diff --git a/packages/playwright-core/src/server/browser.ts b/packages/playwright-core/src/server/browser.ts
index 66546b7f4bf63..b2446893519c1 100644
--- a/packages/playwright-core/src/server/browser.ts
+++ b/packages/playwright-core/src/server/browser.ts
@@ -18,7 +18,7 @@ import fs from 'fs';
 
 import { makeSocketPath } from '@utils/fileUtils';
 import { createGuid } from '@utils/crypto';
-import { BrowserContext, effectiveProxy, validateBrowserContextOptions } from './browserContext';
+import { BrowserContext, validateBrowserContextOptions } from './browserContext';
 import { Download } from './download';
 import { SdkObject } from './instrumentation';
 import { Page } from './page';
@@ -108,7 +108,7 @@ export abstract class Browser extends SdkObject {
     let context: BrowserContext | undefined;
     try {
       if (options.clientCertificates?.length) {
-        clientCertificatesProxy = await ClientCertificatesProxy.create(progress, { ...options, proxy: effectiveProxy(options.proxy, this.options.proxy) });
+        clientCertificatesProxy = await ClientCertificatesProxy.create(progress, { ...options, proxy: options.proxy || this.options.proxy });
         options = { ...options, proxyOverride: clientCertificatesProxy.proxySettings(), internalIgnoreHTTPSErrors: true };
       }
       context = await progress.race(this.doCreateNewContext(options));
diff --git a/packages/playwright-core/src/server/browserContext.ts b/packages/playwright-core/src/server/browserContext.ts
index 5cde633b4bd89..cd59af0ba7fe0 100644
--- a/packages/playwright-core/src/server/browserContext.ts
+++ b/packages/playwright-core/src/server/browserContext.ts
@@ -828,10 +828,6 @@ export function verifyClientCertificates(clientCertificates?: types.BrowserConte
   }
 }
 
-export function effectiveProxy(contextProxy: types.ProxySettings | undefined, launchProxy: types.ProxySettings | undefined): types.ProxySettings | undefined {
-  return contextProxy || (launchProxy?.server === 'per-context' ? undefined : launchProxy);
-}
-
 export function normalizeProxySettings(proxy: types.ProxySettings): types.ProxySettings {
   let { server, bypass } = proxy;
   let url;
diff --git a/packages/playwright-core/src/server/browserType.ts b/packages/playwright-core/src/server/browserType.ts
index bed4f1d3e86a4..42360d96ef4b6 100644
--- a/packages/playwright-core/src/server/browserType.ts
+++ b/packages/playwright-core/src/server/browserType.ts
@@ -302,6 +302,9 @@ export abstract class BrowserType extends SdkObject {
       headless = false;
     if (downloadsPath && !path.isAbsolute(downloadsPath))
       downloadsPath = path.join(process.cwd(), downloadsPath);
+    // Legacy placeholder for "every context sets its own proxy", no longer required.
+    if (proxy?.server === 'per-context' || proxy?.server === 'http://per-context')
+      proxy = undefined;
     if (options.socksProxyPort)
       proxy = { server: `socks5://127.0.0.1:${options.socksProxyPort}` };
     return { ...options, headless, downloadsPath, proxy };
diff --git a/packages/playwright-core/src/server/fetch.ts b/packages/playwright-core/src/server/fetch.ts
index 4905f22f8369a..c7bb3a8c53912 100644
--- a/packages/playwright-core/src/server/fetch.ts
+++ b/packages/playwright-core/src/server/fetch.ts
@@ -168,13 +168,6 @@ export abstract class APIRequestContext extends SdkObject {
     this.emit(APIRequestContext.Events.Dispose);
   }
 
-  private _proxyAgentForUrl(url: URL): http.Agent | undefined {
-    const proxy = this._defaultOptions().proxy;
-    // We skip 'per-context' in order to not break existing users. 'per-context' was previously used to
-    // workaround an upstream Chromium bug. Can be removed in the future.
-    return createProxyAgent(proxy?.server === 'per-context' ? undefined : proxy, url);
-  }
-
   private _ensureAgent(protocol: string): http.Agent {
     let agent = this._agentForProtocol.get(protocol);
     if (!agent) {
@@ -367,7 +360,7 @@ export abstract class APIRequestContext extends SdkObject {
         ...options,
         ...happyEyeballsOptions,
         ...getMatchingTLSOptionsForOrigin(this._defaultOptions().clientCertificates, url.origin),
-        agent: this._proxyAgentForUrl(url) ?? this._ensureAgent(url.protocol),
+        agent: createProxyAgent(this._defaultOptions().proxy, url) ?? this._ensureAgent(url.protocol),
       };
       if (options.__testHookLookup)
         requestOptions.lookup = lookupWithTestHook(options.__testHookLookup);
diff --git a/tests/library/browsercontext-proxy.spec.ts b/tests/library/browsercontext-proxy.spec.ts
index c5f25e3f5a156..c0861471a6b1d 100644
--- a/tests/library/browsercontext-proxy.spec.ts
+++ b/tests/library/browsercontext-proxy.spec.ts
@@ -42,6 +42,31 @@ it('should work when passing the proxy only on the context level', async ({ brow
   }
 });
 
+for (const launchProxy of ['per-context', 'http://per-context']) {
+  it(`should ignore legacy '${launchProxy}' launch proxy`, async ({ browserType, server, proxyServer }) => {
+    proxyServer.forwardTo(server.PORT, { allowConnectRequests: true });
+    const browser = await browserType.launch({ proxy: { server: launchProxy } });
+    try {
+      const context = await browser.newContext({ proxy: { server: proxyServer.HOST } });
+      const page = await context.newPage();
+      await page.goto('http://non-existent.com/target.html');
+      expect(await page.title()).toBe('Served by the proxy');
+      const response = await context.request.get('http://non-existent.com/target.html');
+      expect(await response.text()).toContain('Served by the proxy');
+      expect(proxyServer.connectHosts).toContain('non-existent.com:80');
+
+      const directContext = await browser.newContext();
+      const directPage = await directContext.newPage();
+      await directPage.goto(server.PREFIX + '/target.html');
+      expect(await directPage.title()).toBe('Served by the proxy');
+      const directResponse = await directContext.request.get(server.PREFIX + '/target.html');
+      expect(directResponse.ok()).toBe(true);
+    } finally {
+      await browser.close();
+    }
+  });
+}
+
 it('should throw for bad server value', async ({ contextFactory }) => {
   const error = await contextFactory({
     // @ts-expect-error server must be a string