diff --git a/docs/architecture.md b/docs/architecture.md
index 3c5678b0ab..a7ad69c14d 100644
--- a/docs/architecture.md
+++ b/docs/architecture.md
@@ -493,6 +493,16 @@ The supervisor alone publishes its ready worker's endpoint in `paseo.pid`, clear
 
 Worker restart retains supervisor arguments/environment and rereads the configuration file. Updating a package and observing its new worker version do not refresh the running supervisor code; the launcher owns full-process replacement. See [CLI lifecycle contracts](../public-docs/cli.md#daemon-management).
 
+## Outbound networking
+
+The daemon and its plugin processes honor `HTTPS_PROXY`, `HTTP_PROXY`, and `NO_PROXY`
+(including lowercase forms, which take precedence). Fetch and relay, Hub, and connected-host WebSockets
+share this policy. Loopback (`localhost`, `127.0.0.1`, `::1`) always goes direct.
+A proxy without a scheme uses HTTP. Invalid values and unsupported proxy schemes
+are treated as unset, with one warning naming the variable in `daemon.log`.
+Agent and terminal environments are unchanged. System proxy settings and SOCKS-only
+`ALL_PROXY` configurations are not supported.
+
 ## Deployment models
 
 1. **Local daemon** (default): `paseo daemon start` on `127.0.0.1:6767`
diff --git a/package-lock.json b/package-lock.json
index 3351d15ac9..80355dbb21 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -40690,6 +40690,7 @@
         "esbuild": "^0.25.12",
         "express": "^4.18.2",
         "fast-deep-equal": "^3.1.3",
+        "https-proxy-agent": "^7.0.6",
         "lru-cache": "^11.5.1",
         "markdown-it": "^10.0.0",
         "mnemonic-id": "^3.2.7",
@@ -40707,6 +40708,7 @@
         "strip-ansi": "^7.1.2",
         "tree-kill": "^1.2.2",
         "typescript": "^5.9.3",
+        "undici": "^7.24.8",
         "uuid": "^9.0.1",
         "which": "^5.0.0",
         "ws": "^8.14.2",
@@ -41280,6 +41282,15 @@
         "url": "https://opencollective.com/vitest"
       }
     },
+    "packages/server/node_modules/agent-base": {
+      "version": "7.1.4",
+      "resolved": "https://registry.npmjs.org/agent-base/-/agent-base-7.1.4.tgz",
+      "integrity": "sha512-MnA+YT8fwfJPgBx3m60MNqakm30XOkyIoH1y6huTQvC0PwZG7ki8NacLBcrPbNoo8vEZy7Jpuk7+jMO+CUovTQ==",
+      "license": "MIT",
+      "engines": {
+        "node": ">= 14"
+      }
+    },
     "packages/server/node_modules/ajv": {
       "version": "8.20.0",
       "resolved": "https://registry.npmjs.org/ajv/-/ajv-8.20.0.tgz",
@@ -41349,6 +41360,19 @@
         "@esbuild/win32-x64": "0.25.12"
       }
     },
+    "packages/server/node_modules/https-proxy-agent": {
+      "version": "7.0.6",
+      "resolved": "https://registry.npmjs.org/https-proxy-agent/-/https-proxy-agent-7.0.6.tgz",
+      "integrity": "sha512-vK9P5/iUfdl95AI+JVyUuIcVtd4ofvtrOr3HNtM2yxC9bnMbEdp3x01OhQNnjb8IJYi38VlTE3mBXwcfvywuSw==",
+      "license": "MIT",
+      "dependencies": {
+        "agent-base": "^7.1.2",
+        "debug": "4"
+      },
+      "engines": {
+        "node": ">= 14"
+      }
+    },
     "packages/server/node_modules/isexe": {
       "version": "3.1.5",
       "resolved": "https://registry.npmjs.org/isexe/-/isexe-3.1.5.tgz",
diff --git a/packages/client/src/node/index.ts b/packages/client/src/node/index.ts
index 7132d09f10..46b5cff17a 100644
--- a/packages/client/src/node/index.ts
+++ b/packages/client/src/node/index.ts
@@ -2,6 +2,7 @@ export { createHostChannelTransport } from "../hosts/index.js";
 import { HostTransportBudget } from "./buffering.js";
 export { HostTransportBudget } from "./buffering.js";
 import { homedir } from "node:os";
+import type { Agent } from "node:http";
 import { WebSocket } from "ws";
 import { parseHostTarget, type HostTarget } from "@getpaseo/protocol/host-target";
 import { createSshTunnel, type SshTunnel } from "./ssh-tunnel.js";
@@ -19,10 +20,15 @@ export { parseHostTarget };
 export type { SshTunnel } from "./ssh-tunnel.js";
 export { createSshTunnel, resolveSshFailureDetail } from "./ssh-tunnel.js";
 
+export interface HostTransportOptions {
+  webSocketAgent?: (url: string) => Agent | undefined;
+}
+
 /** A factory owns one attempt, including a fresh SSH process and its teardown. */
 export function createHostTransportFactory(
   connection: string,
   budget = new HostTransportBudget(),
+  options: HostTransportOptions = {},
 ): DaemonTransportFactory {
   const target = parseHostTarget(connection);
   // Rises to "protected" once the daemon negotiates it, so a later attempt
@@ -68,12 +74,13 @@ export function createHostTransportFactory(
