From dc1916415702fa13403cfb30ad8d97fb95b9956c Mon Sep 17 00:00:00 2001
From: Will Burford <will@lmstudio.ai>
Date: Thu, 24 Sep 2026 17:40:34 -0400
Subject: [PATCH 1/2] Resolve Outlines cache from the launcher-provided LM
 Studio home

---
 README.md              |  6 ++++++
 mlx_engine/__init__.py | 21 +++++++--------------
 2 files changed, 13 insertions(+), 14 deletions(-)

diff --git a/README.md b/README.md
index 67781237..392eeb62 100644
--- a/README.md
+++ b/README.md
@@ -26,6 +26,12 @@ Download LM Studio from [here](https://lmstudio.ai/download?os=mac)
 
 <br/>
 
+## Outlines cache
+
+LM Studio passes its resolved home in `LMS_LMSTUDIO_HOME`. The engine uses
+`<home>/.internal/outlines` for the Outlines cache. An explicit `OUTLINES_CACHE_DIR`
+takes precedence. Without either variable, Outlines uses its default cache location.
+
 ## Standalone Demo
 
 ### Prerequisites
diff --git a/mlx_engine/__init__.py b/mlx_engine/__init__.py
index a76c329b..516f2144 100644
--- a/mlx_engine/__init__.py
+++ b/mlx_engine/__init__.py
@@ -17,6 +17,13 @@
 from pathlib import Path
 import os
 
+# Outlines can open its cache during import, so configure it before loading dependencies.
+_lmstudio_home = os.environ.get("LMS_LMSTUDIO_HOME")
+if _lmstudio_home and not os.environ.get("OUTLINES_CACHE_DIR"):
+    os.environ["OUTLINES_CACHE_DIR"] = str(
+        Path(_lmstudio_home) / ".internal" / "outlines"
+    )
+
 from .utils.disable_hf_download import patch_huggingface_hub
 from .utils.register_models import register_models
 from .utils.logger import setup_logging
@@ -37,17 +44,3 @@
 patch_huggingface_hub()
 register_models()
 setup_logging()
-
-
-def _set_outlines_cache_dir(cache_dir: Path | str):
-    """
-    Set the cache dir for Outlines.
-
-    Outlines reads the OUTLINES_CACHE_DIR environment variable to
-    determine where to read/write its cache files
-    """
-    cache_dir = Path(cache_dir).expanduser().resolve()
-    os.environ["OUTLINES_CACHE_DIR"] = str(cache_dir)
-
-
-_set_outlines_cache_dir(Path("~/.cache/lm-studio/.internal/outlines"))

From c571a913f644cfc41ea02dbf65dfe52863ca468c Mon Sep 17 00:00:00 2001
From: Will Burford <will@lmstudio.ai>
Date: Fri, 25 Sep 2026 12:50:31 -0400
Subject: [PATCH 2/2] Remove the Outlines cache README addition

---
 README.md | 6 ------
 1 file changed, 6 deletions(-)

diff --git a/README.md b/README.md
index 392eeb62..67781237 100644
--- a/README.md
+++ b/README.md
@@ -26,12 +26,6 @@ Download LM Studio from [here](https://lmstudio.ai/download?os=mac)
 
 <br/>
 
-## Outlines cache
-
-LM Studio passes its resolved home in `LMS_LMSTUDIO_HOME`. The engine uses
-`<home>/.internal/outlines` for the Outlines cache. An explicit `OUTLINES_CACHE_DIR`
-takes precedence. Without either variable, Outlines uses its default cache location.
-
 ## Standalone Demo
 
 ### Prerequisites