diff --git a/packages/ai/CHANGELOG.md b/packages/ai/CHANGELOG.md
index cae191ec9..f72a763f8 100644
--- a/packages/ai/CHANGELOG.md
+++ b/packages/ai/CHANGELOG.md
@@ -11,6 +11,7 @@
 
 - Fixed Mistral streams being aborted mid-generation (e.g. during long thinking) after the request timeout; the timeout now applies only to waiting for response headers ([#10609](https://github.com/earendil-works/pi/issues/10609))
 - Fixed OpenRouter router models such as `openrouter/auto` showing a cost of -$1,000,000 per 1M tokens; OpenRouter's negative placeholder prices are now 0
+- Fixed Anthropic `strict: "prefer"` tools failing when the provider rejects the strict tool set for grammar size, tool count, or union limits; requests now retry once with preferred tools non-strict while keeping `strict: "require"` tools strict ([#10409](https://github.com/earendil-works/pi/issues/10409))
 
 ## [1.1.0] - 2026-10-07
 
diff --git a/packages/ai/src/api/anthropic-messages.ts b/packages/ai/src/api/anthropic-messages.ts
index 452a3ccd0..29e13db1d 100644
--- a/packages/ai/src/api/anthropic-messages.ts
+++ b/packages/ai/src/api/anthropic-messages.ts
@@ -636,24 +636,57 @@ export const stream: StreamFunction<"anthropic-messages", AnthropicOptions> = (
 				client = created.client;
 				isOAuth = created.isOAuthToken;
 			}
-			let params = buildParams(model, normalizedContext, isOAuth, options);
-			const nextParams = await options?.onPayload?.(params, model);
-			if (nextParams !== undefined) {
-				params = { ...(nextParams as MessageCreateParamsStreaming), stream: true };
-			}
 			const requestOptions = {
 				...(options?.signal ? { signal: options.signal } : {}),
 				...(options?.timeoutMs !== undefined ? { timeout: options.timeoutMs } : {}),
 				maxRetries: 0,
 			};
-			const response = await retryProviderRequest(
-				() => client.beta.messages.create(params, requestOptions).asResponse(),
-				{
-					maxRetries: options?.maxRetries,
-					maxRetryDelayMs: options?.maxRetryDelayMs,
-					signal: options?.signal,
-				},
-			);
+			let disablePreferredStrictTools = false;
+			let response: Response;
+			for (;;) {
+				options?.signal?.throwIfAborted();
+				const built = buildParams(model, normalizedContext, isOAuth, options, disablePreferredStrictTools);
+				let params = built.params;
+				const nextParams = await options?.onPayload?.(params, model);
+				if (nextParams !== undefined) {
+					params = { ...(nextParams as MessageCreateParamsStreaming), stream: true };
+				}
+				try {
+					response = await retryProviderRequest(
+						() => client.beta.messages.create(params, requestOptions).asResponse(),
+						{
+							maxRetries: options?.maxRetries,
+							maxRetryDelayMs: options?.maxRetryDelayMs,
+							signal: options?.signal,
+						},
+					);
+					break;
+				} catch (error) {
+					// Only downgrade a rejected request, never an already-started stream.
+					if (
+						options?.signal?.aborted ||
+						disablePreferredStrictTools ||
+						!built.hasPreferredStrictTools ||
+						!(error instanceof Anthropic.APIError) ||
+						error.status !== 400 ||
+						error.type !== "invalid_request_error" ||
+						![
+							"The compiled grammar is too large",
+							"Too many strict tools (",
+							"Schemas contains too many parameters with union types (",
+						].some((message) => error.message.includes(message))
+					) {
+						throw error;
+					}
+					disablePreferredStrictTools = true;
+					appendAssistantMessageDiagnostic(output, {
+						type: "anthropic_strict_tools_fallback",
+						timestamp: Date.now(),
+						error: { message: error.message },
+						details: { reason: "strict_tool_limits_exceeded" },
+					});
+				}
+			}
 			await options?.onResponse?.({ status: response.status, headers: headersToRecord(response.headers) }, model);
 			stream.push({ type: "start", partial: output });
 
@@ -1126,7 +1159,8 @@ function buildParams(
 	context: TranscriptContext,
 	isOAuthToken: boolean,
 	options?: AnthropicOptions,
-): MessageCreateParamsStreaming {
+	disablePreferredStrictTools = false,
+): { params: MessageCreateParamsStreaming; hasPreferredStrictTools: boolean } {
 	const { cacheControl } = getCacheControl(model, options?.cacheRetention, options?.env);
 	const compat = getAnthropicCompat(model);
 	const initialSystemMessage = getInitialSystemMessage(context.messages);
@@ -1137,6 +1171,26 @@ function buildParams(
 	// by value in a `tool_addition` block, which also expresses same-name redefinitions.
