diff --git a/pkg/instance/lifecycle.go b/pkg/instance/lifecycle.go
index 3db3ca7..dd4c2c0 100644
--- a/pkg/instance/lifecycle.go
+++ b/pkg/instance/lifecycle.go
@@ -4,6 +4,7 @@ import (
 	"context"
 	"fmt"
 	"log"
+	"net/http"
 	"os/exec"
 	"runtime"
 	"syscall"
@@ -143,6 +144,85 @@ func (i *Process) Stop() error {
 	return nil
 }
 
+func (i *Process) WaitForHealthy(timeout int) error {
+	if !i.Running {
+		return fmt.Errorf("instance %s is not running", i.Name)
+	}
+
+	if timeout <= 0 {
+		timeout = 30 // Default to 30 seconds if no timeout is specified
+	}
+	ctx, cancel := context.WithTimeout(context.Background(), time.Duration(timeout)*time.Second)
+	defer cancel()
+
+	// Get the reverse proxy for this instance
+	proxy, err := i.GetProxy()
+	if err != nil {
+		return fmt.Errorf("failed to get proxy for instance %s: %w", i.Name, err)
+	}
+
+	// Polling interval
+	ticker := time.NewTicker(1 * time.Second)
+	defer ticker.Stop()
+
+	// Helper function to check health using the proxy
+	checkHealth := func() bool {
+		// Create a request to /health
+		req, err := http.NewRequestWithContext(ctx, "GET", "/health", nil)
+		if err != nil {
+			return false
+		}
+
+		// Create a custom ResponseRecorder to capture the proxy response
+		recorder := &healthResponseRecorder{
+			statusCode: 0,
+			headers:    make(http.Header),
+		}
+
+		// Use the proxy to forward the request
+		proxy.ServeHTTP(recorder, req)
+
+		return recorder.statusCode == http.StatusOK
+	}
+
+	// Try immediate check first
+	if checkHealth() {
+		return nil // Instance is healthy
+	}
+
+	// If immediate check failed, start polling
+	for {
+		select {
+		case <-ctx.Done():
+			return fmt.Errorf("timeout waiting for instance %s to become healthy after %d seconds", i.Name, timeout)
+		case <-ticker.C:
+			if checkHealth() {
+				return nil // Instance is healthy
+			}
+			// Continue polling
+		}
+	}
+}
+
+// healthResponseRecorder implements http.ResponseWriter to capture proxy responses
+type healthResponseRecorder struct {
+	statusCode int
+	headers    http.Header
+}
+
+func (r *healthResponseRecorder) Header() http.Header {
+	return r.headers
+}
+
+func (r *healthResponseRecorder) Write([]byte) (int, error) {
+	// We don't need to capture the body for health checks
+	return 0, nil
+}
+
+func (r *healthResponseRecorder) WriteHeader(statusCode int) {
+	r.statusCode = statusCode
+}
+
 func (i *Process) monitorProcess() {
 	defer func() {
 		i.mu.Lock()
diff --git a/pkg/server/handlers.go b/pkg/server/handlers.go
index 0d473e7..843407e 100644
--- a/pkg/server/handlers.go
+++ b/pkg/server/handlers.go
@@ -575,8 +575,23 @@ func (h *Handler) OpenAIProxy() http.HandlerFunc {
 		}
 
 		if !inst.Running {
-			http.Error(w, "Instance is not running", http.StatusServiceUnavailable)
-			return
+			if inst.GetOptions().OnDemandStart != nil && *inst.GetOptions().OnDemandStart {
+				// If on-demand start is enabled, start the instance
+				if _, err := h.InstanceManager.StartInstance(modelName); err != nil {
+					http.Error(w, "Failed to start instance: "+err.Error(), http.StatusInternalServerError)
+					return
+				}
+
+				// Wait for the instance to become healthy before proceeding
+				if err := inst.WaitForHealthy(120); err != nil { // 2 minutes timeout
+					http.Error(w, "Instance failed to become healthy: "+err.Error(), http.StatusServiceUnavailable)
+					return
+				}
+
+			} else {
+				http.Error(w, "Instance is not running", http.StatusServiceUnavailable)
+				return
+			}
 		}
 
 		proxy, err := inst.GetProxy()