diff --git a/lib/core/auth/api_auth_interceptor.dart b/lib/core/auth/api_auth_interceptor.dart
index ebb4146..f283e77 100644
--- a/lib/core/auth/api_auth_interceptor.dart
+++ b/lib/core/auth/api_auth_interceptor.dart
@@ -35,6 +35,13 @@ class ApiAuthInterceptor extends Interceptor {
     '/api/v1/configs/models',
   };
 
+  // Endpoints for features that can be disabled server-side.
+  // A 403 on these indicates the feature is disabled, not an auth failure.
+  static const Set<String> _featureEndpoints = {
+    '/api/v1/folders/',
+    '/api/v1/folders',
+  };
+
   ApiAuthInterceptor({
     String? authToken,
     this.onAuthTokenInvalid,
@@ -79,6 +86,20 @@ class ApiAuthInterceptor extends Interceptor {
     return _optionalAuthEndpoints.contains(path);
   }
 
+  /// Check if endpoint is for a feature that can be disabled server-side.
+  /// A 403 on these indicates feature disabled, not an auth failure.
+  bool _isFeatureEndpoint(String path) {
+    // Direct match for exact paths like /api/v1/folders or /api/v1/folders/
+    if (_featureEndpoints.contains(path)) {
+      return true;
+    }
+    // Check for folder sub-paths (e.g., /api/v1/folders/{id})
+    if (path.startsWith('/api/v1/folders/')) {
+      return true;
+    }
+    return false;
+  }
+
   @override
   void onRequest(RequestOptions options, RequestInterceptorHandler handler) {
     final path = options.path;
@@ -153,9 +174,15 @@ class ApiAuthInterceptor extends Interceptor {
       }
     } else if (statusCode == 403) {
       // 403 on protected endpoints indicates insufficient permissions or invalid token
+      // BUT 403 on feature endpoints indicates the feature is disabled server-side
       final requiresAuth = _requiresAuth(path);
       final optionalAuth = _hasOptionalAuth(path);
-      if (requiresAuth && !optionalAuth) {
+      final isFeatureEndpoint = _isFeatureEndpoint(path);
+      if (isFeatureEndpoint) {
+        DebugLogger.auth(
+          '403 Forbidden on feature endpoint $path - feature likely disabled server-side',
+        );
+      } else if (requiresAuth && !optionalAuth) {
         _notifyAuthFailure(
           '403 Forbidden on protected endpoint $path - notifying app without clearing token',
         );
diff --git a/lib/core/providers/app_providers.dart b/lib/core/providers/app_providers.dart
index 7e71b01..ac620e5 100644
--- a/lib/core/providers/app_providers.dart
+++ b/lib/core/providers/app_providers.dart
@@ -1285,7 +1285,10 @@ class Conversations extends _$Conversations {
           error: error,
           stackTrace: stackTrace,
         );
-        return <Map<String, dynamic>>[];
+        // Preserve the existing enabled state on error (don't override a
+        // previously determined disabled state due to network errors)
+        final currentEnabled = ref.read(foldersFeatureEnabledProvider);
+        return (const <Map<String, dynamic>>[], currentEnabled);
       });
 
       final results = await Future.wait<dynamic>([
@@ -1293,7 +1296,14 @@ class Conversations extends _$Conversations {
         foldersFuture,
       ]);
       final conversations = results[0] as List<Conversation>;
-      final foldersData = results[1] as List<Map<String, dynamic>>;
+      final foldersResult = results[1] as (List<Map<String, dynamic>>, bool);
+      final foldersData = foldersResult.$1;
+      final foldersEnabled = foldersResult.$2;
+
+      // Update the folders feature enabled state
+      ref
+          .read(foldersFeatureEnabledProvider.notifier)
+          .setEnabled(foldersEnabled);
       DebugLogger.log(
         'fetch-ok',
         scope: 'conversations',
@@ -2130,6 +2140,22 @@ final webSearchAvailableProvider = Provider<bool>((ref) {
   );
 });
 
+/// Tracks whether the folders feature is enabled on the server.
+/// When the server returns 403 for folders endpoint, this becomes false.
+final foldersFeatureEnabledProvider =
+    NotifierProvider<FoldersFeatureEnabledNotifier, bool>(
+      FoldersFeatureEnabledNotifier.new,
+    );
+
+class FoldersFeatureEnabledNotifier extends Notifier<bool> {
+  @override
+  bool build() => true;
+
+  void setEnabled(bool enabled) {
+    state = enabled;
+  }
+}
+
 // Folders provider
 @Riverpod(keepAlive: true)
 class Folders extends _$Folders {
@@ -2224,14 +2250,20 @@ class Folders extends _$Folders {
 
   Future<List<Folder>> _load(ApiService api) async {
     try {
-      final foldersData = await api.getFolders();
+      final (foldersData, featureEnabled) = await api.getFolders();
+
+      // Update the folders feature enabled state
+      ref
+          .read(foldersFeatureEnabledProvider.notifier)
+          .setEnabled(featureEnabled);
+
       final folders = foldersData
           .map((folderData) => Folder.fromJson(folderData))
           .toList();
       DebugLogger.log(
         'fetch-ok',
         scope: 'folders',
-        data: {'count': folders.length},
+        data: {'count': folders.length, 'enabled': featureEnabled},
       );
       final sorted = _sort(folders);
       _persistFoldersAsync(sorted);
diff --git a/lib/core/services/api_service.dart b/lib/core/services/api_service.dart
index daecffb..488770c 100644
--- a/lib/core/services/api_service.dart
+++ b/lib/core/services/api_service.dart
@@ -1123,7 +1123,9 @@ class ApiService {
   }
 
