diff --git a/client/internal/dns/mgmt/bypass_resolver.go b/client/internal/dns/mgmt/bypass_resolver.go
new file mode 100644
index 000000000..5a4c4442c
--- /dev/null
+++ b/client/internal/dns/mgmt/bypass_resolver.go
@@ -0,0 +1,55 @@
+package mgmt
+
+import (
+	"context"
+	"fmt"
+	"net"
+	"net/netip"
+
+	nbnet "github.com/netbirdio/netbird/client/net"
+)
+
+// NewBypassResolver builds a *net.Resolver that sends queries directly to
+// the supplied nameservers through a socket that bypasses the NetBird
+// overlay interface. This lets the mgmt cache refresh control-plane
+// FQDNs (api/signal/relay/stun/turn) even when an exit-node default
+// route is installed on the overlay before its peer is live.
+//
+// Returns nil if nameservers is empty. The caller must not pass
+// loopback/overlay IPs (e.g. 127.0.0.1, the overlay listener address);
+// those would defeat the purpose of bypassing.
+func NewBypassResolver(nameservers []netip.Addr) *net.Resolver {
+	if len(nameservers) == 0 {
+		return nil
+	}
+
+	servers := make([]string, 0, len(nameservers))
+	for _, ns := range nameservers {
+		if !ns.IsValid() || ns.IsLoopback() || ns.IsUnspecified() {
+			continue
+		}
+		servers = append(servers, netip.AddrPortFrom(ns, 53).String())
+	}
+	if len(servers) == 0 {
+		return nil
+	}
+
+	return &net.Resolver{
+		PreferGo: true,
+		Dial: func(ctx context.Context, network, _ string) (net.Conn, error) {
+			nbDialer := nbnet.NewDialer()
+			var lastErr error
+			for _, ns := range servers {
+				conn, err := nbDialer.DialContext(ctx, network, ns)
+				if err == nil {
+					return conn, nil
+				}
+				lastErr = err
+			}
+			if lastErr == nil {
+				return nil, fmt.Errorf("no bypass nameservers configured")
+			}
+			return nil, fmt.Errorf("dial bypass nameservers: %w", lastErr)
+		},
+	}
+}
diff --git a/client/internal/dns/mgmt/mgmt.go b/client/internal/dns/mgmt/mgmt.go
index 988e427fb..750c08466 100644
--- a/client/internal/dns/mgmt/mgmt.go
+++ b/client/internal/dns/mgmt/mgmt.go
@@ -71,6 +71,14 @@ type Resolver struct {
 	refreshing map[dns.Question]*atomic.Bool
 
 	cacheTTL time.Duration
+
+	// bypassResolver, when non-nil, is used by osLookup instead of
+	// net.DefaultResolver. It is constructed by the caller to dial the
+	// original (pre-NetBird) system nameservers through a socket that
+	// bypasses the overlay interface (control-plane fwmark / bound iface),
+	// so that when an exit-node default route is installed before a peer
+	// is handshaked the refresh does not fail with ENOKEY.
+	bypassResolver *net.Resolver
 }
 
 // NewResolver creates a new management domains cache resolver.
@@ -98,8 +106,28 @@ func (m *Resolver) SetChainResolver(chain ChainResolver, maxPriority int) {
 	m.mutex.Unlock()
 }
 
