diff --git a/apps/web/src/components/terminal/TerminalPanel.test.tsx b/apps/web/src/components/terminal/TerminalPanel.test.tsx
index 3ee9d83..7fc5902 100644
--- a/apps/web/src/components/terminal/TerminalPanel.test.tsx
+++ b/apps/web/src/components/terminal/TerminalPanel.test.tsx
@@ -1,6 +1,6 @@
 /**
  * @file TerminalPanel.test.tsx
- * @description Unit tests for the TerminalPanel component
+ * @description Unit tests for the TerminalPanel component — multi-tab scenarios
  */
 
 import { describe, it, expect, vi, beforeEach } from "vitest";
@@ -13,27 +13,93 @@ import type { ReactElement } from "react";
 
 // Mock XTerminal to avoid xterm.js DOM dependencies in panel tests
 vi.mock("./XTerminal", () => ({
-  XTerminal: vi.fn(({ token, isVisible }: { token: string; isVisible: boolean }) => (
-    <div
-      data-testid="mock-xterminal"
-      data-token={token}
-      data-visible={isVisible ? "true" : "false"}
-    />
-  )),
+  XTerminal: vi.fn(
+    ({
+      sessionId,
+      isVisible,
+      sessionStatus,
+    }: {
+      sessionId: string;
+      isVisible: boolean;
+      sessionStatus: string;
+    }) => (
+      <div
+        data-testid="mock-xterminal"
+        data-session-id={sessionId}
+        data-visible={isVisible ? "true" : "false"}
+        data-status={sessionStatus}
+      />
+    )
+  ),
+}));
+
+// Mock useTerminalSessions
+const mockCreateSession = vi.fn();
+const mockCloseSession = vi.fn();
+const mockRenameSession = vi.fn();
+const mockSetActiveSession = vi.fn();
+const mockSendInput = vi.fn();
+const mockResize = vi.fn();
+const mockRegisterOutputCallback = vi.fn(() => vi.fn());
+
+// Mutable state for the mock — tests update these
+let mockSessions = new Map<
+  string,
+  {
+    sessionId: string;
+    name: string;
+    status: "active" | "exited";
+    exitCode?: number;
+  }
+>();
+let mockActiveSessionId: string | null = null;
+let mockIsConnected = false;
+let mockConnectionError: string | null = null;
+
+vi.mock("@/hooks/useTerminalSessions", () => ({
+  useTerminalSessions: vi.fn(() => ({
+    sessions: mockSessions,
+    activeSessionId: mockActiveSessionId,
+    isConnected: mockIsConnected,
+    connectionError: mockConnectionError,
+    createSession: mockCreateSession,
+    closeSession: mockCloseSession,
+    renameSession: mockRenameSession,
+    setActiveSession: mockSetActiveSession,
+    sendInput: mockSendInput,
+    resize: mockResize,
+    registerOutputCallback: mockRegisterOutputCallback,
+  })),
 }));
 
 import { TerminalPanel } from "./TerminalPanel";
 
+// ==========================================
+// Helpers
+// ==========================================
+
+function setTwoSessions(): void {
+  mockSessions = new Map([
+    ["session-1", { sessionId: "session-1", name: "Terminal 1", status: "active" }],
+    ["session-2", { sessionId: "session-2", name: "Terminal 2", status: "active" }],
+  ]);
+  mockActiveSessionId = "session-1";
+}
+
 // ==========================================
 // Tests
 // ==========================================
 
 describe("TerminalPanel", () => {
   const onClose = vi.fn();
-  const onTabChange = vi.fn();
 
   beforeEach(() => {
     vi.clearAllMocks();
+    mockSessions = new Map();
+    mockActiveSessionId = null;
+    mockIsConnected = false;
+    mockConnectionError = null;
+    mockRegisterOutputCallback.mockReturnValue(vi.fn());
   });
 
   // ==========================================
@@ -60,112 +126,249 @@ describe("TerminalPanel", () => {
       expect(panel).toHaveStyle({ height: "0px" });
     });
 
-    it("passes isVisible=true to XTerminal when open", () => {
+    it("renders empty state when no sessions exist", () => {
       render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
-      const xterm = screen.getByTestId("mock-xterminal");
-      expect(xterm).toHaveAttribute("data-visible", "true");
+      // No XTerminal instances should be mounted
+      expect(screen.queryByTestId("mock-xterminal")).not.toBeInTheDocument();
     });
 
-    it("passes isVisible=false to XTerminal when closed", () => {
-      const { container } = render(
-        (<TerminalPanel open={false} onClose={onClose} token="test-token" />) as ReactElement
-      );
-      // Use container query since the element is inside an aria-hidden region
-      const xterm = container.querySelector('[data-testid="mock-xterminal"]');
-      expect(xterm).toHaveAttribute("data-visible", "false");
+    it("shows connecting message in empty state when not connected", () => {
+      mockIsConnected = false;
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      expect(screen.getByText("Connecting...")).toBeInTheDocument();
     });
 
-    it("passes token to XTerminal", () => {
-      render(
-        (<TerminalPanel open={true} onClose={onClose} token="my-auth-token" />) as ReactElement
-      );
-      const xterm = screen.getByTestId("mock-xterminal");
-      expect(xterm).toHaveAttribute("data-token", "my-auth-token");
+    it("shows creating message in empty state when connected", () => {
+      mockIsConnected = true;
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      expect(screen.getByText("Creating terminal...")).toBeInTheDocument();
     });
   });
 
   // ==========================================
-  // Tab bar
+  // Tab bar from sessions
   // ==========================================
 
   describe("tab bar", () => {
-    it("renders default tabs when none provided", () => {
+    it("renders a tab for each session", () => {
+      setTwoSessions();
       render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
-      expect(screen.getByRole("tab", { name: "main" })).toBeInTheDocument();
-    });
-
-    it("renders custom tabs", () => {
-      const tabs = [
-        { id: "tab1", label: "Terminal 1" },
-        { id: "tab2", label: "Terminal 2" },
-      ];
-      render(
-        (
-          <TerminalPanel open={true} onClose={onClose} tabs={tabs} token="test-token" />
-        ) as ReactElement
-      );
       expect(screen.getByRole("tab", { name: "Terminal 1" })).toBeInTheDocument();
       expect(screen.getByRole("tab", { name: "Terminal 2" })).toBeInTheDocument();
     });
 
-    it("marks the active tab as selected", () => {
-      const tabs = [
-        { id: "tab1", label: "Tab 1" },
-        { id: "tab2", label: "Tab 2" },
-      ];
-      render(
-        (
-          <TerminalPanel
-            open={true}
-            onClose={onClose}
-            tabs={tabs}
-            activeTab="tab2"
-            token="test-token"
-          />
-        ) as ReactElement
+    it("marks the active session tab as selected", () => {
+      setTwoSessions();
+      mockActiveSessionId = "session-2";
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      expect(screen.getByRole("tab", { name: "Terminal 2" })).toHaveAttribute(
+        "aria-selected",
+        "true"
+      );
+      expect(screen.getByRole("tab", { name: "Terminal 1" })).toHaveAttribute(
+        "aria-selected",
+        "false"
       );
-      const tab2 = screen.getByRole("tab", { name: "Tab 2" });
-      expect(tab2).toHaveAttribute("aria-selected", "true");
     });
 
-    it("calls onTabChange when a tab is clicked", () => {
-      const tabs = [
-        { id: "tab1", label: "Tab 1" },
-        { id: "tab2", label: "Tab 2" },
-      ];
-      render(
-        (
-          <TerminalPanel
-            open={true}
-            onClose={onClose}
-            tabs={tabs}
-            onTabChange={onTabChange}
-            token="test-token"
-          />
-        ) as ReactElement
-      );
-      fireEvent.click(screen.getByRole("tab", { name: "Tab 2" }));
-      expect(onTabChange).toHaveBeenCalledWith("tab2");
+    it("calls setActiveSession when a tab is clicked", () => {
+      setTwoSessions();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      fireEvent.click(screen.getByRole("tab", { name: "Terminal 2" }));
+      expect(mockSetActiveSession).toHaveBeenCalledWith("session-2");
+    });
+
+    it("has tablist role on the tab bar", () => {
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      expect(screen.getByRole("tablist")).toBeInTheDocument();
     });
   });
 
   // ==========================================
-  // Close button
+  // New tab button
   // ==========================================
 
-  describe("close button", () => {
-    it("renders the close button", () => {
+  describe("new tab button", () => {
+    it("renders the new tab button", () => {
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      expect(screen.getByRole("button", { name: "New terminal tab" })).toBeInTheDocument();
+    });
+
+    it("calls createSession when new tab button is clicked", () => {
+      setTwoSessions();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      fireEvent.click(screen.getByRole("button", { name: "New terminal tab" }));
+      expect(mockCreateSession).toHaveBeenCalledWith(
+        // eslint-disable-next-line @typescript-eslint/no-unsafe-assignment
+        expect.objectContaining({ name: expect.any(String) })
+      );
+    });
+  });
+
+  // ==========================================
+  // Per-tab close button
+  // ==========================================
+
+  describe("per-tab close button", () => {
+    it("renders a close button for each tab", () => {
+      setTwoSessions();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      expect(screen.getByRole("button", { name: "Close Terminal 1" })).toBeInTheDocument();
+      expect(screen.getByRole("button", { name: "Close Terminal 2" })).toBeInTheDocument();
+    });
+
+    it("calls closeSession with the correct sessionId when tab close is clicked", () => {
+      setTwoSessions();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      fireEvent.click(screen.getByRole("button", { name: "Close Terminal 1" }));
+      expect(mockCloseSession).toHaveBeenCalledWith("session-1");
+    });
+  });
+
+  // ==========================================
+  // Panel close button
+  // ==========================================
+
+  describe("panel close button", () => {
+    it("renders the close panel button", () => {
       render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
       expect(screen.getByRole("button", { name: "Close terminal" })).toBeInTheDocument();
     });
 
