diff --git a/README.md b/README.md
index f84a00c..e08c7b1 100644
--- a/README.md
+++ b/README.md
@@ -386,7 +386,7 @@ Check the [ADE](https://app.letta.com) to see if your agent is attempting to use
 ## Documentation
 
 - [Getting Started](docs/getting-started.md)
-- [Self-Hosted Setup](docs/selfhosted-setup.md) - Run with your own Letta server
+- [Docker Server Setup](docs/selfhosted-setup.md) - Run with your own Letta server
 - [Configuration Reference](docs/configuration.md)
 - [Slack Setup](docs/slack-setup.md)
 - [Discord Setup](docs/discord-setup.md)
diff --git a/SKILL.md b/SKILL.md
index 62172dc..58df5c4 100644
--- a/SKILL.md
+++ b/SKILL.md
@@ -61,7 +61,7 @@ The wizard will guide you through:
 
 | Variable | Description | Default |
 |----------|-------------|---------|
-| `LETTA_API_KEY` | API key from app.letta.com | Required (unless self-hosted) |
+| `LETTA_API_KEY` | API key from app.letta.com | Required (unless using a Docker server) |
 | `LETTA_BASE_URL` | API endpoint | `https://api.letta.com` |
 
 ### Agent Selection
@@ -329,9 +329,9 @@ The agent can verify success by checking:
 - Config file exists at `~/.lettabot/config.yaml`
 - User can message bot on configured channel(s)
 
-## Self-Hosted Letta
+## Docker Server Letta
 
-To use a self-hosted Letta server:
+To use a Letta Docker server:
 
 ```bash
 # Run Letta Docker
diff --git a/TESTING.md b/TESTING.md
index bafff0f..1488b8b 100644
--- a/TESTING.md
+++ b/TESTING.md
@@ -58,7 +58,7 @@ describe('myFunction', () => {
 
 ## E2E Tests
 
-E2E tests verify the full message flow against a real Letta Cloud agent.
+E2E tests verify the full message flow against a real Letta API agent.
 
 ### Setup
 
@@ -73,7 +73,7 @@ Without these, E2E tests are automatically skipped.
 
 ### Test Agent
 
-We use a dedicated test agent named "greg" on Letta Cloud. This agent:
+We use a dedicated test agent named "greg" on Letta API. This agent:
 - Has minimal configuration
 - Is only used for automated testing
 - Should not have any sensitive data
@@ -137,7 +137,7 @@ Tests run automatically via GitHub Actions (`.github/workflows/test.yml`):
 | Job | Trigger | What it tests |
 |-----|---------|---------------|
 | `unit` | All PRs and pushes | Unit tests only |
-| `e2e` | Pushes to main | Full E2E with Letta Cloud |
+| `e2e` | Pushes to main | Full E2E with Letta API |
 
 E2E tests only run on `main` because they require secrets that aren't available to fork PRs.
 
diff --git a/docs/README.md b/docs/README.md
index 59ba2f0..1a476ac 100644
--- a/docs/README.md
+++ b/docs/README.md
@@ -5,7 +5,7 @@ LettaBot is a multi-channel AI assistant powered by [Letta](https://letta.com) t
 ## Guides
 
 - [Getting Started](./getting-started.md) - Installation and basic setup
-- [Self-Hosted Setup](./selfhosted-setup.md) - Run with your own Letta server
+- [Docker Server Setup](./selfhosted-setup.md) - Run with your own Letta server
 - [Configuration Reference](./configuration.md) - All config options
 - [Commands Reference](./commands.md) - Bot commands reference
 - [CLI Tools](./cli-tools.md) - Agent/operator CLI tools
@@ -62,7 +62,7 @@ LettaBot uses a **single agent with unified memory** across all channels:
                        ┌──────────────────────────┐
                        │      Letta Server        │
                        │  (api.letta.com or       │
-                       │   self-hosted Docker)    │
+                       │   Docker/custom)         │
                        │                          │
                        │  • Agent Memory          │
                        │  • LLM Inference         │
diff --git a/docs/configuration.md b/docs/configuration.md
index 0af420a..fb77518 100644
--- a/docs/configuration.md
+++ b/docs/configuration.md
@@ -21,8 +21,8 @@ For global installs (`npm install -g`), either:
 ```yaml
 # Server connection
 server:
-  mode: cloud                    # 'cloud' or 'selfhosted'
-  apiKey: letta_...              # Required for cloud mode
+  mode: api                      # 'api' or 'docker' (legacy: 'cloud'/'selfhosted')
+  apiKey: letta_...              # Required for api mode
 
 # Agent settings (single agent mode)
 # For multiple agents, use `agents:` array instead -- see Multi-Agent section
@@ -98,15 +98,15 @@ api:
 
 | Option | Type | Description |
 |--------|------|-------------|
-| `server.mode` | `'cloud'` \| `'selfhosted'` | Connection mode |
-| `server.apiKey` | string | API key for Letta Cloud |
-| `server.baseUrl` | string | URL for self-hosted server (e.g., `http://localhost:8283`) |
+| `server.mode` | `'api'` \| `'docker'` | Connection mode (legacy aliases: `'cloud'`, `'selfhosted'`) |
+| `server.apiKey` | string | API key for Letta API |
+| `server.baseUrl` | string | URL for Docker/custom server (e.g., `http://localhost:8283`) |
 
-### Self-Hosted Mode
+### Docker Server Mode
 
 ```yaml
 server:
-  mode: selfhosted
+  mode: docker
   baseUrl: http://localhost:8283
 ```
 
