diff --git a/AGENTS.md b/AGENTS.md
index 7d4aef35e4..e07c05408a 100644
--- a/AGENTS.md
+++ b/AGENTS.md
@@ -521,10 +521,10 @@ When adding code that needs a new string, decide up front which rule it falls un
 - `scripts/dev-safe.mjs` uses `uvx` for temporary agent-server installation — no permanent `uv tool install` needed. Environment variables (highest precedence first):
   - `OH_AGENT_SERVER_LOCAL_PATH` — absolute path to a local `software-agent-sdk` checkout. Runs the local checkout via `uvx` with `--with-editable` for `openhands-sdk`/`openhands-tools`/`openhands-workspace` and `--reinstall` for `openhands-agent-server`, so SDK edits are picked up on restart. Highest precedence.
   - `OH_AGENT_SERVER_GIT_REF` — git commit SHA or branch name (takes precedence over version)
-  - `OH_AGENT_SERVER_VERSION` — specific PyPI version (e.g., "1.28.1")
+  - `OH_AGENT_SERVER_VERSION` — specific PyPI version (e.g., "1.27.0")
   - `OH_SECRET_KEY` — secret key for settings encryption; auto-generated and persisted to `~/.openhands/agent-canvas/secret-key.txt` on first run (same file Docker uses), ensuring dev mode and Docker share the same key when both mount the same `~/.openhands` directory. Override with the env var to pin a specific key.
   - `SESSION_API_KEY` / `OH_SESSION_API_KEYS_0` / `VITE_SESSION_API_KEY` — session API key for agent-server authentication; auto-generated using `crypto.randomBytes(32)` if not set, passed to both agent-server (`OH_SESSION_API_KEYS_0`) and frontend (`VITE_SESSION_API_KEY`)
-  - Default: released PyPI version `1.28.1` for agent-server SDK libraries
+  - Default: released PyPI version `1.27.0` for agent-server SDK libraries
 
 - Security: `scripts/dev-safe.mjs` and `scripts/dev-with-automation.mjs` auto-generate random API keys when needed and persist the defaults so static builds, localStorage, and restarted services stay in sync:
   - `SESSION_API_KEY` — 64-character hex (256-bit) for agent-server API authentication; persisted at `~/.openhands/agent-canvas/session-api-key.txt` unless overridden via env var
diff --git a/__tests__/components/settings/llm-profiles/llm-settings-local-view.test.tsx b/__tests__/components/settings/llm-profiles/llm-settings-local-view.test.tsx
index 03c5033767..3ca4b23b1d 100644
--- a/__tests__/components/settings/llm-profiles/llm-settings-local-view.test.tsx
+++ b/__tests__/components/settings/llm-profiles/llm-settings-local-view.test.tsx
@@ -625,46 +625,6 @@ describe("LlmSettingsLocalView", () => {
       expect(savedLlm.model).toBe("litellm_proxy/claude-opus-4-8");
       expect(savedLlm.base_url).toBe(OPENHANDS_LLM_PROXY_BASE_URL);
     });
-
-    it("injects the proxy base_url for a litellm_proxy model when server omits it (agent-server ≥1.28)", async () => {
-      // Arrange — agent-server ≥1.28 may omit the default base_url from stored
-      // profile configs. When the profile is fetched with base_url:null the save
-      // must still inject the All-Hands proxy URL, otherwise the profile is
-      // stranded on the next save from the Basic tab.
-      const user = userEvent.setup();
-      vi.mocked(ProfilesService.getProfile).mockResolvedValue({
-        name: "gpt-4-profile",
-        api_key_set: true,
-        config: {
-          model: "litellm_proxy/claude-opus-4-8",
-          api_key: "gAAAA_encrypted_key",
-          base_url: null,
-        },
-      });
-      mockSaveMutateAsync.mockResolvedValueOnce({ success: true });
-
-      renderWithProviders(<LlmSettingsLocalView />);
-
-      await user.click(screen.getAllByTestId("profile-menu-trigger")[0]);
-      await user.click(screen.getByTestId("profile-edit"));
-      await waitFor(() => {
-        expect(screen.getByTestId("profile-name-input")).toHaveValue(
-          "gpt-4-profile",
-        );
-      });
-      await user.click(await screen.findByTestId("sdk-section-basic-toggle"));
-      await waitFor(() => {
-        expect(screen.getByTestId("save-profile-btn")).not.toBeDisabled();
-      });
-      await user.click(screen.getByTestId("save-profile-btn"));
-
-      // Assert — even though the server returned base_url:null, the Basic-tab
-      // save must inject the proxy URL so the profile stays usable.
-      await waitFor(() => expect(mockSaveMutateAsync).toHaveBeenCalled());
-      const savedLlm = mockSaveMutateAsync.mock.calls[0][0].request.llm;
-      expect(savedLlm.model).toBe("litellm_proxy/claude-opus-4-8");
-      expect(savedLlm.base_url).toBe(OPENHANDS_LLM_PROXY_BASE_URL);
-    });
   });
 
