diff --git a/src/basic_memory/api/v2/routers/project_router.py b/src/basic_memory/api/v2/routers/project_router.py
index bd67256e..77cfb01b 100644
--- a/src/basic_memory/api/v2/routers/project_router.py
+++ b/src/basic_memory/api/v2/routers/project_router.py
@@ -48,7 +48,7 @@ async def list_projects(
         A list of all projects with metadata
     """
     projects = await project_service.list_projects()
-    default_project = project_service.default_project
+    default_project = await project_service.get_default_project_name()
 
     project_items = [
         ProjectItem(
diff --git a/src/basic_memory/services/project_service.py b/src/basic_memory/services/project_service.py
index 2d8413de..018187ea 100644
--- a/src/basic_memory/services/project_service.py
+++ b/src/basic_memory/services/project_service.py
@@ -82,6 +82,21 @@ class ProjectService:
         """
         return self.config_manager.default_project
 
+    async def get_default_project_name(self) -> str:
+        """Get the default project name, falling back to the database.
+
+        ConfigManager reads from the local config file, which doesn't exist
+        in cloud mode. When it returns None, fall back to the is_default
+        flag stored in the database.
+        """
+        default = self.config_manager.default_project
+        if default is not None:
+            return default
+        db_default = await self.repository.get_default_project()
+        if db_default is not None:
+            return db_default.name
+        raise ValueError("No default project configured")
+
     @property
     def current_project(self) -> Optional[str]:
         """Get the name of the currently active project.
diff --git a/tests/api/v2/test_project_router.py b/tests/api/v2/test_project_router.py
index 2bbdf5c3..dec6e343 100644
--- a/tests/api/v2/test_project_router.py
+++ b/tests/api/v2/test_project_router.py
@@ -11,6 +11,21 @@ from basic_memory.schemas.project_info import ProjectItem, ProjectStatusResponse
 from basic_memory.schemas.v2 import ProjectResolveResponse
 
 
+@pytest.mark.asyncio
+async def test_list_projects(client: AsyncClient, test_project: Project, v2_projects_url):
+    """Test listing projects returns default_project from the database."""
+    response = await client.get(f"{v2_projects_url}/")
+
+    assert response.status_code == 200
+    data = response.json()
+
+    # default_project must be populated from the is_default flag in the database
+    assert data["default_project"] == test_project.name
+
+    project_names = [p["name"] for p in data["projects"]]
+    assert test_project.name in project_names
+
+
 @pytest.mark.asyncio
 async def test_get_project_by_id(client: AsyncClient, test_project: Project, v2_projects_url):
     """Test getting a project by its external_id UUID."""
@@ -361,9 +376,10 @@ async def test_legacy_v1_list_projects_endpoint(client: AsyncClient, test_projec
     assert response.status_code == 200
     data = response.json()
     assert "projects" in data
-    assert "default_project" in data
 
-    # Verify the test project is in the list
+    # default_project must be populated, not null
+    assert data["default_project"] == test_project.name
+
     project_names = [p["name"] for p in data["projects"]]
     assert test_project.name in project_names