diff --git a/cli/azd/extensions/azure.ai.agents/internal/cmd/init.go b/cli/azd/extensions/azure.ai.agents/internal/cmd/init.go
index 0b48d8a78fb..9baa3299f83 100644
--- a/cli/azd/extensions/azure.ai.agents/internal/cmd/init.go
+++ b/cli/azd/extensions/azure.ai.agents/internal/cmd/init.go
@@ -1547,7 +1547,12 @@ from code-deploy ZIP packaging (uses .gitignore syntax).`,
 		"Name of an existing model deployment to use from the Foundry project. Only used when paired with an existing Foundry project, either via --project-id or interactive prompts")
 
 	cmd.Flags().StringVar(&flags.model, "model", "",
-		"Name of the AI model to use (e.g., 'gpt-4o'). If not specified, defaults to 'gpt-4.1-mini'. Mutually exclusive with --model-deployment, with --model-deployment being used if both are provided")
+		fmt.Sprintf(
+			"Name of the AI model to deploy. Defaults to '%s' during interactive model selection; "+
+				"required to deploy a new model with --no-prompt. If --model-deployment is also provided, "+
+				"--model-deployment takes precedence",
+			defaultAgentModel,
+		))
 
 	cmd.Flags().StringVarP(&flags.manifestPointer, "manifest", "m", "",
 		"Path or URI to an agent manifest, or to a sample's unified azure.yaml to adopt as the project manifest")
diff --git a/cli/azd/extensions/azure.ai.agents/internal/cmd/init_adopt.go b/cli/azd/extensions/azure.ai.agents/internal/cmd/init_adopt.go
index 70aa787adab..81dcecdc829 100644
--- a/cli/azd/extensions/azure.ai.agents/internal/cmd/init_adopt.go
+++ b/cli/azd/extensions/azure.ai.agents/internal/cmd/init_adopt.go
@@ -493,7 +493,7 @@ func promptAlternativeDeployment(
 	if useCatalog {
 		// Use the full model + deployment prompt which handles version,
 		// SKU, and capacity selection (same as manifest path).
-		defaultModel := "gpt-4.1-mini"
+		defaultModel := defaultAgentModel
 		if modelFlag != "" {
 			defaultModel = modelFlag
 		}
diff --git a/cli/azd/extensions/azure.ai.agents/internal/cmd/init_foundry_resources_helpers.go b/cli/azd/extensions/azure.ai.agents/internal/cmd/init_foundry_resources_helpers.go
index aae2bd9de23..32085a6668f 100644
--- a/cli/azd/extensions/azure.ai.agents/internal/cmd/init_foundry_resources_helpers.go
+++ b/cli/azd/extensions/azure.ai.agents/internal/cmd/init_foundry_resources_helpers.go
@@ -1241,7 +1241,7 @@ func selectNewModel(
 	azureContext *azdext.AzureContext,
 	modelFlag string,
 ) (*azdext.AiModel, error) {
-	defaultModel := "gpt-4.1-mini"
+	defaultModel := defaultAgentModel
 	if modelFlag != "" {
 		defaultModel = modelFlag
 	}
@@ -1266,8 +1266,12 @@ func selectNewModel(
 		return nil, exterrors.Dependency(
 			exterrors.CodeModelResolutionFailed,
 			fmt.Sprintf("failed to select an AI model: %s", err),
-			"pass --model <name> (e.g. --model gpt-4.1-mini) or --project-id "+
-				"<id> with --model-deployment <name> to skip interactive model selection",
+			fmt.Sprintf(
+				"to run non-interactively, pass --no-prompt with --model <name> "+
+					"(e.g. --model %s), or --no-prompt with --project-id <id> "+
+					"and --model-deployment <name>",
+				defaultAgentModel,
+			),
 		)
 	}
 
diff --git a/cli/azd/extensions/azure.ai.agents/internal/cmd/init_foundry_resources_helpers_test.go b/cli/azd/extensions/azure.ai.agents/internal/cmd/init_foundry_resources_helpers_test.go
index 4ce6327c205..124cbf71442 100644
--- a/cli/azd/extensions/azure.ai.agents/internal/cmd/init_foundry_resources_helpers_test.go
+++ b/cli/azd/extensions/azure.ai.agents/internal/cmd/init_foundry_resources_helpers_test.go
@@ -421,6 +421,79 @@ func TestAgentModelFilter(t *testing.T) {
 	}
 }
 
+type recordingPromptAiModelServer struct {
+	azdext.UnimplementedPromptServiceServer
+	requests []*azdext.PromptAiModelRequest
+}
+
+func (s *recordingPromptAiModelServer) PromptAiModel(
+	_ context.Context,
+	req *azdext.PromptAiModelRequest,
+) (*azdext.PromptAiModelResponse, error) {
+	s.requests = append(s.requests, req)
+	return &azdext.PromptAiModelResponse{
+		Model: &azdext.AiModel{Name: "selected-model"},
+	}, nil
+}
+
+func TestSelectNewModel(t *testing.T) {
+	t.Parallel()
+
+	tests := []struct {
+		name        string
+		modelFlag   string
+		wantDefault string
+	}{
+		{
+			name:        "uses default agent model",
+			wantDefault: defaultAgentModel,
+		},
+		{
+			name:        "explicit model wins",
+			modelFlag:   "gpt-5",
+			wantDefault: "gpt-5",
+		},
+	}
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			t.Parallel()
+
+			promptServer := &recordingPromptAiModelServer{}
+			azdClient := newTestAzdClient(
+				t,
+				&testEnvironmentServiceServer{},
+				&testWorkflowServiceServer{},
+				promptServer,
+			)
+			azureContext := &azdext.AzureContext{
+				Scope: &azdext.AzureScope{Location: "eastus"},
+			}
+
+			model, err := selectNewModel(
+				t.Context(),
+				azdClient,
+				azureContext,
+				tt.modelFlag,
+			)
+
+			require.NoError(t, err)
+			require.Equal(t, "selected-model", model.Name)
+			require.Len(t, promptServer.requests, 1)
+
+			req := promptServer.requests[0]
+			require.Equal(t, tt.wantDefault, req.DefaultValue)
+			require.NotNil(t, req.Filter)
+			require.Equal(t, []string{"eastus"}, req.Filter.Locations)
+			require.Equal(
+				t,
+				[]string{agentsV2ModelCapability},
+				req.Filter.Capabilities,
+			)
+		})
+	}
+}
+
 func TestLocationAllowed(t *testing.T) {
 	t.Parallel()
 
diff --git a/cli/azd/extensions/azure.ai.agents/internal/cmd/init_models.go b/cli/azd/extensions/azure.ai.agents/internal/cmd/init_models.go
index 8083cecf4e9..8a6b3ad9667 100644
--- a/cli/azd/extensions/azure.ai.agents/internal/cmd/init_models.go
+++ b/cli/azd/extensions/azure.ai.agents/internal/cmd/init_models.go
@@ -27,6 +27,9 @@ import (
 
 var defaultSkuPriority = []string{"GlobalStandard", "DataZoneStandard", "Standard"}
 
+// defaultAgentModel is preselected in interactive catalog prompts.
+const defaultAgentModel = "gpt-5.4-mini"
+
 // defaultDeploymentCapacity is the preferred deployment capacity for agent model deployments.
 // This overrides the lower SKU default (typically 10) which is insufficient for agents.
 const defaultDeploymentCapacity int32 = 50