diff --git a/packages/cli/src/ui/AppContainer.tsx b/packages/cli/src/ui/AppContainer.tsx
index abf92108c3..fe5ebd1fad 100644
--- a/packages/cli/src/ui/AppContainer.tsx
+++ b/packages/cli/src/ui/AppContainer.tsx
@@ -433,6 +433,7 @@ Logging in with Google... Please restart Gemini CLI to continue.
   const handleApiKeySubmit = useCallback(
     async (apiKey: string) => {
       try {
+        onAuthError(null);
         if (!apiKey.trim() && apiKey.length > 1) {
           onAuthError(
             'API key cannot be empty string with length greater than 1.',
diff --git a/packages/core/src/core/apiKeyCredentialStorage.test.ts b/packages/core/src/core/apiKeyCredentialStorage.test.ts
index 703884c6aa..b0b0551f4b 100644
--- a/packages/core/src/core/apiKeyCredentialStorage.test.ts
+++ b/packages/core/src/core/apiKeyCredentialStorage.test.ts
@@ -79,4 +79,10 @@ describe('ApiKeyCredentialStorage', () => {
     await clearApiKey();
     expect(deleteCredentialsMock).toHaveBeenCalledWith('default-api-key');
   });
+
+  it('should not throw when clearing an API key fails', async () => {
+    deleteCredentialsMock.mockRejectedValueOnce(new Error('Failed to delete'));
+    await expect(saveApiKey('')).resolves.not.toThrow();
+    expect(deleteCredentialsMock).toHaveBeenCalledWith('default-api-key');
+  });
 });
diff --git a/packages/core/src/core/apiKeyCredentialStorage.ts b/packages/core/src/core/apiKeyCredentialStorage.ts
index 691ce949d2..4836ba075b 100644
--- a/packages/core/src/core/apiKeyCredentialStorage.ts
+++ b/packages/core/src/core/apiKeyCredentialStorage.ts
@@ -26,15 +26,6 @@ export async function loadApiKey(): Promise<string | null> {
 
     return null;
   } catch (error: unknown) {
-    // Ignore "file not found" error from FileTokenStorage, it just means no key is saved yet.
-    // This is common in fresh environments like e2e tests.
-    if (
-      error instanceof Error &&
-      error.message === 'Token file does not exist'
-    ) {
-      return null;
-    }
-
     // Log other errors but don't crash, just return null so user can re-enter key
     debugLogger.error('Failed to load API key from storage:', error);
     return null;
@@ -48,7 +39,12 @@ export async function saveApiKey(
   apiKey: string | null | undefined,
 ): Promise<void> {
   if (!apiKey || apiKey.trim() === '') {
-    await storage.deleteCredentials(DEFAULT_API_KEY_ENTRY);
+    try {
+      await storage.deleteCredentials(DEFAULT_API_KEY_ENTRY);
+    } catch (error: unknown) {
+      // Ignore errors when deleting, as it might not exist
+      debugLogger.warn('Failed to delete API key from storage:', error);
+    }
     return;
   }
 
diff --git a/packages/core/src/mcp/token-storage/file-token-storage.test.ts b/packages/core/src/mcp/token-storage/file-token-storage.test.ts
index fcaebaf508..48050f37e6 100644
--- a/packages/core/src/mcp/token-storage/file-token-storage.test.ts
+++ b/packages/core/src/mcp/token-storage/file-token-storage.test.ts
@@ -58,12 +58,11 @@ describe('FileTokenStorage', () => {
   });
 
   describe('getCredentials', () => {
-    it('should throw error when file does not exist', async () => {
+    it('should return null when file does not exist', async () => {
       mockFs.readFile.mockRejectedValue({ code: 'ENOENT' });
 
-      await expect(storage.getCredentials('test-server')).rejects.toThrow(
-        'Token file does not exist',
-      );
+      const result = await storage.getCredentials('test-server');
+      expect(result).toBeNull();
     });
 
     it('should return null for expired tokens', async () => {
@@ -179,7 +178,7 @@ describe('FileTokenStorage', () => {
       mockFs.readFile.mockRejectedValue({ code: 'ENOENT' });
 
       await expect(storage.deleteCredentials('test-server')).rejects.toThrow(
-        'Token file does not exist',
+        'No credentials found for test-server',
       );
     });
 
@@ -246,12 +245,11 @@ describe('FileTokenStorage', () => {
   });
 
   describe('listServers', () => {
-    it('should throw error when file does not exist', async () => {
+    it('should return empty list when file does not exist', async () => {
       mockFs.readFile.mockRejectedValue({ code: 'ENOENT' });
 
-      await expect(storage.listServers()).rejects.toThrow(
-        'Token file does not exist',
-      );
+      const result = await storage.listServers();
+      expect(result).toEqual([]);
     });
 
     it('should return list of server names', async () => {
diff --git a/packages/core/src/mcp/token-storage/file-token-storage.ts b/packages/core/src/mcp/token-storage/file-token-storage.ts
index 4da1d5935d..a9e17b60da 100644
--- a/packages/core/src/mcp/token-storage/file-token-storage.ts
+++ b/packages/core/src/mcp/token-storage/file-token-storage.ts
@@ -77,7 +77,7 @@ export class FileTokenStorage extends BaseTokenStorage {
     } catch (error: unknown) {
       const err = error as NodeJS.ErrnoException & { message?: string };
       if (err.code === 'ENOENT') {
-        throw new Error('Token file does not exist');
+        return new Map();
       }
       if (
         err.message?.includes('Invalid encrypted data format') ||
diff --git a/packages/core/src/mcp/token-storage/keychain-token-storage.ts b/packages/core/src/mcp/token-storage/keychain-token-storage.ts
index 93e94acb29..b8ea7b689b 100644
--- a/packages/core/src/mcp/token-storage/keychain-token-storage.ts
+++ b/packages/core/src/mcp/token-storage/keychain-token-storage.ts
@@ -46,8 +46,8 @@ export class KeychainTokenStorage
       const moduleName = 'keytar';
       const module = await import(moduleName);
       this.keytarModule = module.default || module;
-    } catch (error) {
-      coreEvents.emitFeedback('error', "Failed to load 'keytar' module", error);
+    } catch (_) {
+      //Keytar is optional so we shouldn't raise an error of log anything.
     }
     return this.keytarModule;
   }