diff --git a/internal/adapter/discovery/service.go b/internal/adapter/discovery/service.go
index ac62bea6..136554bd 100644
--- a/internal/adapter/discovery/service.go
+++ b/internal/adapter/discovery/service.go
@@ -231,6 +231,13 @@ func (s *ModelDiscoveryService) discoverConcurrently(ctx context.Context, endpoi
 
 // handleDiscoveryError processes discovery errors and manages endpoint disabling
 func (s *ModelDiscoveryService) handleDiscoveryError(endpoint *domain.Endpoint, err error) {
+	// Discovery requests are canceled during coordinated shutdown/restart.
+	// Treat these as expected lifecycle events, not endpoint failures.
+	if errors.Is(err, context.Canceled) {
+		s.logger.InfoWithEndpoint("Model discovery canceled during shutdown", endpoint.Name)
+		return
+	}
+
 	// Create user-friendly message for console output and detailed error for logs
 	userMsg := GetUserFriendlyMessage(err)
 
diff --git a/internal/adapter/discovery/service_test.go b/internal/adapter/discovery/service_test.go
index e495ed73..c86f3839 100644
--- a/internal/adapter/discovery/service_test.go
+++ b/internal/adapter/discovery/service_test.go
@@ -341,6 +341,40 @@ func TestEndpointDisabledAfterMaxFailures(t *testing.T) {
 	}
 }
 
+func TestDiscoverEndpointContextCanceledDoesNotCountAsFailure(t *testing.T) {
+	endpoint := createMockEndpoint("http://localhost:11434", "test-endpoint")
+
+	client := &mockDiscoveryClient{
+		discoveryErrors: map[string]error{
+			endpoint.URLString: &DiscoveryError{
+				EndpointURL: endpoint.URLString,
+				ProfileType: domain.ProfileOMLX,
+				Operation:   "http_request",
+				Err: &NetworkError{
+					URL: endpoint.URLString + "/v1/models",
+					Err: context.Canceled,
+				},
+			},
+		},
+	}
+	endpointRepo := &mockEndpointRepository{}
+	modelRegistry := &mockModelRegistry{registeredModels: make([]*domain.ModelInfo, 0)}
+	service := NewModelDiscoveryService(client, endpointRepo, modelRegistry, DiscoveryConfig{Timeout: 5 * time.Second}, createTestLogger())
+
+	err := service.DiscoverEndpoint(context.Background(), endpoint)
+	if err == nil {
+		t.Fatalf("expected context cancellation error, got nil")
+	}
+
+	if got := service.getFailureCount(endpoint.URLString); got != 0 {
+		t.Fatalf("expected no failure count increment for context cancellation, got %d", got)
+	}
+
+	if service.isEndpointDisabled(endpoint.URLString) {
+		t.Fatalf("endpoint should not be disabled for context cancellation")
+	}
+}
+
 func TestFilterActiveEndpoints(t *testing.T) {
 	endpoints := []*domain.Endpoint{
 		createMockEndpoint("http://localhost:11434", "enabled-1"),
diff --git a/internal/logger/logger.go b/internal/logger/logger.go
index 03e5a32d..35fa653c 100644
--- a/internal/logger/logger.go
+++ b/internal/logger/logger.go
@@ -18,6 +18,7 @@ import (
 type Config struct {
 	Level      string
 	LogDir     string
+	OutputPath string
 	Theme      string
 	MaxSize    int // megabytes
 	MaxBackups int
@@ -129,12 +130,18 @@ func createJSONHandler(level slog.Level, writer *os.File) slog.Handler {
 // createFileHandler creates a file-based JSON handler with rotation
 // wraps with ansiStripHandler to ensure clean JSON output without ANSI codes
 func createFileHandler(cfg *Config, level slog.Level) (slog.Handler, func(), error) {
-	if err := os.MkdirAll(cfg.LogDir, 0755); err != nil {
+	logFilePath := filepath.Join(cfg.LogDir, DefaultLogOutputName)
+	if cfg.OutputPath != "" {
+		logFilePath = cfg.OutputPath
+	}
+
+	logDir := filepath.Dir(logFilePath)
+	if err := os.MkdirAll(logDir, 0755); err != nil {
 		return nil, nil, err
 	}
 
