diff --git a/server/src/__tests__/project-icon-persistence.test.ts b/server/src/__tests__/project-icon-persistence.test.ts
index e19bf7c1316..688072ad5f4 100644
--- a/server/src/__tests__/project-icon-persistence.test.ts
+++ b/server/src/__tests__/project-icon-persistence.test.ts
@@ -68,4 +68,28 @@ describeEmbeddedPostgres("project icon persistence", () => {
     const fetched = await projects.getById(created.id);
     expect(fetched?.icon).toBeNull();
   });
+
+  // PAP-71: new projects must NOT auto-assign a color — they stay neutral gray
+  // (color = null) unless an explicit color is supplied on create.
+  it("defaults color to null when none is provided (no auto-assign)", async () => {
+    companyId = await seedCompany();
+    const projects = projectService(db);
+
+    const created = await projects.create(companyId, { name: "Gray" });
+    expect(created.color).toBeNull();
+
+    const fetched = await projects.getById(created.id);
+    expect(fetched?.color).toBeNull();
+  });
+
+  it("still persists an explicit color when one is supplied", async () => {
+    companyId = await seedCompany();
+    const projects = projectService(db);
+
+    const created = await projects.create(companyId, { name: "Blue", color: "#3b82f6" });
+    expect(created.color).toBe("#3b82f6");
+
+    const fetched = await projects.getById(created.id);
+    expect(fetched?.color).toBe("#3b82f6");
+  });
 });
diff --git a/server/src/services/projects.ts b/server/src/services/projects.ts
index b05b5032ffb..7cb38f676d2 100644
--- a/server/src/services/projects.ts
+++ b/server/src/services/projects.ts
@@ -12,7 +12,6 @@ import {
   workspaceRuntimeServices,
 } from "@paperclipai/db";
 import {
-  PROJECT_COLORS,
   deriveProjectUrlKey,
   hasNonAsciiContent,
   isUuidLike,
@@ -549,13 +548,8 @@ export function projectService(db: Db) {
     const { goalIds: inputGoalIds, ...projectData } = data;
     const ids = resolveGoalIds({ goalIds: inputGoalIds, goalId: projectData.goalId });
 
-    // Auto-assign a color from the palette if none provided
-    if (!projectData.color) {
-      const existing = await db.select({ color: projects.color }).from(projects).where(eq(projects.companyId, companyId));
-      const usedColors = new Set(existing.map((r) => r.color).filter(Boolean));
-      const nextColor = PROJECT_COLORS.find((c) => !usedColors.has(c)) ?? PROJECT_COLORS[existing.length % PROJECT_COLORS.length];
-      projectData.color = nextColor;
-    }
+    // Note: color is intentionally NOT auto-assigned. New projects default to
+    // `color = null` (neutral gray) unless an explicit color is supplied. See PAP-68.
 
     const existingProjects = await db
       .select({ id: projects.id, name: projects.name })
diff --git a/ui/src/components/NewProjectDialog.tsx b/ui/src/components/NewProjectDialog.tsx
index ad4aee14dd3..2d732f69d3f 100644
--- a/ui/src/components/NewProjectDialog.tsx
+++ b/ui/src/components/NewProjectDialog.tsx
@@ -33,7 +33,6 @@ import {
   TooltipContent,
   TooltipTrigger,
 } from "@/components/ui/tooltip";
-import { PROJECT_COLORS } from "@paperclipai/shared";
 import { cn } from "../lib/utils";
 import { MarkdownEditor, type MarkdownEditorRef, type MentionOption } from "./MarkdownEditor";
 import { StatusBadge } from "./StatusBadge";
@@ -165,7 +164,7 @@ export function NewProjectDialog() {
         name: name.trim(),
         description: description.trim() || undefined,
         status,
-        color: PROJECT_COLORS[Math.floor(Math.random() * PROJECT_COLORS.length)],
+        // No color is sent — new projects persist color = null (neutral gray). See PAP-68.
         ...(goalIds.length > 0 ? { goalIds } : {}),
         ...(targetDate ? { targetDate } : {}),
       });