diff --git a/CHANGELOG.md b/CHANGELOG.md
index 390d81d..fe6846e 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -5,6 +5,24 @@ All notable changes to this project will be documented in this file.
 The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/),
 and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0.html).
 
+## [0.5.7] - 2026-03-02
+
+### Changed
+
+- **Default API key lookup order**: `AI::Chat.new` and `AI::Chat.generate_schema!` now look for `AICHAT_API_KEY` first, then fall back to `OPENAI_API_KEY` when the first value is missing or empty.
+
+- **Explicit API key override behavior**: Passing `api_key:` still takes highest precedence, and passing `api_key_env_var:` still uses that environment variable exactly.
+
+### Added
+
+- **Unit coverage for API key precedence**: Added tests covering default env order, empty `AICHAT_API_KEY` fallback, explicit `api_key_env_var:`, and explicit `api_key:` behavior.
+
+### Updated
+
+- **Integration test setup**: Integration tests now run when either `AICHAT_API_KEY` or `OPENAI_API_KEY` is present.
+
+- **Documentation**: README now documents the new default key lookup order and updates the direct `OpenAI::Client` example to match.
+
 ## [0.5.6] - 2026-03-02
 
 ### Changed
diff --git a/Gemfile.lock b/Gemfile.lock
index 4a01d5b..e53e2f1 100644
--- a/Gemfile.lock
+++ b/Gemfile.lock
@@ -1,7 +1,7 @@
 PATH
   remote: .
   specs:
-    ai-chat (0.5.6)
+    ai-chat (0.5.7)
       amazing_print (~> 2.0)
       base64 (~> 0.1, > 0.1.1)
       json (~> 2.0)
diff --git a/README.md b/README.md
index 3318346..e0fb024 100644
--- a/README.md
+++ b/README.md
@@ -238,7 +238,7 @@ See [OpenAI's model documentation](https://platform.openai.com/docs/models) for
 
 ### API key
 
-The gem by default looks for an environment variable called `OPENAI_API_KEY` and uses that if it finds it.
+The gem by default looks for `AICHAT_API_KEY` first. If that is missing (or empty), it falls back to `OPENAI_API_KEY`.
 
 You can specify a different environment variable name:
 
@@ -404,7 +404,7 @@ AI::Chat.generate_schema!("A user profile with name (required), email (required)
 
 This method returns a String containing the JSON schema. The JSON schema also writes (or overwrites) to `schema.json` at the root of the project.
 
-Similar to generating messages with `AI::Chat` objects, this class method will assume that you have an API key called `OPENAI_API_KEY` defined. You can also pass the API key directly or choose a different environment variable key for it to use.
+Similar to generating messages with `AI::Chat` objects, this class method will look for `AICHAT_API_KEY` first, then fall back to `OPENAI_API_KEY` if needed. You can also pass the API key directly or choose a different environment variable key for it to use.
 
 ```rb
 # Passing the API key directly
@@ -748,7 +748,9 @@ This is particularly useful for background mode workflows. If you want to retrie
 ```ruby
 require "openai"
 
-client = OpenAI::Client.new(api_key: ENV.fetch("OPENAI_API_KEY"))
+api_key = ENV["AICHAT_API_KEY"]
+api_key = ENV.fetch("OPENAI_API_KEY") if api_key.nil? || api_key.empty?
+client = OpenAI::Client.new(api_key: api_key)
 
 response_id = "resp_abc123..." # e.g., load from your database
 response = client.responses.retrieve(response_id)
diff --git a/ai-chat.gemspec b/ai-chat.gemspec
index 23b64a5..33a881a 100644
--- a/ai-chat.gemspec
+++ b/ai-chat.gemspec
@@ -2,7 +2,7 @@
 
 Gem::Specification.new do |spec|
   spec.name = "ai-chat"
-  spec.version = "0.5.6"
+  spec.version = "0.5.7"
   spec.authors = ["Raghu Betina", "Jelani Woods"]
   spec.email = ["raghu@firstdraft.com", "jelani@firstdraft.com"]
   spec.homepage = "https://github.com/firstdraft/ai-chat"
diff --git a/lib/ai/chat.rb b/lib/ai/chat.rb
index 087c9a7..b9fb108 100644
--- a/lib/ai/chat.rb
+++ b/lib/ai/chat.rb
@@ -23,8 +23,8 @@ class Chat
 
     BASE_PROXY_URL = "https://prepend.me/api.openai.com/v1"
 
