diff --git a/src/foundation/mem.c b/src/foundation/mem.c
index 65f57b1a8..61d13fe91 100644
--- a/src/foundation/mem.c
+++ b/src/foundation/mem.c
@@ -248,9 +248,19 @@ cbm_mem_budget_t cbm_mem_resolve_budget(size_t total_ram, double ram_fraction,
 cbm_mem_budget_t cbm_mem_resolve_budget_capped(size_t total_ram, double ram_fraction,
                                                const char *budget_mb, size_t hard_cap_bytes) {
     cbm_mem_budget_t result = cbm_mem_resolve_budget(total_ram, ram_fraction, budget_mb);
+    /* The parent already divided the aggregate budget (env override or
+     * ram_fraction) across job slots. That per-slot share is the hard cap:
+     * N workers × a per-worker absolute override would oversubscribe the host
+     * (#1654). A lower explicit value still wins. Keep CBM_MEM_BUDGET_MB as
+     * the source when the env discriminator fired so the ceiling is visible
+     * as the user's aggregate, not as a silent daemon_worker_cap rewrite. */
     if (hard_cap_bytes > 0 && (result.budget == 0 || result.budget > hard_cap_bytes)) {
+        bool explicit_override =
+            result.source != NULL && strcmp(result.source, "CBM_MEM_BUDGET_MB") == 0;
         result.budget = hard_cap_bytes;
-        result.source = "daemon_worker_cap";
+        if (!explicit_override) {
+            result.source = "daemon_worker_cap";
+        }
         result.hard_capped = true;
     }
     return result;
diff --git a/src/foundation/mem.h b/src/foundation/mem.h
index a2ae37376..bbd9d769f 100644
--- a/src/foundation/mem.h
+++ b/src/foundation/mem.h
@@ -31,7 +31,7 @@ void cbm_mem_init_with_cap(double ram_fraction, size_t hard_cap_bytes);
  * the caller never re-parses the env string. */
 typedef struct {
     size_t budget;      /* resolved budget in bytes */
-    const char *source; /* log token: "ram_fraction" | "CBM_MEM_BUDGET_MB" */
+    const char *source; /* "ram_fraction" | "CBM_MEM_BUDGET_MB" | "daemon_worker_cap" */
     bool clamped;       /* override was valid but exceeded total_ram → clamped down */
     bool invalid;       /* override was present but unparseable / out-of-range / ≤0 */
     bool hard_capped;   /* internal worker hard cap reduced the resolved budget */
diff --git a/tests/test_mem.c b/tests/test_mem.c
index 31c5a686f..1ded83dad 100644
--- a/tests/test_mem.c
+++ b/tests/test_mem.c
@@ -516,6 +516,11 @@ TEST(resolve_budget_override_when_total_unknown) {
     PASS();
 }
 
+/* CBM_MEM_BUDGET_MB is an aggregate ceiling the parent divides across job
+ * slots. A lower explicit value still wins; a raise is clipped to the per-slot
+ * share so N workers cannot oversubscribe the host (#1654). The source stays
+ * CBM_MEM_BUDGET_MB so the clip is the user's aggregate, not a silent
+ * daemon_worker_cap rewrite of a fraction-derived default. */
 TEST(resolve_budget_worker_cap_preserves_lower_user_override) {
     size_t total = 8192 * CBM_TEST_MB;
     size_t worker_cap = 16 * CBM_TEST_MB;
@@ -524,10 +529,15 @@ TEST(resolve_budget_worker_cap_preserves_lower_user_override) {
     ASSERT_STR_EQ(lower.source, "CBM_MEM_BUDGET_MB");
     ASSERT_FALSE(lower.hard_capped);
 
-    cbm_mem_budget_t capped = cbm_mem_resolve_budget_capped(total, 0.5, "64", worker_cap);
-    ASSERT_EQ(capped.budget, worker_cap);
-    ASSERT_STR_EQ(capped.source, "daemon_worker_cap");
-    ASSERT_TRUE(capped.hard_capped);
+    cbm_mem_budget_t raised = cbm_mem_resolve_budget_capped(total, 0.5, "64", worker_cap);
+    ASSERT_EQ(raised.budget, worker_cap);
+    ASSERT_STR_EQ(raised.source, "CBM_MEM_BUDGET_MB");
+    ASSERT_TRUE(raised.hard_capped);
+
+    cbm_mem_budget_t fraction = cbm_mem_resolve_budget_capped(total, 0.5, NULL, worker_cap);
+    ASSERT_EQ(fraction.budget, worker_cap);
+    ASSERT_STR_EQ(fraction.source, "daemon_worker_cap");
+    ASSERT_TRUE(fraction.hard_capped);
     PASS();
 }