 	// Anthropic rejects a tool list where every tool is deferred, so there must be an initial
 	// active tool to anchor the placeholder. Otherwise the current tool list is sent.
+	let hasPreferredStrictTools = false;
+	const convertToolDefinitions = (tools: Tool[], toolCacheControl?: CacheControlEphemeral): BetaTool[] => {
+		const definitions = convertTools(
+			tools,
+			isOAuthToken,
+			compat.supportsEagerToolInputStreaming,
+			compat.supportsStrictTools,
+			toolCacheControl,
+			disablePreferredStrictTools,
+		);
+		if (
+			definitions.some((definition, index) => {
+				const config = tools[index].constrainedSampling;
+				return definition.strict === true && config && config.type === "json_schema" && config.strict === "prefer";
+			})
+		) {
+			hasPreferredStrictTools = true;
+		}
+		return definitions;
+	};
 	const initialTools = initialSystemMessage?.toolsAdded ?? [];
 	const nativeToolChanges =
 		compat.supportsMidConvoSystemMessages && compat.supportsMidConvoToolChanges && initialTools.length > 0;
@@ -1146,10 +1200,7 @@ function buildParams(
 		cacheControl,
 		compat.allowEmptySignature,
 		model.compat?.supportsMidConvoEffort === true ? model.provider : undefined,
-		nativeToolChanges
-			? (tools) =>
-					convertTools(tools, isOAuthToken, compat.supportsEagerToolInputStreaming, compat.supportsStrictTools)
-			: undefined,
+		nativeToolChanges ? convertToolDefinitions : undefined,
 	);
 	const activeEffort = options?.effort ?? "high";
 	const betaFeatures = getBetaFeatures(model, context, isOAuthToken, nativeToolChanges, options);
@@ -1207,26 +1258,11 @@ function buildParams(
 		// placeholder. The list never changes afterwards: later tools are defined by value in
 		// `tool_addition` blocks and withdrawn by `tool_removal`, so the cached prefix survives
 		// every tool change.
-		params.tools = [
-			...convertTools(
-				initialTools,
-				isOAuthToken,
-				compat.supportsEagerToolInputStreaming,
-				compat.supportsStrictTools,
-				toolCacheControl,
-			),
-			DEFERRED_TOOL_PLACEHOLDER,
-		];
+		params.tools = [...convertToolDefinitions(initialTools, toolCacheControl), DEFERRED_TOOL_PLACEHOLDER];
 	} else {
 		const tools = getCurrentTools(context.messages);
 		if (tools.length > 0) {
-			params.tools = convertTools(
-				tools,
-				isOAuthToken,
-				compat.supportsEagerToolInputStreaming,
-				compat.supportsStrictTools,
-				toolCacheControl,
-			);
+			params.tools = convertToolDefinitions(tools, toolCacheControl);
 		}
 	}
 
@@ -1283,7 +1319,7 @@ function buildParams(
 		params.fallbacks = allowedFallbackModels.map((fallback) => ({ model: fallback.model }));
 	}
 
-	return params;
+	return { params, hasPreferredStrictTools };
 }
 
 // Normalize tool call IDs to match Anthropic's required pattern and length
@@ -1579,11 +1615,16 @@ function convertTools(
 	supportsEagerToolInputStreaming: boolean,
 	supportsStrictTools: boolean,
 	cacheControl?: CacheControlEphemeral,
+	disablePreferredStrictTools = false,
 ): BetaTool[] {
 	if (!tools) return [];
 
 	return tools.map((tool, index) => {
-		const strict = resolveJsonSchemaStrictSampling(tool, supportsStrictTools, isAnthropicStrictUnsupportedKeyword);
+		const config = tool.constrainedSampling;
+		const strict =
+			disablePreferredStrictTools && config && config.type === "json_schema" && config.strict === "prefer"
+				? undefined
+				: resolveJsonSchemaStrictSampling(tool, supportsStrictTools, isAnthropicStrictUnsupportedKeyword);
 		const parameters = getJsonSchemaToolParameters(tool, strict);
 		const schema = parameters as { properties?: unknown; required?: string[] };
 		const legacyInputSchema = {
diff --git a/packages/ai/test/anthropic-strict-tool-fallback.test.ts b/packages/ai/test/anthropic-strict-tool-fallback.test.ts
new file mode 100644
index 000000000..7aa4641ae
--- /dev/null
+++ b/packages/ai/test/anthropic-strict-tool-fallback.test.ts
