diff --git a/.vscode/launch.json b/.vscode/launch.json
index 38740d05..95c1bf69 100644
--- a/.vscode/launch.json
+++ b/.vscode/launch.json
@@ -13,7 +13,8 @@
       "skipFiles": ["<node_internals>/**"],
       "cwd": "${workspaceFolder}",
       "env": {
-        "GEMINI_SANDBOX": "false"
+        "GEMINI_SANDBOX": "false",
+        "GEMINI_API_KEY": "testkey"
       }
     },
     {
diff --git a/packages/cli/src/gemini.tsx b/packages/cli/src/gemini.tsx
index 4f16f0b0..9657ba8f 100644
--- a/packages/cli/src/gemini.tsx
+++ b/packages/cli/src/gemini.tsx
@@ -11,7 +11,11 @@ import { loadCliConfig } from './config/config.js';
 import { readStdin } from './utils/readStdin.js';
 import { basename } from 'node:path';
 import { start_sandbox } from './utils/sandbox.js';
-import { LoadedSettings, loadSettings } from './config/settings.js';
+import {
+  LoadedSettings,
+  loadSettings,
+  SettingScope,
+} from './config/settings.js';
 import { themeManager } from './ui/themes/theme-manager.js';
 import { getStartupWarnings } from './utils/startupWarnings.js';
 import { runNonInteractive } from './nonInteractiveCli.js';
@@ -50,6 +54,16 @@ export async function main() {
   const extensions = loadExtensions(workspaceRoot);
   const config = await loadCliConfig(settings.merged, extensions, sessionId);
 
+  // set default fallback to gemini api key
+  // this has to go after load cli becuase thats where the env is set
+  if (!settings.merged.selectedAuthType && process.env.GEMINI_API_KEY) {
+    settings.setValue(
+      SettingScope.User,
+      'selectedAuthType',
+      AuthType.USE_GEMINI,
+    );
+  }
+
   setMaxSizedBoxDebugging(config.getDebugMode());
 
   // Initialize centralized FileDiscoveryService