   describe("All tab save", () => {
diff --git a/__tests__/scripts/dev-safe.test.ts b/__tests__/scripts/dev-safe.test.ts
index ee062d2d2e..9bfc8e8638 100644
--- a/__tests__/scripts/dev-safe.test.ts
+++ b/__tests__/scripts/dev-safe.test.ts
@@ -389,16 +389,16 @@ describe("buildAgentServerCommand", () => {
     // Defaults to the released PyPI version with all SDK packages pinned to same version
     expect(cmd.args).toEqual([
       "--from",
-      "openhands-agent-server==1.28.1",
+      "openhands-agent-server==1.27.0",
       "--with",
-      "openhands-sdk==1.28.1",
+      "openhands-sdk==1.27.0",
       "--with",
-      "openhands-tools==1.28.1",
+      "openhands-tools==1.27.0",
       "--with",
-      "openhands-workspace==1.28.1",
+      "openhands-workspace==1.27.0",
       "agent-server",
     ]);
-    expect(cmd.source).toBe("PyPI (1.28.1, default)");
+    expect(cmd.source).toBe("PyPI (1.27.0, default)");
   });
 
   it("uses specific PyPI version when OH_AGENT_SERVER_VERSION is set with all packages pinned", () => {
diff --git a/config/defaults.json b/config/defaults.json
index e6fdfa971b..b30a64ab41 100644
--- a/config/defaults.json
+++ b/config/defaults.json
@@ -2,10 +2,10 @@
   "_comment": "Single source of truth for version pins, ports, paths, and defaults shared across the npm and Docker install paths. Read by scripts/dev-safe.mjs, scripts/dev-with-automation.mjs, docker/entrypoint.sh (via generated defaults.env), and .github/workflows/docker.yml.",
 
   "versions": {
-    "agentServer": "1.28.1",
+    "agentServer": "1.27.0",
     "agentCanvas": "1.0.0-rc.6",
-    "automation": "1.0.0a9",
-    "automationSdk": "1.28.1",
+    "automation": "1.0.0a7",
+    "automationSdk": "1.27.0",
     "githubMcpServer": "1.2.0"
   },
 
