What this error means

litellm.AuthenticationError: 401 — Proxy virtual key expired or budget exhausted is a LiteLLM failure pattern reported for developers trying to fix litellm proxy 401 authentication error when virtual api key expires or budget is exhausted. Based on the imported evidence, treat this as a tool-specific troubleshooting page rather than a generic API error.

Why this happens

Recent LiteLLM PR (May 2026) fixed three proxy auth error status code mappings: budget exhaustion→429, model allowlist denial→403, expired virtual keys→401. OpenHands SDK also added typed exception mapping for 401/403.

Common causes

  • LiteLLM proxy is widely used as an LLM routing layer. When virtual keys expire or team budgets are depleted, developers get confusing 401/403/429 errors. The proxy maps different conditions to different status codes, making debugging non-obvious.
  • Recent LiteLLM PR (May 2026) fixed three proxy auth error status code mappings: budget exhaustion→429, model allowlist denial→403, expired virtual keys→401. OpenHands SDK also added typed exception mapping for 401/403.

Quick fixes

  1. Confirm the exact error signature matches litellm.AuthenticationError: 401 — Proxy virtual key expired or budget exhausted.
  2. Check the LiteLLM account, local tool state, and provider configuration involved in the failing workflow.
  3. Verify the account session, API key, provider settings, and environment where the failing tool is running.

Platform/tool-specific checks

  • Verify the command, editor, extension, or API client that produced the error.
  • Compare local settings with CI, deployment, or editor-level settings when the error appears in only one environment.
  • Avoid deleting credentials, local model data, or project settings until the failing scope is clear.

Step-by-step troubleshooting

  1. Capture the exact error message and the command, editor action, or request that triggered it.
  2. Check whether the failure is account/auth, quota/rate, model/provider, local runtime, or deployment configuration.
  3. Review the source evidence below and compare it with your environment.
  4. Apply one change at a time and rerun the smallest failing action.
  5. Keep the working fix documented for the team or deployment environment.

How to prevent it

  • Keep provider/tool configuration documented.
  • Record non-secret diagnostics such as tool version, provider name, model name, and command path.
  • Add a lightweight check before CI or production workflows depend on the tool.