diff --git a/apps/api/package.json b/apps/api/package.json
index d06c678..d4e3938 100644
--- a/apps/api/package.json
+++ b/apps/api/package.json
@@ -66,6 +66,7 @@
     "marked-gfm-heading-id": "^4.1.3",
     "marked-highlight": "^2.2.3",
     "matrix-bot-sdk": "^0.8.0",
+    "node-pty": "^1.0.0",
     "ollama": "^0.6.3",
     "openai": "^6.17.0",
     "reflect-metadata": "^0.2.2",
diff --git a/apps/api/src/app.module.ts b/apps/api/src/app.module.ts
index 23c4cd2..945f6e4 100644
--- a/apps/api/src/app.module.ts
+++ b/apps/api/src/app.module.ts
@@ -40,6 +40,7 @@ import { CredentialsModule } from "./credentials/credentials.module";
 import { MosaicTelemetryModule } from "./mosaic-telemetry";
 import { SpeechModule } from "./speech/speech.module";
 import { DashboardModule } from "./dashboard/dashboard.module";
+import { TerminalModule } from "./terminal/terminal.module";
 import { RlsContextInterceptor } from "./common/interceptors/rls-context.interceptor";
 
 @Module({
@@ -103,6 +104,7 @@ import { RlsContextInterceptor } from "./common/interceptors/rls-context.interce
     MosaicTelemetryModule,
     SpeechModule,
     DashboardModule,
+    TerminalModule,
   ],
   controllers: [AppController, CsrfController],
   providers: [
diff --git a/apps/api/src/terminal/terminal.dto.ts b/apps/api/src/terminal/terminal.dto.ts
new file mode 100644
index 0000000..940b98a
--- /dev/null
+++ b/apps/api/src/terminal/terminal.dto.ts
@@ -0,0 +1,89 @@
+/**
+ * Terminal DTOs
+ *
+ * Data Transfer Objects for terminal WebSocket events.
+ * Validated using class-validator decorators.
+ */
+
+import {
+  IsString,
+  IsOptional,
+  IsNumber,
+  IsInt,
+  Min,
+  Max,
+  MinLength,
+  MaxLength,
+} from "class-validator";
+
+/**
+ * DTO for creating a new terminal PTY session.
+ */
+export class CreateTerminalDto {
+  @IsOptional()
+  @IsString()
+  @MaxLength(128)
+  name?: string;
+
+  @IsOptional()
+  @IsInt()
+  @Min(1)
+  @Max(500)
+  cols?: number;
+
+  @IsOptional()
+  @IsInt()
+  @Min(1)
+  @Max(200)
+  rows?: number;
+
+  @IsOptional()
+  @IsString()
+  @MaxLength(4096)
+  cwd?: string;
+}
+
+/**
+ * DTO for sending input data to a terminal PTY session.
+ */
+export class TerminalInputDto {
+  @IsString()
+  @MinLength(1)
+  @MaxLength(64)
+  sessionId!: string;
+
+  @IsString()
+  data!: string;
+}
+
+/**
+ * DTO for resizing a terminal PTY session.
+ */
+export class TerminalResizeDto {
+  @IsString()
+  @MinLength(1)
+  @MaxLength(64)
+  sessionId!: string;
+
+  @IsNumber()
+  @IsInt()
+  @Min(1)
+  @Max(500)
+  cols!: number;
+
+  @IsNumber()
+  @IsInt()
+  @Min(1)
+  @Max(200)
+  rows!: number;
+}
+
+/**
+ * DTO for closing a terminal PTY session.
+ */
+export class CloseTerminalDto {
+  @IsString()
+  @MinLength(1)
+  @MaxLength(64)
+  sessionId!: string;
+}
diff --git a/apps/api/src/terminal/terminal.gateway.spec.ts b/apps/api/src/terminal/terminal.gateway.spec.ts
new file mode 100644
index 0000000..82f54c8
--- /dev/null
+++ b/apps/api/src/terminal/terminal.gateway.spec.ts
@@ -0,0 +1,501 @@
+/**
+ * TerminalGateway Tests
+ *
+ * Unit tests for WebSocket terminal gateway:
+ * - Authentication on connection
+ * - terminal:create event handling
+ * - terminal:input event handling
+ * - terminal:resize event handling
+ * - terminal:close event handling
+ * - disconnect cleanup
+ * - Error paths
+ */
+
+import { describe, it, expect, beforeEach, vi, afterEach } from "vitest";
+import type { Socket } from "socket.io";
+import { TerminalGateway } from "./terminal.gateway";
+import { TerminalService } from "./terminal.service";
+import { AuthService } from "../auth/auth.service";
+import { PrismaService } from "../prisma/prisma.service";
+
+// ==========================================
+// Mocks
+// ==========================================
+
+// Mock node-pty globally so TerminalService doesn't fail to import
+vi.mock("node-pty", () => ({
+  spawn: vi.fn(() => ({
+    onData: vi.fn(),
+    onExit: vi.fn(),
+    write: vi.fn(),
+    resize: vi.fn(),
+    kill: vi.fn(),
+    pid: 1000,
+  })),
+}));
+
+interface AuthenticatedSocket extends Socket {
+  data: {
+    userId?: string;
+    workspaceId?: string;
+  };
+}
+
+function createMockSocket(id = "test-socket-id"): AuthenticatedSocket {
+  return {
+    id,
+    emit: vi.fn(),
+    join: vi.fn(),
+    leave: vi.fn(),
+    disconnect: vi.fn(),
+    data: {},
+    handshake: {
+      auth: { token: "valid-token" },
+      query: {},
+      headers: {},
+    },
+  } as unknown as AuthenticatedSocket;
+}
+
+function createMockAuthService() {
+  return {
+    verifySession: vi.fn().mockResolvedValue({
+      user: { id: "user-123" },
+      session: { id: "session-123" },
+    }),
+  };
+}
+
+function createMockPrismaService() {
+  return {
+    workspaceMember: {
+      findFirst: vi.fn().mockResolvedValue({
+        userId: "user-123",
+        workspaceId: "workspace-456",
+        role: "MEMBER",
+      }),
+    },
+  };
+}
+
+function createMockTerminalService() {
+  return {
+    createSession: vi.fn().mockReturnValue({
+      sessionId: "session-uuid-1",
+      name: undefined,
+      cols: 80,
+      rows: 24,
+    }),
+    writeToSession: vi.fn(),
+    resizeSession: vi.fn(),
+    closeSession: vi.fn().mockReturnValue(true),
+    closeWorkspaceSessions: vi.fn(),
+    sessionBelongsToWorkspace: vi.fn().mockReturnValue(true),
+    getWorkspaceSessionCount: vi.fn().mockReturnValue(0),
+  };
+}
+
+// ==========================================
+// Tests
+// ==========================================
+
+describe("TerminalGateway", () => {
+  let gateway: TerminalGateway;
+  let mockAuthService: ReturnType<typeof createMockAuthService>;
+  let mockPrismaService: ReturnType<typeof createMockPrismaService>;
+  let mockTerminalService: ReturnType<typeof createMockTerminalService>;
+  let mockClient: AuthenticatedSocket;
+
+  beforeEach(() => {
+    mockAuthService = createMockAuthService();
+    mockPrismaService = createMockPrismaService();
+    mockTerminalService = createMockTerminalService();
+    mockClient = createMockSocket();
+
+    gateway = new TerminalGateway(
+      mockAuthService as unknown as AuthService,
+      mockPrismaService as unknown as PrismaService,
+      mockTerminalService as unknown as TerminalService
+    );
+
+    vi.clearAllMocks();
+  });
+
+  afterEach(() => {
+    vi.clearAllMocks();
+  });
+
+  // ==========================================
+  // handleConnection (authentication)
+  // ==========================================
