diff --git a/sagemaker-serve/src/sagemaker/serve/model_builder_servers.py b/sagemaker-serve/src/sagemaker/serve/model_builder_servers.py
index d4f2e0cc37..d18ef7585e 100644
--- a/sagemaker-serve/src/sagemaker/serve/model_builder_servers.py
+++ b/sagemaker-serve/src/sagemaker/serve/model_builder_servers.py
@@ -579,7 +579,7 @@ def _build_for_djl(self) -> Model:
         model = self._create_model()
 
         if "HF_HUB_OFFLINE" in self.env_vars:
-            self.env_vars.update({"TRANSFORMERS_OFFLINE": "0"})
+            self.env_vars.update({"HF_HUB_OFFLINE": "0"})
 
         return model
 
diff --git a/sagemaker-serve/tests/unit/servers/test_djl_hf_cache_env.py b/sagemaker-serve/tests/unit/servers/test_djl_hf_cache_env.py
index 40d3a2a1a9..0a6b842d22 100644
--- a/sagemaker-serve/tests/unit/servers/test_djl_hf_cache_env.py
+++ b/sagemaker-serve/tests/unit/servers/test_djl_hf_cache_env.py
@@ -143,6 +143,13 @@ def test_local_mode_sets_hf_hub_offline(self, tmp_path):
         builder = _create_djl_builder(tmp_path, mode=Mode.LOCAL_CONTAINER)
         # Local mode doesn't need GPU info mocks for instance_type validation
         builder.instance_type = None
+        envs_at_create = []
+        mock_create = self._mocks[
+            _DJL_PATCHES.index("sagemaker.serve.model_builder.ModelBuilder._create_model")
+        ]
+        mock_create.side_effect = lambda: envs_at_create.append(dict(builder.env_vars))
         builder._build_for_djl()
 
-        assert builder.env_vars["HF_HUB_OFFLINE"] == "1"
+        # The model (and so the local container) is created with HF_HUB_OFFLINE=1; the
+        # in-memory flag is reset afterwards so it does not leak into a later build.
+        assert envs_at_create[-1]["HF_HUB_OFFLINE"] == "1"
diff --git a/sagemaker-serve/tests/unit/servers/test_model_builder_servers.py b/sagemaker-serve/tests/unit/servers/test_model_builder_servers.py
index e4509c6af8..dea27e5c52 100644
--- a/sagemaker-serve/tests/unit/servers/test_model_builder_servers.py
+++ b/sagemaker-serve/tests/unit/servers/test_model_builder_servers.py
@@ -992,6 +992,52 @@ def test_build_sagemaker_endpoint_tensor_parallel(
         self.assertEqual(self.builder.env_vars["TENSOR_PARALLEL_DEGREE"], "4")
         mock_create.assert_called_once()
 
+    @patch("sagemaker.serve.model_builder_servers._get_gpu_info")
+    @patch("sagemaker.serve.model_builder_servers._get_default_tensor_parallel_degree")
+    @patch("sagemaker.serve.model_builder_servers._get_model_config_properties_from_hf")
+    @patch("sagemaker.serve.model_builder_servers._get_default_djl_configurations")
+    @patch("sagemaker.serve.model_builder_servers._get_nb_instance")
+    @patch("sagemaker.serve.model_server.djl_serving.prepare._create_dir_structure")
+    @patch.object(MockModelBuilderServers, "_validate_djl_serving_sample_data")
+    @patch.object(MockModelBuilderServers, "_is_jumpstart_model_id")
+    @patch.object(MockModelBuilderServers, "_auto_detect_image_uri")
+    @patch.object(MockModelBuilderServers, "_prepare_for_mode")
+    @patch.object(MockModelBuilderServers, "_create_model")
+    def test_local_build_does_not_leave_hf_hub_offline_for_endpoint_build(
+        self,
+        mock_create,
+        mock_prepare,
+        mock_detect,
+        mock_js,
+        mock_validate,
+        mock_dir,
+        mock_nb,
+        mock_djl_config,
+        mock_hf_config,
+        mock_tp,
+        mock_gpu,
+    ):
+        """HF_HUB_OFFLINE=1 set for a local build must be reset, as TGI/TEI do."""
+        mock_js.return_value = False
+        mock_nb.return_value = None
+        mock_hf_config.return_value = {"model_type": "gpt2"}
+        mock_djl_config.return_value = ({}, 512)
+        mock_prepare.return_value = ("s3://bucket/model.tar.gz", None)
+        mock_tp.return_value = 1
+        mock_gpu.return_value = 1
+        envs_at_create = []
+        mock_create.side_effect = lambda: envs_at_create.append(dict(self.builder.env_vars))
+        self.builder.model = "gpt2"
+        self.builder.instance_type = "ml.g5.2xlarge"
+
+        self.builder.mode = Mode.LOCAL_CONTAINER
+        self.builder._build_for_djl()
+        self.builder.mode = Mode.SAGEMAKER_ENDPOINT
+        self.builder._build_for_djl()
+
+        self.assertEqual(envs_at_create[0]["HF_HUB_OFFLINE"], "1")
+        self.assertNotEqual(envs_at_create[1].get("HF_HUB_OFFLINE"), "1")
+
     # ------------------------------------------------------------------
     # Preservation property test (tgi-s3-model-loading bugfix spec)
     #