diff --git a/packages/types/src/providers/openai.ts b/packages/types/src/providers/openai.ts
index 47b883e0e1..ed4801fd16 100644
--- a/packages/types/src/providers/openai.ts
+++ b/packages/types/src/providers/openai.ts
@@ -551,7 +551,10 @@ export const openAiModelInfoSaneDefaults: ModelInfo = {
 	inputPrice: 0,
 	outputPrice: 0,
 	supportsNativeTools: true,
-	defaultToolProtocol: "native",
+	// Default to XML for OpenAI Compatible providers since third-party proxies
+	// have varying levels of support for native tool calling. Users who want
+	// native tool calling can explicitly enable it in Advanced Settings.
+	defaultToolProtocol: "xml",
 }
 
 // https://learn.microsoft.com/en-us/azure/ai-services/openai/api-version-deprecation
diff --git a/src/utils/__tests__/resolveToolProtocol.spec.ts b/src/utils/__tests__/resolveToolProtocol.spec.ts
index 5fbc534438..235f08a38c 100644
--- a/src/utils/__tests__/resolveToolProtocol.spec.ts
+++ b/src/utils/__tests__/resolveToolProtocol.spec.ts
@@ -376,13 +376,15 @@ describe("resolveToolProtocol", () => {
 			expect(result).toBe(TOOL_PROTOCOL.XML) // Model default wins
 		})
 
-		it("should use native tools for OpenAI compatible provider with default model info", () => {
+		it("should use XML for OpenAI compatible provider with default model info", () => {
 			const settings: ProviderSettings = {
 				apiProvider: "openai",
 			}
-			// Using the actual openAiModelInfoSaneDefaults to verify the fix
+			// OpenAI Compatible defaults to XML protocol since third-party proxies
+			// have varying levels of support for native tool calling.
+			// Users who want native can explicitly enable it in Advanced Settings.
 			const result = resolveToolProtocol(settings, openAiModelInfoSaneDefaults)
-			expect(result).toBe(TOOL_PROTOCOL.NATIVE) // Should use native tools by default
+			expect(result).toBe(TOOL_PROTOCOL.XML) // Should use XML by default for better compatibility
 		})
 	})
 })