in chat completions, so
+    # skipping the check is safe.
+    for mc in recipe.get("model_configs", []):
+        if not isinstance(mc, dict):
+            continue
+        if mc.get("provider") in local_names:
+            mc["skip_health_check"] = True
+
+
 def _normalize_run_name(value: Any) -> str | None:
     if value is None:
         return None
@@ -40,7 +197,7 @@ def _normalize_run_name(value: Any) -> str | None:
 
 
 @router.post("/jobs", response_class = JSONResponse, response_model = JobCreateResponse)
-def create_job(payload: RecipePayload):
+def create_job(payload: RecipePayload, request: Request):
     recipe = payload.recipe
     if not recipe.get("columns"):
         raise HTTPException(status_code = 400, detail = "Recipe must include columns.")
@@ -67,6 +224,11 @@ def create_job(payload: RecipePayload):
                 status_code = 400, detail = f"invalid run_config: {exc}"
             ) from exc
 
+    try:
+        _inject_local_providers(recipe, request)
+    except ValueError as exc:
+        raise HTTPException(status_code = 400, detail = str(exc)) from exc
+
     mgr = get_job_manager()
     try:
         job_id = mgr.start(recipe = recipe, run = run)
diff --git a/studio/backend/routes/data_recipe/validate.py b/studio/backend/routes/data_recipe/validate.py
index a793a3b172..555e3eaa06 100644
--- a/studio/backend/routes/data_recipe/validate.py
+++ b/studio/backend/routes/data_recipe/validate.py
@@ -68,6 +68,20 @@ def _collect_validation_errors(recipe: dict[str, Any]) -> list[ValidateError]:
     return errors
 
 
+def _patch_local_providers(recipe: dict[str, Any]) -> None:
+    """Strip is_local and fill a dummy endpoint so validation doesn't choke.
+
+    Uses a strict `is True` check to match _inject_local_providers in
+    jobs.py - malformed payloads with truthy but non-boolean is_local
+    values should not be treated as local.
+    """
+    for provider in recipe.get("model_providers", []):
+        if not isinstance(provider, dict):
+            continue
+        if provider.pop("is_local", None) is True:
+            provider["endpoint"] = "http://127.0.0.1"
+
+
 @router.post("/validate", response_model = ValidateResponse)
 def validate(payload: RecipePayload) -> ValidateResponse:
     recipe = payload.recipe
@@ -77,6 +91,8 @@ def validate(payload: RecipePayload) -> ValidateResponse:
             errors = [ValidateError(message = "Recipe must include columns.")],
         )
 
+    _patch_local_providers(recipe)
+
     try:
         validate_recipe(recipe)
     except RuntimeError as exc:
diff --git a/studio/backend/run.py b/studio/backend/run.py
index 9c3622988e..86c1194661 100644
--- a/studio/backend/run.py
+++ b/studio/backend/run.py
@@ -324,6 +324,14 @@ def run_server(
     _server = uvicorn.Server(config)
     _shutdown_event = Event()
 
+    # Expose the actual bound port so request-handling code can build
+    # loopback URLs that point at the real backend, not whatever port a
+    # reverse proxy or tunnel exposed in the request URL. Only publish
+    # an explicit value when we know the concrete port; for ephemeral
+    # binds (port==0) leave it unset and let request handlers fall back
+    # to the ASGI request scope or request.base_url.
+    app.state.server_port = port if port and port > 0 else None
+
     # Run server in a daemon thread
     def _run():
         asyncio.run(_server.serve())
diff --git a/studio/frontend/src/features/recipe-studio/blocks/render-dialog.tsx b/studio/frontend/src/features/recipe-studio/blocks/render-dialog.tsx
index 10fcaa489d..92f72dfff1 100644
--- a/studio/frontend/src/features/recipe-studio/blocks/render-dialog.tsx
+++ b/studio/frontend/src/features/recipe-studio/blocks/render-dialog.tsx
@@ -28,6 +28,7 @@ export function renderBlockDialog(
   categoryOptions: SamplerConfig[],
   modelConfigAliases: string[],
   modelProviderOptions: string[],
+  localProviderNames: Set<string>,
   toolProfileAliases: string[],
   datetimeOptions: string[],
   onUpdate: (id: string, patch: Partial<NodeConfig>) => void,
@@ -109,6 +110,7 @@ export function renderBlockDialog(
         <ModelConfigDialog
           config={config}
           providerOptions={modelProviderOptions}
+          localProviderNames={localProviderNames}
           onUpdate={update}
         />
       ) : null;
diff --git a/studio/frontend/src/features/recipe-studio/components/inline/inline-model.tsx b/studio/frontend/src/features/recipe-studio/components/inline/inline-model.tsx
index d3ca22b00b..16e99f4fae 100644
--- a/studio/frontend/src/features/recipe-studio/components/inline/inline-model.tsx
+++ b/studio/frontend/src/features/recipe-studio/components/inline/inline-model.tsx
@@ -10,11 +10,21 @@ type InlineModelPatch = Partial<ModelProviderConfig> | Partial<ModelConfig>;
 