@@ -142,7 +142,7 @@ Use the `agents:` array instead of the top-level `agent:` and `channels:` keys:
 
 ```yaml
 server:
-  mode: cloud
+  mode: api
   apiKey: letta_...
 
 agents:
diff --git a/docs/railway-deploy.md b/docs/railway-deploy.md
index 442efb7..99f562b 100644
--- a/docs/railway-deploy.md
+++ b/docs/railway-deploy.md
@@ -17,7 +17,7 @@ Deploy LettaBot to [Railway](https://railway.app) for always-on hosting.
 
 | Variable | Description |
 |----------|-------------|
-| `LETTA_API_KEY` | Your Letta Cloud API key ([get one here](https://app.letta.com)) |
+| `LETTA_API_KEY` | Your Letta API key ([get one here](https://app.letta.com)) |
 
 ### Channel Configuration (at least one required)
 
@@ -59,7 +59,7 @@ SLACK_APP_TOKEN=xapp-...
 
 On startup, LettaBot:
 1. Checks for `LETTA_AGENT_ID` env var - uses if set
-2. Otherwise, searches Letta Cloud for an agent named `LETTA_AGENT_NAME` (or legacy `AGENT_NAME`, default: "LettaBot")
+2. Otherwise, searches Letta API for an agent named `LETTA_AGENT_NAME` (or legacy `AGENT_NAME`, default: "LettaBot")
 3. If found, uses the existing agent (preserves memory!)
 4. If not found, creates a new agent on first message
 
diff --git a/docs/selfhosted-setup.md b/docs/selfhosted-setup.md
index 79febdd..1fab7be 100644
--- a/docs/selfhosted-setup.md
+++ b/docs/selfhosted-setup.md
@@ -1,6 +1,6 @@
-# Self-Hosted Letta Server Setup
+# Docker Server Setup
 
-Run LettaBot with your own Letta server instead of Letta Cloud.
+Run LettaBot with your own Letta Docker/custom server instead of Letta API.
 
 ## Prerequisites
 
@@ -42,7 +42,7 @@ curl http://localhost:8283/v1/health
 lettabot onboard
 ```
 
-Select "Enter self-hosted URL" and enter `http://localhost:8283`.
+Select "Enter Docker server URL" and enter `http://localhost:8283`.
 
 ### Option B: Manual Configuration
 
@@ -50,7 +50,7 @@ Create `lettabot.yaml`:
 
 ```yaml
 server:
-  mode: selfhosted
+  mode: docker
   baseUrl: http://localhost:8283
   # apiKey: optional-if-server-requires-auth
 
@@ -79,7 +79,7 @@ lettabot server
 You should see:
 ```
 [Config] Loaded from /path/to/lettabot.yaml
-[Config] Mode: selfhosted, Agent: LettaBot, Model: gpt-4o
+[Config] Mode: docker, Agent: LettaBot, Model: gpt-4o
 Starting LettaBot...
 LettaBot initialized. Agent ID: (new)
 [Telegram] Bot started as @YourBotName
diff --git a/e2e/bot.e2e.test.ts b/e2e/bot.e2e.test.ts
index 5719c7d..b74dd8b 100644
--- a/e2e/bot.e2e.test.ts
+++ b/e2e/bot.e2e.test.ts
@@ -1,7 +1,7 @@
 /**
  * E2E Tests for LettaBot
  * 
- * These tests use a real Letta Cloud agent to verify the full message flow.
+ * These tests use a real Letta API agent to verify the full message flow.
  * Requires LETTA_API_KEY and LETTA_E2E_AGENT_ID environment variables.
  * 
  * Run with: npm run test:e2e
@@ -17,7 +17,7 @@ import { join } from 'node:path';
 // Skip if no API key (local dev without secrets)
 const SKIP_E2E = !process.env.LETTA_API_KEY || !process.env.LETTA_E2E_AGENT_ID;
 
-describe.skipIf(SKIP_E2E)('e2e: LettaBot with Letta Cloud', () => {
+describe.skipIf(SKIP_E2E)('e2e: LettaBot with Letta API', () => {
   let bot: LettaBot;
   let mockAdapter: MockChannelAdapter;
   let tempDir: string;
diff --git a/e2e/models.e2e.test.ts b/e2e/models.e2e.test.ts
index c174cfd..6f434bf 100644
--- a/e2e/models.e2e.test.ts
+++ b/e2e/models.e2e.test.ts
@@ -1,7 +1,7 @@
 /**
  * E2E Tests for Model API
  * 
- * Tests model listing and retrieval against Letta Cloud.
+ * Tests model listing and retrieval against Letta API.
  * Requires LETTA_API_KEY and LETTA_E2E_AGENT_ID environment variables.
  * 
  * Run with: npm run test:e2e
@@ -13,10 +13,10 @@ import { listModels, getAgentModel } from '../src/tools/letta-api.js';
 const SKIP_E2E = !process.env.LETTA_API_KEY || !process.env.LETTA_E2E_AGENT_ID;
 
 describe.skipIf(SKIP_E2E)('e2e: Model API', () => {
-  it('lists available models from Letta Cloud', async () => {
+  it('lists available models from Letta API', async () => {
     const models = await listModels();
     expect(models.length).toBeGreaterThan(0);
-    // Known providers should always exist on Letta Cloud
+    // Known providers should always exist on Letta API
     const handles = models.map(m => m.handle);
     expect(handles.some(h => h.includes('anthropic') || h.includes('openai'))).toBe(true);
   }, 30000);
diff --git a/lettabot.example.yaml b/lettabot.example.yaml
index e543215..7c1137d 100644
--- a/lettabot.example.yaml
+++ b/lettabot.example.yaml
@@ -2,15 +2,16 @@
 # Copy this to lettabot.yaml and fill in your values.
 # 
 # Server modes:
-# - 'cloud': Use Letta Cloud (api.letta.com) with API key
-# - 'selfhosted': Use self-hosted Letta server
+# - 'api': Use Letta API (api.letta.com) with API key
+# - 'docker': Use a Docker/custom Letta server
+# Legacy aliases still accepted: 'cloud', 'selfhosted'
 