         return;
       }
       const socketPath = socketTarget.socketPath?.replace(/^~(?=\/)/, homedir());
-      let factory = createWebSocketTransportFactory((url, options) => {
+      let factory = createWebSocketTransportFactory((url, socketOptions) => {
         const socket = new WebSocket(
           socketPath && url.startsWith("ws+unix:") ? `ws+unix://${socketPath}:/ws` : url,
-          options?.protocols,
+          socketOptions?.protocols,
           {
-            headers: options?.headers,
+            headers: socketOptions?.headers,
+            agent: socketPath ? undefined : options.webSocketAgent?.(url),
             ...(socketPath ? { socketPath } : {}),
             maxPayload: 100 * 1024 * 1024,
           },
@@ -191,14 +198,15 @@ export function createHostTransportFactory(
 }
 export function createHostClient(
   connection: string,
-  config: Omit<DaemonClientConfig, "url" | "transportFactory">,
+  config: Omit<DaemonClientConfig, "url" | "transportFactory"> & HostTransportOptions,
   budget?: HostTransportBudget,
 ): DaemonClient {
   const target = parseHostTarget(connection);
+  const { webSocketAgent, ...clientConfig } = config;
   return new DaemonClient({
-    ...config,
+    ...clientConfig,
     url: "ws://host-connector/ws",
     ...(target.password ? { password: target.password } : {}),
-    transportFactory: createHostTransportFactory(connection, budget),
+    transportFactory: createHostTransportFactory(connection, budget, { webSocketAgent }),
   });
 }
diff --git a/packages/server/package.json b/packages/server/package.json
index 13e5c9b49c..a31ce8d02a 100644
--- a/packages/server/package.json
+++ b/packages/server/package.json
@@ -89,7 +89,7 @@
     "speech:transcribe:local": "tsx scripts/transcribe-local-wav.ts",
     "test": "npm run test:unit && npm run test:integration",
     "test:unit": "vitest run --fileParallelism --exclude \"**/*.e2e.test.ts\"",
-    "test:integration": "vitest run --maxWorkers=1 src/server/git-filename-diffs.e2e.test.ts src/server/daemon-e2e/checkout-diff-content.e2e.test.ts src/server/daemon-e2e/filesystem.e2e.test.ts src/server/daemon-e2e/file-download.e2e.test.ts src/server/daemon-e2e/cli-logs-follow.e2e.test.ts src/server/creation/creation.e2e.test.ts src/server/daemon-e2e/terminal-workspace-sdk.e2e.test.ts src/server/daemon-e2e/terminal-worker-lifecycle.e2e.test.ts src/server/workspace-create-worktree-source.e2e.test.ts src/server/daemon-e2e/models.e2e.test.ts src/server/daemon-e2e/live-preferences.e2e.test.ts src/server/daemon-e2e/oversized-message.e2e.test.ts src/server/agent/model-catalog.e2e.test.ts src/server/plugins/plugin-paseo-api.e2e.test.ts src/server/plugins/lifecycle.e2e.test.ts src/server/connected-hosts/hosts.e2e.test.ts src/server/owned-subscriptions.e2e.test.ts && vitest run --maxWorkers=1 src/server/agent/providers/omp/history.e2e.test.ts src/server/daemon-e2e/git-operations.e2e.test.ts src/server/session.create-agent-worktree-autoarchive.e2e.test.ts src/server/agent/providers/opencode-bridge.local.e2e.test.ts src/server/daemon-e2e/relay-transport.e2e.test.ts -t \"merges into|creates a worktree and auto-archives both|versioned runtime|oversized attachments|connected hosts|password-protected daemon refuses|replays selected OMP history\"",
+    "test:integration": "vitest run --maxWorkers=1 src/server/git-filename-diffs.e2e.test.ts src/server/daemon-e2e/checkout-diff-content.e2e.test.ts src/server/daemon-e2e/filesystem.e2e.test.ts src/server/daemon-e2e/file-download.e2e.test.ts src/server/daemon-e2e/cli-logs-follow.e2e.test.ts src/server/creation/creation.e2e.test.ts src/server/daemon-e2e/terminal-workspace-sdk.e2e.test.ts src/server/daemon-e2e/terminal-worker-lifecycle.e2e.test.ts src/server/workspace-create-worktree-source.e2e.test.ts src/server/daemon-e2e/models.e2e.test.ts src/server/daemon-e2e/live-preferences.e2e.test.ts src/server/daemon-e2e/oversized-message.e2e.test.ts src/server/agent/model-catalog.e2e.test.ts src/server/plugins/plugin-paseo-api.e2e.test.ts src/server/plugins/usage-sources.e2e.test.ts src/server/plugins/lifecycle.e2e.test.ts src/server/connected-hosts/hosts.e2e.test.ts src/server/owned-subscriptions.e2e.test.ts && vitest run --maxWorkers=1 src/server/agent/providers/omp/history.e2e.test.ts src/server/daemon-e2e/git-operations.e2e.test.ts src/server/session.create-agent-worktree-autoarchive.e2e.test.ts src/server/agent/providers/opencode-bridge.local.e2e.test.ts src/server/daemon-e2e/relay-transport.e2e.test.ts -t \"merges into|creates a worktree and auto-archives both|versioned runtime|oversized attachments|connected hosts|password-protected daemon refuses|replays selected OMP history\"",
