diff --git a/packages/model-core/src/model-error-classifier-openai-usage-limit.test.ts b/packages/model-core/src/model-error-classifier-openai-usage-limit.test.ts
new file mode 100644
index 000000000..0d6f2dc7b
--- /dev/null
+++ b/packages/model-core/src/model-error-classifier-openai-usage-limit.test.ts
@@ -0,0 +1,18 @@
+import { describe, expect, test } from "bun:test"
+import { shouldRetryError } from "./model-error-classifier"
+
+describe("model-error-classifier OpenAI usage_limit_reached", () => {
+  test("treats OpenAI usage_limit_reached response bodies as retryable provider exhaustion", () => {
+    //#given
+    const error = {
+      name: "AI_APICallError",
+      message: '{"error":{"type":"usage_limit_reached","message":"The usage limit has been reached"}}',
+    }
+
+    //#when
+    const result = shouldRetryError(error)
+
+    //#then
+    expect(result).toBe(true)
+  })
+})
diff --git a/packages/model-core/src/model-error-classifier.test.ts b/packages/model-core/src/model-error-classifier.test.ts
index 172899e64..43096fc5a 100644
--- a/packages/model-core/src/model-error-classifier.test.ts
+++ b/packages/model-core/src/model-error-classifier.test.ts
@@ -172,7 +172,7 @@ describe("model-error-classifier", () => {
     expect(result).toBe(false)
   })
 
-  test("treats usage limit reached message as non-retryable STOP error (no error name)", () => {
+  test("treats provider usage limit reached message as retryable fallback signal", () => {
     //#given
     const error = { message: "usage limit has been reached for your account" }
 
@@ -180,7 +180,7 @@ describe("model-error-classifier", () => {
     const result = shouldRetryError(error)
 
     //#then
-    expect(result).toBe(false)
+    expect(result).toBe(true)
   })
 
