diff --git a/packages/core/src/config/config.ts b/packages/core/src/config/config.ts
index c2d131991..3589948e9 100644
--- a/packages/core/src/config/config.ts
+++ b/packages/core/src/config/config.ts
@@ -108,6 +108,7 @@ import { shouldDefaultToNodePty } from '../utils/shell-utils.js';
 import { WorkspaceContext } from '../utils/workspaceContext.js';
 import { type ToolName } from '../utils/tool-utils.js';
 import { getErrorMessage } from '../utils/errors.js';
+import { normalizeProxyUrl } from '../utils/proxyUtils.js';
 
 // Local config modules
 import type { FileFilteringOptions } from './constants.js';
@@ -747,8 +748,9 @@ export class Config {
       initializeTelemetry(this);
     }
 
-    if (this.getProxy()) {
-      setGlobalDispatcher(new ProxyAgent(this.getProxy() as string));
+    const proxyUrl = this.getProxy();
+    if (proxyUrl) {
+      setGlobalDispatcher(new ProxyAgent(proxyUrl));
     }
     this.geminiClient = new GeminiClient(this);
     this.chatRecordingService = this.chatRecordingEnabled
@@ -1717,7 +1719,7 @@ export class Config {
   }
 
   getProxy(): string | undefined {
-    return this.proxy;
+    return normalizeProxyUrl(this.proxy);
   }
 
