diff --git a/src/index.ts b/src/index.ts
index ba3c776..e2dae80 100755
--- a/src/index.ts
+++ b/src/index.ts
@@ -6,10 +6,36 @@ import { program } from "commander";
 import * as dotenv from "dotenv";
 import { GrokAgent } from "./agent/grok-agent";
 import ChatInterface from "./ui/components/chat-interface";
+import * as fs from "fs";
+import * as path from "path";
+import * as os from "os";
 
 // Load environment variables
 dotenv.config();
 
+// Load API key from user settings if not in environment
+function loadApiKey(): string | undefined {
+  // First check environment variables
+  let apiKey = process.env.GROK_API_KEY;
+  
+  if (!apiKey) {
+    // Try to load from user settings file
+    try {
+      const homeDir = os.homedir();
+      const settingsFile = path.join(homeDir, '.grok', 'user-settings.json');
+      
+      if (fs.existsSync(settingsFile)) {
+        const settings = JSON.parse(fs.readFileSync(settingsFile, 'utf8'));
+        apiKey = settings.apiKey;
+      }
+    } catch (error) {
+      // Ignore errors, apiKey will remain undefined
+    }
+  }
+  
+  return apiKey;
+}
+
 program
   .name("grok")
   .description(
@@ -19,18 +45,6 @@ program
   .option("-d, --directory <dir>", "set working directory", process.cwd())
   .option("-k, --api-key <key>", "Grok API key (or set GROK_API_KEY env var)")
   .action((options) => {
-    // Get API key from options or environment
-    const apiKey = options.apiKey || process.env.GROK_API_KEY;
-
-    if (!apiKey) {
-      console.error("❌ Error: Grok API key is required");
-      console.error(
-        "   Set GROK_API_KEY environment variable or use --api-key option"
-      );
-      console.error("   Copy .env.example to .env and add your API key");
-      process.exit(1);
-    }
-
     if (options.directory) {
       try {
         process.chdir(options.directory);
@@ -44,7 +58,9 @@ program
     }
 
     try {
-      const agent = new GrokAgent(apiKey);
+      // Get API key from options, environment, or user settings
+      const apiKey = options.apiKey || loadApiKey();
+      const agent = apiKey ? new GrokAgent(apiKey) : undefined;
 
       console.log("🤖 Starting Grok CLI Conversational Assistant...\n");
 
