diff --git a/apps/api/prisma/migrations/20260131115600_add_llm_provider_instance/migration.sql b/apps/api/prisma/migrations/20260131115600_add_llm_provider_instance/migration.sql
new file mode 100644
index 0000000..ab87a30
--- /dev/null
+++ b/apps/api/prisma/migrations/20260131115600_add_llm_provider_instance/migration.sql
@@ -0,0 +1,29 @@
+-- CreateTable
+CREATE TABLE "llm_provider_instances" (
+    "id" UUID NOT NULL,
+    "provider_type" TEXT NOT NULL,
+    "display_name" TEXT NOT NULL,
+    "user_id" UUID,
+    "config" JSONB NOT NULL,
+    "is_default" BOOLEAN NOT NULL DEFAULT false,
+    "is_enabled" BOOLEAN NOT NULL DEFAULT true,
+    "created_at" TIMESTAMPTZ NOT NULL DEFAULT CURRENT_TIMESTAMP,
+    "updated_at" TIMESTAMPTZ NOT NULL,
+
+    CONSTRAINT "llm_provider_instances_pkey" PRIMARY KEY ("id")
+);
+
+-- CreateIndex
+CREATE INDEX "llm_provider_instances_user_id_idx" ON "llm_provider_instances"("user_id");
+
+-- CreateIndex
+CREATE INDEX "llm_provider_instances_provider_type_idx" ON "llm_provider_instances"("provider_type");
+
+-- CreateIndex
+CREATE INDEX "llm_provider_instances_is_default_idx" ON "llm_provider_instances"("is_default");
+
+-- CreateIndex
+CREATE INDEX "llm_provider_instances_is_enabled_idx" ON "llm_provider_instances"("is_enabled");
+
+-- AddForeignKey
+ALTER TABLE "llm_provider_instances" ADD CONSTRAINT "llm_provider_instances_user_id_fkey" FOREIGN KEY ("user_id") REFERENCES "users"("id") ON DELETE CASCADE ON UPDATE CASCADE;
diff --git a/apps/api/prisma/schema.prisma b/apps/api/prisma/schema.prisma
index 4b16c6b..c1fdc16 100644
--- a/apps/api/prisma/schema.prisma
+++ b/apps/api/prisma/schema.prisma
@@ -168,6 +168,7 @@ model User {
   userLayouts             UserLayout[]
   userPreference          UserPreference?
   knowledgeEntryVersions  KnowledgeEntryVersion[]  @relation("EntryVersionAuthor")
+  llmProviders            LlmProviderInstance[]    @relation("UserLlmProviders")
 
   @@map("users")
 }
@@ -944,3 +945,28 @@ model Personality {
   @@index([workspaceId, isActive])
   @@map("personalities")
 }
+
+// ============================================
+// LLM PROVIDER MODULE
+// ============================================
+
+model LlmProviderInstance {
+  id           String  @id @default(uuid()) @db.Uuid
+  providerType String  @map("provider_type")  // "ollama" | "claude" | "openai"
+  displayName  String  @map("display_name")
+  userId       String? @map("user_id") @db.Uuid // NULL = system-level, UUID = user-level
+  config       Json                             // Provider-specific configuration
+  isDefault    Boolean @default(false) @map("is_default")
+  isEnabled    Boolean @default(true) @map("is_enabled")
+  createdAt    DateTime @default(now()) @map("created_at") @db.Timestamptz
+  updatedAt    DateTime @updatedAt @map("updated_at") @db.Timestamptz
+
+  // Relations
+  user User? @relation("UserLlmProviders", fields: [userId], references: [id], onDelete: Cascade)
+
+  @@index([userId])
+  @@index([providerType])
+  @@index([isDefault])
+  @@index([isEnabled])
+  @@map("llm_provider_instances")
+}
diff --git a/docs/scratchpads/128-llm-provider-schema.md b/docs/scratchpads/128-llm-provider-schema.md
new file mode 100644
index 0000000..b5a63b3
--- /dev/null
+++ b/docs/scratchpads/128-llm-provider-schema.md
@@ -0,0 +1,120 @@
+# Issue #128: Add LlmProviderInstance Prisma Schema
+
+## Objective
+
+Create database schema for LLM provider instance configuration to support multi-provider LLM backend.
+
+## Approach
+
+### Schema Design
+
+```prisma
+model LlmProviderInstance {
+  id            String   @id @default(uuid())
+  providerType  String   @map("provider_type")  // "ollama" | "claude" | "openai"
+  displayName   String   @map("display_name")
+  userId        String?  @map("user_id")        // NULL = system-level, UUID = user-level
+  config        Json                             // Provider-specific configuration
+  isDefault     Boolean  @default(false) @map("is_default")
+  isEnabled     Boolean  @default(true) @map("is_enabled")
+  createdAt     DateTime @default(now()) @map("created_at")
+  updatedAt     DateTime @updatedAt @map("updated_at")
+
+  user          User?    @relation(fields: [userId], references: [id], onDelete: Cascade)
+
+  @@index([userId])
+  @@index([providerType])
+  @@index([isDefault])
+  @@map("llm_provider_instances")
+}
+```
+
+### Configuration Patterns
+
+**System-level instances** (user_id = NULL):
+
+- Available to all users
+- Managed by admins only
+- Example: Shared Ollama server
+
+**User-level instances** (user_id = UUID):
+
+- Private to specific user
+- User manages their own API keys
+- Example: Personal OpenAI API key
+
+### Config Field Structure
+
+```json
+{
+  "endpoint": "http://localhost:11434",
+  "timeout": 30000,
+  "apiKey": "sk-...", // encrypted in production
+  "organization": "org-...",
+  "customHeaders": {}
+}
+```
+
+## Progress
+
+- [x] Read current Prisma schema
+- [x] Add LlmProviderInstance model
+- [x] Add relation to User model
+- [x] Add indexes for performance
+- [x] Create migration (20260131115600_add_llm_provider_instance)
+- [x] Update Prisma client types (prisma generate)
+- [ ] Run migration on dev database (manual step, requires DB connection)
+- [ ] Verify migration succeeded (manual step, requires DB connection)
+
+## Testing
+
+- Verify model is accessible via Prisma client
+- Verify indexes exist in database
+- Verify foreign key constraints work
+- Test both system and user-level instances
+
+## Notes
+
+- Using snake_case for database columns (project convention)
+- JSON field for flexible provider configs
+- Cascade delete when user is deleted
+- `isDefault` allows marking one provider as default per user
+
+## Implementation Details
+
+**Model Added:**
+
+- `LlmProviderInstance` with all required fields
+- Foreign key relation to `User` model (nullable for system-level instances)
+- Added `llmProviders` relation array to User model
+
+**Indexes Created:**
+
+- `user_id` - Fast lookup by user
+- `provider_type` - Fast filtering by provider
+- `is_default` - Quick default provider lookup
+- `is_enabled` - Filter enabled/disabled providers
+
+**Migration File:** `20260131115600_add_llm_provider_instance`
+
+- Creates table with proper PostgreSQL types
+- Sets up foreign key constraint with CASCADE delete
+- Creates all performance indexes
+
+## Acceptance Criteria Status
+
+- ✅ Migration created successfully
+- ✅ Model accessible via Prisma client (prisma generate succeeded)
+- ✅ Indexes defined correctly
+- ⏸️ Migration not run (requires database connection)
+- ⏸️ No data loss risk (new table, no existing data)
+
+## Next Steps
+
+When database is available:
+
+```bash
+pnpm --filter @mosaic/api prisma migrate deploy
+# OR for development:
+pnpm --filter @mosaic/api prisma migrate dev
+```