@@ -0,0 +1,288 @@
+import Anthropic from "@anthropic-ai/sdk";
+import type { BetaTool, MessageCreateParamsStreaming } from "@anthropic-ai/sdk/resources/beta/messages/messages.js";
+import { Type } from "typebox";
+import { describe, expect, it, vi } from "vitest";
+import { type AnthropicOptions, stream as streamAnthropic } from "../src/api/anthropic-messages.ts";
+import { stream as streamPiMessages } from "../src/api/pi-messages.ts";
+import type { Model, Tool, TranscriptContext } from "../src/types.ts";
+import { normalizeContext } from "../src/utils/transcript.ts";
+
+const grammarError =
+	"The compiled grammar is too large, which would cause performance issues. Simplify your tool schemas or reduce the number of strict tools.";
+const model: Model<"anthropic-messages"> = {
+	id: "claude-haiku-4-5",
+	name: "Test Claude",
+	api: "anthropic-messages",
+	provider: "anthropic",
+	baseUrl: "https://anthropic.example",
+	reasoning: false,
+	input: ["text"],
+	cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+	contextWindow: 200000,
+	maxTokens: 100,
+	compat: { supportsStrictTools: true },
+};
+
+function tool(name: string, strict?: "prefer" | "require"): Tool {
+	return {
+		name,
+		description: "Look up a value",
+		parameters: Type.Object({ value: Type.String(), optional: Type.Optional(Type.Number()) }),
+		...(strict ? { constrainedSampling: { type: "json_schema", strict } } : {}),
+	};
+}
+
+function context(tools: Tool[]): TranscriptContext {
+	return normalizeContext({ tools, messages: [{ role: "user", content: "Hello", timestamp: 1 }] });
+}
+
+function errorResponse(message = grammarError, status = 400, type = "invalid_request_error"): Response {
+	return Response.json({ type: "error", error: { type, message } }, { status });
+}
+
+function successResponse(): Response {
+	const events = [
+		{
+			type: "message_start",
+			message: { id: "msg_test", model: model.id, usage: { input_tokens: 10, output_tokens: 0 } },
+		},
+		{ type: "message_delta", delta: { stop_reason: "end_turn" }, usage: { output_tokens: 1 } },
+		{ type: "message_stop" },
+	];
+	return new Response(events.map((event) => `event: ${event.type}\ndata: ${JSON.stringify(event)}\n\n`).join(""), {
+		headers: { "content-type": "text/event-stream" },
+	});
+}
+
+function harness(respond: (payload: MessageCreateParamsStreaming, attempt: number) => Response) {
+	const payloads: MessageCreateParamsStreaming[] = [];
+	const fetch: NonNullable<AnthropicOptions["fetch"]> = async (_input, init) => {
+		const payload = JSON.parse(init?.body as string) as MessageCreateParamsStreaming;
+		payloads.push(payload);
+		return respond(payload, payloads.length);
+	};
+	return { payloads, options: { apiKey: "test-key", fetch, maxRetries: 0 } satisfies AnthropicOptions };
+}
+
+// Regression tests for https://github.com/earendil-works/pi/issues/10409.
+describe("Anthropic preferred strict tool fallback", () => {
+	it.each([
+		grammarError,
+		// Observed from the live API: 32 strict tools, then 20 tools with 24 optional fields each.
+		"Too many strict tools (32). The maximum number of strict tools supported is 20. Try reducing the number of tools marked as strict.",
+		"Schemas contains too many parameters with union types (480 parameters with type arrays or anyOf). This causes exponential compilation cost. Reduce the number of nullable or union-typed parameters (limit: 16 parameters with unions).",
+	])("retries %s with original non-strict schemas and preserves required tools", async (message) => {
+		const preferred = tool("preferred", "prefer");
+		const required = tool("required", "require");
+		const ordinary = tool("ordinary");
+		const transcript = context([preferred, required, ordinary]);
+		const original = JSON.stringify(transcript);
+		// Use the real SDK's HTTP error parsing, not a synthetic thrown Error.