-    it("calls onClose when close button is clicked", () => {
+    it("calls onClose when close panel button is clicked", () => {
       render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
       fireEvent.click(screen.getByRole("button", { name: "Close terminal" }));
       expect(onClose).toHaveBeenCalledTimes(1);
     });
   });
 
+  // ==========================================
+  // Multi-tab XTerminal rendering
+  // ==========================================
+
+  describe("multi-tab terminal rendering", () => {
+    it("renders an XTerminal for each session", () => {
+      setTwoSessions();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      const terminals = screen.getAllByTestId("mock-xterminal");
+      expect(terminals).toHaveLength(2);
+    });
+
+    it("shows the active session terminal as visible", () => {
+      setTwoSessions();
+      mockActiveSessionId = "session-1";
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      const terminal1 = screen
+        .getAllByTestId("mock-xterminal")
+        .find((el) => el.getAttribute("data-session-id") === "session-1");
+      expect(terminal1).toHaveAttribute("data-visible", "true");
+    });
+
+    it("hides inactive session terminals", () => {
+      setTwoSessions();
+      mockActiveSessionId = "session-1";
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      const terminal2 = screen
+        .getAllByTestId("mock-xterminal")
+        .find((el) => el.getAttribute("data-session-id") === "session-2");
+      expect(terminal2).toHaveAttribute("data-visible", "false");
+    });
+
+    it("passes sessionStatus to XTerminal", () => {
+      mockSessions = new Map([
+        [
+          "session-1",
+          { sessionId: "session-1", name: "Terminal 1", status: "exited", exitCode: 0 },
+        ],
+      ]);
+      mockActiveSessionId = "session-1";
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      const terminal = screen.getByTestId("mock-xterminal");
+      expect(terminal).toHaveAttribute("data-status", "exited");
+    });
+
+    it("passes isVisible=false to all terminals when panel is closed", () => {
+      setTwoSessions();
+      const { container } = render(
+        (<TerminalPanel open={false} onClose={onClose} token="test-token" />) as ReactElement
+      );
+      const terminals = container.querySelectorAll('[data-testid="mock-xterminal"]');
+      terminals.forEach((terminal) => {
+        expect(terminal).toHaveAttribute("data-visible", "false");
+      });
+    });
+  });
+
+  // ==========================================
+  // Inline tab rename
+  // ==========================================
+
+  describe("tab rename", () => {
+    it("shows a rename input when a tab is double-clicked", () => {
+      setTwoSessions();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      fireEvent.dblClick(screen.getByRole("tab", { name: "Terminal 1" }));
+      expect(screen.getByTestId("tab-rename-input")).toBeInTheDocument();
+    });
+
+    it("calls renameSession when rename input loses focus", () => {
+      setTwoSessions();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      fireEvent.dblClick(screen.getByRole("tab", { name: "Terminal 1" }));
+
+      const input = screen.getByTestId("tab-rename-input");
+      fireEvent.change(input, { target: { value: "Custom Shell" } });
+      fireEvent.blur(input);
+
+      expect(mockRenameSession).toHaveBeenCalledWith("session-1", "Custom Shell");
+    });
+
+    it("calls renameSession when Enter is pressed in the rename input", () => {
+      setTwoSessions();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      fireEvent.dblClick(screen.getByRole("tab", { name: "Terminal 1" }));
+
+      const input = screen.getByTestId("tab-rename-input");
+      fireEvent.change(input, { target: { value: "New Name" } });
+      fireEvent.keyDown(input, { key: "Enter" });
+
+      expect(mockRenameSession).toHaveBeenCalledWith("session-1", "New Name");
+    });
+
+    it("cancels rename when Escape is pressed", () => {
+      setTwoSessions();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      fireEvent.dblClick(screen.getByRole("tab", { name: "Terminal 1" }));
+
+      const input = screen.getByTestId("tab-rename-input");
+      fireEvent.change(input, { target: { value: "Abandoned Name" } });
+      fireEvent.keyDown(input, { key: "Escape" });
+
+      expect(mockRenameSession).not.toHaveBeenCalled();
+      expect(screen.queryByTestId("tab-rename-input")).not.toBeInTheDocument();
+    });
+  });
+
+  // ==========================================
+  // Connection error banner
+  // ==========================================
+
+  describe("connection error", () => {
+    it("shows a connection error banner when connectionError is set", () => {
+      mockConnectionError = "WebSocket connection failed";
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      const alert = screen.getByRole("alert");
+      expect(alert).toBeInTheDocument();
+      expect(alert).toHaveTextContent(/WebSocket connection failed/);
+    });
+
+    it("does not show the error banner when connectionError is null", () => {
+      mockConnectionError = null;
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      expect(screen.queryByRole("alert")).not.toBeInTheDocument();
+    });
+  });
+
   // ==========================================
   // Accessibility
   // ==========================================
@@ -175,8 +378,6 @@ describe("TerminalPanel", () => {
       const { container } = render(
         (<TerminalPanel open={false} onClose={onClose} token="test-token" />) as ReactElement
       );
-      // When aria-hidden=true, testing-library role queries ignore the element's aria-label.
-      // Use a direct DOM query to verify the attribute.
       const panel = container.querySelector('[role="region"][aria-label="Terminal panel"]');
       expect(panel).toHaveAttribute("aria-hidden", "true");
     });
@@ -186,10 +387,42 @@ describe("TerminalPanel", () => {
       const panel = screen.getByRole("region", { name: "Terminal panel" });
       expect(panel).toHaveAttribute("aria-hidden", "false");
     });
+  });
 
-    it("has tablist role on the tab bar", () => {
+  // ==========================================
+  // Auto-create session
+  // ==========================================
+
+  describe("auto-create first session", () => {
+    it("calls createSession when connected and no sessions exist", () => {
+      mockIsConnected = true;
+      mockSessions = new Map();
       render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
-      expect(screen.getByRole("tablist")).toBeInTheDocument();
+      expect(mockCreateSession).toHaveBeenCalledWith(
+        // eslint-disable-next-line @typescript-eslint/no-unsafe-assignment
+        expect.objectContaining({ name: expect.any(String) })
+      );
+    });
+
+    it("does not call createSession when sessions already exist", () => {
+      mockIsConnected = true;
+      setTwoSessions();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      expect(mockCreateSession).not.toHaveBeenCalled();
+    });
+
+    it("does not call createSession when not connected", () => {
+      mockIsConnected = false;
+      mockSessions = new Map();
+      render((<TerminalPanel open={true} onClose={onClose} token="test-token" />) as ReactElement);
+      expect(mockCreateSession).not.toHaveBeenCalled();
+    });
+
+    it("does not call createSession when panel is closed", () => {
+      mockIsConnected = true;
+      mockSessions = new Map();
+      render((<TerminalPanel open={false} onClose={onClose} token="test-token" />) as ReactElement);
+      expect(mockCreateSession).not.toHaveBeenCalled();
     });
   });
 });
diff --git a/apps/web/src/components/terminal/TerminalPanel.tsx b/apps/web/src/components/terminal/TerminalPanel.tsx
index 8da853a..1309db7 100644
--- a/apps/web/src/components/terminal/TerminalPanel.tsx
+++ b/apps/web/src/components/terminal/TerminalPanel.tsx
@@ -3,35 +3,38 @@
 /**
  * TerminalPanel
  *
- * Shell panel that wraps the XTerminal component with a tab bar and close button.
- * Replaces the former mock terminal with a real xterm.js PTY terminal.
+ * Multi-tab terminal panel. Manages multiple PTY sessions via useTerminalSessions,
+ * rendering one XTerminal per session and keeping all instances mounted (for
+ * scrollback preservation) while switching visibility with display:none.
+ *
+ * Features:
+ * - "+" button to open a new tab
+ * - Per-tab close button
+ * - Double-click tab label for inline rename
+ * - Auto-creates the first session on connect
+ * - Connection error state
  */
 
-import type { ReactElement, CSSProperties } from "react";
+import { useState, useEffect, useRef, useCallback } from "react";
+import type { ReactElement, CSSProperties, KeyboardEvent } from "react";
 import { XTerminal } from "./XTerminal";
+import { useTerminalSessions } from "@/hooks/useTerminalSessions";
 
 // ==========================================
-// Types (retained for backwards compatibility)
+// Types
 // ==========================================
 
-export interface TerminalTab {
-  id: string;
-  label: string;
-}
-
 export interface TerminalPanelProps {
+  /** Whether the panel is visible */
   open: boolean;
+  /** Called when the user closes the panel */
   onClose: () => void;
-  tabs?: TerminalTab[];
-  activeTab?: string;
-  onTabChange?: (id: string) => void;
   /** Authentication token for the WebSocket connection */
   token?: string;
+  /** Optional CSS class name */
   className?: string;
 }
 
