diff --git a/tests/tools/test_terminal_task_cwd.py b/tests/tools/test_terminal_task_cwd.py
new file mode 100644
index 00000000000..8c8ff867c36
--- /dev/null
+++ b/tests/tools/test_terminal_task_cwd.py
@@ -0,0 +1,74 @@
+"""Regression tests for task/session cwd propagation in terminal_tool."""
+
+import json
+
+import tools.terminal_tool as terminal_tool
+
+
+def _minimal_terminal_config(cwd="/default"):
+    return {
+        "env_type": "local",
+        "cwd": cwd,
+        "timeout": 60,
+    }
+
+
+def test_foreground_command_uses_registered_task_cwd_for_existing_environment(monkeypatch):
+    """ACP can update task cwd after the local env exists; foreground must honor it."""
+    calls = []
+
+    class FakeEnv:
+        env = {}
+
+        def execute(self, command, **kwargs):
+            calls.append((command, kwargs))
+            return {"output": "ok", "returncode": 0}
+
+    task_id = "acp-session-1"
+    monkeypatch.setattr(terminal_tool, "_active_environments", {task_id: FakeEnv()})
+    monkeypatch.setattr(terminal_tool, "_last_activity", {})
+    monkeypatch.setattr(terminal_tool, "_task_env_overrides", {task_id: {"cwd": "/workspace/acp"}})
+    monkeypatch.setattr(terminal_tool, "_get_env_config", lambda: _minimal_terminal_config())
+    monkeypatch.setattr(
+        terminal_tool,
+        "_check_all_guards",
+        lambda command, env_type: {"approved": True},
+    )
+
+    result = json.loads(terminal_tool.terminal_tool(command="pwd", task_id=task_id))
+
+    assert result["exit_code"] == 0
+    assert calls == [("pwd", {"timeout": 60, "cwd": "/workspace/acp"})]
+
+
+def test_explicit_workdir_still_wins_over_registered_task_cwd(monkeypatch):
+    calls = []
+
+    class FakeEnv:
+        env = {}
+
+        def execute(self, command, **kwargs):
+            calls.append(kwargs)
+            return {"output": "ok", "returncode": 0}
+
+    task_id = "acp-session-1"
+    monkeypatch.setattr(terminal_tool, "_active_environments", {task_id: FakeEnv()})
+    monkeypatch.setattr(terminal_tool, "_last_activity", {})
+    monkeypatch.setattr(terminal_tool, "_task_env_overrides", {task_id: {"cwd": "/workspace/acp"}})
+    monkeypatch.setattr(terminal_tool, "_get_env_config", lambda: _minimal_terminal_config())
+    monkeypatch.setattr(
+        terminal_tool,
+        "_check_all_guards",
+        lambda command, env_type: {"approved": True},
+    )
+
+    result = json.loads(
+        terminal_tool.terminal_tool(
+            command="pwd",
+            task_id=task_id,
+            workdir="/explicit/workdir",
+        )
+    )
+
+    assert result["exit_code"] == 0
+    assert calls == [{"timeout": 60, "cwd": "/explicit/workdir"}]
diff --git a/tools/terminal_tool.py b/tools/terminal_tool.py
index b65af93fa3b..52de7873e5f 100644
--- a/tools/terminal_tool.py
+++ b/tools/terminal_tool.py
@@ -2001,9 +2001,10 @@ def terminal_tool(
             
             while retry_count <= max_retries:
                 try:
-                    execute_kwargs = {"timeout": effective_timeout}
-                    if workdir:
-                        execute_kwargs["cwd"] = workdir
+                    execute_kwargs = {
+                        "timeout": effective_timeout,
+                        "cwd": workdir or cwd,
+                    }
                     result = env.execute(command, **execute_kwargs)
                 except Exception as e:
                     error_str = str(e).lower()