diff --git a/packages/server/src/server/workspace-reconciliation-service.test.ts b/packages/server/src/server/workspace-reconciliation-service.test.ts
index 7c85cc3cf..f327e2771 100644
--- a/packages/server/src/server/workspace-reconciliation-service.test.ts
+++ b/packages/server/src/server/workspace-reconciliation-service.test.ts
@@ -114,6 +114,15 @@ function createWorkspaceGitServiceStub(
   };
 }
 
+function initGitRepoInDir(dir: string): void {
+  execFileSync("git", ["init", "-b", "main"], { cwd: dir, stdio: "ignore" });
+  execFileSync("git", ["config", "user.email", "test@test.com"], { cwd: dir, stdio: "ignore" });
+  execFileSync("git", ["config", "user.name", "Test"], { cwd: dir, stdio: "ignore" });
+  execFileSync("git", ["config", "commit.gpgsign", "false"], { cwd: dir, stdio: "ignore" });
+  execFileSync("git", ["add", "."], { cwd: dir, stdio: "ignore" });
+  execFileSync("git", ["commit", "-m", "init"], { cwd: dir, stdio: "ignore" });
+}
+
 function createTempGitRepo(prefix: string): string {
   const raw = mkdtempSync(path.join(tmpdir(), prefix));
   const dir = realpathSync(raw);
@@ -252,19 +261,7 @@ describe("WorkspaceReconciliationService", () => {
       }),
     );
 
-    // Initialize as git repo
-    execFileSync("git", ["init", "-b", "main"], { cwd: resolved, stdio: "ignore" });
-    execFileSync("git", ["config", "user.email", "test@test.com"], {
-      cwd: resolved,
-      stdio: "ignore",
-    });
-    execFileSync("git", ["config", "user.name", "Test"], { cwd: resolved, stdio: "ignore" });
-    execFileSync("git", ["config", "commit.gpgsign", "false"], {
-      cwd: resolved,
-      stdio: "ignore",
-    });
-    execFileSync("git", ["add", "."], { cwd: resolved, stdio: "ignore" });
-    execFileSync("git", ["commit", "-m", "init"], { cwd: resolved, stdio: "ignore" });
+    initGitRepoInDir(resolved);
 
     const service = new WorkspaceReconciliationService({
       projectRegistry,
@@ -286,6 +283,59 @@ describe("WorkspaceReconciliationService", () => {
     expect(projects.get("p1")!.kind).toBe("git");
   });
 
+  test("updates workspace kind when a directory becomes a git repo", async () => {
+    const dir = mkdtempSync(path.join(tmpdir(), "reconcile-ws-kind-"));
+    const resolved = realpathSync(dir);
+    tempDirs.push(resolved);
+    writeFileSync(path.join(resolved, "README.md"), "# Test\n");
+
+    const { projects, workspaces, projectRegistry, workspaceRegistry } = createTestRegistries();
+
+    projects.set(
+      "p1",
+      createPersistedProjectRecord({
+        projectId: "p1",
+        rootPath: resolved,
+        kind: "non_git",
+        displayName: path.basename(resolved),
+        createdAt: timestamp,
+        updatedAt: timestamp,
+      }),
+    );
+    workspaces.set(
+      "w1",
+      createPersistedWorkspaceRecord({
+        workspaceId: "w1",
+        projectId: "p1",
+        cwd: resolved,
+        kind: "directory",
+        displayName: path.basename(resolved),
+        createdAt: timestamp,
+        updatedAt: timestamp,
+      }),
+    );
+
+    initGitRepoInDir(resolved);
+
+    const service = new WorkspaceReconciliationService({
+      projectRegistry,
+      workspaceRegistry,
+      logger: createTestLogger(),
+      workspaceGitService: createWorkspaceGitServiceStub({
+        [resolved]: {
+          projectKind: "git",
+          projectDisplayName: path.basename(resolved),
+          workspaceDisplayName: "main",
+        },
+      }),
+    });
+
+    await service.runOnce();
+
+    expect(projects.get("p1")!.kind).toBe("git");
+    expect(workspaces.get("w1")!.kind).toBe("local_checkout");
+  });
+
   test("updates project display name when git remote changes", async () => {
     const dir = createTempGitRepo("reconcile-remote-");
     tempDirs.push(dir);
diff --git a/packages/server/src/server/workspace-reconciliation-service.ts b/packages/server/src/server/workspace-reconciliation-service.ts
index cbb3676df..eb8f63a33 100644
--- a/packages/server/src/server/workspace-reconciliation-service.ts
+++ b/packages/server/src/server/workspace-reconciliation-service.ts
@@ -10,6 +10,15 @@ import type { WorkspaceGitService } from "./workspace-git-service.js";
 
 const DEFAULT_RECONCILE_INTERVAL_MS = 60_000;
 
+function deriveWorkspaceKindFromMetadata(metadata: {
+  projectKind: "git" | "directory";
+  isWorktree: boolean;
+}): PersistedWorkspaceRecord["kind"] {
+  if (metadata.projectKind !== "git") return "directory";
+  if (metadata.isWorktree) return "worktree";
+  return "local_checkout";
+}
+
 export type ReconciliationChange =
   | { kind: "workspace_archived"; workspaceId: string; directory: string; reason: string }
   | { kind: "project_archived"; projectId: string; directory: string; reason: string }
@@ -23,7 +32,7 @@ export type ReconciliationChange =
       kind: "workspace_updated";
       workspaceId: string;
       directory: string;
-      fields: Partial<Pick<PersistedWorkspaceRecord, "displayName">>;
+      fields: Partial<Pick<PersistedWorkspaceRecord, "displayName" | "kind">>;
     };
 
 export interface ReconciliationResult {
@@ -222,20 +231,35 @@ export class WorkspaceReconciliationService {
         const wsDirName = workspace.cwd.split(/[\\/]/).findLast(Boolean) ?? workspace.cwd;
         const wsGit = await this.readWorkspaceGitMetadata(workspace.cwd, wsDirName);
 
+        const expectedKind = deriveWorkspaceKindFromMetadata(wsGit);
+
+        const workspaceUpdates: Partial<Pick<PersistedWorkspaceRecord, "displayName" | "kind">> =
+          {};
+
         if (wsGit.projectKind === "git" && workspace.displayName !== wsGit.workspaceDisplayName) {
-          const timestamp = new Date().toISOString();
-          await this.workspaceRegistry.upsert({
-            ...workspace,
-            displayName: wsGit.workspaceDisplayName,
-            updatedAt: timestamp,
-          });
-          changes.push({
-            kind: "workspace_updated",
-            workspaceId: workspace.workspaceId,
-            directory: workspace.cwd,
-            fields: { displayName: wsGit.workspaceDisplayName },
-          });
+          workspaceUpdates.displayName = wsGit.workspaceDisplayName;
         }
+
+        if (workspace.kind !== expectedKind) {
+          workspaceUpdates.kind = expectedKind;
+        }
+
+        if (Object.keys(workspaceUpdates).length === 0) {
+          return;
+        }
+
+        const timestamp = new Date().toISOString();
+        await this.workspaceRegistry.upsert({
+          ...workspace,
+          ...workspaceUpdates,
+          updatedAt: timestamp,
+        });
+        changes.push({
+          kind: "workspace_updated",
+          workspaceId: workspace.workspaceId,
+          directory: workspace.cwd,
+          fields: workspaceUpdates,
+        });
       }),
     );
   }