-const defaultTabs: TerminalTab[] = [{ id: "main", label: "main" }];
-
 // ==========================================
 // Component
 // ==========================================
@@ -39,14 +42,107 @@ const defaultTabs: TerminalTab[] = [{ id: "main", label: "main" }];
 export function TerminalPanel({
   open,
   onClose,
-  tabs,
-  activeTab,
-  onTabChange,
   token = "",
   className = "",
 }: TerminalPanelProps): ReactElement {
-  const resolvedTabs = tabs ?? defaultTabs;
-  const resolvedActiveTab = activeTab ?? resolvedTabs[0]?.id ?? "";
+  const {
+    sessions,
+    activeSessionId,
+    isConnected,
+    connectionError,
+    createSession,
+    closeSession,
+    renameSession,
+    setActiveSession,
+    sendInput,
+    resize,
+    registerOutputCallback,
+  } = useTerminalSessions({ token });
+
+  // ==========================================
+  // Inline rename state
+  // ==========================================
+
+  const [editingTabId, setEditingTabId] = useState<string | null>(null);
+  const [editingName, setEditingName] = useState("");
+  const editInputRef = useRef<HTMLInputElement>(null);
+
+  // Focus the rename input when editing starts
+  useEffect(() => {
+    if (editingTabId !== null) {
+      editInputRef.current?.select();
+    }
+  }, [editingTabId]);
+
+  // ==========================================
+  // Auto-create first session on connect
+  // ==========================================
+
+  useEffect(() => {
+    if (open && isConnected && sessions.size === 0) {
+      createSession({ name: "Terminal 1" });
+    }
+  }, [open, isConnected, sessions.size, createSession]);
+
+  // ==========================================
+  // Tab rename helpers
+  // ==========================================
+
+  const commitRename = useCallback((): void => {
+    if (editingTabId !== null) {
+      const trimmed = editingName.trim();
+      if (trimmed.length > 0) {
+        renameSession(editingTabId, trimmed);
+      }
+      setEditingTabId(null);
+      setEditingName("");
+    }
+  }, [editingTabId, editingName, renameSession]);
+
+  const handleTabDoubleClick = useCallback((sessionId: string, currentName: string): void => {
+    setEditingTabId(sessionId);
+    setEditingName(currentName);
+  }, []);
+
+  const handleRenameKeyDown = useCallback(
+    (e: KeyboardEvent<HTMLInputElement>): void => {
+      if (e.key === "Enter") {
+        commitRename();
+      } else if (e.key === "Escape") {
+        setEditingTabId(null);
+        setEditingName("");
+      }
+    },
+    [commitRename]
+  );
+
+  // ==========================================
+  // Session control helpers
+  // ==========================================
+
+  const handleCreateTab = useCallback((): void => {
+    const tabNumber = sessions.size + 1;
+    createSession({ name: `Terminal ${tabNumber.toString()}` });
+  }, [sessions.size, createSession]);
+
+  const handleCloseTab = useCallback(
+    (sessionId: string): void => {
+      closeSession(sessionId);
+    },
+    [closeSession]
+  );
+
+  const handleRestart = useCallback(
+    (sessionId: string, name: string): void => {
+      closeSession(sessionId);
+      createSession({ name });
+    },
+    [closeSession, createSession]
+  );
+
+  // ==========================================
+  // Styles
+  // ==========================================
 
   const panelStyle: CSSProperties = {
     background: "var(--bg-deep)",
@@ -71,12 +167,15 @@ export function TerminalPanel({
   const tabBarStyle: CSSProperties = {
     display: "flex",
     gap: 2,
+    alignItems: "center",
+    flex: 1,
+    overflow: "hidden",
   };
 
   const actionsStyle: CSSProperties = {
-    marginLeft: "auto",
     display: "flex",
     gap: 4,
+    alignItems: "center",
   };
 
   const bodyStyle: CSSProperties = {
@@ -85,8 +184,13 @@ export function TerminalPanel({
     display: "flex",
     flexDirection: "column",
     minHeight: 0,
+    position: "relative",
   };
 
+  // ==========================================
+  // Render
+  // ==========================================
+
   return (
     <div
       className={className}
@@ -99,50 +203,172 @@ export function TerminalPanel({
       <div style={headerStyle}>
         {/* Tab bar */}
         <div style={tabBarStyle} role="tablist" aria-label="Terminal tabs">
-          {resolvedTabs.map((tab) => {
-            const isActive = tab.id === resolvedActiveTab;
+          {[...sessions.entries()].map(([sessionId, sessionInfo]) => {
+            const isActive = sessionId === activeSessionId;
+            const isEditing = sessionId === editingTabId;
+
             const tabStyle: CSSProperties = {
-              padding: "3px 10px",
+              display: "flex",
+              alignItems: "center",
+              gap: 4,
+              padding: "3px 6px 3px 10px",
               borderRadius: 4,
               fontSize: "0.75rem",
               fontFamily: "var(--mono)",
               color: isActive ? "var(--success)" : "var(--muted)",
-              cursor: "pointer",
               background: isActive ? "var(--surface)" : "transparent",
               border: "none",
               outline: "none",
+              flexShrink: 0,
             };
 
             return (
-              <button
-                key={tab.id}
-                role="tab"
-                aria-selected={isActive}
-                style={tabStyle}
-                onClick={(): void => {
-                  onTabChange?.(tab.id);
-                }}
-                onMouseEnter={(e): void => {
-                  if (!isActive) {
+              <div key={sessionId} style={tabStyle}>
+                {isEditing ? (
+                  <input
+                    ref={editInputRef}
+                    value={editingName}
+                    onChange={(e): void => {
+                      setEditingName(e.target.value);
+                    }}
+                    onBlur={commitRename}
+                    onKeyDown={handleRenameKeyDown}
+                    data-testid="tab-rename-input"
+                    style={{
+                      background: "transparent",
+                      border: "none",
+                      outline: "1px solid var(--primary)",
+                      borderRadius: 2,
+                      fontFamily: "var(--mono)",
+                      fontSize: "0.75rem",
+                      color: "var(--text)",
+                      width: `${Math.max(editingName.length, 4).toString()}ch`,
+                      padding: "0 2px",
+                    }}
+                    aria-label="Rename terminal tab"
+                  />
+                ) : (
+                  <button
+                    role="tab"
+                    aria-selected={isActive}
+                    style={{
+                      background: "transparent",
+                      border: "none",
+                      outline: "none",
+                      fontFamily: "var(--mono)",
+                      fontSize: "0.75rem",
+                      color: isActive ? "var(--success)" : "var(--muted)",
+                      cursor: "pointer",
+                      padding: 0,
+                    }}
+                    onClick={(): void => {
+                      setActiveSession(sessionId);
+                    }}
+                    onDoubleClick={(): void => {
+                      handleTabDoubleClick(sessionId, sessionInfo.name);
+                    }}
+                    onMouseEnter={(e): void => {
+                      if (!isActive) {
+                        (e.currentTarget as HTMLButtonElement).style.color = "var(--text-2)";
+                      }
+                    }}
+                    onMouseLeave={(e): void => {
+                      if (!isActive) {
+                        (e.currentTarget as HTMLButtonElement).style.color = "var(--muted)";
+                      }
+                    }}
+                    aria-label={sessionInfo.name}
+                  >
+                    {sessionInfo.name}
+                  </button>
+                )}
+
+                {/* Per-tab close button */}
+                <button
+                  aria-label={`Close ${sessionInfo.name}`}
+                  style={{
+                    width: 16,
+                    height: 16,
+                    borderRadius: 3,
+                    display: "flex",
+                    alignItems: "center",
+                    justifyContent: "center",
+                    color: "var(--muted)",
+                    cursor: "pointer",
+                    background: "transparent",
+                    border: "none",
+                    outline: "none",
+                    padding: 0,
+                    flexShrink: 0,
+                  }}
+                  onClick={(): void => {
+                    handleCloseTab(sessionId);
+                  }}
+                  onMouseEnter={(e): void => {
                     (e.currentTarget as HTMLButtonElement).style.background = "var(--surface)";
-                    (e.currentTarget as HTMLButtonElement).style.color = "var(--text-2)";
-                  }
-                }}
-                onMouseLeave={(e): void => {
-                  if (!isActive) {
+                    (e.currentTarget as HTMLButtonElement).style.color = "var(--text)";
+                  }}
+                  onMouseLeave={(e): void => {
                     (e.currentTarget as HTMLButtonElement).style.background = "transparent";
                     (e.currentTarget as HTMLButtonElement).style.color = "var(--muted)";
-                  }
-                }}
-              >
-                {tab.label}
-              </button>
+                  }}
+                >
+                  <svg width="8" height="8" viewBox="0 0 8 8" fill="none" aria-hidden="true">
+                    <path
+                      d="M1 1L7 7M7 1L1 7"
+                      stroke="currentColor"
+                      strokeWidth="1.5"
+                      strokeLinecap="round"
+                    />
+                  </svg>
+                </button>
+              </div>
             );
           })}
+
+          {/* New tab button */}
+          <button
+            aria-label="New terminal tab"
+            style={{
+              width: 22,
+              height: 22,
+              borderRadius: 4,
+              display: "flex",
+              alignItems: "center",
+              justifyContent: "center",
+              color: "var(--muted)",
+              cursor: "pointer",
+              background: "transparent",
+              border: "none",
+              outline: "none",
+              padding: 0,
+              flexShrink: 0,
+            }}
+            onClick={handleCreateTab}
+            onMouseEnter={(e): void => {
+              (e.currentTarget as HTMLButtonElement).style.background = "var(--surface)";
+              (e.currentTarget as HTMLButtonElement).style.color = "var(--text)";
+            }}
+            onMouseLeave={(e): void => {
+              (e.currentTarget as HTMLButtonElement).style.background = "transparent";
+              (e.currentTarget as HTMLButtonElement).style.color = "var(--muted)";
+            }}
+          >
+            {/* Plus icon */}
+            <svg width="12" height="12" viewBox="0 0 12 12" fill="none" aria-hidden="true">
+              <path
+                d="M6 1V11M1 6H11"
+                stroke="currentColor"
+                strokeWidth="1.5"
+                strokeLinecap="round"
+              />
+            </svg>
+          </button>
         </div>
 
