diff --git a/server/src/llm/__tests__/llmService.test.ts b/server/src/llm/__tests__/llmService.test.ts
index 0e7048c..f35369e 100644
--- a/server/src/llm/__tests__/llmService.test.ts
+++ b/server/src/llm/__tests__/llmService.test.ts
@@ -6,68 +6,157 @@ describe('llmService', () => {
 
   beforeEach(() => {
     originalFetch = globalThis.fetch;
+    vi.useFakeTimers();
   });
 
   afterEach(() => {
     globalThis.fetch = originalFetch;
     delete process.env.OPENROUTER_API_KEY;
+    delete process.env.LLM_MODEL;
+    delete process.env.LLM_FALLBACK_MODEL;
+    vi.useRealTimers();
   });
 
-  it('returns null when LLM is disabled (no API key)', async () => {
+  function setupEnv(opts?: { fallback?: string }) {
+    process.env.OPENROUTER_API_KEY = 'test-key';
+    process.env.LLM_MODEL = 'free/model:free';
+    if (opts?.fallback) {
+      process.env.LLM_FALLBACK_MODEL = opts.fallback;
+    }
+  }
+
+  function mockFetchOk(content: string) {
+    globalThis.fetch = vi.fn().mockResolvedValue({
+      ok: true,
+      json: () => Promise.resolve({
+        choices: [{ message: { content } }],
+      }),
+    });
+  }
+
+  function mockFetch429(resetAt?: number) {
+    const metadata = resetAt != null
+      ? { headers: { 'X-RateLimit-Reset': String(resetAt) } }
+      : undefined;
+    globalThis.fetch = vi.fn().mockResolvedValue({
+      ok: false,
+      status: 429,
+      statusText: 'Too Many Requests',
+      json: () => Promise.resolve({
+        error: { code: 429, message: 'Rate limit exceeded', metadata },
+      }),
+    });
+  }
+
+  it('returns null when LLM is disabled', async () => {
     delete process.env.OPENROUTER_API_KEY;
     const service = createLlmService();
     const result = await service.generate('backstory', { npcName: 'Test' });
     expect(result).toBeNull();
   });
 
-  it('generates text using a named template', async () => {
-    process.env.OPENROUTER_API_KEY = 'test-key';
-    globalThis.fetch = vi.fn().mockResolvedValue({
-      ok: true,
-      json: () => Promise.resolve({
-        choices: [{ message: { content: 'A brave warrior from the north.' } }],
-      }),
-    });
+  it('generates text using primary model', async () => {
+    setupEnv();
+    mockFetchOk('A brave warrior.');
 
     const service = createLlmService();
     const result = await service.generate('backstory', {
       npcName: 'Brynn',
-      stats: 'STR:15, DEX:12, CON:14, INT:8, PER:10, SOC:6, COU:16, CUR:11, EMP:7, TMP:13',
+      stats: 'STR:15',
     });
+    await vi.advanceTimersByTimeAsync(100);
 
-    expect(result).toBe('A brave warrior from the north.');
+    expect(result).toBe('A brave warrior.');
   });
 
-  it('returns false for isDailyLimitReached when disabled', () => {
-    delete process.env.OPENROUTER_API_KEY;
+  it('switches to fallback model on 429', async () => {
+    setupEnv({ fallback: 'paid/model' });
+    const resetAt = Date.now() + 3600000; // 1 hour from now
+
+    // First call hits 429
+    mockFetch429(resetAt);
     const service = createLlmService();
-    expect(service.isDailyLimitReached()).toBe(false);
+    const result1 = await service.generate('backstory', {
+      npcName: 'Brynn',
+      stats: 'STR:15',
+    });
+    await vi.advanceTimersByTimeAsync(100);
+    expect(result1).toBeNull(); // The 429 request itself returns null
+
+    // Second call should use fallback model
+    mockFetchOk('Fallback response.');
+    const result2 = await service.generate('backstory', {
+      npcName: 'Brynn',
+      stats: 'STR:15',
+    });
+    await vi.advanceTimersByTimeAsync(100);
+    expect(result2).toBe('Fallback response.');
+
+    // Verify the model sent was the fallback
+    const body = JSON.parse(
+      (globalThis.fetch as ReturnType<typeof vi.fn>).mock.calls[0][1].body,
+    );
+    expect(body.model).toBe('paid/model');
   });
 
-  it('exposes isDailyLimitReached when enabled', () => {
-    process.env.OPENROUTER_API_KEY = 'test-key';
-    globalThis.fetch = vi.fn().mockResolvedValue({
-      ok: true,
-      json: () => Promise.resolve({
-        choices: [{ message: { content: 'ok' } }],
-      }),
-    });
+  it('switches back to primary model after reset time', async () => {
+    setupEnv({ fallback: 'paid/model' });
+    const resetAt = Date.now() + 5000; // 5 seconds from now
+
+    // Hit 429
+    mockFetch429(resetAt);
+    const service = createLlmService();
+    await service.generate('backstory', { npcName: 'X', stats: 'S:1' });
+    await vi.advanceTimersByTimeAsync(100);
+
+    expect(service.activeModel()).toBe('paid/model');
+
+    // Advance past reset time
+    await vi.advanceTimersByTimeAsync(6000);
+
+    expect(service.activeModel()).toBe('free/model:free');
+  });
+
+  it('returns null on 429 when no fallback model configured', async () => {
+    setupEnv(); // no fallback
+    mockFetch429(Date.now() + 3600000);
 
