diff --git a/kits/firestore-send-email/CHANGELOG.md b/kits/firestore-send-email/CHANGELOG.md
index 711eb60d36..156348bc17 100644
--- a/kits/firestore-send-email/CHANGELOG.md
+++ b/kits/firestore-send-email/CHANGELOG.md
@@ -1 +1,3 @@
 - Initial release of kit, see README for differences between the legacy extension and this kit
+- SendGrid sends now work with `AUTH_TYPE=OAuth2`: the `SMTP_PASSWORD` secret is no longer dropped from the config under OAuth2, so the SendGrid transport receives its API key
+- SendGrid delivery no longer fails with `sgMail.setApiKey is not a function`: the transport imports `@sendgrid/mail` in a form that survives the compiled output
diff --git a/kits/firestore-send-email/README.md b/kits/firestore-send-email/README.md
index 722146cd36..fa89411050 100644
--- a/kits/firestore-send-email/README.md
+++ b/kits/firestore-send-email/README.md
@@ -154,7 +154,10 @@ picked up. All four are attached to the function whatever `AUTH_TYPE` is set to,
 and were optional in the extension. If a secret does not exist, `firebase deploy`
 prompts you for a value, and fails outright when running non-interactively (CI).
 On username/password auth create the three OAuth2 secrets with a placeholder
-value, and on OAuth2 auth do the same for `SMTP_PASSWORD`.
+value. On OAuth2 auth do the same for `SMTP_PASSWORD`, unless you send through
+SendGrid: the SendGrid transport reads `SMTP_PASSWORD` as its API key whatever
+`AUTH_TYPE` is set to, so a connection URI pointing at `smtp.sendgrid.net` needs
+your real API key there and a placeholder fails every send with a 401.
 
 ### DATABASE_REGION now decides where the function runs
 
diff --git a/kits/firestore-send-email/src/config.ts b/kits/firestore-send-email/src/config.ts
index 77059e6e53..55bdd56c02 100644
--- a/kits/firestore-send-email/src/config.ts
+++ b/kits/firestore-send-email/src/config.ts
@@ -311,7 +311,14 @@ export const secretParams = [
 export function secretParamsForAuthType(authType?: string) {
   switch (authType || AuthenticatonType.UsernamePassword) {
     case AuthenticatonType.OAuth2:
-      return [params.clientId, params.clientSecret, params.refreshToken];
+      // The SendGrid transport reads SMTP_PASSWORD as its API key regardless
+      // of auth type, so it must stay bound under OAuth2.
+      return [
+        params.smtpPassword,
+        params.clientId,
+        params.clientSecret,
+        params.refreshToken,
+      ];
     case AuthenticatonType.UsernamePassword:
     case AuthenticatonType.ApiKey:
       return [params.smtpPassword];
@@ -336,10 +343,9 @@ export function configFromEnv(): SendEmailConfig {
     databaseRegion: params.databaseRegion.value(),
     mailCollection: params.mailCollection.value(),
     smtpConnectionUri: params.smtpConnectionUri.value(),
-    smtpPassword:
-      authType === AuthenticatonType.OAuth2
-        ? undefined
-        : optionalSecret(params.smtpPassword),
+    // Not gated on auth type: the SendGrid transport reads it as its API key
+    // even when AUTH_TYPE is OAuth2.
+    smtpPassword: optionalSecret(params.smtpPassword),
     defaultFrom: params.defaultFrom.value(),
     defaultReplyTo: params.defaultReplyTo.value(),
     usersCollection: params.usersCollection.value(),
diff --git a/kits/firestore-send-email/src/nodemailer-sendgrid/index.ts b/kits/firestore-send-email/src/nodemailer-sendgrid/index.ts
index 94f914baf6..0f83a0f732 100644
--- a/kits/firestore-send-email/src/nodemailer-sendgrid/index.ts
+++ b/kits/firestore-send-email/src/nodemailer-sendgrid/index.ts
@@ -14,7 +14,7 @@
  * limitations under the License.
  */
 
