diff --git a/apps/desktop/src/renderer/components/terminal/__tests__/usePtyProcess.test.ts b/apps/desktop/src/renderer/components/terminal/__tests__/usePtyProcess.test.ts
new file mode 100644
index 0000000000..0a5036c031
--- /dev/null
+++ b/apps/desktop/src/renderer/components/terminal/__tests__/usePtyProcess.test.ts
@@ -0,0 +1,167 @@
+/**
+ * @vitest-environment jsdom
+ */
+
+/**
+ * Unit tests for usePtyProcess
+ *
+ * Covers the guard that prevents PTY creation when a terminal has exited
+ * naturally (status === 'exited'), which was causing an infinite
+ * mount → create PTY → unmount → mount loop via the TerminalGrid
+ * pendingCleanup grace-period mechanism.
+ */
+import { describe, it, expect, vi, beforeEach } from 'vitest';
+import { renderHook, act } from '@testing-library/react';
+import { useRef } from 'react';
+import { usePtyProcess } from '../usePtyProcess';
+import type { TerminalStatus } from '../../../stores/terminal-store';
+
+const mockCreateTerminal = vi.fn();
+const mockDestroyTerminal = vi.fn();
+const mockRestoreTerminalSession = vi.fn();
+
+Object.defineProperty(window, 'electronAPI', {
+  configurable: true,
+  writable: true,
+  value: {
+    createTerminal: mockCreateTerminal,
+    destroyTerminal: mockDestroyTerminal,
+    restoreTerminalSession: mockRestoreTerminalSession,
+  },
+});
+
+/** Mutable terminal state controlled per test */
+let mockTerminalStatus: TerminalStatus = 'idle';
+let mockIsRestored = false;
+
+const mockSetTerminalStatus = vi.fn();
+const mockUpdateTerminal = vi.fn();
+
+vi.mock('../../../stores/terminal-store', () => ({
+  useTerminalStore: Object.assign(vi.fn(), {
+    getState: () => ({
+      terminals: [
+        {
+          id: 'term-1',
+          status: mockTerminalStatus,
+          isRestored: mockIsRestored,
+          isCLIMode: false,
+          cwd: '/test',
+          title: 'Terminal 1',
+          claudeSessionId: undefined,
+          worktreeConfig: undefined,
+          createdAt: new Date('2024-01-01T00:00:00Z'),
+        },
+      ],
+      setTerminalStatus: mockSetTerminalStatus,
+      updateTerminal: mockUpdateTerminal,
+    }),
+  }),
+}));
+
+const DEFAULT_OPTIONS = {
+  terminalId: 'term-1',
+  cwd: '/test',
+  projectPath: '/test',
+  cols: 80,
+  rows: 24,
+  skipCreation: false,
+} as const;
+
+describe('usePtyProcess — exited-terminal guard (#fix/terminal-exit-pty-recreation-loop)', () => {
+  beforeEach(() => {
+    vi.clearAllMocks();
+    mockTerminalStatus = 'idle';
+    mockIsRestored = false;
+    mockCreateTerminal.mockResolvedValue({ success: true });
+    mockDestroyTerminal.mockResolvedValue({ success: true });
+    mockRestoreTerminalSession.mockResolvedValue({ success: true, data: { success: true } });
+  });
+
+  it('does not call createTerminal when terminal status is exited (natural exit)', async () => {
+    mockTerminalStatus = 'exited';
+
+    await act(async () => {
+      renderHook(() => usePtyProcess(DEFAULT_OPTIONS));
+    });
+
+    expect(mockCreateTerminal).not.toHaveBeenCalled();
+  });
+
+  it('does not call createTerminal on repeated mounts when status remains exited', async () => {
+    mockTerminalStatus = 'exited';
+
+    for (let i = 0; i < 3; i++) {
+      await act(async () => {
+        const { unmount } = renderHook(() => usePtyProcess(DEFAULT_OPTIONS));
+        unmount();
+      });
+    }
+
+    expect(mockCreateTerminal).not.toHaveBeenCalled();
+    expect(mockDestroyTerminal).not.toHaveBeenCalled();
+  });
+
+  it('allows PTY creation when status is exited but isRecreatingRef is true (worktree switch)', async () => {
+    mockTerminalStatus = 'exited';
+
+    await act(async () => {
+      renderHook(() => {
+        const isRecreatingRef = useRef(true);
+        return usePtyProcess({ ...DEFAULT_OPTIONS, isRecreatingRef });
+      });
+    });
+
+    expect(mockCreateTerminal).toHaveBeenCalledTimes(1);
+    // The recreation path must reset status from 'exited' → 'idle' BEFORE creating the PTY,
+    // otherwise the exited-guard above would short-circuit creation.