+// SetBypassResolver installs a resolver that osLookup uses instead of
+// net.DefaultResolver. It is intended to dial the original (pre-NetBird)
+// system nameservers through a socket that does not follow the overlay
+// default route, so that a refresh initiated while an exit node is active
+// but its WireGuard peer is not yet installed cannot deadlock on ENOKEY.
+// Passing nil restores use of net.DefaultResolver.
+func (m *Resolver) SetBypassResolver(r *net.Resolver) {
+	m.mutex.Lock()
+	m.bypassResolver = r
+	m.mutex.Unlock()
+}
+
 // ServeDNS serves cached A/AAAA records. Stale entries are returned
 // immediately and refreshed asynchronously (stale-while-revalidate).
+//
+// If the query name is not in the cache but falls under a pool-root
+// domain (a domain the mgmt advertised in ServerDomains.Relay, whose
+// instance subdomains like streamline-de-fra1-0.relay.netbird.io are
+// part of the relay pool), resolve it on demand through the bypass
+// resolver and cache the result. This is what lets the daemon reach
+// a foreign relay FQDN after an exit-node default route has been
+// installed on the overlay before its peer is live.
 func (m *Resolver) ServeDNS(w dns.ResponseWriter, r *dns.Msg) {
 	if len(r.Question) == 0 {
 		m.continueToNext(w, r)
@@ -126,6 +154,10 @@ func (m *Resolver) ServeDNS(w dns.ResponseWriter, r *dns.Msg) {
 	m.mutex.RUnlock()
 
 	if !found {
+		if m.isUnderPoolRoot(question.Name) {
+			m.resolveOnDemand(w, r, question)
+			return
+		}
 		m.continueToNext(w, r)
 		return
 	}
@@ -155,12 +187,87 @@ func (m *Resolver) ServeDNS(w dns.ResponseWriter, r *dns.Msg) {
 	}
 }
 
-// MatchSubdomains returns false since this resolver only handles exact domain matches
-// for NetBird infrastructure domains (signal, relay, flow, etc.), not their subdomains.
+// MatchSubdomains returns false by default: the bare resolver is registered
+// against exact domains. Pool-root domains (currently Relay entries from
+// ServerDomains) are registered through a subdomain-matching wrapper at
+// the call site instead, so instance subdomains hit this handler and get
+// the on-demand resolve path in ServeDNS.
 func (m *Resolver) MatchSubdomains() bool {
 	return false
 }
 
+// isUnderPoolRoot reports whether fqdn is an instance subdomain under any
+// pool-root domain advertised by the mgmt (currently ServerDomains.Relay),
+// e.g. "streamline-de-fra1-0.relay.netbird.io." is under "relay.netbird.io".
+// The pool-root itself is not considered a subdomain (it matches the exact
+// cache entry populated by AddDomain instead).
+func (m *Resolver) isUnderPoolRoot(fqdn string) bool {
+	m.mutex.RLock()
+	defer m.mutex.RUnlock()
+	if m.serverDomains == nil {
+		return false
+	}
+	fqdn = strings.ToLower(strings.TrimSuffix(fqdn, "."))
+	for _, root := range m.serverDomains.Relay {
+		r := strings.ToLower(strings.TrimSuffix(root.PunycodeString(), "."))
+		if r == "" || fqdn == r {
+			continue
+		}
+		if strings.HasSuffix(fqdn, "."+r) {
+			return true
+		}
+	}
+	return false
+}
+
+// resolveOnDemand resolves an uncached pool-root subdomain (e.g. a relay
+// instance FQDN) through the bypass resolver path, caches the result, and
+// writes it back to w. Falls through to the next handler on error so the
+// normal chain can still attempt the resolve.
+func (m *Resolver) resolveOnDemand(w dns.ResponseWriter, r *dns.Msg, question dns.Question) {
+	d, err := domain.FromString(strings.TrimSuffix(question.Name, "."))
+	if err != nil {
+		log.Debugf("on-demand resolve: parse domain %q: %v", question.Name, err)
+		m.continueToNext(w, r)
+		return
+	}
+
+	ctx, cancel := context.WithTimeout(context.Background(), dnsTimeout)
+	defer cancel()
+
+	records, err := m.lookupRecords(ctx, d, question)
+	if err != nil {
+		log.Debugf("on-demand resolve %s type=%s: %v",
+			d.SafeString(), dns.TypeToString[question.Qtype], err)
+		m.continueToNext(w, r)
+		return
+	}
+	if len(records) == 0 {
+		m.continueToNext(w, r)
+		return
+	}
+
+	now := time.Now()
+	m.mutex.Lock()
+	if _, exists := m.records[question]; !exists {
+		m.records[question] = &cachedRecord{records: records, cachedAt: now}
+	}
+	m.mutex.Unlock()
+
+	resp := &dns.Msg{}
+	resp.SetReply(r)
+	resp.Authoritative = false
+	resp.RecursionAvailable = true
+	resp.Answer = cloneRecordsWithTTL(records, uint32(m.cacheTTL.Seconds()))
+
+	log.Debugf("on-demand resolved %d records for domain=%s", len(resp.Answer), question.Name)
+
+	if err := w.WriteMsg(resp); err != nil {
+		log.Errorf("failed to write on-demand response: %v", err)
+	}
+}
+
+
 // continueToNext signals the handler chain to continue to the next handler.
 func (m *Resolver) continueToNext(w dns.ResponseWriter, r *dns.Msg) {
 	resp := &dns.Msg{}
@@ -315,14 +422,29 @@ func (m *Resolver) markRefreshFailed(question dns.Question, expected *cachedReco
 	return c.consecFailures
 }
 
