diff --git a/packages/core/src/agents/agentLoader.test.ts b/packages/core/src/agents/agentLoader.test.ts
index a54626b637..a62c0b02ba 100644
--- a/packages/core/src/agents/agentLoader.test.ts
+++ b/packages/core/src/agents/agentLoader.test.ts
@@ -373,7 +373,6 @@ agent_card_url: https://example.com/card
 auth:
   type: apiKey
   key: $MY_API_KEY
-  in: header
   name: X-Custom-Key
 ---
 `);
@@ -385,7 +384,6 @@ auth:
         auth: {
           type: 'apiKey',
           key: '$MY_API_KEY',
-          in: 'header',
           name: 'X-Custom-Key',
         },
       });
@@ -468,7 +466,7 @@ auth:
 ---
 `);
       await expect(parseAgentMarkdown(filePath)).rejects.toThrow(
-        /Basic scheme requires "username" and "password"/,
+        /Basic authentication requires "password"/,
       );
     });
 
@@ -494,7 +492,6 @@ auth:
         auth: {
           type: 'apiKey' as const,
           key: '$API_KEY',
-          in: 'header' as const,
         },
       };
 
@@ -505,7 +502,6 @@ auth:
         auth: {
           type: 'apiKey',
           key: '$API_KEY',
-          location: 'header',
         },
       });
     });
diff --git a/packages/core/src/agents/agentLoader.ts b/packages/core/src/agents/agentLoader.ts
index cb2a605779..ed648c6191 100644
--- a/packages/core/src/agents/agentLoader.ts
+++ b/packages/core/src/agents/agentLoader.ts
@@ -48,7 +48,6 @@ interface FrontmatterAuthConfig {
   agent_card_requires_auth?: boolean;
   // API Key
   key?: string;
-  in?: 'header' | 'query' | 'cookie';
   name?: string;
   // HTTP
   scheme?: 'Bearer' | 'Basic';
@@ -129,7 +128,6 @@ const apiKeyAuthSchema = z.object({
   ...baseAuthFields,
   type: z.literal('apiKey'),
   key: z.string().min(1, 'API key is required'),
-  in: z.enum(['header', 'query', 'cookie']).optional(),
   name: z.string().optional(),
 });
 
@@ -138,24 +136,18 @@ const apiKeyAuthSchema = z.object({
  * Note: Validation for scheme-specific fields is applied in authConfigSchema
  * since discriminatedUnion doesn't support refined schemas directly.
  */
-const httpAuthSchemaBase = z.object({
+const httpAuthSchema = z.object({
   ...baseAuthFields,
   type: z.literal('http'),
   scheme: z.enum(['Bearer', 'Basic']),
-  token: z.string().optional(),
-  username: z.string().optional(),
-  password: z.string().optional(),
+  token: z.string().min(1).optional(),
+  username: z.string().min(1).optional(),
+  password: z.string().min(1).optional(),
 });
 
-/**
- * Combined auth schema - discriminated union of all auth types.
- * Note: We use the base schema for discriminatedUnion, then apply refinements
- * via superRefine since discriminatedUnion doesn't support refined schemas directly.
- */
 const authConfigSchema = z
-  .discriminatedUnion('type', [apiKeyAuthSchema, httpAuthSchemaBase])
+  .discriminatedUnion('type', [apiKeyAuthSchema, httpAuthSchema])
   .superRefine((data, ctx) => {
-    // Apply HTTP auth validation after union parsing
     if (data.type === 'http') {
       if (data.scheme === 'Bearer' && !data.token) {
         ctx.addIssue({
@@ -164,12 +156,21 @@ const authConfigSchema = z
           path: ['token'],
         });
       }
-      if (data.scheme === 'Basic' && (!data.username || !data.password)) {
-        ctx.addIssue({
-          code: z.ZodIssueCode.custom,
-          message: 'Basic scheme requires "username" and "password"',
-          path: data.username ? ['password'] : ['username'],
-        });
+      if (data.scheme === 'Basic') {
+        if (!data.username) {
+          ctx.addIssue({
+            code: z.ZodIssueCode.custom,
+            message: 'Basic authentication requires "username"',
+            path: ['username'],
+          });
+        }
+        if (!data.password) {
+          ctx.addIssue({
+            code: z.ZodIssueCode.custom,
+            message: 'Basic authentication requires "password"',
+            path: ['password'],
+          });
+        }
       }
     }
   });
@@ -338,7 +339,6 @@ function convertFrontmatterAuthToConfig(
         ...base,
         type: 'apiKey',
         key: frontmatter.key,
-        location: frontmatter.in,
         name: frontmatter.name,
       };
 