+    expect(mockSetTerminalStatus).toHaveBeenNthCalledWith(1, 'term-1', 'idle');
+  });
+
+  it('calls createTerminal when terminal status is idle', async () => {
+    mockTerminalStatus = 'idle';
+
+    await act(async () => {
+      renderHook(() => usePtyProcess(DEFAULT_OPTIONS));
+    });
+
+    expect(mockCreateTerminal).toHaveBeenCalledTimes(1);
+    expect(mockCreateTerminal).toHaveBeenCalledWith(
+      expect.objectContaining({ id: 'term-1', cwd: '/test', cols: 80, rows: 24 }),
+    );
+  });
+
+  it('calls createTerminal (new-terminal branch) when status is running and isRestored is false', async () => {
+    mockTerminalStatus = 'running';
+
+    await act(async () => {
+      renderHook(() => usePtyProcess(DEFAULT_OPTIONS));
+    });
+
+    expect(mockCreateTerminal).toHaveBeenCalledTimes(1);
+    expect(mockRestoreTerminalSession).not.toHaveBeenCalled();
+  });
+
+  it('calls restoreTerminalSession (restore branch) when status is running and isRestored is true', async () => {
+    mockTerminalStatus = 'running';
+    mockIsRestored = true;
+
+    await act(async () => {
+      renderHook(() => usePtyProcess(DEFAULT_OPTIONS));
+    });
+
+    expect(mockRestoreTerminalSession).toHaveBeenCalledTimes(1);
+    expect(mockCreateTerminal).not.toHaveBeenCalled();
+    expect(mockUpdateTerminal).toHaveBeenCalledWith('term-1', { isRestored: false });
+  });
+
+  it('does not call createTerminal when skipCreation is true', async () => {
+    mockTerminalStatus = 'idle';
+
+    await act(async () => {
+      renderHook(() => usePtyProcess({ ...DEFAULT_OPTIONS, skipCreation: true }));
+    });
+
+    expect(mockCreateTerminal).not.toHaveBeenCalled();
+  });
+});
diff --git a/apps/desktop/src/renderer/components/terminal/usePtyProcess.ts b/apps/desktop/src/renderer/components/terminal/usePtyProcess.ts
index c75465edb3..6f4fd64f6e 100644
--- a/apps/desktop/src/renderer/components/terminal/usePtyProcess.ts
+++ b/apps/desktop/src/renderer/components/terminal/usePtyProcess.ts
@@ -23,6 +23,18 @@ interface UsePtyProcessOptions {
   onError?: (error: string) => void;
 }
 
+/**
+ * Manages the PTY process lifecycle for a terminal instance.
+ *
+ * Creates and tracks the underlying PTY process, handling:
+ * - Initial creation once xterm has measured valid dimensions (`skipCreation`)
+ * - Session restoration for terminals persisted across hot-reloads
+ * - Deliberate recreation after worktree switches (`isRecreatingRef`)
+ * - Retry logic when dimensions are not yet ready during recreation
+ *
+ * @returns `prepareForRecreate` / `resetForRecreate` callbacks used by
+ *   `Terminal.tsx` to coordinate controlled PTY destruction and recreation.
+ */
 export function usePtyProcess({
   terminalId,
   cwd,
@@ -140,6 +152,19 @@ export function usePtyProcess({
     const alreadyRunning = terminalState?.status === 'running' || terminalState?.status === 'claude-active';
     const isRestored = terminalState?.isRestored;
 
+    // Do not create a new PTY when the terminal has exited naturally or is no longer
+    // in the store (removed while the component was still mounted).
+    // When the shell exits (e.g. user types "exit"), the terminal is kept in the DOM
+    // for a short grace period (pendingCleanup). During that period the component can
+    // mount/unmount rapidly — without this guard each mount would spin up a new PTY,
+    // causing an infinite mount → create PTY → unmount → mount loop.
+    // Deliberate recreation (worktree switch) sets isRecreatingRef before exiting, so
+    // it is excluded from this guard.
+    if (!terminalState || (terminalState.status === 'exited' && !isRecreatingRef?.current)) {
+      debugLog(`[usePtyProcess] Skipping PTY creation for terminal: ${terminalId} - terminal has exited naturally or is not in store (status=${terminalState?.status})`);
+      return;
+    }
+
     debugLog(`[usePtyProcess] Starting PTY creation for terminal: ${terminalId}`);
     debugLog(`[usePtyProcess] Terminal ${terminalId} state: isRestored=${isRestored}, status=${terminalState?.status}`);
     debugLog(`[usePtyProcess] Terminal ${terminalId} dimensions for PTY: cols=${cols}, rows=${rows}`);