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What Are the Prerequisites for Using Ollama

Before getting started, ensure your system meets these requirements:
  • Operating System: macOS, Linux, or Windows
  • RAM: Minimum 8GB (16GB+ recommended)
  • Storage: At least 10GB free space
  • Continue extension installed

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How to Install Ollama - Step-by-Step

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Step 1: Install Ollama

Choose the installation method for your operating system: 
# macOS
brew install ollama

# Linux
curl -fsSL https://ollama.ai/install.sh | sh

# Windows
# Download from ollama.ai

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Step 2: Start Ollama Service

After installation, start the Ollama service: 
# Start Ollama (runs in background)
ollama serve

# Verify it's running
curl http://localhost:11434
# Should return "Ollama is running"

# Check Ollama version
ollama --version

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Step 3: Download Models

Important: Always use ollama pull instead of ollama run to download models. The run command starts an interactive session which isn’t needed for Continue.
Download models using the exact tag specified: 
# Pull models with specific tags
ollama pull deepseek-r1:32b       # 32B parameter version
ollama pull deepseek-r1:latest     # Latest/default version
ollama pull mistral:latest
ollama pull qwen2.5-coder:1.5b

# List all downloaded models
ollama list
Common Model Tags:
  • :latest - Default version (used if no tag specified)
  • :32b, :7b, :1.5b - Parameter count versions
  • :instruct, :base - Model variants
If a model page shows deepseek-r1:32b on Ollama’s website, you must pull it with that exact tag. Using just deepseek-r1 will pull :latest which may be a different size.

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How to Configure Ollama with Continue

There are multiple ways to configure Ollama models in Continue:

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Method 1: Using Hub Model Blocks in Local config.yaml

The easiest way is to use pre-configured model blocks from the Continue Hub in your local configuration:
~/.continue/assistants/My Local Assistant.yaml
name: My Local Assistant
version: 0.0.1
schema: v1
models:
  - uses: ollama/deepseek-r1-32b
  - uses: ollama/qwen2.5-coder-7b
  - uses: ollama/gpt-oss-20b
Important: Hub blocks only provide configuration - you still need to pull the model locally. The hub block ollama/deepseek-r1-32b configures Continue to use model: deepseek-r1:32b, but the actual model must be installed:
# Check what the hub block expects (view on hub.continue.dev)
# Then pull that exact model tag locally
ollama pull deepseek-r1:32b  # Required for ollama/deepseek-r1-32b hub block
If the model isn’t installed, Ollama will return: 404 model "deepseek-r1:32b" not found, try pulling it first

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Method 2: Using Autodetect

Continue can automatically detect available Ollama models. You can configure this in your YAML:
~/.continue/config.yaml
models:
  - name: Autodetect
    provider: ollama
    model: AUTODETECT
    roles:
      - chat
      - edit
      - apply
      - rerank
      - autocomplete
Or use it through the GUI:
  1. Click on the model selector dropdown
  2. Select “Autodetect” option
  3. Continue will scan for available Ollama models
  4. Select your desired model from the detected list
The Autodetect feature scans your local Ollama installation and lists all available models. When set to AUTODETECT, Continue will dynamically populate the model list based on what’s installed locally via ollama list. This is useful for quickly switching between models without manual configuration. For any roles not covered by the detected models, you may need to manually configure them.
You can update apiBase with the IP address of a remote machine serving Ollama.

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Method 3: Manual Configuration

For custom configurations or models not on the hub: 
models:
  - name: DeepSeek R1 32B
    provider: ollama
    model: deepseek-r1:32b # Must match exactly what `ollama list` shows
    apiBase: http://localhost:11434
    roles:
      - chat
      - edit
    capabilities: # Add if not auto-detected
      - tool_use
  - name: Qwen2.5-Coder 1.5B
    provider: ollama
    model: qwen2.5-coder:1.5b
    roles:
      - autocomplete

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Model Capabilities and Tool Support

Some Ollama models support tools (function calling) which is required for Agent mode. However, not all models that claim tool support work correctly:

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Checking Tool Support

models:
  - name: DeepSeek R1
    provider: ollama
    model: deepseek-r1:latest
    capabilities:
      - tool_use # Add this to enable tools
Known Issue: Some models like DeepSeek R1 may show “Agent mode is not supported” or “does not support tools” even with capabilities configured. This is a known limitation where the model’s actual tool support differs from its advertised capabilities.

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If Agent Mode Shows “Not Supported”

  1. First, add capabilities: [tool_use] to your model config
  2. If you still get errors, the model may not actually support tools despite documentation
  3. Use a different model known to work with tools (e.g., Llama 3.1, Mistral)
See the Model Capabilities guide for more details.