         {/* Action buttons */}
         <div style={actionsStyle}>
+          {/* Close panel button */}
           <button
             aria-label="Close terminal"
             style={{
@@ -182,9 +408,72 @@ export function TerminalPanel({
         </div>
       </div>
 
-      {/* Terminal body */}
+      {/* Connection error banner */}
+      {connectionError !== null && (
+        <div
+          role="alert"
+          style={{
+            padding: "4px 16px",
+            fontSize: "0.75rem",
+            fontFamily: "var(--mono)",
+            color: "var(--danger)",
+            backgroundColor: "var(--bg-deep)",
+            borderBottom: "1px solid var(--border)",
+            flexShrink: 0,
+          }}
+        >
+          Connection error: {connectionError}
+        </div>
+      )}
+
+      {/* Terminal body — keep all XTerminal instances mounted for scrollback */}
       <div style={bodyStyle}>
-        <XTerminal token={token} isVisible={open} style={{ flex: 1, minHeight: 0 }} />
+        {[...sessions.entries()].map(([sessionId, sessionInfo]) => {
+          const isActive = sessionId === activeSessionId;
+          const termStyle: CSSProperties = {
+            display: isActive ? "flex" : "none",
+            flex: 1,
+            flexDirection: "column",
+            minHeight: 0,
+          };
+
+          return (
+            <div key={sessionId} style={termStyle}>
+              <XTerminal
+                sessionId={sessionId}
+                sendInput={sendInput}
+                resize={resize}
+                closeSession={closeSession}
+                registerOutputCallback={registerOutputCallback}
+                isConnected={isConnected}
+                sessionStatus={sessionInfo.status}
+                {...(sessionInfo.exitCode !== undefined ? { exitCode: sessionInfo.exitCode } : {})}
+                isVisible={isActive && open}
+                onRestart={(): void => {
+                  handleRestart(sessionId, sessionInfo.name);
+                }}
+                style={{ flex: 1, minHeight: 0 }}
+              />
+            </div>
+          );
+        })}
+
+        {/* Empty state */}
+        {sessions.size === 0 && (
+          <div
+            style={{
+              flex: 1,
+              display: "flex",
+              alignItems: "center",
+              justifyContent: "center",
+              color: "var(--muted)",
+              fontSize: "0.75rem",
+              fontFamily: "var(--mono)",
+            }}
+          >
+            {isConnected ? "Creating terminal..." : (connectionError ?? "Connecting...")}
+          </div>
+        )}
       </div>
     </div>
   );
diff --git a/apps/web/src/components/terminal/XTerminal.test.tsx b/apps/web/src/components/terminal/XTerminal.test.tsx
index 201fb8e..5f2da13 100644
--- a/apps/web/src/components/terminal/XTerminal.test.tsx
+++ b/apps/web/src/components/terminal/XTerminal.test.tsx
@@ -4,21 +4,13 @@
  */
 
 import { describe, it, expect, vi, beforeEach, afterEach } from "vitest";
-import { render, screen } from "@testing-library/react";
+import { render, screen, fireEvent } from "@testing-library/react";
 import type { ReactElement } from "react";
 
 // ==========================================
 // Mocks — set up before importing components
 // ==========================================
 
-// Mock socket.io-client
-vi.mock("socket.io-client");
-
-// Mock lib/config
-vi.mock("@/lib/config", () => ({
-  API_BASE_URL: "http://localhost:3001",
-}));
-
 // Mock xterm packages — they require a DOM canvas not available in jsdom
 const mockTerminalDispose = vi.fn();
 const mockTerminalWrite = vi.fn();
@@ -76,26 +68,6 @@ vi.mock("@xterm/addon-web-links", () => ({
 // Mock the CSS import
 vi.mock("@xterm/xterm/css/xterm.css", () => ({}));
 
-// Mock useTerminal hook
-const mockCreateSession = vi.fn();
-const mockSendInput = vi.fn();
-const mockResize = vi.fn();
-const mockCloseSession = vi.fn();
-let mockIsConnected = false;
-let mockSessionId: string | null = null;
-
-vi.mock("@/hooks/useTerminal", () => ({
-  useTerminal: vi.fn(() => ({
-    isConnected: mockIsConnected,
-    sessionId: mockSessionId,
-    createSession: mockCreateSession,
-    sendInput: mockSendInput,
-    resize: mockResize,
-    closeSession: mockCloseSession,
-    connectionError: null,
-  })),
-}));
-
 // Mock ResizeObserver
 const mockObserve = vi.fn();
 const mockUnobserve = vi.fn();
@@ -128,6 +100,31 @@ vi.stubGlobal(
 
 import { XTerminal } from "./XTerminal";
 
+// ==========================================
+// Default props factory
+// ==========================================
+
+const mockSendInput = vi.fn();
+const mockResize = vi.fn();
+const mockCloseSession = vi.fn();
+const mockRegisterOutputCallback = vi.fn(() => vi.fn()); // returns unsubscribe fn
+const mockOnRestart = vi.fn();
+
+function makeDefaultProps(
+  overrides: Partial<Parameters<typeof XTerminal>[0]> = {}
+): Parameters<typeof XTerminal>[0] {
+  return {
+    sessionId: "session-test",
+    sendInput: mockSendInput,
+    resize: mockResize,
+    closeSession: mockCloseSession,
+    registerOutputCallback: mockRegisterOutputCallback,
+    isConnected: false,
+    sessionStatus: "active" as const,
+    ...overrides,
+  };
+}
+
 // ==========================================
 // Tests
 // ==========================================
@@ -135,10 +132,9 @@ import { XTerminal } from "./XTerminal";
 describe("XTerminal", () => {
   beforeEach(() => {
     vi.clearAllMocks();
-    mockIsConnected = false;
-    mockSessionId = null;
     mockTerminalCols = 80;
     mockTerminalRows = 24;
+    mockRegisterOutputCallback.mockReturnValue(vi.fn());
   });
 
   afterEach(() => {
@@ -151,66 +147,101 @@ describe("XTerminal", () => {
 
   describe("rendering", () => {
     it("renders the terminal container", () => {
-      render((<XTerminal token="test-token" />) as ReactElement);
+      render((<XTerminal {...makeDefaultProps()} />) as ReactElement);
       expect(screen.getByTestId("xterminal-container")).toBeInTheDocument();
     });
 
     it("renders the xterm viewport div", () => {
-      render((<XTerminal token="test-token" />) as ReactElement);
+      render((<XTerminal {...makeDefaultProps()} />) as ReactElement);
       expect(screen.getByTestId("xterm-viewport")).toBeInTheDocument();
     });
 
     it("applies the className prop to the container", () => {
-      render((<XTerminal token="test-token" className="custom-class" />) as ReactElement);
+      render((<XTerminal {...makeDefaultProps()} className="custom-class" />) as ReactElement);
       expect(screen.getByTestId("xterminal-container")).toHaveClass("custom-class");
     });
 
-    it("shows connecting message when not connected", () => {
-      mockIsConnected = false;
+    it("sets data-session-id on the container", () => {
+      render((<XTerminal {...makeDefaultProps({ sessionId: "my-session" })} />) as ReactElement);
+      expect(screen.getByTestId("xterminal-container")).toHaveAttribute(
+        "data-session-id",
+        "my-session"
+      );
+    });
 
-      render((<XTerminal token="test-token" />) as ReactElement);
+    it("shows connecting message when not connected and session is active", () => {
+      render((<XTerminal {...makeDefaultProps({ isConnected: false })} />) as ReactElement);
       expect(screen.getByText("Connecting to terminal...")).toBeInTheDocument();
     });
 
-    it("does not show connecting message when connected", async () => {
-      mockIsConnected = true;
+    it("does not show connecting message when connected", () => {
+      render((<XTerminal {...makeDefaultProps({ isConnected: true })} />) as ReactElement);
+      expect(screen.queryByText("Connecting to terminal...")).not.toBeInTheDocument();
+    });
 
-      const { useTerminal } = await import("@/hooks/useTerminal");
-      vi.mocked(useTerminal).mockReturnValue({
-        isConnected: true,
-        sessionId: "session-xyz",
-        createSession: mockCreateSession,
-        sendInput: mockSendInput,
-        resize: mockResize,
-        closeSession: mockCloseSession,
-        connectionError: null,
-      });
-
-      render((<XTerminal token="test-token" />) as ReactElement);
+    it("does not show connecting message when session has exited", () => {
+      render(
+        (
+          <XTerminal {...makeDefaultProps({ isConnected: false, sessionStatus: "exited" })} />
+        ) as ReactElement
+      );
       expect(screen.queryByText("Connecting to terminal...")).not.toBeInTheDocument();
     });
   });
 
   // ==========================================
-  // useTerminal integration
+  // Exit overlay
   // ==========================================
 
-  describe("useTerminal integration", () => {
-    it("passes the token to useTerminal", async () => {
-      const { useTerminal } = await import("@/hooks/useTerminal");
-      render((<XTerminal token="my-auth-token" />) as ReactElement);
-      expect(vi.mocked(useTerminal)).toHaveBeenCalledWith(
-        expect.objectContaining({ token: "my-auth-token" })
-      );
+  describe("exit overlay", () => {
+    it("shows restart button when session has exited", () => {
+      render((<XTerminal {...makeDefaultProps({ sessionStatus: "exited" })} />) as ReactElement);
+      expect(screen.getByRole("button", { name: /restart terminal/i })).toBeInTheDocument();
     });
 
