diff --git a/src/resources/extensions/gsd/auto-dispatch.ts b/src/resources/extensions/gsd/auto-dispatch.ts
index a51d2d47d..36df025a7 100644
--- a/src/resources/extensions/gsd/auto-dispatch.ts
+++ b/src/resources/extensions/gsd/auto-dispatch.ts
@@ -25,6 +25,7 @@ import {
 } from "./paths.js";
 import { existsSync, mkdirSync, writeFileSync } from "node:fs";
 import { join } from "node:path";
+import { hasImplementationArtifacts } from "./auto-recovery.js";
 import {
   buildResearchMilestonePrompt,
   buildPlanMilestonePrompt,
@@ -543,6 +544,17 @@ const DISPATCH_RULES: DispatchRule[] = [
         }
       }
 
+      // Safety guard (#1703): verify the milestone produced implementation
+      // artifacts (non-.gsd/ files). A milestone with only plan files and
+      // zero implementation code should not be marked complete.
+      if (!hasImplementationArtifacts(basePath)) {
+        return {
+          action: "stop",
+          reason: `Cannot complete milestone ${mid}: no implementation files found outside .gsd/. The milestone has only plan files — actual code changes are required.`,
+          level: "error",
+        };
+      }
+
       return {
         action: "dispatch",
         unitType: "complete-milestone",
diff --git a/src/resources/extensions/gsd/auto-recovery.ts b/src/resources/extensions/gsd/auto-recovery.ts
index c4e752180..b33e53088 100644
--- a/src/resources/extensions/gsd/auto-recovery.ts
+++ b/src/resources/extensions/gsd/auto-recovery.ts
@@ -46,6 +46,7 @@ import {
   writeFileSync,
   unlinkSync,
 } from "node:fs";
+import { execFileSync } from "node:child_process";
 import { dirname, join } from "node:path";
 
 // ─── Artifact Resolution & Verification ───────────────────────────────────────
@@ -119,6 +120,112 @@ export function resolveExpectedArtifactPath(
   }
 }
 
+/**
+ * Check whether a milestone produced implementation artifacts (non-`.gsd/` files)
+ * in the git history. Uses `git log --name-only` to inspect all commits on the
+ * current branch that touch files outside `.gsd/`.
+ *
+ * Returns true if at least one non-`.gsd/` file was committed, false otherwise.
+ * Non-fatal: returns true on git errors to avoid blocking the pipeline when
+ * running outside a git repo (e.g., tests).
+ */
+export function hasImplementationArtifacts(basePath: string): boolean {
+  try {
+    // Verify we're in a git repo — fail open if not
+    try {
+      execFileSync("git", ["rev-parse", "--is-inside-work-tree"], {
+        cwd: basePath,
+        stdio: ["ignore", "pipe", "pipe"],
+        encoding: "utf-8",
+      });
+    } catch {
+      return true;
+    }
+
+    // Strategy: check `git diff --name-only` against the merge-base with the
+    // main branch. This captures ALL files changed during the milestone's
+    // lifetime. If no merge-base exists (e.g., single-branch workflow), fall
+    // back to checking the last N commits.
+    const mainBranch = detectMainBranch(basePath);
+    const changedFiles = getChangedFilesSinceBranch(basePath, mainBranch);
+
+    // No files changed at all — fail open (could be detached HEAD, single-
+    // commit repo, or other edge case where git diff returns nothing).
+    if (changedFiles.length === 0) return true;
+
+    // Filter out .gsd/ files — only implementation files count.
+    // If every changed file is under .gsd/, the milestone produced no
+    // implementation code (#1703).
+    const implFiles = changedFiles.filter(f => !f.startsWith(".gsd/") && !f.startsWith(".gsd\\"));
+    return implFiles.length > 0;
+  } catch {
+    // Non-fatal — if git operations fail, don't block the pipeline
+    return true;
+  }
+}
+
+/**
+ * Detect the main/master branch name.
+ */
+function detectMainBranch(basePath: string): string {
+  try {
+    const result = execFileSync("git", ["rev-parse", "--verify", "main"], {
+      cwd: basePath,
+      stdio: ["ignore", "pipe", "pipe"],
+      encoding: "utf-8",
+    });
+    if (result.trim()) return "main";
+  } catch {
+    // main doesn't exist
+  }
+  try {
+    const result = execFileSync("git", ["rev-parse", "--verify", "master"], {
+      cwd: basePath,
+      stdio: ["ignore", "pipe", "pipe"],
+      encoding: "utf-8",
+    });
+    if (result.trim()) return "master";
+  } catch {
+    // master doesn't exist either
+  }
+  return "main"; // default fallback
+}
+
+/**
+ * Get files changed since the branch diverged from the target branch.
+ * Falls back to checking HEAD~20 if merge-base detection fails.
+ */
+function getChangedFilesSinceBranch(basePath: string, targetBranch: string): string[] {
+  try {
+    // Try merge-base approach first
+    const mergeBase = execFileSync(
+      "git", ["merge-base", targetBranch, "HEAD"],
+      { cwd: basePath, stdio: ["ignore", "pipe", "pipe"], encoding: "utf-8" },
+    ).trim();
+
+    if (mergeBase) {
+      const result = execFileSync(
+        "git", ["diff", "--name-only", mergeBase, "HEAD"],
+        { cwd: basePath, stdio: ["ignore", "pipe", "pipe"], encoding: "utf-8" },
+      ).trim();
+      return result ? result.split("\n").filter(Boolean) : [];
+    }
+  } catch {
+    // merge-base failed — fall back
+  }
+
+  // Fallback: check last 20 commits
+  try {
+    const result = execFileSync(
+      "git", ["log", "--name-only", "--pretty=format:", "-20", "HEAD"],
+      { cwd: basePath, stdio: ["ignore", "pipe", "pipe"], encoding: "utf-8" },
+    ).trim();
+    return result ? [...new Set(result.split("\n").filter(Boolean))] : [];
+  } catch {
+    return [];
+  }
+}
+
 /**
  * Check whether the expected artifact(s) for a unit exist on disk.
  * Returns true if all required artifacts exist, or if the unit type has no
@@ -287,6 +394,13 @@ export function verifyExpectedArtifact(
     }
   }
 
