diff --git a/packages/shared/src/projectSettings.test.ts b/packages/shared/src/projectSettings.test.ts
index 1cd6baf133bcc..a5edf854c3aec 100644
--- a/packages/shared/src/projectSettings.test.ts
+++ b/packages/shared/src/projectSettings.test.ts
@@ -119,6 +119,32 @@ describe("resolveProjectSettings", () => {
     expect(resolved.sources.defaultModelSelection).toBe("environment");
   });
 
+  // regression: #17556 a hidden project default silently became the catalog's first model
+  it.each([
+    ["hidden", ["gpt-5.6-terra", "gpt-5.6-sol"], [], "gpt-6.1-sol", "environment"],
+    ["visible", ["gpt-5.6-terra"], [], "gpt-5.6-sol", "project"],
+    ["custom", ["gpt-5.6-sol"], ["gpt-5.6-sol"], "gpt-5.6-sol", "project"],
+  ] as const)(
+    "resolves a %s project default model against the environment default",
+    (_visibility, hiddenModels, customModels, expectedModel, expectedSource) => {
+      const codex = ProviderInstanceId.make("codex");
+      const settings = applyServerSettingsPatch(DEFAULT_SERVER_SETTINGS, {
+        defaultModelSelection: createModelSelection(codex, "gpt-6.1-sol"),
+        providerInstances: {
+          [codex]: { driver: ProviderDriverKind.make("codex"), config: { customModels } },
+        },
+        providerModelPreferences: { [codex]: { hiddenModels, modelOrder: [] } },
+        projectSettingsOverrides: {
+          [projectId]: { defaultModelSelection: createModelSelection(codex, "gpt-5.6-sol") },
+        },
+      });
+      const resolved = resolveProjectSettings(settings, projectId);
+      expect(resolved.settings.defaultModelSelection?.model).toBe(expectedModel);
+      expect(resolved.sources.defaultModelSelection).toBe(expectedSource);
+      expect(resolved.overrides.defaultModelSelection?.model).toBe("gpt-5.6-sol");
+    },
+  );
+
   it("moves text generation off an instance the project turned off", () => {
     const codex = ProviderInstanceId.make("codex");
     const settings = {
diff --git a/packages/shared/src/projectSettings.ts b/packages/shared/src/projectSettings.ts
index bde695fb21386..e6a9ac22418a0 100644
--- a/packages/shared/src/projectSettings.ts
+++ b/packages/shared/src/projectSettings.ts
@@ -14,6 +14,7 @@ import {
   type ThreadEnvMode,
   type WorktreeCleanupRules,
 } from "@t3tools/contracts";
+import { readCustomModelEntries } from "./model.ts";
 import { normalizeProjectPathForComparison } from "./path.ts";
 import { fallbackTextGenerationModelSelection } from "./serverSettings.ts";
 
@@ -148,6 +149,21 @@ function resolveProjectOverrides(
     ) {
       continue;
     }
+    // Clients resolve a hidden model to the catalog's first visible one, so a
+    // hidden project default would silently pick a model nobody chose.
+    // Custom models stay visible even when listed as hidden, as in the clients.
+    if (key === "defaultModelSelection" && value !== null) {
+      const { instanceId, model } = value as ModelSelection;
+      const config = settings.providerInstances[instanceId]?.config as
+        | { customModels?: unknown }
+        | undefined;
+      if (
+        settings.providerModelPreferences?.[instanceId]?.hiddenModels.includes(model) &&
+        !readCustomModelEntries(config?.customModels).some((entry) => entry.slug === model)
+      ) {
+        continue;
+      }
+    }
     effective[key] = value;
     sources[key] = "project";
   }