diff --git a/src/resources/extensions/gsd/auto-worktree-sync.ts b/src/resources/extensions/gsd/auto-worktree-sync.ts
index 0f4dd6158..643576098 100644
--- a/src/resources/extensions/gsd/auto-worktree-sync.ts
+++ b/src/resources/extensions/gsd/auto-worktree-sync.ts
@@ -170,6 +170,20 @@ export function escapeStaleWorktree(base: string): string {
 
   // base is inside .gsd/worktrees/<something> — extract the project root
   const projectRoot = base.slice(0, idx);
+
+  // Guard: If the candidate project root's .gsd IS the user-level ~/.gsd,
+  // the string-slice heuristic matched the wrong /.gsd/ boundary. This happens
+  // when .gsd is a symlink into ~/.gsd/projects/<hash> and process.cwd()
+  // resolved through the symlink. Returning ~ would be catastrophic (#1676).
+  const candidateGsd = join(projectRoot, ".gsd").replaceAll("\\", "/");
+  const gsdHomePath = gsdHome.replaceAll("\\", "/");
+  if (candidateGsd === gsdHomePath || candidateGsd.startsWith(gsdHomePath + "/")) {
+    // Don't chdir to home — return base unchanged.
+    // resolveProjectRoot() in worktree.ts has the full git-file-based recovery
+    // and will be called by the caller (startAuto → projectRoot()).
+    return base;
+  }
+
   try {
     process.chdir(projectRoot);
   } catch {
diff --git a/src/resources/extensions/gsd/repo-identity.ts b/src/resources/extensions/gsd/repo-identity.ts
index ccfd4f3fb..3a5416198 100644
--- a/src/resources/extensions/gsd/repo-identity.ts
+++ b/src/resources/extensions/gsd/repo-identity.ts
@@ -243,6 +243,15 @@ export function ensureGsdSymlink(projectPath: string): string {
   const localGsd = join(projectPath, ".gsd");
   const inWorktree = isInsideWorktree(projectPath);
 
+  // Guard: Never create a symlink at ~/.gsd — that's the user-level GSD home,
+  // not a project .gsd. This can happen if resolveProjectRoot() or
+  // escapeStaleWorktree() returned ~ as the project root (#1676).
+  const localGsdNormalized = localGsd.replaceAll("\\", "/");
+  const gsdHomePath = gsdHome.replaceAll("\\", "/");
+  if (localGsdNormalized === gsdHomePath) {
+    return localGsd;
+  }
+
   // Ensure external directory exists
   mkdirSync(externalPath, { recursive: true });
 
diff --git a/src/resources/extensions/gsd/tests/worktree.test.ts b/src/resources/extensions/gsd/tests/worktree.test.ts
index 40842f8a3..d95a00c94 100644
--- a/src/resources/extensions/gsd/tests/worktree.test.ts
+++ b/src/resources/extensions/gsd/tests/worktree.test.ts
@@ -204,6 +204,9 @@ async function main(): Promise<void> {
     "/real/project",
     "uses GSD_PROJECT_ROOT when set",
   );
+  delete process.env.GSD_PROJECT_ROOT;
+
+  // Without GSD_PROJECT_ROOT, direct layout still works (no ~/.gsd collision)
   assertEq(
     resolveProjectRoot("/some/repo"),
     "/some/repo",
diff --git a/src/resources/extensions/gsd/worktree.ts b/src/resources/extensions/gsd/worktree.ts
index 573b865bf..b38cabacd 100644
--- a/src/resources/extensions/gsd/worktree.ts
+++ b/src/resources/extensions/gsd/worktree.ts
@@ -123,16 +123,15 @@ export function detectWorktreeName(basePath: string): string | null {
  * operate against the real project root, not a worktree subdirectory.
  */
 export function resolveProjectRoot(basePath: string): string {
-  const normalizedPath = basePath.replaceAll("\\", "/");
-  const seg = findWorktreeSegment(normalizedPath);
-  if (!seg) return basePath;
-
   // Layer 1: If the coordinator passed the real project root, use it.
-  // Only apply this override when basePath actually looks like a worktree path.
   if (process.env.GSD_PROJECT_ROOT) {
     return process.env.GSD_PROJECT_ROOT;
   }
 