-// lookupBoth resolves A and AAAA via chain or OS. Per-family errors let
-// callers tell records, NODATA (nil err, no records), and failure apart.
+// lookupBoth resolves A and AAAA via bypass resolver, chain, or OS.
+// Per-family errors let callers tell records, NODATA (nil err, no records),
+// and failure apart.
+//
+// Preference order:
+//  1. bypassResolver (direct, overlay-bypassing dial to original system
+//     nameservers; immune to the exit-node ENOKEY race).
+//  2. chain (handler chain; used when NetBird is the system resolver and
+//     no bypass resolver is installed).
+//  3. net.DefaultResolver via osLookup (legacy fallback).
 func (m *Resolver) lookupBoth(ctx context.Context, d domain.Domain, dnsName string) (aRecords, aaaaRecords []dns.RR, errA, errAAAA error) {
 	m.mutex.RLock()
 	chain := m.chain
 	maxPriority := m.chainMaxPriority
+	bypass := m.bypassResolver
 	m.mutex.RUnlock()
 
+	if bypass != nil {
+		aRecords, errA = m.osLookup(ctx, d, dnsName, dns.TypeA)
+		aaaaRecords, errAAAA = m.osLookup(ctx, d, dnsName, dns.TypeAAAA)
+		return
+	}
+
 	if chain != nil && chain.HasRootHandlerAtOrBelow(maxPriority) {
 		aRecords, errA = m.lookupViaChain(ctx, chain, maxPriority, dnsName, dns.TypeA)
 		aaaaRecords, errAAAA = m.lookupViaChain(ctx, chain, maxPriority, dnsName, dns.TypeAAAA)
@@ -337,15 +459,22 @@ func (m *Resolver) lookupBoth(ctx context.Context, d domain.Domain, dnsName stri
 	return
 }
 
-// lookupRecords resolves a single record type via chain or OS. The OS branch
-// arms the loop detector for the duration of its call so that ServeDNS can
-// spot the OS resolver routing the recursive query back to us.
+// lookupRecords resolves a single record type. See lookupBoth for the
+// preference order. The OS branch arms the loop detector for the duration
+// of its call so that ServeDNS can spot the OS resolver routing the
+// recursive query back to us; the bypass branch skips the loop detector
+// because its dial does not enter the system resolver.
 func (m *Resolver) lookupRecords(ctx context.Context, d domain.Domain, q dns.Question) ([]dns.RR, error) {
 	m.mutex.RLock()
 	chain := m.chain
 	maxPriority := m.chainMaxPriority
+	bypass := m.bypassResolver
 	m.mutex.RUnlock()
 
+	if bypass != nil {
+		return m.osLookup(ctx, d, q.Name, q.Qtype)
+	}
+
 	if chain != nil && chain.HasRootHandlerAtOrBelow(maxPriority) {
 		return m.lookupViaChain(ctx, chain, maxPriority, q.Name, q.Qtype)
 	}
@@ -394,9 +523,9 @@ func (m *Resolver) lookupViaChain(ctx context.Context, chain ChainResolver, maxP
 	return filtered, nil
 }
 
