diff --git a/inc/Main.php b/inc/Main.php
index 55f2784b..fe0f9a23 100644
--- a/inc/Main.php
+++ b/inc/Main.php
@@ -158,21 +158,22 @@ function ( $data ) use ( $settings, $post_types_for_js ) {
 				return array_merge(
 					$data,
 					[
-						'api'            => $this->api->get_endpoint(),
-						'rest_url'       => rest_url( $this->api->get_endpoint() ),
-						'postTypes'      => $post_types_for_js,
-						'hasAPIKey'      => isset( $settings['api_key'] ) && ! empty( $settings['api_key'] ),
-						'chunksLimit'    => apply_filters( 'hyve_chunks_limit', 500 ),
-						'isQdrantActive' => Qdrant_API::is_active(),
-						'assets'         => [
+						'api'               => $this->api->get_endpoint(),
+						'rest_url'          => rest_url( $this->api->get_endpoint() ),
+						'postTypes'         => $post_types_for_js,
+						'hasAPIKey'         => isset( $settings['api_key'] ) && ! empty( $settings['api_key'] ),
+						'isApiKeyConnected' => self::is_api_key_connected( $settings ),
+						'chunksLimit'       => apply_filters( 'hyve_chunks_limit', 500 ),
+						'isQdrantActive'    => Qdrant_API::is_active(),
+						'assets'            => [
 							'images' => HYVE_LITE_URL . 'assets/images/',
 						],
-						'stats'          => $this->get_stats(),
-						'docs'           => 'https://docs.themeisle.com/article/2009-hyve-documentation',
-						'qdrant_docs'    => 'https://docs.themeisle.com/article/2066-integrate-hyve-with-qdrant',
-						'pro'            => 'https://themeisle.com/plugins/hyve/',
-						'chart'          => $this->get_chart_data(),
-						'hasPro'         => apply_filters( 'product_hyve_license_status', false ),
+						'stats'             => $this->get_stats(),
+						'docs'              => 'https://docs.themeisle.com/article/2009-hyve-documentation',
+						'qdrant_docs'       => 'https://docs.themeisle.com/article/2066-integrate-hyve-with-qdrant',
+						'pro'               => 'https://themeisle.com/plugins/hyve/',
+						'chart'             => $this->get_chart_data(),
+						'hasPro'            => apply_filters( 'product_hyve_license_status', false ),
 					]
 				);
 			},
@@ -641,6 +642,43 @@ function ( $date ) {
 		];
 	}
 
+	/**
+	 * Determine whether the saved OpenAI API key is connected.
+	 *
+	 * The key is validated against OpenAI whenever it is saved, and any
+	 * key-related failure during use is stored in the error option. The key is
+	 * considered connected when it is set and the last stored error (if any) is
+	 * not one that invalidates the key itself.
+	 *
+	 * @param array<string, mixed> $settings Plugin settings.
+	 *
+	 * @return bool
+	 */
+	public static function is_api_key_connected( $settings ) {
+		if ( empty( $settings['api_key'] ) ) {
+			return false;
+		}
+
+		$last_error = get_option( OpenAI::ERROR_OPTION_KEY, false );
+
+		if ( ! is_array( $last_error ) || empty( $last_error['code'] ) ) {
+			return true;
+		}
+
+		$key_error_codes = [
+			'invalid_api_key',
+			'invalid_authentication',
+			'account_deactivated',
+			'billing_not_active',
+			'organization_not_found',
+			'organization_deactivated',
+			'permission_denied',
+			'insufficient_quota',
+		];
+
+		return ! in_array( $last_error['code'], $key_error_codes, true );
+	}
+
 	/**
 	 * Append services errors if they exists.
 	 *
diff --git a/src/backend/parts/settings/Advanced.js b/src/backend/parts/settings/Advanced.js
index ff6a99b5..65cabc53 100644
--- a/src/backend/parts/settings/Advanced.js
+++ b/src/backend/parts/settings/Advanced.js
@@ -9,6 +9,7 @@ import {
 	BaseControl,
 	Button,
 	ExternalLink,
+	Icon,
 	Panel,
 	PanelRow,
 	TextControl,
@@ -20,6 +21,14 @@ import { useDispatch, useSelect } from '@wordpress/data';
 
 import { applyFilters } from '@wordpress/hooks';
 
+const getInitialApiStatus = () => {
+	if ( window.hyve?.isApiKeyConnected ) {
+		return 'connected';
+	}
+
+	return window.hyve?.hasAPIKey ? 'error' : 'none';
+};
+
 const Advanced = () => {
 	const settings = useSelect( ( select ) => select( 'hyve' ).getSettings() );
 
@@ -29,6 +38,8 @@ const Advanced = () => {
 
 	const [ isSaving, setIsSaving ] = useState( false );
 
+	const [ apiStatus, setApiStatus ] = useState( getInitialApiStatus );
+
 	const onSave = async () => {
 		setIsSaving( true );
 