-import * as sgMail from "@sendgrid/mail";
+import sgMail from "@sendgrid/mail";
 import type {
   Address,
   MailSource,
diff --git a/kits/firestore-send-email/tests/build-interop.test.ts b/kits/firestore-send-email/tests/build-interop.test.ts
new file mode 100644
index 0000000000..d9e7be0821
--- /dev/null
+++ b/kits/firestore-send-email/tests/build-interop.test.ts
@@ -0,0 +1,31 @@
+/**
+ * Copyright 2026 Google LLC
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *    https://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+import { createRequire } from "node:module";
+import { describe, expect, test } from "vitest";
+
+// The subject is the compiled output, not src: only tsc's esModuleInterop
+// helper drops the prototype methods off the instance @sendgrid/mail exports,
+// and vitest's own transform does not reproduce that. Needs `npm run build`,
+// which CI runs before `npm test`.
+const requireBuilt = createRequire(import.meta.url);
+
+describe("built SendGridTransport", () => {
+  test("reaches the methods on the @sendgrid/mail instance", () => {
+    const { SendGridTransport } = requireBuilt("../lib/nodemailer-sendgrid");
+    expect(() => new SendGridTransport({ apiKey: "SG.test" })).not.toThrow();
+  });
+});
diff --git a/kits/firestore-send-email/tests/config.test.ts b/kits/firestore-send-email/tests/config.test.ts
index 95e28f18be..aa2f4221bc 100644
--- a/kits/firestore-send-email/tests/config.test.ts
+++ b/kits/firestore-send-email/tests/config.test.ts
@@ -14,22 +14,26 @@
  * limitations under the License.
  */
 
-import { describe, expect, test, vi } from "vitest";
+import { afterEach, describe, expect, test, vi } from "vitest";
 
 interface StringParamOpts {
   default?: string;
   input?: { text?: { validationRegex?: RegExp } };
 }
 
-const { stringParamOpts } = vi.hoisted(() => ({
+const { stringParamOpts, paramEnv } = vi.hoisted(() => ({
   stringParamOpts: new Map<string, StringParamOpts | undefined>(),
+  paramEnv: new Map<string, string>(),
 }));
 
 vi.mock("firebase-functions/params", () => ({
+  // Values come from paramEnv rather than process.env: AUTH_TYPE, USER and
+  // HOST are all real param names that collide with ambient shell vars, which
+  // would otherwise make results machine-dependent.
   defineString: (name: string, opts?: StringParamOpts) => {
     stringParamOpts.set(name, opts);
     return {
-      value: () => opts?.default ?? "",
+      value: () => paramEnv.get(name) ?? opts?.default ?? "",
     };
   },
   defineInt: (_name: string, opts?: { default?: number }) => ({
@@ -60,6 +64,10 @@ import { resolveConfig } from "../src/export-config";
 import { AuthenticatonType } from "../src/types";
 
 describe("configFromEnv", () => {
+  afterEach(() => {
+    paramEnv.clear();
+  });
+
   test("maps params and keeps secret-backed values deferred", () => {
     const config = configFromEnv();
     expect(config.mailCollection).toBe("mail");
@@ -68,6 +76,16 @@ describe("configFromEnv", () => {
     expect(typeof config.smtpPassword).toBe("object");
     expect(config.clientId).toBeUndefined();
   });
+
+  test("keeps the SMTP password for OAuth2 so SendGrid can use it as API key", () => {
+    paramEnv.set("AUTH_TYPE", AuthenticatonType.OAuth2);
+    const config = configFromEnv();
+    expect(config.authType).toBe(AuthenticatonType.OAuth2);
+    expect(typeof config.smtpPassword).toBe("object");
+    expect(typeof config.clientId).toBe("object");
+    expect(typeof config.clientSecret).toBe("object");
+    expect(typeof config.refreshToken).toBe("object");
+  });
 });
 
 describe("secretParamsForAuthType", () => {
@@ -79,12 +97,12 @@ describe("secretParamsForAuthType", () => {
     ).toEqual(["SMTP_PASSWORD"]);
   });
 