     "test:hub-cli-contract": "vitest run --maxWorkers=1 src/server/hub/hub-cli-contract.test.ts",
     "test:integration:all": "npm run test:e2e",
     "test:integration:real": "vitest run real.e2e.test.ts",
@@ -124,6 +124,7 @@
     "esbuild": "^0.25.12",
     "express": "^4.18.2",
     "fast-deep-equal": "^3.1.3",
+    "https-proxy-agent": "^7.0.6",
     "lru-cache": "^11.5.1",
     "markdown-it": "^10.0.0",
     "mnemonic-id": "^3.2.7",
@@ -141,6 +142,7 @@
     "strip-ansi": "^7.1.2",
     "tree-kill": "^1.2.2",
     "typescript": "^5.9.3",
+    "undici": "^7.24.8",
     "uuid": "^9.0.1",
     "which": "^5.0.0",
     "ws": "^8.14.2",
diff --git a/packages/server/src/server/connected-hosts/index.ts b/packages/server/src/server/connected-hosts/index.ts
index 1a8f7c2731..96d6ac35d2 100644
--- a/packages/server/src/server/connected-hosts/index.ts
+++ b/packages/server/src/server/connected-hosts/index.ts
@@ -21,6 +21,7 @@ import {
   type HostUpdate,
 } from "@getpaseo/protocol/hosts";
 import type { DaemonPermission, WSHelloMessage } from "@getpaseo/protocol/messages";
+import { webSocketProxyAgent } from "../network/index.js";
 
 export class HostError extends Error {
   constructor(
@@ -242,6 +243,7 @@ export class ConnectedHosts {
       {
         clientId: `host-link-${this.self.serverId}-${row.registrationId}`,
         connectTimeoutMs: 10000,
+        webSocketAgent: webSocketProxyAgent,
       },
       this.budget,
     );
diff --git a/packages/server/src/server/daemon-worker.ts b/packages/server/src/server/daemon-worker.ts
index 317903a592..8af60cd7bc 100644
--- a/packages/server/src/server/daemon-worker.ts
+++ b/packages/server/src/server/daemon-worker.ts
@@ -1,5 +1,6 @@
 import { appendFileSync, mkdirSync } from "node:fs";
 import path from "node:path";
+import { initializeEnvironmentProxy } from "./network/index.js";
 import { createPaseoDaemon, formatListenTarget } from "./bootstrap.js";
 import { loadConfig } from "./config.js";
 import { resolvePaseoHome } from "./paseo-home.js";
@@ -132,6 +133,11 @@ function applyCliFlagOverrides(config: ReturnType<typeof loadConfig>): void {
 
 async function main() {
   const { paseoHome, logger, config } = bootstrapFromEnvironment();
+  for (const variable of initializeEnvironmentProxy()) {
+    writeWorkerLifecycleLog(paseoHome, "Ignoring invalid or unsupported HTTP proxy variable", {
+      variable,
+    });
+  }
   let daemon: Awaited<ReturnType<typeof createPaseoDaemon>> | null = null;
   let shutdownPromise: Promise<number> | null = null;
   let exitHookInstalled = false;
diff --git a/packages/server/src/server/hub/relationship-remote.ts b/packages/server/src/server/hub/relationship-remote.ts
index 9c6f88a63d..6427b71fa6 100644
--- a/packages/server/src/server/hub/relationship-remote.ts
+++ b/packages/server/src/server/hub/relationship-remote.ts
@@ -1,5 +1,6 @@
 import { WebSocket } from "ws";
 import { z } from "zod";
+import { webSocketProxyAgent } from "../network/index.js";
 import type { WebSocketLike } from "../websocket-server.js";
 
 const SOCKET_PING_INTERVAL_MS = 10_000;
@@ -166,6 +167,7 @@ export class DirectHubRelationshipRemote implements HubRelationshipRemote {
   openSocket(input: HubSocketCredentials, events: HubSocketEvents): HubSocketConnection {
     let sessionProtocol: "legacy" | "session-v1" = "legacy";
     const socket = new WebSocket(input.webSocketUrl, {
+      agent: webSocketProxyAgent(input.webSocketUrl),
       handshakeTimeout: this.requestTimeoutMs,
       headers: {
         authorization: `Bearer ${input.credential}`,
diff --git a/packages/server/src/server/network/index.ts b/packages/server/src/server/network/index.ts
new file mode 100644
index 0000000000..46565d801a
--- /dev/null
+++ b/packages/server/src/server/network/index.ts
@@ -0,0 +1,116 @@
+import type { Agent } from "node:http";
+import { EnvHttpProxyAgent, Pool, setGlobalDispatcher } from "undici";
+import { HttpsProxyAgent } from "https-proxy-agent";
+
+interface ProxyEnvironment {
+  httpProxy: string;
+  httpsProxy: string;
+  noProxy: string;
+}
+
+let environment = readEnvironment(process.env, process.platform).environment;
+
+function readEnvironment(
+  env: NodeJS.ProcessEnv,
+  platform: NodeJS.Platform,
+): {
+  environment: ProxyEnvironment;
+  ignored: string[];
+} {
+  // process.env lookups are case-insensitive on Windows. Read each actual entry once.
