diff --git a/packages/cli/src/config/settingsSchema.test.ts b/packages/cli/src/config/settingsSchema.test.ts
index 37ddf87642..c358cd65aa 100644
--- a/packages/cli/src/config/settingsSchema.test.ts
+++ b/packages/cli/src/config/settingsSchema.test.ts
@@ -538,8 +538,32 @@ describe('SettingsSchema', () => {
       }
     };
 
+    const visitJsonSchema = (jsonSchema: Record<string, unknown>) => {
+      const ref = jsonSchema['ref'];
+      if (typeof ref === 'string') {
+        referenced.add(ref);
+      }
+      const properties = jsonSchema['properties'];
+      if (
+        properties &&
+        typeof properties === 'object' &&
+        !Array.isArray(properties)
+      ) {
+        Object.values(properties as Record<string, unknown>).forEach((prop) =>
+          visitJsonSchema(prop as Record<string, unknown>),
+        );
+      }
+      const items = jsonSchema['items'];
+      if (items && typeof items === 'object' && !Array.isArray(items)) {
+        visitJsonSchema(items as Record<string, unknown>);
+      }
+    };
+
     Object.values(schema).forEach(visitDefinition);
 
+    // Also visit all definitions to find nested references
+    Object.values(SETTINGS_SCHEMA_DEFINITIONS).forEach(visitJsonSchema);
+
     // Ensure definitions map doesn't accumulate stale entries.
     Object.keys(SETTINGS_SCHEMA_DEFINITIONS).forEach((key) => {
       if (!referenced.has(key)) {
diff --git a/packages/cli/src/config/settingsSchema.ts b/packages/cli/src/config/settingsSchema.ts
index 3724253e97..3a622460aa 100644
--- a/packages/cli/src/config/settingsSchema.ts
+++ b/packages/cli/src/config/settingsSchema.ts
@@ -1094,7 +1094,7 @@ const SETTINGS_SCHEMA = {
         showInDialog: false,
         additionalProperties: {
           type: 'array',
-          ref: 'ModelPolicy',
+          ref: 'ModelPolicyChain',
         },
       },
     },
@@ -2998,6 +2998,14 @@ export const SETTINGS_SCHEMA_DEFINITIONS: Record<
       },
     },
   },
+  ModelPolicyChain: {
+    type: 'array',
+    description: 'A chain of model policies for fallback behavior.',
+    items: {
+      type: 'object',
+      ref: 'ModelPolicy',
+    },
+  },
   ModelPolicy: {
     type: 'object',
     description:
diff --git a/packages/cli/src/ui/components/ModelDialog.tsx b/packages/cli/src/ui/components/ModelDialog.tsx
index 85cf16de3b..c42838c070 100644
--- a/packages/cli/src/ui/components/ModelDialog.tsx
+++ b/packages/cli/src/ui/components/ModelDialog.tsx
@@ -233,7 +233,8 @@ export function ModelDialog({ onClose }: ModelDialogProps): React.JSX.Element {
         });
 
       // Deduplicate: only show one entry per unique resolved model value.
-      // This is needed because 3 pro and 3.1 pro models can resolve to the same value.
+      // This is needed because 3 pro and 3.1 pro models can resolve to the same
+      // value, depending on the useGemini31 flag.
       const seen = new Set<string>();
       return list.filter((option) => {
         if (seen.has(option.value)) return false;
diff --git a/schemas/settings.schema.json b/schemas/settings.schema.json
index 85a907e57e..a231558bf7 100644
--- a/schemas/settings.schema.json
+++ b/schemas/settings.schema.json
@@ -2061,7 +2061,7 @@
           },
           "type": "object",
           "additionalProperties": {
-            "$ref": "#/$defs/ModelPolicy"
+            "$ref": "#/$defs/ModelPolicyChain"
           }
         }
       },
@@ -3686,6 +3686,14 @@
         }
       }
     },
+    "ModelPolicyChain": {
+      "type": "array",
+      "description": "A chain of model policies for fallback behavior.",
+      "items": {
+        "type": "object",
+        "ref": "ModelPolicy"
+      }
+    },
     "ModelPolicy": {
       "type": "object",
       "description": "Defines the policy for a single model in the availability chain.",