diff --git a/hermes_cli/auth.py b/hermes_cli/auth.py
index b2211287d1..fd9919be96 100644
--- a/hermes_cli/auth.py
+++ b/hermes_cli/auth.py
@@ -690,8 +690,10 @@ def resolve_provider(
     }
     normalized = _PROVIDER_ALIASES.get(normalized, normalized)
 
-    if normalized in {"openrouter", "custom"}:
+    if normalized == "openrouter":
         return "openrouter"
+    if normalized == "custom":
+        return "custom"
     if normalized in PROVIDER_REGISTRY:
         return normalized
     if normalized != "auto":
diff --git a/hermes_cli/runtime_provider.py b/hermes_cli/runtime_provider.py
index 0c20c6768d..760775c4cd 100644
--- a/hermes_cli/runtime_provider.py
+++ b/hermes_cli/runtime_provider.py
@@ -198,7 +198,7 @@ def _resolve_named_custom_runtime(
     api_key = next((candidate for candidate in api_key_candidates if has_usable_secret(candidate)), "")
 
     return {
-        "provider": "openrouter",
+        "provider": "custom",
         "api_mode": custom_provider.get("api_mode")
         or _detect_api_mode_for_url(base_url)
         or "chat_completions",
@@ -279,8 +279,16 @@ def _resolve_openrouter_runtime(
 
     source = "explicit" if (explicit_api_key or explicit_base_url) else "env/config"
 
+    # When "custom" was explicitly requested, preserve that as the provider
+    # name instead of silently relabeling to "openrouter" (#2562).
+    # Also provide a placeholder API key for local servers that don't require
+    # authentication — the OpenAI SDK requires a non-empty api_key string.
+    effective_provider = "custom" if requested_norm == "custom" else "openrouter"
+    if effective_provider == "custom" and not api_key and not _is_openrouter_url:
+        api_key = "no-key-required"
+
     return {
-        "provider": "openrouter",
+        "provider": effective_provider,
         "api_mode": _parse_api_mode(model_cfg.get("api_mode"))
         or _detect_api_mode_for_url(base_url)
         or "chat_completions",
diff --git a/tests/test_runtime_provider_resolution.py b/tests/test_runtime_provider_resolution.py
index c478bc23cb..3597986bff 100644
--- a/tests/test_runtime_provider_resolution.py
+++ b/tests/test_runtime_provider_resolution.py
@@ -267,7 +267,7 @@ def test_named_custom_provider_uses_saved_credentials(monkeypatch):
 
     resolved = rp.resolve_runtime_provider(requested="local")
 
-    assert resolved["provider"] == "openrouter"
+    assert resolved["provider"] == "custom"
     assert resolved["api_mode"] == "chat_completions"
     assert resolved["base_url"] == "http://1.2.3.4:1234/v1"
     assert resolved["api_key"] == "local-provider-key"
@@ -579,3 +579,81 @@ def test_named_custom_provider_anthropic_api_mode(monkeypatch):
 
     assert resolved["api_mode"] == "anthropic_messages"
     assert resolved["base_url"] == "https://proxy.example.com/anthropic"
+
+
+# ------------------------------------------------------------------
+# fix #2562 — resolve_provider("custom") must not remap to "openrouter"
+# ------------------------------------------------------------------
+
+
+def test_resolve_provider_custom_returns_custom():
+    """resolve_provider('custom') must return 'custom', not 'openrouter'."""
+    from hermes_cli.auth import resolve_provider
+    assert resolve_provider("custom") == "custom"
+
+
+def test_resolve_provider_openrouter_unchanged():
+    """resolve_provider('openrouter') must still return 'openrouter'."""
+    from hermes_cli.auth import resolve_provider
+    assert resolve_provider("openrouter") == "openrouter"
+
+
+def test_custom_provider_runtime_preserves_provider_name(monkeypatch):
+    """resolve_runtime_provider with provider='custom' must return provider='custom'."""
+    monkeypatch.delenv("OPENAI_API_KEY", raising=False)
+    monkeypatch.delenv("OPENROUTER_API_KEY", raising=False)
+    monkeypatch.delenv("OPENAI_BASE_URL", raising=False)
+    monkeypatch.delenv("OPENROUTER_BASE_URL", raising=False)
+    monkeypatch.setattr(
+        rp,
+        "load_config",
+        lambda: {
+            "model": {
+                "provider": "custom",
+                "base_url": "http://localhost:8080/v1",
+                "api_key": "test-key-123",
+            }
+        },
+    )
+
+    resolved = rp.resolve_runtime_provider(requested="custom")
+    assert resolved["provider"] == "custom", (
+        f"Expected provider='custom', got provider='{resolved['provider']}'"
+    )
+    assert resolved["base_url"] == "http://localhost:8080/v1"
+    assert resolved["api_key"] == "test-key-123"
+
+
+def test_custom_provider_no_key_gets_placeholder(monkeypatch):
+    """Local server with no API key should get 'no-key-required' placeholder."""
+    monkeypatch.delenv("OPENAI_API_KEY", raising=False)
+    monkeypatch.delenv("OPENROUTER_API_KEY", raising=False)
+    monkeypatch.delenv("OPENAI_BASE_URL", raising=False)
+    monkeypatch.delenv("OPENROUTER_BASE_URL", raising=False)
+    monkeypatch.setattr(
+        rp,
+        "load_config",
+        lambda: {
+            "model": {
+                "provider": "custom",
+                "base_url": "http://localhost:8080/v1",
+            }
+        },
+    )
+
+    resolved = rp.resolve_runtime_provider(requested="custom")
+    assert resolved["provider"] == "custom"
+    assert resolved["api_key"] == "no-key-required"
+    assert resolved["base_url"] == "http://localhost:8080/v1"
+
+
+def test_openrouter_provider_not_affected_by_custom_fix(monkeypatch):
+    """Fixing custom must not change openrouter behavior."""
+    monkeypatch.delenv("OPENAI_API_KEY", raising=False)
+    monkeypatch.delenv("OPENAI_BASE_URL", raising=False)
+    monkeypatch.delenv("OPENROUTER_BASE_URL", raising=False)
+    monkeypatch.setenv("OPENROUTER_API_KEY", "test-or-key")
+    monkeypatch.setattr(rp, "load_config", lambda: {})
+
+    resolved = rp.resolve_runtime_provider(requested="openrouter")
+    assert resolved["provider"] == "openrouter"