     const service = createLlmService();
-    expect(service.isDailyLimitReached()).toBe(false);
+    const result = await service.generate('backstory', {
+      npcName: 'X',
+      stats: 'S:1',
+    });
+    await vi.advanceTimersByTimeAsync(100);
+
+    expect(result).toBeNull();
+  });
+
+  it('tracks usage per model', async () => {
+    setupEnv({ fallback: 'paid/model' });
+    mockFetchOk('ok');
+
+    const service = createLlmService();
+    await service.generate('backstory', { npcName: 'X', stats: 'S:1' });
+    await vi.advanceTimersByTimeAsync(100);
+
+    const stats = service.usageStats();
+    expect(stats['free/model:free']?.total).toBe(1);
   });
 
   it('exposes queue depth and clear', async () => {
-    process.env.OPENROUTER_API_KEY = 'test-key';
-    globalThis.fetch = vi.fn().mockResolvedValue({
-      ok: true,
-      json: () => Promise.resolve({
-        choices: [{ message: { content: 'ok' } }],
-      }),
-    });
+    setupEnv();
+    mockFetchOk('ok');
 
     const service = createLlmService();
     expect(service.queueDepth()).toBe(0);
     service.clear();
   });
+
+  it('exposes activeModel', () => {
+    setupEnv({ fallback: 'paid/model' });
+    mockFetchOk('ok');
+
+    const service = createLlmService();
+    expect(service.activeModel()).toBe('free/model:free');
+  });
 });
diff --git a/server/src/llm/llmService.ts b/server/src/llm/llmService.ts
index bb8dd92..5056036 100644
--- a/server/src/llm/llmService.ts
+++ b/server/src/llm/llmService.ts
@@ -1,6 +1,7 @@
 import { getLlmConfig } from '../config/llmConfig.js';
-import { createOpenRouterClient } from './openRouterClient.js';
+import { createOpenRouterClient, isRateLimited } from './openRouterClient.js';
 import { createGenerationQueue } from './generationQueue.js';
+import { createUsageCounters } from './usageCounters.js';
 import { renderTemplate } from './promptTemplate.js';
 import { templates } from './templates.js';
 
@@ -8,18 +9,22 @@ export interface LlmService {
   generate(templateName: string, variables: Record<string, string>): Promise<string | null>;
   queueDepth(): number;
   clear(): void;
-  isDailyLimitReached(): boolean;
+  activeModel(): string;
+  usageStats(): Record<string, { total: number }>;
+  usageSummary(): string;
 }
 
 export function createLlmService(): LlmService {
   const config = getLlmConfig();
 
-  if (!config.enabled) {
+  if (!config.enabled || !config.model) {
     return {
       generate: async () => null,
       queueDepth: () => 0,
       clear: () => {},
-      isDailyLimitReached: () => false,
+      activeModel: () => '',
+      usageStats: () => ({}),
+      usageSummary: () => 'LLM disabled',
     };
   }
 
@@ -27,6 +32,35 @@ export function createLlmService(): LlmService {
   const queue = createGenerationQueue(client, {
     requestsPerMinute: config.requestsPerMinute,
   });
+  const counters = createUsageCounters();
+
+  let currentModel = config.model;
+  let switchBackTimer: ReturnType<typeof setTimeout> | null = null;
+
+  function getNextMidnightUTC(): number {
+    const now = new Date();
+    return new Date(Date.UTC(
+      now.getUTCFullYear(), now.getUTCMonth(), now.getUTCDate() + 1,
+      0, 0, 0, 0,
+    )).getTime();
+  }
+
+  function switchToFallback(resetAt: number | null): void {
+    if (!config.fallbackModel) return;
+
+    currentModel = config.fallbackModel;
+    console.log(`[LLM] Switched to fallback model: ${currentModel}`);
+
+    const resetTime = resetAt ?? getNextMidnightUTC();
+    const delay = Math.max(0, resetTime - Date.now());
+
+    if (switchBackTimer) clearTimeout(switchBackTimer);
+    switchBackTimer = setTimeout(() => {
+      currentModel = config.model;
+      switchBackTimer = null;
+      console.log(`[LLM] Switched back to primary model: ${currentModel}`);
+    }, delay);
+  }
 
   return {
     async generate(
@@ -39,7 +73,18 @@ export function createLlmService(): LlmService {
         return null;
       }
       const rendered = renderTemplate(template, variables);
-      return queue.enqueue(rendered);
+      const result = await queue.enqueue({ ...rendered, model: currentModel });
+
+      if (isRateLimited(result)) {
+        switchToFallback(result.resetAt);
+        return null;
+      }
+
+      if (typeof result === 'string') {
+        counters.record(currentModel);
+      }
+
+      return result;
     },
 
     queueDepth(): number {
@@ -50,8 +95,16 @@ export function createLlmService(): LlmService {
       queue.clear();
     },
 
-    isDailyLimitReached(): boolean {
-      return queue.isDailyLimitReached();
+    activeModel(): string {
+      return currentModel;
+    },
+
+    usageStats(): Record<string, { total: number }> {
+      return counters.getStats();
+    },
+
+    usageSummary(): string {
+      return counters.getSummary();
     },
   };
 }