 	rotator := &lumberjack.Logger{
-		Filename:   filepath.Join(cfg.LogDir, DefaultLogOutputName),
+		Filename:   logFilePath,
 		MaxSize:    cfg.MaxSize,
 		MaxBackups: cfg.MaxBackups,
 		MaxAge:     cfg.MaxAge,
diff --git a/main.go b/main.go
index 69bc1d7b..937ea7f3 100644
--- a/main.go
+++ b/main.go
@@ -8,7 +8,9 @@ import (
 	"log/slog"
 	"os"
 	"os/signal"
+	"path/filepath"
 	"runtime"
+	"strings"
 	"syscall"
 	"time"
 
@@ -77,8 +79,15 @@ func main() {
 		vlog.Printf(theme.ColourProfiler("Profiling server started at http://%s/debug/pprof/\n"), profileAddress)
 	}
 
+	// Load configuration before logger setup so logging.output is respected.
+	cfg, err := config.Load(configFile)
+	if err != nil {
+		fmt.Fprintf(os.Stderr, "Failed to load configuration: %v\n", err)
+		os.Exit(1)
+	}
+
 	// Setup logging
-	lcfg := buildLoggerConfig()
+	lcfg := buildLoggerConfig(cfg)
 	logInstance, styledLogger, cleanup, err := logger.NewWithTheme(lcfg)
 	if err != nil {
 		fmt.Fprintf(os.Stderr, "Failed to initialise logger: %v\n", err)
@@ -106,12 +115,6 @@ func main() {
 		cancel()
 	}()
 
-	// Load configuration
-	cfg, err := config.Load(configFile)
-	if err != nil {
-		logger.FatalWithLogger(logInstance, "Failed to load configuration", "error", err)
-	}
-
 	// Validate model alias configuration at startup
 	if err = cfg.ValidateModelAliases(); err != nil {
 		logger.FatalWithLogger(logInstance, "Invalid model alias configuration", "error", err)
@@ -202,8 +205,8 @@ func reportProcessStats(logger logger.StyledLogger, startTime time.Time) {
 	)
 }
 
-func buildLoggerConfig() *logger.Config {
-	return &logger.Config{
+func buildLoggerConfig(cfg *config.Config) *logger.Config {
+	lcfg := &logger.Config{
 		Level:      env.GetEnvOrDefault("OLLA_LOG_LEVEL", DefaultLoggerLevel),
 		PrettyLogs: env.GetEnvBoolOrDefault("OLLA_PRETTY_LOGS", DefaultPrettyLogs),
 		FileOutput: env.GetEnvBoolOrDefault("OLLA_FILE_OUTPUT", DefaultFileOutput),
@@ -213,4 +216,33 @@ func buildLoggerConfig() *logger.Config {
 		MaxAge:     env.GetEnvIntOrDefault("OLLA_LOG_MAX_AGE_DAYS", DefaultLogMaxAgeDays),
 		Theme:      env.GetEnvOrDefault("OLLA_THEME", DefaultTheme),
 	}
+
+	if cfg == nil {
+		return lcfg
+	}
+
+	if cfg.Logging.Level != "" {
+		lcfg.Level = cfg.Logging.Level
+	}
+
+	output := strings.TrimSpace(cfg.Logging.Output)
+	switch strings.ToLower(output) {
+	case "", "stdout":
+		lcfg.FileOutput = false
+		lcfg.OutputPath = ""
+	case "stderr":
+		lcfg.FileOutput = false
+		lcfg.OutputPath = ""
+	default:
+		lcfg.FileOutput = true
+		if filepath.IsAbs(output) {
+			lcfg.OutputPath = output
+			lcfg.LogDir = filepath.Dir(output)
+		} else {
+			lcfg.OutputPath = filepath.Clean(output)
+			lcfg.LogDir = filepath.Dir(lcfg.OutputPath)
+		}
+	}
+
+	return lcfg
 }