diff --git a/apps/web/src/components/ChatView.tsx b/apps/web/src/components/ChatView.tsx
index 87520c6f84faee7a57971f59fb789df21cf36874..957a14d6e8d08e4315139ff527969a1e211ff897 100644
--- a/apps/web/src/components/ChatView.tsx
+++ b/apps/web/src/components/ChatView.tsx
@@ -213,7 +213,11 @@ import { PanelLayoutControls, RightPanelMaximizeControl } from "./chat/PanelLayo
 import { type ExpandedImagePreview } from "./chat/ExpandedImagePreview";
 import { NoActiveThreadState } from "./NoActiveThreadState";
 import { resolveEffectiveEnvMode, resolveLocalCheckoutBranchMismatch } from "./BranchToolbar.logic";
-import { ProviderStatusBanner } from "./chat/ProviderStatusBanner";
+import {
+  getProviderStatusBannerKey,
+  ProviderStatusBanner,
+  shouldShowProviderStatusBanner,
+} from "./chat/ProviderStatusBanner";
 import { ThreadErrorBanner } from "./chat/ThreadErrorBanner";
 import { ComposerBannerStack, type ComposerBannerStackItem } from "./chat/ComposerBannerStack";
 import {
@@ -2320,11 +2324,22 @@ function ChatViewContent(props: ChatViewProps) {
     const defaultInstanceId = defaultInstanceIdForDriver(selectedProvider);
     return providerStatuses.find((status) => status.instanceId === defaultInstanceId) ?? null;
   }, [activeProviderInstanceId, providerStatuses, selectedProvider]);
-  const hasTimelineTopBanner =
-    Boolean(threadError) ||
-    (activeProviderStatus !== null &&
-      activeProviderStatus.status !== "ready" &&
-      activeProviderStatus.status !== "disabled");
+  const providerStatusBannerKey = getProviderStatusBannerKey(activeProviderStatus);
+  const [dismissedProviderStatusBannerKey, setDismissedProviderStatusBannerKey] = useState<
+    string | null
+  >(null);
+  useEffect(() => {
+    if (providerStatusBannerKey === null && dismissedProviderStatusBannerKey !== null) {
+      setDismissedProviderStatusBannerKey(null);
+    }
+  }, [dismissedProviderStatusBannerKey, providerStatusBannerKey]);
+  const visibleProviderStatus = shouldShowProviderStatusBanner(
+    activeProviderStatus,
+    dismissedProviderStatusBannerKey,
+  )
+    ? activeProviderStatus
+    : null;
+  const hasTimelineTopBanner = Boolean(threadError) || visibleProviderStatus !== null;
   const activeProjectCwd = activeProject?.workspaceRoot ?? null;
   const activeThreadWorktreePath = activeThread?.worktreePath ?? null;
   const activeWorkspaceRoot = activeThreadWorktreePath ?? activeProjectCwd ?? undefined;
@@ -5463,7 +5478,10 @@ function ChatViewContent(props: ChatViewProps) {
           <div className="relative flex min-h-0 min-w-0 flex-1 flex-col">
             {/* Provider status overlays the timeline without changing its content height. */}
             <div className="pointer-events-none absolute inset-x-0 top-0 z-20">
-              <ProviderStatusBanner status={activeProviderStatus} />
+              <ProviderStatusBanner
+                status={visibleProviderStatus}
+                onDismiss={() => setDismissedProviderStatusBannerKey(providerStatusBannerKey)}
+              />
             </div>
             {/* Messages Wrapper */}
             <div className="relative flex min-h-0 flex-1 flex-col">
diff --git a/apps/web/src/components/chat/ProviderStatusBanner.test.tsx b/apps/web/src/components/chat/ProviderStatusBanner.test.tsx
index 2bd217bfe42e19a942a894293418a62341b30d6f..2a5bfe9ed3a893d4f180e55f290ceda9d06a401e 100644
--- a/apps/web/src/components/chat/ProviderStatusBanner.test.tsx
+++ b/apps/web/src/components/chat/ProviderStatusBanner.test.tsx
@@ -2,7 +2,11 @@ import { ProviderDriverKind, ProviderInstanceId, type ServerProvider } from "@t3
 import { renderToStaticMarkup } from "react-dom/server";
 import { describe, expect, it } from "vite-plus/test";
 