+  describe("handleConnection", () => {
+    it("should authenticate client and join workspace room on valid token", async () => {
+      mockAuthService.verifySession.mockResolvedValue({
+        user: { id: "user-123" },
+      });
+      mockPrismaService.workspaceMember.findFirst.mockResolvedValue({
+        userId: "user-123",
+        workspaceId: "workspace-456",
+        role: "MEMBER",
+      });
+
+      await gateway.handleConnection(mockClient);
+
+      expect(mockAuthService.verifySession).toHaveBeenCalledWith("valid-token");
+      expect(mockClient.data.userId).toBe("user-123");
+      expect(mockClient.data.workspaceId).toBe("workspace-456");
+      expect(mockClient.join).toHaveBeenCalledWith("terminal:workspace-456");
+    });
+
+    it("should disconnect and emit error if no token provided", async () => {
+      const clientNoToken = createMockSocket("no-token");
+      clientNoToken.handshake = {
+        auth: {},
+        query: {},
+        headers: {},
+      } as typeof clientNoToken.handshake;
+
+      await gateway.handleConnection(clientNoToken);
+
+      expect(clientNoToken.disconnect).toHaveBeenCalled();
+      expect(clientNoToken.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("no token") })
+      );
+    });
+
+    it("should disconnect and emit error if token is invalid", async () => {
+      mockAuthService.verifySession.mockResolvedValue(null);
+
+      await gateway.handleConnection(mockClient);
+
+      expect(mockClient.disconnect).toHaveBeenCalled();
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("invalid") })
+      );
+    });
+
+    it("should disconnect and emit error if no workspace access", async () => {
+      mockAuthService.verifySession.mockResolvedValue({ user: { id: "user-123" } });
+      mockPrismaService.workspaceMember.findFirst.mockResolvedValue(null);
+
+      await gateway.handleConnection(mockClient);
+
+      expect(mockClient.disconnect).toHaveBeenCalled();
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("workspace") })
+      );
+    });
+
+    it("should disconnect and emit error if auth throws", async () => {
+      mockAuthService.verifySession.mockRejectedValue(new Error("Auth service down"));
+
+      await gateway.handleConnection(mockClient);
+
+      expect(mockClient.disconnect).toHaveBeenCalled();
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.any(String) })
+      );
+    });
+
+    it("should extract token from handshake.query as fallback", async () => {
+      const clientQueryToken = createMockSocket("query-token-client");
+      clientQueryToken.handshake = {
+        auth: {},
+        query: { token: "query-token" },
+        headers: {},
+      } as typeof clientQueryToken.handshake;
+
+      mockAuthService.verifySession.mockResolvedValue({ user: { id: "user-123" } });
+      mockPrismaService.workspaceMember.findFirst.mockResolvedValue({
+        userId: "user-123",
+        workspaceId: "workspace-456",
+        role: "MEMBER",
+      });
+
+      await gateway.handleConnection(clientQueryToken);
+
+      expect(mockAuthService.verifySession).toHaveBeenCalledWith("query-token");
+    });
+
+    it("should extract token from Authorization header as last fallback", async () => {
+      const clientHeaderToken = createMockSocket("header-token-client");
+      clientHeaderToken.handshake = {
+        auth: {},
+        query: {},
+        headers: { authorization: "Bearer header-token" },
+      } as typeof clientHeaderToken.handshake;
+
+      mockAuthService.verifySession.mockResolvedValue({ user: { id: "user-123" } });
+      mockPrismaService.workspaceMember.findFirst.mockResolvedValue({
+        userId: "user-123",
+        workspaceId: "workspace-456",
+        role: "MEMBER",
+      });
+
+      await gateway.handleConnection(clientHeaderToken);
+
+      expect(mockAuthService.verifySession).toHaveBeenCalledWith("header-token");
+    });
+  });
+
+  // ==========================================
+  // handleDisconnect
+  // ==========================================
+  describe("handleDisconnect", () => {
+    it("should close all workspace sessions on disconnect", async () => {
+      await gateway.handleConnection(mockClient);
+      vi.clearAllMocks();
+
+      gateway.handleDisconnect(mockClient);
+
+      expect(mockTerminalService.closeWorkspaceSessions).toHaveBeenCalledWith("workspace-456");
+    });
+
+    it("should not throw for unauthenticated client disconnect", () => {
+      const unauthClient = createMockSocket("unauth-disconnect");
+
+      expect(() => gateway.handleDisconnect(unauthClient)).not.toThrow();
+      expect(mockTerminalService.closeWorkspaceSessions).not.toHaveBeenCalled();
+    });
+  });
+
+  // ==========================================
+  // handleCreate (terminal:create)
+  // ==========================================
+  describe("handleCreate", () => {
+    beforeEach(async () => {
+      mockAuthService.verifySession.mockResolvedValue({ user: { id: "user-123" } });
+      mockPrismaService.workspaceMember.findFirst.mockResolvedValue({
+        userId: "user-123",
+        workspaceId: "workspace-456",
+        role: "MEMBER",
+      });
+      await gateway.handleConnection(mockClient);
+      vi.clearAllMocks();
+    });
+
+    it("should create a PTY session and emit terminal:created", async () => {
+      mockTerminalService.createSession.mockReturnValue({
+        sessionId: "new-session-id",
+        cols: 80,
+        rows: 24,
+      });
+
+      await gateway.handleCreate(mockClient, {});
+
+      expect(mockTerminalService.createSession).toHaveBeenCalled();
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:created",
+        expect.objectContaining({ sessionId: "new-session-id" })
+      );
+    });
+
+    it("should pass cols, rows, cwd, name to service", async () => {
+      await gateway.handleCreate(mockClient, {
+        cols: 132,
+        rows: 50,
+        cwd: "/home/user",
+        name: "my-shell",
+      });
+
+      expect(mockTerminalService.createSession).toHaveBeenCalledWith(
+        expect.anything(),
+        expect.objectContaining({ cols: 132, rows: 50, cwd: "/home/user", name: "my-shell" })
+      );
+    });
+
+    it("should emit terminal:error if not authenticated", async () => {
+      const unauthClient = createMockSocket("unauth");
+
+      await gateway.handleCreate(unauthClient, {});
+
+      expect(unauthClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("authenticated") })
+      );
+    });
+
