diff --git a/apps/desktop/src/settings/DesktopClientSettings.test.ts b/apps/desktop/src/settings/DesktopClientSettings.test.ts
index 28cce3cfb507..0d9ddc8fde91 100644
--- a/apps/desktop/src/settings/DesktopClientSettings.test.ts
+++ b/apps/desktop/src/settings/DesktopClientSettings.test.ts
@@ -26,7 +26,6 @@ const clientSettings: ClientSettings = {
   confirmThreadArchive: true,
   confirmThreadDelete: false,
   confirmThreadUnpin: false,
-  continueThreadsAfterServerUpdate: true,
   contextWindowMeterEnabled: false,
   composerCollapseOnBlur: false,
   composerCollapseOnScroll: true,
diff --git a/apps/server/src/provider/Layers/ProviderService.test.ts b/apps/server/src/provider/Layers/ProviderService.test.ts
index 5e59960685a7..95e5a7983346 100644
--- a/apps/server/src/provider/Layers/ProviderService.test.ts
+++ b/apps/server/src/provider/Layers/ProviderService.test.ts
@@ -452,6 +452,125 @@ function makeProviderServiceLayer(
   };
 }
 
+for (const [enabled, completed] of [
+  [false, false],
+  [true, false],
+  [true, true],
+] as const) {
+  it.effect(
+    `persists shutdown recovery before stopping providers when enabled=${enabled}, completed=${completed}`,
+    () =>
+      Effect.gen(function* () {
+        const codex = makeFakeCodexAdapter();
+        const persistence = yield* Layer.build(
+          ProviderSessionDirectoryLive.pipe(
+            Layer.provide(
+              ProviderSessionRuntime.layer.pipe(Layer.provide(SqlitePersistenceMemory)),
+            ),
+          ),
+        );
+        const directory = yield* ProviderSessionDirectory.ProviderSessionDirectory.pipe(
+          Effect.provide(persistence),
+        );
+        const threadId = asThreadId("shutdown-recovery");
+        const turnId = asTurnId("shutdown-recovery-turn");
+        const scope = yield* Scope.make();
+        const services = yield* Layer.build(
+          makeProviderServiceLive().pipe(
+            Layer.provide(
+              Layer.succeed(ProviderSessionDirectory.ProviderSessionDirectory, directory),
+            ),
+            Layer.provide(
+              Layer.succeed(
+                ProviderAdapterRegistry.ProviderAdapterRegistry,
+                makeStaticInstanceRegistry([[codexInstanceId, codex.adapter]]),
+              ),
+            ),
+            Layer.provide(ServerSettings.layerTest({ continueThreadsAfterServerUpdate: enabled })),
+            Layer.provide(serverConfigTestLayer),
+            Layer.provide(AnalyticsService.layerTest),
+            Layer.provide(
+              Layer.succeed(
+                ProviderEventLoggers.ProviderEventLoggers,
+                ProviderEventLoggers.NoOpProviderEventLoggers,
+              ),
+            ),
+          ),
+        ).pipe(Scope.provide(scope));
+        const provider = yield* ProviderService.ProviderService.pipe(Effect.provide(services));
+        const session = yield* provider.startSession(threadId, {
+          provider: CODEX_DRIVER,
+          providerInstanceId: codexInstanceId,
+          threadId,
+          runtimeMode: "full-access",
+        });
+        codex.listSessions.mockReturnValue(
+          Effect.succeed([
+            {
+              ...session,
+              status: completed ? "ready" : "running",
+              activeTurnId: completed ? undefined : turnId,
+            },
+          ]),
+        );
+        const pending = yield* directory.getBinding(threadId);
+        assert(Option.isSome(pending));
+        yield* directory.upsert({
+          ...pending.value,
+          runtimePayload: { activeTurnId: null, continueAfterServerUpdate: turnId },
+        });
+        const accepted = yield* provider.sendTurn({ threadId, continuation: true });
+        const admitted = yield* directory.getBinding(threadId);
+        assert(Option.isSome(admitted));
+        assert.propertyVal(admitted.value.runtimePayload, "activeTurnId", accepted.turnId);
+        assert.propertyVal(admitted.value.runtimePayload, "continueAfterServerUpdate", null);
+        if (completed) {
+          // Updates can mark an already-admitted turn immediately before it finishes.
+          yield* directory.upsert({
+            ...admitted.value,
+            runtimePayload: {
+              continueAfterServerUpdate: accepted.turnId,
