diff --git a/ui/src/components/AgentConfigForm.render.test.tsx b/ui/src/components/AgentConfigForm.render.test.tsx
new file mode 100644
index 0000000000..9d94ed5073
--- /dev/null
+++ b/ui/src/components/AgentConfigForm.render.test.tsx
@@ -0,0 +1,272 @@
+// @vitest-environment jsdom
+
+import { createRoot, type Root } from "react-dom/client";
+import { act } from "react";
+import { QueryClient, QueryClientProvider } from "@tanstack/react-query";
+import { afterEach, beforeEach, describe, expect, it, vi } from "vitest";
+import type { Agent, Environment } from "@paperclipai/shared";
+import { TooltipProvider } from "@/components/ui/tooltip";
+import { AgentConfigForm } from "./AgentConfigForm";
+
+const mockAgentsApi = vi.hoisted(() => ({
+  adapterModels: vi.fn(),
+  detectModel: vi.fn(),
+  list: vi.fn(),
+}));
+
+const mockEnvironmentsApi = vi.hoisted(() => ({
+  list: vi.fn(),
+}));
+
+const mockInstanceSettingsApi = vi.hoisted(() => ({
+  get: vi.fn(),
+  getExperimental: vi.fn(),
+  getGeneral: vi.fn(),
+}));
+
+const mockSecretsApi = vi.hoisted(() => ({
+  list: vi.fn(),
+}));
+
+vi.mock("../api/agents", () => ({
+  agentsApi: mockAgentsApi,
+}));
+
+vi.mock("../api/environments", () => ({
+  environmentsApi: mockEnvironmentsApi,
+}));
+
+vi.mock("../api/instanceSettings", () => ({
+  instanceSettingsApi: mockInstanceSettingsApi,
+}));
+
+vi.mock("../api/secrets", () => ({
+  secretsApi: mockSecretsApi,
+}));
+
+vi.mock("../context/CompanyContext", () => ({
+  useCompany: () => ({
+    companies: [{ id: "company-1", name: "Paperclip" }],
+    selectedCompanyId: "company-1",
+    selectedCompany: { id: "company-1", name: "Paperclip" },
+    selectionSource: "bootstrap",
+    loading: false,
+    error: null,
+    setSelectedCompanyId: vi.fn(),
+    reloadCompanies: vi.fn(),
+    createCompany: vi.fn(),
+  }),
+}));
+
+vi.mock("../adapters", () => ({
+  getUIAdapter: () => ({
+    type: "codex_local",
+    label: "Codex",
+    ConfigFields: () => null,
+    buildAdapterConfig: () => ({}),
+    parseStdoutLine: () => [],
+  }),
+}));
+
+vi.mock("../adapters/use-adapter-capabilities", () => ({
+  useAdapterCapabilities: () => () => ({
+    supportsInstructionsBundle: true,
+    supportsSkills: true,
+    supportsLocalAgentJwt: true,
+    requiresMaterializedRuntimeSkills: false,
+    supportsModelProfiles: true,
+  }),
+}));
+
+vi.mock("../adapters/use-disabled-adapters", () => ({
+  useDisabledAdaptersSync: () => [],
+}));
+
+vi.mock("./MarkdownEditor", () => ({
+  MarkdownEditor: ({
+    value,
+    onChange,
+    placeholder,
+  }: {
+    value: string;
+    onChange: (value: string) => void;
+    placeholder?: string;
+  }) => (
+    <textarea
+      aria-label={placeholder ?? "Markdown"}
+      value={value}
+      onChange={(event) => onChange(event.currentTarget.value)}
+    />
+  ),
+}));
+
+// eslint-disable-next-line @typescript-eslint/no-explicit-any
+(globalThis as any).IS_REACT_ACT_ENVIRONMENT = true;
+
+async function flushReact() {
+  await act(async () => {
+    for (let i = 0; i < 4; i += 1) {
+      await Promise.resolve();
+      await new Promise((resolve) => window.setTimeout(resolve, 0));
+    }
+  });
+}
+
+function makeAgent(overrides: Partial<Agent> = {}): Agent {
+  return {
+    id: "agent-1",
+    companyId: "company-1",
+    name: "Cody",
+    role: "Engineer",
+    title: null,
+    icon: null,
+    status: "idle",
+    reportsTo: null,
+    capabilities: null,
+    adapterType: "codex_local",
+    adapterConfig: {},
+    runtimeConfig: {},
+    defaultEnvironmentId: null,
+    contextMode: "thin",
+    budgetMonthlyCents: 0,
+    spentMonthlyCents: 0,
+    permissions: {},
+    lastHeartbeatAt: null,
+    metadata: null,
+    createdAt: new Date(0),
+    updatedAt: new Date(0),
+    ...overrides,
+  } as Agent;
+}
+
+function makeEnvironment(overrides: Partial<Environment>): Environment {
+  return {
+    id: "env-1",
+    name: "Local",
+    description: null,
+    driver: "local",
+    status: "active",
+    config: {},
+    envVars: {},
+    metadata: null,
+    createdAt: new Date(0),
+    updatedAt: new Date(0),
+    ...overrides,
+  };
+}
+
+async function renderForm(environments: Environment[], agentOverrides: Partial<Agent> = {}) {
+  mockEnvironmentsApi.list.mockResolvedValue(environments);
+
+  const container = document.createElement("div");
+  document.body.appendChild(container);
+  const root = createRoot(container);
+  const queryClient = new QueryClient({
+    defaultOptions: {
+      queries: { retry: false },
