diff --git a/ui/src/components/NewIssueDialog.test.tsx b/ui/src/components/NewIssueDialog.test.tsx
index 37ad879edde..bf608f1d0ae 100644
--- a/ui/src/components/NewIssueDialog.test.tsx
+++ b/ui/src/components/NewIssueDialog.test.tsx
@@ -284,6 +284,7 @@ describe("NewIssueDialog", () => {
     mockAuthApi.getSession.mockResolvedValue({ user: { id: "user-1" } });
     mockAssetsApi.uploadImage.mockResolvedValue({ contentPath: "/uploads/asset.png" });
     mockInstanceSettingsApi.getExperimental.mockResolvedValue({ enableIsolatedWorkspaces: false });
+    localStorage.clear();
     mockIssuesApi.create.mockResolvedValue({
       id: "issue-2",
       companyId: "company-1",
@@ -391,6 +392,17 @@ describe("NewIssueDialog", () => {
   });
 
   it("submits the latest locally typed title and description", async () => {
+    let resolveProjects: (projects: Array<{
+      id: string;
+      name: string;
+      description: string | null;
+      archivedAt: string | null;
+      color: string;
+    }>) => void = () => undefined;
+    mockProjectsApi.list.mockReturnValue(new Promise((resolve) => {
+      resolveProjects = resolve;
+    }));
+
     const { root } = renderDialog(container);
     await flush();
 
@@ -419,6 +431,20 @@ describe("NewIssueDialog", () => {
     });
     await flush();
 
+    await act(async () => {
+      resolveProjects([
+        {
+          id: "project-1",
+          name: "Alpha",
+          description: null,
+          archivedAt: null,
+          color: "#445566",
+        },
+      ]);
+      await Promise.resolve();
+    });
+    await flush();
+
     const submitButton = Array.from(container.querySelectorAll("button"))
       .find((button) => button.textContent?.includes("Create Issue"));
     expect(submitButton).not.toBeUndefined();
diff --git a/ui/src/components/NewIssueDialog.tsx b/ui/src/components/NewIssueDialog.tsx
index b5623322acf..e05d13795a8 100644
--- a/ui/src/components/NewIssueDialog.tsx
+++ b/ui/src/components/NewIssueDialog.tsx
@@ -417,6 +417,7 @@ export function NewIssueDialog() {
   const [isFileDragOver, setIsFileDragOver] = useState(false);
   const draftTimer = useRef<ReturnType<typeof setTimeout> | null>(null);
   const executionWorkspaceDefaultProjectId = useRef<string | null>(null);
+  const initializationKeyRef = useRef<string | null>(null);
 
   const effectiveCompanyId = dialogCompanyId ?? selectedCompanyId;
   const dialogCompany = companies.find((c) => c.id === effectiveCompanyId) ?? selectedCompany;
@@ -673,7 +674,13 @@ export function NewIssueDialog() {
 
   // Restore draft or apply defaults when dialog opens
   useEffect(() => {
-    if (!newIssueOpen) return;
+    if (!newIssueOpen) {
+      initializationKeyRef.current = null;
+      return;
+    }
+    const initializationKey = `${selectedCompanyId ?? ""}:${JSON.stringify(newIssueDefaults)}`;
+    if (initializationKeyRef.current === initializationKey) return;
+    initializationKeyRef.current = initializationKey;
     setDialogCompanyId(selectedCompanyId);
     executionWorkspaceDefaultProjectId.current = null;
 
