diff --git a/tests/test_tui_gateway_server.py b/tests/test_tui_gateway_server.py
index 688fcfed5b3..baa8b7f79e6 100644
--- a/tests/test_tui_gateway_server.py
+++ b/tests/test_tui_gateway_server.py
@@ -1185,6 +1185,26 @@ def test_config_sync_failure_emits_error_once_per_edit(monkeypatch):
     assert "broken/model" in emits[0][1]["message"]
 
 
+def test_config_sync_config_wins_over_env_seed(monkeypatch):
+    # Hosted instances set HERMES_INFERENCE_MODEL as a provision-time seed;
+    # the per-turn sync must follow config.yaml edits, not stay pinned to it.
+    monkeypatch.setenv("HERMES_INFERENCE_MODEL", "seed/model")
+    monkeypatch.delenv("HERMES_MODEL", raising=False)
+    monkeypatch.setattr(server, "_load_cfg", lambda: {"model": {"default": "new/model"}})
+    session = _sync_test_session(config_model_seen=("seed/model", ""))
+    calls = []
+    monkeypatch.setattr(
+        server,
+        "_apply_model_switch",
+        lambda sid, sess, raw, **kw: calls.append(raw),
+    )
+
+    server._sync_agent_model_with_config("sid", session)
+
+    assert calls == ["new/model"]
+    assert session["config_model_seen"] == ("new/model", "")
+
+
 def test_startup_runtime_uses_tui_provider_env(monkeypatch):
     monkeypatch.setenv("HERMES_MODEL", "nous/hermes-test")
     monkeypatch.setenv("HERMES_TUI_PROVIDER", "nous")
diff --git a/tui_gateway/server.py b/tui_gateway/server.py
index 5f9b7e1fb6f..4c1746b8f77 100644
--- a/tui_gateway/server.py
+++ b/tui_gateway/server.py
@@ -1418,14 +1418,27 @@ def _resolve_model() -> str:
 
 
 def _config_model_target() -> tuple[str, str]:
-    """(model, provider) currently selected by env/config."""
-    model = _resolve_model()
+    """(model, provider) currently selected by config (env as fallback).
+
+    config.yaml wins over HERMES_MODEL / HERMES_INFERENCE_MODEL here, the
+    reverse of `_resolve_model()`'s startup order. Those env vars are a
+    provision-time seed (hosted instances set HERMES_INFERENCE_MODEL in the
+    container env); if they outranked config.yaml, the per-turn sync would
+    stay pinned to the seed forever and dashboard/CLI model changes would
+    never reach an open chat — the exact bug this sync exists to fix.
+    """
     cfg_model = _load_cfg().get("model")
+    model = ""
     provider = ""
     if isinstance(cfg_model, dict):
+        model = str(cfg_model.get("default", "") or "").strip()
         provider = str(cfg_model.get("provider") or "").strip()
         if provider.lower() == "auto":
             provider = ""
+    elif isinstance(cfg_model, str):
+        model = cfg_model.strip()
+    if not model:
+        model = _resolve_model()
     return model, provider