diff --git a/joi/src/core/Tabs/Tabs.test.tsx b/joi/src/core/Tabs/Tabs.test.tsx
index b6dcf8a7b..46bd48435 100644
--- a/joi/src/core/Tabs/Tabs.test.tsx
+++ b/joi/src/core/Tabs/Tabs.test.tsx
@@ -96,4 +96,20 @@ describe('@joi/core/Tabs', () => {
       'Disabled tab'
     )
   })
+
+  it('applies the tabStyle if provided', () => {
+    render(
+      <Tabs
+        data-testid="segmented-style"
+        options={mockOptions}
+        value="tab1"
+        onValueChange={() => {}}
+        tabStyle="segmented"
+      />
+    )
+
+    const tabsContainer = screen.getByTestId('segmented-style')
+    expect(tabsContainer).toHaveClass('tabs')
+    expect(tabsContainer).toHaveClass('tabs--segmented')
+  })
 })
diff --git a/joi/src/core/Tabs/index.tsx b/joi/src/core/Tabs/index.tsx
index af004e2ba..2dca19831 100644
--- a/joi/src/core/Tabs/index.tsx
+++ b/joi/src/core/Tabs/index.tsx
@@ -7,6 +7,8 @@ import { Tooltip } from '../Tooltip'
 import './styles.scss'
 import { twMerge } from 'tailwind-merge'
 
+type TabStyles = 'segmented'
+
 type TabsProps = {
   options: {
     name: string
@@ -14,8 +16,10 @@ type TabsProps = {
     disabled?: boolean
     tooltipContent?: string
   }[]
-  children: ReactNode
+  children?: ReactNode
+
   defaultValue?: string
+  tabStyle?: TabStyles
   value: string
   onValueChange?: (value: string) => void
 }
@@ -40,15 +44,18 @@ const TabsContent = ({ value, children, className }: TabsContentProps) => {
 const Tabs = ({
   options,
   children,
+  tabStyle,
   defaultValue,
   value,
   onValueChange,
+  ...props
 }: TabsProps) => (
   <TabsPrimitive.Root
-    className="tabs"
+    className={twMerge('tabs', tabStyle && `tabs--${tabStyle}`)}
     value={value}
     defaultValue={defaultValue}
     onValueChange={onValueChange}
+    {...props}
   >
     <TabsPrimitive.List className="tabs__list">
       {options.map((option, i) => {
diff --git a/joi/src/core/Tabs/styles.scss b/joi/src/core/Tabs/styles.scss
index a24585b4e..ce3df013b 100644
--- a/joi/src/core/Tabs/styles.scss
+++ b/joi/src/core/Tabs/styles.scss
@@ -3,6 +3,27 @@
   flex-direction: column;
   width: 100%;
 