-    it("passes onOutput, onExit, onError callbacks to useTerminal", async () => {
-      const { useTerminal } = await import("@/hooks/useTerminal");
-      render((<XTerminal token="test-token" />) as ReactElement);
-      const callArgs = vi.mocked(useTerminal).mock.calls[0]?.[0];
-      expect(typeof callArgs?.onOutput).toBe("function");
-      expect(typeof callArgs?.onExit).toBe("function");
-      expect(typeof callArgs?.onError).toBe("function");
+    it("does not show restart button when session is active", () => {
+      render((<XTerminal {...makeDefaultProps({ sessionStatus: "active" })} />) as ReactElement);
+      expect(screen.queryByRole("button", { name: /restart terminal/i })).not.toBeInTheDocument();
+    });
+
+    it("shows exit code in restart button when provided", () => {
+      render(
+        (
+          <XTerminal {...makeDefaultProps({ sessionStatus: "exited", exitCode: 1 })} />
+        ) as ReactElement
+      );
+      expect(screen.getByRole("button", { name: /exit 1/i })).toBeInTheDocument();
+    });
+
+    it("calls onRestart when restart button is clicked", () => {
+      render(
+        (
+          <XTerminal {...makeDefaultProps({ sessionStatus: "exited", onRestart: mockOnRestart })} />
+        ) as ReactElement
+      );
+      fireEvent.click(screen.getByRole("button", { name: /restart terminal/i }));
+      expect(mockOnRestart).toHaveBeenCalledTimes(1);
+    });
+  });
+
+  // ==========================================
+  // Output callback registration
+  // ==========================================
+
+  describe("registerOutputCallback", () => {
+    it("registers a callback for its sessionId on mount", () => {
+      render((<XTerminal {...makeDefaultProps({ sessionId: "test-session" })} />) as ReactElement);
+      expect(mockRegisterOutputCallback).toHaveBeenCalledWith("test-session", expect.any(Function));
+    });
+
+    it("calls the returned unsubscribe function on unmount", () => {
+      const unsubscribe = vi.fn();
+      mockRegisterOutputCallback.mockReturnValue(unsubscribe);
+
+      const { unmount } = render((<XTerminal {...makeDefaultProps()} />) as ReactElement);
+      unmount();
+
+      expect(unsubscribe).toHaveBeenCalled();
     });
   });
 
@@ -220,8 +251,20 @@ describe("XTerminal", () => {
 
   describe("accessibility", () => {
     it("has an accessible region role", () => {
-      render((<XTerminal token="test-token" />) as ReactElement);
+      render((<XTerminal {...makeDefaultProps()} />) as ReactElement);
       expect(screen.getByRole("region", { name: "Terminal" })).toBeInTheDocument();
     });
   });
+
+  // ==========================================
+  // Visibility
+  // ==========================================
+
+  describe("isVisible", () => {
+    it("renders with isVisible=true by default", () => {
+      render((<XTerminal {...makeDefaultProps()} />) as ReactElement);
+      // Container is present; isVisible affects re-fit timing
+      expect(screen.getByTestId("xterminal-container")).toBeInTheDocument();
+    });
+  });
 });
diff --git a/apps/web/src/components/terminal/XTerminal.tsx b/apps/web/src/components/terminal/XTerminal.tsx
index b11dd2e..b25a2f6 100644
--- a/apps/web/src/components/terminal/XTerminal.tsx
+++ b/apps/web/src/components/terminal/XTerminal.tsx
@@ -3,29 +3,55 @@
 /**
  * XTerminal component
  *
- * Renders a real xterm.js terminal connected to the backend /terminal WebSocket namespace.
- * Handles resize, copy/paste, theme, and session lifecycle.
+ * Renders a real xterm.js terminal. The parent (TerminalPanel via useTerminalSessions)
+ * owns the WebSocket connection and session lifecycle. This component receives the
+ * sessionId and control functions as props and registers for output data specific
+ * to its session.
+ *
+ * Handles resize, copy/paste, theme, exit overlay, and reconnect.
  */
 
-import { useEffect, useRef, useCallback, useState } from "react";
+import { useEffect, useRef, useCallback } from "react";
 import type { ReactElement, CSSProperties } from "react";
 import "@xterm/xterm/css/xterm.css";
 import type { Terminal as XTerm } from "@xterm/xterm";
 import type { FitAddon as XFitAddon } from "@xterm/addon-fit";
-import { useTerminal } from "@/hooks/useTerminal";
+import type { SessionStatus } from "@/hooks/useTerminalSessions";
 
 // ==========================================
 // Types
 // ==========================================
 
 export interface XTerminalProps {
-  /** Authentication token for the WebSocket connection */
-  token: string;
+  /** Session identifier (provided by useTerminalSessions) */
+  sessionId: string;
+  /** Send keyboard input to this session */
+  sendInput: (sessionId: string, data: string) => void;
+  /** Notify the server of a terminal resize */
+  resize: (sessionId: string, cols: number, rows: number) => void;
+  /** Close this PTY session */
+  closeSession: (sessionId: string) => void;
+  /**
+   * Register a callback to receive output for this session.
+   * Returns an unsubscribe function.
+   */
+  registerOutputCallback: (sessionId: string, cb: (data: string) => void) => () => void;
+  /** Whether the WebSocket is currently connected */
+  isConnected: boolean;
+  /** Current PTY process status */
+  sessionStatus: SessionStatus;
+  /** Exit code, populated when sessionStatus === 'exited' */
+  exitCode?: number;
+  /**
+   * Called when the user clicks the restart button after the session has exited.
+   * The parent is responsible for closing the old session and creating a new one.
+   */
+  onRestart?: () => void;
   /** Optional CSS class name for the outer container */
   className?: string;
   /** Optional inline styles for the outer container */
   style?: CSSProperties;
-  /** Whether the terminal is visible (used to trigger re-fit) */
+  /** Whether the terminal is visible (used to trigger re-fit on tab switch) */
   isVisible?: boolean;
 }
 
@@ -45,8 +71,6 @@ function getCssVar(varName: string, fallback: string): string {
 
 /**
  * Build an xterm.js ITheme object from the current design system CSS variables.
- * All 5 themes (dark, light, aurora, midnight, sunlit, ocean) update --ms-* primitives
- * which flow through to the semantic aliases we read here.
  */
 function buildXtermTheme(): Record<string, string> {
   return {
@@ -82,11 +106,20 @@ function buildXtermTheme(): Record<string, string> {
 // ==========================================
 
 /**
- * XTerminal renders a real PTY terminal powered by xterm.js,
- * connected to the backend /terminal WebSocket namespace.
+ * XTerminal renders a real PTY terminal powered by xterm.js.
+ * The parent provides the sessionId and control functions; this component
+ * registers for output data and manages the xterm.js instance lifecycle.
  */
 export function XTerminal({
-  token,
+  sessionId,
+  sendInput,
+  resize,
+  closeSession: _closeSession,
+  registerOutputCallback,
+  isConnected,
+  sessionStatus,
+  exitCode,
+  onRestart,
   className = "",
   style,
   isVisible = true,
@@ -97,41 +130,7 @@ export function XTerminal({
   const resizeObserverRef = useRef<ResizeObserver | null>(null);
   const isTerminalMountedRef = useRef(false);
 
-  const [hasExited, setHasExited] = useState(false);
-  const [exitCode, setExitCode] = useState<number | null>(null);
-
-  // ==========================================
-  // Terminal session callbacks
-  // ==========================================
-
-  const handleOutput = useCallback((sessionId: string, data: string): void => {
-    void sessionId; // sessionId is single-session in this component
-    terminalRef.current?.write(data);
-  }, []);
-
-  const handleExit = useCallback((event: { sessionId: string; exitCode: number }): void => {
-    void event.sessionId;
-    setHasExited(true);
-    setExitCode(event.exitCode);
-    const term = terminalRef.current;
-    if (term) {
-      term.write(`\r\n\x1b[33m[Process exited with code ${event.exitCode.toString()}]\x1b[0m\r\n`);
-    }
-  }, []);
-
-  const handleError = useCallback((message: string): void => {
-    const term = terminalRef.current;
-    if (term) {
-      term.write(`\r\n\x1b[31m[Error: ${message}]\x1b[0m\r\n`);
-    }
-  }, []);
-
-  const { isConnected, sessionId, createSession, sendInput, resize, closeSession } = useTerminal({
-    token,
-    onOutput: handleOutput,
-    onExit: handleExit,
-    onError: handleError,
-  });
+  const hasExited = sessionStatus === "exited";
 
   // ==========================================
   // Fit helper
@@ -144,11 +143,11 @@ export function XTerminal({
 
     try {
       fitAddon.fit();
-      resize(terminal.cols, terminal.rows);
+      resize(sessionId, terminal.cols, terminal.rows);
     } catch {
       // Ignore fit errors (e.g., when container has zero dimensions)
     }
-  }, [resize]);
+  }, [resize, sessionId]);
 
   // ==========================================
   // Mount xterm.js terminal (client-only)
@@ -217,8 +216,20 @@ export function XTerminal({
     return (): void => {
       cancelled = true;
     };
+    // Intentionally empty dep array — mount once only
   }, []);
 