+      mutations: { retry: false },
+    },
+  });
+
+  await act(async () => {
+    root.render(
+      <QueryClientProvider client={queryClient}>
+        <TooltipProvider>
+          <AgentConfigForm
+            mode="edit"
+            agent={makeAgent(agentOverrides)}
+            onSave={vi.fn()}
+            hidePromptTemplate
+            showAdapterTypeField={false}
+            showAdapterTestEnvironmentButton={false}
+          />
+        </TooltipProvider>
+      </QueryClientProvider>,
+    );
+  });
+
+  await flushReact();
+  return { container, root };
+}
+
+describe("AgentConfigForm environment selector", () => {
+  let roots: Root[] = [];
+
+  beforeEach(() => {
+    mockAgentsApi.adapterModels.mockResolvedValue([]);
+    mockAgentsApi.detectModel.mockResolvedValue(null);
+    mockAgentsApi.list.mockResolvedValue([]);
+    mockInstanceSettingsApi.get.mockResolvedValue({ defaultEnvironmentId: null });
+    mockInstanceSettingsApi.getExperimental.mockResolvedValue({ enableEnvironments: true });
+    mockInstanceSettingsApi.getGeneral.mockResolvedValue({ executionMode: "any" });
+    mockSecretsApi.list.mockResolvedValue([]);
+  });
+
+  afterEach(async () => {
+    for (const root of roots) {
+      await act(async () => {
+        root.unmount();
+      });
+    }
+    roots = [];
+    document.body.innerHTML = "";
+    vi.clearAllMocks();
+  });
+
+  it("hides the environment override when Local is the only configured environment", async () => {
+    const result = await renderForm([
+      makeEnvironment({ id: "local-1", name: "Local", driver: "local" }),
+    ]);
+    roots.push(result.root);
+
+    expect(result.container.textContent).not.toContain("Environment override");
+    expect(result.container.querySelector("select")).toBeNull();
+  });
+
+  it("shows concise Environment copy when one runnable non-local environment exists", async () => {
+    const result = await renderForm([
+      makeEnvironment({ id: "local-1", name: "Local", driver: "local" }),
+      makeEnvironment({
+        id: "sandbox-1",
+        name: "E2B",
+        driver: "sandbox",
+        config: { provider: "e2b" },
+      }),
+    ]);
+    roots.push(result.root);
+
+    const text = result.container.textContent ?? "";
+    const selector = result.container.querySelector("select");
+
+    expect(text).toContain("Environment");
+    expect(text).toContain("Environment override");
+    expect(selector?.textContent).toContain("Default: Local");
+    expect(selector?.textContent).toContain("E2B · sandbox");
+    expect(text).not.toContain("Execution");
+    expect(text).not.toContain("Leave this unset to inherit the instance default");
+    expect(text).not.toContain("Inherit instance default");
+  });
+
+  it("keeps an existing non-runnable override visible so it can be cleared", async () => {
+    const result = await renderForm(
+      [
+        makeEnvironment({ id: "local-1", name: "Local", driver: "local" }),
+        makeEnvironment({
+          id: "fake-sandbox-1",
+          name: "Fake Sandbox",
+          driver: "sandbox",
+          config: { provider: "fake" },
+        }),
+      ],
+      { defaultEnvironmentId: "fake-sandbox-1" },
+    );
+    roots.push(result.root);
+
+    const text = result.container.textContent ?? "";
+    const selector = result.container.querySelector("select");
+
+    expect(text).toContain("Environment override");
+    expect(selector?.textContent).toContain("Default: Local");
+    expect(selector?.textContent).toContain("Fake Sandbox · sandbox");
+  });
+});
diff --git a/ui/src/components/AgentConfigForm.tsx b/ui/src/components/AgentConfigForm.tsx
index 2b2316f2bc..a673f2ca07 100644
--- a/ui/src/components/AgentConfigForm.tsx
+++ b/ui/src/components/AgentConfigForm.tsx
@@ -400,10 +400,20 @@ export function AgentConfigForm(props: AgentConfigFormProps) {
     }),
     [environments, supportedEnvironmentDrivers],
   );
+  const environmentOptions = useMemo(() => {
+    if (!currentDefaultEnvironment) return runnableEnvironments;
+    if (runnableEnvironments.some((environment) => environment.id === currentDefaultEnvironment.id)) {
+      return runnableEnvironments;
+    }
+    return [...runnableEnvironments, currentDefaultEnvironment];
+  }, [currentDefaultEnvironment, runnableEnvironments]);
+  // `runnableEnvironments` excludes the always-available Local environment, so a
+  // single entry already means the user has more than one environment configured
+  // (Local + that environment) and the override selector is meaningful.