diff --git a/packages/core/src/agents/auth-provider/api-key-provider.test.ts b/packages/core/src/agents/auth-provider/api-key-provider.test.ts
new file mode 100644
index 0000000000..82d8c271e5
--- /dev/null
+++ b/packages/core/src/agents/auth-provider/api-key-provider.test.ts
@@ -0,0 +1,180 @@
+/**
+ * @license
+ * Copyright 2026 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { describe, it, expect, afterEach, vi } from 'vitest';
+import { ApiKeyAuthProvider } from './api-key-provider.js';
+
+describe('ApiKeyAuthProvider', () => {
+  afterEach(() => {
+    vi.unstubAllEnvs();
+  });
+
+  describe('initialization', () => {
+    it('should initialize with literal API key', async () => {
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: 'my-api-key',
+      });
+      await provider.initialize();
+
+      const headers = await provider.headers();
+      expect(headers).toEqual({ 'X-API-Key': 'my-api-key' });
+    });
+
+    it('should resolve API key from environment variable', async () => {
+      vi.stubEnv('TEST_API_KEY', 'env-api-key');
+
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: '$TEST_API_KEY',
+      });
+      await provider.initialize();
+
+      const headers = await provider.headers();
+      expect(headers).toEqual({ 'X-API-Key': 'env-api-key' });
+    });
+
+    it('should throw if environment variable is not set', async () => {
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: '$MISSING_KEY_12345',
+      });
+
+      await expect(provider.initialize()).rejects.toThrow(
+        "Environment variable 'MISSING_KEY_12345' is not set",
+      );
+    });
+  });
+
+  describe('headers', () => {
+    it('should throw if not initialized', async () => {
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: 'test-key',
+      });
+
+      await expect(provider.headers()).rejects.toThrow('not initialized');
+    });
+
+    it('should use custom header name', async () => {
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: 'my-key',
+        name: 'X-Custom-Auth',
+      });
+      await provider.initialize();
+
+      const headers = await provider.headers();
+      expect(headers).toEqual({ 'X-Custom-Auth': 'my-key' });
+    });
+
+    it('should use default header name X-API-Key', async () => {
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: 'my-key',
+      });
+      await provider.initialize();
+
+      const headers = await provider.headers();
+      expect(headers).toEqual({ 'X-API-Key': 'my-key' });
+    });
+  });
+
+  describe('shouldRetryWithHeaders', () => {
+    it('should return undefined for non-auth errors', async () => {
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: 'test-key',
+      });
+      await provider.initialize();
+
+      const result = await provider.shouldRetryWithHeaders(
+        {},
+        new Response(null, { status: 500 }),
+      );
+      expect(result).toBeUndefined();
+    });
+
+    it('should return undefined for literal keys on 401 (same headers would fail again)', async () => {
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: 'test-key',
+      });
+      await provider.initialize();
+
+      const result = await provider.shouldRetryWithHeaders(
+        {},
+        new Response(null, { status: 401 }),
+      );
+      expect(result).toBeUndefined();
+    });
+
+    it('should return undefined for env-var keys on 403', async () => {
+      vi.stubEnv('RETRY_TEST_KEY', 'some-key');
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: '$RETRY_TEST_KEY',
+      });
+      await provider.initialize();
+
+      const result = await provider.shouldRetryWithHeaders(
+        {},
+        new Response(null, { status: 403 }),
+      );
+      expect(result).toBeUndefined();
+    });
+
+    it('should re-resolve and return headers for command keys on 401', async () => {
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: '!echo refreshed-key',
+      });
+      await provider.initialize();
+
+      const result = await provider.shouldRetryWithHeaders(
+        {},
+        new Response(null, { status: 401 }),
+      );
+      expect(result).toEqual({ 'X-API-Key': 'refreshed-key' });
+    });
+