   test("treats insufficient credits message as non-retryable STOP error (no error name)", () => {
diff --git a/packages/model-core/src/model-error-classifier.ts b/packages/model-core/src/model-error-classifier.ts
index 0786cd9fe..f9f5b3e5e 100644
--- a/packages/model-core/src/model-error-classifier.ts
+++ b/packages/model-core/src/model-error-classifier.ts
@@ -40,6 +40,8 @@ const NON_RETRYABLE_ERROR_NAMES = new Set([
 const RETRYABLE_MESSAGE_PATTERNS = [
   "rate_limit",
   "rate limit",
+  "usage_limit_reached",
+  "usage limit has been reached",
   "quota",
   "all credentials for model",
   "cooling down",
@@ -92,7 +94,6 @@ const RETRYABLE_MESSAGE_PATTERNS = [
 const STOP_MESSAGE_PATTERNS = [
   "quota will reset after",
   "quota exceeded",
-  "usage limit has been reached",
   "free usage limit",
   "billing limit",
   "billing hard limit",
diff --git a/src/features/background-agent/atlas-subagent-fallback-retry.test.ts b/src/features/background-agent/atlas-subagent-fallback-retry.test.ts
new file mode 100644
index 000000000..4c67ee6b4
--- /dev/null
+++ b/src/features/background-agent/atlas-subagent-fallback-retry.test.ts
@@ -0,0 +1,213 @@
+/// <reference types="bun-types" />
+
+import { afterEach, beforeEach, describe, expect, test } from "bun:test"
+import type { PluginInput } from "@opencode-ai/plugin"
+import { _resetMemCacheForTesting as resetConnectedProvidersCacheForTesting } from "../../shared/connected-providers-cache"
+import { releaseAllPromptAsyncReservationsForTesting } from "../../shared/prompt-async-gate"
+import {
+  getSessionAgent,
+  _resetForTesting as resetClaudeCodeSessionState,
+  subagentSessions,
+} from "../claude-code-session-state"
+import { BackgroundManager } from "./manager"
+import { clearBackgroundTaskRegistryForTesting } from "./task-registry"
+
+type SessionGetArgs = { readonly path: { readonly id: string } }
+type SessionCreateArgs = {
+  readonly body?: {
+    readonly parentID?: string
+    readonly model?: { readonly providerID?: string; readonly id?: string; readonly variant?: string }
+  }
+}
+type PromptCall = { readonly path: { readonly id: string }; readonly body?: unknown }
+
+const originalXdgCacheHome = process.env.XDG_CACHE_HOME
+const testDirectory = "/tmp/omo-atlas-fallback-test"
+let cacheCounter = 0
+
+beforeEach(() => {
+  process.env.XDG_CACHE_HOME = `${testDirectory}/cache-${cacheCounter}`
+  cacheCounter += 1
+  resetConnectedProvidersCacheForTesting()
+  resetClaudeCodeSessionState()
+})
+
+afterEach(() => {
+  if (originalXdgCacheHome === undefined) {
+    delete process.env.XDG_CACHE_HOME
+  } else {
+    process.env.XDG_CACHE_HOME = originalXdgCacheHome
+  }
+  resetConnectedProvidersCacheForTesting()
+  resetClaudeCodeSessionState()
+  clearBackgroundTaskRegistryForTesting()
+  releaseAllPromptAsyncReservationsForTesting()
+})
+
+function createPluginInput(client: unknown, directory: string): PluginInput {
+  return { client, directory } as PluginInput
+}
+
+async function flushAsyncWork(cycles = 30): Promise<void> {
+  for (let index = 0; index < cycles; index++) {
+    await Promise.resolve()
+  }
+}
+
+function createAtlasHarness(): {
+  readonly manager: BackgroundManager
+  readonly createdSessions: Array<{ readonly id: string; readonly body: SessionCreateArgs["body"] }>
+  readonly promptCalls: PromptCall[]
+  readonly markSessionMissing: (sessionID: string) => void
+} {
+  const directory = testDirectory
+  const sessionAlive = new Map<string, boolean>([["atlas-parent", true]])
+  const createdSessions: Array<{ readonly id: string; readonly body: SessionCreateArgs["body"] }> = []
+  const promptCalls: PromptCall[] = []
+  const sessionIDs = ["ses_primary", "ses_fallback"]
+
+  const client = {
+    session: {
+      get: async ({ path }: SessionGetArgs) => {
+        if (path.id === "atlas-parent") {
+          return { data: { id: path.id, directory, parentID: undefined } }
+        }
+        if (sessionAlive.get(path.id)) {
+          return { data: { id: path.id, directory, parentID: "atlas-parent" } }
+        }
+        return { error: { status: 404, message: `session ${path.id} not found` } }
+      },
+      create: async (args: SessionCreateArgs) => {
+        const id = sessionIDs[createdSessions.length] ?? `ses_extra_${createdSessions.length}`
+        createdSessions.push({ id, body: args.body })
+        sessionAlive.set(id, true)
+        return { data: { id } }
+      },
+      promptAsync: async (args: PromptCall) => {
+        promptCalls.push(args)
+        return {}
+      },
+      abort: async ({ path }: SessionGetArgs) => {
+        sessionAlive.set(path.id, false)
+        return {}
+      },
+    },
+  }
+  const manager = new BackgroundManager({ pluginContext: createPluginInput(client, directory) })
