diff --git a/cli/src/agent/runners/runAgentSession.ts b/cli/src/agent/runners/runAgentSession.ts
index e8f32cabd..f0cdcf817 100644
--- a/cli/src/agent/runners/runAgentSession.ts
+++ b/cli/src/agent/runners/runAgentSession.ts
@@ -7,7 +7,7 @@ import { convertAgentMessage } from '@/agent/messageConverter';
 import { PermissionAdapter } from '@/agent/permissionAdapter';
 import type { AgentBackend, PromptContent } from '@/agent/types';
 import { startHappyServer } from '@/claude/utils/startHappyServer';
-import { getHappyCliCommand } from '@/utils/spawnHappyCLI';
+import { getHappyCliCommand, getSpawnedWorkingDirectory } from '@/utils/spawnHappyCLI';
 import { registerKillSessionHandler } from '@/claude/registerKillSessionHandler';
 import { bootstrapSession } from '@/agent/sessionFactory';
 import { formatMessageWithAttachments } from '@/utils/attachmentFormatter';
@@ -34,7 +34,7 @@ export async function runAgentSession(opts: {
     const { session } = await bootstrapSession({
         flavor: opts.agentType,
         startedBy: opts.startedBy ?? 'terminal',
-        workingDirectory: process.cwd(),
+        workingDirectory: getSpawnedWorkingDirectory(),
         agentState: initialState
     });
 
@@ -67,7 +67,7 @@ export async function runAgentSession(opts: {
     ];
 
     const agentSessionId = await backend.newSession({
-        cwd: process.cwd(),
+        cwd: getSpawnedWorkingDirectory(),
         mcpServers
     });
 
diff --git a/cli/src/claude/runClaude.ts b/cli/src/claude/runClaude.ts
index 796365b3a..f9200fa5e 100644
--- a/cli/src/claude/runClaude.ts
+++ b/cli/src/claude/runClaude.ts
@@ -8,6 +8,7 @@ import { extractSDKMetadataAsync } from '@/claude/sdk/metadataExtractor';
 import { parseSpecialCommand } from '@/parsers/specialCommands';
 import { getEnvironmentInfo } from '@/ui/doctor';
 import { startHappyServer } from '@/claude/utils/startHappyServer';
+import { getSpawnedWorkingDirectory } from '@/utils/spawnHappyCLI';
 import { startHookServer } from '@/claude/utils/startHookServer';
 import { generateHookSettingsFile, cleanupHookSettingsFile } from '@/modules/common/hooks/generateHookSettings';
 import { registerKillSessionHandler } from './registerKillSessionHandler';
@@ -29,7 +30,7 @@ export interface StartOptions {
 }
 
 export async function runClaude(options: StartOptions = {}): Promise<void> {
-    const workingDirectory = process.cwd();
+    const workingDirectory = getSpawnedWorkingDirectory();
     const startedBy = options.startedBy ?? 'terminal';
 
     // Log environment info at startup
diff --git a/cli/src/codex/runCodex.ts b/cli/src/codex/runCodex.ts
index 91657ecad..d56eb8c6a 100644
--- a/cli/src/codex/runCodex.ts
+++ b/cli/src/codex/runCodex.ts
@@ -11,6 +11,7 @@ import { createModeChangeHandler, createRunnerLifecycle, setControlledByUser } f
 import { isPermissionModeAllowedForFlavor } from '@hapi/protocol';
 import { PermissionModeSchema } from '@hapi/protocol/schemas';
 import { formatMessageWithAttachments } from '@/utils/attachmentFormatter';
+import { getSpawnedWorkingDirectory } from '@/utils/spawnHappyCLI';
 
 export { emitReadyIfIdle } from './utils/emitReadyIfIdle';
 
