diff --git a/app/models/provider/openai.rb b/app/models/provider/openai.rb
index 9ba1d23b0..d4045020a 100644
--- a/app/models/provider/openai.rb
+++ b/app/models/provider/openai.rb
@@ -4,6 +4,18 @@ class Provider::Openai < Provider
   # Subclass so errors caught in this provider are raised as Provider::Openai::Error
   Error = Class.new(Provider::Error)
 
+  # Specific error for models that don't support function calling
+  class FunctionCallingNotSupportedError < Error
+    def initialize(model:, provider_url:)
+      message = I18n.t(
+        "errors.llm.function_calling_not_supported",
+        model: model,
+        provider_url: provider_url
+      )
+      super(message)
+    end
+  end
+
   # Supported OpenAI model prefixes (e.g., "gpt-4" matches "gpt-4", "gpt-4.1", "gpt-4-turbo", etc.)
   DEFAULT_OPENAI_MODEL_PREFIXES = %w[gpt-4 gpt-5 o1 o3]
   DEFAULT_MODEL = "gpt-4.1"
@@ -318,11 +330,37 @@ class Provider::Openai < Provider
             user_identifier: user_identifier
           )
           record_llm_usage(family: family, model: model, operation: "chat", error: e)
+
+          # Detect function calling not supported error (404 with tools)
+          if tools.present? && function_calling_not_supported_error?(e)
+            raise FunctionCallingNotSupportedError.new(model: model, provider_url: @uri_base)
+          end
+
           raise
         end
       end
     end
 
+    def function_calling_not_supported_error?(error)
+      # Check if this is a 404 error which often indicates the endpoint doesn't support tools
+      # Different providers may return different error formats
+      http_status = extract_http_status_code(error)
+      return true if http_status == 404
+
+      # Also check error message for common tool-related error patterns
+      error_message = error.message.to_s.downcase
+      tool_error_patterns = [
+        "tools",
+        "tool_choice",
+        "function",
+        "does not support",
+        "not supported",
+        "invalid parameter",
+        "unknown parameter"
+      ]
+      tool_error_patterns.any? { |pattern| error_message.include?(pattern) }
+    end
+
     def build_generic_messages(prompt:, instructions: nil, function_results: [])
       messages = []
 
diff --git a/app/views/chats/_error.html.erb b/app/views/chats/_error.html.erb
index bbcb75818..bf12e61bc 100644
--- a/app/views/chats/_error.html.erb
+++ b/app/views/chats/_error.html.erb
@@ -1,5 +1,20 @@
 <%# locals: (chat:) %>
 
+<%
+  # Try to extract a meaningful error message
+  error_message = nil
+  begin
+    if chat.error.present?
+      parsed = JSON.parse(chat.error) rescue nil
+      if parsed.is_a?(Hash) && parsed["message"].present?
+        error_message = parsed["message"]
+      end
+    end
+  rescue
+    # Fall back to generic message
+  end
+%>
+
 <div id="chat-error" class="px-3 py-2 bg-red-100 border border-red-500 rounded-lg">
   <% if chat.debug_mode? %>
     <div class="overflow-x-auto text-xs p-4 bg-red-200 rounded-md mb-2">
@@ -7,8 +22,12 @@
     </div>
   <% end %>
 
-  <div class="flex items-center justify-between gap-2">
-    <p class="text-xs text-red-500">Failed to generate response.  Please try again.</p>
+  <div class="flex flex-col gap-2">
+    <% if error_message.present? %>
+      <p class="text-xs text-red-500"><%= error_message %></p>
+    <% else %>
+      <p class="text-xs text-red-500">Failed to generate response. Please try again.</p>
+    <% end %>
 
     <%= render DS::Button.new(
       text: "Retry",
diff --git a/config/locales/views/chats/en.yml b/config/locales/views/chats/en.yml
index 89bd1d152..33561d046 100644
--- a/config/locales/views/chats/en.yml
+++ b/config/locales/views/chats/en.yml
@@ -3,3 +3,6 @@ en:
   chats:
     demo_banner_title: "Demo Mode Active"
     demo_banner_message: "You are using an open-weights Qwen3 LLM with credits provided by Cloudflare Workers AI.  Result may vary since the codebase was mostly tested on `gpt-4.1` but your tokens don't go anywhere else to be trained with! 🤖"
+  errors:
+    llm:
+      function_calling_not_supported: "The model '%{model}' does not appear to support function calling (tools). The AI assistant requires a model that supports function calling to retrieve your financial data. Please select a different model that supports this feature in your AI settings, or contact your provider (%{provider_url}) to verify model capabilities."
diff --git a/test/models/provider/openai_test.rb b/test/models/provider/openai_test.rb
index 83b2b787e..7512a61c0 100644
--- a/test/models/provider/openai_test.rb
+++ b/test/models/provider/openai_test.rb
@@ -286,4 +286,72 @@ class Provider::OpenaiTest < ActiveSupport::TestCase
 
     assert_equal "configured model: custom-model", custom_provider.supported_models_description
   end
+
+  test "FunctionCallingNotSupportedError provides helpful message" do
+    error = Provider::Openai::FunctionCallingNotSupportedError.new(
+      model: "test-model",
+      provider_url: "https://openrouter.ai/api/v1"
+    )
+
+    assert_includes error.message, "test-model"
+    assert_includes error.message, "function calling"
+    assert_includes error.message, "openrouter.ai"
+  end
+
+  test "detects 404 error as function calling not supported" do
+    custom_provider = Provider::Openai.new(
+      "test-token",
+      uri_base: "https://openrouter.ai/api/v1",
+      model: "some-model-without-tools"
+    )
+
+    # Create a mock error with 404 status
+    mock_error = OpenStruct.new(
+      message: "404 Not Found",
+      http_status: 404
+    )
+
+    assert custom_provider.send(:function_calling_not_supported_error?, mock_error)
+  end
+
+  test "detects tool-related error messages as function calling not supported" do
+    custom_provider = Provider::Openai.new(
+      "test-token",
+      uri_base: "https://openrouter.ai/api/v1",
+      model: "some-model-without-tools"
+    )
+
+    # Test various error message patterns
+    tool_errors = [
+      OpenStruct.new(message: "tools parameter is not supported", http_status: nil),
+      OpenStruct.new(message: "Invalid parameter: tool_choice", http_status: nil),
+      OpenStruct.new(message: "function calling does not support this model", http_status: nil),
+      OpenStruct.new(message: "This model does not support tools", http_status: nil)
+    ]
+
+    tool_errors.each do |error|
+      assert custom_provider.send(:function_calling_not_supported_error?, error),
+        "Expected '#{error.message}' to be detected as function calling not supported"
+    end
+  end
+
+  test "does not flag unrelated errors as function calling not supported" do
+    custom_provider = Provider::Openai.new(
+      "test-token",
+      uri_base: "https://openrouter.ai/api/v1",
+      model: "some-model"
+    )
+
+    # Test unrelated error messages
+    unrelated_errors = [
+      OpenStruct.new(message: "Rate limit exceeded", http_status: 429),
+      OpenStruct.new(message: "Internal server error", http_status: 500),
+      OpenStruct.new(message: "Invalid API key", http_status: 401)
+    ]
+
+    unrelated_errors.each do |error|
+      assert_not custom_provider.send(:function_calling_not_supported_error?, error),
+        "Did not expect '#{error.message}' to be detected as function calling not supported"
+    end
+  end
 end