diff --git a/src/server/__tests__/proxy-network-settings.test.ts b/src/server/__tests__/proxy-network-settings.test.ts
index 7845ac50..d4bdb812 100644
--- a/src/server/__tests__/proxy-network-settings.test.ts
+++ b/src/server/__tests__/proxy-network-settings.test.ts
@@ -180,7 +180,7 @@ describe('proxy network settings', () => {
     }
   })
 
-  test('uses configured AI request timeout for streaming upstream requests', async () => {
+  test('uses configured AI request timeout only while opening streaming upstream requests', async () => {
     await fs.writeFile(
       path.join(tmpDir, 'settings.json'),
       JSON.stringify({
@@ -209,8 +209,12 @@ describe('proxy network settings', () => {
 
     const originalFetch = globalThis.fetch
     const originalTimeout = AbortSignal.timeout
+    const originalSetTimeout = globalThis.setTimeout
+    const originalClearTimeout = globalThis.clearTimeout
     const timeoutCalls: number[] = []
-    globalThis.fetch = mock(async (_url: string | URL | Request, _init?: RequestInit) => {
+    const timers: Array<{ ms: number | undefined; cleared: boolean }> = []
+    globalThis.fetch = mock(async (_url: string | URL | Request, init?: RequestInit) => {
+      expect(init?.signal).toBeInstanceOf(AbortSignal)
       return new Response(
         new ReadableStream({
           start(controller) {
@@ -228,6 +232,15 @@ describe('proxy network settings', () => {
       timeoutCalls.push(ms)
       return originalTimeout(ms)
     }) as typeof AbortSignal.timeout
+    globalThis.setTimeout = ((handler: TimerHandler, ms?: number, ...args: unknown[]) => {
+      const timer = { ms, cleared: false }
+      timers.push(timer)
+      return timer as unknown as ReturnType<typeof setTimeout>
+    }) as typeof setTimeout
+    globalThis.clearTimeout = ((timer?: ReturnType<typeof setTimeout>) => {
+      const found = timers.find((entry) => entry === timer)
+      if (found) found.cleared = true
+    }) as typeof clearTimeout
 
     try {
       const body = {
@@ -245,10 +258,14 @@ describe('proxy network settings', () => {
         },
       )
       const res = await handleProxyRequest(req, new URL(req.url))
+      await res.text()
 
       expect(res.status).toBe(200)
-      expect(timeoutCalls).toEqual([180_000])
+      expect(timeoutCalls).toEqual([])
+      expect(timers).toEqual([{ ms: 180_000, cleared: true }])
     } finally {
+      globalThis.clearTimeout = originalClearTimeout
+      globalThis.setTimeout = originalSetTimeout
       AbortSignal.timeout = originalTimeout
       globalThis.fetch = originalFetch
     }
diff --git a/src/server/proxy/handler.ts b/src/server/proxy/handler.ts
index 1d9dc546..cb0fc7e4 100644
--- a/src/server/proxy/handler.ts
+++ b/src/server/proxy/handler.ts
@@ -24,6 +24,50 @@ import { getManualNetworkProxyUrl, loadNetworkSettings } from '../services/netwo
 
 const providerService = new ProviderService()
 
+type ProxyFetchOptions = ReturnType<typeof getProxyFetchOptions>
+type UpstreamRequestInit = RequestInit & ProxyFetchOptions
+
+function createTimeoutController(timeoutMs: number): {
+  signal: AbortSignal
+  clear: () => void
+} {
+  const controller = new AbortController()
+  const timer = setTimeout(() => {
+    controller.abort(new DOMException('The operation timed out.', 'TimeoutError'))
+  }, timeoutMs)
+
+  return {
+    signal: controller.signal,
+    clear: () => clearTimeout(timer),
+  }
+}
+
+async function fetchUpstreamWithTimeout(
+  url: string,
+  init: Omit<UpstreamRequestInit, 'signal'>,
+  timeoutMs: number,
+  isStream: boolean,
+): Promise<Response> {
+  if (!isStream) {
+    return fetch(url, {
+      ...init,
+      signal: AbortSignal.timeout(timeoutMs),
+    })
+  }
+
+  // For streaming requests, this timeout should only cover the connection and
+  // response headers. Keeping the signal alive aborts long generations mid-body.
+  const timeout = createTimeoutController(timeoutMs)
+  try {
+    return await fetch(url, {
+      ...init,
+      signal: timeout.signal,
+    })
+  } finally {
+    timeout.clear()
+  }
+}
+
 export async function handleProxyRequest(req: Request, url: URL): Promise<Response> {
   const providerMatch = url.pathname.match(/^\/proxy\/providers\/([^/]+)\/v1\/messages$/)
   const providerId = providerMatch ? decodeURIComponent(providerMatch[1]!) : undefined
@@ -127,16 +171,15 @@ async function handleOpenaiChat(
   const url = `${baseUrl}/v1/chat/completions`
   const proxyOptions = getProxyFetchOptions({ proxyUrl })
 
-  const upstream = await fetch(url, {
+  const upstream = await fetchUpstreamWithTimeout(url, {
     method: 'POST',
     headers: {
       'Content-Type': 'application/json',
       Authorization: `Bearer ${apiKey}`,
     },
     body: signClaudeCodeCCHInTransformedString(JSON.stringify(transformed)),
-    signal: AbortSignal.timeout(aiRequestTimeoutMs),
     ...proxyOptions,
-  })
+  }, aiRequestTimeoutMs, isStream)
 
   if (!upstream.ok) {
     const errText = await upstream.text().catch(() => '')
@@ -195,16 +238,15 @@ async function handleOpenaiResponses(
   const url = `${baseUrl}/v1/responses`
   const proxyOptions = getProxyFetchOptions({ proxyUrl })
 
-  const upstream = await fetch(url, {
+  const upstream = await fetchUpstreamWithTimeout(url, {
     method: 'POST',
     headers: {
       'Content-Type': 'application/json',
       Authorization: `Bearer ${apiKey}`,
     },
     body: signClaudeCodeCCHInTransformedString(JSON.stringify(transformed)),
-    signal: AbortSignal.timeout(aiRequestTimeoutMs),
     ...proxyOptions,
-  })
+  }, aiRequestTimeoutMs, isStream)
 
   if (!upstream.ok) {
     const errText = await upstream.text().catch(() => '')