diff --git a/packages/ai/src/ai/common/chat.py b/packages/ai/src/ai/common/chat.py
index 64c403914..35c769ae1 100644
--- a/packages/ai/src/ai/common/chat.py
+++ b/packages/ai/src/ai/common/chat.py
@@ -38,6 +38,59 @@ def _stop_kwargs() -> dict:
     return {'stop': stop} if stop else {}
 
 
+def _is_stop_rejection(e: Exception, stop_kwargs: dict) -> bool:
+    """Determine if an exception is due to an unsupported stop parameter."""
+    if not stop_kwargs:
+        return False
+        
+    status = getattr(e, 'status_code', None)
+    if status == 400:
+        body = getattr(e, 'body', None) or {}
+        code = getattr(e, 'code', None)
+        param = getattr(e, 'param', None)
+        if isinstance(body, dict):
+            code = code or body.get('code')
+            param = param or body.get('param')
+        if code == 'unsupported_parameter' or param == 'stop':
+            return True
+            
+    err_str = str(e).lower()
+    return 'stop' in err_str and ('unsupported' in err_str or 'invalid' in err_str)
+
+
+def _invoke_with_stop_fallback(llm, prompt, stop_kwargs):
+    """Invoke the LLM, but fallback to no stop kwargs if the API rejects them."""
+    try:
+        return llm.invoke(prompt, **stop_kwargs)
+    except Exception as e:
+        if _is_stop_rejection(e, stop_kwargs):
+            warning(f"LLM rejected 'stop' parameter: {e}. Retrying without stop.")
+            # Note: Retrying without the stop parameter means the model might hallucinate the
+            # '\\nObservation:' sequence and return it before agent-level truncation trims it.
+            return llm.invoke(prompt)
+        raise
+
+
+def _stream_with_stop_fallback(llm, prompt, stop_kwargs):
+    """Stream from the LLM, but fallback to no stop kwargs if the API rejects them."""
+    try:
+        it = llm.stream(prompt, **stop_kwargs)
+        first = next(it)
+    except StopIteration:
+        return
+    except Exception as e:
+        if _is_stop_rejection(e, stop_kwargs):
+            warning(f"LLM rejected 'stop' parameter: {e}. Retrying stream without stop.")
+            # Note: Retrying without the stop parameter means the model might hallucinate the
+            # '\\nObservation:' sequence and stream it to the UI before agent truncation trims it.
+            yield from llm.stream(prompt)
+            return
+        raise
+        
+    yield first
+    yield from it
+
+
 def _make_think_tag_splitter():
     """Split ``<think>...</think>`` CoT out of the content stream (Ollama, Perplexity).
 
@@ -240,7 +293,7 @@ def _chat(self, prompt: str) -> str:
         """
         # Ask the LLM. The stop kwarg is only added when the agent set stop sequences,
         # so non-agent callers (and backends/mocks without a stop param) are unaffected.
-        results = self._llm.invoke(prompt, **_stop_kwargs())
+        results = _invoke_with_stop_fallback(self._llm, prompt, _stop_kwargs())
 
         # Return the results
         return results.content
@@ -496,7 +549,7 @@ def _chat_string_responses(
             # Only retry non-streaming if nothing has reached the UI; otherwise
             # the full fallback would arrive on top of the partial we already streamed.
             if emitted is None or not emitted['any']:
-                results = self._llm.invoke(prompt, **_stop_kwargs())
+                results = _invoke_with_stop_fallback(self._llm, prompt, _stop_kwargs())
                 content = getattr(results, 'content', '') or ''
                 content_text = content if isinstance(content, str) else str(content)
                 text_parts = [content_text]
@@ -597,7 +650,7 @@ def on_chunk_w(t):
                 finish_reason: Optional[str] = None
                 _signature_only_note_sent = False
                 _think_split = _make_think_tag_splitter()
-                for piece in _llm.stream(prompt, **_stop_kwargs()):
+                for piece in _stream_with_stop_fallback(_llm, prompt, _stop_kwargs()):