diff --git a/package-lock.json b/package-lock.json
index df22f98b84..34a3d55737 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -12,7 +12,7 @@
         "@heroui/react": "2.8.10",
         "@microlink/react-json-view": "1.31.20",
         "@monaco-editor/react": "4.7.0",
-        "@openhands/extensions": "0.4.1",
+        "@openhands/extensions": "0.4.0",
         "@openhands/typescript-client": "1.24.3",
         "@react-router/node": "7.17.0",
         "@react-router/serve": "7.17.0",
@@ -3468,9 +3468,9 @@
       "license": "MIT"
     },
     "node_modules/@openhands/extensions": {
-      "version": "0.4.1",
-      "resolved": "https://registry.npmjs.org/@openhands/extensions/-/extensions-0.4.1.tgz",
-      "integrity": "sha512-wpoLYiuy4aiaiLeJpUdkoc2oK861/u5uc8rvZD9s+98fDS8vjnDSImEIG35XKsKT6xMsKlOK6pTpdgNfb8sB8w==",
+      "version": "0.4.0",
+      "resolved": "https://registry.npmjs.org/@openhands/extensions/-/extensions-0.4.0.tgz",
+      "integrity": "sha512-cz0k8/rl/rfsD8rAatU1P0SOj/LKaSy+aUu9qp11yEfl0yF2D1vltY4XYa84LmTkTwxtOwDbKtqRPdZ6GJ5b/A==",
       "license": "MIT",
       "engines": {
         "node": ">=18.20.0"
diff --git a/package.json b/package.json
index 5b7a31e807..4a24c1235d 100644
--- a/package.json
+++ b/package.json
@@ -23,7 +23,7 @@
     "@heroui/react": "2.8.10",
     "@microlink/react-json-view": "1.31.20",
     "@monaco-editor/react": "4.7.0",
-    "@openhands/extensions": "0.4.1",
+    "@openhands/extensions": "0.4.0",
     "@openhands/typescript-client": "1.24.3",
     "@react-router/node": "7.17.0",
     "@react-router/serve": "7.17.0",
diff --git a/scripts/check-sdk-version-sync.mjs b/scripts/check-sdk-version-sync.mjs
index b21e78cd57..582ef0c9aa 100644
--- a/scripts/check-sdk-version-sync.mjs
+++ b/scripts/check-sdk-version-sync.mjs
@@ -19,7 +19,7 @@
  *
  * Usage:
  *   node scripts/check-sdk-version-sync.mjs
- *   EXPECTED_SDK_VERSION=1.28.1 node scripts/check-sdk-version-sync.mjs
+ *   EXPECTED_SDK_VERSION=1.27.0 node scripts/check-sdk-version-sync.mjs
  *   node scripts/check-sdk-version-sync.mjs --check-pypi
  *
  * Environment variables:
@@ -79,7 +79,7 @@ Triggering from other repos:
     -H "Authorization: token \$GITHUB_TOKEN" \\
     -H "Accept: application/vnd.github.v3+json" \\
     https://api.github.com/repos/OpenHands/agent-canvas/dispatches \\
-    -d '{"event_type": "sdk-version-check", "client_payload": {"version": "1.28.1"}}'
+    -d '{"event_type": "sdk-version-check", "client_payload": {"version": "1.27.0"}}'
 `);
   process.exit(0);
 }
@@ -268,9 +268,9 @@ async function fetchPyPIDependencies(packageName, version) {
  * Parse PyPI requires_dist array and extract SDK package versions
  *
  * PyPI returns dependencies in PEP 508 format like:
- *   "openhands-sdk>=1.28.1,<2.0.0"
- *   "openhands-tools==1.28.1"
- *   "openhands-workspace (>=1.28.1)"
+ *   "openhands-sdk>=1.27.0,<2.0.0"
+ *   "openhands-tools==1.27.0"
+ *   "openhands-workspace (>=1.27.0)"
  */
 function parseSdkVersionsFromRequiresDist(requiresDist) {
   const versions = {};
@@ -284,7 +284,7 @@ function parseSdkVersionsFromRequiresDist(requiresDist) {
       }
 
