diff --git a/src/resources/extensions/gsd/state.ts b/src/resources/extensions/gsd/state.ts
index 08c63026b..4655aab80 100644
--- a/src/resources/extensions/gsd/state.ts
+++ b/src/resources/extensions/gsd/state.ts
@@ -79,10 +79,20 @@ import {
  * as ghosts, causing auto-mode to skip them entirely.
  */
 export function isGhostMilestone(basePath: string, mid: string): boolean {
-  // If the milestone has a DB row, it's a known milestone — not a ghost.
+  // If the milestone has a DB row, it's usually a known milestone — not a ghost.
+  // Exception: a "queued" row with no disk artifacts is a phantom from
+  // gsd_milestone_generate_id that was never planned (#3645).
   if (isDbAvailable()) {
     const dbRow = getMilestone(mid);
-    if (dbRow) return false;
+    if (dbRow) {
+      if (dbRow.status === 'queued') {
+        const hasContent = resolveMilestoneFile(basePath, mid, "CONTEXT")
+          || resolveMilestoneFile(basePath, mid, "ROADMAP")
+          || resolveMilestoneFile(basePath, mid, "SUMMARY");
+        return !hasContent;
+      }
+      return false;
+    }
   }
 
   // If a worktree exists for this milestone, it was legitimately created.
diff --git a/src/resources/extensions/gsd/tests/derive-state-db.test.ts b/src/resources/extensions/gsd/tests/derive-state-db.test.ts
index 81466f16a..08ea28f8a 100644
--- a/src/resources/extensions/gsd/tests/derive-state-db.test.ts
+++ b/src/resources/extensions/gsd/tests/derive-state-db.test.ts
@@ -1098,16 +1098,17 @@ describe('derive-state-db', async () => {
       // M001: complete milestone with summary
       writeFile(base, 'milestones/M001/M001-SUMMARY.md', '# M001 Summary\n\nDone.');
 
-      // M002: queued milestone — directory exists, no content files, but has DB row
+      // M002: queued milestone — directory exists with CONTEXT file and DB row
       mkdirSync(join(base, '.gsd', 'milestones', 'M002', 'slices'), { recursive: true });
+      writeFile(base, 'milestones/M002/M002-CONTEXT.md', '# M002 Context\n\nPlanned milestone.');
 
       // DB has both M001 complete and M002 queued
       openDatabase(':memory:');
       insertMilestone({ id: 'M001', title: 'First', status: 'complete' });
       insertMilestone({ id: 'M002', title: 'Second', status: 'queued' });
 
-      // isGhostMilestone should NOT treat M002 as ghost when DB row exists
-      assert.ok(!isGhostMilestone(base, 'M002'), 'ghost-dbrow: M002 with DB row is NOT a ghost');
+      // isGhostMilestone should NOT treat M002 as ghost when DB row + content files exist
+      assert.ok(!isGhostMilestone(base, 'M002'), 'ghost-dbrow: M002 with DB row and content is NOT a ghost');
 
       invalidateStateCache();
       const dbState = await deriveStateFromDb(base);
diff --git a/src/resources/extensions/gsd/tests/phantom-ghost-detection.test.ts b/src/resources/extensions/gsd/tests/phantom-ghost-detection.test.ts
new file mode 100644
index 000000000..06878f25a
--- /dev/null
+++ b/src/resources/extensions/gsd/tests/phantom-ghost-detection.test.ts
@@ -0,0 +1,55 @@
+/**
+ * Regression test for #3671 — isGhostMilestone detects phantom queued rows
+ *
+ * gsd_milestone_generate_id inserts a DB row with status "queued" as a side
+ * effect. If the milestone is never planned, isGhostMilestone previously
+ * returned false for any milestone with a DB row, blocking the state machine.
+ *
+ * The fix makes isGhostMilestone treat a "queued" DB row with no disk
+ * artifacts (CONTEXT, ROADMAP, SUMMARY) as a ghost.
+ *
+ * This structural test verifies the dbRow.status === 'queued' guard exists.
+ */
+
+import { describe, test } from 'node:test';
+import assert from 'node:assert/strict';
+import { readFileSync } from 'node:fs';
+import { fileURLToPath } from 'node:url';
+import { dirname, join } from 'node:path';
+
+const __filename = fileURLToPath(import.meta.url);
+const __dirname = dirname(__filename);
+
+const source = readFileSync(join(__dirname, '..', 'state.ts'), 'utf-8');
+
+describe('isGhostMilestone phantom queued detection (#3671)', () => {
+  test('isGhostMilestone function exists', () => {
+    assert.match(source, /export function isGhostMilestone\(/,
+      'isGhostMilestone should be exported');
+  });
+
+  test('checks dbRow.status === queued', () => {
+    assert.match(source, /dbRow\.status\s*===\s*['"]queued['"]/,
+      'isGhostMilestone should check dbRow.status === "queued"');
+  });
+
+  test('checks for CONTEXT disk artifact', () => {
+    assert.match(source, /resolveMilestoneFile\(basePath,\s*mid,\s*["']CONTEXT["']\)/,
+      'should check for CONTEXT file');
+  });
+
+  test('checks for ROADMAP disk artifact', () => {
+    assert.match(source, /resolveMilestoneFile\(basePath,\s*mid,\s*["']ROADMAP["']\)/,
+      'should check for ROADMAP file');
+  });
+
+  test('checks for SUMMARY disk artifact', () => {
+    assert.match(source, /resolveMilestoneFile\(basePath,\s*mid,\s*["']SUMMARY["']\)/,
+      'should check for SUMMARY file');
+  });
+
+  test('returns !hasContent for queued rows (ghost if no artifacts)', () => {
+    assert.match(source, /return !hasContent/,
+      'should return !hasContent for queued phantom milestones');
+  });
+});