 server:
-  mode: cloud
-  # For cloud mode, set your API key (get one at https://app.letta.com):
+  mode: api
+  # For api mode, set your API key (get one at https://app.letta.com):
   apiKey: sk-let-YOUR-API-KEY
-  # For selfhosted mode, uncomment and set the base URL:
-  # mode: selfhosted
+  # For docker mode, uncomment and set the base URL:
+  # mode: docker
   # baseUrl: http://localhost:8283
 
 agent:
@@ -19,8 +20,8 @@ agent:
   # Note: model is configured on the Letta agent server-side.
   # Select a model during `lettabot onboard` or change it with `lettabot model set <handle>`.
 
-# BYOK Providers (optional, cloud mode only)
-# These will be synced to Letta Cloud on startup
+# BYOK Providers (optional, api mode only)
+# These will be synced to Letta API on startup
 # providers:
 #   - id: anthropic
 #     name: lc-anthropic
diff --git a/src/auth/oauth.ts b/src/auth/oauth.ts
index 12ecd4b..81aae95 100644
--- a/src/auth/oauth.ts
+++ b/src/auth/oauth.ts
@@ -1,5 +1,5 @@
 /**
- * OAuth 2.0 utilities for Letta Cloud authentication
+ * OAuth 2.0 utilities for Letta API authentication
  * Uses Device Code Flow for CLI authentication
  * 
  * Ported from @letta-ai/letta-code
@@ -7,13 +7,15 @@
 
 import Letta from "@letta-ai/letta-client";
 
-export const LETTA_CLOUD_API_URL = "https://api.letta.com";
+export const LETTA_API_URL = "https://api.letta.com";
+// Backward-compatible alias for older imports.
+export const LETTA_CLOUD_API_URL = LETTA_API_URL;
 
 export const OAUTH_CONFIG = {
   clientId: "ci-let-724dea7e98f4af6f8f370f4b1466200c",
   clientSecret: "", // Not needed for device code flow
   authBaseUrl: "https://app.letta.com",
-  apiBaseUrl: LETTA_CLOUD_API_URL,
+  apiBaseUrl: LETTA_API_URL,
 } as const;
 
 export interface DeviceCodeResponse {
diff --git a/src/cli.ts b/src/cli.ts
index bd0a767..8a648b6 100644
--- a/src/cli.ts
+++ b/src/cli.ts
@@ -9,7 +9,7 @@
  */
 
 // Config loaded from lettabot.yaml
-import { loadConfig, applyConfigToEnv } from './config/index.js';
+import { loadConfig, applyConfigToEnv, serverModeLabel } from './config/index.js';
 const config = loadConfig();
 applyConfigToEnv(config);
 import { existsSync, readFileSync, writeFileSync } from 'node:fs';
@@ -48,7 +48,7 @@ async function configure() {
 
   // Show current config from YAML
   const configRows = [
-    ['Server Mode', config.server.mode],
+    ['Server Mode', serverModeLabel(config.server.mode)],
     ['API Key', config.server.apiKey ? '✓ Set' : '✗ Not set'],
     ['Agent Name', config.agent.name],
     ['Telegram', config.channels.telegram?.enabled ? '✓ Enabled' : '✗ Disabled'],
diff --git a/src/commands/model.ts b/src/commands/model.ts
index e815220..44352d2 100644
--- a/src/commands/model.ts
+++ b/src/commands/model.ts
@@ -9,7 +9,7 @@
 
 import { getAgentModel, updateAgentModel } from '../tools/letta-api.js';
 import { buildModelOptions, handleModelSelection, getBillingTier } from '../utils/model-selection.js';
-import { isLettaCloudUrl } from '../utils/server.js';
+import { isLettaApiUrl } from '../utils/server.js';
 import { Store } from '../core/store.js';
 
 /**
@@ -79,11 +79,11 @@ export async function modelInteractive(): Promise<void> {
     p.log.info(`Current model: ${currentModel}`);
   }
 
-  // Determine if self-hosted
+  // Determine if using Docker/custom server
   const baseUrl = process.env.LETTA_BASE_URL;
-  const isSelfHosted = !!baseUrl && !isLettaCloudUrl(baseUrl);
+  const isSelfHosted = !!baseUrl && !isLettaApiUrl(baseUrl);
 
-  // Get billing tier for cloud users
+  // Get billing tier for Letta API users
   let billingTier: string | null = null;
   if (!isSelfHosted) {
     const spinner = p.spinner();
diff --git a/src/config/io.ts b/src/config/io.ts
index 7dcebc6..9f69b4d 100644
--- a/src/config/io.ts
+++ b/src/config/io.ts
@@ -9,7 +9,8 @@ import { homedir } from 'node:os';
 import { dirname, join, resolve } from 'node:path';
 import YAML from 'yaml';
 import type { LettaBotConfig, ProviderConfig } from './types.js';
-import { DEFAULT_CONFIG } from './types.js';
+import { DEFAULT_CONFIG, canonicalizeServerMode, isApiServerMode, isDockerServerMode } from './types.js';
+import { LETTA_API_URL } from '../auth/oauth.js';
 
 // Config file locations (checked in order)
 const CONFIG_PATHS = [
@@ -64,14 +65,22 @@ export function loadConfig(): LettaBotConfig {
     // Re-extract from document AST to preserve the original string representation.
     fixLargeGroupIds(content, parsed);
 
