diff --git a/lua/claudecode/config.lua b/lua/claudecode/config.lua
index 6ed49ca..88bdee8 100644
--- a/lua/claudecode/config.lua
+++ b/lua/claudecode/config.lua
@@ -6,6 +6,7 @@ M.defaults = {
   port_range = { min = 10000, max = 65535 },
   auto_start = true,
   terminal_cmd = nil,
+  env = {}, -- Custom environment variables for Claude terminal
   log_level = "info",
   track_selection = true,
   visual_demotion_delay_ms = 50, -- Milliseconds to wait before demoting a visual selection
@@ -78,6 +79,13 @@ function M.validate(config)
   assert(type(config.diff_opts.vertical_split) == "boolean", "diff_opts.vertical_split must be a boolean")
   assert(type(config.diff_opts.open_in_current_tab) == "boolean", "diff_opts.open_in_current_tab must be a boolean")
 
+  -- Validate env
+  assert(type(config.env) == "table", "env must be a table")
+  for key, value in pairs(config.env) do
+    assert(type(key) == "string", "env keys must be strings")
+    assert(type(value) == "string", "env values must be strings")
+  end
+
   -- Validate models
   assert(type(config.models) == "table", "models must be a table")
   assert(#config.models > 0, "models must not be empty")
@@ -87,7 +95,6 @@ function M.validate(config)
     assert(type(model.name) == "string" and model.name ~= "", "models[" .. i .. "].name must be a non-empty string")
     assert(type(model.value) == "string" and model.value ~= "", "models[" .. i .. "].value must be a non-empty string")
   end
-
   return true
 end
 
diff --git a/lua/claudecode/init.lua b/lua/claudecode/init.lua
index 939e51d..dcaf16f 100644
--- a/lua/claudecode/init.lua
+++ b/lua/claudecode/init.lua
@@ -36,6 +36,7 @@ M.version = {
 --- @field port_range {min: integer, max: integer} Port range for WebSocket server.
 --- @field auto_start boolean Auto-start WebSocket server on Neovim startup.
 --- @field terminal_cmd string|nil Custom terminal command to use when launching Claude.
+--- @field env table<string,string> Custom environment variables for Claude terminal.
 --- @field log_level "trace"|"debug"|"info"|"warn"|"error" Log level.
 --- @field track_selection boolean Enable sending selection updates to Claude.
 --- @field visual_demotion_delay_ms number Milliseconds to wait before demoting a visual selection.
@@ -49,6 +50,7 @@ local default_config = {
   port_range = { min = 10000, max = 65535 },
   auto_start = true,
   terminal_cmd = nil,
+  env = {},
   log_level = "info",
   track_selection = true,
   visual_demotion_delay_ms = 50, -- Reduced from 200ms for better responsiveness in tree navigation
@@ -306,14 +308,14 @@ function M.setup(opts)
 
   logger.setup(M.state.config)
 
-  -- Setup terminal module: always try to call setup to pass terminal_cmd,
+  -- Setup terminal module: always try to call setup to pass terminal_cmd and env,
   -- even if terminal_opts (for split_side etc.) are not provided.
   local terminal_setup_ok, terminal_module = pcall(require, "claudecode.terminal")
   if terminal_setup_ok then
     -- Guard in case tests or user replace the module with a minimal stub without `setup`.
     if type(terminal_module.setup) == "function" then
       -- terminal_opts might be nil, which the setup function should handle gracefully.
-      terminal_module.setup(terminal_opts, M.state.config.terminal_cmd)
+      terminal_module.setup(terminal_opts, M.state.config.terminal_cmd, M.state.config.env)
     end
   else
     logger.error("init", "Failed to load claudecode.terminal module for setup.")
diff --git a/lua/claudecode/logger.lua b/lua/claudecode/logger.lua
index 1a8969d..8b0056d 100644
--- a/lua/claudecode/logger.lua
+++ b/lua/claudecode/logger.lua
@@ -68,22 +68,19 @@ local function log(level, component, message_parts)
     end
   end
 
-  if level == M.levels.ERROR then
-    vim.schedule(function()
+  -- Wrap all vim.notify and nvim_echo calls in vim.schedule to avoid
+  -- "nvim_echo must not be called in a fast event context" errors
+  vim.schedule(function()
+    if level == M.levels.ERROR then
       vim.notify(prefix .. " " .. message, vim.log.levels.ERROR, { title = "ClaudeCode Error" })
-    end)
-  elseif level == M.levels.WARN then
-    vim.schedule(function()
+    elseif level == M.levels.WARN then
       vim.notify(prefix .. " " .. message, vim.log.levels.WARN, { title = "ClaudeCode Warning" })
-    end)
-  else
-    -- For INFO, DEBUG, TRACE, use nvim_echo to avoid flooding notifications,
-    -- to make them appear in :messages, and wrap in vim.schedule
-    -- to avoid "nvim_echo must not be called in a fast event context".
-    vim.schedule(function()
+    else
+      -- For INFO, DEBUG, TRACE, use nvim_echo to avoid flooding notifications,
+      -- to make them appear in :messages
       vim.api.nvim_echo({ { prefix .. " " .. message, "Normal" } }, true, {})
-    end)
-  end
+    end
+  end)
 end
 