+              continueAfterServerUpdatePrepared: null,
+            },
+          });
+        }
+        const markers: unknown[] = [];
+        codex.stopAll.mockImplementation(() =>
+          Effect.gen(function* () {
+            const binding = yield* directory.getBinding(threadId);
+            assert(Option.isSome(binding));
+            markers.push(binding.value.runtimePayload);
+          }).pipe(Effect.orDie),
+        );
+        yield* Scope.close(scope, Exit.void);
+        const binding = yield* directory.getBinding(threadId);
+        assert(Option.isSome(binding));
+        assert.equal(codex.stopAll.mock.calls.length, 1);
+        assert.deepStrictEqual(binding.value.resumeCursor, session.resumeCursor);
+        assert.equal(binding.value.status, "stopped");
+        assert.propertyVal(markers[0], "activeTurnId", completed ? null : turnId);
+        if (enabled && !completed) {
+          assert.propertyVal(markers[0], "continueAfterServerUpdate", turnId);
+          assert.propertyVal(binding.value.runtimePayload, "continueAfterServerUpdate", turnId);
+        } else if (completed) {
+          assert.propertyVal(
+            binding.value.runtimePayload,
+            "continueAfterServerUpdate",
+            accepted.turnId,
+          );
+          assert.propertyVal(
+            binding.value.runtimePayload,
+            "continueAfterServerUpdatePrepared",
+            null,
+          );
+        } else {
+          assert.propertyVal(markers[0], "continueAfterServerUpdate", null);
+          assert.propertyVal(binding.value.runtimePayload, "continueAfterServerUpdate", null);
+        }
+      }).pipe(Effect.provide(NodeServices.layer)),
+  );
+}
+
 it.effect("ProviderServiceLive catches stopAll failures during shutdown", () =>
   Effect.gen(function* () {
     const codex = makeFakeCodexAdapter();
diff --git a/apps/server/src/provider/Layers/ProviderService.ts b/apps/server/src/provider/Layers/ProviderService.ts
index 2098cacda5eb..cf9d9b395d5b 100644
--- a/apps/server/src/provider/Layers/ProviderService.ts
+++ b/apps/server/src/provider/Layers/ProviderService.ts
@@ -223,6 +223,7 @@ function toRuntimePayloadFromSession(
   session: ProviderSession,
   extra?: {
     readonly modelSelection?: unknown;
+    readonly continueAfterServerUpdate?: TurnId;
     readonly lastRuntimeEvent?: string;
     readonly lastRuntimeEventAt?: string;
   },
@@ -232,6 +233,9 @@ function toRuntimePayloadFromSession(
     model: session.model ?? null,
     activeTurnId: session.activeTurnId ?? null,
     lastError: session.lastError ?? null,
+    ...(extra?.continueAfterServerUpdate !== undefined
+      ? { continueAfterServerUpdate: extra.continueAfterServerUpdate }
+      : {}),
     ...(extra?.modelSelection !== undefined ? { modelSelection: extra.modelSelection } : {}),
     ...(extra?.lastRuntimeEvent !== undefined ? { lastRuntimeEvent: extra.lastRuntimeEvent } : {}),
     ...(extra?.lastRuntimeEventAt !== undefined
@@ -831,6 +835,7 @@ const makeProviderService = Effect.fn("makeProviderService")(function* (
     threadId: ThreadId,
     extra?: {
       readonly modelSelection?: unknown;
+      readonly continueAfterServerUpdate?: TurnId;
       readonly lastRuntimeEvent?: string;
       readonly lastRuntimeEventAt?: string;
     },
@@ -1433,6 +1438,9 @@ const makeProviderService = Effect.fn("makeProviderService")(function* (
         runtimePayload: {
           ...(input.modelSelection !== undefined ? { modelSelection: input.modelSelection } : {}),
           activeTurnId: turn.turnId,
+          // Admission and marker consumption must survive the same restart.
+          continueAfterServerUpdate: null,
+          continueAfterServerUpdatePrepared: null,
           lastRuntimeEvent: "provider.sendTurn",
           lastRuntimeEventAt: yield* nowIso,
         },
@@ -1733,6 +1741,8 @@ const makeProviderService = Effect.fn("makeProviderService")(function* (
           status: "stopped",
           runtimePayload: {
             activeTurnId: null,
+            continueAfterServerUpdate: null,
+            continueAfterServerUpdatePrepared: null,
           },
         });
         yield* analytics.record("provider.session.stopped", {
@@ -1942,6 +1952,10 @@ const makeProviderService = Effect.fn("makeProviderService")(function* (
   );
 