+    it("should emit terminal:error if service throws (session limit)", async () => {
+      mockTerminalService.createSession.mockImplementation(() => {
+        throw new Error("Workspace has reached the maximum of 10 concurrent terminal sessions");
+      });
+
+      await gateway.handleCreate(mockClient, {});
+
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("maximum") })
+      );
+    });
+
+    it("should emit terminal:error for invalid payload (negative cols)", async () => {
+      await gateway.handleCreate(mockClient, { cols: -1 });
+
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("Invalid payload") })
+      );
+    });
+  });
+
+  // ==========================================
+  // handleInput (terminal:input)
+  // ==========================================
+  describe("handleInput", () => {
+    beforeEach(async () => {
+      mockAuthService.verifySession.mockResolvedValue({ user: { id: "user-123" } });
+      mockPrismaService.workspaceMember.findFirst.mockResolvedValue({
+        userId: "user-123",
+        workspaceId: "workspace-456",
+        role: "MEMBER",
+      });
+      await gateway.handleConnection(mockClient);
+      vi.clearAllMocks();
+    });
+
+    it("should write data to the PTY session", async () => {
+      mockTerminalService.sessionBelongsToWorkspace.mockReturnValue(true);
+
+      await gateway.handleInput(mockClient, { sessionId: "sess-1", data: "ls\n" });
+
+      expect(mockTerminalService.writeToSession).toHaveBeenCalledWith("sess-1", "ls\n");
+    });
+
+    it("should emit terminal:error if session does not belong to workspace", async () => {
+      mockTerminalService.sessionBelongsToWorkspace.mockReturnValue(false);
+
+      await gateway.handleInput(mockClient, { sessionId: "alien-sess", data: "data" });
+
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("not found") })
+      );
+      expect(mockTerminalService.writeToSession).not.toHaveBeenCalled();
+    });
+
+    it("should emit terminal:error if not authenticated", async () => {
+      const unauthClient = createMockSocket("unauth");
+
+      await gateway.handleInput(unauthClient, { sessionId: "sess-1", data: "x" });
+
+      expect(unauthClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("authenticated") })
+      );
+    });
+
+    it("should emit terminal:error for invalid payload (missing sessionId)", async () => {
+      await gateway.handleInput(mockClient, { data: "some input" });
+
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("Invalid payload") })
+      );
+    });
+  });
+
+  // ==========================================
+  // handleResize (terminal:resize)
+  // ==========================================
+  describe("handleResize", () => {
+    beforeEach(async () => {
+      mockAuthService.verifySession.mockResolvedValue({ user: { id: "user-123" } });
+      mockPrismaService.workspaceMember.findFirst.mockResolvedValue({
+        userId: "user-123",
+        workspaceId: "workspace-456",
+        role: "MEMBER",
+      });
+      await gateway.handleConnection(mockClient);
+      vi.clearAllMocks();
+    });
+
+    it("should resize the PTY session", async () => {
+      mockTerminalService.sessionBelongsToWorkspace.mockReturnValue(true);
+
+      await gateway.handleResize(mockClient, { sessionId: "sess-1", cols: 120, rows: 40 });
+
+      expect(mockTerminalService.resizeSession).toHaveBeenCalledWith("sess-1", 120, 40);
+    });
+
+    it("should emit terminal:error if session does not belong to workspace", async () => {
+      mockTerminalService.sessionBelongsToWorkspace.mockReturnValue(false);
+
+      await gateway.handleResize(mockClient, { sessionId: "alien-sess", cols: 80, rows: 24 });
+
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("not found") })
+      );
+    });
+
+    it("should emit terminal:error for invalid payload (cols too large)", async () => {
+      await gateway.handleResize(mockClient, { sessionId: "sess-1", cols: 9999, rows: 24 });
+
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("Invalid payload") })
+      );
+    });
+  });
+
+  // ==========================================
+  // handleClose (terminal:close)
+  // ==========================================
+  describe("handleClose", () => {
+    beforeEach(async () => {
+      mockAuthService.verifySession.mockResolvedValue({ user: { id: "user-123" } });
+      mockPrismaService.workspaceMember.findFirst.mockResolvedValue({
+        userId: "user-123",
+        workspaceId: "workspace-456",
+        role: "MEMBER",
+      });
+      await gateway.handleConnection(mockClient);
+      vi.clearAllMocks();
+    });
+
+    it("should close an existing PTY session", async () => {
+      mockTerminalService.sessionBelongsToWorkspace.mockReturnValue(true);
+      mockTerminalService.closeSession.mockReturnValue(true);
+
+      await gateway.handleClose(mockClient, { sessionId: "sess-1" });
+
+      expect(mockTerminalService.closeSession).toHaveBeenCalledWith("sess-1");
+    });
+
+    it("should emit terminal:error if session does not belong to workspace", async () => {
+      mockTerminalService.sessionBelongsToWorkspace.mockReturnValue(false);
+
+      await gateway.handleClose(mockClient, { sessionId: "alien-sess" });
+
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("not found") })
+      );
+    });
+
+    it("should emit terminal:error if closeSession returns false (session gone)", async () => {
+      mockTerminalService.sessionBelongsToWorkspace.mockReturnValue(true);
+      mockTerminalService.closeSession.mockReturnValue(false);
+
+      await gateway.handleClose(mockClient, { sessionId: "gone-sess" });
+
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("not found") })
+      );
+    });
+
+    it("should emit terminal:error for invalid payload (missing sessionId)", async () => {
+      await gateway.handleClose(mockClient, {});
+
+      expect(mockClient.emit).toHaveBeenCalledWith(
+        "terminal:error",
+        expect.objectContaining({ message: expect.stringContaining("Invalid payload") })
+      );
+    });
+  });
+});
diff --git a/apps/api/src/terminal/terminal.gateway.ts b/apps/api/src/terminal/terminal.gateway.ts
new file mode 100644
index 0000000..1932f03
--- /dev/null
+++ b/apps/api/src/terminal/terminal.gateway.ts
@@ -0,0 +1,423 @@
+/**
+ * TerminalGateway
+ *
+ * WebSocket gateway for real-time PTY terminal sessions.
+ * Uses the `/terminal` namespace to keep terminal traffic separate
+ * from the main WebSocket gateway.
