diff --git a/tests/tools/test_terminal_task_cwd.py b/tests/tools/test_terminal_task_cwd.py
index 1947836fb..b49e8e1e6 100644
--- a/tests/tools/test_terminal_task_cwd.py
+++ b/tests/tools/test_terminal_task_cwd.py
@@ -218,3 +218,27 @@ def test_registering_non_cwd_override_leaves_live_env_cwd_untouched(monkeypatch)
     terminal_tool.register_task_env_overrides(task_id, {"modal_image": "custom:latest"})
 
     assert fake_env.cwd == "/workspace/keep"
+
+
+def test_safe_getcwd_returns_real_cwd(monkeypatch):
+    monkeypatch.setattr(terminal_tool.os, "getcwd", lambda: "/home/user/project")
+    assert terminal_tool._safe_getcwd() == "/home/user/project"
+
+
+def test_safe_getcwd_falls_back_to_terminal_cwd_when_cwd_deleted(monkeypatch):
+    def _boom():
+        raise FileNotFoundError("[Errno 2] No such file or directory")
+
+    monkeypatch.setattr(terminal_tool.os, "getcwd", _boom)
+    monkeypatch.setenv("TERMINAL_CWD", "/srv/work")
+    assert terminal_tool._safe_getcwd() == "/srv/work"
+
+
+def test_safe_getcwd_falls_back_to_home_when_no_terminal_cwd(monkeypatch):
+    def _boom():
+        raise FileNotFoundError()
+
+    monkeypatch.setattr(terminal_tool.os, "getcwd", _boom)
+    monkeypatch.delenv("TERMINAL_CWD", raising=False)
+    monkeypatch.setattr(terminal_tool.os.path, "expanduser", lambda p: "/home/me")
+    assert terminal_tool._safe_getcwd() == "/home/me"
diff --git a/tools/terminal_tool.py b/tools/terminal_tool.py
index 14577b9bd..3e81eff9f 100644
--- a/tools/terminal_tool.py
+++ b/tools/terminal_tool.py
@@ -1030,6 +1030,20 @@ def _parse_env_var(name: str, default: str, converter=int, type_label: str = "in
         )
 
 
+def _safe_getcwd() -> str:
+    """Return the current working directory, tolerating a deleted CWD.
+
+    ``os.getcwd()`` raises FileNotFoundError when the process's working
+    directory has been removed out from under it (e.g. a scratch workspace
+    that was cleaned up mid-session). Fall back to TERMINAL_CWD, then the
+    user's home directory, so terminal setup never crashes on a stale CWD.
+    """
+    try:
+        return os.getcwd()
+    except FileNotFoundError:
+        return os.getenv("TERMINAL_CWD") or os.path.expanduser("~")
+
+
 def _get_env_config() -> Dict[str, Any]:
     """Get terminal environment configuration from environment variables."""
     # Default image with Python and Node.js for maximum compatibility
@@ -1042,7 +1056,7 @@ def _get_env_config() -> Dict[str, Any]:
     # remote home, and everything else starts in the backend's default
     # root-like cwd.
     if env_type == "local":
-        default_cwd = os.getcwd()
+        default_cwd = _safe_getcwd()
     elif env_type == "ssh":
         default_cwd = "~"
     else:
@@ -1058,7 +1072,7 @@ def _get_env_config() -> Dict[str, Any]:
     host_cwd = None
     host_prefixes = ("/Users/", "/home/", "C:\\", "C:/")
     if env_type == "docker" and mount_docker_cwd:
-        docker_cwd_source = os.getenv("TERMINAL_CWD") or os.getcwd()
+        docker_cwd_source = os.getenv("TERMINAL_CWD") or _safe_getcwd()
         candidate = os.path.abspath(os.path.expanduser(docker_cwd_source))
         if (
             any(candidate.startswith(p) for p in host_prefixes)
@@ -2516,7 +2530,7 @@ if __name__ == "__main__":
     print(f"  TERMINAL_SINGULARITY_IMAGE: {os.getenv('TERMINAL_SINGULARITY_IMAGE', f'docker://{default_img}')}")
     print(f"  TERMINAL_MODAL_IMAGE: {os.getenv('TERMINAL_MODAL_IMAGE', default_img)}")
     print(f"  TERMINAL_DAYTONA_IMAGE: {os.getenv('TERMINAL_DAYTONA_IMAGE', default_img)}")
-    print(f"  TERMINAL_CWD: {os.getenv('TERMINAL_CWD', os.getcwd())}")
+    print(f"  TERMINAL_CWD: {os.getenv('TERMINAL_CWD', _safe_getcwd())}")
     from hermes_constants import display_hermes_home as _dhh
     print(f"  TERMINAL_SANDBOX_DIR: {os.getenv('TERMINAL_SANDBOX_DIR', f'{_dhh()}/sandboxes')}")
     print(f"  TERMINAL_TIMEOUT: {os.getenv('TERMINAL_TIMEOUT', '60')}")