diff --git a/frontend/src/app/onboarding/components/ollama-onboarding.tsx b/frontend/src/app/onboarding/components/ollama-onboarding.tsx
index 261f0e6d..cec7763d 100644
--- a/frontend/src/app/onboarding/components/ollama-onboarding.tsx
+++ b/frontend/src/app/onboarding/components/ollama-onboarding.tsx
@@ -1,5 +1,4 @@
 import { useEffect, useState } from "react";
-import { useGetSettingsQuery } from "@/app/api/queries/useGetSettingsQuery";
 import { LabelInput } from "@/components/label-input";
 import { LabelWrapper } from "@/components/label-wrapper";
 import OllamaLogo from "@/components/logo/ollama-logo";
@@ -12,151 +11,150 @@ import { AdvancedOnboarding } from "./advanced";
 import { ModelSelector } from "./model-selector";
 
 export function OllamaOnboarding({
-	setSettings,
-	sampleDataset,
-	setSampleDataset,
+  setSettings,
+  sampleDataset,
+  setSampleDataset,
 }: {
-	setSettings: (settings: OnboardingVariables) => void;
-	sampleDataset: boolean;
-	setSampleDataset: (dataset: boolean) => void;
+  setSettings: (settings: OnboardingVariables) => void;
+  sampleDataset: boolean;
+  setSampleDataset: (dataset: boolean) => void;
 }) {
-	const { data: settings } = useGetSettingsQuery();
-	const [endpoint, setEndpoint] = useState(`http://${settings?.localhost_url ?? "localhost"}:11434`);
-	const [showConnecting, setShowConnecting] = useState(false);
-	const debouncedEndpoint = useDebouncedValue(endpoint, 500);
+  const [endpoint, setEndpoint] = useState(`http://{localhost}:11434`);
+  const [showConnecting, setShowConnecting] = useState(false);
+  const debouncedEndpoint = useDebouncedValue(endpoint, 500);
 
-	// Fetch models from API when endpoint is provided (debounced)
-	const {
-		data: modelsData,
-		isLoading: isLoadingModels,
-		error: modelsError,
-	} = useGetOllamaModelsQuery(
-		debouncedEndpoint ? { endpoint: debouncedEndpoint } : undefined,
-	);
+  // Fetch models from API when endpoint is provided (debounced)
+  const {
+    data: modelsData,
+    isLoading: isLoadingModels,
+    error: modelsError,
+  } = useGetOllamaModelsQuery(
+    debouncedEndpoint ? { endpoint: debouncedEndpoint } : undefined,
+  );
 
-	// Use custom hook for model selection logic
-	const {
-		languageModel,
-		embeddingModel,
-		setLanguageModel,
-		setEmbeddingModel,
-		languageModels,
-		embeddingModels,
-	} = useModelSelection(modelsData);
+  // Use custom hook for model selection logic
+  const {
+    languageModel,
+    embeddingModel,
+    setLanguageModel,
+    setEmbeddingModel,
+    languageModels,
+    embeddingModels,
+  } = useModelSelection(modelsData);
 
-	// Handle delayed display of connecting state
-	useEffect(() => {
-		let timeoutId: NodeJS.Timeout;
+  // Handle delayed display of connecting state
+  useEffect(() => {
+    let timeoutId: NodeJS.Timeout;
 
-		if (debouncedEndpoint && isLoadingModels) {
-			timeoutId = setTimeout(() => {
-				setShowConnecting(true);
-			}, 500);
-		} else {
-			setShowConnecting(false);
-		}
+    if (debouncedEndpoint && isLoadingModels) {
+      timeoutId = setTimeout(() => {
+        setShowConnecting(true);
+      }, 500);
+    } else {
+      setShowConnecting(false);
+    }
 
-		return () => {
-			if (timeoutId) {
-				clearTimeout(timeoutId);
-			}
-		};
-	}, [debouncedEndpoint, isLoadingModels]);
+    return () => {
+      if (timeoutId) {
+        clearTimeout(timeoutId);
+      }
+    };
+  }, [debouncedEndpoint, isLoadingModels]);
 
-	const handleSampleDatasetChange = (dataset: boolean) => {
-		setSampleDataset(dataset);
-	};
+  const handleSampleDatasetChange = (dataset: boolean) => {
+    setSampleDataset(dataset);
+  };
 
-	// Update settings when values change
-	useUpdateSettings(
-		"ollama",
-		{
-			endpoint,
-			languageModel,
-			embeddingModel,
-		},
-		setSettings,
-	);
+  // Update settings when values change
+  useUpdateSettings(
+    "ollama",
+    {
+      endpoint,
+      languageModel,
+      embeddingModel,
+    },
+    setSettings,
+  );
 
-	// Check validation state based on models query
-	const hasConnectionError = debouncedEndpoint && modelsError;
-	const hasNoModels =
-		modelsData &&
-		!modelsData.language_models?.length &&
-		!modelsData.embedding_models?.length;
+  // Check validation state based on models query
+  const hasConnectionError = debouncedEndpoint && modelsError;
+  const hasNoModels =
+    modelsData &&
+    !modelsData.language_models?.length &&
+    !modelsData.embedding_models?.length;
 