+ *
+ * Protocol:
+ * 1. Client connects with auth token in handshake
+ * 2. Client emits `terminal:create` to spawn a new PTY session
+ * 3. Server emits `terminal:created` with { sessionId }
+ * 4. Client emits `terminal:input` with { sessionId, data } to send keystrokes
+ * 5. Server emits `terminal:output` with { sessionId, data } for stdout/stderr
+ * 6. Client emits `terminal:resize` with { sessionId, cols, rows } on window resize
+ * 7. Client emits `terminal:close` with { sessionId } to terminate the PTY
+ * 8. Server emits `terminal:exit` with { sessionId, exitCode, signal } on PTY exit
+ *
+ * Authentication:
+ * - Same pattern as websocket.gateway.ts and speech.gateway.ts
+ * - Token extracted from handshake.auth.token / query.token / Authorization header
+ *
+ * Workspace isolation:
+ * - Clients join room `terminal:{workspaceId}` on connect
+ * - Sessions are scoped to workspace; cross-workspace access is denied
+ */
+
+import {
+  WebSocketGateway as WSGateway,
+  WebSocketServer,
+  SubscribeMessage,
+  OnGatewayConnection,
+  OnGatewayDisconnect,
+} from "@nestjs/websockets";
+import { Logger } from "@nestjs/common";
+import { Server, Socket } from "socket.io";
+import { AuthService } from "../auth/auth.service";
+import { PrismaService } from "../prisma/prisma.service";
+import { TerminalService } from "./terminal.service";
+import {
+  CreateTerminalDto,
+  TerminalInputDto,
+  TerminalResizeDto,
+  CloseTerminalDto,
+} from "./terminal.dto";
+import { validate } from "class-validator";
+import { plainToInstance } from "class-transformer";
+
+// ==========================================
+// Types
+// ==========================================
+
+interface AuthenticatedSocket extends Socket {
+  data: {
+    userId?: string;
+    workspaceId?: string;
+  };
+}
+
+// ==========================================
+// Gateway
+// ==========================================
+
+@WSGateway({
+  namespace: "/terminal",
+  cors: {
+    origin: process.env.WEB_URL ?? "http://localhost:3000",
+    credentials: true,
+  },
+})
+export class TerminalGateway implements OnGatewayConnection, OnGatewayDisconnect {
+  @WebSocketServer()
+  server!: Server;
+
+  private readonly logger = new Logger(TerminalGateway.name);
+  private readonly CONNECTION_TIMEOUT_MS = 5000;
+
+  constructor(
+    private readonly authService: AuthService,
+    private readonly prisma: PrismaService,
+    private readonly terminalService: TerminalService
+  ) {}
+
+  // ==========================================
+  // Connection lifecycle
+  // ==========================================
+
+  /**
+   * Authenticate client on connection using handshake token.
+   * Validates workspace membership and joins the workspace-scoped room.
+   */
+  async handleConnection(client: Socket): Promise<void> {
+    const authenticatedClient = client as AuthenticatedSocket;
+
+    const timeoutId = setTimeout(() => {
+      if (!authenticatedClient.data.userId) {
+        this.logger.warn(
+          `Terminal client ${authenticatedClient.id} timed out during authentication`
+        );
+        authenticatedClient.emit("terminal:error", {
+          message: "Authentication timed out.",
+        });
+        authenticatedClient.disconnect();
+      }
+    }, this.CONNECTION_TIMEOUT_MS);
+
+    try {
+      const token = this.extractTokenFromHandshake(authenticatedClient);
+
+      if (!token) {
+        this.logger.warn(`Terminal client ${authenticatedClient.id} connected without token`);
+        authenticatedClient.emit("terminal:error", {
+          message: "Authentication failed: no token provided.",
+        });
+        authenticatedClient.disconnect();
+        clearTimeout(timeoutId);
+        return;
+      }
+
+      const sessionData = await this.authService.verifySession(token);
+
+      if (!sessionData) {
+        this.logger.warn(`Terminal client ${authenticatedClient.id} has invalid token`);
+        authenticatedClient.emit("terminal:error", {
+          message: "Authentication failed: invalid or expired token.",
+        });
+        authenticatedClient.disconnect();
+        clearTimeout(timeoutId);
+        return;
+      }
+
+      const user = sessionData.user as { id: string };
+      const userId = user.id;
+
+      const workspaceMembership = await this.prisma.workspaceMember.findFirst({
+        where: { userId },
+        select: { workspaceId: true, userId: true, role: true },
+      });
+
+      if (!workspaceMembership) {
+        this.logger.warn(`Terminal user ${userId} has no workspace access`);
+        authenticatedClient.emit("terminal:error", {
+          message: "Authentication failed: no workspace access.",
+        });
+        authenticatedClient.disconnect();
+        clearTimeout(timeoutId);
+        return;
+      }
+
+      authenticatedClient.data.userId = userId;
+      authenticatedClient.data.workspaceId = workspaceMembership.workspaceId;
+
+      // Join workspace-scoped terminal room
+      const room = this.getWorkspaceRoom(workspaceMembership.workspaceId);
+      await authenticatedClient.join(room);
+
+      clearTimeout(timeoutId);
+      this.logger.log(
+        `Terminal client ${authenticatedClient.id} connected (user: ${userId}, workspace: ${workspaceMembership.workspaceId})`
+      );
+    } catch (error) {
+      clearTimeout(timeoutId);
+      this.logger.error(
+        `Authentication failed for terminal client ${authenticatedClient.id}:`,
+        error instanceof Error ? error.message : "Unknown error"
+      );
+      authenticatedClient.emit("terminal:error", {
+        message: "Authentication failed: an unexpected error occurred.",
+      });
+      authenticatedClient.disconnect();
+    }
+  }
+
+  /**
+   * Clean up all PTY sessions for this client's workspace on disconnect.
+   */
+  handleDisconnect(client: Socket): void {
+    const authenticatedClient = client as AuthenticatedSocket;
+    const { workspaceId, userId } = authenticatedClient.data;
+
+    if (workspaceId) {
+      this.terminalService.closeWorkspaceSessions(workspaceId);
+
+      const room = this.getWorkspaceRoom(workspaceId);
+      void authenticatedClient.leave(room);
+      this.logger.log(
+        `Terminal client ${authenticatedClient.id} disconnected (user: ${userId ?? "unknown"}, workspace: ${workspaceId})`
+      );
+    } else {
+      this.logger.debug(`Terminal client ${authenticatedClient.id} disconnected (unauthenticated)`);
+    }
+  }
+
+  // ==========================================
+  // Terminal events
+  // ==========================================
+
+  /**
+   * Spawn a new PTY session for the connected client.
+   *
+   * Emits `terminal:created` with { sessionId, name, cols, rows } on success.
+   * Emits `terminal:error` on failure.
+   */
+  @SubscribeMessage("terminal:create")
+  async handleCreate(client: Socket, payload: unknown): Promise<void> {
+    const authenticatedClient = client as AuthenticatedSocket;
+    const { userId, workspaceId } = authenticatedClient.data;
+
+    if (!userId || !workspaceId) {
+      authenticatedClient.emit("terminal:error", {
+        message: "Not authenticated. Connect with a valid token.",
+      });
+      return;
+    }
+
+    // Validate DTO
+    const dto = plainToInstance(CreateTerminalDto, payload ?? {});
+    const errors = await validate(dto);
+    if (errors.length > 0) {
+      const messages = errors.map((e) => Object.values(e.constraints ?? {}).join(", ")).join("; ");
+      authenticatedClient.emit("terminal:error", {
+        message: `Invalid payload: ${messages}`,
+      });
+      return;
+    }
+
+    try {
+      const result = this.terminalService.createSession(authenticatedClient, {
+        workspaceId,
+        socketId: authenticatedClient.id,
+        ...(dto.name !== undefined ? { name: dto.name } : {}),
+        ...(dto.cols !== undefined ? { cols: dto.cols } : {}),
+        ...(dto.rows !== undefined ? { rows: dto.rows } : {}),
+        ...(dto.cwd !== undefined ? { cwd: dto.cwd } : {}),
+      });
+
+      authenticatedClient.emit("terminal:created", {
+        sessionId: result.sessionId,
+        name: result.name,
+        cols: result.cols,
+        rows: result.rows,
+      });
+
+      this.logger.log(
+        `Terminal session ${result.sessionId} created for client ${authenticatedClient.id} (workspace: ${workspaceId})`
+      );
+    } catch (error) {
+      const message = error instanceof Error ? error.message : String(error);
+      this.logger.error(
+        `Failed to create terminal session for client ${authenticatedClient.id}: ${message}`
+      );
+      authenticatedClient.emit("terminal:error", { message });
+    }
+  }
+
+  /**
+   * Write input data to an existing PTY session.
