diff --git a/litellm/proxy/_types.py b/litellm/proxy/_types.py
index 0516a4aaa6..185de9ec0a 100644
--- a/litellm/proxy/_types.py
+++ b/litellm/proxy/_types.py
@@ -851,6 +851,13 @@ class GenerateRequestBase(LiteLLMPydanticObjectBase):
     aliases: Optional[dict] = {}
     object_permission: Optional[LiteLLM_ObjectPermissionBase] = None
 
+    @field_validator("max_budget", mode="before")
+    @classmethod
+    def check_max_budget(cls, v):
+        if v == "":
+            return None
+        return v
+
 
 class AllowedVectorStoreIndexItem(LiteLLMPydanticObjectBase):
     index_name: str
diff --git a/litellm/proxy/management_endpoints/internal_user_endpoints.py b/litellm/proxy/management_endpoints/internal_user_endpoints.py
index 9a986326c0..38a867d031 100644
--- a/litellm/proxy/management_endpoints/internal_user_endpoints.py
+++ b/litellm/proxy/management_endpoints/internal_user_endpoints.py
@@ -814,7 +814,9 @@ def _update_internal_user_params(
 ) -> dict:
     non_default_values = {}
     for k, v in data_json.items():
-        if (
+        if k == "max_budget":
+            non_default_values[k] = v
+        elif (
             v is not None
             and v
             not in (
diff --git a/tests/test_litellm/proxy/management_endpoints/test_internal_user_endpoints.py b/tests/test_litellm/proxy/management_endpoints/test_internal_user_endpoints.py
index 397a6af556..dc436bac08 100644
--- a/tests/test_litellm/proxy/management_endpoints/test_internal_user_endpoints.py
+++ b/tests/test_litellm/proxy/management_endpoints/test_internal_user_endpoints.py
@@ -1096,3 +1096,57 @@ async def test_get_users_user_id_partial_match(mocker):
     assert "user_id" in captured_where_conditions
     assert "in" in captured_where_conditions["user_id"]
     assert captured_where_conditions["user_id"]["in"] == ["user1", "user2", "user3"]
+
+
+def test_update_internal_user_params_reset_max_budget_with_none():
+    """
+    Test that _update_internal_user_params allows setting max_budget to None.
+    This verifies the fix for unsetting/resetting the budget to unlimited.
+    """
+    
+    # Case 1: max_budget is explicitly None in the input dictionary
+    data_json = {"max_budget": None, "user_id": "test_user"}
+    data = UpdateUserRequest(max_budget=None, user_id="test_user")
+
+    # Call the function
+    non_default_values = _update_internal_user_params(data_json=data_json, data=data)
+
+    # Assertions
+    assert "max_budget" in non_default_values
+    assert non_default_values["max_budget"] is None
+    assert non_default_values["user_id"] == "test_user"
+
+
+def test_update_internal_user_params_ignores_other_nones():
+    """
+    Test that other fields are still filtered out if None
+    """
+    # Create test data with other None fields
+    data_json = {"user_alias": None, "user_id": "test_user", "max_budget": 100.0}
+    data = UpdateUserRequest(user_alias=None, user_id="test_user", max_budget=100.0)
+
+    # Call the function
+    non_default_values = _update_internal_user_params(data_json=data_json, data=data)
+
+    # Assertions
+    assert "user_alias" not in non_default_values
+    assert non_default_values["max_budget"] == 100.0
+
+
+def test_generate_request_base_validator():
+    """
+    Test that GenerateRequestBase validator converts empty string to None for max_budget
+    """
+    from litellm.proxy._types import GenerateRequestBase
+    
+    # Test with empty string
+    req = GenerateRequestBase(max_budget="")
+    assert req.max_budget is None
+
+    # Test with actual float
+    req = GenerateRequestBase(max_budget=100.0)
+    assert req.max_budget == 100.0
+
+    # Test with None
+    req = GenerateRequestBase(max_budget=None)
+    assert req.max_budget is None
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