-import { ProviderStatusBanner } from "./ProviderStatusBanner";
+import {
+  getProviderStatusBannerKey,
+  ProviderStatusBanner,
+  shouldShowProviderStatusBanner,
+} from "./ProviderStatusBanner";
 
 function warningProvider(): ServerProvider {
   return {
@@ -23,11 +27,31 @@ function warningProvider(): ServerProvider {
 }
 
 describe("ProviderStatusBanner", () => {
+  it("stays hidden after its current warning is dismissed", () => {
+    const status = warningProvider();
+
+    expect(shouldShowProviderStatusBanner(status, null)).toBe(true);
+    expect(shouldShowProviderStatusBanner(status, getProviderStatusBannerKey(status))).toBe(false);
+  });
+
   it("renders an accessible dismiss control for provider warnings", () => {
-    const markup = renderToStaticMarkup(<ProviderStatusBanner status={warningProvider()} />);
+    const markup = renderToStaticMarkup(
+      <ProviderStatusBanner status={warningProvider()} onDismiss={() => {}} />,
+    );
 
     expect(markup).toContain('role="alert"');
     expect(markup).toContain('aria-label="Dismiss Codex provider warning"');
     expect(markup).toContain("absolute top-2 right-2");
   });
+
+  it("labels error dismiss controls with the correct severity", () => {
+    const markup = renderToStaticMarkup(
+      <ProviderStatusBanner
+        status={{ ...warningProvider(), status: "error" }}
+        onDismiss={() => {}}
+      />,
+    );
+
+    expect(markup).toContain('aria-label="Dismiss Codex provider error"');
+  });
 });
diff --git a/apps/web/src/components/chat/ProviderStatusBanner.tsx b/apps/web/src/components/chat/ProviderStatusBanner.tsx
index a900129aace7c6061a092debe4ad7886d22cca61..a64a94bc1c38bba4def7d3665fd9b1032f31a36c 100644
--- a/apps/web/src/components/chat/ProviderStatusBanner.tsx
+++ b/apps/web/src/components/chat/ProviderStatusBanner.tsx
@@ -1,33 +1,34 @@
 import { type ServerProvider } from "@t3tools/contracts";
-import { memo, useEffect, useState } from "react";
+import { memo } from "react";
 import { InfoIcon, XIcon } from "lucide-react";
 import { cn } from "~/lib/utils";
 import { formatProviderDriverKindLabel } from "../../providerModels";
 import { Tooltip, TooltipPopup, TooltipTrigger } from "../ui/tooltip";
 
+export function getProviderStatusBannerKey(status: ServerProvider | null): string | null {
+  return !status || status.status === "ready" || status.status === "disabled"
+    ? null
+    : [status.instanceId, status.status, status.auth.status, status.message ?? ""].join("\u0000");
+}
+
+export function shouldShowProviderStatusBanner(
+  status: ServerProvider | null,
+  dismissedBannerKey: string | null,
+): boolean {
+  const bannerKey = getProviderStatusBannerKey(status);
+  return bannerKey !== null && bannerKey !== dismissedBannerKey;
+}
+
 export const ProviderStatusBanner = memo(function ProviderStatusBanner({
+  onDismiss,
   status,
 }: {
+  onDismiss: () => void;
   status: ServerProvider | null;
 }) {
-  const bannerKey =
-    !status || status.status === "ready" || status.status === "disabled"
-      ? null
-      : [status.instanceId, status.status, status.auth.status, status.message ?? ""].join("\u0000");
-  const [dismissedBannerKey, setDismissedBannerKey] = useState<string | null>(null);
-
-  useEffect(() => {
-    if (bannerKey === null && dismissedBannerKey !== null) {
-      setDismissedBannerKey(null);
-    }
-  }, [bannerKey, dismissedBannerKey]);
-
   if (!status || status.status === "ready" || status.status === "disabled") {
     return null;
   }
-  if (bannerKey === dismissedBannerKey) {
-    return null;
-  }
 
   const providerName = status.displayName?.trim() || formatProviderDriverKindLabel(status.driver);
   const isUnauthenticated = status.status === "error" && status.auth.status === "unauthenticated";
@@ -66,9 +67,9 @@ export const ProviderStatusBanner = memo(function ProviderStatusBanner({
         </div>
         <button
           type="button"
-          aria-label={`Dismiss ${providerName} provider warning`}
+          aria-label={`Dismiss ${providerName} provider ${status.status}`}
           className="absolute top-2 right-2 inline-flex size-6 cursor-pointer items-center justify-center rounded-md text-muted-foreground outline-none transition-colors hover:bg-foreground/8 hover:text-foreground focus-visible:ring-2 focus-visible:ring-ring"
-          onClick={() => setDismissedBannerKey(bannerKey)}
+          onClick={onDismiss}
         >
           <XIcon aria-hidden className="size-3.5" />
         </button>