+   *
+   * Emits `terminal:error` if the session is not found or unauthorized.
+   */
+  @SubscribeMessage("terminal:input")
+  async handleInput(client: Socket, payload: unknown): Promise<void> {
+    const authenticatedClient = client as AuthenticatedSocket;
+    const { userId, workspaceId } = authenticatedClient.data;
+
+    if (!userId || !workspaceId) {
+      authenticatedClient.emit("terminal:error", {
+        message: "Not authenticated. Connect with a valid token.",
+      });
+      return;
+    }
+
+    const dto = plainToInstance(TerminalInputDto, payload ?? {});
+    const errors = await validate(dto);
+    if (errors.length > 0) {
+      const messages = errors.map((e) => Object.values(e.constraints ?? {}).join(", ")).join("; ");
+      authenticatedClient.emit("terminal:error", {
+        message: `Invalid payload: ${messages}`,
+      });
+      return;
+    }
+
+    if (!this.terminalService.sessionBelongsToWorkspace(dto.sessionId, workspaceId)) {
+      authenticatedClient.emit("terminal:error", {
+        message: `Terminal session ${dto.sessionId} not found or unauthorized.`,
+      });
+      return;
+    }
+
+    try {
+      this.terminalService.writeToSession(dto.sessionId, dto.data);
+    } catch (error) {
+      const message = error instanceof Error ? error.message : String(error);
+      this.logger.warn(`Failed to write to terminal session ${dto.sessionId}: ${message}`);
+      authenticatedClient.emit("terminal:error", { message });
+    }
+  }
+
+  /**
+   * Resize an existing PTY session.
+   *
+   * Emits `terminal:error` if the session is not found or unauthorized.
+   */
+  @SubscribeMessage("terminal:resize")
+  async handleResize(client: Socket, payload: unknown): Promise<void> {
+    const authenticatedClient = client as AuthenticatedSocket;
+    const { userId, workspaceId } = authenticatedClient.data;
+
+    if (!userId || !workspaceId) {
+      authenticatedClient.emit("terminal:error", {
+        message: "Not authenticated. Connect with a valid token.",
+      });
+      return;
+    }
+
+    const dto = plainToInstance(TerminalResizeDto, payload ?? {});
+    const errors = await validate(dto);
+    if (errors.length > 0) {
+      const messages = errors.map((e) => Object.values(e.constraints ?? {}).join(", ")).join("; ");
+      authenticatedClient.emit("terminal:error", {
+        message: `Invalid payload: ${messages}`,
+      });
+      return;
+    }
+
+    if (!this.terminalService.sessionBelongsToWorkspace(dto.sessionId, workspaceId)) {
+      authenticatedClient.emit("terminal:error", {
+        message: `Terminal session ${dto.sessionId} not found or unauthorized.`,
+      });
+      return;
+    }
+
+    try {
+      this.terminalService.resizeSession(dto.sessionId, dto.cols, dto.rows);
+    } catch (error) {
+      const message = error instanceof Error ? error.message : String(error);
+      this.logger.warn(`Failed to resize terminal session ${dto.sessionId}: ${message}`);
+      authenticatedClient.emit("terminal:error", { message });
+    }
+  }
+
+  /**
+   * Kill and close an existing PTY session.
+   *
+   * Emits `terminal:error` if the session is not found or unauthorized.
+   */
+  @SubscribeMessage("terminal:close")
+  async handleClose(client: Socket, payload: unknown): Promise<void> {
+    const authenticatedClient = client as AuthenticatedSocket;
+    const { userId, workspaceId } = authenticatedClient.data;
+
+    if (!userId || !workspaceId) {
+      authenticatedClient.emit("terminal:error", {
+        message: "Not authenticated. Connect with a valid token.",
+      });
+      return;
+    }
+
+    const dto = plainToInstance(CloseTerminalDto, payload ?? {});
+    const errors = await validate(dto);
+    if (errors.length > 0) {
+      const messages = errors.map((e) => Object.values(e.constraints ?? {}).join(", ")).join("; ");
+      authenticatedClient.emit("terminal:error", {
+        message: `Invalid payload: ${messages}`,
+      });
+      return;
+    }
+
+    if (!this.terminalService.sessionBelongsToWorkspace(dto.sessionId, workspaceId)) {
+      authenticatedClient.emit("terminal:error", {
+        message: `Terminal session ${dto.sessionId} not found or unauthorized.`,
+      });
+      return;
+    }
+
+    const closed = this.terminalService.closeSession(dto.sessionId);
+    if (!closed) {
+      authenticatedClient.emit("terminal:error", {
+        message: `Terminal session ${dto.sessionId} not found.`,
+      });
+      return;
+    }
+
+    this.logger.log(`Terminal session ${dto.sessionId} closed by client ${authenticatedClient.id}`);
+  }
+
+  // ==========================================
+  // Private helpers
+  // ==========================================
+
+  /**
+   * Extract authentication token from Socket.IO handshake.
+   * Checks auth.token, query.token, and Authorization header (in that order).
+   */
+  private extractTokenFromHandshake(client: Socket): string | undefined {
+    const authToken = client.handshake.auth.token as unknown;
+    if (typeof authToken === "string" && authToken.length > 0) {
+      return authToken;
+    }
+
+    const queryToken = client.handshake.query.token as unknown;
+    if (typeof queryToken === "string" && queryToken.length > 0) {
+      return queryToken;
+    }
+
+    const authHeader = client.handshake.headers.authorization as unknown;
+    if (typeof authHeader === "string") {
+      const parts = authHeader.split(" ");
+      const [type, token] = parts;
+      if (type === "Bearer" && token) {
+        return token;
+      }
+    }
+
+    return undefined;
+  }
+
+  /**
+   * Get the workspace-scoped room name for the terminal namespace.
+   */
+  private getWorkspaceRoom(workspaceId: string): string {
+    return `terminal:${workspaceId}`;
+  }
+}
diff --git a/apps/api/src/terminal/terminal.module.ts b/apps/api/src/terminal/terminal.module.ts
new file mode 100644
index 0000000..8ddb34c
--- /dev/null
+++ b/apps/api/src/terminal/terminal.module.ts
@@ -0,0 +1,28 @@
+/**
+ * TerminalModule
+ *
+ * NestJS module for WebSocket-based terminal sessions via node-pty.
