diff --git a/CHANGELOG.md b/CHANGELOG.md
index 2fe4e33..7d96c68 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -6,6 +6,7 @@ Full release notes with details on each version: [GitHub Releases](https://githu
 
 - Fix: `--update`-style section writes to `CLAUDE.md`/`AGENTS.md` no longer corrupt or drop content (#1688, thanks @bdfinst). `_replace_or_append_section` located its managed block by substring (`marker in content`) and `next(... if marker in line)`, so a heading that appeared as a substring of another line (or duplicate headings) matched the wrong offset and the rewrite could truncate the file. It now matches the section heading exactly (`line.strip() == marker`), appends when absent, and prefers the last exact match when several exist, so unrelated content is preserved.
 - Fix: token estimation no longer crashes on files containing tiktoken special-token text like `<|endoftext|>` (#1685, thanks @Kyzcreig). `_TOKENIZER.encode(content)` raises `ValueError` by default when the text contains a special token, which aborted packing on docs/corpora that merely mention these strings. Both `encode` sites now pass `disallowed_special=()` so such text is tokenized as ordinary bytes.
+- Fix: the Ollama backend no longer multiplies a hang by the retry count (#1686, thanks @Kyzcreig). A stalled local model would wedge for `timeout * (max_retries + 1)`, which with the default 6 retries turned one long stall into a very long one. Ollama now defaults to zero client-side retries (a local model that stalls will not un-stall on retry); set `GRAPHIFY_MAX_RETRIES` to opt back in. Other backends are unchanged. Note: the underlying stall is non-deterministic and driven by the model server, so this bounds the wait rather than eliminating the hang.
 
 ## 0.9.7 (2026-07-06)
 
diff --git a/graphify/llm.py b/graphify/llm.py
index 62dd4b6..7933403 100644
--- a/graphify/llm.py
+++ b/graphify/llm.py
@@ -962,8 +962,18 @@ def _call_openai_compat(
     # default. Honour GRAPHIFY_API_TIMEOUT (seconds) for explicit override;
     # default to 600s, which is long enough for a 31B model on a 16k chunk
     # but still bounds runaway connections (issue #792 addendum).
+    # The SDK's transient-error retries (default 6) exist for cloud rate limits
+    # (429). A local Ollama server does not rate-limit, and if it wedges it will
+    # not recover by retrying, so 6 retries turn a 180s --api-timeout into a
+    # ~21min block (7 attempts x 180s) with no progress (#1686). Default ollama
+    # to 0 SDK retries so --api-timeout is the hard wall-clock bound and a hung
+    # request fails fast into the chunk-level retry/skip. An explicit
+    # GRAPHIFY_MAX_RETRIES still wins for users who want it.
+    _retries = _resolve_max_retries()
+    if backend == "ollama" and not os.environ.get("GRAPHIFY_MAX_RETRIES", "").strip():
+        _retries = 0
     client = OpenAI(api_key=api_key, base_url=base_url, timeout=_resolve_api_timeout(),
-                    max_retries=_resolve_max_retries())
+                    max_retries=_retries)
     kwargs: dict = {
         "model": model,
         "messages": [
diff --git a/tests/test_ollama_retry_cap.py b/tests/test_ollama_retry_cap.py
new file mode 100644
index 0000000..5ad43cc
--- /dev/null
+++ b/tests/test_ollama_retry_cap.py
@@ -0,0 +1,60 @@
+"""#1686 - a wedged local Ollama request must not multiply --api-timeout by the
+SDK's 6 transient-error retries into a ~20min block. Ollama defaults to 0 SDK
+retries so the timeout is the effective wall-clock bound; an explicit
+GRAPHIFY_MAX_RETRIES still wins.
+"""
+from __future__ import annotations
+
+from unittest.mock import MagicMock
+
+import graphify.llm as llm
+
+
+def _capture_client_kwargs(monkeypatch):
+    captured: dict = {}
+
+    def _factory(**kwargs):
+        captured.update(kwargs)
+        client = MagicMock()
+        resp = MagicMock()
+        resp.choices[0].message.content = '{"nodes": [], "edges": [], "hyperedges": []}'
+        resp.choices[0].finish_reason = "stop"
+        resp.usage.prompt_tokens = 1
+        resp.usage.completion_tokens = 1
+        client.chat.completions.create.return_value = resp
+        return client
+
+    monkeypatch.setattr("openai.OpenAI", _factory)
+    return captured
+
+
+def test_ollama_defaults_to_zero_sdk_retries(monkeypatch):
+    monkeypatch.delenv("GRAPHIFY_MAX_RETRIES", raising=False)
+    captured = _capture_client_kwargs(monkeypatch)
+    llm._call_openai_compat("http://localhost:11434/v1", "ollama", "m",
+                            "def f(): pass", backend="ollama")
+    assert captured.get("max_retries") == 0
+
+
+def test_ollama_honors_explicit_max_retries(monkeypatch):
+    monkeypatch.setenv("GRAPHIFY_MAX_RETRIES", "3")
+    captured = _capture_client_kwargs(monkeypatch)
+    llm._call_openai_compat("http://localhost:11434/v1", "ollama", "m",
+                            "def f(): pass", backend="ollama")
+    assert captured.get("max_retries") == 3
+
+
+def test_cloud_backend_keeps_default_retries(monkeypatch):
+    monkeypatch.delenv("GRAPHIFY_MAX_RETRIES", raising=False)
+    captured = _capture_client_kwargs(monkeypatch)
+    llm._call_openai_compat("https://api.moonshot.cn/v1", "sk-x", "m",
+                            "def f(): pass", backend="kimi")
+    assert captured.get("max_retries") == 6  # default retained for rate-limited clouds
+
+
+def test_api_timeout_is_passed_to_client(monkeypatch):
+    monkeypatch.setenv("GRAPHIFY_API_TIMEOUT", "180")
+    captured = _capture_client_kwargs(monkeypatch)
+    llm._call_openai_compat("http://localhost:11434/v1", "ollama", "m",
+                            "def f(): pass", backend="ollama")
+    assert captured.get("timeout") == 180.0