                     # content: str for OpenAI-style, list of typed blocks for Anthropic.
                     content = piece.content
                     text = ''
diff --git a/packages/ai/tests/ai/common/test_chat_fallback.py b/packages/ai/tests/ai/common/test_chat_fallback.py
new file mode 100644
index 000000000..0f5c11266
--- /dev/null
+++ b/packages/ai/tests/ai/common/test_chat_fallback.py
@@ -0,0 +1,161 @@
+import pytest
+
+from ai.common.chat import _invoke_with_stop_fallback, _stream_with_stop_fallback
+
+class MockInvokeLLM:
+    def __init__(self, should_fail_on_stop=True):
+        self.should_fail_on_stop = should_fail_on_stop
+        self.invoked_kwargs = []
+
+    def invoke(self, prompt, **kwargs):
+        self.invoked_kwargs.append(kwargs)
+        if self.should_fail_on_stop and 'stop' in kwargs:
+            # Simulate the OpenAI 400 Bad Request error for unsupported stop parameter
+            raise ValueError("unsupported_parameter: 'stop'")
+        return 'success'
+
+class MockStreamLLM:
+    def __init__(self, should_fail_on_stop=True):
+        self.should_fail_on_stop = should_fail_on_stop
+        self.streamed_kwargs = []
+
+    def stream(self, prompt, **kwargs):
+        self.streamed_kwargs.append(kwargs)
+        if self.should_fail_on_stop and 'stop' in kwargs:
+            def failing_generator():
+                # The error usually occurs on the first yield of the lazy stream
+                raise ValueError("unsupported_parameter: 'stop' is invalid")
+                yield 'never'
+            return failing_generator()
+        
+        def success_generator():
+            yield 'chunk1'
+            yield 'chunk2'
+        return success_generator()
+
+def test_invoke_with_stop_fallback_recovers():
+    """Verify that a 400 unsupported parameter error on invoke is caught and retried."""
+    llm = MockInvokeLLM(should_fail_on_stop=True)
+    stop_kwargs = {'stop': ['\nObservation:']}
+    
+    result = _invoke_with_stop_fallback(llm, 'Hello', stop_kwargs)
+    
+    assert result == 'success'
+    assert len(llm.invoked_kwargs) == 2
+    assert 'stop' in llm.invoked_kwargs[0]
+    assert 'stop' not in llm.invoked_kwargs[1]
+
+def test_invoke_with_stop_fallback_success():
+    """Verify that if the model supports stop, it works on the first try."""
+    llm = MockInvokeLLM(should_fail_on_stop=False)
+    stop_kwargs = {'stop': ['\nObservation:']}
+    
+    result = _invoke_with_stop_fallback(llm, 'Hello', stop_kwargs)
+    
+    assert result == 'success'
+    assert len(llm.invoked_kwargs) == 1
+    assert 'stop' in llm.invoked_kwargs[0]
+
+def test_stream_with_stop_fallback_recovers():
+    """Verify that a 400 unsupported parameter error on stream is caught and retried."""
+    llm = MockStreamLLM(should_fail_on_stop=True)
+    stop_kwargs = {'stop': ['\nObservation:']}
+    
+    chunks = list(_stream_with_stop_fallback(llm, 'Hello', stop_kwargs))
+    
+    assert chunks == ['chunk1', 'chunk2']
+    assert len(llm.streamed_kwargs) == 2
+    assert 'stop' in llm.streamed_kwargs[0]
+    assert 'stop' not in llm.streamed_kwargs[1]
+
+def test_stream_with_stop_fallback_success():
+    """Verify that if the model supports stop, streaming works on the first try."""