@@ -47,8 +58,10 @@ const Advanced = () => {
 
 			if ( settings.api_key ) {
 				setHasAPI( true );
+				setApiStatus( 'connected' );
 			} else {
 				setHasAPI( false );
+				setApiStatus( 'none' );
 			}
 
 			createNotice( 'success', __( 'Settings saved.', 'hyve-lite' ), {
@@ -56,6 +69,10 @@ const Advanced = () => {
 				isDismissible: true,
 			} );
 		} catch ( error ) {
+			if ( settings.api_key ) {
+				setApiStatus( 'error' );
+			}
+
 			createNotice( 'error', error, {
 				type: 'snackbar',
 				isDismissible: true,
@@ -86,17 +103,37 @@ const Advanced = () => {
 									featureComponent: 'api-key',
 									featureValue: 'added',
 								} );
+								setApiStatus( 'editing' );
 								setSetting( 'api_key', newValue );
 							} }
 						/>
 					</BaseControl>
 
-					<ExternalLink
-						href="https://platform.openai.com/api-keys"
-						className="flex mb-2 items-centertext-sm text-blue-600"
-					>
-						{ __( 'Get an API key', 'hyve-lite' ) }
-					</ExternalLink>
+					{ 'connected' === apiStatus && (
+						<p className="mb-2 flex items-center text-green-700">
+							<Icon icon="yes" className="text-green-600" />
+							{ __( 'Connected', 'hyve-lite' ) }
+						</p>
+					) }
+
+					{ 'error' === apiStatus && (
+						<p className="mb-2 flex items-center text-red-700">
+							<Icon icon="warning" className="text-red-600" />
+							{ __(
+								'Not connected. Please check your API key.',
+								'hyve-lite'
+							) }
+						</p>
+					) }
+
+					{ 'connected' !== apiStatus && (
+						<ExternalLink
+							href="https://platform.openai.com/api-keys"
+							className="flex mb-2 items-centertext-sm text-blue-600"
+						>
+							{ __( 'Get an API key', 'hyve-lite' ) }
+						</ExternalLink>
+					) }
 
 					<Button
 						variant="primary"
diff --git a/tests/php/unit/tests/test-api-key-connected.php b/tests/php/unit/tests/test-api-key-connected.php
new file mode 100644
index 00000000..1e70ed9d
--- /dev/null
+++ b/tests/php/unit/tests/test-api-key-connected.php
@@ -0,0 +1,82 @@
+<?php
+/**
+ * Test_Api_Key_Connected class.
+ *
+ * @package Codeinwp/HyveLite
+ */
+
+use ThemeIsle\HyveLite\Main;
+use ThemeIsle\HyveLite\OpenAI;
+
+/**
+ * Class Test_Api_Key_Connected.
+ */
+class Test_Api_Key_Connected extends WP_UnitTestCase {
+	/**
+	 * Clean up the stored error between tests.
+	 */
+	public function tear_down() {
+		delete_option( OpenAI::ERROR_OPTION_KEY );
+		parent::tear_down();
+	}
+
+	/**
+	 * An empty key is never connected.
+	 */
+	public function testEmptyKeyIsNotConnected() {
+		$this->assertFalse( Main::is_api_key_connected( [] ) );
+		$this->assertFalse( Main::is_api_key_connected( [ 'api_key' => '' ] ) );
+	}
+
+	/**
+	 * A key with no stored error is connected.
+	 */
+	public function testKeyWithoutErrorIsConnected() {
+		delete_option( OpenAI::ERROR_OPTION_KEY );
+
+		$this->assertTrue( Main::is_api_key_connected( [ 'api_key' => 'sk-test' ] ) );
+	}
+
+	/**
+	 * A key-invalidating error reports as not connected.
+	 */
+	public function testKeyErrorIsNotConnected() {
+		$codes = [
+			'invalid_api_key',
+			'invalid_authentication',
+			'account_deactivated',
+			'billing_not_active',
+			'organization_not_found',
+			'organization_deactivated',
+			'permission_denied',
+			'insufficient_quota',
+		];
+
+		foreach ( $codes as $code ) {
+			update_option( OpenAI::ERROR_OPTION_KEY, [ 'code' => $code ] );
+
+			$this->assertFalse(
+				Main::is_api_key_connected( [ 'api_key' => 'sk-test' ] ),
+				"Code {$code} should mark the key as not connected."
+			);
+		}
+	}
+
+	/**
+	 * A transient error (e.g. rate limiting) keeps the key connected.
+	 */
+	public function testTransientErrorStaysConnected() {
+		update_option( OpenAI::ERROR_OPTION_KEY, [ 'code' => 'rate_limit_exceeded' ] );
+
+		$this->assertTrue( Main::is_api_key_connected( [ 'api_key' => 'sk-test' ] ) );
+	}
+
+	/**
+	 * A stored error without a code does not invalidate the key.
+	 */
+	public function testErrorWithoutCodeStaysConnected() {
+		update_option( OpenAI::ERROR_OPTION_KEY, [ 'message' => 'Something happened.' ] );
+
+		$this->assertTrue( Main::is_api_key_connected( [ 'api_key' => 'sk-test' ] ) );
+	}
+}