+  const values = new Map(
+    Object.entries(env).map(([name, value]) => [
+      platform === "win32" ? name.toLowerCase() : name,
+      value,
+    ]),
+  );
+  const ignored: string[] = [];
+  function proxy(variable: string): string | undefined {
+    const value = values.get(variable);
+    if (value === undefined) return undefined;
+    if (!value.trim()) return undefined;
+    try {
+      const url = new URL(value.includes("://") ? value : `http://${value}`);
+      if (url.protocol !== "http:" && url.protocol !== "https:")
+        throw new Error("Unsupported proxy protocol");
+      decodeURIComponent(url.username);
+      decodeURIComponent(url.password);
+      return url.href;
+    } catch {
+      ignored.push(variable);
+      return undefined;
+    }
+  }
+  const httpProxy = proxy("http_proxy") ?? proxy("HTTP_PROXY") ?? "";
+  return {
+    environment: {
+      httpProxy,
+      httpsProxy: proxy("https_proxy") ?? proxy("HTTPS_PROXY") ?? httpProxy,
+      noProxy: values.get("no_proxy") ?? values.get("NO_PROXY") ?? "",
+    },
+    ignored,
+  };
+}
+
+function bypassList(noProxy: string): string {
+  return noProxy.split(/[,\s]+/).includes("*") ? "*" : `${noProxy},localhost,127.0.0.1,[::1],::1`;
+}
+
+function proxyClient(origin: URL, options: object) {
+  const pool = new Pool(origin, options);
+  if (!origin.username && !origin.password) return pool;
+  const credentials = `${decodeURIComponent(origin.username)}:${decodeURIComponent(origin.password)}`;
+  const authorization = `Basic ${Buffer.from(credentials).toString("base64")}`;
+  // This pool only sends CONNECT requests to this proxy, never requests to the origin.
+  // undici's URL auth requires both fields; HTTP Basic also permits either field to be empty.
+  return pool.compose(
+    (dispatch) => (request, handler) =>
+      dispatch(
+        {
+          ...request,
+          headers: { ...request.headers, "proxy-authorization": authorization },
+        },
+        handler,
+      ),
+  );
+}
+
+/** Install once at startup; return ignored variable names for logging without exposing credentials. */
+export function initializeEnvironmentProxy(
+  env: NodeJS.ProcessEnv = process.env,
+  platform: NodeJS.Platform = process.platform,
+): string[] {
+  const resolved = readEnvironment(env, platform);
+  environment = resolved.environment;
+  setGlobalDispatcher(
+    new EnvHttpProxyAgent({
+      httpProxy: environment.httpProxy,
+      httpsProxy: environment.httpsProxy,
+      noProxy: bypassList(environment.noProxy),
+      clientFactory: proxyClient,
+    }),
+  );
+  return resolved.ignored;
+}
+
+/** ws uses Node HTTP agents rather than the fetch dispatcher. */
+export function webSocketProxyAgent(address: string): Agent | undefined {
+  const url = new URL(address);
+  const hostname = url.hostname.toLowerCase();
+  const port = url.port || (url.protocol === "wss:" ? "443" : "80");
+  const entries = bypassList(environment.noProxy)
+    .toLowerCase()
+    .split(/[,\s]+/);
+  if (
+    entries.some((entry) => {
+      if (entry === "*") return true;
+      const match = entry.match(/^(.+):(\d+)$/);
+      if (match && Number(match[2]) !== Number(port)) return false;
+      const host = (match ? match[1]! : entry).replace(/^\*?\./, "");
+      return host !== "" && (hostname === host || hostname.endsWith(`.${host}`));
+    })
+  )
+    return undefined;
+  const proxy = url.protocol === "wss:" ? environment.httpsProxy : environment.httpProxy;
+  return proxy ? new HttpsProxyAgent(proxy) : undefined;
+}
diff --git a/packages/server/src/server/network/network.test.ts b/packages/server/src/server/network/network.test.ts
new file mode 100644
index 0000000000..88e7d61aa6
--- /dev/null
+++ b/packages/server/src/server/network/network.test.ts
@@ -0,0 +1,341 @@
+import { fork } from "node:child_process";
+import { mkdtemp, readFile, rm } from "node:fs/promises";
+import os from "node:os";
+import path from "node:path";
+import { fileURLToPath } from "node:url";
+import { createServer, type Server } from "node:http";
+import { once } from "node:events";
+import { connect } from "node:net";
+import { afterEach, expect, test } from "vitest";
+import { WebSocket, WebSocketServer } from "ws";
+import { getGlobalDispatcher, setGlobalDispatcher } from "undici";
+import { initializeEnvironmentProxy, webSocketProxyAgent } from "./index.js";
+import { ConnectedHosts } from "../connected-hosts/index.js";
+const original = getGlobalDispatcher();
+const servers: Server[] = [];
+afterEach(async () => {
+  const installed = getGlobalDispatcher();
+  setGlobalDispatcher(original);
+  if (installed !== original) await installed.close();
+  await Promise.all(
+    servers.splice(0).map(