 type InlineModelProps = {
   config: ModelProviderConfig | ModelConfig;
+  localProviderNames?: Set<string>;
   onUpdate: (patch: InlineModelPatch) => void;
 };
 
 export function InlineModel(props: InlineModelProps): ReactElement {
   if (props.config.kind === "model_provider") {
+    if (props.config.is_local) {
+      return (
+        <div className="flex items-center gap-2 px-1 py-0.5">
+          <span className="text-xs font-medium text-muted-foreground">
+            Local model (Chat)
+          </span>
+        </div>
+      );
+    }
     return (
       <div className="grid gap-3 sm:grid-cols-2">
         <InlineField label="Endpoint">
@@ -42,21 +52,40 @@ export function InlineModel(props: InlineModelProps): ReactElement {
     );
   }
 
+  // model_config branch - mirror the local-aware provider sync from the
+  // dialog path so inline edits do not leave stale "local" placeholders
+  // on external providers and fill the placeholder when switching to local.
+  const localNames = props.localProviderNames ?? new Set<string>();
+  const modelConfig = props.config;
+  const handleProviderChange = (nextProvider: string) => {
+    const isLocal = localNames.has(nextProvider);
+    if (isLocal && !modelConfig.model.trim()) {
+      props.onUpdate({ provider: nextProvider, model: "local" });
+      return;
+    }
+    if (!isLocal && modelConfig.model === "local") {
+      props.onUpdate({ provider: nextProvider, model: "" });
+      return;
+    }
+    props.onUpdate({ provider: nextProvider });
+  };
+  const isLinkedToLocal = localNames.has(modelConfig.provider);
+
   return (
     <div className="grid gap-3 sm:grid-cols-2">
       <InlineField label="Provider">
         <Input
           className="nodrag h-8 w-full text-xs"
           placeholder="provider alias"
-          value={props.config.provider}
-          onChange={(event) => props.onUpdate({ provider: event.target.value })}
+          value={modelConfig.provider}
+          onChange={(event) => handleProviderChange(event.target.value)}
         />
       </InlineField>
       <InlineField label="Model">
         <Input
           className="nodrag h-8 w-full text-xs"
-          placeholder="gpt-4o-mini"
-          value={props.config.model}
+          placeholder={isLinkedToLocal ? "local" : "gpt-4o-mini"}
+          value={modelConfig.model}
           onChange={(event) => props.onUpdate({ model: event.target.value })}
         />
       </InlineField>
@@ -65,7 +94,7 @@ export function InlineModel(props: InlineModelProps): ReactElement {
           className="nodrag h-8 w-full text-xs"
           type="number"
           placeholder="0.7"
-          value={props.config.inference_temperature ?? ""}
+          value={modelConfig.inference_temperature ?? ""}
           onChange={(event) =>
             props.onUpdate({
               // biome-ignore lint/style/useNamingConvention: api schema
diff --git a/studio/frontend/src/features/recipe-studio/components/recipe-graph-node.tsx b/studio/frontend/src/features/recipe-studio/components/recipe-graph-node.tsx
index 0fcf202190..8afc4e26bf 100644
--- a/studio/frontend/src/features/recipe-studio/components/recipe-graph-node.tsx
+++ b/studio/frontend/src/features/recipe-studio/components/recipe-graph-node.tsx
@@ -30,7 +30,7 @@ import {
   Position,
   useUpdateNodeInternals,
 } from "@xyflow/react";
-import { type ReactElement, memo, useEffect } from "react";
+import { type ReactElement, memo, useEffect, useMemo } from "react";
 import {
   MAX_NODE_WIDTH,
   MAX_NOTE_NODE_WIDTH,
@@ -287,6 +287,7 @@ function renderNodeBody(
   config: NodeConfig | undefined,
   summary: string,
   updateConfig: (id: string, patch: Partial<NodeConfig>) => void,
+  localProviderNames: Set<string>,
 ): ReactElement {
   if (config?.kind === "markdown_note") {
     return <MarkdownPreview markdown={config.markdown} />;
@@ -300,7 +301,13 @@ function renderNodeBody(
       return <InlineSampler config={config} onUpdate={onUpdate} />;
     }
     if (config.kind === "model_provider" || config.kind === "model_config") {
-      return <InlineModel config={config} onUpdate={onUpdate} />;
+      return (
+        <InlineModel
+          config={config}
+          localProviderNames={localProviderNames}
+          onUpdate={onUpdate}
+        />
+      );
     }
     if (config.kind === "llm") {
       return <InlineLlm config={config} onUpdate={onUpdate} />;
@@ -355,6 +362,16 @@ function RecipeGraphNodeBase({
   const config = useRecipeStudioStore((state) => state.configs[id]);
   const openConfig = useRecipeStudioStore((state) => state.openConfig);
   const updateConfig = useRecipeStudioStore((state) => state.updateConfig);
+  const allConfigs = useRecipeStudioStore((state) => state.configs);
+  const localProviderNames = useMemo(() => {
+    const names = new Set<string>();
+    for (const cfg of Object.values(allConfigs)) {
+      if (cfg.kind === "model_provider" && cfg.is_local === true) {
+        names.add(cfg.name);
+      }
+    }
+    return names;
+  }, [allConfigs]);
   const llmAuxVisible = useRecipeStudioStore(
     (state) => state.llmAuxVisibility[id] ?? false,
   );
@@ -418,7 +435,12 @@ function RecipeGraphNodeBase({
     data.kind === "tool_config" ||
     data.kind === "validator";
   const summary = getConfigSummary(config);
-  const nodeBody = renderNodeBody(config, summary, updateConfig);
+  const nodeBody = renderNodeBody(
+    config,
+    summary,
+    updateConfig,
+    localProviderNames,
+  );
   const canShowLlmAux =
     config?.kind === "llm" &&
     (Boolean(config.prompt.trim()) ||
diff --git a/studio/frontend/src/features/recipe-studio/dialogs/config-dialog.tsx b/studio/frontend/src/features/recipe-studio/dialogs/config-dialog.tsx
index 6457993c35..c62169956d 100644
--- a/studio/frontend/src/features/recipe-studio/dialogs/config-dialog.tsx
+++ b/studio/frontend/src/features/recipe-studio/dialogs/config-dialog.tsx
@@ -18,6 +18,7 @@ type ConfigDialogProps = {
   categoryOptions: SamplerConfig[];
   modelConfigAliases: string[];
   modelProviderOptions: string[];
+  localProviderNames: Set<string>;
   toolProfileAliases: string[];
   datetimeOptions: string[];
   onUpdate: (id: string, patch: Partial<NodeConfig>) => void;
@@ -32,6 +33,7 @@ export function ConfigDialog({
   categoryOptions,
   modelConfigAliases,
   modelProviderOptions,
+  localProviderNames,
   toolProfileAliases,
   datetimeOptions,
   onUpdate,
@@ -101,6 +103,7 @@ export function ConfigDialog({
                 categoryOptions,
                 modelConfigAliases,
                 modelProviderOptions,
+                localProviderNames,
                 toolProfileAliases,
                 datetimeOptions,
                 onUpdate,
diff --git a/studio/frontend/src/features/recipe-studio/dialogs/models/model-config-dialog.tsx b/studio/frontend/src/features/recipe-studio/dialogs/models/model-config-dialog.tsx
index 3192dc8fd9..368ae08acb 100644
--- a/studio/frontend/src/features/recipe-studio/dialogs/models/model-config-dialog.tsx
+++ b/studio/frontend/src/features/recipe-studio/dialogs/models/model-config-dialog.tsx
@@ -17,7 +17,7 @@ import {
 } from "@/components/ui/combobox";
 import { Input } from "@/components/ui/input";
 import { Textarea } from "@/components/ui/textarea";
-import { type ReactElement, useRef, useState } from "react";
+import { type ReactElement, useEffect, useRef, useState } from "react";
 import type { ModelConfig } from "../../types";
 import { CollapsibleSectionTriggerButton } from "../shared/collapsible-section-trigger";
 import { FieldLabel } from "../shared/field-label";
@@ -26,14 +26,17 @@ import { NameField } from "../shared/name-field";
 type ModelConfigDialogProps = {
   config: ModelConfig;
   providerOptions: string[];
+  localProviderNames: Set<string>;
   onUpdate: (patch: Partial<ModelConfig>) => void;
 };
 