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How to Configure Advanced Settings

For optimal performance, consider these advanced configuration options: 
models:
  - name: Optimized DeepSeek
    provider: ollama
    model: deepseek-r1:32b
    contextLength: 8192 # Adjust context window (default varies by model)
    completionOptions:
      temperature: 0.7 # Controls randomness (0.0-1.0)
      top_p: 0.9 # Nucleus sampling threshold
      top_k: 40 # Top-k sampling
      num_predict: 2048 # Max tokens to generate
    # Ollama-specific options (set via environment or modelfile)
    # num_gpu: 35        # Number of GPU layers to offload
    # num_thread: 8      # CPU threads to use
For GPU acceleration and memory tuning, create an Ollama Modelfile: 
# Create custom model with optimizations
FROM deepseek-r1:32b
PARAMETER num_gpu 35
PARAMETER num_thread 8
PARAMETER num_ctx 4096

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What Are the Best Practices for Ollama

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How to Choose the Right Model

Choose models based on your specific needs (see recommended models for more options):
  1. Code Generation:
    • qwen2.5-coder:7b - Excellent for code completion
    • codellama:13b - Strong general coding support
    • deepseek-coder:6.7b - Fast and efficient
  2. Chat & Reasoning:
    • llama3.1:8b - Latest Llama with tool support
    • mistral:7b - Fast and versatile
    • deepseek-r1:32b - Advanced reasoning capabilities
  3. Autocomplete:
    • qwen2.5-coder:1.5b - Lightweight and fast
    • starcoder2:3b - Optimized for code completion
  4. Memory Requirements:
    • 1.5B-3B models: ~4GB RAM
    • 7B models: ~8GB RAM
    • 13B models: ~16GB RAM
    • 32B models: ~32GB RAM

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How to Optimize Performance

To get the best performance from Ollama:
  • Monitor system resources with ollama ps to see memory usage
  • Adjust context window size based on available RAM
  • Use appropriate model sizes for your hardware
  • Enable GPU acceleration when available (NVIDIA CUDA or AMD ROCm)
  • Use ollama logs to debug performance issues

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How to Troubleshoot Ollama Issues

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Common Configuration Problems

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”404 model not found, try pulling it first”

This error occurs when the model isn’t installed locally: Problem: Using a hub block or config that references a model not yet pulled Solution: 
# Check what models you have
ollama list

# Pull the exact model version needed
ollama pull model-name:tag  # e.g., deepseek-r1:32b

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Model Tag Mismatches

Problem: ollama pull deepseek-r1 installs :latest but hub block expects :32b Solution: Always pull with the exact tag: 
# Wrong - pulls :latest
ollama pull deepseek-r1

# Right - pulls specific version
ollama pull deepseek-r1:32b

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“Agent mode is not supported”

Problem: Model doesn’t support tools/function calling Solutions:
  1. Add capabilities: [tool_use] to your model config
  2. If still not working, the model may not actually support tools
  3. Switch to a model with confirmed tool support (Llama 3.1, Mistral)

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Using Hub Blocks in Local Config

Problem: Unclear how to use hub models locally Solution: Create a local assistant file: 
# ~/.continue/assistants/Local.yaml
name: Local Assistant
version: 0.0.1
schema: v1
models:
  - uses: ollama/model-name

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How to Fix Connection Problems

  • Verify Ollama is running: curl http://localhost:11434
  • Check service status: systemctl status ollama (Linux)
  • Ensure port 11434 is not blocked by firewall
  • For remote connections, set OLLAMA_HOST=0.0.0.0:11434

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How to Resolve Performance Issues

  • Insufficient RAM: Use smaller models (7B instead of 32B)
  • Model too large: Check available memory with ollama ps
  • GPU issues: Verify CUDA/ROCm installation for GPU acceleration
  • Slow generation: Adjust num_gpu layers in model configuration
  • Check system diagnostics: ollama ps for active models and memory usage

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What Are Example Workflows with Ollama

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How to Use Ollama for Code Generation

# Example: Generate a FastAPI endpoint
from fastapi import FastAPI, HTTPException
from pydantic import BaseModel

app = FastAPI()

class User(BaseModel):
    name: str
    email: str
    age: int

@app.post("/users/")
async def create_user(user: User):
    # Continue will help complete this implementation
    # Use Cmd+I (Mac) or Ctrl+I (Windows/Linux) to generate code
    pass

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How to Use Ollama for Code Review

Use Continue with Ollama to:
  • Analyze code quality
  • Suggest improvements
  • Identify potential bugs
  • Generate documentation

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Conclusion

Ollama with Continue provides a powerful local development environment for AI-assisted coding. You now have complete control over your AI models, ensuring privacy and enabling offline development workflows.
This guide is based on Ollama v0.11.x and Continue v1.1.x. Please check for updates regularly.