-    def initialize(api_key: nil, api_key_env_var: "OPENAI_API_KEY")
-      @api_key = api_key || ENV.fetch(api_key_env_var)
+    def initialize(api_key: nil, api_key_env_var: nil)
+      @api_key = self.class.resolve_api_key(api_key: api_key, api_key_env_var: api_key_env_var)
       @proxy = ENV["AICHAT_PROXY"] == "true"
       @messages = []
       @reasoning_effort = nil
@@ -39,8 +39,8 @@ def initialize(api_key: nil, api_key_env_var: "OPENAI_API_KEY")
       @verbosity = :medium
     end
 
-    def self.generate_schema!(description, location: "schema.json", api_key: nil, api_key_env_var: "OPENAI_API_KEY", proxy: nil)
-      api_key ||= ENV.fetch(api_key_env_var)
+    def self.generate_schema!(description, location: "schema.json", api_key: nil, api_key_env_var: nil, proxy: nil)
+      api_key = resolve_api_key(api_key: api_key, api_key_env_var: api_key_env_var)
       proxy = ENV["AICHAT_PROXY"] == "true" if proxy.nil?
       prompt_path = File.expand_path("../prompts/schema_generator.md", __dir__)
       system_prompt = File.read(prompt_path)
@@ -73,6 +73,16 @@ def self.generate_schema!(description, location: "schema.json", api_key: nil, ap
       content
     end
 
+    def self.resolve_api_key(api_key: nil, api_key_env_var: nil)
+      return api_key if api_key
+      return ENV.fetch(api_key_env_var) if api_key_env_var
+
+      aichat_api_key = ENV["AICHAT_API_KEY"]
+      return aichat_api_key if aichat_api_key && !aichat_api_key.empty?
+
+      ENV.fetch("OPENAI_API_KEY")
+    end
+
     # :reek:TooManyStatements
     # :reek:NilCheck
     def add(content, role: "user", response: nil, status: nil, image: nil, images: nil, file: nil, files: nil)
diff --git a/spec/integration/ai_chat_integration_spec.rb b/spec/integration/ai_chat_integration_spec.rb
index fb13728..f288ee5 100644
--- a/spec/integration/ai_chat_integration_spec.rb
+++ b/spec/integration/ai_chat_integration_spec.rb
@@ -225,12 +225,12 @@
   end
 
   describe "API key configuration" do
-    it "uses OPENAI_API_KEY environment variable by default" do
+    it "uses the default API key env lookup by default" do
       expect { AI::Chat.new }.not_to raise_error
     end
 
     it "accepts a custom environment variable name" do
-      ENV["CUSTOM_OPENAI_KEY"] = ENV["OPENAI_API_KEY"]
+      ENV["CUSTOM_OPENAI_KEY"] = ENV["AICHAT_API_KEY"] || ENV["OPENAI_API_KEY"]
 
       chat = AI::Chat.new(api_key_env_var: "CUSTOM_OPENAI_KEY")
       chat.user("Hi")
@@ -241,7 +241,7 @@
     end
 
     it "accepts an API key directly" do
-      chat = AI::Chat.new(api_key: ENV["OPENAI_API_KEY"])
+      chat = AI::Chat.new(api_key: ENV["AICHAT_API_KEY"] || ENV["OPENAI_API_KEY"])
       chat.user("Hi")
 
       expect { chat.generate! }.not_to raise_error
diff --git a/spec/support/integration_helper.rb b/spec/support/integration_helper.rb
index 4bb57db..708460d 100644
--- a/spec/support/integration_helper.rb
+++ b/spec/support/integration_helper.rb
@@ -2,8 +2,8 @@
 
 RSpec.configure do |config|
   config.before(:each, :integration) do
-    if ENV["OPENAI_API_KEY"].nil?
-      skip "Integration tests require OPENAI_API_KEY environment variable"
+    if ENV["AICHAT_API_KEY"].to_s.empty? && ENV["OPENAI_API_KEY"].to_s.empty?
+      skip "Integration tests require AICHAT_API_KEY or OPENAI_API_KEY environment variable"
     end
   end
 end
diff --git a/spec/unit/chat_spec.rb b/spec/unit/chat_spec.rb
index 5689ee3..79b675d 100644
--- a/spec/unit/chat_spec.rb
+++ b/spec/unit/chat_spec.rb
@@ -32,7 +32,66 @@ def schema_client_double
 