 export function ModelConfigDialog({
   config,
   providerOptions,
+  localProviderNames,
   onUpdate,
 }: ModelConfigDialogProps): ReactElement {
+  const isLinkedToLocal = localProviderNames.has(config.provider);
   const [optionalOpen, setOptionalOpen] = useState(false);
   const modelId = `${config.id}-model`;
   const providerId = `${config.id}-provider`;
@@ -44,11 +47,13 @@ export function ModelConfigDialog({
   const extraBodyId = `${config.id}-inference-extra-body`;
   const providerAnchorRef = useRef<HTMLDivElement>(null);
   const providerInputRef = useRef(config.provider);
-  const lastProviderRef = useRef(config.provider);
-  if (lastProviderRef.current !== config.provider) {
-    lastProviderRef.current = config.provider;
+  // Sync providerInputRef with the current provider value. Updating a ref in
+  // an effect (vs reading/writing it during render) satisfies the
+  // react-hooks/refs rule and keeps the combobox blur path stable across
+  // re-renders.
+  useEffect(() => {
     providerInputRef.current = config.provider;
-  }
+  }, [config.provider]);
   const updateField = <K extends keyof ModelConfig>(
     key: K,
     value: ModelConfig[K],
@@ -56,6 +61,21 @@ export function ModelConfigDialog({
     onUpdate({ [key]: value } as Partial<ModelConfig>);
   };
 