+  // complete-milestone must have produced implementation artifacts (#1703).
+  // A milestone with only .gsd/ plan files and zero implementation code is
+  // not genuinely complete — the LLM wrote plan files but skipped actual work.
+  if (unitType === "complete-milestone") {
+    if (!hasImplementationArtifacts(base)) return false;
+  }
+
   return true;
 }
 
diff --git a/src/resources/extensions/gsd/tests/auto-recovery.test.ts b/src/resources/extensions/gsd/tests/auto-recovery.test.ts
index 2bd57caef..45f0a485d 100644
--- a/src/resources/extensions/gsd/tests/auto-recovery.test.ts
+++ b/src/resources/extensions/gsd/tests/auto-recovery.test.ts
@@ -11,6 +11,7 @@ import {
   diagnoseExpectedArtifact,
   buildLoopRemediationSteps,
   selfHealRuntimeRecords,
+  hasImplementationArtifacts,
 } from "../auto-recovery.ts";
 import { parseRoadmap, clearParseCache } from "../files.ts";
 import { invalidateAllCaches } from "../cache.ts";
@@ -484,3 +485,106 @@ test("#793: invalidateAllCaches clears all caches so deriveState sees fresh disk
     cleanup(base);
   }
 });
+
+// ─── hasImplementationArtifacts (#1703) ───────────────────────────────────
+
+import { execFileSync } from "node:child_process";
+
+function makeGitBase(): string {
+  const base = join(tmpdir(), `gsd-test-git-${randomUUID()}`);
+  mkdirSync(base, { recursive: true });
+  execFileSync("git", ["init", "--initial-branch=main"], { cwd: base, stdio: "ignore" });
+  execFileSync("git", ["config", "user.email", "test@test.com"], { cwd: base, stdio: "ignore" });
+  execFileSync("git", ["config", "user.name", "Test"], { cwd: base, stdio: "ignore" });
+  // Create initial commit so HEAD exists
+  writeFileSync(join(base, ".gitkeep"), "");
+  execFileSync("git", ["add", "."], { cwd: base, stdio: "ignore" });
+  execFileSync("git", ["commit", "-m", "initial"], { cwd: base, stdio: "ignore" });
+  return base;
+}
+
+test("hasImplementationArtifacts returns false when only .gsd/ files committed (#1703)", () => {
+  const base = makeGitBase();
+  try {
+    // Create a feature branch and commit only .gsd/ files
+    execFileSync("git", ["checkout", "-b", "feat/test-milestone"], { cwd: base, stdio: "ignore" });
+    mkdirSync(join(base, ".gsd", "milestones", "M001"), { recursive: true });
+    writeFileSync(join(base, ".gsd", "milestones", "M001", "M001-ROADMAP.md"), "# Roadmap");
+    writeFileSync(join(base, ".gsd", "milestones", "M001", "M001-SUMMARY.md"), "# Summary");
+    execFileSync("git", ["add", "."], { cwd: base, stdio: "ignore" });
+    execFileSync("git", ["commit", "-m", "chore: add plan files"], { cwd: base, stdio: "ignore" });
+
+    const result = hasImplementationArtifacts(base);
+    assert.equal(result, false, "should return false when only .gsd/ files were committed");
+  } finally {
+    cleanup(base);
+  }
+});
+
+test("hasImplementationArtifacts returns true when implementation files committed (#1703)", () => {
+  const base = makeGitBase();
+  try {
+    // Create a feature branch with both .gsd/ and implementation files
+    execFileSync("git", ["checkout", "-b", "feat/test-impl"], { cwd: base, stdio: "ignore" });
