diff --git a/extensions/ollama/provider-policy-api.ts b/extensions/ollama/provider-policy-api.ts
new file mode 100644
index 00000000000..0ab0477a579
--- /dev/null
+++ b/extensions/ollama/provider-policy-api.ts
@@ -0,0 +1,40 @@
+// Inlined to avoid custom source-loader resolution issues
+const OLLAMA_DEFAULT_BASE_URL = "http://127.0.0.1:11434";
+
+/**
+ * Provider policy surface for Ollama: normalize provider configs used by
+ * core defaults/normalizers. This runs during config defaults application and
+ * normalization paths (not Zod validation).
+ */
+export function normalizeConfig({
+  provider,
+  providerConfig,
+}: {
+  provider: string;
+  providerConfig: unknown;
+}): unknown {
+  if (!providerConfig || typeof providerConfig !== "object") {
+    return providerConfig;
+  }
+
+  // provider is already a string, no need for String() cast
+  const normalizedProviderId = (provider ?? "").trim().toLowerCase();
+  if (normalizedProviderId !== "ollama") {
+    return providerConfig;
+  }
+
+  // Safely cast to Record to allow mutations without 'any'
+  const next: Record<string, unknown> = { ...(providerConfig as Record<string, unknown>) };
+
+  // If baseUrl is missing, empty, or whitespace-only, default to local Ollama host.
+  if (typeof next.baseUrl !== "string" || !next.baseUrl.trim()) {
+    next.baseUrl = OLLAMA_DEFAULT_BASE_URL;
+  }
+
+  // If models is missing/not an array, default to empty array to signal discovery
+  if (!Array.isArray(next.models)) {
+    next.models = [];
+  }
+
+  return next;
+}