+      (server) =>
+        new Promise<void>((resolve) => {
+          server.closeAllConnections();
+          server.close(() => resolve());
+        }),
+    ),
+  );
+});
+async function listen(server: Server) {
+  servers.push(server);
+  server.listen(0, "127.0.0.1");
+  await once(server, "listening");
+  const address = server.address();
+  if (!address || typeof address === "string") throw new Error("Missing address");
+  return `127.0.0.1:${address.port}`;
+}
+async function proxy() {
+  const tunnels: string[] = [];
+  const server = createServer();
+  server.on("connect", (request, socket) => {
+    tunnels.push(request.url!);
+    socket.end("HTTP/1.1 502 Bad Gateway\r\nConnection: close\r\n\r\n");
+  });
+  return { url: `http://${await listen(server)}`, tunnels };
+}
+test("loopback fetch and WebSockets bypass HTTP_PROXY with empty NO_PROXY", async () => {
+  const recorder = await proxy();
+  initializeEnvironmentProxy({ HTTP_PROXY: recorder.url, NO_PROXY: "" });
+  const server = createServer((_, response) => response.end("direct"));
+  const sockets = new WebSocketServer({ server });
+  sockets.on("connection", (socket) => socket.send("direct"));
+  const address = await listen(server);
+  expect(await (await fetch(`http://${address}`)).text()).toBe("direct");
+  const socket = new WebSocket(`ws://${address}`, {
+    agent: webSocketProxyAgent(`ws://${address}`),
+  });
+  expect((await once(socket, "message"))[0].toString()).toBe("direct");
+  socket.close();
+  await once(socket, "close");
+  await new Promise<void>((resolve) => sockets.close(() => resolve()));
+  for (const host of ["localhost", "127.0.0.1", "[::1]"])
+    expect(webSocketProxyAgent(`wss://${host}:1234`)).toBeUndefined();
+  expect(recorder.tunnels).toEqual([]);
+});
+test("fetch and WebSockets send non-loopback traffic through CONNECT", async () => {
+  const recorder = await proxy();
+  initializeEnvironmentProxy({ http_proxy: recorder.url });
+  await expect(
+    fetch("https://vendor.invalid/", { signal: AbortSignal.timeout(500) }),
+  ).rejects.toThrow();
+  const socket = new WebSocket("wss://vendor.invalid", {
+    agent: webSocketProxyAgent("wss://vendor.invalid"),
+  });
+  await once(socket, "error");
+  expect(
+    recorder.tunnels.filter((host) => host === "vendor.invalid:443").length,
+  ).toBeGreaterThanOrEqual(2);
+});
+test("NO_PROXY and absent variables keep matching WebSockets direct", async () => {
+  const recorder = await proxy();
+  initializeEnvironmentProxy({
+    HTTPS_PROXY: recorder.url,
+    NO_PROXY: "vendor.invalid,.example.invalid:443",
+  });
+  expect(webSocketProxyAgent("wss://vendor.invalid")).toBeUndefined();
+  await expect(
+    fetch("https://vendor.invalid/", { signal: AbortSignal.timeout(500) }),
+  ).rejects.toThrow();
+  expect(webSocketProxyAgent("wss://sub.example.invalid")).toBeUndefined();
+  expect(webSocketProxyAgent("wss://example.invalid:444")).toBeDefined();
+  initializeEnvironmentProxy({ HTTP_PROXY: recorder.url, no_proxy: "*" });
+  expect(webSocketProxyAgent("ws://vendor.invalid")).toBeUndefined();
+  initializeEnvironmentProxy({});
+  expect(webSocketProxyAgent("wss://vendor.invalid")).toBeUndefined();
+  const address = await listen(createServer((_, response) => response.end("direct")));
+  expect(await (await fetch(`http://${address}`)).text()).toBe("direct");
+  expect(recorder.tunnels).toEqual([]);
+});
+
+test.each(["127.0.0.1", "localhost"])(
+  "scheme-less %s proxies work for fetch and WebSockets",
+  async (host) => {
+    const recorder = await proxy();
+    const address = new URL(recorder.url);
+    initializeEnvironmentProxy({ https_proxy: `${host}:${address.port}` });
+    await expect(
+      fetch("https://vendor.invalid", { signal: AbortSignal.timeout(500) }),
+    ).rejects.toThrow();
+    const socket = new WebSocket("wss://vendor.invalid", {
+      agent: webSocketProxyAgent("wss://vendor.invalid"),
+    });
+    await once(socket, "error");
+    expect(recorder.tunnels).toContain("vendor.invalid:443");
+  },
+);
+
+test.each([
+  "http://[",
+  "http://user%zz:secret@proxy.corp",
+  "socks5://127.0.0.1:7890",
+  "ftp://proxy.corp:8080",
+])("ignores invalid or unsupported proxy %s without stopping startup", async (value) => {
+  const recorder = await proxy();
+  expect(initializeEnvironmentProxy({ HTTP_PROXY: recorder.url, https_proxy: value })).toEqual([
+    "https_proxy",
+  ]);
+  expect(webSocketProxyAgent("wss://vendor.invalid")).toBeDefined();
+  await expect(
+    fetch("https://vendor.invalid", { signal: AbortSignal.timeout(500) }),
+  ).rejects.toThrow();
+  const socket = new WebSocket("wss://vendor.invalid", {
+    agent: webSocketProxyAgent("wss://vendor.invalid"),
