diff --git a/packages/nextjs/src/server/actions/__tests__/handleOAuthCallbackAction.test.ts b/packages/nextjs/src/server/actions/__tests__/handleOAuthCallbackAction.test.ts
new file mode 100644
index 00000000..1511fb7e
--- /dev/null
+++ b/packages/nextjs/src/server/actions/__tests__/handleOAuthCallbackAction.test.ts
@@ -0,0 +1,106 @@
+// Copyright 2026 The ThunderID Authors
+// SPDX-License-Identifier: Apache-2.0
+
+import {cookies} from 'next/headers';
+import {afterEach, beforeEach, describe, expect, it, Mock, vi} from 'vitest';
+import SessionManager from '../../../utils/SessionManager';
+import getClient from '../../getClient';
+import handleOAuthCallbackAction from '../handleOAuthCallbackAction';
+
+vi.mock('next/headers', () => ({
+  cookies: vi.fn(),
+}));
+
+vi.mock('../../getClient', () => ({
+  default: vi.fn(),
+}));
+
+vi.mock('../../../utils/SessionManager', () => ({
+  default: {
+    createSessionToken: vi.fn(),
+    getSessionCookieName: vi.fn(),
+    getSessionCookieOptions: vi.fn(),
+    getTempSessionCookieName: vi.fn(),
+    resolveSessionCookieExpiry: vi.fn(),
+    verifyTempSession: vi.fn(),
+  },
+}));
+
+vi.mock('../../../utils/chunkedCookie', () => ({
+  setChunkedCookie: vi.fn(),
+}));
+
+interface FakeClient {
+  getConfiguration: Mock;
+  getDecodedIdToken: Mock;
+  initialize: Mock;
+  isInitialized: boolean;
+  signIn: Mock;
+}
+
+describe('handleOAuthCallbackAction', () => {
+  let client: FakeClient;
+
+  beforeEach(() => {
+    vi.resetAllMocks();
+
+    client = {
+      getConfiguration: vi.fn().mockResolvedValue({afterSignInUrl: '/home'}),
+      getDecodedIdToken: vi.fn().mockResolvedValue({sub: 'user-1'}),
+      initialize: vi.fn(),
+      isInitialized: false,
+      signIn: vi.fn().mockResolvedValue({accessToken: 'at', idToken: 'id', scope: 'openid'}),
+    };
+    (getClient as unknown as Mock).mockReturnValue(client);
+    (cookies as unknown as Mock).mockResolvedValue({
+      delete: vi.fn(),
+      get: (): {value: string} => ({value: 'temp-token'}),
+    });
+    (SessionManager.getTempSessionCookieName as unknown as Mock).mockReturnValue('temp');
+    (SessionManager.getSessionCookieName as unknown as Mock).mockReturnValue('session');
+    (SessionManager.verifyTempSession as unknown as Mock).mockResolvedValue({sessionId: 'session-1'});
+    (SessionManager.createSessionToken as unknown as Mock).mockResolvedValue('jwt');
+    (SessionManager.resolveSessionCookieExpiry as unknown as Mock).mockReturnValue(3600);
+    (SessionManager.getSessionCookieOptions as unknown as Mock).mockReturnValue({});
+  });
+
+  afterEach(() => {
+    vi.restoreAllMocks();
+  });
+
+  it('initializes the client from the environment when this module context has not been initialized', async () => {
+    client.initialize.mockImplementation((): Promise<boolean> => {
+      client.isInitialized = true;
+
+      return Promise.resolve(true);
+    });
+
+    const result = await handleOAuthCallbackAction('code-1', 'state-1');
+
+    expect(client.initialize).toHaveBeenCalledOnce();
+    expect(client.signIn).toHaveBeenCalledWith(
+      {code: 'code-1', session_state: undefined, state: 'state-1'},
+      {},
+      'session-1',
+    );
+    expect(result).toEqual({redirectUrl: '/home', success: true});
+  });
+
+  it('does not initialize again when the client already is', async () => {
+    client.isInitialized = true;
+
+    const result = await handleOAuthCallbackAction('code-1', 'state-1');
+
+    expect(client.initialize).not.toHaveBeenCalled();
+    expect(result.success).toBe(true);
+  });
+
+  it('fails when the client cannot be initialized', async () => {
+    client.initialize.mockResolvedValue(false);
+
+    const result = await handleOAuthCallbackAction('code-1', 'state-1');
+
+    expect(client.signIn).not.toHaveBeenCalled();
+    expect(result).toEqual({error: 'ThunderID client is not initialized', success: false});
+  });
+});
diff --git a/packages/nextjs/src/server/actions/handleOAuthCallbackAction.ts b/packages/nextjs/src/server/actions/handleOAuthCallbackAction.ts
index d3798b3e..08c4bb4d 100644
--- a/packages/nextjs/src/server/actions/handleOAuthCallbackAction.ts
+++ b/packages/nextjs/src/server/actions/handleOAuthCallbackAction.ts
@@ -40,6 +40,12 @@ const handleOAuthCallbackAction = async (
 
     const thunderIDClient = getClient();
 
+    // A server action can run in a module context that no provider render has initialized, for
+    // example after the dev server recompiles, so initialize from the environment first.
+    if (!thunderIDClient.isInitialized) {
+      await thunderIDClient.initialize({} as ThunderIDNextConfig);
+    }
+
     if (!thunderIDClient.isInitialized) {
       return {
         error: 'ThunderID client is not initialized',