-	return (
-		<>
-			<div className="space-y-4">
-				<div className="space-y-1">
-					<LabelInput
-						label="Ollama Base URL"
-						helperText="Base URL of your Ollama server"
-						id="api-endpoint"
-						required
-						placeholder="http://localhost:11434"
-						value={endpoint}
-						onChange={(e) => setEndpoint(e.target.value)}
-					/>
-					{showConnecting && (
-						<p className="text-mmd text-muted-foreground">
-							Connecting to Ollama server...
-						</p>
-					)}
-					{hasConnectionError && (
-						<p className="text-mmd text-accent-amber-foreground">
-							Can’t reach Ollama at {debouncedEndpoint}. Update the base URL or
-							start the server.
-						</p>
-					)}
-					{hasNoModels && (
-						<p className="text-mmd text-accent-amber-foreground">
-							No models found. Install embedding and agent models on your Ollama
-							server.
-						</p>
-					)}
-				</div>
-				<LabelWrapper
-					label="Embedding model"
-					helperText="Model used for knowledge ingest and retrieval"
-					id="embedding-model"
-					required={true}
-				>
-					<ModelSelector
-						options={embeddingModels}
-						icon={<OllamaLogo className="w-4 h-4" />}
-						noOptionsPlaceholder={
-							isLoadingModels
-								? "Loading models..."
-								: "No embedding models detected. Install an embedding model to continue."
-						}
-						value={embeddingModel}
-						onValueChange={setEmbeddingModel}
-					/>
-				</LabelWrapper>
-				<LabelWrapper
-					label="Language model"
-					helperText="Model used for chat"
-					id="embedding-model"
-					required={true}
-				>
-					<ModelSelector
-						options={languageModels}
-						icon={<OllamaLogo className="w-4 h-4" />}
-						noOptionsPlaceholder={
-							isLoadingModels
-								? "Loading models..."
-								: "No language models detected. Install a language model to continue."
-						}
-						value={languageModel}
-						onValueChange={setLanguageModel}
-					/>
-				</LabelWrapper>
-			</div>
-			<AdvancedOnboarding
-				sampleDataset={sampleDataset}
-				setSampleDataset={handleSampleDatasetChange}
-			/>
-		</>
-	);
+  return (
+    <>
+      <div className="space-y-4">
+        <div className="space-y-1">
+          <LabelInput
+            label="Ollama Base URL"
+            helperText="Base URL of your Ollama server"
+            id="api-endpoint"
+            required
+            placeholder="http://localhost:11434"
+            value={endpoint}
+            onChange={(e) => setEndpoint(e.target.value)}
+          />
+          {showConnecting && (
+            <p className="text-mmd text-muted-foreground">
+              Connecting to Ollama server...
+            </p>
+          )}
+          {hasConnectionError && (
+            <p className="text-mmd text-accent-amber-foreground">
+              Can’t reach Ollama at {debouncedEndpoint}. Update the base URL or
+              start the server.
+            </p>
+          )}
+          {hasNoModels && (
+            <p className="text-mmd text-accent-amber-foreground">
+              No models found. Install embedding and agent models on your Ollama
+              server.
+            </p>
+          )}
+        </div>
+        <LabelWrapper
+          label="Embedding model"
+          helperText="Model used for knowledge ingest and retrieval"
+          id="embedding-model"
+          required={true}
+        >
+          <ModelSelector
+            options={embeddingModels}
+            icon={<OllamaLogo className="w-4 h-4" />}
+            noOptionsPlaceholder={
+              isLoadingModels
+                ? "Loading models..."
+                : "No embedding models detected. Install an embedding model to continue."
+            }
+            value={embeddingModel}
+            onValueChange={setEmbeddingModel}
+          />
+        </LabelWrapper>
+        <LabelWrapper
+          label="Language model"
+          helperText="Model used for chat"
+          id="embedding-model"
+          required={true}
+        >
+          <ModelSelector
+            options={languageModels}
+            icon={<OllamaLogo className="w-4 h-4" />}
+            noOptionsPlaceholder={
+              isLoadingModels
+                ? "Loading models..."
+                : "No language models detected. Install a language model to continue."
+            }
+            value={languageModel}
+            onValueChange={setLanguageModel}
+          />
+        </LabelWrapper>
+      </div>
+      <AdvancedOnboarding
+        sampleDataset={sampleDataset}
+        setSampleDataset={handleSampleDatasetChange}
+      />
+    </>
+  );
 }
diff --git a/src/api/settings.py b/src/api/settings.py
index a32e8a1e..1d67919e 100644
--- a/src/api/settings.py
+++ b/src/api/settings.py
@@ -1,6 +1,7 @@
 import json
 import platform
 from starlette.responses import JSONResponse
+from utils.container_utils import transform_localhost_url
 from utils.logging_config import get_logger
 from config.settings import (
     LANGFLOW_URL,
@@ -441,6 +442,8 @@ async def onboarding(request, flows_service):
                     {"error": "endpoint must be a non-empty string"}, status_code=400
                 )
             current_config.provider.endpoint = body["endpoint"].strip()
+            if "model_provider" in body and body["model_provider"].strip() == "ollama":
+                current_config.provider.endpoint = transform_localhost_url(body["endpoint"].strip())
             config_updated = True
 
         if "project_id" in body:
diff --git a/src/services/models_service.py b/src/services/models_service.py
index 35a54895..a90a74f4 100644
--- a/src/services/models_service.py
+++ b/src/services/models_service.py
@@ -1,5 +1,6 @@
 import httpx
 from typing import Dict, List
+from utils.container_utils import transform_localhost_url
 from utils.logging_config import get_logger
 
 logger = get_logger(__name__)
@@ -95,7 +96,7 @@ class ModelsService:
         """Fetch available models from Ollama API with tool calling capabilities for language models"""
         try:
             # Use provided endpoint or default
-            ollama_url = endpoint
+            ollama_url = transform_localhost_url(endpoint)
 
             # API endpoints
             tags_url = f"{ollama_url}/api/tags"