+  });
+  await once(socket, "error");
+  expect(recorder.tunnels).toEqual(["vendor.invalid:443", "vendor.invalid:443"]);
+});
+
+test("daemon starts with an ignored proxy and writes one redacted warning to daemon.log", async () => {
+  const home = await mkdtemp(path.join(os.tmpdir(), "daemon-invalid-proxy-"));
+  const env = Object.fromEntries(
+    Object.entries(process.env).filter(
+      ([key]) => !["http_proxy", "https_proxy"].includes(key.toLowerCase()),
+    ),
+  );
+  const worker = fork(fileURLToPath(new URL("../daemon-worker.ts", import.meta.url)), [], {
+    execArgv: ["--import", "tsx"],
+    silent: true,
+    env: {
+      ...env,
+      PASEO_HOME: home,
+      HOME: home,
+      USERPROFILE: home,
+      PASEO_LISTEN: "127.0.0.1:0",
+      PASEO_RELAY_ENABLED: "0",
+      https_proxy: "socks5://private:secret@127.0.0.1:7890",
+    },
+  });
+  worker.stdout?.resume();
+  let stderr = "";
+  worker.stderr?.on("data", (chunk) => {
+    stderr += String(chunk);
+  });
+  try {
+    await new Promise<void>((resolve, reject) => {
+      worker.on("message", (message) => {
+        if (
+          typeof message === "object" &&
+          message !== null &&
+          "type" in message &&
+          message.type === "paseo:ready"
+        )
+          resolve();
+      });
+      worker.on("exit", (code) => reject(new Error(`Worker exited ${code}: ${stderr}`)));
+    });
+    const log = await readFile(path.join(home, "daemon.log"), "utf8");
+    const warnings = log
+      .split("\n")
+      .filter((line) => line.includes("Ignoring invalid or unsupported HTTP proxy variable"));
+    expect(warnings).toHaveLength(1);
+    expect(JSON.parse(warnings[0]!).variable).toBe("https_proxy");
+    expect(warnings[0]).not.toContain("secret");
+  } finally {
+    if (worker.exitCode === null && worker.signalCode === null) {
+      const exited = once(worker, "exit");
+      worker.kill("SIGTERM");
+      await exited;
+    }
+    await rm(home, { recursive: true, force: true });
+  }
+}, 60_000);
+
+test("accepts a scheme-less corporate proxy hostname", () => {
+  expect(initializeEnvironmentProxy({ https_proxy: "proxy.corp:8080" })).toEqual([]);
+  expect(webSocketProxyAgent("wss://vendor.invalid")).toBeDefined();
+});
+
+test("an ignored lowercase variable falls back to the uppercase variable", async () => {
+  const recorder = await proxy();
+  expect(
+    initializeEnvironmentProxy(
+      {
+        https_proxy: "socks5://proxy.invalid",
+        HTTPS_PROXY: recorder.url,
+      },
+      "linux",
+    ),
+  ).toEqual(["https_proxy"]);
+  await expect(
+    fetch("https://vendor.invalid", { signal: AbortSignal.timeout(500) }),
+  ).rejects.toThrow();
+  const socket = new WebSocket("wss://vendor.invalid", {
+    agent: webSocketProxyAgent("wss://vendor.invalid"),
+  });
+  await once(socket, "error");
+  expect(recorder.tunnels).toEqual(["vendor.invalid:443", "vendor.invalid:443"]);
+});
+
+test("case-insensitive environment access reports a variable only once", () => {
+  const env = new Proxy(
+    { https_proxy: "socks5://127.0.0.1:7890" },
+    {
+      get(target, key) {
+        return Reflect.get(target, typeof key === "string" ? key.toLowerCase() : key);
+      },
+    },
+  );
+  expect(initializeEnvironmentProxy(env)).toEqual(["https_proxy"]);
+});
+
+test("connected-host links send remote WebSockets through the environment proxy", async () => {
+  const recorder = await proxy();
+  initializeEnvironmentProxy({ HTTPS_PROXY: recorder.url });
+  const home = await mkdtemp(path.join(os.tmpdir(), "connected-host-proxy-"));
+  const hosts = new ConnectedHosts(home, { serverId: "self", label: "Self" });
+  try {
+    await hosts.add(
+      { connection: "wss://remote.invalid/ws" },
+      { sourceId: "test", manageSources: true },
+    );
+    await expect.poll(() => recorder.tunnels).toContain("remote.invalid:443");
+  } finally {
+    await hosts.close();
+    await rm(home, { recursive: true, force: true });
+  }
+});
+
+test.each(["corp.internal,*", "vendor.invalid:0443"])(
+  "fetch and WebSockets share NO_PROXY=%s",
+  async (noProxy) => {
+    const recorder = await proxy();
+    initializeEnvironmentProxy({ HTTPS_PROXY: recorder.url, NO_PROXY: noProxy });
+    expect(webSocketProxyAgent("wss://vendor.invalid")).toBeUndefined();
+    await expect(
+      fetch("https://vendor.invalid", { signal: AbortSignal.timeout(500) }),
+    ).rejects.toThrow();
+    expect(recorder.tunnels).toEqual([]);
+  },
+);
+
+test("Windows mixed-case environment names route and bypass both transports", async () => {
+  const recorder = await proxy();
+  // Windows preserves spelling but treats environment names without regard to case.