+    it('should stop retrying after MAX_AUTH_RETRIES', async () => {
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: '!echo rotating-key',
+      });
+      await provider.initialize();
+
+      const r1 = await provider.shouldRetryWithHeaders(
+        {},
+        new Response(null, { status: 401 }),
+      );
+      expect(r1).toBeDefined();
+
+      const r2 = await provider.shouldRetryWithHeaders(
+        {},
+        new Response(null, { status: 401 }),
+      );
+      expect(r2).toBeDefined();
+
+      const r3 = await provider.shouldRetryWithHeaders(
+        {},
+        new Response(null, { status: 401 }),
+      );
+      expect(r3).toBeUndefined();
+    });
+  });
+
+  describe('type property', () => {
+    it('should have type apiKey', () => {
+      const provider = new ApiKeyAuthProvider({
+        type: 'apiKey',
+        key: 'test',
+      });
+      expect(provider.type).toBe('apiKey');
+    });
+  });
+});
diff --git a/packages/core/src/agents/auth-provider/api-key-provider.ts b/packages/core/src/agents/auth-provider/api-key-provider.ts
new file mode 100644
index 0000000000..207c987271
--- /dev/null
+++ b/packages/core/src/agents/auth-provider/api-key-provider.ts
@@ -0,0 +1,85 @@
+/**
+ * @license
+ * Copyright 2026 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import type { HttpHeaders } from '@a2a-js/sdk/client';
+import { BaseA2AAuthProvider } from './base-provider.js';
+import type { ApiKeyAuthConfig } from './types.js';
+import { resolveAuthValue, needsResolution } from './value-resolver.js';
+import { debugLogger } from '../../utils/debugLogger.js';
+
+const DEFAULT_HEADER_NAME = 'X-API-Key';
+
+/**
+ * Authentication provider for API Key authentication.
+ * Sends the API key as an HTTP header.
+ *
+ * The API key value can be:
+ * - A literal string
+ * - An environment variable reference ($ENV_VAR)
+ * - A shell command (!command)
+ */
+export class ApiKeyAuthProvider extends BaseA2AAuthProvider {
+  readonly type = 'apiKey' as const;
+
+  private resolvedKey: string | undefined;
+  private readonly headerName: string;
+
+  constructor(private readonly config: ApiKeyAuthConfig) {
+    super();
+    this.headerName = config.name ?? DEFAULT_HEADER_NAME;
+  }
+
+  override async initialize(): Promise<void> {
+    if (needsResolution(this.config.key)) {
+      this.resolvedKey = await resolveAuthValue(this.config.key);
+      debugLogger.debug(
+        `[ApiKeyAuthProvider] Resolved API key from: ${this.config.key.startsWith('$') ? 'env var' : 'command'}`,
+      );
+    } else {
+      this.resolvedKey = this.config.key;
+    }
+  }
+
+  async headers(): Promise<HttpHeaders> {
+    if (!this.resolvedKey) {
+      throw new Error(
+        'ApiKeyAuthProvider not initialized. Call initialize() first.',
+      );
+    }
+    return { [this.headerName]: this.resolvedKey };
+  }
+
+  /**
+   * Re-resolve command-based API keys on auth failure.
+   */
+  override async shouldRetryWithHeaders(
+    _req: RequestInit,
+    res: Response,
+  ): Promise<HttpHeaders | undefined> {
+    if (res.status !== 401 && res.status !== 403) {
+      this.authRetryCount = 0;
+      return undefined;
+    }
+
+    // Only retry for command-based keys that may resolve to a new value.
+    // Literal and env-var keys would just resend the same failing headers.
+    if (!this.config.key.startsWith('!') || this.config.key.startsWith('!!')) {
+      return undefined;
+    }
+
+    if (this.authRetryCount >= BaseA2AAuthProvider.MAX_AUTH_RETRIES) {
+      return undefined;
+    }
+    this.authRetryCount++;
+
+    debugLogger.debug(
+      '[ApiKeyAuthProvider] Re-resolving API key after auth failure',
+    );
+    this.resolvedKey = await resolveAuthValue(this.config.key);
+
+    return this.headers();
+  }
+}
diff --git a/packages/core/src/agents/auth-provider/base-provider.ts b/packages/core/src/agents/auth-provider/base-provider.ts
index 7fb2e61acc..2c8fd3ee2a 100644
--- a/packages/core/src/agents/auth-provider/base-provider.ts
+++ b/packages/core/src/agents/auth-provider/base-provider.ts
@@ -23,8 +23,8 @@ export abstract class BaseA2AAuthProvider implements A2AAuthProvider {
    */
   abstract headers(): Promise<HttpHeaders>;
 
