diff --git a/pkg/agent/inject_defaults_test.go b/pkg/agent/inject_defaults_test.go
new file mode 100644
index 0000000000..ec21f0ae31
--- /dev/null
+++ b/pkg/agent/inject_defaults_test.go
@@ -0,0 +1,114 @@
+package agent
+
+import (
+	"testing"
+
+	"github.com/devsy-org/devsy/pkg/config"
+	"github.com/devsy-org/devsy/pkg/version"
+	"github.com/stretchr/testify/assert"
+)
+
+func TestApplyURLDefaults_NormalizesTagURL(t *testing.T) {
+	t.Setenv(config.EnvAgentURL, "")
+
+	opts := &InjectOptions{
+		DownloadURL: config.GitHubReleasesURL + "/releases/tag/v1.2.3",
+	}
+	opts.applyURLDefaults()
+
+	assert.Equal(t, config.GitHubReleasesURL+"/releases/download/v1.2.3", opts.DownloadURL)
+}
+
+func TestApplyURLDefaults_PreservesNonTagURL(t *testing.T) {
+	t.Setenv(config.EnvAgentURL, "")
+
+	custom := "http://localhost:8080/devsy-linux-amd64"
+	opts := &InjectOptions{DownloadURL: custom}
+	opts.applyURLDefaults()
+
+	assert.Equal(t, custom, opts.DownloadURL)
+}
+
+func TestApplyURLDefaults_FillsFromEnvWhenEmpty(t *testing.T) {
+	override := "http://localhost:8080"
+	t.Setenv(config.EnvAgentURL, override)
+
+	opts := &InjectOptions{}
+	opts.applyURLDefaults()
+
+	assert.Equal(t, override, opts.DownloadURL)
+}
+
+func TestApplyPreferDownloadDefaults_CustomAgentURL(t *testing.T) {
+	t.Setenv(config.EnvAgentURL, "http://localhost:8080")
+	t.Setenv(config.EnvAgentPreferDownload, "")
+
+	opts := &InjectOptions{DownloadURL: "http://localhost:8080"}
+	opts.applyPreferDownloadDefaults()
+
+	assert.NotNil(t, opts.PreferDownloadFromRemoteUrl)
+	assert.True(t, *opts.PreferDownloadFromRemoteUrl)
+	assert.True(t, opts.SkipVersionCheck)
+}
+
+func TestApplyPreferDownloadDefaults_EnvTrue(t *testing.T) {
+	t.Setenv(config.EnvAgentURL, "")
+	t.Setenv(config.EnvAgentPreferDownload, "true")
+
+	opts := &InjectOptions{}
+	opts.applyPreferDownloadDefaults()
+
+	assert.NotNil(t, opts.PreferDownloadFromRemoteUrl)
+	assert.True(t, *opts.PreferDownloadFromRemoteUrl)
+	assert.True(t, opts.SkipVersionCheck)
+}
+
+func TestApplyPreferDownloadDefaults_EnvFalse(t *testing.T) {
+	t.Setenv(config.EnvAgentURL, "")
+	t.Setenv(config.EnvAgentPreferDownload, "false")
+
+	opts := &InjectOptions{}
+	opts.applyPreferDownloadDefaults()
+
+	assert.NotNil(t, opts.PreferDownloadFromRemoteUrl)
+	assert.False(t, *opts.PreferDownloadFromRemoteUrl)
+	assert.True(t, opts.SkipVersionCheck)
+}
+
+func TestApplyPreferDownloadDefaults_EnvInvalidDefaultsTrue(t *testing.T) {
+	t.Setenv(config.EnvAgentURL, "")
+	t.Setenv(config.EnvAgentPreferDownload, "not-a-bool")
+
+	opts := &InjectOptions{}
+	opts.applyPreferDownloadDefaults()
+
+	assert.NotNil(t, opts.PreferDownloadFromRemoteUrl)
+	assert.True(t, *opts.PreferDownloadFromRemoteUrl)
+	assert.True(t, opts.SkipVersionCheck)
+}
+
+func TestApplyPreferDownloadDefaults_DevBuildPrefersLocal(t *testing.T) {
+	if version.GetVersion() != version.DevVersion {
+		t.Skip("test assumes a dev build")
+	}
+	t.Setenv(config.EnvAgentURL, "")
+	t.Setenv(config.EnvAgentPreferDownload, "")
+
+	opts := &InjectOptions{}
+	opts.ApplyDefaults()
+
+	assert.NotNil(t, opts.PreferDownloadFromRemoteUrl)
+	assert.False(t, *opts.PreferDownloadFromRemoteUrl)
+	assert.True(t, opts.SkipVersionCheck)
+}
+
+func TestApplyPreferDownloadDefaults_ExplicitPreferencePreserved(t *testing.T) {
+	t.Setenv(config.EnvAgentURL, "http://localhost:8080")
+	t.Setenv(config.EnvAgentPreferDownload, "false")
+
+	opts := &InjectOptions{PreferDownloadFromRemoteUrl: new(true)}
+	opts.applyPreferDownloadDefaults()
+
+	assert.True(t, *opts.PreferDownloadFromRemoteUrl)
+	assert.False(t, opts.SkipVersionCheck)
+}