diff --git a/packages/ai/CHANGELOG.md b/packages/ai/CHANGELOG.md
index f3c5d5992..6400420c6 100644
--- a/packages/ai/CHANGELOG.md
+++ b/packages/ai/CHANGELOG.md
@@ -4,6 +4,7 @@
 
 ### Fixed
 
+- Fixed Cloud Code Assist (Gemini / Antigravity) rejecting tool schemas with `Invalid JSON payload received. Unknown name "propertyNames"` (HTTP 400) when a tool exposed a property literally named `properties` (e.g. the Resend MCP `create_contact` tool). The schema normalizer's `insideProperties` flag was re-asserted when descending into such a property's value schema, so Google-unsupported keywords (`propertyNames`, `additionalProperties`, …) nested inside it were never stripped. The flag is now only set when entering a real `properties` map from a schema node, not from within another `properties` map.
 - Fixed local/self-hosted providers leaking machine-specific endpoints into the bundled `models.json`. A `generate-models` run on a machine with a LiteLLM proxy baked 1202 `litellm` models pinned to `http://localhost:4000/v1` into the committed catalog. `litellm` (and `lm-studio`) now join `ollama`/`vllm` in the generator's discovery-only exclusion set, so local providers are never fetched during generation nor written to `models.json` — they are discovered dynamically at runtime instead. LiteLLM model discovery now enriches metadata against models.dev (the same reference source the other gateway providers use) rather than a bundled reference map. Added a regression test pinning the invariant (no local provider blocks, no loopback/private-network `baseUrl`s in the bundled catalog).
 
 ## [15.8.2] - 2026-06-03
diff --git a/packages/ai/src/utils/schema/normalize.ts b/packages/ai/src/utils/schema/normalize.ts
index 90311e8ac..1b21afd67 100644
--- a/packages/ai/src/utils/schema/normalize.ts
+++ b/packages/ai/src/utils/schema/normalize.ts
@@ -280,7 +280,7 @@ function normalizeSchemaNode(value: unknown, options: NormalizeSchemaWalkOptions
 			if (options.stripNullableKeyword && key === "nullable") continue;
 			result[key] = normalizeSchemaNode(entry, {
 				...options,
-				insideProperties: key === "properties",
+				insideProperties: !options.insideProperties && key === "properties",
 			});
 		}
 		applyDescriptionSpill(result, spill, options);
@@ -302,7 +302,7 @@ function normalizeSchemaNode(value: unknown, options: NormalizeSchemaWalkOptions
 		}
 		result[key] = normalizeSchemaNode(entry, {
 			...options,
-			insideProperties: key === "properties",
+			insideProperties: !options.insideProperties && key === "properties",
 		});
 	}
 
diff --git a/packages/ai/test/google-tool-schema.test.ts b/packages/ai/test/google-tool-schema.test.ts
index 54cb3709f..69c425893 100644
--- a/packages/ai/test/google-tool-schema.test.ts
+++ b/packages/ai/test/google-tool-schema.test.ts
@@ -70,6 +70,37 @@ describe("Cloud Code Assist Claude tool schema conversion", () => {
 		});
 	});
 
+	it("strips schema keywords inside a property literally named properties", () => {
+		// Regression: the Resend MCP `create_contact` tool exposes a property
+		// literally named `properties`. The walker must not treat that property's
+		// value schema as a properties map — otherwise nested `propertyNames` /
+		// `additionalProperties` keywords leak to the CCA wire and get rejected
+		// with `Unknown name "propertyNames"` (HTTP 400).
+		const schema = {
+			type: "object",
+			properties: {
+				properties: {
+					description: "Custom property key-value pairs",
+					type: "object",
+					propertyNames: { type: "string" },
+					additionalProperties: { type: "string" },
+					properties: {},
+				},
+			},
+		} as unknown;
+
+		expect(normalizeSchemaForCCA(schema)).toEqual({
+			type: "object",
+			properties: {
+				properties: {
+					description: "Custom property key-value pairs",
+					type: "object",
+					properties: {},
+				},
+			},
+		});
+	});
+
 	it("uses sanitized parameters for claude models with deterministic output", () => {
 		const parameters = {
 			type: "object",