diff --git a/openhands/core/config/llm_config.py b/openhands/core/config/llm_config.py
index ae6742cacd..00d440fe4d 100644
--- a/openhands/core/config/llm_config.py
+++ b/openhands/core/config/llm_config.py
@@ -164,8 +164,8 @@ class LLMConfig(BaseModel):
         if self.openrouter_app_name:
             os.environ['OR_APP_NAME'] = self.openrouter_app_name
 
-        # Assign an API version for Azure models
-        # While it doesn't seem required, the format supported by the API without version seems old and will likely break.
-        # Azure issue: https://github.com/All-Hands-AI/OpenHands/issues/6777
+        # Set an API version by default for Azure models
+        # Required for newer models.
+        # Azure issue: https://github.com/All-Hands-AI/OpenHands/issues/7755
         if self.model.startswith('azure') and self.api_version is None:
-            self.api_version = '2024-08-01-preview'
+            self.api_version = '2024-12-01-preview'
diff --git a/openhands/resolver/resolve_all_issues.py b/openhands/resolver/resolve_all_issues.py
index dde5a884c9..3961b5e5a0 100644
--- a/openhands/resolver/resolve_all_issues.py
+++ b/openhands/resolver/resolve_all_issues.py
@@ -349,6 +349,7 @@ def main() -> None:
         model=my_args.llm_model or os.environ['LLM_MODEL'],
         api_key=SecretStr(api_key) if api_key else None,
         base_url=my_args.llm_base_url or os.environ.get('LLM_BASE_URL', None),
+        api_version=os.environ.get('LLM_API_VERSION', None),
     )
 
     repo_instruction = None
diff --git a/openhands/resolver/resolve_issue.py b/openhands/resolver/resolve_issue.py
index 0156fe6ba4..2aafd7f8c5 100644
--- a/openhands/resolver/resolve_issue.py
+++ b/openhands/resolver/resolve_issue.py
@@ -656,12 +656,21 @@ def main() -> None:
         raise ValueError('Token is invalid.')
 
     api_key = my_args.llm_api_key or os.environ['LLM_API_KEY']
+    model = my_args.llm_model or os.environ['LLM_MODEL']
+    base_url = my_args.llm_base_url or os.environ.get('LLM_BASE_URL', None)
+    api_version = os.environ.get('LLM_API_VERSION', None)
+
+    # Create LLMConfig instance
     llm_config = LLMConfig(
-        model=my_args.llm_model or os.environ['LLM_MODEL'],
+        model=model,
         api_key=SecretStr(api_key) if api_key else None,
-        base_url=my_args.llm_base_url or os.environ.get('LLM_BASE_URL', None),
+        base_url=base_url,
     )
 
+    # Only set api_version if it was explicitly provided, otherwise let LLMConfig handle it
+    if api_version is not None:
+        llm_config.api_version = api_version
+
     repo_instruction = None
     if my_args.repo_instruction_file:
         with open(my_args.repo_instruction_file, 'r') as f:
diff --git a/tests/unit/test_llm_config.py b/tests/unit/test_llm_config.py
index fba91aa54c..17fb0e9f6e 100644
--- a/tests/unit/test_llm_config.py
+++ b/tests/unit/test_llm_config.py
@@ -212,3 +212,45 @@ unknown_attr = "should_not_exist"
     assert custom_invalid.model == 'base-model'
     assert custom_invalid.api_key.get_secret_value() == 'base-api-key'
     assert custom_invalid.num_retries == 3  # default value
+
+
+def test_azure_model_api_version(
+    default_config: AppConfig, tmp_path: pathlib.Path
+) -> None:
+    """Test that Azure models get the correct API version by default."""
+    toml_content = """
+[core]
+workspace_base = "./workspace"
+
+[llm]
+model = "azure/o3-mini"
+api_key = "test-api-key"
+    """
+    toml_file = tmp_path / 'azure_llm.toml'
+    toml_file.write_text(toml_content)
+
+    load_from_toml(default_config, str(toml_file))
+
+    # Verify Azure model gets default API version
+    azure_llm = default_config.get_llm_config('llm')
+    assert azure_llm.model == 'azure/o3-mini'
+    assert azure_llm.api_version == '2024-12-01-preview'
+
+    # Test that non-Azure models don't get default API version
+    toml_content = """
+[core]
+workspace_base = "./workspace"
+
+[llm]
+model = "anthropic/claude-3-sonnet"
+api_key = "test-api-key"
+    """
+    toml_file = tmp_path / 'non_azure_llm.toml'
+    toml_file.write_text(toml_content)
+
+    load_from_toml(default_config, str(toml_file))
+
+    # Verify non-Azure model doesn't get default API version
+    non_azure_llm = default_config.get_llm_config('llm')
+    assert non_azure_llm.model == 'anthropic/claude-3-sonnet'
+    assert non_azure_llm.api_version is None