diff --git a/server/src/__tests__/workspace-runtime.test.ts b/server/src/__tests__/workspace-runtime.test.ts
index e1908c5f40b..cf0c144a1a3 100644
--- a/server/src/__tests__/workspace-runtime.test.ts
+++ b/server/src/__tests__/workspace-runtime.test.ts
@@ -1993,13 +1993,18 @@ describe("resolveShell (shell fallback)", () => {
   });
 
   it("returns process.env.SHELL when set", () => {
-    process.env.SHELL = "/usr/bin/zsh";
-    expect(resolveShell()).toBe("/usr/bin/zsh");
+    process.env.SHELL = process.execPath;
+    expect(resolveShell()).toBe(process.execPath);
   });
 
   it("trims whitespace from SHELL env var", () => {
-    process.env.SHELL = "  /usr/bin/fish  ";
-    expect(resolveShell()).toBe("/usr/bin/fish");
+    process.env.SHELL = `  ${process.execPath}  `;
+    expect(resolveShell()).toBe(process.execPath);
+  });
+
+  it("preserves non-absolute shell names so PATH lookup still works", () => {
+    process.env.SHELL = "zsh";
+    expect(resolveShell()).toBe("zsh");
   });
 
   it("falls back to /bin/sh on non-Windows when SHELL is unset", () => {
@@ -2031,6 +2036,12 @@ describe("resolveShell (shell fallback)", () => {
     Object.defineProperty(process, "platform", { value: "win32" });
     expect(resolveShell()).toBe("sh");
   });
+
+  it("falls back when SHELL points to a missing absolute path", () => {
+    process.env.SHELL = "/definitely/missing/zsh";
+    Object.defineProperty(process, "platform", { value: "linux" });
+    expect(resolveShell()).toBe("/bin/sh");
+  });
 });
 
 describeEmbeddedPostgres("workspace runtime startup reconciliation", () => {
diff --git a/server/src/services/workspace-runtime.ts b/server/src/services/workspace-runtime.ts
index 846af64f340..dce5a258ba7 100644
--- a/server/src/services/workspace-runtime.ts
+++ b/server/src/services/workspace-runtime.ts
@@ -26,7 +26,11 @@ import { readExecutionWorkspaceConfig } from "./execution-workspaces.js";
 import { readProjectWorkspaceRuntimeConfig } from "./project-workspace-runtime-config.js";
 
 export function resolveShell(): string {
-  return process.env.SHELL?.trim() || (process.platform === "win32" ? "sh" : "/bin/sh");
+  const fallback = process.platform === "win32" ? "sh" : "/bin/sh";
+  const shell = process.env.SHELL?.trim();
+  if (!shell) return fallback;
+  if (path.isAbsolute(shell) && !existsSync(shell)) return fallback;
+  return shell;
 }
 
 export interface ExecutionWorkspaceInput {
@@ -1735,6 +1739,11 @@ async function startLocalRuntimeService(input: {
     detached: process.platform !== "win32",
     stdio: ["ignore", "pipe", "pipe"],
   });
+  const spawnErrorPromise = new Promise<never>((_, reject) => {
+    child.once("error", (err) => {
+      reject(err);
+    });
+  });
   let stderrExcerpt = "";
   let stdoutExcerpt = "";
   child.stdout?.on("data", async (chunk) => {
@@ -1749,7 +1758,10 @@ async function startLocalRuntimeService(input: {
   });
 
   try {
-    await waitForReadiness({ service: input.service, url });
+    await Promise.race([
+      waitForReadiness({ service: input.service, url }),
+      spawnErrorPromise,
+    ]);
   } catch (err) {
     terminateChildProcess(child);
     throw new Error(