   getWorkingDir(): string {
diff --git a/packages/core/src/index.ts b/packages/core/src/index.ts
index 66359a865..83ab203ca 100644
--- a/packages/core/src/index.ts
+++ b/packages/core/src/index.ts
@@ -217,6 +217,7 @@ export * from './utils/pathReader.js';
 export * from './utils/paths.js';
 export * from './utils/projectSummary.js';
 export * from './utils/promptIdContext.js';
+export * from './utils/proxyUtils.js';
 export * from './utils/quotaErrorDetection.js';
 export * from './utils/readManyFiles.js';
 export * from './utils/request-tokenizer/supportedImageFormats.js';
diff --git a/packages/core/src/utils/proxyUtils.test.ts b/packages/core/src/utils/proxyUtils.test.ts
new file mode 100644
index 000000000..4f971aec5
--- /dev/null
+++ b/packages/core/src/utils/proxyUtils.test.ts
@@ -0,0 +1,105 @@
+/**
+ * @license
+ * Copyright 2025 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { describe, it, expect } from 'vitest';
+import { normalizeProxyUrl } from './proxyUtils.js';
+
+describe('normalizeProxyUrl', () => {
+  it('should return undefined for undefined input', () => {
+    expect(normalizeProxyUrl(undefined)).toBeUndefined();
+  });
+
+  it('should return undefined for empty string', () => {
+    expect(normalizeProxyUrl('')).toBeUndefined();
+  });
+
+  it('should return undefined for whitespace-only string', () => {
+    expect(normalizeProxyUrl('   ')).toBeUndefined();
+  });
+
+  it('should add http:// prefix to proxy URL without protocol', () => {
+    expect(normalizeProxyUrl('127.0.0.1:7860')).toBe('http://127.0.0.1:7860');
+  });
+
+  it('should add http:// prefix to proxy URL with port only', () => {
+    expect(normalizeProxyUrl('localhost:8080')).toBe('http://localhost:8080');
+  });
+
+  it('should not modify URL that already has http:// prefix', () => {
+    expect(normalizeProxyUrl('http://127.0.0.1:7860')).toBe(
+      'http://127.0.0.1:7860',
+    );
+  });
+
+  it('should not modify URL that already has https:// prefix', () => {
+    expect(normalizeProxyUrl('https://proxy.example.com:443')).toBe(
+      'https://proxy.example.com:443',
+    );
+  });
+
+  it('should handle HTTP:// prefix (case insensitive)', () => {
+    expect(normalizeProxyUrl('HTTP://127.0.0.1:7860')).toBe(
+      'HTTP://127.0.0.1:7860',
+    );
+  });
+
+  it('should handle HTTPS:// prefix (case insensitive)', () => {
+    expect(normalizeProxyUrl('HTTPS://proxy.example.com:443')).toBe(
+      'HTTPS://proxy.example.com:443',
+    );
+  });
+
+  it('should handle proxy URL with authentication', () => {
+    expect(normalizeProxyUrl('user:pass@proxy.example.com:8080')).toBe(
+      'http://user:pass@proxy.example.com:8080',
+    );
+  });
+
+  it('should handle proxy URL with authentication and http:// prefix', () => {
+    expect(normalizeProxyUrl('http://user:pass@proxy.example.com:8080')).toBe(
+      'http://user:pass@proxy.example.com:8080',
+    );
+  });
+
+  it('should trim whitespace from proxy URL', () => {
+    expect(normalizeProxyUrl('  127.0.0.1:7860  ')).toBe(
+      'http://127.0.0.1:7860',
+    );
+  });
+
+  it('should handle IPv6 addresses', () => {
+    expect(normalizeProxyUrl('[::1]:8080')).toBe('http://[::1]:8080');
+  });
+
+  it('should handle IPv6 addresses with http:// prefix', () => {
+    expect(normalizeProxyUrl('http://[::1]:8080')).toBe('http://[::1]:8080');
+  });
+
+  // SOCKS proxy tests - should throw error since undici doesn't support SOCKS
+  it('should throw error for socks:// proxy URL', () => {
+    expect(() => normalizeProxyUrl('socks://proxy.example.com:1080')).toThrow(
+      'SOCKS proxy is not supported',
+    );
+  });
+
+  it('should throw error for socks4:// proxy URL', () => {
+    expect(() => normalizeProxyUrl('socks4://proxy.example.com:1080')).toThrow(
+      'SOCKS proxy is not supported',
+    );
+  });
+
+  it('should throw error for socks5:// proxy URL', () => {
+    expect(() => normalizeProxyUrl('socks5://proxy.example.com:1080')).toThrow(
+      'SOCKS proxy is not supported',
+    );
+  });
+
+  it('should throw error for SOCKS5:// proxy URL (case insensitive)', () => {
+    expect(() => normalizeProxyUrl('SOCKS5://proxy.example.com:1080')).toThrow(
+      'SOCKS proxy is not supported',
+    );
+  });
+});
diff --git a/packages/core/src/utils/proxyUtils.ts b/packages/core/src/utils/proxyUtils.ts
new file mode 100644
index 000000000..b989494c5
--- /dev/null
+++ b/packages/core/src/utils/proxyUtils.ts
@@ -0,0 +1,53 @@
+/**
+ * @license
+ * Copyright 2025 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+/**
+ * Normalizes a proxy URL to ensure it has a valid protocol prefix.
+ *
+ * Many proxy tools and environment variables provide proxy addresses without
+ * a protocol prefix (e.g., "127.0.0.1:7860" instead of "http://127.0.0.1:7860").
+ * This function adds the "http://" prefix if missing, since HTTP proxies are
+ * the most common default.
+ *
+ * Note: Only HTTP and HTTPS proxies are supported. SOCKS proxies (socks://,
+ * socks4://, socks5://) are NOT supported because the underlying undici library
+ * does not support them. See: https://github.com/nodejs/undici/issues/2224
+ *
+ * @param proxyUrl - The proxy URL to normalize
+ * @returns The normalized proxy URL with protocol prefix, or undefined if input is undefined/empty
+ * @throws Error if a SOCKS proxy URL is provided
+ */
+export function normalizeProxyUrl(
+  proxyUrl: string | undefined,
+): string | undefined {
+  if (!proxyUrl) {
+    return undefined;
+  }
+
+  const trimmed = proxyUrl.trim();
+  if (!trimmed) {
+    return undefined;
+  }
+
+  // Check if the URL already has a protocol prefix
+  // Only support http and https protocols (undici limitation)
+  if (/^https?:\/\//i.test(trimmed)) {
+    return trimmed;
+  }
+
+  // Reject SOCKS proxies - undici does not support them
+  if (/^socks[45]?:\/\//i.test(trimmed)) {
+    throw new Error(
+      `SOCKS proxy is not supported. The underlying HTTP client (undici) only supports HTTP and HTTPS proxies. ` +
+        `Please use an HTTP/HTTPS proxy instead, or set up a SOCKS-to-HTTP proxy converter. ` +
+        `See: https://github.com/nodejs/undici/issues/2224`,
+    );
+  }
+
+  // Add http:// prefix for proxy URLs without protocol
+  // HTTP is the default for most proxy configurations
+  return `http://${trimmed}`;
+}