+    mkdirSync(join(base, ".gsd", "milestones", "M001"), { recursive: true });
+    writeFileSync(join(base, ".gsd", "milestones", "M001", "M001-ROADMAP.md"), "# Roadmap");
+    mkdirSync(join(base, "src"), { recursive: true });
+    writeFileSync(join(base, "src", "feature.ts"), "export function feature() {}");
+    execFileSync("git", ["add", "."], { cwd: base, stdio: "ignore" });
+    execFileSync("git", ["commit", "-m", "feat: add feature"], { cwd: base, stdio: "ignore" });
+
+    const result = hasImplementationArtifacts(base);
+    assert.equal(result, true, "should return true when implementation files are present");
+  } finally {
+    cleanup(base);
+  }
+});
+
+test("hasImplementationArtifacts returns true on non-git directory (fail-open)", () => {
+  const base = join(tmpdir(), `gsd-test-nogit-${randomUUID()}`);
+  mkdirSync(base, { recursive: true });
+  try {
+    const result = hasImplementationArtifacts(base);
+    assert.equal(result, true, "should return true (fail-open) in non-git directory");
+  } finally {
+    cleanup(base);
+  }
+});
+
+// ─── verifyExpectedArtifact: complete-milestone requires impl artifacts (#1703) ──
+
+test("verifyExpectedArtifact complete-milestone fails with only .gsd/ files (#1703)", () => {
+  const base = makeGitBase();
+  try {
+    // Create feature branch with only .gsd/ files
+    execFileSync("git", ["checkout", "-b", "feat/ms-only-gsd"], { cwd: base, stdio: "ignore" });
+    mkdirSync(join(base, ".gsd", "milestones", "M001"), { recursive: true });
+    writeFileSync(join(base, ".gsd", "milestones", "M001", "M001-SUMMARY.md"), "# Milestone Summary\nDone.");
+    execFileSync("git", ["add", "."], { cwd: base, stdio: "ignore" });
+    execFileSync("git", ["commit", "-m", "chore: milestone plan files"], { cwd: base, stdio: "ignore" });
+
+    const result = verifyExpectedArtifact("complete-milestone", "M001", base);
+    assert.equal(result, false, "complete-milestone should fail verification when only .gsd/ files present");
+  } finally {
+    cleanup(base);
+  }
+});
+
+test("verifyExpectedArtifact complete-milestone passes with impl files (#1703)", () => {
+  const base = makeGitBase();
+  try {
+    // Create feature branch with implementation files AND milestone summary
+    execFileSync("git", ["checkout", "-b", "feat/ms-with-impl"], { cwd: base, stdio: "ignore" });
+    mkdirSync(join(base, ".gsd", "milestones", "M001"), { recursive: true });
+    writeFileSync(join(base, ".gsd", "milestones", "M001", "M001-SUMMARY.md"), "# Milestone Summary\nDone.");
+    mkdirSync(join(base, "src"), { recursive: true });
+    writeFileSync(join(base, "src", "app.ts"), "console.log('hello');");
+    execFileSync("git", ["add", "."], { cwd: base, stdio: "ignore" });
+    execFileSync("git", ["commit", "-m", "feat: implementation"], { cwd: base, stdio: "ignore" });
+
+    const result = verifyExpectedArtifact("complete-milestone", "M001", base);
+    assert.equal(result, true, "complete-milestone should pass verification with implementation files");
+  } finally {
+    cleanup(base);
+  }
+});