-    // Merge with defaults
-    return {
+    // Merge with defaults and canonicalize server mode.
+    const merged = {
       ...DEFAULT_CONFIG,
       ...parsed,
       server: { ...DEFAULT_CONFIG.server, ...parsed.server },
       agent: { ...DEFAULT_CONFIG.agent, ...parsed.agent },
       channels: { ...DEFAULT_CONFIG.channels, ...parsed.channels },
     };
+
+    return {
+      ...merged,
+      server: {
+        ...merged.server,
+        mode: canonicalizeServerMode(merged.server.mode),
+      },
+    };
   } catch (err) {
     console.error(`[Config] Failed to load ${configPath}:`, err);
     return { ...DEFAULT_CONFIG };
@@ -107,7 +116,7 @@ export function configToEnv(config: LettaBotConfig): Record<string, string> {
   const env: Record<string, string> = {};
   
   // Server
-  if (config.server.mode === 'selfhosted' && config.server.baseUrl) {
+  if (isDockerServerMode(config.server.mode) && config.server.baseUrl) {
     env.LETTA_BASE_URL = config.server.baseUrl;
   }
   if (config.server.apiKey) {
@@ -309,10 +318,10 @@ export function applyConfigToEnv(config: LettaBotConfig): void {
 }
 
 /**
- * Create BYOK providers on Letta Cloud
+ * Create BYOK providers on Letta API
  */
 export async function syncProviders(config: Partial<LettaBotConfig> & Pick<LettaBotConfig, 'server'>): Promise<void> {
-  if (config.server.mode !== 'cloud' || !config.server.apiKey) {
+  if (!isApiServerMode(config.server.mode) || !config.server.apiKey) {
     return;
   }
   
@@ -321,7 +330,7 @@ export async function syncProviders(config: Partial<LettaBotConfig> & Pick<Letta
   }
   
   const apiKey = config.server.apiKey;
-  const baseUrl = 'https://api.letta.com';
+  const baseUrl = LETTA_API_URL;
   
   // List existing providers
   const listResponse = await fetch(`${baseUrl}/v1/providers`, {
diff --git a/src/config/normalize.test.ts b/src/config/normalize.test.ts
index 152a501..d455c93 100644
--- a/src/config/normalize.test.ts
+++ b/src/config/normalize.test.ts
@@ -1,7 +1,23 @@
 import { describe, it, expect, beforeEach, afterEach, vi } from 'vitest';
-import { normalizeAgents, type LettaBotConfig, type AgentConfig } from './types.js';
+import {
+  normalizeAgents,
+  canonicalizeServerMode,
+  isApiServerMode,
+  isDockerServerMode,
+  type LettaBotConfig,
+  type AgentConfig,
+} from './types.js';
 
 describe('normalizeAgents', () => {
+  it('canonicalizes legacy server mode aliases', () => {
+    expect(canonicalizeServerMode('cloud')).toBe('api');
+    expect(canonicalizeServerMode('api')).toBe('api');
+    expect(canonicalizeServerMode('selfhosted')).toBe('docker');
+    expect(canonicalizeServerMode('docker')).toBe('docker');
+    expect(isApiServerMode('cloud')).toBe(true);
+    expect(isDockerServerMode('selfhosted')).toBe(true);
+  });
+
   it('should normalize legacy single-agent config to one-entry array', () => {
     const config: LettaBotConfig = {
       server: { mode: 'cloud' },
diff --git a/src/config/types.ts b/src/config/types.ts
index 3774238..c3bd517 100644
--- a/src/config/types.ts
+++ b/src/config/types.ts
@@ -2,10 +2,29 @@
  * LettaBot Configuration Types
  * 
  * Two modes:
- * 1. Self-hosted: Uses baseUrl (e.g., http://localhost:8283), no API key
- * 2. Letta Cloud: Uses apiKey, optional BYOK providers
+ * 1. Docker server: Uses baseUrl (e.g., http://localhost:8283), no API key
+ * 2. Letta API: Uses apiKey, optional BYOK providers
  */
 
+export type ServerMode = 'api' | 'docker' | 'cloud' | 'selfhosted';
+export type CanonicalServerMode = 'api' | 'docker';
+
+export function canonicalizeServerMode(mode?: ServerMode): CanonicalServerMode {
+  return mode === 'docker' || mode === 'selfhosted' ? 'docker' : 'api';
+}
+
+export function isDockerServerMode(mode?: ServerMode): boolean {
+  return canonicalizeServerMode(mode) === 'docker';
+}
+
+export function isApiServerMode(mode?: ServerMode): boolean {
+  return canonicalizeServerMode(mode) === 'api';
+}
+
+export function serverModeLabel(mode?: ServerMode): string {
+  return canonicalizeServerMode(mode);
+}
+
 /**
  * Configuration for a single agent in multi-agent mode.
  * Each agent has its own name, channels, and features.
@@ -50,11 +69,12 @@ export interface AgentConfig {
 export interface LettaBotConfig {
   // Server connection
   server: {
-    // 'cloud' (api.letta.com) or 'selfhosted'
-    mode: 'cloud' | 'selfhosted';
-    // Only for selfhosted mode
+    // Canonical values: 'api' or 'docker'
+    // Legacy aliases accepted for compatibility: 'cloud', 'selfhosted'
+    mode: ServerMode;
+    // Only for docker mode
     baseUrl?: string;
-    // Only for cloud mode
+    // Only for api mode
     apiKey?: string;
   };
 
@@ -71,7 +91,7 @@ export interface LettaBotConfig {
     model?: string;
   };
 
-  // BYOK providers (cloud mode only)
+  // BYOK providers (api mode only)
   providers?: ProviderConfig[];
 
