diff --git a/index.js b/index.js
index d981220..ce7fcf4 100644
--- a/index.js
+++ b/index.js
@@ -633,13 +633,17 @@ async function initUI() {
     });
 
     $('#rpg-external-api-key').on('change', function() {
+        // Securely store API key in localStorage instead of shared extension settings
+        const apiKey = String($(this).val()).trim();
+        localStorage.setItem('rpg_companion_external_api_key', apiKey);
+        
+        // Ensure the externalApiSettings object exists, but don't store the key in it
         if (!extensionSettings.externalApiSettings) {
             extensionSettings.externalApiSettings = {
-                baseUrl: '', apiKey: '', model: '', maxTokens: 8192, temperature: 0.7
+                baseUrl: '', model: '', maxTokens: 8192, temperature: 0.7
             };
+            saveSettings();
         }
-        extensionSettings.externalApiSettings.apiKey = String($(this).val()).trim();
-        saveSettings();
     });
 
     $('#rpg-external-model').on('change', function() {
@@ -771,7 +775,11 @@ async function initUI() {
     // Initialize External API settings values
     if (extensionSettings.externalApiSettings) {
         $('#rpg-external-base-url').val(extensionSettings.externalApiSettings.baseUrl || '');
-        $('#rpg-external-api-key').val(extensionSettings.externalApiSettings.apiKey || '');
+        
+        // Load API Key from secure localStorage
+        const storedApiKey = localStorage.getItem('rpg_companion_external_api_key') || '';
+        $('#rpg-external-api-key').val(storedApiKey);
+        
         $('#rpg-external-model').val(extensionSettings.externalApiSettings.model || '');
         $('#rpg-external-max-tokens').val(extensionSettings.externalApiSettings.maxTokens || 8192);
         $('#rpg-external-temperature').val(extensionSettings.externalApiSettings.temperature ?? 0.7);
diff --git a/src/core/state.js b/src/core/state.js
index b7a6377..0941ea7 100644
--- a/src/core/state.js
+++ b/src/core/state.js
@@ -175,7 +175,7 @@ export let extensionSettings = {
     // External API settings for 'external' generation mode
     externalApiSettings: {
         baseUrl: '',           // OpenAI-compatible API base URL (e.g., "https://api.openai.com/v1")
-        apiKey: '',            // API key for the external service
+        // apiKey is NOT stored here for security. It is stored in localStorage('rpg_companion_api_key')
         model: '',             // Model identifier (e.g., "gpt-4o-mini")
         maxTokens: 8192,       // Maximum tokens for generation
         temperature: 0.7       // Temperature setting for generation
diff --git a/src/systems/generation/apiClient.js b/src/systems/generation/apiClient.js
index 894997b..34254ac 100644
--- a/src/systems/generation/apiClient.js
+++ b/src/systems/generation/apiClient.js
@@ -39,14 +39,16 @@ let originalPresetName = null;
  * @throws {Error} If the API call fails or configuration is invalid
  */
 export async function generateWithExternalAPI(messages) {
-    const { baseUrl, apiKey, model, maxTokens, temperature } = extensionSettings.externalApiSettings || {};
+    const { baseUrl, model, maxTokens, temperature } = extensionSettings.externalApiSettings || {};
+    // Retrieve API key from secure storage (not shared extension settings)
+    const apiKey = localStorage.getItem('rpg_companion_external_api_key');
 
     // Validate required settings
     if (!baseUrl || !baseUrl.trim()) {
         throw new Error('External API base URL is not configured');
     }
     if (!apiKey || !apiKey.trim()) {
-        throw new Error('External API key is not configured');
+        throw new Error('External API key is not found. If you switched browsers or cleared your cache, please re-enter your API key in the extension settings.');
     }
     if (!model || !model.trim()) {
         throw new Error('External API model is not configured');
@@ -113,12 +115,15 @@ export async function generateWithExternalAPI(messages) {
  * @returns {Promise<{success: boolean, message: string, model?: string}>}
  */
 export async function testExternalAPIConnection() {
-    const { baseUrl, apiKey, model } = extensionSettings.externalApiSettings || {};
+    const { baseUrl, model } = extensionSettings.externalApiSettings || {};
+    const apiKey = localStorage.getItem('rpg_companion_external_api_key');
 
     if (!baseUrl || !apiKey || !model) {
         return {
             success: false,
-            message: 'Please fill in all required fields (Base URL, API Key, and Model)'
+            message: !apiKey 
+                ? 'API Key not found. Please re-enter it in settings (keys are stored locally per-browser).'
+                : 'Please fill in all required fields (Base URL, API Key, and Model)'
         };
     }