+  // Apply provider selection while keeping the local-provider model autofill
+  // consistent across both dropdown selection and free-typed + blur input.
+  const applyProviderChange = (selectedProvider: string) => {
+    const isLocal = localProviderNames.has(selectedProvider);
+    if (isLocal && !config.model.trim()) {
+      onUpdate({ provider: selectedProvider, model: "local" });
+      return;
+    }
+    if (!isLocal && config.model === "local") {
+      onUpdate({ provider: selectedProvider, model: "" });
+      return;
+    }
+    updateField("provider", selectedProvider);
+  };
+
   return (
     <div className="space-y-4">
       <NameField
@@ -84,7 +104,7 @@ export function ModelConfigDialog({
             filteredItems={providerOptions}
             filter={null}
             value={config.provider || null}
-            onValueChange={(value) => updateField("provider", value ?? "")}
+            onValueChange={(value) => applyProviderChange(value ?? "")}
             onInputValueChange={(value) => {
               providerInputRef.current = value;
             }}
@@ -98,7 +118,7 @@ export function ModelConfigDialog({
               onBlur={() => {
                 const next = providerInputRef.current;
                 if (next !== config.provider) {
-                  updateField("provider", next);
+                  applyProviderChange(next);
                 }
               }}
             />
@@ -124,12 +144,12 @@ export function ModelConfigDialog({
         <FieldLabel
           label="Model ID"
           htmlFor={modelId}
-          hint="The exact model name sent to the connection."
+          hint={isLinkedToLocal ? "Uses the model loaded in Chat. Any value works here." : "The exact model name sent to the connection."}
         />
         <Input
           id={modelId}
           className="nodrag"
-          placeholder="gpt-4o-mini"
+          placeholder={isLinkedToLocal ? "local" : "gpt-4o-mini"}
           value={config.model}
           onChange={(event) => updateField("model", event.target.value)}
         />
diff --git a/studio/frontend/src/features/recipe-studio/dialogs/models/model-provider-dialog.tsx b/studio/frontend/src/features/recipe-studio/dialogs/models/model-provider-dialog.tsx
index 897fc7ee36..ef7366a225 100644
--- a/studio/frontend/src/features/recipe-studio/dialogs/models/model-provider-dialog.tsx
+++ b/studio/frontend/src/features/recipe-studio/dialogs/models/model-provider-dialog.tsx
@@ -24,6 +24,7 @@ export function ModelProviderDialog({
   onUpdate,
 }: ModelProviderDialogProps): ReactElement {
   const [optionalOpen, setOptionalOpen] = useState(false);
+  const isLocal = config.is_local ?? false;
   const endpointId = `${config.id}-endpoint`;
   const apiKeyEnvId = `${config.id}-api-key-env`;
   const apiKeyId = `${config.id}-api-key`;
@@ -43,94 +44,163 @@ export function ModelProviderDialog({
         value={config.name}
         onChange={(value) => onUpdate({ name: value })}
       />
-      <div className="rounded-2xl border border-border/60 bg-muted/10 px-4 py-3">
-        <p className="text-sm font-semibold text-foreground">
-          Start with the endpoint you want this model to use
-        </p>
-        <p className="mt-1 text-xs text-muted-foreground">
-          Most connections only need an endpoint. Add an API key if that
-          service requires one.
-        </p>
-      </div>
-      <div className="grid gap-1.5">
-        <FieldLabel
-          label="Endpoint"
-          htmlFor={endpointId}
-          hint="Base URL for the model service or gateway."
-        />
-        <Input
-          id={endpointId}
-          className="nodrag"
-          placeholder="https://..."
-          value={config.endpoint}
-          onChange={(event) => updateField("endpoint", event.target.value)}
-        />
-      </div>
+
+      {/* Model source toggle */}
       <div className="grid gap-1.5">
-        <FieldLabel
-          label="API key (optional)"
-          htmlFor={apiKeyId}
-          hint="Paste a key here, or use an environment variable below."
-        />
-        <Input
-          id={apiKeyId}
-          className="nodrag"
-          value={config.api_key ?? ""}
-          onChange={(event) => updateField("api_key", event.target.value)}
-        />
+        <p className="text-sm font-semibold text-foreground">Model source</p>
+        <div className="grid grid-cols-2 gap-2">
+          <button
+            type="button"
+            className={`rounded-xl border px-4 py-3 text-left transition-colors ${
+              isLocal
+                ? "border-primary/40 bg-primary/5"
+                : "border-border/60 bg-muted/10 hover:border-border"
+            }`}
+            onClick={() =>
+              onUpdate({
+                is_local: true,
+                endpoint: "",
+                api_key: "",
+                api_key_env: "",
+                extra_headers: "",
+                extra_body: "",
+              })
+            }
+          >
+            <p className="text-sm font-semibold text-foreground">
+              Local model
+            </p>
+            <p className="mt-0.5 text-xs text-muted-foreground">
+              Use the model loaded in the Chat tab
+            </p>
+          </button>
+          <button
+            type="button"
+            className={`rounded-xl border px-4 py-3 text-left transition-colors ${
+              !isLocal
+                ? "border-primary/40 bg-primary/5"
+                : "border-border/60 bg-muted/10 hover:border-border"
+            }`}
+            onClick={() => onUpdate({ is_local: false })}
+          >
+            <p className="text-sm font-semibold text-foreground">
+              External endpoint
+            </p>
+            <p className="mt-0.5 text-xs text-muted-foreground">
+              Connect to an API like OpenAI, Together, or a custom server
+            </p>
+          </button>
+        </div>
       </div>
-      <Collapsible open={optionalOpen} onOpenChange={setOptionalOpen}>
-        <CollapsibleTrigger asChild={true}>
-          <CollapsibleSectionTriggerButton
-            label="Advanced request overrides"
-            open={optionalOpen}
-          />
-        </CollapsibleTrigger>
-        <CollapsibleContent className="mt-3 space-y-4">
+
+      {isLocal ? (
+        <div className="rounded-2xl border border-border/60 bg-muted/10 px-4 py-3">
+          <p className="text-sm font-semibold text-foreground">
+            Ready to go
+          </p>
+          <p className="mt-1 text-xs text-muted-foreground">
+            Recipes will use whatever model is loaded in the Chat tab when you
+            hit run. No endpoint or API key needed.
+          </p>
+        </div>
+      ) : (
+        <>
+          <div className="rounded-2xl border border-border/60 bg-muted/10 px-4 py-3">
+            <p className="text-sm font-semibold text-foreground">
+              Start with the endpoint you want this model to use
+            </p>
+            <p className="mt-1 text-xs text-muted-foreground">
+              Most connections only need an endpoint. Add an API key if that
+              service requires one.
