diff --git a/portkey_ai/api_resources/global_constants.py b/portkey_ai/api_resources/global_constants.py
index c9e95f60..9948b62e 100644
--- a/portkey_ai/api_resources/global_constants.py
+++ b/portkey_ai/api_resources/global_constants.py
@@ -44,6 +44,7 @@
 PORTKEY_GATEWAY_URL = PORTKEY_BASE_URL
 LOCAL_BASE_URL = "http://localhost:8787/v1"
 PORTKEY_API_KEY_ENV = "PORTKEY_API_KEY"
+PORTKEY_BASE_URL_ENV = "PORTKEY_BASE_URL"
 PORTKEY_PROXY_ENV = "PORTKEY_PROXY"
 OPEN_AI_API_KEY = "OPENAI_API_KEY"
 DEFAULT_CONNECTION_LIMITS = httpx.Limits(
diff --git a/portkey_ai/api_resources/utils.py b/portkey_ai/api_resources/utils.py
index bd124b8a..4f9a52bc 100644
--- a/portkey_ai/api_resources/utils.py
+++ b/portkey_ai/api_resources/utils.py
@@ -42,6 +42,7 @@
     MISSING_MODE_MESSAGE,
     PORTKEY_BASE_URL,
     PORTKEY_API_KEY_ENV,
+    PORTKEY_BASE_URL_ENV,
     PORTKEY_HEADER_PREFIX,
     PORTKEY_PROXY_ENV,
 )
@@ -509,7 +510,9 @@ def set_base_url(base_url, api_key):
     if base_url:
         return base_url
 
-    env_base_url = os.environ.get(PORTKEY_BASE_URL) or os.environ.get(PORTKEY_PROXY_ENV)
+    env_base_url = os.environ.get(PORTKEY_BASE_URL_ENV) or os.environ.get(
+        PORTKEY_PROXY_ENV
+    )
 
     if env_base_url:
         return env_base_url
diff --git a/tests/test_set_base_url.py b/tests/test_set_base_url.py
new file mode 100644
index 00000000..b7c7f6c4
--- /dev/null
+++ b/tests/test_set_base_url.py
@@ -0,0 +1,48 @@
+import pytest
+
+from portkey_ai.api_resources.global_constants import (
+    LOCAL_BASE_URL,
+    PORTKEY_BASE_URL,
+)
+from portkey_ai.api_resources.utils import set_base_url
+
+
+@pytest.fixture(autouse=True)
+def clear_base_url_env(monkeypatch):
+    # set_base_url reads process env vars; isolate the test from the ambient
+    # environment so PORTKEY_BASE_URL / PORTKEY_PROXY / PORTKEY_API_KEY do not leak in.
+    monkeypatch.delenv("PORTKEY_BASE_URL", raising=False)
+    monkeypatch.delenv("PORTKEY_PROXY", raising=False)
+    monkeypatch.delenv("PORTKEY_API_KEY", raising=False)
+
+
+class TestSetBaseUrl:
+    def test_explicit_base_url_takes_precedence(self, monkeypatch):
+        monkeypatch.setenv("PORTKEY_BASE_URL", "https://env-gateway.example/v1")
+        assert (
+            set_base_url("https://explicit.example/v1", None)
+            == "https://explicit.example/v1"
+        )
+
+    def test_portkey_base_url_env_is_honored_without_api_key(self, monkeypatch):
+        monkeypatch.setenv("PORTKEY_BASE_URL", "https://env-gateway.example/v1")
+        assert set_base_url(None, None) == "https://env-gateway.example/v1"
+
+    def test_portkey_base_url_env_is_honored_with_api_key(self, monkeypatch):
+        monkeypatch.setenv("PORTKEY_BASE_URL", "https://env-gateway.example/v1")
+        assert set_base_url(None, "pk-fakekey") == "https://env-gateway.example/v1"
+
+    def test_portkey_base_url_env_wins_over_portkey_proxy_env(self, monkeypatch):
+        monkeypatch.setenv("PORTKEY_BASE_URL", "https://env-gateway.example/v1")
+        monkeypatch.setenv("PORTKEY_PROXY", "https://proxy.example/v1")
+        assert set_base_url(None, None) == "https://env-gateway.example/v1"
+
+    def test_portkey_proxy_env_used_when_base_url_env_absent(self, monkeypatch):
+        monkeypatch.setenv("PORTKEY_PROXY", "https://proxy.example/v1")
+        assert set_base_url(None, None) == "https://proxy.example/v1"
+
+    def test_defaults_to_localhost_without_api_key(self):
+        assert set_base_url(None, None) == LOCAL_BASE_URL
+
+    def test_defaults_to_portkey_base_url_with_api_key(self):
+        assert set_base_url(None, "pk-fakekey") == PORTKEY_BASE_URL