   const showEnvironmentOverrideControl = environmentsEnabled && (
     forcedKubernetes ||
     currentDefaultEnvironmentId.length > 0 ||
-    runnableEnvironments.length > 1
+    runnableEnvironments.length >= 1
   );
   const inheritedEnvironmentLabel = instanceDefaultEnvironment
     ? `${instanceDefaultEnvironment.name} (${instanceDefaultEnvironment.driver})`
@@ -883,8 +893,8 @@ export function AgentConfigForm(props: AgentConfigFormProps) {
         // Render the environment read-only instead of the selectable picker.
         <div className={cn(!cards && (isCreate ? "border-t border-border" : "border-b border-border"))}>
           {cards
-            ? <h3 className="text-sm font-medium mb-3">Execution</h3>
-            : <div className="px-4 py-2 text-xs font-medium text-muted-foreground">Execution</div>
+            ? <h3 className="text-sm font-medium mb-3">Environment</h3>
+            : <div className="px-4 py-2 text-xs font-medium text-muted-foreground">Environment</div>
           }
           <div className={cn(cards ? "border border-border rounded-lg p-4 space-y-3" : "px-4 pb-3 space-y-3")}>
             <Field
@@ -908,20 +918,12 @@ export function AgentConfigForm(props: AgentConfigFormProps) {
       ) : showEnvironmentOverrideControl ? (
         <div className={cn(!cards && (isCreate ? "border-t border-border" : "border-b border-border"))}>
           {cards
-            ? <h3 className="text-sm font-medium mb-3">Execution</h3>
-            : <div className="px-4 py-2 text-xs font-medium text-muted-foreground">Execution</div>
+            ? <h3 className="text-sm font-medium mb-3">Environment</h3>
+            : <div className="px-4 py-2 text-xs font-medium text-muted-foreground">Environment</div>
           }
           <div className={cn(cards ? "border border-border rounded-lg p-4 space-y-3" : "px-4 pb-3 space-y-3")}>
-            <Field
-              label="Environment override"
-              hint="Leave this unset to inherit the instance default. Agent-specific overrides only appear when there is a real alternative."
-            >
+            <Field label="Environment override">
               <div className="space-y-2">
-                <div className="text-xs text-muted-foreground">
-                  {currentDefaultEnvironment
-                    ? `Overriding the instance default with ${currentDefaultEnvironment.name}.`
-                    : `Inheriting the instance default: ${inheritedEnvironmentLabel}.`}
-                </div>
                 <select
                   className={inputClass}
                   value={currentDefaultEnvironmentId}
@@ -934,8 +936,8 @@ export function AgentConfigForm(props: AgentConfigFormProps) {
                     mark("identity", "defaultEnvironmentId", nextValue || null);
                   }}
                 >
-                  <option value="">Inherit instance default ({inheritedEnvironmentLabel})</option>
-                  {runnableEnvironments.map((environment) => (
+                  <option value="">Default: {inheritedEnvironmentLabel}</option>
+                  {environmentOptions.map((environment) => (
                     <option key={environment.id} value={environment.id}>
                       {environment.name} · {environment.driver}
                     </option>