-// osLookup resolves a single family via net.DefaultResolver using resutil,
-// which disambiguates NODATA from NXDOMAIN and Unmaps v4-mapped-v6. NODATA
-// returns (nil, nil).
+// osLookup resolves a single family via the bypass resolver (if configured)
+// or net.DefaultResolver using resutil, which disambiguates NODATA from
+// NXDOMAIN and Unmaps v4-mapped-v6. NODATA returns (nil, nil).
 func (m *Resolver) osLookup(ctx context.Context, d domain.Domain, dnsName string, qtype uint16) ([]dns.RR, error) {
 	network := resutil.NetworkForQtype(qtype)
 	if network == "" {
@@ -406,7 +535,14 @@ func (m *Resolver) osLookup(ctx context.Context, d domain.Domain, dnsName string
 	log.Infof("looking up IP for mgmt domain=%s type=%s", d.SafeString(), dns.TypeToString[qtype])
 	defer log.Infof("done looking up IP for mgmt domain=%s type=%s", d.SafeString(), dns.TypeToString[qtype])
 
-	result := resutil.LookupIP(ctx, net.DefaultResolver, network, d.PunycodeString(), qtype)
+	m.mutex.RLock()
+	resolver := m.bypassResolver
+	m.mutex.RUnlock()
+	if resolver == nil {
+		resolver = net.DefaultResolver
+	}
+
+	result := resutil.LookupIP(ctx, resolver, network, d.PunycodeString(), qtype)
 	if result.Rcode == dns.RcodeSuccess {
 		return resutil.IPsToRRs(dnsName, result.IPs, uint32(m.cacheTTL.Seconds())), nil
 	}
@@ -467,6 +603,24 @@ func (m *Resolver) RemoveDomain(d domain.Domain) error {
 	return nil
 }
 
+// GetPoolRootDomains returns the set of domains that should be registered
+// with subdomain matching (currently the Relay entries from ServerDomains).
+// Instance subdomains under these roots are resolved on demand in ServeDNS.
+func (m *Resolver) GetPoolRootDomains() domain.List {
+	m.mutex.RLock()
+	defer m.mutex.RUnlock()
+	if m.serverDomains == nil {
+		return nil
+	}
+	out := make(domain.List, 0, len(m.serverDomains.Relay))
+	for _, d := range m.serverDomains.Relay {
+		if d != "" {
+			out = append(out, d)
+		}
+	}
+	return out
+}
+
 // GetCachedDomains returns a list of all cached domains.
 func (m *Resolver) GetCachedDomains() domain.List {
 	m.mutex.RLock()
diff --git a/client/internal/dns/server.go b/client/internal/dns/server.go
index d4f54dec5..36ebd6b45 100644
--- a/client/internal/dns/server.go
+++ b/client/internal/dns/server.go
@@ -31,6 +31,28 @@ import (
 
 const envSkipDNSProbe = "NB_SKIP_DNS_PROBE"
 
+// subdomainMatchHandler is a thin wrapper used to register a handler under
+// a pool-root domain (e.g. a relay URL advertised by the mgmt) with
+// subdomain matching enabled. The underlying handler's own MatchSubdomains
+// is left untouched so that exact-match registrations keep their
+// semantics.
+type subdomainMatchHandler struct {
+	dns.Handler
+}
+
+// MatchSubdomains lets the handler chain route any instance subdomain
+// (e.g. streamline-de-fra1-0.relay.netbird.io) to the wrapped handler.
+func (subdomainMatchHandler) MatchSubdomains() bool { return true }
+
+// String returns a debug-friendly name; the chain uses fmt.Stringer for
+// its "registering handler X" logs.
+func (h subdomainMatchHandler) String() string {
+	if s, ok := h.Handler.(fmt.Stringer); ok {
+		return s.String() + "[subdomains]"
+	}
+	return "subdomainMatchHandler"
+}
+
 // ReadyListener is a notification mechanism what indicate the server is ready to handle host dns address changes
 type ReadyListener interface {
 	OnReady()
@@ -597,9 +619,32 @@ func (s *DefaultServer) UpdateServerConfig(domains dnsconfig.ServerDomains) erro
 			s.deregisterHandler(removedDomains.ToPunycodeList(), PriorityMgmtCache)
 		}
 