+ *
+ * Imports:
+ * - AuthModule for WebSocket authentication (verifySession)
+ * - PrismaModule for workspace membership queries
+ *
+ * Providers:
+ * - TerminalService: manages PTY session lifecycle
+ * - TerminalGateway: WebSocket gateway on /terminal namespace
+ *
+ * The module does not export providers; terminal sessions are
+ * self-contained within this module.
+ */
+
+import { Module } from "@nestjs/common";
+import { TerminalGateway } from "./terminal.gateway";
+import { TerminalService } from "./terminal.service";
+import { AuthModule } from "../auth/auth.module";
+import { PrismaModule } from "../prisma/prisma.module";
+
+@Module({
+  imports: [AuthModule, PrismaModule],
+  providers: [TerminalGateway, TerminalService],
+})
+export class TerminalModule {}
diff --git a/apps/api/src/terminal/terminal.service.spec.ts b/apps/api/src/terminal/terminal.service.spec.ts
new file mode 100644
index 0000000..8a93dcf
--- /dev/null
+++ b/apps/api/src/terminal/terminal.service.spec.ts
@@ -0,0 +1,337 @@
+/**
+ * TerminalService Tests
+ *
+ * Unit tests for PTY session management: create, write, resize, close,
+ * workspace cleanup, and access control.
+ */
+
+import { describe, it, expect, beforeEach, vi, afterEach } from "vitest";
+import type { Socket } from "socket.io";
+import { TerminalService, MAX_SESSIONS_PER_WORKSPACE } from "./terminal.service";
+
+// ==========================================
+// Mocks
+// ==========================================
+
+// Mock node-pty before importing service
+const mockPtyProcess = {
+  onData: vi.fn(),
+  onExit: vi.fn(),
+  write: vi.fn(),
+  resize: vi.fn(),
+  kill: vi.fn(),
+  pid: 12345,
+};
+
+vi.mock("node-pty", () => ({
+  spawn: vi.fn(() => mockPtyProcess),
+}));
+
+function createMockSocket(id = "socket-1"): Socket {
+  return {
+    id,
+    emit: vi.fn(),
+    join: vi.fn(),
+    leave: vi.fn(),
+    disconnect: vi.fn(),
+    data: {},
+  } as unknown as Socket;
+}
+
+// ==========================================
+// Tests
+// ==========================================
+
+describe("TerminalService", () => {
+  let service: TerminalService;
+  let mockSocket: Socket;
+
+  beforeEach(() => {
+    vi.clearAllMocks();
+    // Reset mock implementations
+    mockPtyProcess.onData.mockImplementation((_cb: (data: string) => void) => {});
+    mockPtyProcess.onExit.mockImplementation(
+      (_cb: (e: { exitCode: number; signal?: number }) => void) => {}
+    );
+    service = new TerminalService();
+    mockSocket = createMockSocket();
+  });
+
+  afterEach(() => {
+    vi.clearAllMocks();
+  });
+
+  // ==========================================
+  // createSession
+  // ==========================================
+  describe("createSession", () => {
+    it("should create a PTY session and return sessionId", () => {
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+      });
+
+      expect(result.sessionId).toBeDefined();
+      expect(typeof result.sessionId).toBe("string");
+      expect(result.cols).toBe(80);
+      expect(result.rows).toBe(24);
+    });
+
+    it("should use provided cols and rows", () => {
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+        cols: 120,
+        rows: 40,
+      });
+
+      expect(result.cols).toBe(120);
+      expect(result.rows).toBe(40);
+    });
+
+    it("should return the provided session name", () => {
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+        name: "my-terminal",
+      });
+
+      expect(result.name).toBe("my-terminal");
+    });
+
+    it("should wire PTY onData to emit terminal:output", () => {
+      let dataCallback: ((data: string) => void) | undefined;
+      mockPtyProcess.onData.mockImplementation((cb: (data: string) => void) => {
+        dataCallback = cb;
+      });
+
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+      });
+
+      expect(dataCallback).toBeDefined();
+      dataCallback!("hello world");
+
+      expect(mockSocket.emit).toHaveBeenCalledWith("terminal:output", {
+        sessionId: result.sessionId,
+        data: "hello world",
+      });
+    });
+
+    it("should wire PTY onExit to emit terminal:exit and cleanup", () => {
+      let exitCallback: ((e: { exitCode: number; signal?: number }) => void) | undefined;
+      mockPtyProcess.onExit.mockImplementation(
+        (cb: (e: { exitCode: number; signal?: number }) => void) => {
+          exitCallback = cb;
+        }
+      );
+
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+      });
+
+      expect(exitCallback).toBeDefined();
+      exitCallback!({ exitCode: 0 });
+
+      expect(mockSocket.emit).toHaveBeenCalledWith("terminal:exit", {
+        sessionId: result.sessionId,
+        exitCode: 0,
+        signal: undefined,
+      });
+
+      // Session should be cleaned up
+      expect(service.sessionBelongsToWorkspace(result.sessionId, "ws-1")).toBe(false);
+      expect(service.getWorkspaceSessionCount("ws-1")).toBe(0);
+    });
+
+    it("should throw when workspace session limit is reached", () => {
+      const limit = MAX_SESSIONS_PER_WORKSPACE;
+
+      for (let i = 0; i < limit; i++) {
+        service.createSession(createMockSocket(`socket-${String(i)}`), {
+          workspaceId: "ws-limit",
+          socketId: `socket-${String(i)}`,
+        });
+      }
+
+      expect(() =>
+        service.createSession(createMockSocket("socket-overflow"), {
+          workspaceId: "ws-limit",
+          socketId: "socket-overflow",
+        })
+      ).toThrow(/maximum/i);
+    });
+
+    it("should allow sessions in different workspaces independently", () => {
+      service.createSession(mockSocket, { workspaceId: "ws-a", socketId: "s1" });
+      service.createSession(createMockSocket("s2"), { workspaceId: "ws-b", socketId: "s2" });
+
+      expect(service.getWorkspaceSessionCount("ws-a")).toBe(1);
+      expect(service.getWorkspaceSessionCount("ws-b")).toBe(1);
+    });
+  });
+
+  // ==========================================
+  // writeToSession
+  // ==========================================
+  describe("writeToSession", () => {
+    it("should write data to PTY", () => {
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+      });
+
+      service.writeToSession(result.sessionId, "ls -la\n");
+
+      expect(mockPtyProcess.write).toHaveBeenCalledWith("ls -la\n");
+    });
+
+    it("should throw for unknown sessionId", () => {
+      expect(() => service.writeToSession("nonexistent-id", "data")).toThrow(/not found/i);
+    });
+  });
+
+  // ==========================================
+  // resizeSession
+  // ==========================================
+  describe("resizeSession", () => {
+    it("should resize PTY dimensions", () => {
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+      });