+  &--segmented {
+    background-color: hsla(var(--secondary-bg));
+    border-radius: 6px;
+    height: 33px;
+
+    .tabs__list {
+      border: none;
+      justify-content: center;
+      align-items: center;
+      height: 33px;
+    }
+
+    .tabs__trigger[data-state='active'] {
+      background-color: hsla(var(--app-bg));
+      border: none;
+      height: 25px;
+      margin: 0 4px;
+      border-radius: 5px;
+    }
+  }
+
   &__list {
     flex-shrink: 0;
     display: flex;
@@ -14,9 +35,11 @@
     flex: 1;
     height: 38px;
     display: flex;
+    color: hsla(var(--text-secondary));
     align-items: center;
     justify-content: center;
     line-height: 1;
+    font-weight: medium;
     user-select: none;
     &:focus {
       position: relative;
@@ -38,4 +61,5 @@
 .tabs__trigger[data-state='active'] {
   border-bottom: 1px solid hsla(var(--primary-bg));
   font-weight: 600;
+  color: hsla(var(--text-primary));
 }
diff --git a/web/containers/ModelDropdown/index.test.tsx b/web/containers/ModelDropdown/index.test.tsx
new file mode 100644
index 000000000..7541f891b
--- /dev/null
+++ b/web/containers/ModelDropdown/index.test.tsx
@@ -0,0 +1,101 @@
+import { render, screen, waitFor } from '@testing-library/react'
+import { useAtomValue, useAtom, useSetAtom } from 'jotai'
+import ModelDropdown from './index'
+import useRecommendedModel from '@/hooks/useRecommendedModel'
+import '@testing-library/jest-dom'
+
+class ResizeObserverMock {
+  observe() {}
+  unobserve() {}
+  disconnect() {}
+}
+
+global.ResizeObserver = ResizeObserverMock
+
+jest.mock('jotai', () => {
+  const originalModule = jest.requireActual('jotai')
+  return {
+    ...originalModule,
+    useAtom: jest.fn(),
+    useAtomValue: jest.fn(),
+    useSetAtom: jest.fn(),
+  }
+})
+
+jest.mock('@/containers/ModelLabel')
+jest.mock('@/hooks/useRecommendedModel')
+
+describe('ModelDropdown', () => {
+  const remoteModel = {
+    metadata: { tags: ['Featured'], size: 100 },
+    name: 'Test Model',
+    engine: 'openai',
+  }
+
+  const localModel = {
+    metadata: { tags: ['Local'], size: 100 },
+    name: 'Local Model',
+    engine: 'nitro',
+  }
+
+  const configuredModels = [remoteModel, localModel]
+
+  const mockConfiguredModel = configuredModels
+  const selectedModel = { id: 'selectedModel', name: 'selectedModel' }
+  const setSelectedModel = jest.fn()
+  const showEngineListModel = ['nitro']
+  const showEngineListModelAtom = jest.fn()
+
+  beforeEach(() => {
+    jest.clearAllMocks()
+    ;(useAtom as jest.Mock).mockReturnValue([selectedModel, setSelectedModel])
+    ;(useAtom as jest.Mock).mockReturnValue([
+      showEngineListModel,
+      showEngineListModelAtom,
+    ])
+    ;(useAtomValue as jest.Mock).mockReturnValue(mockConfiguredModel)
+    ;(useRecommendedModel as jest.Mock).mockReturnValue({
+      recommendedModel: { id: 'model1', parameters: [], settings: [] },
+      downloadedModels: [],
+    })
+  })
+
+  it('renders the ModelDropdown component', async () => {
+    render(<ModelDropdown />)
+
+    await waitFor(() => {
+      expect(screen.getByTestId('model-selector')).toBeInTheDocument()
+    })
+  })
+
+  it('renders the ModelDropdown component as disabled', async () => {
+    render(<ModelDropdown disabled />)
+
+    await waitFor(() => {
+      expect(screen.getByTestId('model-selector')).toBeInTheDocument()
+      expect(screen.getByTestId('model-selector')).toHaveClass(
+        'pointer-events-none'
+      )
+    })
+  })
+
+  it('renders the ModelDropdown component as badge for chat Input', async () => {
+    render(<ModelDropdown chatInputMode />)
+
+    await waitFor(() => {
+      expect(screen.getByTestId('model-selector')).toBeInTheDocument()
+      expect(screen.getByTestId('model-selector-badge')).toBeInTheDocument()
+      expect(screen.getByTestId('model-selector-badge')).toHaveClass('badge')
+    })
+  })
+
+  it('renders the Tab correctly', async () => {
+    render(<ModelDropdown />)
+
+    await waitFor(() => {
+      expect(screen.getByTestId('model-selector')).toBeInTheDocument()
+      expect(screen.getByText('On-device'))
+      expect(screen.getByText('Cloud'))
+    })
+  })
+})
diff --git a/web/containers/ModelDropdown/index.tsx b/web/containers/ModelDropdown/index.tsx
index d8743ddce..2a0c4ffaf 100644
--- a/web/containers/ModelDropdown/index.tsx
+++ b/web/containers/ModelDropdown/index.tsx
@@ -8,7 +8,7 @@ import {
   Button,
   Input,
   ScrollArea,
-  Select,
+  Tabs,
   useClickOutside,
 } from '@janhq/joi'
 
@@ -70,8 +70,8 @@ const ModelDropdown = ({
   strictedThread = true,
 }: Props) => {
   const { downloadModel } = useDownloadModel()
-  const [searchFilter, setSearchFilter] = useState('all')
-  const [filterOptionsOpen, setFilterOptionsOpen] = useState(false)
+
+  const [searchFilter, setSearchFilter] = useState('local')
   const [searchText, setSearchText] = useState('')
   const [open, setOpen] = useState(false)
   const activeThread = useAtomValue(activeThreadAtom)
@@ -92,10 +92,7 @@ const ModelDropdown = ({
   )
   const { updateThreadMetadata } = useCreateNewThread()
 