@@ -21,7 +22,7 @@ export async function runCodex(opts: {
     resumeSessionId?: string;
     model?: string;
 }): Promise<void> {
-    const workingDirectory = process.cwd();
+    const workingDirectory = getSpawnedWorkingDirectory();
     const startedBy = opts.startedBy ?? 'terminal';
 
     logger.debug(`[codex] Starting with options: startedBy=${startedBy}`);
diff --git a/cli/src/cursor/runCursor.ts b/cli/src/cursor/runCursor.ts
index 124c7b4f4..1d775515e 100644
--- a/cli/src/cursor/runCursor.ts
+++ b/cli/src/cursor/runCursor.ts
@@ -10,6 +10,7 @@ import { createModeChangeHandler, createRunnerLifecycle, setControlledByUser } f
 import { isPermissionModeAllowedForFlavor } from '@hapi/protocol';
 import { PermissionModeSchema } from '@hapi/protocol/schemas';
 import { formatMessageWithAttachments } from '@/utils/attachmentFormatter';
+import { getSpawnedWorkingDirectory } from '@/utils/spawnHappyCLI';
 
 const formatFailureReason = (message: string): string => {
     const maxLength = 200;
@@ -26,7 +27,7 @@ export async function runCursor(opts: {
     resumeSessionId?: string;
     model?: string;
 }): Promise<void> {
-    const workingDirectory = process.cwd();
+    const workingDirectory = getSpawnedWorkingDirectory();
     const startedBy = opts.startedBy ?? 'terminal';
 
     logger.debug(`[cursor] Starting with options: startedBy=${startedBy}`);
diff --git a/cli/src/gemini/runGemini.ts b/cli/src/gemini/runGemini.ts
index 5cef176b8..dd1de14db 100644
--- a/cli/src/gemini/runGemini.ts
+++ b/cli/src/gemini/runGemini.ts
@@ -14,6 +14,7 @@ import { resolveGeminiRuntimeConfig } from './utils/config';
 import { isPermissionModeAllowedForFlavor } from '@hapi/protocol';
 import { PermissionModeSchema } from '@hapi/protocol/schemas';
 import { formatMessageWithAttachments } from '@/utils/attachmentFormatter';
+import { getSpawnedWorkingDirectory } from '@/utils/spawnHappyCLI';
 
 export async function runGemini(opts: {
     startedBy?: 'runner' | 'terminal';
@@ -21,7 +22,7 @@ export async function runGemini(opts: {
     permissionMode?: PermissionMode;
     model?: string;
 } = {}): Promise<void> {
-    const workingDirectory = process.cwd();
+    const workingDirectory = getSpawnedWorkingDirectory();
     const startedBy = opts.startedBy ?? 'terminal';
 
     logger.debug(`[gemini] Starting with options: startedBy=${startedBy}, startingMode=${opts.startingMode}`);
diff --git a/cli/src/opencode/runOpencode.ts b/cli/src/opencode/runOpencode.ts
index 6888c36d4..97af4703c 100644
--- a/cli/src/opencode/runOpencode.ts
+++ b/cli/src/opencode/runOpencode.ts
@@ -12,6 +12,7 @@ import { isPermissionModeAllowedForFlavor } from '@hapi/protocol';
 import { PermissionModeSchema } from '@hapi/protocol/schemas';
 import { startOpencodeHookServer } from './utils/startOpencodeHookServer';
 import { formatMessageWithAttachments } from '@/utils/attachmentFormatter';
+import { getSpawnedWorkingDirectory } from '@/utils/spawnHappyCLI';
 
 export async function runOpencode(opts: {
     startedBy?: 'runner' | 'terminal';
@@ -19,7 +20,7 @@ export async function runOpencode(opts: {
     permissionMode?: PermissionMode;
     resumeSessionId?: string;
 } = {}): Promise<void> {
-    const workingDirectory = process.cwd();
+    const workingDirectory = getSpawnedWorkingDirectory();
     const startedBy = opts.startedBy ?? 'terminal';
 
     logger.debug(`[opencode] Starting with options: startedBy=${startedBy}, startingMode=${opts.startingMode}`);
diff --git a/cli/src/runner/run.ts b/cli/src/runner/run.ts
index 3ae5ac441..c8f1e99d2 100644
--- a/cli/src/runner/run.ts
+++ b/cli/src/runner/run.ts
@@ -127,6 +127,7 @@ export async function startRunner(): Promise<void> {
 