   around do |example|
     with_env_var("AICHAT_PROXY", nil) do
-      example.run
+      with_env_var("AICHAT_API_KEY", nil) do
+        example.run
+      end
+    end
+  end
+
+  describe "api key defaults" do
+    it "uses AICHAT_API_KEY before OPENAI_API_KEY by default" do
+      with_env_var("AICHAT_API_KEY", "aichat-key") do
+        with_env_var("OPENAI_API_KEY", "openai-key") do
+          client_double = instance_double(OpenAI::Client)
+          expect(OpenAI::Client).to receive(:new).with(api_key: "aichat-key").and_return(client_double)
+
+          AI::Chat.new
+        end
+      end
+    end
+
+    it "falls back to OPENAI_API_KEY when AICHAT_API_KEY is missing" do
+      with_env_var("AICHAT_API_KEY", nil) do
+        with_env_var("OPENAI_API_KEY", "openai-key") do
+          client_double = instance_double(OpenAI::Client)
+          expect(OpenAI::Client).to receive(:new).with(api_key: "openai-key").and_return(client_double)
+
+          AI::Chat.new
+        end
+      end
+    end
+
+    it "treats empty AICHAT_API_KEY as missing and falls back to OPENAI_API_KEY" do
+      with_env_var("AICHAT_API_KEY", "") do
+        with_env_var("OPENAI_API_KEY", "openai-key") do
+          client_double = instance_double(OpenAI::Client)
+          expect(OpenAI::Client).to receive(:new).with(api_key: "openai-key").and_return(client_double)
+
+          AI::Chat.new
+        end
+      end
+    end
+
+    it "uses only the explicitly provided api_key_env_var when present" do
+      with_env_var("AICHAT_API_KEY", "aichat-key") do
+        with_env_var("CUSTOM_OPENAI_KEY", "custom-key") do
+          client_double = instance_double(OpenAI::Client)
+          expect(OpenAI::Client).to receive(:new).with(api_key: "custom-key").and_return(client_double)
+
+          AI::Chat.new(api_key_env_var: "CUSTOM_OPENAI_KEY")
+        end
+      end
+    end
+
+    it "uses explicit api_key before env vars" do
+      with_env_var("AICHAT_API_KEY", "aichat-key") do
+        with_env_var("OPENAI_API_KEY", "openai-key") do
+          client_double = instance_double(OpenAI::Client)
+          expect(OpenAI::Client).to receive(:new).with(api_key: "direct-key").and_return(client_double)
+
+          AI::Chat.new(api_key: "direct-key")
+        end
+      end
     end
   end
 
@@ -103,6 +162,50 @@ def schema_client_double
   end
 
   describe ".generate_schema!" do
+    it "uses AICHAT_API_KEY before OPENAI_API_KEY by default" do
+      with_env_var("AICHAT_API_KEY", "aichat-key") do
+        with_env_var("OPENAI_API_KEY", "openai-key") do
+          client_double = schema_client_double
+          expect(OpenAI::Client).to receive(:new).with(api_key: "aichat-key").and_return(client_double)
+
+          AI::Chat.generate_schema!("A tiny schema", location: false)
+        end
+      end
+    end
+
+    it "falls back to OPENAI_API_KEY when AICHAT_API_KEY is empty" do
+      with_env_var("AICHAT_API_KEY", "") do
+        with_env_var("OPENAI_API_KEY", "openai-key") do
+          client_double = schema_client_double
+          expect(OpenAI::Client).to receive(:new).with(api_key: "openai-key").and_return(client_double)
+
+          AI::Chat.generate_schema!("A tiny schema", location: false)
+        end
+      end
+    end
+
+    it "uses only the explicitly provided api_key_env_var when present" do
+      with_env_var("AICHAT_API_KEY", "aichat-key") do
+        with_env_var("CUSTOM_OPENAI_KEY", "custom-key") do
+          client_double = schema_client_double
+          expect(OpenAI::Client).to receive(:new).with(api_key: "custom-key").and_return(client_double)
+
+          AI::Chat.generate_schema!("A tiny schema", location: false, api_key_env_var: "CUSTOM_OPENAI_KEY")
+        end
+      end
+    end
+
+    it "uses explicit api_key before env vars" do
+      with_env_var("AICHAT_API_KEY", "aichat-key") do
+        with_env_var("OPENAI_API_KEY", "openai-key") do
+          client_double = schema_client_double
+          expect(OpenAI::Client).to receive(:new).with(api_key: "direct-key").and_return(client_double)
+
+          AI::Chat.generate_schema!("A tiny schema", location: false, api_key: "direct-key")
+        end
+      end
+    end
+
     it "uses env proxy default when proxy keyword is omitted" do
       with_env_var("AICHAT_PROXY", "true") do
         client_double = schema_client_double