-  useClickOutside(() => !filterOptionsOpen && setOpen(false), null, [
-    dropdownOptions,
-    toggle,
-  ])
+  useClickOutside(() => setOpen(false), null, [dropdownOptions, toggle])
 
   const [showEngineListModel, setShowEngineListModel] = useAtom(
     showEngineListModelAtom
@@ -115,9 +112,6 @@ const ModelDropdown = ({
           e.name.toLowerCase().includes(searchText.toLowerCase().trim())
         )
         .filter((e) => {
-          if (searchFilter === 'all') {
-            return e.engine
-          }
           if (searchFilter === 'local') {
             return localEngines.includes(e.engine)
           }
@@ -152,9 +146,9 @@ const ModelDropdown = ({
 
   useEffect(() => {
     if (!activeThread) return
-    let model = downloadedModels.find(
-      (model) => model.id === activeThread.assistants[0].model.id
-    )
+    const modelId = activeThread?.assistants?.[0]?.model?.id
+
+    let model = downloadedModels.find((model) => model.id === modelId)
     if (!model) {
       model = recommendedModel
     }
@@ -309,10 +303,14 @@ const ModelDropdown = ({
   }
 
   return (
-    <div className={twMerge('relative', disabled && 'pointer-events-none')}>
+    <div
+      className={twMerge('relative', disabled && 'pointer-events-none')}
+      data-testid="model-selector"
+    >
       <div ref={setToggle}>
         {chatInputMode ? (
           <Badge
+            data-testid="model-selector-badge"
             theme="secondary"
             variant={open ? 'solid' : 'outline'}
             className={twMerge(
@@ -341,19 +339,30 @@ const ModelDropdown = ({
       </div>
       <div
         className={twMerge(
-          'w=80 absolute right-0 z-20 mt-2 max-h-80 w-full overflow-hidden rounded-lg border border-[hsla(var(--app-border))] bg-[hsla(var(--app-bg))] shadow-sm',
+          'absolute right-0 z-20 mt-2 max-h-80 w-full overflow-hidden rounded-lg border border-[hsla(var(--app-border))] bg-[hsla(var(--app-bg))] shadow-sm',
           open ? 'flex' : 'hidden',
           chatInputMode && 'bottom-8 left-0 w-72'
         )}
         ref={setDropdownOptions}
       >
         <div className="w-full">
-          <div className="relative">
+          <div className="p-2 pb-0">
+            <Tabs
+              options={[
+                { name: 'On-device', value: 'local' },
+                { name: 'Cloud', value: 'remote' },
+              ]}
+              tabStyle="segmented"
+              value={searchFilter as string}
+              onValueChange={(value) => setSearchFilter(value)}
+            />
+          </div>
+          <div className="relative border-b border-[hsla(var(--app-border))] py-2">
             <Input
               placeholder="Search"
               value={searchText}
               ref={searchInputRef}
-              className="rounded-none border-x-0 border-t-0 focus-within:ring-0 hover:border-b-[hsla(var(--app-border))]"
+              className="rounded-none border-x-0 border-b-0 border-t-0 focus-within:ring-0 "
               onChange={(e) => setSearchText(e.target.value)}
               suffixIcon={
                 searchText.length > 0 && (
@@ -365,26 +374,8 @@ const ModelDropdown = ({
                 )
               }
             />
-            <div
-              className={twMerge(
-                'absolute right-2 top-1/2 -translate-y-1/2',
-                searchText.length && 'hidden'
-              )}
-            >
-              <Select
-                value={searchFilter}
-                className="h-6 gap-1 px-2"
-                options={[
-                  { name: 'All', value: 'all' },
-                  { name: 'On-device', value: 'local' },
-                  { name: 'Cloud', value: 'remote' },
-                ]}
-                onValueChange={(value) => setSearchFilter(value)}
-                onOpenChange={(open) => setFilterOptionsOpen(open)}
-              />
-            </div>
           </div>
-          <ScrollArea className="h-[calc(100%-36px)] w-full">
+          <ScrollArea className="h-[calc(100%-90px)] w-full">
             {groupByEngine.map((engine, i) => {
               const apiKey = !localEngines.includes(engine)
                 ? extensionHasSettings.filter((x) => x.provider === engine)[0]