+  // ==========================================
+  // Register output callback for this session
+  // ==========================================
+
+  useEffect(() => {
+    const unregister = registerOutputCallback(sessionId, (data: string) => {
+      terminalRef.current?.write(data);
+    });
+    return unregister;
+  }, [sessionId, registerOutputCallback]);
+
   // ==========================================
   // Re-fit when visibility changes
   // ==========================================
@@ -243,39 +254,13 @@ export function XTerminal({
     if (!terminal) return;
 
     const disposable = terminal.onData((data: string): void => {
-      sendInput(data);
+      sendInput(sessionId, data);
     });
 
     return (): void => {
       disposable.dispose();
     };
-  }, [sendInput]);
-
-  // ==========================================
-  // Create PTY session when connected
-  // ==========================================
-
-  useEffect(() => {
-    if (!isConnected || sessionId !== null) return;
-
-    const terminal = terminalRef.current;
-    const fitAddon = fitAddonRef.current;
-
-    let cols = 80;
-    let rows = 24;
-
-    if (terminal && fitAddon) {
-      try {
-        fitAddon.fit();
-        cols = terminal.cols;
-        rows = terminal.rows;
-      } catch {
-        // Use defaults
-      }
-    }
-
-    createSession({ cols, rows });
-  }, [isConnected, sessionId, createSession]);
+  }, [sendInput, sessionId]);
 
   // ==========================================
   // Update xterm theme when data-theme attribute changes
@@ -309,16 +294,26 @@ export function XTerminal({
       resizeObserverRef.current?.disconnect();
       resizeObserverRef.current = null;
 
-      // Close PTY session
-      closeSession();
-
       // Dispose xterm terminal
       terminalRef.current?.dispose();
       terminalRef.current = null;
       fitAddonRef.current = null;
       isTerminalMountedRef.current = false;
     };
-  }, [closeSession]);
+  }, []);
+
+  // ==========================================
+  // Restart handler
+  // ==========================================
+
+  const handleRestart = useCallback((): void => {
+    const terminal = terminalRef.current;
+    if (terminal) {
+      terminal.clear();
+    }
+    // Notify parent to close old session and create a new one
+    onRestart?.();
+  }, [onRestart]);
 