+
+      service.resizeSession(result.sessionId, 132, 50);
+
+      expect(mockPtyProcess.resize).toHaveBeenCalledWith(132, 50);
+    });
+
+    it("should throw for unknown sessionId", () => {
+      expect(() => service.resizeSession("nonexistent-id", 80, 24)).toThrow(/not found/i);
+    });
+  });
+
+  // ==========================================
+  // closeSession
+  // ==========================================
+  describe("closeSession", () => {
+    it("should kill PTY and return true for existing session", () => {
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+      });
+
+      const closed = service.closeSession(result.sessionId);
+
+      expect(closed).toBe(true);
+      expect(mockPtyProcess.kill).toHaveBeenCalled();
+      expect(service.sessionBelongsToWorkspace(result.sessionId, "ws-1")).toBe(false);
+    });
+
+    it("should return false for nonexistent sessionId", () => {
+      const closed = service.closeSession("does-not-exist");
+      expect(closed).toBe(false);
+    });
+
+    it("should clean up workspace tracking after close", () => {
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+      });
+
+      expect(service.getWorkspaceSessionCount("ws-1")).toBe(1);
+      service.closeSession(result.sessionId);
+      expect(service.getWorkspaceSessionCount("ws-1")).toBe(0);
+    });
+
+    it("should not throw if PTY kill throws", () => {
+      mockPtyProcess.kill.mockImplementationOnce(() => {
+        throw new Error("PTY already dead");
+      });
+
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+      });
+
+      expect(() => service.closeSession(result.sessionId)).not.toThrow();
+    });
+  });
+
+  // ==========================================
+  // closeWorkspaceSessions
+  // ==========================================
+  describe("closeWorkspaceSessions", () => {
+    it("should kill all sessions for a workspace", () => {
+      service.createSession(mockSocket, { workspaceId: "ws-1", socketId: "s1" });
+      service.createSession(createMockSocket("s2"), { workspaceId: "ws-1", socketId: "s2" });
+
+      expect(service.getWorkspaceSessionCount("ws-1")).toBe(2);
+
+      service.closeWorkspaceSessions("ws-1");
+
+      expect(service.getWorkspaceSessionCount("ws-1")).toBe(0);
+      expect(mockPtyProcess.kill).toHaveBeenCalledTimes(2);
+    });
+
+    it("should not affect sessions in other workspaces", () => {
+      service.createSession(mockSocket, { workspaceId: "ws-1", socketId: "s1" });
+      service.createSession(createMockSocket("s2"), { workspaceId: "ws-2", socketId: "s2" });
+
+      service.closeWorkspaceSessions("ws-1");
+
+      expect(service.getWorkspaceSessionCount("ws-1")).toBe(0);
+      expect(service.getWorkspaceSessionCount("ws-2")).toBe(1);
+    });
+
+    it("should not throw for workspaces with no sessions", () => {
+      expect(() => service.closeWorkspaceSessions("ws-nonexistent")).not.toThrow();
+    });
+  });
+
+  // ==========================================
+  // sessionBelongsToWorkspace
+  // ==========================================
+  describe("sessionBelongsToWorkspace", () => {
+    it("should return true for a session belonging to the workspace", () => {
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+      });
+
+      expect(service.sessionBelongsToWorkspace(result.sessionId, "ws-1")).toBe(true);
+    });
+
+    it("should return false for a session in a different workspace", () => {
+      const result = service.createSession(mockSocket, {
+        workspaceId: "ws-1",
+        socketId: "socket-1",
+      });
+
+      expect(service.sessionBelongsToWorkspace(result.sessionId, "ws-2")).toBe(false);
+    });
+
+    it("should return false for a nonexistent sessionId", () => {
+      expect(service.sessionBelongsToWorkspace("no-such-id", "ws-1")).toBe(false);
+    });
+  });
+
+  // ==========================================
+  // getWorkspaceSessionCount
+  // ==========================================
+  describe("getWorkspaceSessionCount", () => {
+    it("should return 0 for workspace with no sessions", () => {
+      expect(service.getWorkspaceSessionCount("empty-ws")).toBe(0);
+    });
+
+    it("should track session count accurately", () => {
+      service.createSession(mockSocket, { workspaceId: "ws-count", socketId: "s1" });
+      expect(service.getWorkspaceSessionCount("ws-count")).toBe(1);
+
+      service.createSession(createMockSocket("s2"), { workspaceId: "ws-count", socketId: "s2" });
+      expect(service.getWorkspaceSessionCount("ws-count")).toBe(2);
+    });
+  });
+});
diff --git a/apps/api/src/terminal/terminal.service.ts b/apps/api/src/terminal/terminal.service.ts
new file mode 100644
index 0000000..8025572
--- /dev/null
+++ b/apps/api/src/terminal/terminal.service.ts
@@ -0,0 +1,251 @@
+/**
+ * TerminalService
+ *
+ * Manages PTY (pseudo-terminal) sessions for workspace users.
+ * Spawns real shell processes via node-pty, streams I/O to connected sockets,
+ * and enforces per-workspace session limits.
+ *
+ * Session lifecycle:
+ * - createSession: spawn a new PTY, wire onData/onExit, return sessionId
+ * - writeToSession: send input data to PTY stdin
+ * - resizeSession: resize PTY dimensions (cols x rows)
+ * - closeSession: kill PTY process, emit terminal:exit, cleanup
+ * - closeWorkspaceSessions: kill all sessions for a workspace (on disconnect)
+ */
+
+import { Injectable, Logger } from "@nestjs/common";
+import * as pty from "node-pty";
+import type { Socket } from "socket.io";
+import { randomUUID } from "node:crypto";
+
+/** Maximum concurrent PTY sessions per workspace */
+export const MAX_SESSIONS_PER_WORKSPACE = parseInt(
+  process.env.TERMINAL_MAX_SESSIONS_PER_WORKSPACE ?? "10",
+  10
+);
+
+/** Default PTY dimensions */
+const DEFAULT_COLS = 80;
+const DEFAULT_ROWS = 24;
+
+export interface TerminalSession {
+  sessionId: string;
+  workspaceId: string;
+  pty: pty.IPty;
+  name?: string;
+  createdAt: Date;
+}
+
+export interface CreateSessionOptions {
+  name?: string;
+  cols?: number;
+  rows?: number;
+  cwd?: string;
+  workspaceId: string;
+  socketId: string;
+}
+
+export interface SessionCreatedResult {
+  sessionId: string;
+  name?: string;
+  cols: number;
+  rows: number;
+}
+
+@Injectable()
+export class TerminalService {
+  private readonly logger = new Logger(TerminalService.name);
+
+  /**
+   * Map of sessionId -> TerminalSession
+   */
+  private readonly sessions = new Map<string, TerminalSession>();
+
+  /**
+   * Map of workspaceId -> Set<sessionId> for fast per-workspace lookups
+   */
+  private readonly workspaceSessions = new Map<string, Set<string>>();
+
+  /**
+   * Create a new PTY session for the given workspace and socket.