+    llm = MockStreamLLM(should_fail_on_stop=False)
+    stop_kwargs = {'stop': ['\nObservation:']}
+    
+    chunks = list(_stream_with_stop_fallback(llm, 'Hello', stop_kwargs))
+    
+    assert chunks == ['chunk1', 'chunk2']
+    assert len(llm.streamed_kwargs) == 1
+    assert 'stop' in llm.streamed_kwargs[0]
+
+def test_invoke_with_stop_fallback_empty_stop_kwargs():
+    """Verify that an error does not trigger a retry if stop_kwargs is empty."""
+    llm = MockInvokeLLM()
+    def failing_invoke(prompt, **kwargs):
+        llm.invoked_kwargs.append(kwargs)
+        raise ValueError("unsupported_parameter: 'stop'")
+    llm.invoke = failing_invoke
+    
+    with pytest.raises(ValueError, match="unsupported_parameter: 'stop'"):
+        _invoke_with_stop_fallback(llm, 'Hello', {})
+        
+    assert len(llm.invoked_kwargs) == 1  # No retry occurred
+
+def test_invoke_with_stop_fallback_unrelated_error():
+    """Verify that an unrelated error does not trigger a retry even with stop_kwargs."""
+    llm = MockInvokeLLM()
+    def failing_invoke(prompt, **kwargs):
+        llm.invoked_kwargs.append(kwargs)
+        raise ValueError('Rate limit exceeded')
+    llm.invoke = failing_invoke
+    
+    stop_kwargs = {'stop': ['\nObservation:']}
+    with pytest.raises(ValueError, match='Rate limit exceeded'):
+        _invoke_with_stop_fallback(llm, 'Hello', stop_kwargs)
+        
+    assert len(llm.invoked_kwargs) == 1  # No retry occurred
+
+def test_stream_with_stop_fallback_empty_stop_kwargs():
+    """Verify that a stream error does not trigger a retry if stop_kwargs is empty."""
+    llm = MockStreamLLM()
+    def failing_stream(prompt, **kwargs):
+        llm.streamed_kwargs.append(kwargs)
+        def gen():
+            raise ValueError("unsupported_parameter: 'stop'")
+            yield 'never'
+        return gen()
+    llm.stream = failing_stream
+
+    with pytest.raises(ValueError, match="unsupported_parameter: 'stop'"):
+        list(_stream_with_stop_fallback(llm, 'Hello', {}))
+
+    assert len(llm.streamed_kwargs) == 1  # No retry occurred
+
+
+def test_stream_with_stop_fallback_unrelated_error():
+    """Verify that an unrelated stream error does not trigger a retry even with stop_kwargs."""
+    llm = MockStreamLLM()
+    def failing_stream(prompt, **kwargs):
+        llm.streamed_kwargs.append(kwargs)
+        def gen():
+            raise ValueError('Rate limit exceeded')
+            yield 'never'
+        return gen()
+    llm.stream = failing_stream
+
+    stop_kwargs = {'stop': ['\nObservation:']}
+    with pytest.raises(ValueError, match='Rate limit exceeded'):
+        list(_stream_with_stop_fallback(llm, 'Hello', stop_kwargs))
+
+    assert len(llm.streamed_kwargs) == 1  # No retry occurred
+
+
+def test_stream_with_stop_fallback_mid_stream_error():
+    """Verify that an error raised after the first chunk does not trigger a retry, locking in no-duplicate behavior."""
+    llm = MockStreamLLM()
+    def failing_stream(prompt, **kwargs):
+        llm.streamed_kwargs.append(kwargs)
+        def gen():
+            yield 'chunk1'
+            raise ValueError("unsupported_parameter: 'stop'")
+        return gen()
+    llm.stream = failing_stream
+
+    stop_kwargs = {'stop': ['\nObservation:']}
+    with pytest.raises(ValueError, match="unsupported_parameter: 'stop'"):
+        # The generator will yield 'chunk1', then raise the error.
+        # It should NOT retry because the try/except block does not wrap the main yield loop.
+        list(_stream_with_stop_fallback(llm, 'Hello', stop_kwargs))
+
+    assert len(llm.streamed_kwargs) == 1  # No retry occurred