diff --git a/src/ui/components/api-key-input.tsx b/src/ui/components/api-key-input.tsx
new file mode 100644
index 0000000..b647366
--- /dev/null
+++ b/src/ui/components/api-key-input.tsx
@@ -0,0 +1,138 @@
+import React, { useState } from "react";
+import { Box, Text, useInput, useApp } from "ink";
+import { GrokAgent } from "../../agent/grok-agent";
+import * as fs from "fs";
+import * as path from "path";
+import * as os from "os";
+
+interface ApiKeyInputProps {
+  onApiKeySet: (agent: GrokAgent) => void;
+}
+
+interface UserSettings {
+  apiKey?: string;
+}
+
+export default function ApiKeyInput({ onApiKeySet }: ApiKeyInputProps) {
+  const [input, setInput] = useState("");
+  const [error, setError] = useState("");
+  const [isSubmitting, setIsSubmitting] = useState(false);
+  const { exit } = useApp();
+
+  useInput((inputChar, key) => {
+    if (isSubmitting) return;
+
+    if (key.ctrl && inputChar === "c") {
+      exit();
+      return;
+    }
+
+    if (key.return) {
+      handleSubmit();
+      return;
+    }
+
+
+    if (key.backspace || key.delete) {
+      setInput((prev) => prev.slice(0, -1));
+      setError("");
+      return;
+    }
+
+    if (inputChar && !key.ctrl && !key.meta) {
+      setInput((prev) => prev + inputChar);
+      setError("");
+    }
+  });
+
+
+  const handleSubmit = async () => {
+    if (!input.trim()) {
+      setError("API key cannot be empty");
+      return;
+    }
+
+    setIsSubmitting(true);
+    try {
+      const apiKey = input.trim();
+      const agent = new GrokAgent(apiKey);
+      
+      // Set environment variable for current process
+      process.env.GROK_API_KEY = apiKey;
+      
+      // Save to .grok/user-settings.json
+      try {
+        const homeDir = os.homedir();
+        const grokDir = path.join(homeDir, '.grok');
+        const settingsFile = path.join(grokDir, 'user-settings.json');
+        
+        // Create .grok directory if it doesn't exist
+        if (!fs.existsSync(grokDir)) {
+          fs.mkdirSync(grokDir, { mode: 0o700 });
+        }
+        
+        // Load existing settings or create new
+        let settings: UserSettings = {};
+        if (fs.existsSync(settingsFile)) {
+          try {
+            settings = JSON.parse(fs.readFileSync(settingsFile, 'utf8'));
+          } catch {
+            settings = {};
+          }
+        }
+        
+        // Update API key
+        settings.apiKey = apiKey;
+        
+        // Save settings
+        fs.writeFileSync(settingsFile, JSON.stringify(settings, null, 2), { mode: 0o600 });
+        
+        console.log(`\n✅ API key saved to ~/.grok/user-settings.json`);
+      } catch (error) {
+        console.log('\n⚠️ Could not save API key to settings file');
+        console.log('API key set for current session only');
+      }
+      
+      onApiKeySet(agent);
+    } catch (error: any) {
+      setError("Invalid API key format");
+      setIsSubmitting(false);
+    }
+  };
+
+  const displayText = input.length > 0 ? 
+    (isSubmitting ? "*".repeat(input.length) : "*".repeat(input.length) + "█") : 
+    (isSubmitting ? " " : "█");
+
+  return (
+    <Box flexDirection="column" paddingX={2} paddingY={1}>
+      <Text color="yellow">🔑 Grok API Key Required</Text>
+      <Box marginBottom={1}>
+        <Text color="gray">Please enter your Grok API key to continue:</Text>
+      </Box>
+      
+      <Box borderStyle="round" borderColor="blue" paddingX={1} marginBottom={1}>
+        <Text color="gray">❯ </Text>
+        <Text>{displayText}</Text>
+      </Box>
+
+      {error ? (
+        <Box marginBottom={1}>
+          <Text color="red">❌ {error}</Text>
+        </Box>
+      ) : null}
+
+      <Box flexDirection="column" marginTop={1}>
+        <Text color="gray" dimColor>• Press Enter to submit</Text>
+        <Text color="gray" dimColor>• Press Ctrl+C to exit</Text>
+        <Text color="gray" dimColor>Note: API key will be saved to ~/.grok/user-settings.json</Text>
+      </Box>
+
+      {isSubmitting ? (
+        <Box marginTop={1}>
+          <Text color="yellow">🔄 Validating API key...</Text>
+        </Box>
+      ) : null}
+    </Box>
+  );
+}
\ No newline at end of file
diff --git a/src/ui/components/chat-interface.tsx b/src/ui/components/chat-interface.tsx
index 4505ada..8a984b1 100644
--- a/src/ui/components/chat-interface.tsx
+++ b/src/ui/components/chat-interface.tsx
@@ -9,13 +9,15 @@ import { ChatHistory } from "./chat-history";
 import { ChatInput } from "./chat-input";
 import ConfirmationDialog from "./confirmation-dialog";
 import { ConfirmationService, ConfirmationOptions } from "../../utils/confirmation-service";
+import ApiKeyInput from "./api-key-input";
 import cfonts from "cfonts";
 
 interface ChatInterfaceProps {
-  agent: GrokAgent;
+  agent?: GrokAgent;
 }
 
-export default function ChatInterface({ agent }: ChatInterfaceProps) {
+// Main chat component that handles input when agent is available
+function ChatInterfaceWithAgent({ agent }: { agent: GrokAgent }) {
   const [chatHistory, setChatHistory] = useState<ChatEntry[]>([]);
   const [isProcessing, setIsProcessing] = useState(false);
   const [processingTime, setProcessingTime] = useState(0);
@@ -87,7 +89,6 @@ export default function ChatInterface({ agent }: ChatInterfaceProps) {
     };
   }, [confirmationService]);
 
-
   useEffect(() => {
     if (!isProcessing && !isStreaming) {
       setProcessingTime(0);
@@ -181,3 +182,18 @@ export default function ChatInterface({ agent }: ChatInterfaceProps) {
     </Box>
   );
 }
+
+// Main component that handles API key input or chat interface
+export default function ChatInterface({ agent }: ChatInterfaceProps) {
+  const [currentAgent, setCurrentAgent] = useState<GrokAgent | null>(agent || null);
+
+  const handleApiKeySet = (newAgent: GrokAgent) => {
+    setCurrentAgent(newAgent);
+  };
+
+  if (!currentAgent) {
+    return <ApiKeyInput onApiKeySet={handleApiKeySet} />;
+  }
+
+  return <ChatInterfaceWithAgent agent={currentAgent} />;
+}