diff --git a/cmd/docker-mcp/oauth/auth.go b/cmd/docker-mcp/oauth/auth.go
index 6d5cb6c99..d3c32c451 100644
--- a/cmd/docker-mcp/oauth/auth.go
+++ b/cmd/docker-mcp/oauth/auth.go
@@ -5,20 +5,36 @@ import (
 	"fmt"
 	"time"
 
+	"github.com/docker/mcp-gateway/pkg/catalog"
 	"github.com/docker/mcp-gateway/pkg/desktop"
 	pkgoauth "github.com/docker/mcp-gateway/pkg/oauth"
 )
 
 func Authorize(ctx context.Context, app string, scopes string) error {
-	// Check if running in CE mode
-	if pkgoauth.IsCEMode() {
+	// Check if running in CE mode AND if this is a remote server
+	// CE mode with localhost redirect only works for remote MCP servers
+	// Container-based servers (like github-official) need Docker Desktop OAuth
+	if pkgoauth.IsCEMode() && isRemoteServer(ctx, app) {
 		return authorizeCEMode(ctx, app, scopes)
 	}
 
-	// Desktop mode - existing implementation
+	// Desktop mode - existing implementation (for container servers or when CE mode is off)
 	return authorizeDesktopMode(ctx, app, scopes)
 }
 
+// isRemoteServer checks if the server is a remote MCP server (not a container)
+func isRemoteServer(ctx context.Context, serverName string) bool {
+	cat, err := catalog.GetWithOptions(ctx, true, nil)
+	if err != nil {
+		return false
+	}
+	server, found := cat.Servers[serverName]
+	if !found {
+		return false
+	}
+	return server.Remote.URL != ""
+}
+
 // authorizeDesktopMode handles OAuth via Docker Desktop (existing behavior)
 func authorizeDesktopMode(ctx context.Context, app string, scopes string) error {
 	client := desktop.NewAuthClient()
@@ -42,22 +58,28 @@ func authorizeDesktopMode(ctx context.Context, app string, scopes string) error
 func authorizeCEMode(ctx context.Context, serverName string, scopes string) error {
 	fmt.Printf("Starting OAuth authorization for %s...\n", serverName)
 
-	// Create OAuth manager with read-write credential helper
+	// Step 1: Create callback server FIRST to get the localhost URL
+	// This allows us to register DCR with localhost redirect instead of mcp.docker.com proxy
+	callbackServer, err := pkgoauth.NewCallbackServer()
+	if err != nil {
+		return fmt.Errorf("failed to create callback server: %w", err)
+	}
+
+	// Use localhost callback URL as redirect URI for DCR registration
+	// This bypasses Docker's OAuth proxy which doesn't know about all providers
+	callbackURL := callbackServer.URL()
+	fmt.Printf("Using localhost redirect: %s\n", callbackURL)
+
+	// Create OAuth manager with localhost redirect URI
 	credHelper := pkgoauth.NewReadWriteCredentialHelper()
-	manager := pkgoauth.NewManager(credHelper)
+	manager := pkgoauth.NewManagerWithRedirectURI(credHelper, callbackURL)
 
-	// Step 1: Ensure DCR client is registered
+	// Step 2: Ensure DCR client is registered with localhost redirect
 	fmt.Printf("Checking DCR registration...\n")
 	if err := manager.EnsureDCRClient(ctx, serverName, scopes); err != nil {
 		return fmt.Errorf("DCR registration failed: %w", err)
 	}
 
-	// Step 2: Create callback server
-	callbackServer, err := pkgoauth.NewCallbackServer()
-	if err != nil {
-		return fmt.Errorf("failed to create callback server: %w", err)
-	}
-
 	// Start callback server in background
 	go func() {
 		if err := callbackServer.Start(); err != nil {
@@ -72,7 +94,7 @@ func authorizeCEMode(ctx context.Context, serverName string, scopes string) erro
 		}
 	}()
 
-	// Step 3: Build authorization URL with callback URL in state
+	// Step 3: Build authorization URL (no proxy state needed - direct localhost redirect)
 	fmt.Printf("Generating authorization URL...\n")
 
 	scopesList := []string{}
@@ -80,9 +102,8 @@ func authorizeCEMode(ctx context.Context, serverName string, scopes string) erro
 		scopesList = []string{scopes}
 	}
 
-	// Pass callback URL - will be embedded in state for mcp-oauth proxy routing
-	callbackURL := callbackServer.URL()
-	authURL, baseState, _, err := manager.BuildAuthorizationURL(ctx, serverName, scopesList, callbackURL)
+	// Empty callbackURL since we're using direct localhost redirect (no proxy routing)
+	authURL, baseState, _, err := manager.BuildAuthorizationURL(ctx, serverName, scopesList, "")
 	if err != nil {
 		return fmt.Errorf("failed to generate authorization URL: %w", err)
 	}
diff --git a/pkg/oauth/manager.go b/pkg/oauth/manager.go
index e7f67c105..78e9bdf80 100644
--- a/pkg/oauth/manager.go
+++ b/pkg/oauth/manager.go
@@ -25,11 +25,17 @@ type Manager struct {
 
 // NewManager creates a new OAuth manager for CE mode
 func NewManager(credHelper credentials.Helper) *Manager {
+	return NewManagerWithRedirectURI(credHelper, DefaultRedirectURI)
+}
+
+// NewManagerWithRedirectURI creates a new OAuth manager with a custom redirect URI
+// Use this for CE mode with localhost callbacks
+func NewManagerWithRedirectURI(credHelper credentials.Helper, redirectURI string) *Manager {
 	return &Manager{
-		dcrManager:   dcr.NewManager(credHelper, DefaultRedirectURI),
+		dcrManager:   dcr.NewManager(credHelper, redirectURI),
 		tokenStore:   NewTokenStore(credHelper),
 		stateManager: NewStateManager(),
-		redirectURI:  DefaultRedirectURI,
+		redirectURI:  redirectURI,
 	}
 }
 
diff --git a/pkg/oauth/manager_test.go b/pkg/oauth/manager_test.go
index 756f1928b..cd1a02044 100644
--- a/pkg/oauth/manager_test.go
+++ b/pkg/oauth/manager_test.go
@@ -238,6 +238,18 @@ func TestManager_SetRedirectURI(t *testing.T) {
 	assert.Equal(t, customURI, manager.redirectURI)
 }
 
+func TestNewManagerWithRedirectURI(t *testing.T) {
+	helper := newFakeCredentialHelper()
+	localhostURI := "http://localhost:5001/callback"
+
+	manager := NewManagerWithRedirectURI(helper, localhostURI)
+
+	assert.Equal(t, localhostURI, manager.redirectURI)
+	assert.NotNil(t, manager.dcrManager)
+	assert.NotNil(t, manager.tokenStore)
+	assert.NotNil(t, manager.stateManager)
+}
+
 func TestManager_EnsureDCRClient_AlreadyExists(t *testing.T) {
 	manager := setupTestManager(t)
 	serverName := "test-server"