   // Channel configurations
@@ -272,7 +292,7 @@ export interface GoogleConfig {
 // Default config
 export const DEFAULT_CONFIG: LettaBotConfig = {
   server: {
-    mode: 'cloud',
+    mode: 'api',
   },
   agent: {
     name: 'LettaBot',
diff --git a/src/main.ts b/src/main.ts
index 036dcf4..8a44a96 100644
--- a/src/main.ts
+++ b/src/main.ts
@@ -14,16 +14,23 @@ import { createApiServer } from './api/server.js';
 import { loadOrGenerateApiKey } from './api/auth.js';
 
 // Load YAML config and apply to process.env (overrides .env values)
-import { loadConfig, applyConfigToEnv, syncProviders, resolveConfigPath } from './config/index.js';
-import { isLettaCloudUrl } from './utils/server.js';
+import {
+  loadConfig,
+  applyConfigToEnv,
+  syncProviders,
+  resolveConfigPath,
+  isDockerServerMode,
+  serverModeLabel,
+} from './config/index.js';
+import { isLettaApiUrl } from './utils/server.js';
 import { getDataDir, getWorkingDir, hasRailwayVolume } from './utils/paths.js';
 const yamlConfig = loadConfig();
 const configSource = existsSync(resolveConfigPath()) ? resolveConfigPath() : 'defaults + environment variables';
 console.log(`[Config] Loaded from ${configSource}`);
 if (yamlConfig.agents?.length) {
-  console.log(`[Config] Mode: ${yamlConfig.server.mode}, Agents: ${yamlConfig.agents.map(a => a.name).join(', ')}`);
+  console.log(`[Config] Mode: ${serverModeLabel(yamlConfig.server.mode)}, Agents: ${yamlConfig.agents.map(a => a.name).join(', ')}`);
 } else {
-  console.log(`[Config] Mode: ${yamlConfig.server.mode}, Agent: ${yamlConfig.agent.name}`);
+  console.log(`[Config] Mode: ${serverModeLabel(yamlConfig.server.mode)}, Agent: ${yamlConfig.agent.name}`);
 }
 if (yamlConfig.agent?.model) {
   console.warn('[Config] WARNING: agent.model in lettabot.yaml is deprecated and ignored. Use `lettabot model set <handle>` instead.');
@@ -98,8 +105,8 @@ async function refreshTokensIfNeeded(): Promise<void> {
     return;
   }
   
-  // OAuth tokens only work with Letta Cloud - skip if using custom server
-  if (!isLettaCloudUrl(process.env.LETTA_BASE_URL)) {
+  // OAuth tokens only work with Letta API - skip if using custom server
+  if (!isLettaApiUrl(process.env.LETTA_BASE_URL)) {
     return;
   }
   
@@ -435,11 +442,11 @@ const globalConfig = {
   cronEnabled: process.env.CRON_ENABLED === 'true',  // Legacy env var fallback
 };
 
-// Validate LETTA_API_KEY is set for cloud mode (selfhosted mode doesn't require it)
-if (yamlConfig.server.mode !== 'selfhosted' && !process.env.LETTA_API_KEY) {
-  console.error('\n  Error: LETTA_API_KEY is required for Letta Cloud.');
+// Validate LETTA_API_KEY is set for API mode (docker mode doesn't require it)
+if (!isDockerServerMode(yamlConfig.server.mode) && !process.env.LETTA_API_KEY) {
+  console.error('\n  Error: LETTA_API_KEY is required for Letta API.');
   console.error('  Get your API key from https://app.letta.com and set it as an environment variable.');
-  console.error('  Or use selfhosted mode: run "lettabot onboard" and select "Enter self-hosted URL".\n');
+  console.error('  Or use docker mode: run "lettabot onboard" and select "Enter Docker server URL".\n');
   process.exit(1);
 }
 
diff --git a/src/onboard.ts b/src/onboard.ts
index 286d947..f2bdd1f 100644
--- a/src/onboard.ts
+++ b/src/onboard.ts
@@ -6,9 +6,9 @@ import { existsSync, readFileSync, writeFileSync } from 'node:fs';
 import { resolve } from 'node:path';
 import { spawnSync } from 'node:child_process';
 import * as p from '@clack/prompts';
-import { saveConfig, syncProviders } from './config/index.js';
+import { saveConfig, syncProviders, isApiServerMode } from './config/index.js';
 import type { AgentConfig, LettaBotConfig, ProviderConfig } from './config/types.js';
-import { isLettaCloudUrl } from './utils/server.js';
+import { isLettaApiUrl } from './utils/server.js';
 import { CHANNELS, getChannelHint, isSignalCliInstalled, setupTelegram, setupSlack, setupDiscord, setupWhatsApp, setupSignal } from './channels/setup.js';
 
 // ============================================================================
@@ -118,7 +118,7 @@ async function saveConfigFromEnv(config: any, configPath: string): Promise<void>
   
   const lettabotConfig: Partial<LettaBotConfig> & Pick<LettaBotConfig, 'server'> = {
     server: {
-      mode: isLettaCloudUrl(config.baseUrl) ? 'cloud' : 'selfhosted',
+      mode: isLettaApiUrl(config.baseUrl) ? 'api' : 'docker',
       baseUrl: config.baseUrl,
       apiKey: config.apiKey,
     },
@@ -207,7 +207,7 @@ async function saveConfigFromEnv(config: any, configPath: string): Promise<void>
 
 interface OnboardConfig {
   // Auth
-  authMethod: 'keep' | 'oauth' | 'apikey' | 'selfhosted' | 'skip';
+  authMethod: 'keep' | 'oauth' | 'apikey' | 'docker' | 'selfhosted' | 'skip';
   apiKey?: string;
   baseUrl?: string;
   billingTier?: string;
@@ -288,6 +288,7 @@ interface OnboardConfig {
 }
 
 const isPlaceholder = (val?: string) => !val || /^(your_|sk-\.\.\.|placeholder|example)/i.test(val);
+const isDockerAuthMethod = (method: OnboardConfig['authMethod']) => method === 'docker' || method === 'selfhosted';
 