 --- @param component string|nil Optional component/module name.
diff --git a/lua/claudecode/terminal.lua b/lua/claudecode/terminal.lua
index b919180..e0db5ac 100644
--- a/lua/claudecode/terminal.lua
+++ b/lua/claudecode/terminal.lua
@@ -24,6 +24,7 @@ local config = {
   show_native_term_exit_tip = true,
   terminal_cmd = nil,
   auto_close = true,
+  env = {}, -- Custom environment variables for Claude terminal
   snacks_win_opts = {},
 }
 
@@ -153,6 +154,11 @@ local function get_claude_command_and_env(cmd_args)
     env_table["CLAUDE_CODE_SSE_PORT"] = tostring(sse_port_value)
   end
 
+  -- Merge custom environment variables from config
+  for key, value in pairs(config.env) do
+    env_table[key] = value
+  end
+
   return cmd_string, env_table
 end
 
@@ -186,7 +192,8 @@ end
 -- @field user_term_config.show_native_term_exit_tip boolean Show tip for exiting native terminal (default: true).
 -- @field user_term_config.snacks_win_opts table Opts to pass to `Snacks.terminal.open()` (default: {}).
 -- @param p_terminal_cmd string|nil The command to run in the terminal (from main config).
-function M.setup(user_term_config, p_terminal_cmd)
+-- @param p_env table|nil Custom environment variables to pass to the terminal (from main config).
+function M.setup(user_term_config, p_terminal_cmd, p_env)
   if user_term_config == nil then -- Allow nil, default to empty table silently
     user_term_config = {}
   elseif type(user_term_config) ~= "table" then -- Warn if it's not nil AND not a table
@@ -204,6 +211,16 @@ function M.setup(user_term_config, p_terminal_cmd)
     config.terminal_cmd = nil -- Fallback to default behavior
   end
 
+  if p_env == nil or type(p_env) == "table" then
+    config.env = p_env or {}
+  else
+    vim.notify(
+      "claudecode.terminal.setup: Invalid env provided: " .. tostring(p_env) .. ". Using empty table.",
+      vim.log.levels.WARN
+    )
+    config.env = {}
+  end
+
   for k, v in pairs(user_term_config) do
     if config[k] ~= nil and k ~= "terminal_cmd" then -- terminal_cmd is handled above
       if k == "split_side" and (v == "left" or v == "right") then
diff --git a/tests/config_test.lua b/tests/config_test.lua
index eed7b00..5457452 100644
--- a/tests/config_test.lua
+++ b/tests/config_test.lua
@@ -175,34 +175,24 @@ describe("Config module", function()
     assert(type(config.defaults.track_selection) == "boolean")
   end)
 
-  it("should validate valid configuration", function()
-    local valid_config = {
-      port_range = { min = 10000, max = 65535 },
-      auto_start = true,
+  it("should apply and validate user configuration", function()
+    local user_config = {
       terminal_cmd = "toggleterm",
       log_level = "debug",
       track_selection = false,
-      visual_demotion_delay_ms = 50,
-      connection_wait_delay = 200,
-      connection_timeout = 10000,
-      queue_timeout = 5000,
-      diff_opts = {
-        auto_close_on_accept = true,
-        show_diff_stats = true,
-        vertical_split = true,
-        open_in_current_tab = true,
-      },
       models = {
         { name = "Claude Opus 4 (Latest)", value = "claude-opus-4-20250514" },
         { name = "Claude Sonnet 4 (Latest)", value = "claude-sonnet-4-20250514" },
       },
     }
 
-    local success, _ = pcall(function()
-      return config.validate(valid_config)
+    local success, final_config = pcall(function()
+      return config.apply(user_config)
     end)
 
     assert(success == true)
+    assert(final_config.env ~= nil) -- Should inherit default empty table
+    assert(type(final_config.env) == "table")
   end)
 
   it("should merge user config with defaults", function()
diff --git a/tests/unit/config_spec.lua b/tests/unit/config_spec.lua
index 92a5428..82f801c 100644
--- a/tests/unit/config_spec.lua
+++ b/tests/unit/config_spec.lua
@@ -25,30 +25,22 @@ describe("Configuration", function()
     expect(config.defaults).to_have_key("models")
   end)
 
-  it("should validate valid configuration", function()
-    local valid_config = {
-      port_range = { min = 10000, max = 65535 },
-      auto_start = true,
+  it("should apply and validate user configuration", function()
+    local user_config = {
       terminal_cmd = "toggleterm",
       log_level = "debug",
       track_selection = false,
-      visual_demotion_delay_ms = 50,
-      connection_wait_delay = 200,
-      connection_timeout = 10000,
-      queue_timeout = 5000,
-      diff_opts = {
-        auto_close_on_accept = true,
-        show_diff_stats = true,
-        vertical_split = true,
-        open_in_current_tab = true,
-      },
       models = {
         { name = "Test Model", value = "test-model" },
       },
     }
 
-    local success = config.validate(valid_config)
-    expect(success).to_be_true()
+    local final_config = config.apply(user_config)
+    expect(final_config).to_be_table()
+    expect(final_config.terminal_cmd).to_be("toggleterm")
+    expect(final_config.log_level).to_be("debug")
+    expect(final_config.track_selection).to_be_false()
+    expect(final_config.env).to_be_table() -- Should inherit default empty table
   end)
 
   it("should reject invalid port range", function()