       // Extract the version number - look for patterns like:
-      // ">=1.28.1", "==1.28.1", "(>=1.28.1)", "~=1.28.1"
+      // ">=1.27.0", "==1.27.0", "(>=1.27.0)", "~=1.27.0"
       // After the package name and before any comma or closing paren
       const versionPattern = /[><=~!]+\s*([0-9]+(?:\.[0-9]+)*)/;
       const match = dep.match(versionPattern);
diff --git a/scripts/dev-safe.mjs b/scripts/dev-safe.mjs
index 284d1776e9..cac5b7ebc8 100644
--- a/scripts/dev-safe.mjs
+++ b/scripts/dev-safe.mjs
@@ -394,7 +394,7 @@ export function validateFrontendDependencies(
  *   edits are picked up without a manual reinstall. The agent-server itself
  *   is rebuilt from local source on each invocation (--reinstall).
  * - OH_AGENT_SERVER_GIT_REF: Git commit SHA or branch name
- * - OH_AGENT_SERVER_VERSION: Specific PyPI version (e.g., "1.28.1")
+ * - OH_AGENT_SERVER_VERSION: Specific PyPI version (e.g., "1.27.0")
  *
  * If none are set, defaults to the released version specified by
  * DEFAULT_AGENT_SERVER_VERSION. Set OH_AGENT_SERVER_GIT_REF to use a
diff --git a/src/components/features/settings/llm-profiles/llm-settings-local-view.tsx b/src/components/features/settings/llm-profiles/llm-settings-local-view.tsx
index 2909785410..3309671f4a 100644
--- a/src/components/features/settings/llm-profiles/llm-settings-local-view.tsx
+++ b/src/components/features/settings/llm-profiles/llm-settings-local-view.tsx
@@ -255,26 +255,13 @@ export function LlmSettingsLocalView() {
 
     // The Basic tab has no base_url field; the provider implies it. Persist
     // the All-Hands proxy explicitly for OpenHands models — including ones the
-    // SDK has already rewritten to `litellm_proxy/*` — because local
+    // SDK has already rewritten to `litellm_proxy/*` — because older local
     // agent-server builds do not infer the LiteLLM proxy api_base on their own,
     // and dropping it strands the profile as `litellm_proxy/* + base_url:null`
     // (issue #1146). For other providers, drop any stale custom value and let
     // the backend use its normal provider defaults.
-    //
-    // Agent-server ≥1.28 may omit the default base_url from profile configs,
-    // causing the stored value to be null even for genuine OpenHands proxy
-    // models. Treat litellm_proxy/* with a missing base_url the same as
-    // litellm_proxy/* with the proxy URL already set.
     if (saveControl.view === "basic") {
-      const model = llmConfig.model;
-      const baseUrl = llmConfig.base_url;
-      const isProxy = isOpenHandsProxyModel(model, baseUrl);
-      const isLitellmProxyWithMissingBaseUrl =
-        !isProxy &&
-        typeof model === "string" &&
-        model.startsWith("litellm_proxy/") &&
-        !baseUrl;
-      if (isProxy || isLitellmProxyWithMissingBaseUrl) {
+      if (isOpenHandsProxyModel(llmConfig.model, llmConfig.base_url)) {
         llmConfig.base_url = OPENHANDS_LLM_PROXY_BASE_URL;
       } else {
         delete llmConfig.base_url;
diff --git a/tests/e2e/mock-llm/mock-llm-profile-management.spec.ts b/tests/e2e/mock-llm/mock-llm-profile-management.spec.ts
index 5a66ed0eff..706387237b 100644
--- a/tests/e2e/mock-llm/mock-llm-profile-management.spec.ts
+++ b/tests/e2e/mock-llm/mock-llm-profile-management.spec.ts
@@ -70,46 +70,6 @@ async function getProfileConfig(
   return (data.config ?? {}) as Record<string, unknown>;
 }
 