+            </p>
+          </div>
           <div className="grid gap-1.5">
             <FieldLabel
-              label="API key environment variable"
-              htmlFor={apiKeyEnvId}
-              hint="Name of the environment variable that stores the key."
+              label="Endpoint"
+              htmlFor={endpointId}
+              hint="Base URL for the model service or gateway."
             />
             <Input
-              id={apiKeyEnvId}
+              id={endpointId}
               className="nodrag"
-              placeholder="OPENAI_API_KEY"
-              value={config.api_key_env ?? ""}
-              onChange={(event) => updateField("api_key_env", event.target.value)}
+              placeholder="https://..."
+              value={config.endpoint}
+              onChange={(event) => updateField("endpoint", event.target.value)}
             />
           </div>
           <div className="grid gap-1.5">
             <FieldLabel
-              label="Extra headers (JSON)"
-              htmlFor={extraHeadersId}
-              hint="Optional headers to send with every request."
-            />
-            <Textarea
-              id={extraHeadersId}
-              className="corner-squircle nodrag"
-              placeholder='{"X-Header": "value"}'
-              value={config.extra_headers ?? ""}
-              onChange={(event) => updateField("extra_headers", event.target.value)}
+              label="API key (optional)"
+              htmlFor={apiKeyId}
+              hint="Paste a key here, or use an environment variable below."
             />
-          </div>
-          <div className="grid gap-1.5">
-            <FieldLabel
-              label="Extra body (JSON)"
-              htmlFor={extraBodyId}
-              hint="Optional request fields to send every time."
-            />
-            <Textarea
-              id={extraBodyId}
-              className="corner-squircle nodrag"
-              placeholder='{"key": "value"}'
-              value={config.extra_body ?? ""}
-              onChange={(event) => updateField("extra_body", event.target.value)}
+            <Input
+              id={apiKeyId}
+              className="nodrag"
+              value={config.api_key ?? ""}
+              onChange={(event) => updateField("api_key", event.target.value)}
             />
           </div>
-        </CollapsibleContent>
-      </Collapsible>
+          <Collapsible open={optionalOpen} onOpenChange={setOptionalOpen}>
+            <CollapsibleTrigger asChild={true}>
+              <CollapsibleSectionTriggerButton
+                label="Advanced request overrides"
+                open={optionalOpen}
+              />
+            </CollapsibleTrigger>
+            <CollapsibleContent className="mt-3 space-y-4">
+              <div className="grid gap-1.5">
+                <FieldLabel
+                  label="API key environment variable"
+                  htmlFor={apiKeyEnvId}
+                  hint="Name of the environment variable that stores the key."
+                />
+                <Input
+                  id={apiKeyEnvId}
+                  className="nodrag"
+                  placeholder="OPENAI_API_KEY"
+                  value={config.api_key_env ?? ""}
+                  onChange={(event) =>
+                    updateField("api_key_env", event.target.value)
+                  }
+                />
+              </div>
+              <div className="grid gap-1.5">
+                <FieldLabel
+                  label="Extra headers (JSON)"
+                  htmlFor={extraHeadersId}
+                  hint="Optional headers to send with every request."
+                />
+                <Textarea
+                  id={extraHeadersId}
+                  className="corner-squircle nodrag"
+                  placeholder='{"X-Header": "value"}'
+                  value={config.extra_headers ?? ""}
+                  onChange={(event) =>
+                    updateField("extra_headers", event.target.value)
+                  }
+                />
+              </div>
+              <div className="grid gap-1.5">
+                <FieldLabel
+                  label="Extra body (JSON)"
+                  htmlFor={extraBodyId}
+                  hint="Optional request fields to send every time."
+                />
+                <Textarea
+                  id={extraBodyId}
+                  className="corner-squircle nodrag"
+                  placeholder='{"key": "value"}'
+                  value={config.extra_body ?? ""}
+                  onChange={(event) =>
+                    updateField("extra_body", event.target.value)
+                  }
+                />
+              </div>
+            </CollapsibleContent>
+          </Collapsible>
+        </>
+      )}
     </div>
   );
 }
diff --git a/studio/frontend/src/features/recipe-studio/recipe-studio-page.tsx b/studio/frontend/src/features/recipe-studio/recipe-studio-page.tsx
index c922293c02..586d5d8ad8 100644
--- a/studio/frontend/src/features/recipe-studio/recipe-studio-page.tsx
+++ b/studio/frontend/src/features/recipe-studio/recipe-studio-page.tsx
@@ -776,6 +776,7 @@ export function RecipeStudioPage({
         categoryOptions={dialogOptions.categoryOptions}
         modelConfigAliases={dialogOptions.modelConfigAliases}
         modelProviderOptions={dialogOptions.modelProviderOptions}
+        localProviderNames={dialogOptions.localProviderNames}
         toolProfileAliases={dialogOptions.toolProfileAliases}
         datetimeOptions={dialogOptions.datetimeOptions}
         onUpdate={updateConfig}
diff --git a/studio/frontend/src/features/recipe-studio/stores/helpers/reference-sync.ts b/studio/frontend/src/features/recipe-studio/stores/helpers/reference-sync.ts
index 3030bcd8ae..56634b84c8 100644
--- a/studio/frontend/src/features/recipe-studio/stores/helpers/reference-sync.ts
+++ b/studio/frontend/src/features/recipe-studio/stores/helpers/reference-sync.ts
@@ -137,7 +137,15 @@ export function applyRemovalToConfig(
   }
   if (config.kind === "model_config" && config.provider === ref) {
     const base = next as ModelConfig;
-    next = { ...base, provider: "" };
+    // Clear the synthetic "local" placeholder when the provider that was
+    // a local provider is removed; otherwise the stale placeholder would
+    // pass validation against a future external provider and then fail
+    // at runtime against a real API ("model not found").
+    next = {
+      ...base,
+      provider: "",
+      model: base.model === "local" ? "" : base.model,
+    };
   }
   if (config.kind === "llm" && config.model_alias === ref) {
     const base = next as LlmConfig;
diff --git a/studio/frontend/src/features/recipe-studio/stores/recipe-studio.ts b/studio/frontend/src/features/recipe-studio/stores/recipe-studio.ts
index 7416efa457..5b16bde4b0 100644
--- a/studio/frontend/src/features/recipe-studio/stores/recipe-studio.ts
+++ b/studio/frontend/src/features/recipe-studio/stores/recipe-studio.ts
@@ -736,6 +736,34 @@ export const useRecipeStudioStore = create<RecipeStudioState>((set, get) => ({
         configs = applyRenameToConfigs(configs, oldName, newName);
       }
 
