diff --git a/src/commands/interactive/connection.rs b/src/commands/interactive/connection.rs
index ea4ce61b..4b229798 100644
--- a/src/commands/interactive/connection.rs
+++ b/src/commands/interactive/connection.rs
@@ -70,13 +70,18 @@ impl InteractiveCommand {
             )
         })?;
 
-        // Check if key authentication failed and password fallback is allowed
+        // Check if authentication failed and password fallback is allowed
+        // This matches SSH key failures as well as SSH agent authentication failures
         let result = match result {
-            Err(SshError::KeyAuthFailed)
-                if allow_password_fallback && atty::is(atty::Stream::Stdin) =>
-            {
+            Err(
+                SshError::KeyAuthFailed
+                | SshError::AgentAuthenticationFailed
+                | SshError::AgentNoIdentities
+                | SshError::AgentConnectionFailed
+                | SshError::AgentRequestIdentitiesFailed,
+            ) if allow_password_fallback && atty::is(atty::Stream::Stdin) => {
                 tracing::debug!(
-                    "SSH key authentication failed for {username}@{host}:{port}, attempting password fallback"
+                    "SSH authentication failed for {username}@{host}:{port}, attempting password fallback"
                 );
 
                 // Prompt for password (matching OpenSSH behavior)
@@ -459,3 +464,114 @@ impl InteractiveCommand {
         Ok(channel)
     }
 }
+
+/// Check if an SSH error indicates an authentication failure that should trigger password fallback.
+///
+/// This function returns true for errors that occur when:
+/// - SSH key authentication fails (server rejects the key)
+/// - SSH agent authentication fails (agent has keys but server rejects them)
+/// - SSH agent has no identities loaded
+/// - SSH agent connection fails
+/// - SSH agent identity request fails
+///
+/// These are all cases where falling back to password authentication makes sense,
+/// matching OpenSSH's behavior.
+pub fn is_auth_error_for_password_fallback(error: &SshError) -> bool {
+    matches!(
+        error,
+        SshError::KeyAuthFailed
+            | SshError::AgentAuthenticationFailed
+            | SshError::AgentNoIdentities
+            | SshError::AgentConnectionFailed
+            | SshError::AgentRequestIdentitiesFailed
+    )
+}
+
+#[cfg(test)]
+mod tests {
+    use super::*;
+
+    #[test]
+    fn test_key_auth_failed_triggers_password_fallback() {
+        let error = SshError::KeyAuthFailed;
+        assert!(
+            is_auth_error_for_password_fallback(&error),
+            "KeyAuthFailed should trigger password fallback"
+        );
+    }
+
+    #[test]
+    fn test_agent_auth_failed_triggers_password_fallback() {
+        let error = SshError::AgentAuthenticationFailed;
+        assert!(
+            is_auth_error_for_password_fallback(&error),
+            "AgentAuthenticationFailed should trigger password fallback"
+        );
+    }
+
+    #[test]
+    fn test_agent_no_identities_triggers_password_fallback() {
+        let error = SshError::AgentNoIdentities;
+        assert!(
+            is_auth_error_for_password_fallback(&error),
+            "AgentNoIdentities should trigger password fallback"
+        );
+    }
+
+    #[test]
+    fn test_agent_connection_failed_triggers_password_fallback() {
+        let error = SshError::AgentConnectionFailed;
+        assert!(
+            is_auth_error_for_password_fallback(&error),
+            "AgentConnectionFailed should trigger password fallback"
+        );
+    }
+
+    #[test]
+    fn test_agent_request_identities_failed_triggers_password_fallback() {
+        let error = SshError::AgentRequestIdentitiesFailed;
+        assert!(
+            is_auth_error_for_password_fallback(&error),
+            "AgentRequestIdentitiesFailed should trigger password fallback"
+        );
+    }
+
+    #[test]
+    fn test_password_wrong_does_not_trigger_fallback() {
+        let error = SshError::PasswordWrong;
+        assert!(
+            !is_auth_error_for_password_fallback(&error),
+            "PasswordWrong should NOT trigger password fallback (already tried password)"
+        );
+    }
+
+    #[test]
+    fn test_server_check_failed_does_not_trigger_fallback() {
+        let error = SshError::ServerCheckFailed;
+        assert!(
+            !is_auth_error_for_password_fallback(&error),
+            "ServerCheckFailed should NOT trigger password fallback (host key issue)"
+        );
+    }
+
+    #[test]
+    fn test_io_error_does_not_trigger_fallback() {
+        let error = SshError::IoError(std::io::Error::new(
+            std::io::ErrorKind::ConnectionRefused,
+            "connection refused",
+        ));
+        assert!(
+            !is_auth_error_for_password_fallback(&error),
+            "IoError should NOT trigger password fallback (network issue)"
+        );
+    }
+
+    #[test]
+    fn test_keyboard_interactive_auth_failed_does_not_trigger_fallback() {
+        let error = SshError::KeyboardInteractiveAuthFailed;
+        assert!(
+            !is_auth_error_for_password_fallback(&error),
+            "KeyboardInteractiveAuthFailed should NOT trigger password fallback"
+        );
+    }
+}
diff --git a/src/commands/interactive/mod.rs b/src/commands/interactive/mod.rs
index d51c2430..8950e739 100644
--- a/src/commands/interactive/mod.rs
+++ b/src/commands/interactive/mod.rs
@@ -53,7 +53,7 @@
 //! - `InteractiveResult`: Summary of interactive session execution
 
