diff --git a/server/src/__tests__/instance-settings-service.test.ts b/server/src/__tests__/instance-settings-service.test.ts
new file mode 100644
index 00000000000..6669414d697
--- /dev/null
+++ b/server/src/__tests__/instance-settings-service.test.ts
@@ -0,0 +1,23 @@
+import { describe, expect, it } from "vitest";
+import { normalizeExperimentalSettings } from "../services/instance-settings.js";
+
+describe("instance settings service", () => {
+  it("ignores retired experimental flags without resetting current settings", () => {
+    expect(normalizeExperimentalSettings({
+      enableEnvironments: true,
+      enableIsolatedWorkspaces: true,
+      enableCloudSync: true,
+      autoRestartDevServerWhenIdle: true,
+      enableIssueGraphLivenessAutoRecovery: true,
+      issueGraphLivenessAutoRecoveryLookbackHours: 48,
+      enableNewestFirstIssueThread: true,
+    })).toEqual({
+      enableEnvironments: true,
+      enableIsolatedWorkspaces: true,
+      enableCloudSync: true,
+      autoRestartDevServerWhenIdle: true,
+      enableIssueGraphLivenessAutoRecovery: true,
+      issueGraphLivenessAutoRecoveryLookbackHours: 48,
+    });
+  });
+});
diff --git a/server/src/services/instance-settings.ts b/server/src/services/instance-settings.ts
index 6c50a67f517..8b02f57c39d 100644
--- a/server/src/services/instance-settings.ts
+++ b/server/src/services/instance-settings.ts
@@ -15,9 +15,11 @@ import {
 import { eq } from "drizzle-orm";
 
 const DEFAULT_SINGLETON_KEY = "default";
+const instanceGeneralSettingsStorageSchema = instanceGeneralSettingsSchema.strip();
+const instanceExperimentalSettingsStorageSchema = instanceExperimentalSettingsSchema.strip();
 
 function normalizeGeneralSettings(raw: unknown): InstanceGeneralSettings {
-  const parsed = instanceGeneralSettingsSchema.safeParse(raw ?? {});
+  const parsed = instanceGeneralSettingsStorageSchema.safeParse(raw ?? {});
   if (parsed.success) {
     return {
       censorUsernameInLogs: parsed.data.censorUsernameInLogs ?? false,
@@ -35,8 +37,8 @@ function normalizeGeneralSettings(raw: unknown): InstanceGeneralSettings {
   };
 }
 
-function normalizeExperimentalSettings(raw: unknown): InstanceExperimentalSettings {
-  const parsed = instanceExperimentalSettingsSchema.safeParse(raw ?? {});
+export function normalizeExperimentalSettings(raw: unknown): InstanceExperimentalSettings {
+  const parsed = instanceExperimentalSettingsStorageSchema.safeParse(raw ?? {});
   if (parsed.success) {
     return {
       enableEnvironments: parsed.data.enableEnvironments ?? false,
diff --git a/ui/src/pages/Inbox.test.tsx b/ui/src/pages/Inbox.test.tsx
index a23af8e7c70..69897990e34 100644
--- a/ui/src/pages/Inbox.test.tsx
+++ b/ui/src/pages/Inbox.test.tsx
@@ -289,6 +289,38 @@ describe("Inbox toolbar", () => {
       root.unmount();
     });
   });
+
+  it("hides workspace grouping when isolated workspaces are disabled", async () => {
+    routerMock.location.pathname = "/inbox/mine";
+    apiMocks.experimentalSettings.mockResolvedValue({ enableIsolatedWorkspaces: false });
+
+    const queryClient = new QueryClient({
+      defaultOptions: { queries: { retry: false, staleTime: 0, gcTime: 0 } },
+    });
+    const root = createRoot(container);
+
+    await act(async () => {
+      root.render(
+        <QueryClientProvider client={queryClient}>
+          <Inbox />
+        </QueryClientProvider>,
+      );
+    });
+
+    const groupButton = container.querySelector<HTMLButtonElement>('button[title="Group"]');
+    expect(groupButton).not.toBeNull();
+
+    await act(async () => {
+      groupButton?.dispatchEvent(new MouseEvent("click", { bubbles: true }));
+    });
+
+    const groupOptions = Array.from(document.body.querySelectorAll("button")).map((button) => button.textContent);
+    expect(groupOptions).not.toContain("Workspace");
+
+    act(() => {
+      root.unmount();
+    });
+  });
 });
 
 describe("FailedRunInboxRow", () => {