diff --git a/src/resources/extensions/gsd/auto-worktree.ts b/src/resources/extensions/gsd/auto-worktree.ts
index e20b2a80c..33dc2c514 100644
--- a/src/resources/extensions/gsd/auto-worktree.ts
+++ b/src/resources/extensions/gsd/auto-worktree.ts
@@ -984,20 +984,32 @@ export function mergeMilestoneToMain(
   }
 
   // 10. Remove worktree directory first (must happen before branch deletion)
-  try {
-    removeWorktree(originalBasePath_, milestoneId, {
-      branch: null as unknown as string,
-      deleteBranch: false,
-    });
-  } catch {
-    // Best-effort -- worktree dir may already be gone
-  }
+  //     ONLY when a commit was actually produced — if nativeCommit returned null
+  //     (nothing to commit), tearing down the worktree would destroy source code
+  //     that was never merged (#1672).
+  if (nothingToCommit) {
+    // eslint-disable-next-line no-console
+    console.warn(
+      `[GSD] Warning: squash merge of ${milestoneBranch} produced nothing to commit. ` +
+        "Worktree and branch preserved to prevent data loss. " +
+        "Inspect the worktree manually and retry.",
+    );
+  } else {
+    try {
+      removeWorktree(originalBasePath_, milestoneId, {
+        branch: null as unknown as string,
+        deleteBranch: false,
+      });
+    } catch {
+      // Best-effort -- worktree dir may already be gone
+    }
 
-  // 11. Delete milestone branch (after worktree removal so ref is unlocked)
-  try {
-    nativeBranchDelete(originalBasePath_, milestoneBranch);
-  } catch {
-    // Best-effort
+    // 11. Delete milestone branch (after worktree removal so ref is unlocked)
+    try {
+      nativeBranchDelete(originalBasePath_, milestoneBranch);
+    } catch {
+      // Best-effort
+    }
   }
 
   // 12. Clear module state
diff --git a/src/resources/extensions/gsd/native-git-bridge.ts b/src/resources/extensions/gsd/native-git-bridge.ts
index d091da965..bd4ae4b68 100644
--- a/src/resources/extensions/gsd/native-git-bridge.ts
+++ b/src/resources/extensions/gsd/native-git-bridge.ts
@@ -835,11 +835,18 @@ export function nativeMergeSquash(basePath: string, branch: string): GitMergeRes
       encoding: "utf-8",
     });
     return { success: true, conflicts: [] };
-  } catch {
-    // Check for conflicts
+  } catch (err: unknown) {
+    // Check for conflicts — only treat as recoverable if actual conflict
+    // markers are present. Other failures (bad ref, corrupt repo, etc.)
+    // must propagate so callers don't assume the merge succeeded (#1672).
     const conflictOutput = gitExec(basePath, ["diff", "--name-only", "--diff-filter=U"], true);
     const conflicts = conflictOutput ? conflictOutput.split("\n").filter(Boolean) : [];
-    return { success: conflicts.length === 0, conflicts };
+    if (conflicts.length > 0) {
+      return { success: false, conflicts };
+    }
+    // No conflicts detected — this is a non-conflict failure; re-throw
+    // so the caller knows the merge did not succeed.
+    throw err;
   }
 }
 
diff --git a/src/resources/extensions/gsd/tests/auto-worktree-milestone-merge.test.ts b/src/resources/extensions/gsd/tests/auto-worktree-milestone-merge.test.ts
index 30fd9a7e4..218750e62 100644
--- a/src/resources/extensions/gsd/tests/auto-worktree-milestone-merge.test.ts
+++ b/src/resources/extensions/gsd/tests/auto-worktree-milestone-merge.test.ts
@@ -17,6 +17,7 @@ import {
   getAutoWorktreeOriginalBase,
 } from "../auto-worktree.ts";
 import { getSliceBranchName } from "../worktree.ts";
+import { nativeMergeSquash } from "../native-git-bridge.ts";
 
 import { createTestContext } from "./test-helpers.ts";
 
@@ -389,6 +390,90 @@ async function main(): Promise<void> {
       assertTrue(!branches.includes("milestone/M070"), "milestone branch deleted after merge");
     }
 
+    // ─── Test 8: Worktree preserved when commit is empty (#1672) ──────
+    console.log("\n=== worktree preserved when commit is empty (#1672) ===");
+    {
+      const repo = freshRepo();
+      const wtPath = createAutoWorktree(repo, "M080");
+
+      // Do NOT add any slices/changes — milestone branch is identical to main.
+      // This simulates the WSL stat-cache bug where autoCommitCurrentBranch
+      // skips commits, leaving the milestone branch identical to main.
+      const roadmap = makeRoadmap("M080", "Empty milestone", []);
+
+      // Capture console.warn to verify the warning is emitted
+      const warnings: string[] = [];
+      const origWarn = console.warn;
+      console.warn = (...args: unknown[]) => {
+        warnings.push(args.map(String).join(" "));
+      };
+
+      try {
+        mergeMilestoneToMain(repo, "M080", roadmap);
+      } finally {
+        console.warn = origWarn;
+      }
+
+      // Milestone branch must still exist (not deleted)
+      const branches = run("git branch", repo);
+      assertTrue(
+        branches.includes("milestone/M080"),
+        "milestone branch preserved when nothing was committed (#1672)",
+      );
+
+      // A warning should have been emitted
+      assertTrue(
+        warnings.some((w) => w.includes("nothing to commit")),
+        "emits warning about empty merge (#1672)",
+      );
+    }
+
+    // ─── Test 9: Worktree removed when commit succeeds (#1672) ──────
+    console.log("\n=== worktree removed when commit succeeds (#1672) ===");
+    {
+      const repo = freshRepo();
+      const wtPath = createAutoWorktree(repo, "M090");
+
+      addSliceToMilestone(repo, wtPath, "M090", "S01", "Teardown test", [
+        { file: "teardown.ts", content: "export const teardown = true;\n", message: "add teardown file" },
+      ]);
+
+      const roadmap = makeRoadmap("M090", "Teardown verification", [
+        { id: "S01", title: "Teardown test" },
+      ]);
+
+      mergeMilestoneToMain(repo, "M090", roadmap);
+
+      // Milestone branch must be deleted
+      const branches = run("git branch", repo);
+      assertTrue(
+        !branches.includes("milestone/M090"),
+        "milestone branch deleted after successful commit (#1672)",
+      );
+
+      // Worktree directory must be removed
+      const worktreeDir = join(repo, ".gsd", "worktrees", "M090");
+      assertTrue(!existsSync(worktreeDir), "worktree directory removed after successful commit (#1672)");
+
+      // File should be on main
+      assertTrue(existsSync(join(repo, "teardown.ts")), "teardown.ts merged to main (#1672)");
+    }
+
+    // ─── Test 10: nativeMergeSquash throws on non-conflict failures (#1672) ─
+    console.log("\n=== nativeMergeSquash throws on non-conflict failures (#1672) ===");
+    {
+      const repo = freshRepo();
+
+      // Merge a nonexistent branch — a non-conflict failure that must throw
+      let threw = false;
+      try {
+        nativeMergeSquash(repo, "nonexistent-branch");
+      } catch {
+        threw = true;
+      }
+      assertTrue(threw, "nativeMergeSquash throws on nonexistent branch (#1672)");
+    }
+
   } finally {
     process.chdir(savedCwd);
     for (const d of tempDirs) {