 // ============================================================================
 // Step Functions
@@ -298,12 +299,12 @@ async function stepAuth(config: OnboardConfig, env: Record<string, string>): Pro
   const { saveTokens, loadTokens, getOrCreateDeviceId, getDeviceName } = await import('./auth/tokens.js');
   
   const baseUrl = config.baseUrl || env.LETTA_BASE_URL || process.env.LETTA_BASE_URL;
-  const isLettaCloud = isLettaCloudUrl(baseUrl);
+  const isLettaApi = isLettaApiUrl(baseUrl);
   
   const existingTokens = loadTokens();
   // Check both env and config for existing API key
   const realApiKey = config.apiKey || (isPlaceholder(env.LETTA_API_KEY) ? undefined : env.LETTA_API_KEY);
-  const validOAuthToken = isLettaCloud ? existingTokens?.accessToken : undefined;
+  const validOAuthToken = isLettaApi ? existingTokens?.accessToken : undefined;
   const hasExistingAuth = !!realApiKey || !!validOAuthToken;
   const displayKey = realApiKey || validOAuthToken;
   
@@ -316,9 +317,9 @@ async function stepAuth(config: OnboardConfig, env: Record<string, string>): Pro
   
   const authOptions = [
     ...(hasExistingAuth ? [{ value: 'keep', label: getAuthLabel(), hint: displayKey?.slice(0, 20) + '...' }] : []),
-    ...(isLettaCloud ? [{ value: 'oauth', label: 'Login to Letta Platform', hint: 'Opens browser' }] : []),
+    ...(isLettaApi ? [{ value: 'oauth', label: 'Login to Letta Platform', hint: 'Opens browser' }] : []),
     { value: 'apikey', label: 'Enter API Key manually', hint: 'Paste your key' },
-    { value: 'selfhosted', label: 'Enter self-hosted URL', hint: 'Local Letta server' },
+    { value: 'docker', label: 'Enter Docker server URL', hint: 'Local/custom Letta server' },
     { value: 'skip', label: 'Skip', hint: 'Continue without auth' },
   ];
   
@@ -390,7 +391,7 @@ async function stepAuth(config: OnboardConfig, env: Record<string, string>): Pro
       config.apiKey = apiKey;
       env.LETTA_API_KEY = apiKey;
     }
-  } else if (authMethod === 'selfhosted') {
+  } else if (authMethod === 'docker' || authMethod === 'selfhosted') {
     const serverUrl = await p.text({ 
       message: 'Letta server URL',
       placeholder: 'http://localhost:8283',
@@ -403,7 +404,7 @@ async function stepAuth(config: OnboardConfig, env: Record<string, string>): Pro
     env.LETTA_BASE_URL = url;
     process.env.LETTA_BASE_URL = url; // Set immediately so model listing works
     
-    // Clear any cloud API key since we're using self-hosted
+    // Clear API key since we're using a Docker/custom server.
     delete env.LETTA_API_KEY;
     delete process.env.LETTA_API_KEY;
   } else if (authMethod === 'keep') {
@@ -458,14 +459,14 @@ async function stepAuth(config: OnboardConfig, env: Record<string, string>): Pro
     }
     
     const spinner = p.spinner();
-    const serverLabel = config.baseUrl || 'Letta Cloud';
+    const serverLabel = config.baseUrl || 'Letta API';
     spinner.start(`Checking connection to ${serverLabel}...`);
     try {
       const { testConnection } = await import('./tools/letta-api.js');
       const ok = await testConnection();
       spinner.stop(ok ? `Connected to ${serverLabel}` : 'Connection issue');
       
-      if (!ok && config.authMethod === 'selfhosted') {
+      if (!ok && isDockerAuthMethod(config.authMethod)) {
         p.log.warn(`Could not connect to ${config.baseUrl}. Make sure the server is running.`);
       }
     } catch {
@@ -561,8 +562,8 @@ const BYOK_PROVIDERS = [
 ];
 
 async function stepProviders(config: OnboardConfig, env: Record<string, string>): Promise<void> {
-  // Only for free tier users on Letta Cloud (not self-hosted, not paid)
-  if (config.authMethod === 'selfhosted') return;
+  // Only for free tier users on Letta API (not Docker/custom servers, not paid)
+  if (isDockerAuthMethod(config.authMethod)) return;
   if (config.billingTier !== 'free') return;
   
   const selectedProviders = await p.multiselect({
@@ -680,10 +681,10 @@ async function stepModel(config: OnboardConfig, env: Record<string, string>): Pr
   
   const spinner = p.spinner();
   
-  // Determine if self-hosted (not Letta Cloud)
-  const isSelfHosted = config.authMethod === 'selfhosted';
+  // Determine if Docker/custom server (not Letta API)
+  const isSelfHosted = isDockerAuthMethod(config.authMethod);
   
-  // Fetch billing tier for Letta Cloud users (if not already fetched)
+  // Fetch billing tier for Letta API users (if not already fetched)
   let billingTier: string | null = config.billingTier || null;
   if (!isSelfHosted && !billingTier) {
     spinner.start('Checking account...');
@@ -1155,7 +1156,8 @@ function showSummary(config: OnboardConfig): void {
     keep: 'Keep existing',
     oauth: 'OAuth login',
     apikey: config.apiKey ? `API Key (${config.apiKey.slice(0, 10)}...)` : 'API Key',
-    selfhosted: config.baseUrl ? `Self-hosted (${config.baseUrl})` : 'Self-hosted',
+    docker: config.baseUrl ? `Docker server (${config.baseUrl})` : 'Docker server',
+    selfhosted: config.baseUrl ? `Docker server (${config.baseUrl})` : 'Docker server',
     skip: 'None',
   }[config.authMethod];
   lines.push(`Auth:      ${authLabel}`);
@@ -1320,12 +1322,12 @@ export async function onboard(options?: { nonInteractive?: boolean }): Promise<v
     console.log('');
     
