diff --git a/tests/test_model_adapters.py b/tests/test_model_adapters.py
index a6f0770d..eaf36f88 100644
--- a/tests/test_model_adapters.py
+++ b/tests/test_model_adapters.py
@@ -206,6 +206,7 @@ def __init__(self, model_name: str, provider: object) -> None:
             captured["provider"] = provider
 
     monkeypatch.delenv("OPENAI_API_KEY", raising=False)
+    monkeypatch.delenv("OPENAI_EMBEDDING_MODEL", raising=False)
     monkeypatch.setenv("AZURE_OPENAI_API_KEY", "test-key")
     monkeypatch.setenv(
         "AZURE_OPENAI_ENDPOINT_EMBEDDING",
@@ -217,13 +218,10 @@ def __init__(self, model_name: str, provider: object) -> None:
         lambda endpoint_envvar, api_key_envvar: provider,
     )
     monkeypatch.setattr(
-        "pydantic_ai.embeddings.openai.OpenAIEmbeddingModel",
-        FakeOpenAIEmbeddingModel,
+        "pydantic_ai.embeddings.openai.OpenAIEmbeddingModel", FakeOpenAIEmbeddingModel
     )
     monkeypatch.setattr(
-        model_adapters,
-        "_PydanticAIEmbedder",
-        lambda embedding_model: embedding_model,
+        model_adapters, "_PydanticAIEmbedder", lambda embedding_model: embedding_model
     )
 
     embedder = create_embedding_model()
@@ -262,8 +260,7 @@ async def request(self, *args: object, **kwargs: object) -> ModelResponse:
         lambda endpoint_envvar="AZURE_OPENAI_ENDPOINT", api_key_envvar="AZURE_OPENAI_API_KEY": provider,
     )
     monkeypatch.setattr(
-        "pydantic_ai.models.openai.OpenAIChatModel",
-        FakeOpenAIChatModel,
+        "pydantic_ai.models.openai.OpenAIChatModel", FakeOpenAIChatModel
     )
 
     chat_model = create_chat_model()
diff --git a/tests/test_utils.py b/tests/test_utils.py
index cd3336f7..ad526129 100644
--- a/tests/test_utils.py
+++ b/tests/test_utils.py
@@ -11,14 +11,13 @@
 import pydantic.dataclasses
 import typechat
 
-import typeagent.aitools.utils as utils
+from typeagent.aitools import utils
 
 
 def test_timelog():
     buf = StringIO()
-    with redirect_stderr(buf):
-        with utils.timelog("test block"):
-            pass
+    with redirect_stderr(buf), utils.timelog("test block"):
+        pass
     out = buf.getvalue()
     assert "test block..." in out
 
@@ -136,8 +135,7 @@ def test_query_string_stripped_from_endpoint(
     ) -> None:
         """Returned endpoint should not contain query string parameters."""
         monkeypatch.setenv(
-            "TEST_ENDPOINT",
-            "https://myhost.openai.azure.com?api-version=2024-06-01",
+            "TEST_ENDPOINT", "https://myhost.openai.azure.com?api-version=2024-06-01"
         )
         endpoint, version = utils.parse_azure_endpoint("TEST_ENDPOINT")
         assert endpoint == "https://myhost.openai.azure.com"
@@ -205,8 +203,41 @@ def test_apim_prefix_preserved(self, monkeypatch: pytest.MonkeyPatch) -> None:
     def test_no_api_version_raises(self, monkeypatch: pytest.MonkeyPatch) -> None:
         """RuntimeError when the endpoint has no api-version field."""
         monkeypatch.setenv(
-            "TEST_ENDPOINT",
-            "https://myhost.openai.azure.com/openai/deployments/gpt-4",
+            "TEST_ENDPOINT", "https://myhost.openai.azure.com/openai/deployments/gpt-4"
         )
         with pytest.raises(RuntimeError, match="doesn't contain valid api-version"):
             utils.parse_azure_endpoint("TEST_ENDPOINT")
+
+
+class TestResolveAzureModelName:
+    """Tests for resolve_azure_model_name."""
+
+    def test_returns_deployment_name_from_endpoint(
+        self, monkeypatch: pytest.MonkeyPatch
+    ) -> None:
+        """Deployment name in the endpoint takes precedence over the fallback."""
+        monkeypatch.setenv(
+            "TEST_ENDPOINT",
+            "https://myhost.openai.azure.com/openai/deployments/gpt-4o-custom?api-version=2025-01-01-preview",
+        )
+        result = utils.resolve_azure_model_name("gpt-4o", "TEST_ENDPOINT")
+        assert result == "gpt-4o-custom"
+
+    def test_falls_back_to_model_name(self, monkeypatch: pytest.MonkeyPatch) -> None:
+        """Falls back to the provided model_name when no deployment in the endpoint."""
+        monkeypatch.setenv(
+            "TEST_ENDPOINT", "https://myhost.openai.azure.com?api-version=2024-06-01"
+        )
+        result = utils.resolve_azure_model_name("gpt-4o", "TEST_ENDPOINT")
+        assert result == "gpt-4o"
+
+    def test_uses_default_endpoint_envvar(
+        self, monkeypatch: pytest.MonkeyPatch
+    ) -> None:
+        """Uses AZURE_OPENAI_ENDPOINT by default."""
+        monkeypatch.setenv(
+            "AZURE_OPENAI_ENDPOINT",
+            "https://myhost.openai.azure.com/openai/deployments/my-deploy?api-version=2024-06-01",
+        )
+        result = utils.resolve_azure_model_name("gpt-4o")
+        assert result == "my-deploy"