diff --git a/packages/app/src/app/agent/new.tsx b/packages/app/src/app/agent/new.tsx
index 5fb67b83f..94cbfb059 100644
--- a/packages/app/src/app/agent/new.tsx
+++ b/packages/app/src/app/agent/new.tsx
@@ -244,6 +244,9 @@ export default function DraftAgentScreen() {
   const isNonGitDirectory =
     repoRequestStatus === "error" &&
     /not in a git repository/i.test(repoRequestError?.message ?? "");
+  const isDirectoryNotExists =
+    repoRequestStatus === "error" &&
+    /does not exist|no such file or directory|ENOENT/i.test(repoRequestError?.message ?? "");
   const repoInfoStatus: "idle" | "loading" | "ready" | "error" = !shouldInspectRepo
     ? "idle"
     : repoAvailabilityError
@@ -490,6 +493,10 @@ export default function DraftAgentScreen() {
         setErrorMessage("Working directory is required");
         throw new Error("Working directory is required");
       }
+      if (isDirectoryNotExists) {
+        setErrorMessage("Working directory does not exist on the selected host");
+        throw new Error("Working directory does not exist on the selected host");
+      }
       if (!trimmedPrompt) {
         setErrorMessage("Initial prompt is required");
         throw new Error("Initial prompt is required");
@@ -562,6 +569,7 @@ export default function DraftAgentScreen() {
       createNewBranch,
       createWorktree,
       gitBlockingError,
+      isDirectoryNotExists,
       isLoading,
       isNonGitDirectory,
       modeOptions,
@@ -692,6 +700,13 @@ export default function DraftAgentScreen() {
                 wrapInContainer={false}
                 renderTrigger={renderDropdownTrigger}
               />
+              {isDirectoryNotExists && (
+                <View style={styles.warningContainer}>
+                  <Text style={styles.warningText}>
+                    Directory does not exist on the selected host
+                  </Text>
+                </View>
+              )}
               {renderConfigRow({
                 label: "Agent",
                 value: `${providerDefinitions.find((p) => p.id === selectedProvider)?.label ?? selectedProvider} · ${selectedModel || "auto"}`,
@@ -1037,6 +1052,17 @@ const styles = StyleSheet.create((theme) => ({
     color: theme.colors.destructiveForeground,
     fontSize: theme.fontSize.sm,
   },
+  warningContainer: {
+    paddingHorizontal: theme.spacing[3],
+    paddingVertical: theme.spacing[2],
+    borderRadius: theme.borderRadius.md,
+    backgroundColor: theme.colors.palette.yellow[400],
+  },
+  warningText: {
+    color: "#000000",
+    fontSize: theme.fontSize.sm,
+    fontWeight: theme.fontWeight.semibold,
+  },
   hostBadge: {
     flexDirection: "row",
     alignItems: "center",
diff --git a/packages/server/src/server/daemon.e2e.test.ts b/packages/server/src/server/daemon.e2e.test.ts
index 16dbc8afd..1e01f0c6f 100644
--- a/packages/server/src/server/daemon.e2e.test.ts
+++ b/packages/server/src/server/daemon.e2e.test.ts
@@ -82,6 +82,19 @@ describe("daemon E2E", () => {
     expect(hasAssistantMessage).toBe(true);
   }, 180000); // 3 minute timeout for E2E test
 
+  test("fails to create agent with non-existent cwd", async () => {
+    const nonExistentCwd = "/this/path/does/not/exist/12345";
+
+    const result = await ctx.client.createAgentExpectFail({
+      provider: "codex",
+      cwd: nonExistentCwd,
+      title: "Should Fail Agent",
+    });
+
+    expect(result.error).toContain("Working directory does not exist");
+    expect(result.error).toContain(nonExistentCwd);
+  });
+
   describe("permission flow: Codex", () => {
     test(
       "approves permission and executes command",
diff --git a/packages/server/src/server/session.ts b/packages/server/src/server/session.ts
index ae286b502..5b3d68a67 100644
--- a/packages/server/src/server/session.ts
+++ b/packages/server/src/server/session.ts
@@ -1,5 +1,5 @@
 import { v4 as uuidv4 } from "uuid";
-import { readFile, mkdir, writeFile } from "fs/promises";
+import { readFile, mkdir, writeFile, stat } from "fs/promises";
 import { exec } from "child_process";
 import { promisify, inspect } from "util";
 import { join } from "path";
@@ -1273,6 +1273,24 @@ export class Session {
     );
 
     try {
+      // Validate that the working directory exists
+      const resolvedCwd = expandTilde(config.cwd);
+      try {
+        const stats = await stat(resolvedCwd);
+        if (!stats.isDirectory()) {
+          throw new Error(
+            `Working directory is not a directory: ${config.cwd}`
+          );
+        }
+      } catch (statError: any) {
+        if (statError.code === "ENOENT") {
+          throw new Error(
+            `Working directory does not exist: ${config.cwd}`
+          );
+        }
+        throw statError;
+      }
+
       const sessionConfig = await this.buildAgentSessionConfig(
         config,
         git,
diff --git a/packages/server/src/server/test-utils/daemon-client.ts b/packages/server/src/server/test-utils/daemon-client.ts
index b90f61545..2e7fc33e8 100644
--- a/packages/server/src/server/test-utils/daemon-client.ts
+++ b/packages/server/src/server/test-utils/daemon-client.ts
@@ -197,6 +197,50 @@ export class DaemonClient {
     ); // 60 second timeout for initialization
   }
 
+  /**
+   * Create an agent and expect it to fail.
+   * Returns the error message from the failure.
+   */
+  async createAgentExpectFail(
+    options: CreateAgentOptions
+  ): Promise<{ error: string }> {
+    const requestId = nanoid();
+
+    // Record the current queue position so we only check NEW messages
+    const startPosition = this.messageQueue.length;
+
+    this.send({
+      type: "create_agent_request",
+      requestId,
+      config: {
+        provider: options.provider,
+        cwd: options.cwd,
+        title: options.title,
+        model: options.model,
+        modeId: options.modeId,
+        mcpServers: options.mcpServers,
+        extra: options.extra,
+      },
+      initialPrompt: options.initialPrompt,
+    });
+
+    // Wait for either agent_create_failed status or timeout
+    return this.waitFor(
+      (msg) => {
+        if (
+          msg.type === "status" &&
+          msg.payload.status === "agent_create_failed" &&
+          msg.payload.requestId === requestId
+        ) {
+          return { error: String(msg.payload.error ?? "Unknown error") };
+        }
+        return null;
+      },
+      10000,
+      { skipQueueBefore: startPosition }
+    );
+  }
+
   async deleteAgent(agentId: string): Promise<void> {
     this.send({ type: "delete_agent_request", agentId });
     await this.waitFor((msg) => {