diff --git a/src/agent/create.ts b/src/agent/create.ts
index e55caf5..0280210 100644
--- a/src/agent/create.ts
+++ b/src/agent/create.ts
@@ -12,6 +12,7 @@ import { getClient } from "./client";
 import { getDefaultMemoryBlocks } from "./memory";
 import {
   formatAvailableModels,
+  getDefaultModel,
   getModelUpdateArgs,
   resolveModel,
 } from "./model";
@@ -120,8 +121,8 @@ export async function createAgent(
     }
     modelHandle = resolved;
   } else {
-    // Use default model
-    modelHandle = "anthropic/claude-sonnet-4-5-20250929";
+    // Use default model from models.json
+    modelHandle = getDefaultModel();
   }
 
   const client = await getClient();
diff --git a/src/cli/profile-selection.tsx b/src/cli/profile-selection.tsx
index ac09bdb..2f64ab0 100644
--- a/src/cli/profile-selection.tsx
+++ b/src/cli/profile-selection.tsx
@@ -305,10 +305,6 @@ function ProfileSelectionUI({
           <Text bold color={colors.selector.title}>
             Select a model
           </Text>
-          <Text dimColor>
-            The default model ({defaultModelHandle || "unknown"}) is not
-            available on this server.
-          </Text>
 
           {showModelSearch && (
             <Box>
diff --git a/src/index.ts b/src/index.ts
index 3b94a9b..be8f46c 100755
--- a/src/index.ts
+++ b/src/index.ts
@@ -1094,6 +1094,9 @@ async function main(): Promise<void> {
           LETTA_CLOUD_API_URL;
         const isSelfHosted = !baseURL.includes("api.letta.com");
 
+        // Track whether we need model picker (for skipping ensureDefaultAgents)
+        let needsModelPicker = false;
+
         if (isSelfHosted) {
           setSelfHostedBaseUrl(baseURL);
           try {
@@ -1108,6 +1111,7 @@ async function main(): Promise<void> {
             // Only set if default model isn't available
             if (!handles.includes(defaultModel)) {
               setAvailableServerModels(handles);
+              needsModelPicker = true;
             }
           } catch {
             // Ignore errors - will fail naturally during agent creation if needed
@@ -1268,10 +1272,15 @@ async function main(): Promise<void> {
         const wouldShowSelector =
           !localSettings.lastAgent && !forceNew && !agentIdArg && !fromAfFile;
 
-        if (wouldShowSelector && globalPinned.length === 0) {
+        if (
+          wouldShowSelector &&
+          globalPinned.length === 0 &&
+          !needsModelPicker
+        ) {
           // New user with no pinned agents - create a fresh Memo agent
           // NOTE: Always creates a new agent (no server-side tag lookup) to avoid
           // picking up agents created by other users on shared orgs.
+          // Skip if needsModelPicker is true - let user select a model first.
           const { ensureDefaultAgents } = await import("./agent/defaults");
           try {
             const memoAgent = await ensureDefaultAgents(client);
@@ -1289,7 +1298,7 @@ async function main(): Promise<void> {
           }
         }
 
-        // If there's a local LRU, use it directly
+        // If there's a local LRU, use it directly (takes priority over model picker)
         if (localSettings.lastAgent) {
           try {
             await client.agents.retrieve(localSettings.lastAgent);
@@ -1303,6 +1312,12 @@ async function main(): Promise<void> {
           }
         }
 
+        // On self-hosted with unavailable default model, show selector to pick a model
+        if (needsModelPicker) {
+          setLoadingState("selecting_global");
+          return;
+        }
+
         // Show selector if there are pinned agents to choose from
         if (wouldShowSelector && globalPinned.length > 0) {
           setLoadingState("selecting_global");