@@ -681,6 +688,7 @@ export function NewIssueDialog() {
     if (newIssueDefaults.parentId) {
       const defaultProjectId = newIssueDefaults.projectId ?? "";
       const defaultProject = orderedProjects.find((project) => project.id === defaultProjectId);
+      const hasExplicitProjectWorkspaceId = newIssueDefaults.projectWorkspaceId !== undefined;
       const defaultProjectWorkspaceId = newIssueDefaults.projectWorkspaceId
         ?? defaultProjectWorkspaceIdForProject(defaultProject);
       const defaultExecutionWorkspaceMode = newIssueDefaults.executionWorkspaceId
@@ -697,7 +705,9 @@ export function NewIssueDialog() {
       setAssigneeChrome(false);
       setExecutionWorkspaceMode(defaultExecutionWorkspaceMode);
       setSelectedExecutionWorkspaceId(newIssueDefaults.executionWorkspaceId ?? "");
-      executionWorkspaceDefaultProjectId.current = defaultProjectId || null;
+      executionWorkspaceDefaultProjectId.current = hasExplicitProjectWorkspaceId || defaultProject
+        ? defaultProjectId || null
+        : null;
     } else if (newIssueDefaults.title) {
       setIssueText(newIssueDefaults.title, newIssueDefaults.description ?? "");
       setStatus(newIssueDefaults.status ?? "todo");
@@ -716,7 +726,7 @@ export function NewIssueDialog() {
       setAssigneeChrome(false);
       setExecutionWorkspaceMode(defaultExecutionWorkspaceModeForProject(defaultProject));
       setSelectedExecutionWorkspaceId("");
-      executionWorkspaceDefaultProjectId.current = defaultProjectId || null;
+      executionWorkspaceDefaultProjectId.current = defaultProject ? defaultProjectId || null : null;
     } else if (draft && draft.title.trim()) {
       const restoredProjectId = newIssueDefaults.projectId ?? draft.projectId;
       const restoredProject = orderedProjects.find((project) => project.id === restoredProjectId);
@@ -742,7 +752,9 @@ export function NewIssueDialog() {
           ?? (draft.useIsolatedExecutionWorkspace ? "isolated_workspace" : defaultExecutionWorkspaceModeForProject(restoredProject)),
       );
       setSelectedExecutionWorkspaceId(draft.selectedExecutionWorkspaceId ?? "");
-      executionWorkspaceDefaultProjectId.current = restoredProjectId || null;
+      executionWorkspaceDefaultProjectId.current = draft.projectWorkspaceId || restoredProject
+        ? restoredProjectId || null
+        : null;
     } else {
       const defaultProjectId = newIssueDefaults.projectId ?? "";
       const defaultProject = orderedProjects.find((project) => project.id === defaultProjectId);
@@ -761,9 +773,9 @@ export function NewIssueDialog() {
       setAssigneeChrome(false);
       setExecutionWorkspaceMode(defaultExecutionWorkspaceModeForProject(defaultProject));
       setSelectedExecutionWorkspaceId("");
-      executionWorkspaceDefaultProjectId.current = defaultProjectId || null;
+      executionWorkspaceDefaultProjectId.current = defaultProject ? defaultProjectId || null : null;
     }
-  }, [newIssueOpen, newIssueDefaults, orderedProjects, setIssueText]);
+  }, [newIssueOpen, newIssueDefaults, orderedProjects, selectedCompanyId, setIssueText]);
 
   useEffect(() => {
     if (!supportsAssigneeOverrides) {
@@ -815,6 +827,7 @@ export function NewIssueDialog() {
     setIsFileDragOver(false);
     setCompanyOpen(false);
     executionWorkspaceDefaultProjectId.current = null;
+    initializationKeyRef.current = null;
   }
 
   function handleCompanyChange(companyId: string) {
@@ -1060,7 +1073,12 @@ export function NewIssueDialog() {
   }, [orderedProjects]);
 
   useEffect(() => {
-    if (!newIssueOpen || !projectId || executionWorkspaceDefaultProjectId.current === projectId) {
+    if (
+      !newIssueOpen ||
+      !projectId ||
+      selectedExecutionWorkspaceId ||
+      executionWorkspaceDefaultProjectId.current === projectId
+    ) {
       return;
     }
     const project = orderedProjects.find((entry) => entry.id === projectId);
@@ -1069,7 +1087,7 @@ export function NewIssueDialog() {
     setProjectWorkspaceId(defaultProjectWorkspaceIdForProject(project));
     setExecutionWorkspaceMode(defaultExecutionWorkspaceModeForProject(project));
     setSelectedExecutionWorkspaceId("");
-  }, [newIssueOpen, orderedProjects, projectId]);
+  }, [newIssueOpen, orderedProjects, projectId, selectedExecutionWorkspaceId]);
   const modelOverrideOptions = useMemo<InlineEntityOption[]>(
     () => {
       return [...(assigneeAdapterModels ?? [])]