     // Validate required fields
-    if (!config.apiKey && isLettaCloudUrl(config.baseUrl)) {
+    if (!config.apiKey && isLettaApiUrl(config.baseUrl)) {
       console.error('❌ Error: LETTA_API_KEY is required');
       console.error('   Get your API key from: https://app.letta.com/settings');
       console.error('   Then run: export LETTA_API_KEY="letta_..."');
       console.error('');
-      console.error('   Or use self-hosted Letta:');
+      console.error('   Or use a Docker server:');
       console.error('   export LETTA_BASE_URL="http://localhost:8283"');
       process.exit(1);
     }
@@ -1385,8 +1387,8 @@ export async function onboard(options?: { nonInteractive?: boolean }): Promise<v
   
   // Pre-populate from existing config
   const baseUrl = existingConfig.server.baseUrl || process.env.LETTA_BASE_URL || 'https://api.letta.com';
-  const isLocal = !isLettaCloudUrl(baseUrl);
-  p.note(`${baseUrl}\n${isLocal ? 'Self-hosted' : 'Letta Cloud'}`, 'Server');
+  const isLocal = !isLettaApiUrl(baseUrl);
+  p.note(`${baseUrl}\n${isLocal ? 'Docker server' : 'Letta API'}`, 'Server');
   
   // Test server connection
   const spinner = p.spinner();
@@ -1479,8 +1481,8 @@ export async function onboard(options?: { nonInteractive?: boolean }): Promise<v
   await stepAuth(config, env);
   await stepAgent(config, env);
   
-  // Fetch billing tier for free plan detection (only for Letta Cloud)
-  if (config.authMethod !== 'selfhosted' && config.agentChoice === 'new') {
+  // Fetch billing tier for free plan detection (only for Letta API)
+  if (!isDockerAuthMethod(config.authMethod) && config.agentChoice === 'new') {
     const { getBillingTier } = await import('./utils/model-selection.js');
     const spinner = p.spinner();
     spinner.start('Checking account...');
@@ -1762,8 +1764,8 @@ export async function onboard(options?: { nonInteractive?: boolean }): Promise<v
   // Convert to YAML config (multi-agent format)
   const yamlConfig: Partial<LettaBotConfig> & Pick<LettaBotConfig, 'server'> = {
     server: {
-      mode: config.authMethod === 'selfhosted' ? 'selfhosted' : 'cloud',
-      ...(config.authMethod === 'selfhosted' && config.baseUrl ? { baseUrl: config.baseUrl } : {}),
+      mode: isDockerAuthMethod(config.authMethod) ? 'docker' : 'api',
+      ...(isDockerAuthMethod(config.authMethod) && config.baseUrl ? { baseUrl: config.baseUrl } : {}),
       ...(config.apiKey ? { apiKey: config.apiKey } : {}),
     },
     agents: [agentConfig],
@@ -1789,10 +1791,10 @@ export async function onboard(options?: { nonInteractive?: boolean }): Promise<v
   saveConfig(yamlConfig, savePath);
   p.log.success('Configuration saved to lettabot.yaml');
   
-  // Sync BYOK providers to Letta Cloud
-  if (yamlConfig.providers && yamlConfig.providers.length > 0 && yamlConfig.server.mode === 'cloud') {
+  // Sync BYOK providers to Letta API.
+  if (yamlConfig.providers && yamlConfig.providers.length > 0 && isApiServerMode(yamlConfig.server.mode)) {
     const spinner = p.spinner();
-    spinner.start('Syncing BYOK providers to Letta Cloud...');
+    spinner.start('Syncing BYOK providers to Letta API...');
     try {
       await syncProviders(yamlConfig);
       spinner.stop('BYOK providers synced');
diff --git a/src/utils/model-selection.ts b/src/utils/model-selection.ts
index d44c140..161770e 100644
--- a/src/utils/model-selection.ts
+++ b/src/utils/model-selection.ts
@@ -26,11 +26,11 @@ export interface ModelInfo {
  * Uses /v1/metadata/balance endpoint (same as letta-code)
  * 
  * @param apiKey - The API key to use
- * @param isSelfHosted - If true, skip billing check (self-hosted has no tiers)
+ * @param isSelfHosted - If true, skip billing check (Docker/custom servers have no tiers)
  */
 export async function getBillingTier(apiKey?: string, isSelfHosted?: boolean): Promise<string | null> {
   try {
-    // Self-hosted servers don't have billing tiers
+    // Docker/custom servers don't have billing tiers.
     if (isSelfHosted) {
       return null;
     }
@@ -39,7 +39,7 @@ export async function getBillingTier(apiKey?: string, isSelfHosted?: boolean): P
       return 'free';
     }
     
-    // Always use Letta Cloud for billing check (not process.env.LETTA_BASE_URL)
+    // Always use Letta API for billing check (not process.env.LETTA_BASE_URL)
     const response = await fetch('https://api.letta.com/v1/metadata/balance', {
       headers: { 
         'Content-Type': 'application/json',
@@ -111,7 +111,7 @@ async function fetchByokModels(apiKey?: string): Promise<ByokModel[]> {
  * 
  * For free users: Show free models first, then BYOK models from API
  * For paid users: Show featured models first, then all models
- * For self-hosted: Fetch models from server
+ * For Docker/custom servers: fetch models from server
  */
 export async function buildModelOptions(options?: {
   billingTier?: string | null;
@@ -122,7 +122,7 @@ export async function buildModelOptions(options?: {
   const isSelfHosted = options?.isSelfHosted;
   const isFreeTier = billingTier?.toLowerCase() === 'free';
   