 mod commands;
-mod connection;
+pub mod connection;
 mod execution;
 mod multiplex;
 mod single_node;
diff --git a/tests/password_fallback_test.rs b/tests/password_fallback_test.rs
new file mode 100644
index 00000000..fffb6a62
--- /dev/null
+++ b/tests/password_fallback_test.rs
@@ -0,0 +1,107 @@
+// Copyright 2025 Lablup Inc. and Jeongkyu Shin
+//
+// 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
+//
+//     http://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.
+
+//! Tests for password fallback functionality in SSH connections.
+//!
+//! These tests verify that the password fallback mechanism correctly triggers
+//! for various SSH authentication error types, including SSH agent errors.
+
+use bssh::commands::interactive::connection::is_auth_error_for_password_fallback;
+use bssh::ssh::tokio_client::Error as SshError;
+
+/// Test that all SSH agent-related authentication failures trigger password fallback
+#[test]
+fn test_all_agent_errors_trigger_password_fallback() {
+    let agent_errors = vec![
+        (
+            SshError::AgentAuthenticationFailed,
+            "AgentAuthenticationFailed",
+        ),
+        (SshError::AgentNoIdentities, "AgentNoIdentities"),
+        (SshError::AgentConnectionFailed, "AgentConnectionFailed"),
+        (
+            SshError::AgentRequestIdentitiesFailed,
+            "AgentRequestIdentitiesFailed",
+        ),
+    ];
+
+    for (error, name) in agent_errors {
+        assert!(
+            is_auth_error_for_password_fallback(&error),
+            "{} should trigger password fallback",
+            name
+        );
+    }
+}
+
+/// Test that key authentication failure triggers password fallback
+#[test]
+fn test_key_auth_failure_triggers_password_fallback() {
+    let error = SshError::KeyAuthFailed;
+    assert!(
+        is_auth_error_for_password_fallback(&error),
+        "KeyAuthFailed should trigger password fallback"
+    );
+}
+
+/// Test that non-authentication errors do NOT trigger password fallback
+#[test]
+fn test_non_auth_errors_do_not_trigger_fallback() {
+    let non_auth_errors: Vec<(SshError, &str)> = vec![
+        (SshError::PasswordWrong, "PasswordWrong"),
+        (SshError::ServerCheckFailed, "ServerCheckFailed"),
+        (SshError::CommandDidntExit, "CommandDidntExit"),
+        (
+            SshError::KeyboardInteractiveAuthFailed,
+            "KeyboardInteractiveAuthFailed",
+        ),
+        (
+            SshError::IoError(std::io::Error::new(
+                std::io::ErrorKind::ConnectionRefused,
+                "connection refused",
+            )),
+            "IoError",
+        ),
+    ];
+
+    for (error, name) in non_auth_errors {
+        assert!(
+            !is_auth_error_for_password_fallback(&error),
+            "{} should NOT trigger password fallback",
+            name
+        );
+    }
+}
+
+/// Test that PasswordWrong specifically does not trigger fallback
+/// (to prevent infinite password retry loops)
+#[test]
+fn test_password_wrong_prevents_infinite_loop() {
+    let error = SshError::PasswordWrong;
+    assert!(
+        !is_auth_error_for_password_fallback(&error),
+        "PasswordWrong must NOT trigger password fallback to prevent infinite retry loops"
+    );
+}
+
+/// Test that ServerCheckFailed (host key verification) does not trigger password fallback
+/// (security: host key issues should not be bypassed)
+#[test]
+fn test_host_key_verification_not_bypassed() {
+    let error = SshError::ServerCheckFailed;
+    assert!(
+        !is_auth_error_for_password_fallback(&error),
+        "ServerCheckFailed must NOT trigger password fallback - host key verification is a security feature"
+    );
+}