+      // When a provider toggles between local and external, keep already
+      // linked model_config nodes in sync. applyRenameToConfigs above has
+      // already propagated any name change, so providerName here is the
+      // post-rename value.
+      if (current.kind === "model_provider" && next.kind === "model_provider") {
+        const prevIsLocal = current.is_local === true;
+        const nextIsLocal = next.is_local === true;
+        if (prevIsLocal !== nextIsLocal) {
+          const providerName = next.name;
+          for (const [cfgId, cfg] of Object.entries(configs)) {
+            if (cfg.kind !== "model_config" || cfg.provider !== providerName) {
+              continue;
+            }
+            if (nextIsLocal && !cfg.model.trim()) {
+              // external -> local: auto fill the placeholder model id so the
+              // config does not fail "model is required" validation.
+              configs = { ...configs, [cfgId]: { ...cfg, model: "local" } };
+              continue;
+            }
+            if (!nextIsLocal && cfg.model === "local") {
+              // local -> external: clear the placeholder so the user picks a
+              // real model id for the new external endpoint.
+              configs = { ...configs, [cfgId]: { ...cfg, model: "" } };
+            }
+          }
+        }
+      }
+
       return { configs, nodes, edges };
     };
     set(applyUpdate);
diff --git a/studio/frontend/src/features/recipe-studio/types/index.ts b/studio/frontend/src/features/recipe-studio/types/index.ts
index 1fb0f36f51..cd1127a4e2 100644
--- a/studio/frontend/src/features/recipe-studio/types/index.ts
+++ b/studio/frontend/src/features/recipe-studio/types/index.ts
@@ -252,6 +252,8 @@ export type ModelProviderConfig = {
   extra_headers?: string;
   // biome-ignore lint/style/useNamingConvention: api schema
   extra_body?: string;
+  // biome-ignore lint/style/useNamingConvention: api schema
+  is_local?: boolean;
 };
 