     // Session spawning awaiter system
     const pidToAwaiter = new Map<number, (session: TrackedSession) => void>();
+    const pidToSpawnReject = new Map<number, (errorMessage: string) => void>();
 
     // Helper functions
     const getCurrentChildren = () => Array.from(pidToTrackedSession.values());
@@ -425,6 +426,7 @@ export async function startRunner(): Promise<void> {
           // Set timeout for webhook
           const timeout = setTimeout(() => {
             pidToAwaiter.delete(pid);
+            pidToSpawnReject.delete(pid);
             logger.debug(`[RUNNER RUN] Session webhook timeout for PID ${pid}`);
             logStderrTail();
             resolve({
@@ -435,9 +437,19 @@ export async function startRunner(): Promise<void> {
             // even though session was still created successfully in ~2 more seconds
           }, 15_000);
 
+          // Register reject for early child exit
+          pidToSpawnReject.set(pid, (errorMessage) => {
+            clearTimeout(timeout);
+            pidToAwaiter.delete(pid);
+            pidToSpawnReject.delete(pid);
+            logStderrTail();
+            resolve({ type: 'error', errorMessage });
+          });
+
           // Register awaiter
           pidToAwaiter.set(pid, (completedSession) => {
             clearTimeout(timeout);
+            pidToSpawnReject.delete(pid);
             logger.debug(`[RUNNER RUN] Session ${completedSession.happySessionId} fully spawned with webhook`);
             resolve({
               type: 'success',
@@ -500,6 +512,12 @@ export async function startRunner(): Promise<void> {
     const onChildExited = (pid: number) => {
       logger.debug(`[RUNNER RUN] Removing exited process PID ${pid} from tracking`);
       pidToTrackedSession.delete(pid);
+
+      // Resolve any pending spawn awaiter immediately on child exit
+      const reject = pidToSpawnReject.get(pid);
+      if (reject) {
+        reject(`Agent process exited unexpectedly (PID ${pid})`);
+      }
     };
 
     // Start control server
diff --git a/cli/src/utils/spawnHappyCLI.ts b/cli/src/utils/spawnHappyCLI.ts
index 12557872d..cb2f45b0e 100644
--- a/cli/src/utils/spawnHappyCLI.ts
+++ b/cli/src/utils/spawnHappyCLI.ts
@@ -77,6 +77,15 @@ export function getHappyCliCommand(args: string[]): HappyCliCommand {
   };
 }
 
+/**
+ * Get the real working directory for spawned CLI processes.
+ * In dev mode, spawnHappyCLI overrides cwd to cli/ for tsconfig resolution
+ * and passes the real project directory via HAPI_SPAWN_CWD.
+ */
+export function getSpawnedWorkingDirectory(): string {
+  return process.env.HAPI_SPAWN_CWD || process.cwd();
+}
+
 export function spawnHappyCLI(args: string[], options: SpawnOptions = {}): ChildProcess {
 
   let directory: string | URL | undefined;
@@ -105,5 +114,21 @@ export function spawnHappyCLI(args: string[], options: SpawnOptions = {}): Child
     }
   }
   
+  // In dev mode, Bun resolves @/ path aliases from tsconfig.json relative to cwd.
+  // Override cwd to cli/ so aliases resolve, and pass the real working directory via env.
+  if (!isBunCompiled() && options.cwd) {
+    const projectRoot = projectPath();
+    const realCwd = typeof options.cwd === 'string' ? options.cwd : options.cwd.toString();
+    options = {
+      ...options,
+      cwd: projectRoot,
+      env: {
+        ...options.env,
+        ...process.env,
+        HAPI_SPAWN_CWD: realCwd
+      }
+    };
+  }
+
   return spawn(spawnCommand, spawnArgs, options);
 }