+
+  return {
+    manager,
+    createdSessions,
+    promptCalls,
+    markSessionMissing: (sessionID: string) => sessionAlive.set(sessionID, false),
+  }
+}
+
+async function launchAtlasOracleSubagent(manager: BackgroundManager): Promise<string> {
+  const task = await manager.launch({
+    description: "Atlas oracle subagent",
+    prompt: "Investigate fallback behavior",
+    agent: "oracle",
+    parentSessionId: "atlas-parent",
+    parentMessageId: "atlas-message",
+    parentAgent: "atlas",
+    model: { providerID: "openai", modelID: "gpt-5.5", variant: "high" },
+    fallbackChain: [
+      { providers: ["github-copilot"], model: "claude-sonnet-4.6", variant: "high" },
+    ],
+  })
+  await flushAsyncWork()
+  return task.id
+}
+
+function emitUsageLimitError(manager: BackgroundManager, sessionID: string): void {
+  manager.handleEvent({
+    type: "session.error",
+    properties: {
+      sessionID,
+      error: {
+        name: "AI_APICallError",
+        data: {
+          error: {
+            type: "usage_limit_reached",
+            message: "The usage limit has been reached",
+          },
+        },
+      },
+    },
+  })
+}
+
+describe("Atlas-spawned subagent runtime fallback", () => {
+  test("retries oracle subagent on OpenAI usage_limit_reached and registers the fallback session", async () => {
+    //#given
+    const { manager, createdSessions, promptCalls } = createAtlasHarness()
+    const taskID = await launchAtlasOracleSubagent(manager)
+
+    //#when
+    emitUsageLimitError(manager, "ses_primary")
+    await flushAsyncWork(60)
+
+    //#then
+    const task = manager.getTask(taskID)
+    expect(task?.status).toBe("running")
+    expect(task?.sessionId).toBe("ses_fallback")
+    expect(task?.model).toEqual({ providerID: "github-copilot", modelID: "claude-sonnet-4.6", variant: "high" })
+    expect(task?.attemptCount).toBe(1)
+    expect(createdSessions).toHaveLength(2)
+    expect(createdSessions[1]?.body?.model).toEqual({ providerID: "github-copilot", id: "claude-sonnet-4.6", variant: "high" })
+    expect(promptCalls).toHaveLength(2)
+    expect(subagentSessions.has("ses_primary")).toBe(false)
+    expect(subagentSessions.has("ses_fallback")).toBe(true)
+    expect(getSessionAgent("ses_fallback")).toBe("oracle")
+
+    manager.shutdown()
+  })
+
+  test("surfaces non-retryable oracle subagent errors without creating a fallback session", async () => {
+    //#given
+    const { manager, createdSessions, markSessionMissing } = createAtlasHarness()
+    const taskID = await launchAtlasOracleSubagent(manager)
+    markSessionMissing("ses_primary")
+
+    //#when
+    manager.handleEvent({
+      type: "session.error",
+      properties: {
+        sessionID: "ses_primary",
+        error: { name: "PermissionDeniedError", data: { message: "permission denied" } },
+      },
+    })
+    await flushAsyncWork(60)
+
+    //#then
+    const task = manager.getTask(taskID)
+    expect(task?.status).toBe("error")
+    expect(task?.error).toBe("permission denied")
+    expect(createdSessions).toHaveLength(1)
+
+    manager.shutdown()
+  })
+
+  test("marks oracle subagent errored when usage_limit_reached exhausts all fallbacks", async () => {
+    //#given
+    const { manager, createdSessions, markSessionMissing } = createAtlasHarness()
+    const taskID = await launchAtlasOracleSubagent(manager)
+    emitUsageLimitError(manager, "ses_primary")
+    await flushAsyncWork(60)
+    markSessionMissing("ses_fallback")
+
+    //#when
+    emitUsageLimitError(manager, "ses_fallback")
+    await flushAsyncWork(60)
+
+    //#then
+    const task = manager.getTask(taskID)
+    expect(task?.status).toBe("error")
+    expect(task?.error).toBe("The usage limit has been reached")
+    expect(task?.attemptCount).toBe(1)
+    expect(createdSessions).toHaveLength(2)
+
+    manager.shutdown()
+  })
+})
diff --git a/src/features/background-agent/error-classifier.ts b/src/features/background-agent/error-classifier.ts
index 7fbfd031b..a0e3b0c01 100644
--- a/src/features/background-agent/error-classifier.ts
+++ b/src/features/background-agent/error-classifier.ts
@@ -104,6 +104,15 @@ export function getSessionErrorMessage(properties: EventPropertiesLike): string
   if (isRecord(dataRaw)) {
     const message = dataRaw["message"]
     if (typeof message === "string") return message
+
+    const nestedError = dataRaw["error"]
+    if (isRecord(nestedError)) {
+      const nestedMessage = nestedError["message"]
+      if (typeof nestedMessage === "string") return nestedMessage
+
+      const nestedType = nestedError["type"]
+      if (typeof nestedType === "string") return nestedType
+    }
   }
 
   const message = errorRaw["message"]