   // ==========================================
   // Render
@@ -339,8 +334,9 @@ export function XTerminal({
       role="region"
       aria-label="Terminal"
       data-testid="xterminal-container"
+      data-session-id={sessionId}
     >
-      {/* Status bar */}
+      {/* Status bar — show when not connected and not exited */}
       {!isConnected && !hasExited && (
         <div
           style={{
@@ -385,28 +381,9 @@ export function XTerminal({
               border: "1px solid var(--border)",
               cursor: "pointer",
             }}
-            onClick={(): void => {
-              setHasExited(false);
-              setExitCode(null);
-              if (isConnected) {
-                const terminal = terminalRef.current;
-                const fitAddon = fitAddonRef.current;
-                let cols = 80;
-                let rows = 24;
-                if (terminal && fitAddon) {
-                  try {
-                    cols = terminal.cols;
-                    rows = terminal.rows;
-                  } catch {
-                    // Use defaults
-                  }
-                }
-                terminal?.clear();
-                createSession({ cols, rows });
-              }
-            }}
+            onClick={handleRestart}
           >
-            Restart terminal {exitCode !== null ? `(exit ${exitCode.toString()})` : ""}
+            Restart terminal{exitCode !== undefined ? ` (exit ${exitCode.toString()})` : ""}
           </button>
         </div>
       )}
diff --git a/apps/web/src/components/terminal/index.ts b/apps/web/src/components/terminal/index.ts
index 5bb8a0a..9c0adeb 100644
--- a/apps/web/src/components/terminal/index.ts
+++ b/apps/web/src/components/terminal/index.ts
@@ -1,4 +1,4 @@
-export type { TerminalTab, TerminalPanelProps } from "./TerminalPanel";
+export type { TerminalPanelProps } from "./TerminalPanel";
 export { TerminalPanel } from "./TerminalPanel";
 export type { XTerminalProps } from "./XTerminal";
 export { XTerminal } from "./XTerminal";
diff --git a/apps/web/src/hooks/useTerminalSessions.test.ts b/apps/web/src/hooks/useTerminalSessions.test.ts
new file mode 100644
index 0000000..db858f3
--- /dev/null
+++ b/apps/web/src/hooks/useTerminalSessions.test.ts
@@ -0,0 +1,690 @@
+/**
+ * @file useTerminalSessions.test.ts
+ * @description Unit tests for the useTerminalSessions hook
+ */
+
+import { describe, it, expect, vi, beforeEach, afterEach } from "vitest";
+import { renderHook, act, waitFor } from "@testing-library/react";
+import { useTerminalSessions } from "./useTerminalSessions";
+import type { Socket } from "socket.io-client";
+
+// ==========================================
+// Mock socket.io-client
+// ==========================================
+
+vi.mock("socket.io-client");
+
+// ==========================================
+// Mock lib/config
+// ==========================================
+
+vi.mock("@/lib/config", () => ({
+  API_BASE_URL: "http://localhost:3001",
+}));
+
+// ==========================================
+// Helpers
+// ==========================================
+
+interface MockSocket {
+  on: ReturnType<typeof vi.fn>;
+  off: ReturnType<typeof vi.fn>;
+  emit: ReturnType<typeof vi.fn>;
+  disconnect: ReturnType<typeof vi.fn>;
+  connected: boolean;
+}
+
+describe("useTerminalSessions", () => {
+  let mockSocket: MockSocket;
+  let socketEventHandlers: Record<string, (data: unknown) => void>;
+  let mockIo: ReturnType<typeof vi.fn>;
+
+  beforeEach(async () => {
+    socketEventHandlers = {};
+
+    mockSocket = {
+      on: vi.fn((event: string, handler: (data: unknown) => void) => {
+        socketEventHandlers[event] = handler;
+        return mockSocket;
+      }),
+      off: vi.fn(),
+      emit: vi.fn(),
+      disconnect: vi.fn(),
+      connected: true,
+    };
+
+    const socketIo = await import("socket.io-client");
+    mockIo = vi.mocked(socketIo.io);
+    mockIo.mockReturnValue(mockSocket as unknown as Socket);
+  });
+
+  afterEach(() => {
+    vi.clearAllMocks();
+  });
+
+  // ==========================================
+  // Connection lifecycle
+  // ==========================================
+
+  describe("connection lifecycle", () => {
+    it("should connect to the /terminal namespace with auth token", () => {
+      renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      expect(mockIo).toHaveBeenCalledWith(
+        expect.stringContaining("/terminal"),
+        expect.objectContaining({
+          auth: { token: "test-token" },
+        })
+      );
+    });
+
+    it("should start disconnected", () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      expect(result.current.isConnected).toBe(false);
+    });
+
+    it("should update isConnected when connect event fires", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers.connect?.(undefined);
+      });
+
+      await waitFor(() => {
+        expect(result.current.isConnected).toBe(true);
+      });
+    });
+
+    it("should set connectionError when connect_error fires", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers.connect_error?.(new Error("Connection refused"));
+      });
+
+      await waitFor(() => {
+        expect(result.current.connectionError).toBe("Connection refused");
+        expect(result.current.isConnected).toBe(false);
+      });
+    });
+
+    it("should not connect when token is empty", () => {
+      renderHook(() => useTerminalSessions({ token: "" }));
+
+      expect(mockIo).not.toHaveBeenCalled();
+    });
+
+    it("should disconnect socket on unmount", () => {
+      const { unmount } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      unmount();
+
+      expect(mockSocket.disconnect).toHaveBeenCalled();
+    });
+  });
+
+  // ==========================================
+  // Session creation
+  // ==========================================
+
+  describe("createSession", () => {
+    it("should emit terminal:create when connected", () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers.connect?.(undefined);
+      });
+
+      act(() => {
+        result.current.createSession({ name: "bash", cols: 120, rows: 40 });
+      });
+
+      expect(mockSocket.emit).toHaveBeenCalledWith("terminal:create", {
+        name: "bash",
+        cols: 120,
+        rows: 40,
+      });
+    });
+
+    it("should not emit terminal:create when disconnected", () => {
+      mockSocket.connected = false;
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        result.current.createSession();
+      });
+
+      expect(mockSocket.emit).not.toHaveBeenCalledWith("terminal:create", expect.anything());
+    });
+
+    it("should add session to sessions map when terminal:created fires", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.has("session-1")).toBe(true);
+        expect(result.current.sessions.get("session-1")?.name).toBe("Terminal 1");
+        expect(result.current.sessions.get("session-1")?.status).toBe("active");
+      });
+    });
+
+    it("should set first created session as active", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.activeSessionId).toBe("session-1");
+      });
+    });
+
+    it("should not change active session when a second session is created", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.activeSessionId).toBe("session-1");
+      });
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-2",
+          name: "Terminal 2",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.size).toBe(2);
+        // Active session should remain session-1
+        expect(result.current.activeSessionId).toBe("session-1");
+      });
+    });
+
+    it("should manage multiple sessions in the sessions map", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-2",
+          name: "Terminal 2",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.size).toBe(2);
+        expect(result.current.sessions.has("session-1")).toBe(true);
+        expect(result.current.sessions.has("session-2")).toBe(true);
+      });
+    });
+  });
+
+  // ==========================================
+  // Session close
+  // ==========================================
+
+  describe("closeSession", () => {
+    it("should emit terminal:close and remove session from map", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.has("session-1")).toBe(true);
+      });
+
+      act(() => {
+        result.current.closeSession("session-1");
+      });
+
+      expect(mockSocket.emit).toHaveBeenCalledWith("terminal:close", {
+        sessionId: "session-1",
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.has("session-1")).toBe(false);
+      });
+    });
+
+    it("should switch active session to another when active is closed", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-2",
+          name: "Terminal 2",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.activeSessionId).toBe("session-1");
+      });
+
+      act(() => {
+        result.current.closeSession("session-1");
+      });
+
+      await waitFor(() => {
+        // Should switch to session-2
+        expect(result.current.activeSessionId).toBe("session-2");
+        expect(result.current.sessions.has("session-1")).toBe(false);
+      });
+    });
+
+    it("should set activeSessionId to null when last session is closed", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.activeSessionId).toBe("session-1");
+      });
+
+      act(() => {
+        result.current.closeSession("session-1");
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.size).toBe(0);
+        expect(result.current.activeSessionId).toBeNull();
+      });
+    });
+  });
+
+  // ==========================================
+  // Rename session
+  // ==========================================
+
+  describe("renameSession", () => {
+    it("should update the session name in the sessions map", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.get("session-1")?.name).toBe("Terminal 1");
+      });
+
+      act(() => {
+        result.current.renameSession("session-1", "My Custom Shell");
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.get("session-1")?.name).toBe("My Custom Shell");
+      });
+    });
+
+    it("should not affect other session names", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-2",
+          name: "Terminal 2",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      act(() => {
+        result.current.renameSession("session-1", "Custom");
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.get("session-1")?.name).toBe("Custom");
+        expect(result.current.sessions.get("session-2")?.name).toBe("Terminal 2");
+      });
+    });
+  });
+
+  // ==========================================
+  // setActiveSession
+  // ==========================================
+
+  describe("setActiveSession", () => {
+    it("should update activeSessionId", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-2",
+          name: "Terminal 2",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.activeSessionId).toBe("session-1");
+      });
+
+      act(() => {
+        result.current.setActiveSession("session-2");
+      });
+
+      await waitFor(() => {
+        expect(result.current.activeSessionId).toBe("session-2");
+      });
+    });
+  });
+
+  // ==========================================
+  // sendInput
+  // ==========================================
+
+  describe("sendInput", () => {
+    it("should emit terminal:input with sessionId and data", () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers.connect?.(undefined);
+      });
+
+      act(() => {
+        result.current.sendInput("session-1", "ls -la\n");
+      });
+
+      expect(mockSocket.emit).toHaveBeenCalledWith("terminal:input", {
+        sessionId: "session-1",
+        data: "ls -la\n",
+      });
+    });
+
+    it("should not emit when disconnected", () => {
+      mockSocket.connected = false;
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        result.current.sendInput("session-1", "ls\n");
+      });
+
+      expect(mockSocket.emit).not.toHaveBeenCalledWith("terminal:input", expect.anything());
+    });
+  });
+
+  // ==========================================
+  // resize
+  // ==========================================
+
+  describe("resize", () => {
+    it("should emit terminal:resize with sessionId, cols, and rows", () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers.connect?.(undefined);
+      });
+
+      act(() => {
+        result.current.resize("session-1", 120, 40);
+      });
+
+      expect(mockSocket.emit).toHaveBeenCalledWith("terminal:resize", {
+        sessionId: "session-1",
+        cols: 120,
+        rows: 40,
+      });
+    });
+  });
+
+  // ==========================================
+  // Output callback routing
+  // ==========================================
+
+  describe("registerOutputCallback", () => {
+    it("should call the registered callback when terminal:output fires for that session", () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+      const cb = vi.fn();
+
+      act(() => {
+        result.current.registerOutputCallback("session-1", cb);
+      });
+
+      act(() => {
+        socketEventHandlers["terminal:output"]?.({
+          sessionId: "session-1",
+          data: "hello world\r\n",
+        });
+      });
+
+      expect(cb).toHaveBeenCalledWith("hello world\r\n");
+    });
+
+    it("should not call callback for a different session", () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+      const cbSession1 = vi.fn();
+      const cbSession2 = vi.fn();
+
+      act(() => {
+        result.current.registerOutputCallback("session-1", cbSession1);
+        result.current.registerOutputCallback("session-2", cbSession2);
+      });
+
+      act(() => {
+        socketEventHandlers["terminal:output"]?.({
+          sessionId: "session-1",
+          data: "output for session 1",
+        });
+      });
+
+      expect(cbSession1).toHaveBeenCalledWith("output for session 1");
+      expect(cbSession2).not.toHaveBeenCalled();
+    });
+
+    it("should stop calling callback after unsubscribing", () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+      const cb = vi.fn();
+      let unsubscribe: (() => void) | undefined;
+
+      act(() => {
+        unsubscribe = result.current.registerOutputCallback("session-1", cb);
+      });
+
+      act(() => {
+        unsubscribe?.();
+      });
+
+      act(() => {
+        socketEventHandlers["terminal:output"]?.({
+          sessionId: "session-1",
+          data: "should not arrive",
+        });
+      });
+
+      expect(cb).not.toHaveBeenCalled();
+    });
+
+    it("should support multiple callbacks for the same session", () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+      const cb1 = vi.fn();
+      const cb2 = vi.fn();
+
+      act(() => {
+        result.current.registerOutputCallback("session-1", cb1);
+        result.current.registerOutputCallback("session-1", cb2);
+      });
+
+      act(() => {
+        socketEventHandlers["terminal:output"]?.({
