diff --git a/llama_stack/cli/llama.py b/llama_stack/cli/llama.py
index 5ff15d8d7..aa8893bc0 100644
--- a/llama_stack/cli/llama.py
+++ b/llama_stack/cli/llama.py
@@ -6,6 +6,8 @@
 
 import argparse
 
+from llama_stack.log import setup_logging
+
 from .stack import StackParser
 from .stack.utils import print_subcommand_description
 
@@ -42,6 +44,9 @@ class LlamaCLIParser:
 
 
 def main():
+    # Initialize logging from environment variables before any other operations
+    setup_logging()
+
     parser = LlamaCLIParser()
     args = parser.parse_args()
     parser.run(args)
diff --git a/llama_stack/core/library_client.py b/llama_stack/core/library_client.py
index 328ca9c6e..c64b9a391 100644
--- a/llama_stack/core/library_client.py
+++ b/llama_stack/core/library_client.py
@@ -47,7 +47,7 @@ from llama_stack.core.stack import (
 from llama_stack.core.utils.config import redact_sensitive_fields
 from llama_stack.core.utils.context import preserve_contexts_async_generator
 from llama_stack.core.utils.exec import in_notebook
-from llama_stack.log import get_logger
+from llama_stack.log import get_logger, setup_logging
 from llama_stack.providers.utils.telemetry.tracing import CURRENT_TRACE_CONTEXT, end_trace, setup_logger, start_trace
 from llama_stack.strong_typing.inspection import is_unwrapped_body_param
 
@@ -200,6 +200,9 @@ class AsyncLlamaStackAsLibraryClient(AsyncLlamaStackClient):
         skip_logger_removal: bool = False,
     ):
         super().__init__()
+        # Initialize logging from environment variables first
+        setup_logging()
+
         # when using the library client, we should not log to console since many
         # of our logs are intended for server-side usage
         if sinks_from_env := os.environ.get("TELEMETRY_SINKS", None):
diff --git a/llama_stack/core/server/server.py b/llama_stack/core/server/server.py
index db7584b01..dd21a72f9 100644
--- a/llama_stack/core/server/server.py
+++ b/llama_stack/core/server/server.py
@@ -56,7 +56,7 @@ from llama_stack.core.stack import (
 from llama_stack.core.utils.config import redact_sensitive_fields
 from llama_stack.core.utils.config_resolution import Mode, resolve_config_or_distro
 from llama_stack.core.utils.context import preserve_contexts_async_generator
-from llama_stack.log import get_logger
+from llama_stack.log import get_logger, setup_logging
 from llama_stack.providers.datatypes import Api
 from llama_stack.providers.inline.telemetry.meta_reference.config import TelemetryConfig
 from llama_stack.providers.inline.telemetry.meta_reference.telemetry import (
@@ -374,6 +374,9 @@ def create_app() -> StackApp:
     Returns:
         Configured StackApp instance.
     """
+    # Initialize logging from environment variables first
+    setup_logging()
+
     config_file = os.getenv("LLAMA_STACK_CONFIG")
     if config_file is None:
         raise ValueError("LLAMA_STACK_CONFIG environment variable is required")
diff --git a/llama_stack/log.py b/llama_stack/log.py
index ff54b2f7c..8dc98cb08 100644
--- a/llama_stack/log.py
+++ b/llama_stack/log.py
@@ -166,14 +166,26 @@ class CustomFileHandler(logging.FileHandler):
         super().emit(record)
 
 
-def setup_logging(category_levels: dict[str, int], log_file: str | None) -> None:
+def setup_logging(category_levels: dict[str, int] | None = None, log_file: str | None = None) -> None:
     """
     Configure logging based on the provided category log levels and an optional log file.
+    If category_levels or log_file are not provided, they will be read from environment variables.
 
     Parameters:
-        category_levels (Dict[str, int]): A dictionary mapping categories to their log levels.
-        log_file (str): Path to a log file to additionally pipe the logs into
+        category_levels (Dict[str, int] | None): A dictionary mapping categories to their log levels.
+            If None, reads from LLAMA_STACK_LOGGING environment variable and uses defaults.
+        log_file (str | None): Path to a log file to additionally pipe the logs into.
+            If None, reads from LLAMA_STACK_LOG_FILE environment variable.
     """
+    # Read from environment variables if not explicitly provided
+    if category_levels is None:
+        category_levels = dict.fromkeys(CATEGORIES, DEFAULT_LOG_LEVEL)
+        env_config = os.environ.get("LLAMA_STACK_LOGGING", "")
+        if env_config:
+            category_levels.update(parse_environment_config(env_config))
+
+    if log_file is None:
+        log_file = os.environ.get("LLAMA_STACK_LOG_FILE")
     log_format = "%(asctime)s %(name)s:%(lineno)d %(category)s: %(message)s"
 
     class CategoryFilter(logging.Filter):
@@ -278,12 +290,3 @@ def get_logger(
             log_level = _category_levels.get("root", DEFAULT_LOG_LEVEL)
     logger.setLevel(log_level)
     return logging.LoggerAdapter(logger, {"category": category})
-
-
-env_config = os.environ.get("LLAMA_STACK_LOGGING", "")
-if env_config:
-    _category_levels.update(parse_environment_config(env_config))
-
-log_file = os.environ.get("LLAMA_STACK_LOG_FILE")
-
-setup_logging(_category_levels, log_file)