diff --git a/.sampo/changesets/claude-agent-sdk-graceful-fallback.md b/.sampo/changesets/claude-agent-sdk-graceful-fallback.md
new file mode 100644
index 00000000..4d78b58a
--- /dev/null
+++ b/.sampo/changesets/claude-agent-sdk-graceful-fallback.md
@@ -0,0 +1,5 @@
+---
+pypi/posthog: patch
+---
+
+fix: graceful fallback in claude_agent_sdk query wrapper when PostHog is not configured
diff --git a/posthog/ai/claude_agent_sdk/__init__.py b/posthog/ai/claude_agent_sdk/__init__.py
index 5fe1828d..170a08c0 100644
--- a/posthog/ai/claude_agent_sdk/__init__.py
+++ b/posthog/ai/claude_agent_sdk/__init__.py
@@ -1,5 +1,6 @@
 from __future__ import annotations
 
+import logging
 from typing import TYPE_CHECKING, Any, Callable, Dict, Optional, Union
 
 if TYPE_CHECKING:
@@ -17,6 +18,8 @@
 from posthog.ai.claude_agent_sdk.client import PostHogClaudeSDKClient
 from posthog.ai.claude_agent_sdk.processor import PostHogClaudeAgentProcessor
 
+log = logging.getLogger("posthog")
+
 __all__ = [
     "PostHogClaudeAgentProcessor",
     "PostHogClaudeSDKClient",
@@ -113,13 +116,28 @@ async def query(
             print(message)
         ```
     """
-    processor = PostHogClaudeAgentProcessor(
-        client=posthog_client,
-        distinct_id=posthog_distinct_id,
-        privacy_mode=posthog_privacy_mode,
-        groups=posthog_groups,
-        properties={},
-    )
+    from claude_agent_sdk import query as original_query
+
+    try:
+        processor = PostHogClaudeAgentProcessor(
+            client=posthog_client,
+            distinct_id=posthog_distinct_id,
+            privacy_mode=posthog_privacy_mode,
+            groups=posthog_groups,
+            properties={},
+        )
+    except ValueError as e:
+        # PostHog is not configured (missing API key); fall back to the
+        # plain SDK so callers are never broken by missing instrumentation.
+        log.warning(
+            "PostHog instrumentation disabled: %s — falling back to plain claude_agent_sdk.query()",
+            e,
+        )
+        async for message in original_query(
+            prompt=prompt, options=options, transport=transport
+        ):
+            yield message
+        return
 
     async for message in processor.query(
         prompt=prompt,
diff --git a/posthog/test/ai/claude_agent_sdk/test_processor.py b/posthog/test/ai/claude_agent_sdk/test_processor.py
index f36283c0..74bfc1e0 100644
--- a/posthog/test/ai/claude_agent_sdk/test_processor.py
+++ b/posthog/test/ai/claude_agent_sdk/test_processor.py
@@ -19,6 +19,7 @@
     from posthog.ai.claude_agent_sdk import (
         PostHogClaudeAgentProcessor,
         instrument,
+        query as posthog_query,
     )
 
     CLAUDE_AGENT_SDK_AVAILABLE = True
@@ -580,3 +581,41 @@ async def fake_query_capture(**kwargs):
                 pass
 
         assert captured_options.get("options").include_partial_messages is True
+
+
+class TestQueryGracefulFallback:
+    @pytest.mark.asyncio
+    async def test_falls_back_to_original_query_when_posthog_not_configured(self):
+        result_msg = _make_result_message()
+        messages_from_sdk = [result_msg]
+
+        with (
+            patch(
+                "posthog.ai.claude_agent_sdk.PostHogClaudeAgentProcessor",
+                side_effect=ValueError("API key is required"),
+            ),
+            patch(
+                "claude_agent_sdk.query",
+                side_effect=lambda **kwargs: _fake_query(messages_from_sdk),
+            ),
+        ):
+            collected = []
+            async for msg in posthog_query(
+                prompt="Hello", options=ClaudeAgentOptions()
+            ):
+                collected.append(msg)
+
+        assert len(collected) == 1
+        assert collected[0] is result_msg
+
+    @pytest.mark.asyncio
+    async def test_non_config_errors_propagate(self):
+        with patch(
+            "posthog.ai.claude_agent_sdk.PostHogClaudeAgentProcessor",
+            side_effect=RuntimeError("unexpected init bug"),
+        ):
+            with pytest.raises(RuntimeError, match="unexpected init bug"):
+                async for _ in posthog_query(
+                    prompt="Hello", options=ClaudeAgentOptions()
+                ):
+                    pass