+		const { payloads, options } = harness((_payload, attempt) =>
+			attempt === 1 ? errorResponse(message) : successResponse(),
+		);
+		const onPayload = vi.fn((payload: unknown) => ({
+			...(payload as MessageCreateParamsStreaming),
+			inference_geo: "us",
+			stream: false,
+		}));
+		const onResponse = vi.fn();
+		const stream = streamAnthropic(model, transcript, { ...options, onPayload, onResponse, cacheRetention: "long" });
+		const events: string[] = [];
+		for await (const event of stream) events.push(event.type);
+		const result = await stream.result();
+
+		expect(result.stopReason).toBe("stop");
+		expect(events).toEqual(["start", "done"]);
+		expect(payloads).toHaveLength(2);
+		expect(onPayload).toHaveBeenCalledTimes(2);
+		expect(onResponse).toHaveBeenCalledTimes(1);
+		const first = payloads[0].tools as BetaTool[];
+		const second = payloads[1].tools as BetaTool[];
+		expect(first[0]).toMatchObject({
+			strict: true,
+			input_schema: {
+				required: ["value", "optional"],
+				properties: { optional: { anyOf: [{ type: "number" }, { type: "null" }] } },
+			},
+		});
+		expect(second[0].strict).toBeUndefined();
+		expect(second[0].input_schema).toEqual({
+			type: "object",
+			properties: { value: { type: "string" }, optional: { type: "number" } },
+			required: ["value"],
+		});
+		expect(second[1]).toEqual(first[1]);
+		expect(second[1].strict).toBe(true);
+		expect(second[2]).toEqual(first[2]);
+		expect(second[2].cache_control).toEqual({ type: "ephemeral", ttl: "1h" });
+		expect(payloads.map((payload) => payload.stream)).toEqual([true, true]);
+		expect(payloads[1]).toMatchObject({ inference_geo: "us" });
+		expect(JSON.stringify(transcript)).toBe(original);
+		expect(result.diagnostics?.[0]).toMatchObject({
+			type: "anthropic_strict_tools_fallback",
+			details: { reason: "strict_tool_limits_exceeded" },
+		});
+	});
+
+	it("downgrades inline additions and same-name redefinitions without downgrading require", async () => {
+		const transcript = context([tool("lookup", "require")]);
+		transcript.messages.push(
+			{ role: "system", content: "", toolsAdded: [tool("lookup", "prefer")], timestamp: 2 },
+			{ role: "system", content: "", toolsAdded: [tool("lookup", "require")], timestamp: 3 },
+		);
+		const { payloads, options } = harness((_payload, attempt) =>
+			attempt === 1 ? errorResponse() : successResponse(),
+		);
+		const result = await streamAnthropic(
+			{
+				...model,
+				compat: { ...model.compat, supportsMidConvoSystemMessages: true, supportsMidConvoToolChanges: true },
+			},
+			transcript,
+			{ ...options, apiKey: "sk-ant-oat-test" },
+		).result();
+		expect(result.stopReason).toBe("stop");
+		expect(payloads).toHaveLength(2);
+		expect(payloads[1].tools).toEqual(payloads[0].tools);
+		const additions = payloads.map((payload) =>
+			payload.messages.flatMap((message) =>
+				Array.isArray(message.content)
+					? message.content.flatMap((block) =>
+							block.type === "tool_addition" && block.tool.type === "tool_definition"
+								? [block.tool.definition as BetaTool]
+								: [],
+						)
+					: [],
+			),
+		);
+		expect(additions[0].map((definition) => definition.strict)).toEqual([true, true]);
+		expect(additions[1].map((definition) => definition.strict)).toEqual([undefined, true]);
+		expect(additions[1][0].input_schema.required).toEqual(["value"]);
+		expect(additions[1][1]).toEqual(additions[0][1]);
+	});
+
+	it.each([
+		["required", [tool("lookup", "require")]],
+		["ordinary", [tool("lookup")]],
+		[
+			"locally unsupported prefer",
+			[{ ...tool("lookup", "prefer"), parameters: Type.Object({ value: Type.Number({ minimum: 1 }) }) }],
+		],
+	])("does not retry a %s tool set", async (_name, tools) => {
+		const { payloads, options } = harness(() => errorResponse());
+		const result = await streamAnthropic(model, context(tools), options).result();
+		expect(result.stopReason).toBe("error");
+		expect(result.errorMessage).toContain(grammarError);
+		expect(payloads).toHaveLength(1);
+	});
+
+	it.each([
+		["unrelated 400", "Invalid tool schema", 400, "invalid_request_error"],
+		["wrong error type", grammarError, 400, "authentication_error"],
+		["wrong HTTP status", grammarError, 500, "invalid_request_error"],
+	])("does not downgrade on %s", async (_name, message, status, type) => {