-  private static readonly MAX_AUTH_RETRIES = 2;
-  private authRetryCount = 0;
+  protected static readonly MAX_AUTH_RETRIES = 2;
+  protected authRetryCount = 0;
 
   /**
    * Check if a request should be retried with new headers.
diff --git a/packages/core/src/agents/auth-provider/factory.test.ts b/packages/core/src/agents/auth-provider/factory.test.ts
index 6aa7069fa9..17de791de9 100644
--- a/packages/core/src/agents/auth-provider/factory.test.ts
+++ b/packages/core/src/agents/auth-provider/factory.test.ts
@@ -478,5 +478,19 @@ describe('A2AAuthProviderFactory', () => {
       // Returns undefined - caller should prompt user to configure auth
       expect(result).toBeUndefined();
     });
+
+    it('should create an ApiKeyAuthProvider for apiKey config', async () => {
+      const provider = await A2AAuthProviderFactory.create({
+        authConfig: {
+          type: 'apiKey',
+          key: 'factory-test-key',
+        },
+      });
+
+      expect(provider).toBeDefined();
+      expect(provider!.type).toBe('apiKey');
+      const headers = await provider!.headers();
+      expect(headers).toEqual({ 'X-API-Key': 'factory-test-key' });
+    });
   });
 });
diff --git a/packages/core/src/agents/auth-provider/factory.ts b/packages/core/src/agents/auth-provider/factory.ts
index b79c8b4f77..9562737345 100644
--- a/packages/core/src/agents/auth-provider/factory.ts
+++ b/packages/core/src/agents/auth-provider/factory.ts
@@ -10,6 +10,7 @@ import type {
   A2AAuthProvider,
   AuthValidationResult,
 } from './types.js';
+import { ApiKeyAuthProvider } from './api-key-provider.js';
 
 export interface CreateAuthProviderOptions {
   /** Required for OAuth/OIDC token storage. */
@@ -43,9 +44,11 @@ export class A2AAuthProviderFactory {
         // TODO: Implement
         throw new Error('google-credentials auth provider not yet implemented');
 
-      case 'apiKey':
-        // TODO: Implement
-        throw new Error('apiKey auth provider not yet implemented');
+      case 'apiKey': {
+        const provider = new ApiKeyAuthProvider(authConfig);
+        await provider.initialize();
+        return provider;
+      }
 
       case 'http':
         // TODO: Implement
diff --git a/packages/core/src/agents/auth-provider/types.ts b/packages/core/src/agents/auth-provider/types.ts
index 67fce94ca8..7d41b1b4a9 100644
--- a/packages/core/src/agents/auth-provider/types.ts
+++ b/packages/core/src/agents/auth-provider/types.ts
@@ -34,14 +34,13 @@ export interface GoogleCredentialsAuthConfig extends BaseAuthConfig {
   scopes?: string[];
 }
 
-/** Client config corresponding to APIKeySecurityScheme. */
+/** Client config corresponding to APIKeySecurityScheme. Only header location is supported. */
+// TODO: Add 'query' and 'cookie' location support if needed.
 export interface ApiKeyAuthConfig extends BaseAuthConfig {
   type: 'apiKey';
   /** The secret. Supports $ENV_VAR, !command, or literal. */
   key: string;
-  /** Defaults to server's SecurityScheme.in value. */
-  location?: 'header' | 'query' | 'cookie';
-  /** Defaults to server's SecurityScheme.name value. */
+  /** Header name. @default 'X-API-Key' */
   name?: string;
 }