 export type ModelConfig = {
diff --git a/studio/frontend/src/features/recipe-studio/utils/config-factories.ts b/studio/frontend/src/features/recipe-studio/utils/config-factories.ts
index 142779757d..76fc2c38ee 100644
--- a/studio/frontend/src/features/recipe-studio/utils/config-factories.ts
+++ b/studio/frontend/src/features/recipe-studio/utils/config-factories.ts
@@ -240,6 +240,8 @@ export function makeModelProviderConfig(
     extra_headers: "",
     // biome-ignore lint/style/useNamingConvention: api schema
     extra_body: "",
+    // biome-ignore lint/style/useNamingConvention: api schema
+    is_local: false,
   };
 }
 
diff --git a/studio/frontend/src/features/recipe-studio/utils/graph/recipe-graph-connection.ts b/studio/frontend/src/features/recipe-studio/utils/graph/recipe-graph-connection.ts
index 32310cd8e0..4fa70b3e3a 100644
--- a/studio/frontend/src/features/recipe-studio/utils/graph/recipe-graph-connection.ts
+++ b/studio/frontend/src/features/recipe-studio/utils/graph/recipe-graph-connection.ts
@@ -386,7 +386,17 @@ export function applyRecipeConnection(
     nextBaseEdges,
   );
   if (source.kind === "model_provider" && target.kind === "model_config") {
-    const next = { ...target, provider: source.name };
+    // Keep the model_config.model field in sync with provider mode when the
+    // link is changed via graph drag (the model-config dialog path has its
+    // own applyProviderChange helper that does the same thing).
+    const isSourceLocal = source.is_local === true;
+    let nextModel = target.model;
+    if (isSourceLocal && !nextModel.trim()) {
+      nextModel = "local";
+    } else if (!isSourceLocal && nextModel === "local") {
+      nextModel = "";
+    }
+    const next = { ...target, provider: source.name, model: nextModel };
     return { edges: nextEdges, configs: { ...configs, [target.id]: next } };
   }
   if (source.kind === "model_config" && target.kind === "llm") {
diff --git a/studio/frontend/src/features/recipe-studio/utils/import/parsers/model-parser.ts b/studio/frontend/src/features/recipe-studio/utils/import/parsers/model-parser.ts
index 8935c65675..15ecf39a7b 100644
--- a/studio/frontend/src/features/recipe-studio/utils/import/parsers/model-parser.ts
+++ b/studio/frontend/src/features/recipe-studio/utils/import/parsers/model-parser.ts
@@ -35,6 +35,8 @@ export function parseModelProvider(
     extra_body: isRecord(provider.extra_body)
       ? JSON.stringify(provider.extra_body, null, 2)
       : "",
+    // biome-ignore lint/style/useNamingConvention: api schema
+    is_local: provider.is_local === true,
   };
 }
 
