diff --git a/workspace-server/internal/handlers/github_token.go b/workspace-server/internal/handlers/github_token.go
index ce9492a9..638a8a72 100644
--- a/workspace-server/internal/handlers/github_token.go
+++ b/workspace-server/internal/handlers/github_token.go
@@ -49,6 +49,7 @@ import (
 	"net/http"
 	"os"
 	"strconv"
+	"strings"
 	"time"
 
 	"github.com/Molecule-AI/molecule-monorepo/platform/pkg/provisionhook"
@@ -98,6 +99,18 @@ func (h *GitHubTokenHandler) GetInstallationToken(c *gin.Context) {
 		token, expiresAt, err := generateAppInstallationToken()
 		if err != nil {
 			log.Printf("[github] fallback token generation failed: %v", err)
+			// #388: When GITHUB_APP_ID/INSTALLATION_ID are unset (Gitea-canonical
+			// deployment), generateAppInstallationToken returns "required" as the error
+			// message. Distinguish it from a transient failure by checking for that
+			// substring and returning 501 Not Implemented so the caller knows GitHub
+			// integration is not configured rather than retrying a permanent failure.
+			if strings.Contains(err.Error(), "required") {
+				c.JSON(http.StatusNotImplemented, gin.H{
+					"error": "GitHub integration not configured",
+					"scm":   "gitea",
+				})
+				return
+			}
 			c.JSON(http.StatusInternalServerError, gin.H{"error": "token refresh failed"})
 			return
 		}
diff --git a/workspace-server/internal/handlers/github_token_test.go b/workspace-server/internal/handlers/github_token_test.go
index 01076c81..bbc92920 100644
--- a/workspace-server/internal/handlers/github_token_test.go
+++ b/workspace-server/internal/handlers/github_token_test.go
@@ -77,12 +77,10 @@ func TestGitHubToken_NilRegistry(t *testing.T) {
 //
 // Post-#960/#1101 the handler now falls back to direct env-based App
 // token generation (GITHUB_APP_ID / INSTALLATION_ID / PRIVATE_KEY_FILE)
-// when no registered provider matches. In the test environment those
-// env vars are unset, so the fallback fails with 500 "token refresh
-// failed" — a clean retryable signal for the workspace credential
-// helper. Previously this path returned 404; the new 500 matches the
-// ProviderError shape so callers don't have to branch on "missing
-// provider" vs "provider failed".
+// when no registered provider matches. On Gitea-canonical deployments
+// those env vars are unset, so the fallback fails with 501 Not Implemented
+// + scm:"gitea" — distinguishing a permanent "not configured" from a
+// transient retryable error. Fixes #388.
 func TestGitHubToken_NoTokenProvider(t *testing.T) {
 	reg := provisionhook.NewRegistry()
 	reg.Register(&mockMutatorOnly{name: "other-plugin"})
@@ -91,12 +89,15 @@ func TestGitHubToken_NoTokenProvider(t *testing.T) {
 
 	h.GetInstallationToken(c)
 
-	if w.Code != http.StatusInternalServerError {
-		t.Fatalf("expected 500 (env-based fallback fails with unset GITHUB_APP_* vars), got %d: %s",
+	if w.Code != http.StatusNotImplemented {
+		t.Fatalf("expected 501 (Gitea deployment: GITHUB_APP_* unset), got %d: %s",
 			w.Code, w.Body.String())
 	}
-	if !strings.Contains(w.Body.String(), "token refresh failed") {
-		t.Errorf("expected body to contain 'token refresh failed', got: %s", w.Body.String())
+	if !strings.Contains(w.Body.String(), "gitea") {
+		t.Errorf("expected body to contain 'gitea', got: %s", w.Body.String())
+	}
+	if !strings.Contains(w.Body.String(), "not configured") {
+		t.Errorf("expected body to contain 'not configured', got: %s", w.Body.String())
 	}
 }