-  // For self-hosted servers, fetch models from server
+  // For Docker/custom servers, fetch models from server
   if (isSelfHosted) {
     return buildServerModelOptions();
   }
@@ -182,7 +182,7 @@ export async function buildModelOptions(options?: {
 }
 
 /**
- * Build model options from self-hosted server
+ * Build model options from Docker/custom server
  */
 async function buildServerModelOptions(): Promise<Array<{ value: string; label: string; hint: string }>> {
   const { listModels } = await import('../tools/letta-api.js');
diff --git a/src/utils/server.test.ts b/src/utils/server.test.ts
index 732ff8b..9fd97e5 100644
--- a/src/utils/server.test.ts
+++ b/src/utils/server.test.ts
@@ -1,45 +1,50 @@
 import { describe, it, expect } from 'vitest';
-import { isLettaCloudUrl } from './server.js';
+import { isLettaApiUrl, isLettaCloudUrl } from './server.js';
 
-describe('isLettaCloudUrl', () => {
-  it('returns true for undefined (default is cloud)', () => {
-    expect(isLettaCloudUrl(undefined)).toBe(true);
+describe('isLettaApiUrl', () => {
+  it('returns true for undefined (default is Letta API)', () => {
+    expect(isLettaApiUrl(undefined)).toBe(true);
   });
 
-  it('returns true for Letta Cloud URL', () => {
-    expect(isLettaCloudUrl('https://api.letta.com')).toBe(true);
+  it('returns true for Letta API URL', () => {
+    expect(isLettaApiUrl('https://api.letta.com')).toBe(true);
   });
 
-  it('returns true for Letta Cloud URL with trailing slash', () => {
-    expect(isLettaCloudUrl('https://api.letta.com/')).toBe(true);
+  it('returns true for Letta API URL with trailing slash', () => {
+    expect(isLettaApiUrl('https://api.letta.com/')).toBe(true);
   });
 
-  it('returns true for Letta Cloud URL with path', () => {
-    expect(isLettaCloudUrl('https://api.letta.com/v1/agents')).toBe(true);
+  it('returns true for Letta API URL with path', () => {
+    expect(isLettaApiUrl('https://api.letta.com/v1/agents')).toBe(true);
   });
 
   it('returns false for localhost', () => {
-    expect(isLettaCloudUrl('http://localhost:8283')).toBe(false);
+    expect(isLettaApiUrl('http://localhost:8283')).toBe(false);
   });
 
   it('returns false for 127.0.0.1', () => {
-    expect(isLettaCloudUrl('http://127.0.0.1:8283')).toBe(false);
+    expect(isLettaApiUrl('http://127.0.0.1:8283')).toBe(false);
   });
 
   it('returns false for custom server', () => {
-    expect(isLettaCloudUrl('https://custom.server.com')).toBe(false);
+    expect(isLettaApiUrl('https://custom.server.com')).toBe(false);
   });
 
   it('returns false for docker network URL', () => {
-    expect(isLettaCloudUrl('http://letta:8283')).toBe(false);
+    expect(isLettaApiUrl('http://letta:8283')).toBe(false);
   });
 
   it('returns false for invalid URL', () => {
-    expect(isLettaCloudUrl('not-a-url')).toBe(false);
+    expect(isLettaApiUrl('not-a-url')).toBe(false);
   });
 
   it('returns true for empty string (treated as default)', () => {
-    // Empty string is falsy, so it's treated like undefined (default to cloud)
-    expect(isLettaCloudUrl('')).toBe(true);
+    // Empty string is falsy, so it's treated like undefined (default to Letta API)
+    expect(isLettaApiUrl('')).toBe(true);
+  });
+
+  it('keeps backward-compatible alias behavior', () => {
+    expect(isLettaCloudUrl('https://api.letta.com')).toBe(true);
+    expect(isLettaCloudUrl('http://localhost:8283')).toBe(false);
   });
 });
diff --git a/src/utils/server.ts b/src/utils/server.ts
index b8ba4cd..6ae81a5 100644
--- a/src/utils/server.ts
+++ b/src/utils/server.ts
@@ -1,24 +1,27 @@
 /**
  * Letta server URL utilities
  *
- * The heuristic is simple: Letta Cloud lives at a known URL.
- * Everything else is self-hosted.
+ * The heuristic is simple: Letta API lives at a known URL.
+ * Everything else is a Docker/custom server.
  */
 
-import { LETTA_CLOUD_API_URL } from '../auth/oauth.js';
+import { LETTA_API_URL } from '../auth/oauth.js';
 
 /**
- * Check if a URL points at Letta Cloud (api.letta.com)
+ * Check if a URL points at Letta API (api.letta.com)
  *
- * @param url - The base URL to check. When absent, assumes cloud (the default).
+ * @param url - The base URL to check. When absent, assumes Letta API (the default).
  */
-export function isLettaCloudUrl(url?: string): boolean {
-  if (!url) return true; // no URL means the default (cloud)
+export function isLettaApiUrl(url?: string): boolean {
+  if (!url) return true; // no URL means the default (Letta API)
   try {
     const given = new URL(url);
-    const cloud = new URL(LETTA_CLOUD_API_URL);
-    return given.hostname === cloud.hostname;
+    const api = new URL(LETTA_API_URL);
+    return given.hostname === api.hostname;
   } catch {
     return false;
   }
 }
+
+// Backward-compatible alias.
+export const isLettaCloudUrl = isLettaApiUrl;