+  const normalizedPath = basePath.replaceAll("\\", "/");
+  const seg = findWorktreeSegment(normalizedPath);
+  if (!seg) return basePath;
+
   // Candidate root via the string-slice heuristic
   const sepChar = basePath.includes("\\") ? "\\" : "/";
   const gsdMarker = `${sepChar}.gsd${sepChar}`;
@@ -173,7 +172,7 @@ function resolveProjectRootFromGitFile(worktreePath: string): string | null {
   try {
     // Walk up from the worktree path to find the .git file
     let dir = worktreePath;
-    while (true) {
+    for (let i = 0; i < 10; i++) {
       const gitPath = join(dir, ".git");
       if (existsSync(gitPath)) {
         const content = readFileSync(gitPath, "utf8").trim();
diff --git a/tests/repro-worktree-bug/verify-fix.mjs b/tests/repro-worktree-bug/verify-fix.mjs
index e40e3d4db..b437dc9a9 100644
--- a/tests/repro-worktree-bug/verify-fix.mjs
+++ b/tests/repro-worktree-bug/verify-fix.mjs
@@ -31,7 +31,7 @@ function findWorktreeSegment(normalizedPath) {
 function resolveProjectRootFromGitFile(worktreePath) {
   try {
     let dir = worktreePath;
-    while (true) {
+    for (let i = 0; i < 10; i++) {
       const gitPath = join(dir, ".git");
       if (existsSync(gitPath)) {
         const content = readFileSync(gitPath, "utf8").trim();
@@ -71,15 +71,15 @@ function normalizePathForCompare(path) {
 }
 
 function resolveProjectRoot(basePath) {
-  const normalizedPath = basePath.replaceAll("\\", "/");
-  const seg = findWorktreeSegment(normalizedPath);
-  if (!seg) return basePath;
-
   // Layer 1: If the coordinator passed the real project root, use it.
   if (process.env.GSD_PROJECT_ROOT) {
     return process.env.GSD_PROJECT_ROOT;
   }
 
+  const normalizedPath = basePath.replaceAll("\\", "/");
+  const seg = findWorktreeSegment(normalizedPath);
+  if (!seg) return basePath;
+
   const sepChar = basePath.includes("\\") ? "\\" : "/";
   const gsdMarker = `${sepChar}.gsd${sepChar}`;
   const gsdIdx = basePath.indexOf(gsdMarker);
diff --git a/tests/repro-worktree-bug/verify-integration.mjs b/tests/repro-worktree-bug/verify-integration.mjs
index 12c3c6f84..adbfc7ce9 100644
--- a/tests/repro-worktree-bug/verify-integration.mjs
+++ b/tests/repro-worktree-bug/verify-integration.mjs
@@ -41,7 +41,7 @@ function findWorktreeSegment(normalizedPath) {
 function resolveProjectRootFromGitFile(worktreePath) {
   try {
     let dir = worktreePath;
-    while (true) {
+    for (let i = 0; i < 10; i++) {
       const gitPath = join(dir, ".git");
       if (existsSync(gitPath)) {
         const content = readFileSync(gitPath, "utf8").trim();
@@ -81,14 +81,15 @@ function normalizePathForCompare(path) {
 }
 
 function resolveProjectRoot(basePath) {
-  const normalizedPath = basePath.replaceAll("\\", "/");
-  const seg = findWorktreeSegment(normalizedPath);
-  if (!seg) return basePath;
-
+  // Layer 1: If the coordinator passed the real project root, use it.
   if (process.env.GSD_PROJECT_ROOT) {
     return process.env.GSD_PROJECT_ROOT;
   }
 
+  const normalizedPath = basePath.replaceAll("\\", "/");
+  const seg = findWorktreeSegment(normalizedPath);
+  if (!seg) return basePath;
+
   const sepChar = basePath.includes("\\") ? "\\" : "/";
   const gsdMarker = `${sepChar}.gsd${sepChar}`;
   const gsdIdx = basePath.indexOf(gsdMarker);