-  test("binds only OAuth secrets for OAuth2 auth", () => {
+  test("keeps the SMTP password bound alongside OAuth secrets for OAuth2 auth", () => {
     expect(
       secretParamsForAuthType(AuthenticatonType.OAuth2).map(
         (secret) => (secret as { name: string }).name
       )
-    ).toEqual(["CLIENT_ID", "CLIENT_SECRET", "REFRESH_TOKEN"]);
+    ).toEqual(["SMTP_PASSWORD", "CLIENT_ID", "CLIENT_SECRET", "REFRESH_TOKEN"]);
   });
 
   test("uses username/password secret binding by default", () => {
diff --git a/kits/firestore-send-email/tests/helpers.test.ts b/kits/firestore-send-email/tests/helpers.test.ts
index f3c025eda2..035538d342 100644
--- a/kits/firestore-send-email/tests/helpers.test.ts
+++ b/kits/firestore-send-email/tests/helpers.test.ts
@@ -17,8 +17,17 @@
 import { logger } from "firebase-functions";
 import Mail from "nodemailer/lib/mailer";
 import { beforeEach, describe, expect, test, vi } from "vitest";
+
+// @sendgrid/mail exports a single MailService instance, so the mock has to be
+// reachable as both the default and the named exports.
+vi.mock("@sendgrid/mail", () => {
+  const mail = { setApiKey: vi.fn(), send: vi.fn() };
+  return { ...mail, default: mail };
+});
+
+import * as sgMail from "@sendgrid/mail";
 import type { ResolvedSendEmailConfig } from "../src/export-config";
-import { isSendGrid, setSmtpCredentials } from "../src/helpers";
+import { isSendGrid, setSmtpCredentials, transportLayer } from "../src/helpers";
 import { AuthenticatonType } from "../src/types";
 
 const warnSpy = vi.spyOn(logger, "warn").mockImplementation(() => undefined);
@@ -253,3 +262,22 @@ describe("isSendGrid", () => {
     expect(isSendGrid(makeConfig({}))).toBe(false);
   });
 });
+
+describe("transportLayer", () => {
+  beforeEach(() => {
+    vi.clearAllMocks();
+  });
+
+  test("passes the SMTP password to SendGrid as the API key when AUTH_TYPE is OAuth2", async () => {
+    const transport = await transportLayer(
+      makeConfig({
+        smtpConnectionUri: "smtps://apikey@smtp.sendgrid.net:465",
+        smtpPassword: "SG.test-key",
+        authType: AuthenticatonType.OAuth2,
+      })
+    );
+
+    expect(vi.mocked(sgMail.setApiKey)).toHaveBeenCalledWith("SG.test-key");
+    expect(transport).toBeDefined();
+  });
+});
diff --git a/kits/firestore-send-email/tests/nodemailer-sendgrid.test.ts b/kits/firestore-send-email/tests/nodemailer-sendgrid.test.ts
index 01ebea2d96..12824eecf7 100644
--- a/kits/firestore-send-email/tests/nodemailer-sendgrid.test.ts
+++ b/kits/firestore-send-email/tests/nodemailer-sendgrid.test.ts
@@ -16,16 +16,21 @@
 
 import { beforeEach, describe, expect, test, vi } from "vitest";
 
-vi.mock("@sendgrid/mail", () => ({
-  setApiKey: vi.fn(),
-  send: vi.fn().mockResolvedValue([
-    {
-      headers: { "x-message-id": "test-message-id" },
-      statusCode: 202,
-    },
-    {},
-  ]),
-}));
+// @sendgrid/mail exports a single MailService instance, so the mock has to be
+// reachable as both the default and the named exports.
+vi.mock("@sendgrid/mail", () => {
+  const mail = {
+    setApiKey: vi.fn(),
+    send: vi.fn().mockResolvedValue([
+      {
+        headers: { "x-message-id": "test-message-id" },
+        statusCode: 202,
+      },
+      {},
+    ]),
+  };
+  return { ...mail, default: mail };
+});
 
 import * as sgMail from "@sendgrid/mail";
 import { SendGridTransport } from "../src/nodemailer-sendgrid";