diff --git a/source/proxy_connection.c b/source/proxy_connection.c
index 1ab165ca9..22ff452c3 100644
--- a/source/proxy_connection.c
+++ b/source/proxy_connection.c
@@ -1190,7 +1190,7 @@ static int s_connect_proxy_via_env_variable(const struct aws_http_client_connect
         proxy_options.connection_type = options->proxy_ev_settings->connection_type;
         if (proxy_options.connection_type == AWS_HPCT_HTTP_LEGACY) {
             if (options->tls_options) {
-                /* Use Tunneling when main connection use TLS. */
+                /* Use tunneling when main connection use TLS. */
                 proxy_options.connection_type = AWS_HPCT_HTTP_TUNNEL;
             } else {
                 /* Use forwarding proxy when main connection use clear text. */
@@ -1212,6 +1212,9 @@ static int s_connect_proxy_via_env_variable(const struct aws_http_client_connect
             };
             proxy_options.proxy_strategy = aws_http_proxy_strategy_new_basic_auth(options->allocator, &config);
         }
+    } else {
+        success = true;
+        goto done;
     }
     struct aws_http_client_connection_options copied_options = *options;
     copied_options.proxy_options = &proxy_options;
@@ -1223,6 +1226,10 @@ static int s_connect_proxy_via_env_variable(const struct aws_http_client_connect
     aws_tls_connection_options_clean_up(&default_tls_connection_options);
     aws_http_proxy_strategy_release(proxy_options.proxy_strategy);
     aws_uri_clean_up(&proxy_uri);
+    if (success && !found) {
+        /* Successfully, but no envrionment variable found. Connect without proxy */
+        return aws_http_client_connect_internal(options, NULL);
+    }
     return success ? AWS_OP_SUCCESS : AWS_OP_ERR;
 }
 
diff --git a/tests/CMakeLists.txt b/tests/CMakeLists.txt
index 67fa14de5..a0e646d7a 100644
--- a/tests/CMakeLists.txt
+++ b/tests/CMakeLists.txt
@@ -442,6 +442,7 @@ add_test_case(h2_client_get_remote_settings)
 add_test_case(server_new_destroy)
 add_test_case(connection_setup_shutdown)
 add_test_case(connection_setup_shutdown_tls)
+add_test_case(connection_setup_shutdown_proxy_setting_on_ev_not_found)
 add_test_case(connection_h2_prior_knowledge)
 add_test_case(connection_h2_prior_knowledge_not_work_with_tls)
 add_test_case(connection_customized_alpn)
diff --git a/tests/test_connection.c b/tests/test_connection.c
index 42b8cbf7d..a7d78d5cb 100644
--- a/tests/test_connection.c
+++ b/tests/test_connection.c
@@ -471,6 +471,43 @@ static int s_test_connection_setup_shutdown_tls(struct aws_allocator *allocator,
 }
 AWS_TEST_CASE(connection_setup_shutdown_tls, s_test_connection_setup_shutdown_tls);
 
+static int s_test_connection_setup_shutdown_proxy_setting_on_ev_not_found(struct aws_allocator *allocator, void *ctx) {
+    (void)ctx;
+    struct tester_options options = {
+        .alloc = allocator,
+        .no_connection = true,
+    };
+    struct tester tester;
+    ASSERT_SUCCESS(s_tester_init(&tester, &options));
+    struct aws_http_client_connection_options client_options = AWS_HTTP_CLIENT_CONNECTION_OPTIONS_INIT;
+    struct proxy_env_var_settings proxy_ev_settings;
+    AWS_ZERO_STRUCT(proxy_ev_settings);
+    proxy_ev_settings.env_var_type = AWS_HPEV_ENABLE;
+    client_options.proxy_ev_settings = &proxy_ev_settings;
+
+    s_client_connection_options_init_tester(&client_options, &tester);
+    tester.client_options = client_options;
+
+    tester.server_connection_num = 0;
+    tester.client_connection_num = 0;
+    ASSERT_SUCCESS(aws_http_client_connect(&tester.client_options));
+
+    /* Wait for server & client connections to finish setup */
+    tester.wait_client_connection_num = 1;
+    tester.wait_server_connection_num = 1;
+    ASSERT_SUCCESS(s_tester_wait(&tester, s_tester_connection_setup_pred));
+
+    release_all_client_connections(&tester);
+    release_all_server_connections(&tester);
+    ASSERT_SUCCESS(s_tester_wait(&tester, s_tester_connection_shutdown_pred));
+
+    ASSERT_SUCCESS(s_tester_clean_up(&tester));
+    return AWS_OP_SUCCESS;
+}
+AWS_TEST_CASE(
+    connection_setup_shutdown_proxy_setting_on_ev_not_found,
+    s_test_connection_setup_shutdown_proxy_setting_on_ev_not_found);
+
 static int s_test_connection_h2_prior_knowledge(struct aws_allocator *allocator, void *ctx) {
     (void)ctx;
     struct tester_options options = {