+   * Wires PTY onData -> emit terminal:output and onExit -> emit terminal:exit.
+   *
+   * @throws Error if workspace session limit is exceeded
+   */
+  createSession(socket: Socket, options: CreateSessionOptions): SessionCreatedResult {
+    const { workspaceId, name, cwd, socketId } = options;
+    const cols = options.cols ?? DEFAULT_COLS;
+    const rows = options.rows ?? DEFAULT_ROWS;
+
+    // Enforce per-workspace session limit
+    const workspaceSessionIds = this.workspaceSessions.get(workspaceId) ?? new Set<string>();
+    if (workspaceSessionIds.size >= MAX_SESSIONS_PER_WORKSPACE) {
+      throw new Error(
+        `Workspace ${workspaceId} has reached the maximum of ${String(MAX_SESSIONS_PER_WORKSPACE)} concurrent terminal sessions`
+      );
+    }
+
+    const sessionId = randomUUID();
+    const shell = process.env.SHELL ?? "/bin/bash";
+
+    this.logger.log(
+      `Spawning PTY session ${sessionId} for workspace ${workspaceId} (socket: ${socketId}, shell: ${shell}, ${String(cols)}x${String(rows)})`
+    );
+
+    const ptyProcess = pty.spawn(shell, [], {
+      name: "xterm-256color",
+      cols,
+      rows,
+      cwd: cwd ?? process.cwd(),
+      env: process.env as Record<string, string>,
+    });
+
+    const session: TerminalSession = {
+      sessionId,
+      workspaceId,
+      pty: ptyProcess,
+      ...(name !== undefined ? { name } : {}),
+      createdAt: new Date(),
+    };
+
+    this.sessions.set(sessionId, session);
+
+    // Track by workspace
+    if (!this.workspaceSessions.has(workspaceId)) {
+      this.workspaceSessions.set(workspaceId, new Set());
+    }
+    const wsSet = this.workspaceSessions.get(workspaceId);
+    if (wsSet) {
+      wsSet.add(sessionId);
+    }
+
+    // Wire PTY stdout/stderr -> terminal:output
+    ptyProcess.onData((data: string) => {
+      socket.emit("terminal:output", { sessionId, data });
+    });
+
+    // Wire PTY exit -> terminal:exit, cleanup
+    ptyProcess.onExit(({ exitCode, signal }) => {
+      this.logger.log(
+        `PTY session ${sessionId} exited (exitCode: ${String(exitCode)}, signal: ${String(signal ?? "none")})`
+      );
+      socket.emit("terminal:exit", { sessionId, exitCode, signal });
+      this.cleanupSession(sessionId, workspaceId);
+    });
+
+    return { sessionId, ...(name !== undefined ? { name } : {}), cols, rows };
+  }
+
+  /**
+   * Write input data to a PTY session's stdin.
+   *
+   * @throws Error if session not found
+   */
+  writeToSession(sessionId: string, data: string): void {
+    const session = this.sessions.get(sessionId);
+    if (!session) {
+      throw new Error(`Terminal session ${sessionId} not found`);
+    }
+    session.pty.write(data);
+  }
+
+  /**
+   * Resize a PTY session's terminal dimensions.
+   *
+   * @throws Error if session not found
+   */
+  resizeSession(sessionId: string, cols: number, rows: number): void {
+    const session = this.sessions.get(sessionId);
+    if (!session) {
+      throw new Error(`Terminal session ${sessionId} not found`);
+    }
+    session.pty.resize(cols, rows);
+    this.logger.debug(`Resized PTY session ${sessionId} to ${String(cols)}x${String(rows)}`);
+  }
+
+  /**
+   * Kill and clean up a specific PTY session.
+   * Returns true if the session existed, false if it was already gone.
+   */
+  closeSession(sessionId: string): boolean {
+    const session = this.sessions.get(sessionId);
+    if (!session) {
+      return false;
+    }
+
+    this.logger.log(`Closing PTY session ${sessionId} for workspace ${session.workspaceId}`);
+
+    try {
+      session.pty.kill();
+    } catch (error) {
+      this.logger.warn(
+        `Error killing PTY session ${sessionId}: ${error instanceof Error ? error.message : String(error)}`
+      );
+    }
+
+    this.cleanupSession(sessionId, session.workspaceId);
+    return true;
+  }
+
+  /**
+   * Close all PTY sessions for a workspace (called on client disconnect).
+   */
+  closeWorkspaceSessions(workspaceId: string): void {
+    const sessionIds = this.workspaceSessions.get(workspaceId);
+    if (!sessionIds || sessionIds.size === 0) {
+      return;
+    }
+
+    this.logger.log(
+      `Closing ${String(sessionIds.size)} PTY session(s) for workspace ${workspaceId} (disconnect)`
+    );
+
+    // Copy to array to avoid mutation during iteration
+    const ids = Array.from(sessionIds);
+    for (const sessionId of ids) {
+      const session = this.sessions.get(sessionId);
+      if (session) {
+        try {
+          session.pty.kill();
+        } catch (error) {
+          this.logger.warn(
+            `Error killing PTY session ${sessionId} on disconnect: ${error instanceof Error ? error.message : String(error)}`
+          );
+        }
+        this.cleanupSession(sessionId, workspaceId);
+      }
+    }
+  }
+
+  /**
+   * Get the number of active sessions for a workspace.
+   */
+  getWorkspaceSessionCount(workspaceId: string): number {
+    return this.workspaceSessions.get(workspaceId)?.size ?? 0;
+  }
+
+  /**
+   * Check if a session belongs to a given workspace.
+   * Used for access control in the gateway.
+   */
+  sessionBelongsToWorkspace(sessionId: string, workspaceId: string): boolean {
+    const session = this.sessions.get(sessionId);
+    return session?.workspaceId === workspaceId;
+  }
+
+  /**
+   * Internal cleanup: remove session from tracking maps.
+   * Does NOT kill the PTY (caller is responsible).
+   */
+  private cleanupSession(sessionId: string, workspaceId: string): void {
+    this.sessions.delete(sessionId);
+
+    const workspaceSessionIds = this.workspaceSessions.get(workspaceId);
+    if (workspaceSessionIds) {
+      workspaceSessionIds.delete(sessionId);
+      if (workspaceSessionIds.size === 0) {
+        this.workspaceSessions.delete(workspaceId);
+      }
+    }
+  }
+}
diff --git a/pnpm-workspace.yaml b/pnpm-workspace.yaml
index a70f796..4f51b83 100644
--- a/pnpm-workspace.yaml
+++ b/pnpm-workspace.yaml
@@ -3,13 +3,14 @@ packages:
   - packages/*
 
 ignoredBuiltDependencies:
-  - '@nestjs/core'
-  - '@swc/core'
+  - "@nestjs/core"
+  - "@swc/core"
   - better-sqlite3
   - esbuild
   - sharp
 
 onlyBuiltDependencies:
-  - '@prisma/client'
-  - '@prisma/engines'
+  - "@prisma/client"
+  - "@prisma/engines"
   - prisma
+  - node-pty