diff --git a/studio/frontend/src/features/recipe-studio/utils/payload/build-payload.ts b/studio/frontend/src/features/recipe-studio/utils/payload/build-payload.ts
index 57160140d9..34c3c34274 100644
--- a/studio/frontend/src/features/recipe-studio/utils/payload/build-payload.ts
+++ b/studio/frontend/src/features/recipe-studio/utils/payload/build-payload.ts
@@ -104,6 +104,7 @@ export function buildRecipePayload(
   const columns: Record<string, unknown>[] = [];
   const modelAliases = new Set<string>();
   const modelProviderNames = new Set<string>();
+  const localProviderNames = new Set<string>();
   const modelProviders: Record<string, unknown>[] = [];
   const mcpProviders: Record<string, unknown>[] = [];
   const modelConfigs: Record<string, unknown>[] = [];
@@ -200,6 +201,9 @@ export function buildRecipePayload(
     }
     if (config.kind === "model_provider") {
       modelProviderNames.add(config.name);
+      if (config.is_local) {
+        localProviderNames.add(config.name);
+      }
       modelProviders.push(buildModelProvider(config, errors));
       modelProviderConfigs.push(config);
       continue;
@@ -240,6 +244,7 @@ export function buildRecipePayload(
     modelConfigConfigs,
     modelAliases,
     modelProviderNames,
+    localProviderNames,
     errors,
   );
   validateUsedProviders(modelProviderConfigs, modelConfigConfigs, errors);
diff --git a/studio/frontend/src/features/recipe-studio/utils/payload/builders-model.ts b/studio/frontend/src/features/recipe-studio/utils/payload/builders-model.ts
index 507da6d32d..14e0faa5cc 100644
--- a/studio/frontend/src/features/recipe-studio/utils/payload/builders-model.ts
+++ b/studio/frontend/src/features/recipe-studio/utils/payload/builders-model.ts
@@ -8,6 +8,26 @@ export function buildModelProvider(
   config: ModelProviderConfig,
   errors: string[],
 ): Record<string, unknown> {
+  // Local providers do not use any of the advanced request overrides -
+  // the backend overrides endpoint/api_key/provider_type and strips the
+  // extra fields in _inject_local_providers. Skip parsing the hidden
+  // JSON inputs here so imported or hydrated recipes with stale extra
+  // headers/body cannot block the client-side validation step.
+  if (config.is_local === true) {
+    return {
+      name: config.name,
+      endpoint: "",
+      // biome-ignore lint/style/useNamingConvention: api schema
+      provider_type: "openai",
+      // biome-ignore lint/style/useNamingConvention: api schema
+      extra_headers: {},
+      // biome-ignore lint/style/useNamingConvention: api schema
+      extra_body: {},
+      // biome-ignore lint/style/useNamingConvention: api schema
+      is_local: true,
+    };
+  }
+
   const extraHeaders = parseJsonObject(
     config.extra_headers,
     `Provider ${config.name} extra_headers`,
diff --git a/studio/frontend/src/features/recipe-studio/utils/payload/validate.ts b/studio/frontend/src/features/recipe-studio/utils/payload/validate.ts
index d73762006c..7e72e8d919 100644
--- a/studio/frontend/src/features/recipe-studio/utils/payload/validate.ts
+++ b/studio/frontend/src/features/recipe-studio/utils/payload/validate.ts
@@ -84,12 +84,16 @@ export function validateModelConfigProviders(
   modelConfigConfigs: ModelConfig[],
   modelAliases: Set<string>,
   modelProviderNames: Set<string>,
+  localProviderNames: Set<string>,
   errors: string[],
 ): void {
   for (const config of modelConfigConfigs) {
     const provider = config.provider.trim();
     const alias = config.name;
-    if (modelAliases.has(alias) && !config.model.trim()) {
+    const isLocal = localProviderNames.has(provider);
+    // Local providers do not require a real model id - the loaded Chat
+    // model is used regardless of what gets sent in the payload.
+    if (!isLocal && modelAliases.has(alias) && !config.model.trim()) {
       errors.push(`Model config ${alias}: model is required.`);
     }
     if (provider && !modelProviderNames.has(provider)) {
@@ -110,6 +114,9 @@ export function validateUsedProviders(
     if (!usedProviders.has(provider.name)) {
       continue;
     }
+    if (provider.is_local) {
+      continue;
+    }
     if (!provider.endpoint.trim()) {
       errors.push(`Model provider ${provider.name}: endpoint is required.`);
     }
diff --git a/studio/frontend/src/features/recipe-studio/utils/recipe-studio-view.ts b/studio/frontend/src/features/recipe-studio/utils/recipe-studio-view.ts
index 5fe4b86118..9de896abea 100644
--- a/studio/frontend/src/features/recipe-studio/utils/recipe-studio-view.ts
+++ b/studio/frontend/src/features/recipe-studio/utils/recipe-studio-view.ts
@@ -7,6 +7,7 @@ export type DialogOptions = {
   categoryOptions: SamplerConfig[];
   modelConfigAliases: string[];
   modelProviderOptions: string[];
+  localProviderNames: Set<string>;
   toolProfileAliases: string[];
   datetimeOptions: string[];
 };
@@ -15,6 +16,7 @@ export function buildDialogOptions(configList: NodeConfig[]): DialogOptions {
   const categoryOptions: SamplerConfig[] = [];
   const modelConfigAliases: string[] = [];
   const modelProviderOptions: string[] = [];
+  const localProviderNames = new Set<string>();
   const toolProfileAliases: string[] = [];
   const datetimeOptions: string[] = [];
 
@@ -34,6 +36,9 @@ export function buildDialogOptions(configList: NodeConfig[]): DialogOptions {
     }
     if (config.kind === "model_provider") {
       modelProviderOptions.push(config.name);
+      if (config.is_local) {
+        localProviderNames.add(config.name);
+      }
       continue;
     }
     if (config.kind === "tool_config") {
@@ -45,6 +50,7 @@ export function buildDialogOptions(configList: NodeConfig[]): DialogOptions {
     categoryOptions,
     modelConfigAliases,
     modelProviderOptions,
+    localProviderNames,
     toolProfileAliases,
     datetimeOptions,
   };