+		const { payloads, options } = harness(() => errorResponse(message, status, type));
+		const result = await streamAnthropic(model, context([tool("lookup", "prefer")]), options).result();
+		expect(result.stopReason).toBe("error");
+		expect(payloads).toHaveLength(1);
+	});
+
+	it("surfaces a second rejection rather than retrying again", async () => {
+		const { payloads, options } = harness((_payload, attempt) =>
+			errorResponse(attempt === 1 ? grammarError : "Required grammar is still too large"),
+		);
+		const result = await streamAnthropic(
+			model,
+			context([tool("lookup", "prefer"), tool("required", "require")]),
+			options,
+		).result();
+		expect(result.stopReason).toBe("error");
+		expect(result.errorMessage).toContain("Required grammar is still too large");
+		expect(payloads).toHaveLength(2);
+		expect((payloads[1].tools as BetaTool[])[1].strict).toBe(true);
+	});
+
+	it("does not downgrade a hook exception, even if it looks like the provider rejection", async () => {
+		const { payloads, options } = harness(() => successResponse());
+		const result = await streamAnthropic(model, context([tool("lookup", "prefer")]), {
+			...options,
+			onPayload: () => {
+				throw Anthropic.APIError.generate(
+					400,
+					{ error: { type: "invalid_request_error", message: grammarError } },
+					grammarError,
+					new Headers(),
+				);
+			},
+		}).result();
+		expect(result.stopReason).toBe("error");
+		expect(payloads).toHaveLength(0);
+		expect(result.diagnostics).toBeUndefined();
+	});
+
+	it("honors cancellation before the fallback attempt", async () => {
+		const controller = new AbortController();
+		const { payloads, options } = harness(() => {
+			controller.abort();
+			return errorResponse();
+		});
+		const result = await streamAnthropic(model, context([tool("lookup", "prefer")]), {
+			...options,
+			signal: controller.signal,
+		}).result();
+		expect(result.stopReason).toBe("aborted");
+		expect(payloads).toHaveLength(1);
+	});
+
+	it("does not retry an SSE error after response headers", async () => {
+		const { payloads, options } = harness(
+			() =>
+				new Response(
+					`event: error\ndata: ${JSON.stringify({ type: "error", error: { type: "invalid_request_error", message: grammarError } })}\n\n`,
+					{ headers: { "content-type": "text/event-stream" } },
+				),
+		);
+		const result = await streamAnthropic(model, context([tool("lookup", "prefer")]), options).result();
+		expect(result.stopReason).toBe("error");
+		expect(payloads).toHaveLength(1);
+	});
+
+	it("does not disable strict sampling on later requests", async () => {
+		const { payloads, options } = harness((_payload, attempt) =>
+			attempt === 1 ? errorResponse() : successResponse(),
+		);
+		const transcript = context([tool("lookup", "prefer")]);
+		await streamAnthropic(model, transcript, options).result();
+		await streamAnthropic(model, transcript, options).result();
+		expect(payloads.map((payload) => (payload.tools as BetaTool[])[0].strict)).toEqual([true, undefined, true]);
+	});
+
+	it("preserves prefer through pi-messages so the gateway's Anthropic adapter can fall back", async () => {
+		const { payloads, options } = harness((_payload, attempt) =>
+			attempt === 1 ? errorResponse() : successResponse(),
+		);
+		const transcript = context([tool("lookup", "prefer")]);
+		const gatewayModel: Model<"pi-messages"> = {
+			...model,
+			api: "pi-messages",
+			provider: "radius",
+			baseUrl: "https://radius.example/v1",
+			compat: undefined,
+		};
+		const result = await streamPiMessages(gatewayModel, transcript, {
+			apiKey: "radius-test",
+			fetch: async (_input, init) => {
+				const request = JSON.parse(init?.body as string) as { context: TranscriptContext };
+				expect(request.context).toEqual(JSON.parse(JSON.stringify(transcript)));
+				const upstream = await streamAnthropic(model, request.context, options).result();
+				return new Response(
+					`data: ${JSON.stringify({ type: "done", reason: upstream.stopReason, usage: upstream.usage })}\n\n`,
+					{ headers: { "content-type": "text/event-stream" } },
+				);
+			},
+		}).result();
+		expect(result.stopReason).toBe("stop");
+		expect(payloads.map((payload) => (payload.tools as BetaTool[])[0].strict)).toEqual([true, undefined]);
+	});
+});