-/**
- * Assert that a proxy profile config is valid after a Basic-tab re-save.
- *
- * Agent-server ≥1.28 normalises `litellm_proxy/*` → `openhands/*` on storage
- * and manages the proxy URL internally (returning base_url:null). Both
- * representations are accepted here. The original issue #1146 regression
- * (litellm_proxy/* with null base_url) is still guarded explicitly.
- */
-function assertProxyProfileConfig(
-  config: Record<string, unknown>,
-  litellmProxyModel: string,
-  openHandsEquivalentModel: string,
-  proxyBaseUrl: string,
-) {
-  const model = config.model as string | null | undefined;
-  const baseUrl = config.base_url as string | null | undefined;
-
-  const isLitellmForm =
-    typeof model === "string" && model.startsWith("litellm_proxy/");
-  const isOpenHandsForm =
-    typeof model === "string" && model.startsWith("openhands/");
-
-  expect(
-    isLitellmForm || isOpenHandsForm,
-    `model must be ${litellmProxyModel} or ${openHandsEquivalentModel}; got: ${model}`,
-  ).toBe(true);
-
-  if (isLitellmForm) {
-    // A litellm_proxy/* profile without the proxy URL is stranded (issue #1146).
-    // The frontend must always inject the URL when saving from the Basic tab.
-    expect(
-      baseUrl,
-      "base_url must be the All-Hands proxy URL for litellm_proxy/* profiles " +
-        "(dropping it strands the profile — issue #1146)",
-    ).toBe(proxyBaseUrl);
-  }
-  // For openhands/* (agent-server ≥1.28 rewrite), null base_url is correct;
-  // the server routes the request through the proxy internally.
-}
-
 test.describe.configure({ mode: "serial" });
 
 // ═══════════════════════════════════════════════════════════════════════
@@ -397,13 +357,8 @@ test.describe("litellm_proxy proxy base_url preservation", () => {
   // Simulates the state the SDK persists after onboarding through the
   // OpenHands provider: openhands/* is rewritten to litellm_proxy/* and
   // paired with the All-Hands proxy base URL.
-  //
-  // Agent-server ≥1.28 additionally normalises litellm_proxy/* back to
-  // openhands/* on storage and manages the proxy URL internally (returning
-  // base_url:null). The assertions below accept both representations.
   const PROXY_PROFILE = "proxy-base-url-test";
   const LITELLM_PROXY_MODEL = "litellm_proxy/claude-opus-4-8";
-  const OPENHANDS_EQUIVALENT_MODEL = "openhands/claude-opus-4-8";
   const OPENHANDS_PROXY_BASE_URL = "https://llm-proxy.app.all-hands.dev/";
 
   test.beforeEach(async ({ page }) => {
@@ -496,15 +451,15 @@ test.describe("litellm_proxy proxy base_url preservation", () => {
       await waitForTestId(page, "add-llm-profile");
     });
 
-    // ── Verify: the proxy setup survived the Basic-tab save ──
-    await test.step("verify proxy setup is preserved after save", async () => {
+    // ── Verify: the proxy base_url survived the Basic-tab save ──
+    await test.step("verify base_url is preserved after save", async () => {
       const config = await getProfileConfig(request, PROXY_PROFILE);
-      assertProxyProfileConfig(
-        config,
-        LITELLM_PROXY_MODEL,
-        OPENHANDS_EQUIVALENT_MODEL,
-        OPENHANDS_PROXY_BASE_URL,
-      );
+      expect(
+        config.base_url,
+        "base_url must be the All-Hands proxy URL after a Basic-tab re-save; " +
+          "dropping it strands the profile (issue #1146)",
+      ).toBe(OPENHANDS_PROXY_BASE_URL);
+      expect(config.model).toBe(LITELLM_PROXY_MODEL);
     });
 
     // ── Verify: the profile also looks correct after a page reload ──
@@ -514,12 +469,8 @@ test.describe("litellm_proxy proxy base_url preservation", () => {
 
       // Re-read via API to confirm persistence is durable
       const config = await getProfileConfig(request, PROXY_PROFILE);
-      assertProxyProfileConfig(
-        config,
-        LITELLM_PROXY_MODEL,
-        OPENHANDS_EQUIVALENT_MODEL,
-        OPENHANDS_PROXY_BASE_URL,
-      );
+      expect(config.base_url).toBe(OPENHANDS_PROXY_BASE_URL);
+      expect(config.model).toBe(LITELLM_PROXY_MODEL);
     });
   });
 });