diff --git a/src/resources/extensions/gsd/state.ts b/src/resources/extensions/gsd/state.ts
index 2d84782c5..e6ff91895 100644
--- a/src/resources/extensions/gsd/state.ts
+++ b/src/resources/extensions/gsd/state.ts
@@ -90,18 +90,13 @@ export function isMilestoneComplete(roadmap: Roadmap): boolean {
 }
 
 /**
- * Check whether a VALIDATION file's verdict is terminal (pass or needs-attention).
- * A non-terminal verdict (needs-remediation) means validation must re-run
- * after remediation slices are executed.
+ * Check whether a VALIDATION file's verdict is terminal.
+ * Any successfully extracted verdict (pass, needs-attention, needs-remediation,
+ * fail, etc.) means validation completed. Only return false when no verdict
+ * could be parsed — i.e. extractVerdict() returns undefined (#2769).
  */
 export function isValidationTerminal(validationContent: string): boolean {
-  const v = extractVerdict(validationContent);
-  if (!v) return false;
-  // 'pass' and 'needs-attention' are always terminal.
-  // 'needs-remediation' is treated as terminal to prevent infinite loops
-  // when no remediation slices exist in the roadmap (#832). The validation
-  // report is preserved on disk for manual review.
-  return v === 'pass' || v === 'needs-attention' || v === 'needs-remediation';
+  return extractVerdict(validationContent) != null;
 }
 
 // ─── State Derivation ──────────────────────────────────────────────────────
diff --git a/src/resources/extensions/gsd/tests/validate-milestone.test.ts b/src/resources/extensions/gsd/tests/validate-milestone.test.ts
index 79fe1c35f..9647ddb46 100644
--- a/src/resources/extensions/gsd/tests/validate-milestone.test.ts
+++ b/src/resources/extensions/gsd/tests/validate-milestone.test.ts
@@ -110,6 +110,16 @@ test("isValidationTerminal returns true for verdict: passed (#1429)", () => {
   assert.equal(isValidationTerminal(content), true);
 });
 
+test("isValidationTerminal returns true for verdict: fail (#2769)", () => {
+  const content = "---\nverdict: fail\nremediation_round: 1\n---\n\n# Validation";
+  assert.equal(isValidationTerminal(content), true);
+});
+
+test("isValidationTerminal returns true for any arbitrary verdict string (#2769)", () => {
+  const content = "---\nverdict: custom-verdict\nremediation_round: 0\n---\n\n# Validation";
+  assert.equal(isValidationTerminal(content), true);
+});
+
 test("isValidationTerminal returns false for missing frontmatter", () => {
   const content = "# Validation\nNo frontmatter here.";
   assert.equal(isValidationTerminal(content), false);
@@ -327,14 +337,14 @@ test("verifyExpectedArtifact rejects VALIDATION with missing verdict field", ()
   }
 });
 
-test("verifyExpectedArtifact rejects VALIDATION with unrecognized verdict", () => {
+test("verifyExpectedArtifact accepts VALIDATION with any extracted verdict", () => {
   const base = makeTmpBase();
   try {
     writeValidation(base, "M001", "---\nverdict: unknown-value\nremediation_round: 0\n---\n\n# Validation");
     clearPathCache();
     clearParseCache();
     const result = verifyExpectedArtifact("validate-milestone", "M001", base);
-    assert.equal(result, false, "VALIDATION with unrecognized verdict should fail verification");
+    assert.equal(result, true, "VALIDATION with any extracted verdict should pass verification");
   } finally {
     cleanup(base);
   }