+  initializeEnvironmentProxy({ Https_Proxy: recorder.url, No_Proxy: "other.invalid" }, "win32");
+  expect(webSocketProxyAgent("wss://other.invalid")).toBeUndefined();
+  await expect(
+    fetch("https://other.invalid", { signal: AbortSignal.timeout(500) }),
+  ).rejects.toThrow();
+  expect(webSocketProxyAgent("wss://vendor.invalid")).toBeDefined();
+  await expect(
+    fetch("https://vendor.invalid", { signal: AbortSignal.timeout(500) }),
+  ).rejects.toThrow();
+  const socket = new WebSocket("wss://vendor.invalid", {
+    agent: webSocketProxyAgent("wss://vendor.invalid"),
+  });
+  await once(socket, "error");
+  expect(recorder.tunnels).toEqual(["vendor.invalid:443", "vendor.invalid:443"]);
+});
+
+test("POSIX mixed-case names do not override standard proxy names", async () => {
+  const recorder = await proxy();
+  initializeEnvironmentProxy(
+    { Https_Proxy: recorder.url, HTTPS_PROXY: recorder.url, No_Proxy: "*" },
+    "linux",
+  );
+  expect(webSocketProxyAgent("wss://vendor.invalid")).toBeDefined();
+  await expect(
+    fetch("https://vendor.invalid", { signal: AbortSignal.timeout(500) }),
+  ).rejects.toThrow();
+  expect(recorder.tunnels).toEqual(["vendor.invalid:443"]);
+});
+
+test("proxy credentials stay on CONNECT and do not reach the HTTP origin", async () => {
+  let originAuthorization: string | undefined;
+  const origin = createServer((request, response) => {
+    originAuthorization = request.headers["proxy-authorization"];
+    response.end("through proxy");
+  });
+  const originAddress = new URL(`http://${await listen(origin)}`);
+  const authorizations: (string | undefined)[] = [];
+  const server = createServer();
+  server.on("connect", (request, socket, head) => {
+    authorizations.push(request.headers["proxy-authorization"]);
+    const upstream = connect(Number(originAddress.port), "127.0.0.1", () => {
+      socket.write("HTTP/1.1 200 Connection Established\r\n\r\n");
+      if (head.length) upstream.write(head);
+      socket.pipe(upstream).pipe(socket);
+    });
+    socket.on("error", () => upstream.destroy());
+    upstream.on("error", () => socket.destroy());
+    socket.on("close", () => upstream.destroy());
+  });
+  initializeEnvironmentProxy({ HTTP_PROXY: `http://user:@${await listen(server)}` });
+  const response = await fetch("http://vendor.invalid", { signal: AbortSignal.timeout(3000) });
+  expect(await response.text()).toBe("through proxy");
+  expect(authorizations).toEqual([`Basic ${Buffer.from("user:").toString("base64")}`]);
+  expect(originAuthorization).toBeUndefined();
+});
+
+test.each(["user:@", ":secret@", "user:secret@"])(
+  "fetch and WebSockets authenticate proxy credentials %s",
+  async (credentials) => {
+    const authorizations: (string | undefined)[] = [];
+    const server = createServer();
+    server.on("connect", (request, socket) => {
+      authorizations.push(request.headers["proxy-authorization"]);
+      socket.end("HTTP/1.1 502 Bad Gateway\r\nConnection: close\r\n\r\n");
+    });
+    initializeEnvironmentProxy({ HTTPS_PROXY: `http://${credentials}${await listen(server)}` });
+    await expect(
+      fetch("https://vendor.invalid", { signal: AbortSignal.timeout(500) }),
+    ).rejects.toThrow();
+    const socket = new WebSocket("wss://vendor.invalid", {
+      agent: webSocketProxyAgent("wss://vendor.invalid"),
+    });
+    await once(socket, "error");
+    const expected = `Basic ${Buffer.from(credentials.slice(0, -1)).toString("base64")}`;
+    expect(authorizations).toEqual([expected, expected]);
+  },
+);
diff --git a/packages/server/src/server/plugins/plugin-process.ts b/packages/server/src/server/plugins/plugin-process.ts
index a72e268e4f..62514cd0b2 100644
--- a/packages/server/src/server/plugins/plugin-process.ts
+++ b/packages/server/src/server/plugins/plugin-process.ts
@@ -24,6 +24,7 @@ import { createPluginClientId } from "./plugin-session-identity.js";
 
 import { PluginSettingsStore } from "./settings/index.js";
 import { readPluginProviderIcon } from "./provider-icon.js";
+import { initializeEnvironmentProxy } from "../network/index.js";
 function describeError(error: unknown): string {
   return error instanceof Error ? error.message : String(error);
 }
@@ -606,6 +607,7 @@ if (process.argv[1] === fileURLToPath(import.meta.url)) {
     const parsed = PluginProcessRequestSchema.safeParse(raw);
     if (!worker && parsed.success && parsed.data.type === "initialize") {
       try {
+        initializeEnvironmentProxy();
         worker = createPluginWorker({ channel, contribute: evaluateBundle(parsed.data.bundle) });
       } catch (error) {
         channel.send({ type: "fatal", error: describeError(error) });
diff --git a/packages/server/src/server/plugins/test-fixtures/usage-proxy-daemon.ts b/packages/server/src/server/plugins/test-fixtures/usage-proxy-daemon.ts
new file mode 100644
index 0000000000..23364d3fda
--- /dev/null
+++ b/packages/server/src/server/plugins/test-fixtures/usage-proxy-daemon.ts
@@ -0,0 +1,31 @@
+import path from "node:path";
+import { initializeEnvironmentProxy } from "../../network/index.js";
+import { DaemonClient } from "../../test-utils/daemon-client.js";
+import { createTestPaseoDaemon } from "../../test-utils/paseo-daemon.js";
+import { BuiltinPluginLoader, resolveBuiltinPluginsRoot } from "../builtin/index.js";
+
+const mode = process.argv[2];
+if (mode !== "builtin" && mode !== "directory") throw new Error("Expected builtin or directory");
+const sources = ["claude-usage-source", "codex-usage-source"];
+// Built-ins run inside the daemon; directory plugins initialize their own subprocess network.