-		newDomains := s.mgmtCacheResolver.GetCachedDomains()
-		if len(newDomains) > 0 {
-			s.registerHandler(newDomains.ToPunycodeList(), s.mgmtCacheResolver, PriorityMgmtCache)
+		// Pool-root domains (advertised by the mgmt as Relay URLs) own
+		// their instance subdomains. Register them through a thin
+		// subdomain-matching wrapper so a query like
+		// "streamline-de-fra1-0.relay.netbird.io" routes to the mgmt
+		// cache resolver, which resolves it on demand through the bypass
+		// resolver instead of falling through to the overlay-routed
+		// upstream handler.
+		poolRoots := s.mgmtCacheResolver.GetPoolRootDomains()
+		poolRootSet := make(map[domain.Domain]struct{}, len(poolRoots))
+		for _, d := range poolRoots {
+			poolRootSet[d] = struct{}{}
+		}
+
+		if len(poolRoots) > 0 {
+			s.registerHandler(poolRoots.ToPunycodeList(), subdomainMatchHandler{Handler: s.mgmtCacheResolver}, PriorityMgmtCache)
+		}
+
+		var exactDomains domain.List
+		for _, d := range s.mgmtCacheResolver.GetCachedDomains() {
+			if _, isPool := poolRootSet[d]; isPool {
+				continue
+			}
+			exactDomains = append(exactDomains, d)
+		}
+		if len(exactDomains) > 0 {
+			s.registerHandler(exactDomains.ToPunycodeList(), s.mgmtCacheResolver, PriorityMgmtCache)
 		}
 	}
 
@@ -759,6 +804,9 @@ func (s *DefaultServer) registerFallback(config HostDNSConfig) {
 	originalNameservers := hostMgrWithNS.getOriginalNameservers()
 	if len(originalNameservers) == 0 {
 		s.deregisterHandler([]string{nbdns.RootZone}, PriorityFallback)
+		if s.mgmtCacheResolver != nil {
+			s.mgmtCacheResolver.SetBypassResolver(nil)
+		}
 		return
 	}
 
@@ -777,6 +825,7 @@ func (s *DefaultServer) registerFallback(config HostDNSConfig) {
 	}
 	handler.routeMatch = s.routeMatch
 
+	var bypassNameservers []netip.Addr
 	for _, ns := range originalNameservers {
 		if ns == config.ServerIP {
 			log.Debugf("skipping original nameserver %s as it is the same as the server IP %s", ns, config.ServerIP)
@@ -785,11 +834,22 @@ func (s *DefaultServer) registerFallback(config HostDNSConfig) {
 
 		addrPort := netip.AddrPortFrom(ns, DefaultPort)
 		handler.upstreamServers = append(handler.upstreamServers, addrPort)
+		bypassNameservers = append(bypassNameservers, ns)
 	}
 	handler.deactivate = func(error) { /* always active */ }
 	handler.reactivate = func() { /* always active */ }
 
 	s.registerHandler([]string{nbdns.RootZone}, handler, PriorityFallback)
+
+	// Wire a bypass resolver into the mgmt cache so its refresh path dials
+	// the original nameservers directly over a fwmarked socket, avoiding
+	// the ENOKEY deadlock that occurs when an exit-node default route is
+	// installed on the overlay before its peer has handshaked. Scoped to
+	// the mgmt cache only: ordinary user DNS still flows through the
+	// normal upstream path.
+	if s.mgmtCacheResolver != nil {
+		s.mgmtCacheResolver.SetBypassResolver(mgmt.NewBypassResolver(bypassNameservers))
+	}
 }
 
 func (s *DefaultServer) buildLocalHandlerUpdate(customZones []nbdns.CustomZone) ([]handlerWrapper, []nbdns.CustomZone, error) {