diff --git a/tests/tui_gateway/test_projects_rpc.py b/tests/tui_gateway/test_projects_rpc.py
index 1acb712dff2c..067a47586388 100644
--- a/tests/tui_gateway/test_projects_rpc.py
+++ b/tests/tui_gateway/test_projects_rpc.py
@@ -295,6 +295,30 @@ def test_scan_time_is_not_treated_as_session_activity(tmp_path):
     assert active["last_active"] > idle["last_active"]
 
 
+def test_terminal_session_persists_its_launch_cwd():
+    """A terminal session's cwd IS its workspace, so the row must record it.
+
+    The user cd'd into that directory before running hermes. Dropping it left
+    the row with no cwd and no git_repo_root, so the sidebar could never place
+    the session under its project.
+    """
+    for source in ("tui", "cli"):
+        assert server._persisted_session_cwd(
+            {"source": source, "cwd": "/somewhere/a-repo"}
+        ) == "/somewhere/a-repo"
+
+
+def test_desktop_launch_cwd_is_not_persisted_as_a_workspace():
+    # The desktop launches from wherever the bundle was opened, so an unpicked
+    # cwd is an artifact — those chats belong under "No workspace".
+    assert server._persisted_session_cwd({"source": "desktop", "cwd": "/opt/whatever"}) is None
+
+    # An explicit pick is always honored, desktop included.
+    assert server._persisted_session_cwd(
+        {"source": "desktop", "cwd": "/picked/repo", "explicit_cwd": True}
+    ) == "/picked/repo"
+
+
 def test_disabled_discovery_clears_cache_and_rejects_new_scan(monkeypatch, tmp_path):
     repo = tmp_path / "cached-repo"
     repo.mkdir()
diff --git a/tui_gateway/server.py b/tui_gateway/server.py
index 7375ab542cf4..6cffc43e48ee 100644
--- a/tui_gateway/server.py
+++ b/tui_gateway/server.py
@@ -2086,6 +2086,25 @@ def _session_cwd(session: dict | None) -> str:
     return _completion_cwd()
 
 
+# Sources whose launch directory is an artifact of how the app was started, not
+# a workspace the user picked. Everything else is terminal-started: the process
+# runs in a directory the user deliberately cd'd into.
+_LAUNCH_CWD_NOT_A_WORKSPACE = {"desktop"}
+
+
+def _persisted_session_cwd(session: dict) -> str | None:
+    """The cwd to stamp on the session's DB row, or None to leave it unset.
+
+    See :func:`_ensure_session_db_row` for why the launch directory counts as a
+    workspace for terminal sessions but not for the desktop.
+    """
+    if session.get("explicit_cwd"):
+        return _session_cwd(session)
+    if _session_source(session) in _LAUNCH_CWD_NOT_A_WORKSPACE:
+        return None
+    return _session_cwd(session) or None
+
+
 def _heal_dead_cwd(cwd: str) -> str:
     """Resolve a session cwd that points at a now-deleted directory.
 
@@ -2184,12 +2203,19 @@ def _ensure_session_db_row(session: dict) -> None:
     Uses INSERT OR IGNORE under the hood, so re-calls (and the AIAgent's own
     lazy create) are no-ops.
 
-    Only an *explicitly chosen* workspace is persisted as the session's cwd.
-    The agent still runs in the auto-detected directory (session["cwd"]), but
-    we don't stamp that onto the row — otherwise every session the user never
-    picked a folder for gets grouped under whatever directory the desktop
-    happened to launch in (e.g. "desktop"). Leaving it null groups them under
-    "No workspace", which is the desired default.
+    A cwd the user *chose* is always persisted. When they made no explicit
+    choice the launch directory stands in, and whether that is meaningful
+    depends on how the session was started:
+
+    * The desktop launches from wherever the app bundle was opened (often ``/``
+      or the user's home), so stamping that would file every unpicked chat under
+      a folder the user never chose. Those stay null and group under "No
+      workspace", which is the desired default.
+    * A terminal session (``hermes`` / ``hermes --tui`` / CLI) is started from a
+      directory the user deliberately ``cd``'d into — that IS the workspace, and
+      it is also where the agent's terminal actually runs. Dropping it stranded
+      the session with no cwd AND no git_repo_root, so the sidebar could never
+      place it under its project.
     """
     key = session.get("session_key")
     if not key:
@@ -2278,7 +2304,7 @@ def _ensure_session_db_row(session: dict) -> None:
             model=row_model,
             model_config=model_config or None,
             parent_session_id=parent_session_id,
-            cwd=_session_cwd(session) if session.get("explicit_cwd") else None,
+            cwd=_persisted_session_cwd(session),
             # Self-describing rows: aggregators that merge multiple profile DBs
             # into one list can't rely on which file a row came from alone. NULL
             # means the launch/default profile (matches run_agent's convention).