+          sessionId: "session-1",
+          data: "broadcast",
+        });
+      });
+
+      expect(cb1).toHaveBeenCalledWith("broadcast");
+      expect(cb2).toHaveBeenCalledWith("broadcast");
+    });
+  });
+
+  // ==========================================
+  // Exit event
+  // ==========================================
+
+  describe("terminal:exit handling", () => {
+    it("should mark session as exited when terminal:exit fires", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.get("session-1")?.status).toBe("active");
+      });
+
+      act(() => {
+        socketEventHandlers["terminal:exit"]?.({
+          sessionId: "session-1",
+          exitCode: 0,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.get("session-1")?.status).toBe("exited");
+        expect(result.current.sessions.get("session-1")?.exitCode).toBe(0);
+      });
+    });
+
+    it("should not remove the session from the map on exit", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      act(() => {
+        socketEventHandlers["terminal:exit"]?.({
+          sessionId: "session-1",
+          exitCode: 1,
+        });
+      });
+
+      await waitFor(() => {
+        // Session remains in map — user can restart or close it manually
+        expect(result.current.sessions.has("session-1")).toBe(true);
+      });
+    });
+  });
+
+  // ==========================================
+  // Disconnect handling
+  // ==========================================
+
+  describe("disconnect handling", () => {
+    it("should mark all active sessions as exited on disconnect", async () => {
+      const { result } = renderHook(() => useTerminalSessions({ token: "test-token" }));
+
+      act(() => {
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-1",
+          name: "Terminal 1",
+          cols: 80,
+          rows: 24,
+        });
+        socketEventHandlers["terminal:created"]?.({
+          sessionId: "session-2",
+          name: "Terminal 2",
+          cols: 80,
+          rows: 24,
+        });
+      });
+
+      await waitFor(() => {
+        expect(result.current.sessions.size).toBe(2);
+      });
+
+      act(() => {
+        socketEventHandlers.disconnect?.(undefined);
+      });
+
+      await waitFor(() => {
+        expect(result.current.isConnected).toBe(false);
+        expect(result.current.sessions.get("session-1")?.status).toBe("exited");
+        expect(result.current.sessions.get("session-2")?.status).toBe("exited");
+      });
+    });
+  });
+});
diff --git a/apps/web/src/hooks/useTerminalSessions.ts b/apps/web/src/hooks/useTerminalSessions.ts
new file mode 100644
index 0000000..0bf8ab5
--- /dev/null
+++ b/apps/web/src/hooks/useTerminalSessions.ts
@@ -0,0 +1,381 @@
+/**
+ * useTerminalSessions hook
+ *
+ * Manages multiple PTY terminal sessions over a single WebSocket connection
+ * to the /terminal namespace. Supports creating, closing, renaming, and switching
+ * between sessions, with per-session output callback multiplexing.
+ *
+ * Protocol (from terminal.gateway.ts):
+ * 1. Connect with auth token in handshake
+ * 2. Emit terminal:create { name?, cols?, rows? } → receive terminal:created { sessionId, name, cols, rows }
+ * 3. Emit terminal:input { sessionId, data } to send keystrokes
+ * 4. Receive terminal:output { sessionId, data } for stdout/stderr
+ * 5. Emit terminal:resize { sessionId, cols, rows } on window resize
+ * 6. Emit terminal:close { sessionId } to terminate the PTY
+ * 7. Receive terminal:exit { sessionId, exitCode, signal } on PTY exit
+ * 8. Receive terminal:error { message } on errors
+ */
+
+import { useEffect, useRef, useState, useCallback } from "react";
+import type { Socket } from "socket.io-client";
+import { io } from "socket.io-client";
+import { API_BASE_URL } from "@/lib/config";
+
+// ==========================================
+// Types
+// ==========================================
+
+export type SessionStatus = "active" | "exited";
+
+export interface SessionInfo {
+  /** Session identifier returned by the server */
+  sessionId: string;
+  /** Human-readable tab label */
+  name: string;
+  /** Whether the PTY process is still running */
+  status: SessionStatus;
+  /** Exit code, populated when status === 'exited' */
+  exitCode?: number;
+}
+
+export interface CreateSessionOptions {
+  /** Optional label for the new session */
+  name?: string;
+  /** Terminal columns */
+  cols?: number;
+  /** Terminal rows */
+  rows?: number;
+  /** Working directory */
+  cwd?: string;
+}
+
+export interface UseTerminalSessionsOptions {
+  /** Authentication token for WebSocket handshake */
+  token: string;
+}
+
+export interface UseTerminalSessionsReturn {
+  /** Map of sessionId → SessionInfo */
+  sessions: Map<string, SessionInfo>;
+  /** Currently active (visible) session id, or null if none */
+  activeSessionId: string | null;
+  /** Whether the WebSocket is connected */
+  isConnected: boolean;
+  /** Connection error message, if any */
+  connectionError: string | null;
+  /** Create a new PTY session */
+  createSession: (options?: CreateSessionOptions) => void;
+  /** Close an existing PTY session */
+  closeSession: (sessionId: string) => void;
+  /** Rename a session (local label only, not persisted to server) */
+  renameSession: (sessionId: string, name: string) => void;
+  /** Switch the visible session */
+  setActiveSession: (sessionId: string) => void;
+  /** Send keyboard input to a session */
+  sendInput: (sessionId: string, data: string) => void;
+  /** Notify the server of a terminal resize */
+  resize: (sessionId: string, cols: number, rows: number) => void;
+  /**
+   * Register a callback that receives output data for a specific session.
+   * Returns an unsubscribe function — call it during cleanup.
+   */
+  registerOutputCallback: (sessionId: string, cb: (data: string) => void) => () => void;
+}
+
+// ==========================================
+// Payload shapes matching terminal.dto.ts
+// ==========================================
+
+interface TerminalCreatedPayload {
+  sessionId: string;
+  name: string;
+  cols: number;
+  rows: number;
+}
+
+interface TerminalOutputPayload {
+  sessionId: string;
+  data: string;
+}
+
+interface TerminalExitPayload {
+  sessionId: string;
+  exitCode: number;
+  signal?: string;
+}
+
+interface TerminalErrorPayload {
+  message: string;
+}
+
+// ==========================================
+// Security validation
+// ==========================================
+
+function validateWebSocketSecurity(url: string): void {
+  const isProduction = process.env.NODE_ENV === "production";
+  const isSecure = url.startsWith("https://") || url.startsWith("wss://");
+
+  if (isProduction && !isSecure) {
+    console.warn(
+      "[Security Warning] Terminal WebSocket using insecure protocol (ws://). " +
+        "Authentication tokens may be exposed. Use wss:// in production."
+    );
+  }
+}
+
+// ==========================================
+// Hook
+// ==========================================
+
+/**
+ * Hook for managing multiple PTY terminal sessions over a single WebSocket connection.
+ *
+ * @param options - Configuration including auth token
+ * @returns Multi-session terminal state and control functions
+ */
+export function useTerminalSessions(
+  options: UseTerminalSessionsOptions
+): UseTerminalSessionsReturn {
+  const { token } = options;
+
+  const socketRef = useRef<Socket | null>(null);
+  // Per-session output callback registry; keyed by sessionId
+  const outputCallbacksRef = useRef<Map<string, Set<(data: string) => void>>>(new Map());
+
+  const [sessions, setSessions] = useState<Map<string, SessionInfo>>(new Map());
+  const [activeSessionId, setActiveSessionIdState] = useState<string | null>(null);
+  const [isConnected, setIsConnected] = useState(false);
+  const [connectionError, setConnectionError] = useState<string | null>(null);
+
+  // ==========================================
+  // Auto-select first available session when active becomes null
+  // ==========================================
+
+  useEffect(() => {
+    if (activeSessionId === null && sessions.size > 0) {
+      const firstId = sessions.keys().next().value;
+      if (firstId !== undefined) {
+        setActiveSessionIdState(firstId);
+      }
+    }
+  }, [activeSessionId, sessions]);
+
+  // ==========================================
+  // WebSocket connection
+  // ==========================================
+
+  useEffect(() => {
+    if (!token) {
+      return;
+    }
+
+    const wsUrl = API_BASE_URL;
+    validateWebSocketSecurity(wsUrl);
+
+    setConnectionError(null);
+
+    const socket = io(`${wsUrl}/terminal`, {
+      auth: { token },
+      transports: ["websocket", "polling"],
+    });
+
+    socketRef.current = socket;
+
+    const handleConnect = (): void => {
+      setIsConnected(true);
+      setConnectionError(null);
+    };
+
+    const handleDisconnect = (): void => {
+      setIsConnected(false);
+      // Sessions remain in the Map but are no longer interactive
+      setSessions((prev) => {
+        const next = new Map(prev);
+        for (const [id, info] of next) {
+          if (info.status === "active") {
+            next.set(id, { ...info, status: "exited" });
+          }
+        }
+        return next;
+      });
+    };
+
+    const handleConnectError = (error: Error): void => {
+      setConnectionError(error.message || "Terminal connection failed");
+      setIsConnected(false);
+    };
+
+    const handleTerminalCreated = (payload: TerminalCreatedPayload): void => {
+      setSessions((prev) => {
+        const next = new Map(prev);
+        next.set(payload.sessionId, {
+          sessionId: payload.sessionId,
+          name: payload.name,
+          status: "active",
+        });
+        return next;
+      });
+      // Set as active session if none is currently active
+      setActiveSessionIdState((prev) => prev ?? payload.sessionId);
+    };
+
+    const handleTerminalOutput = (payload: TerminalOutputPayload): void => {
+      const callbacks = outputCallbacksRef.current.get(payload.sessionId);
+      if (callbacks) {
+        for (const cb of callbacks) {
+          cb(payload.data);
+        }
+      }
+    };
+
+    const handleTerminalExit = (payload: TerminalExitPayload): void => {
+      setSessions((prev) => {
+        const next = new Map(prev);
+        const session = next.get(payload.sessionId);
+        if (session) {
+          next.set(payload.sessionId, {
+            ...session,
+            status: "exited",
+            exitCode: payload.exitCode,
+          });
+        }
+        return next;
+      });
+    };
+
+    const handleTerminalError = (payload: TerminalErrorPayload): void => {
+      console.error("[Terminal] Error:", payload.message);
+    };
+
+    socket.on("connect", handleConnect);
+    socket.on("disconnect", handleDisconnect);
+    socket.on("connect_error", handleConnectError);
+    socket.on("terminal:created", handleTerminalCreated);
+    socket.on("terminal:output", handleTerminalOutput);
+    socket.on("terminal:exit", handleTerminalExit);
+    socket.on("terminal:error", handleTerminalError);
+
+    return (): void => {
+      socket.off("connect", handleConnect);
+      socket.off("disconnect", handleDisconnect);
+      socket.off("connect_error", handleConnectError);
+      socket.off("terminal:created", handleTerminalCreated);
+      socket.off("terminal:output", handleTerminalOutput);
+      socket.off("terminal:exit", handleTerminalExit);
+      socket.off("terminal:error", handleTerminalError);
+
+      // Close all active sessions before disconnecting
+      const currentSessions = sessions;
+      for (const [id, info] of currentSessions) {
+        if (info.status === "active") {
+          socket.emit("terminal:close", { sessionId: id });
+        }
+      }
+
+      socket.disconnect();
+      socketRef.current = null;
+    };
+    // Intentional: token is the only dep that should trigger reconnection
+  }, [token]);
+
+  // ==========================================
+  // Control functions
+  // ==========================================
+
+  const createSession = useCallback((createOptions: CreateSessionOptions = {}): void => {
+    const socket = socketRef.current;
+    if (!socket?.connected) {
+      return;
+    }
+
+    const payload: Record<string, unknown> = {};
+    if (createOptions.name !== undefined) payload.name = createOptions.name;
+    if (createOptions.cols !== undefined) payload.cols = createOptions.cols;
+    if (createOptions.rows !== undefined) payload.rows = createOptions.rows;
+    if (createOptions.cwd !== undefined) payload.cwd = createOptions.cwd;
+
+    socket.emit("terminal:create", payload);
+  }, []);
+
+  const closeSession = useCallback((sessionId: string): void => {
+    const socket = socketRef.current;
+    if (socket?.connected) {
+      socket.emit("terminal:close", { sessionId });
+    }
+
+    setSessions((prev) => {
+      const next = new Map(prev);
+      next.delete(sessionId);
+      return next;
+    });
+
+    // If closing the active session, activeSessionId becomes null
+    // and the auto-select useEffect will pick the first remaining session
+    setActiveSessionIdState((prev) => (prev === sessionId ? null : prev));
+  }, []);
+
+  const renameSession = useCallback((sessionId: string, name: string): void => {
+    setSessions((prev) => {
+      const next = new Map(prev);
+      const session = next.get(sessionId);
+      if (session) {
+        next.set(sessionId, { ...session, name });
+      }
+      return next;
+    });
+  }, []);
+
+  const setActiveSession = useCallback((sessionId: string): void => {
+    setActiveSessionIdState(sessionId);
+  }, []);
+
+  const sendInput = useCallback((sessionId: string, data: string): void => {
+    const socket = socketRef.current;
+    if (!socket?.connected) {
+      return;
+    }
+    socket.emit("terminal:input", { sessionId, data });
+  }, []);
+
+  const resize = useCallback((sessionId: string, cols: number, rows: number): void => {
+    const socket = socketRef.current;
+    if (!socket?.connected) {
+      return;
+    }
+    socket.emit("terminal:resize", { sessionId, cols, rows });
+  }, []);
+
+  const registerOutputCallback = useCallback(
+    (sessionId: string, cb: (data: string) => void): (() => void) => {
+      const registry = outputCallbacksRef.current;
+      if (!registry.has(sessionId)) {
+        registry.set(sessionId, new Set());
+      }
+      // Safe: we just ensured the key exists
+      const callbackSet = registry.get(sessionId);
+      if (callbackSet) {
+        callbackSet.add(cb);
+      }
+
+      return (): void => {
+        registry.get(sessionId)?.delete(cb);
+      };
+    },
+    []
+  );
+
+  return {
+    sessions,
+    activeSessionId,
+    isConnected,
+    connectionError,
+    createSession,
+    closeSession,
+    renameSession,
+    setActiveSession,
+    sendInput,
+    resize,
+    registerOutputCallback,
+  };
+}