+if (mode === "builtin") initializeEnvironmentProxy();
+const daemon = await createTestPaseoDaemon({
+  pluginsEnabled: mode === "directory",
+  builtinPlugins: new BuiltinPluginLoader(
+    resolveBuiltinPluginsRoot(),
+    mode === "builtin" ? sources : [],
+  ),
+});
+const client = new DaemonClient({ url: `ws://127.0.0.1:${daemon.port}/ws` });
+try {
+  await client.connect();
+  if (mode === "directory") {
+    for (const source of sources) {
+      await client.installDirectoryPlugin(path.join(resolveBuiltinPluginsRoot(), source), source);
+    }
+  }
+  await client.listUsageReports();
+} finally {
+  await client.close();
+  await daemon.close();
+}
diff --git a/packages/server/src/server/plugins/usage-sources.e2e.test.ts b/packages/server/src/server/plugins/usage-sources.e2e.test.ts
index 037da5e0c6..46dc134ff6 100644
--- a/packages/server/src/server/plugins/usage-sources.e2e.test.ts
+++ b/packages/server/src/server/plugins/usage-sources.e2e.test.ts
@@ -1,7 +1,11 @@
+import { execFile } from "node:child_process";
+import { promisify } from "node:util";
 import { cp, mkdir, mkdtemp, rm, writeFile } from "node:fs/promises";
 import os from "node:os";
 import path from "node:path";
 import { fileURLToPath, pathToFileURL } from "node:url";
+import { createServer } from "node:http";
+import { once } from "node:events";
 import { expect, test } from "vitest";
 import { DaemonClient } from "../test-utils/daemon-client.js";
 import { createTestPaseoDaemon } from "../test-utils/paseo-daemon.js";
@@ -335,3 +339,74 @@ export default function contribute(server) {
     await rm(root, { recursive: true, force: true });
   }
 }, 60_000);
+
+test.each(["builtin", "directory"])(
+  "%s usage plugins reach the environment proxy",
+  async (mode) => {
+    const root = await mkdtemp(path.join(os.tmpdir(), "usage-proxy-"));
+    const tunnels: string[] = [];
+    const proxy = createServer();
+    proxy.on("connect", (request, socket) => {
+      tunnels.push(request.url!);
+      socket.end("HTTP/1.1 502 Bad Gateway\r\nConnection: close\r\n\r\n");
+    });
+    proxy.listen(0, "127.0.0.1");
+    await once(proxy, "listening");
+    const address = proxy.address();
+    if (!address || typeof address === "string") throw new Error("Missing proxy address");
+    const guard = path.join(root, "network-guard.cjs");
+    // Prevent vendor DNS/network access even when proxy support is broken.
+    await writeFile(
+      guard,
+      `const dns = require('node:dns');
+const lookup = dns.lookup;
+dns.lookup = function(host, ...args) {
+  if (host === 'localhost' || host === '127.0.0.1' || host === '::1') return lookup.call(this, host, ...args);
+  args.at(-1)(Object.assign(new Error('External DNS forbidden in proxy test'), { code: 'ENOTFOUND' }));
+};`,
+    );
+    await mkdir(path.join(root, ".claude"));
+    await mkdir(path.join(root, ".codex"));
+    await writeFile(
+      path.join(root, ".claude", ".credentials.json"),
+      JSON.stringify({ claudeAiOauth: { accessToken: "fixture-claude" } }),
+    );
+    await writeFile(
+      path.join(root, ".codex", "auth.json"),
+      JSON.stringify({ tokens: { access_token: "fixture-codex", account_id: "fixture-account" } }),
+    );
+    try {
+      await promisify(execFile)(
+        process.execPath,
+        [
+          "--import",
+          "tsx",
+          fileURLToPath(new URL("./test-fixtures/usage-proxy-daemon.ts", import.meta.url)),
+          mode,
+        ],
+        {
+          timeout: 45_000,
+          maxBuffer: 1024 * 1024,
+          env: {
+            ...process.env,
+            HOME: root,
+            USERPROFILE: root,
+            CODEX_HOME: path.join(root, ".codex"),
+            CLAUDE_CONFIG_DIR: path.join(root, ".claude"),
+            NODE_OPTIONS: `--require=${JSON.stringify(guard.replaceAll("\\", "/"))}`,
+            https_proxy: `http://127.0.0.1:${address.port}`,
+            no_proxy: "",
+            NO_PROXY: "",
+          },
+        },
+      );
+      expect(tunnels).toContain("api.anthropic.com:443");
+      expect(tunnels).toContain("chatgpt.com:443");
+    } finally {
+      proxy.closeAllConnections();
+      await new Promise<void>((resolve) => proxy.close(() => resolve()));
+      await rm(root, { recursive: true, force: true });
+    }
+  },
+  60_000,
+);
diff --git a/packages/server/src/server/relay-transport.ts b/packages/server/src/server/relay-transport.ts
index 08fcd826d5..a0898df247 100644
--- a/packages/server/src/server/relay-transport.ts
+++ b/packages/server/src/server/relay-transport.ts
@@ -2,6 +2,7 @@
 import { WebSocket } from "ws";
 import type pino from "pino";
 import { buildRelayWebSocketUrl } from "@getpaseo/protocol/daemon-endpoints";
+import { webSocketProxyAgent } from "./network/index.js";
 import type { ExternalSocketMetadata } from "./websocket-server.js";
 
 export interface RelayTransportOptions {
@@ -56,7 +57,7 @@ const RELAY_WEBSOCKET_OPTIONS = {
 } as const;
 
 function createDefaultRelayWebSocket(url: string): RelayWebSocketLike {
-  return new WebSocket(url, RELAY_WEBSOCKET_OPTIONS);
+  return new WebSocket(url, { ...RELAY_WEBSOCKET_OPTIONS, agent: webSocketProxyAgent(url) });
 }
 
 function isRecord(value: unknown): value is Record<string, unknown> {