   // Folders
-  Future<List<Map<String, dynamic>>> getFolders() async {
+  /// Returns a record with (folders data, feature enabled flag).
+  /// When the folders feature is disabled server-side (403), returns ([], false).
+  Future<(List<Map<String, dynamic>>, bool)> getFolders() async {
     try {
       final response = await _dio.get('/api/v1/folders/');
       DebugLogger.log(
@@ -1136,15 +1138,27 @@ class ApiService {
       final data = response.data;
       if (data is List) {
         _traceApi('Found ${data.length} folders');
-        return data.cast<Map<String, dynamic>>();
+        return (data.cast<Map<String, dynamic>>(), true);
       } else {
         DebugLogger.warning(
           'unexpected-type',
           scope: 'api/folders',
           data: {'type': data.runtimeType},
         );
-        return [];
+        return (const <Map<String, dynamic>>[], true);
       }
+    } on DioException catch (e) {
+      // 403 indicates folders feature is disabled server-side
+      if (e.response?.statusCode == 403) {
+        DebugLogger.log(
+          'feature-disabled',
+          scope: 'api/folders',
+          data: {'status': 403},
+        );
+        return (const <Map<String, dynamic>>[], false);
+      }
+      DebugLogger.error('fetch-failed', scope: 'api/folders', error: e);
+      rethrow;
     } catch (e) {
       DebugLogger.error('fetch-failed', scope: 'api/folders', error: e);
       rethrow;
diff --git a/lib/features/navigation/widgets/chats_drawer.dart b/lib/features/navigation/widgets/chats_drawer.dart
index 7687019..c60500f 100644
--- a/lib/features/navigation/widgets/chats_drawer.dart
+++ b/lib/features/navigation/widgets/chats_drawer.dart
@@ -327,6 +327,7 @@ class _ChatsDrawerState extends ConsumerState<ChatsDrawer> {
           final showPinned = ref.watch(_showPinnedProvider);
           final showFolders = ref.watch(_showFoldersProvider);
           final showRecent = ref.watch(_showRecentProvider);
+          final foldersEnabled = ref.watch(foldersFeatureEnabledProvider);
 
           final slivers = <Widget>[
             if (pinned.isNotEmpty) ...[
@@ -347,12 +348,14 @@ class _ChatsDrawerState extends ConsumerState<ChatsDrawer> {
               const SliverToBoxAdapter(child: SizedBox(height: Spacing.md)),
             ],
 
-            // Folders section (shown even if empty)
-            SliverPadding(
-              padding: const EdgeInsets.symmetric(horizontal: Spacing.md),
-              sliver: SliverToBoxAdapter(child: _buildFoldersSectionHeader()),
-            ),
-            if (showFolders) ...[
+            // Folders section (hidden when feature is disabled server-side)
+            if (foldersEnabled) ...[
+              SliverPadding(
+                padding: const EdgeInsets.symmetric(horizontal: Spacing.md),
+                sliver: SliverToBoxAdapter(child: _buildFoldersSectionHeader()),
+              ),
+            ],
+            if (showFolders && foldersEnabled) ...[
               const SliverToBoxAdapter(child: SizedBox(height: Spacing.xs)),
               if (_isDragging && _draggingHasFolder) ...[
                 SliverPadding(
@@ -442,7 +445,8 @@ class _ChatsDrawerState extends ConsumerState<ChatsDrawer> {
                     ],
                   ),
             ],
-            const SliverToBoxAdapter(child: SizedBox(height: Spacing.md)),
+            if (foldersEnabled)
+              const SliverToBoxAdapter(child: SizedBox(height: Spacing.md)),
 
             if (regular.isNotEmpty) ...[
               SliverPadding(
@@ -586,14 +590,18 @@ class _ChatsDrawerState extends ConsumerState<ChatsDrawer> {
           );
         }
 
-        slivers.add(
-          SliverPadding(
-            padding: const EdgeInsets.symmetric(horizontal: Spacing.md),
-            sliver: SliverToBoxAdapter(child: _buildFoldersSectionHeader()),
-          ),
-        );
+        // Folders section (hidden when feature is disabled server-side)
+        final foldersEnabled = ref.watch(foldersFeatureEnabledProvider);
+        if (foldersEnabled) {
+          slivers.add(
+            SliverPadding(
+              padding: const EdgeInsets.symmetric(horizontal: Spacing.md),
+              sliver: SliverToBoxAdapter(child: _buildFoldersSectionHeader()),
+            ),
+          );
+        }
 
-        if (showFolders) {
+        if (showFolders && foldersEnabled) {
           slivers.add(
             const SliverToBoxAdapter(child: SizedBox(height: Spacing.xs)),
           );
@@ -686,9 +694,11 @@ class _ChatsDrawerState extends ConsumerState<ChatsDrawer> {
           slivers.addAll(folderSlivers);
         }
 
-        slivers.add(
-          const SliverToBoxAdapter(child: SizedBox(height: Spacing.md)),
-        );
+        if (foldersEnabled) {
+          slivers.add(
+            const SliverToBoxAdapter(child: SizedBox(height: Spacing.md)),
+          );
+        }
 
         if (regular.isNotEmpty) {
           slivers.add(