   const runStopAll = Effect.fn("runStopAll")(function* () {
+    const continueAfterRestart = yield* serverSettings.getSettings.pipe(
+      Effect.map((settings) => settings.continueThreadsAfterServerUpdate),
+      Effect.orElseSucceed(() => false),
+    );
     const properties = yield* Ref.modify(turnAnalytics, (state) => {
       const completed: Array<Readonly<Record<string, unknown>>> = [];
       for (const [sessionKey, session] of state.sessions) {
@@ -1969,6 +1983,9 @@ const makeProviderService = Effect.fn("makeProviderService")(function* (
     yield* Effect.forEach(activeSessions, (session) =>
       Effect.flatMap(nowIso, (lastRuntimeEventAt) =>
         upsertSessionBinding(session, session.threadId, {
+          ...(continueAfterRestart && session.status === "running" && session.activeTurnId
+            ? { continueAfterServerUpdate: session.activeTurnId }
+            : {}),
           lastRuntimeEvent: "provider.stopAll",
           lastRuntimeEventAt,
         }),
diff --git a/apps/server/src/serverRuntimeStartup.reconcile.test.ts b/apps/server/src/serverRuntimeStartup.reconcile.test.ts
index 39c284330d46..2c95a6163acd 100644
--- a/apps/server/src/serverRuntimeStartup.reconcile.test.ts
+++ b/apps/server/src/serverRuntimeStartup.reconcile.test.ts
@@ -1,6 +1,7 @@
 import * as NodeServices from "@effect/platform-node/NodeServices";
 import {
   type OrchestrationCommand,
+  type OrchestrationSessionStatus,
   ProviderDriverKind,
   ProviderInstanceId,
   type ProviderSendTurnInput,
@@ -10,15 +11,21 @@ import {
 import { assert, it } from "@effect/vitest";
 import * as Deferred from "effect/Deferred";
 import * as Effect from "effect/Effect";
+import * as Layer from "effect/Layer";
 import * as Option from "effect/Option";
 import * as Stream from "effect/Stream";
 
 import { OrchestrationCommandInvariantError } from "./orchestration/Errors.ts";
 import * as OrchestrationEngine from "./orchestration/Services/OrchestrationEngine.ts";
 import * as ProjectionSnapshotQuery from "./orchestration/Services/ProjectionSnapshotQuery.ts";
-import { ProviderSessionDirectoryPersistenceError } from "./provider/Errors.ts";
+import {
+  ProviderSessionDirectoryPersistenceError,
+  ProviderSessionNotFoundError,
+} from "./provider/Errors.ts";
 import * as ProviderService from "./provider/Services/ProviderService.ts";
 import * as ProviderSessionDirectory from "./provider/Services/ProviderSessionDirectory.ts";
+import { ServerActivation } from "./serverActivation.ts";
+import * as ServerSettings from "./serverSettings.ts";
 import * as ServerRuntimeStartup from "./serverRuntimeStartup.ts";
 
 const providerInstanceId = ProviderInstanceId.make("codex");
@@ -26,7 +33,7 @@ const updatedAt = "2026-08-20T12:00:00.000Z";
 
 const makeThread = (
   id: string,
-  status: "starting" | "running" | "ready" | "stopped" | "error",
+  status: OrchestrationSessionStatus,
   activeTurnId: TurnId | null = null,
   archivedAt: string | null = null,
   deletedAt: string | null = null,
@@ -73,6 +80,7 @@ const queryWithThreads = (threads: ReadonlyArray<ReturnType<typeof makeThread>>)
 
 const runReconciliation = (input: {
   readonly threads: ReadonlyArray<ReturnType<typeof makeThread>>;
+  readonly continueAfterRestart?: boolean;
   readonly liveThreadIds?: ReadonlyArray<ThreadId>;
   readonly providerService?: ProviderService.ProviderService["Service"];
   readonly directory: ProviderSessionDirectory.ProviderSessionDirectory["Service"];
@@ -97,7 +105,14 @@ const runReconciliation = (input: {
       subscribeDomainEvents: Effect.succeed(Stream.empty),
       latestSequence: Effect.succeed(0),
     }),
-    Effect.provide(NodeServices.layer),
+    Effect.provide(
+      Layer.mergeAll(
+        ServerSettings.layerTest({
+          continueThreadsAfterServerUpdate: input.continueAfterRestart ?? false,
+        }),
+        NodeServices.layer,
+      ),
+    ),
   );
 
 it.effect("marks active running sessions that have persisted resume state", () => {
@@ -138,7 +153,7 @@ it.effect("marks active running sessions that have persisted resume state", () =
       upsert: (binding) => Effect.sync(() => upserts.push(binding)),
       getProvider: () => Effect.die("unused"),
       listThreadIds: () => Effect.die("unused"),
-      listBindings: () => Effect.die("unused"),
+      listBindings: () => Effect.succeed([]),
     }),
     Effect.tap((marked) =>
       Effect.sync(() => {
@@ -147,169 +162,186 @@ it.effect("marks active running sessions that have persisted resume state", () =
         assert.deepStrictEqual(upserts[0]?.runtimePayload, {
           activeTurnId: "turn-mark-active",
           continueAfterServerUpdate: active.session.activeTurnId,
+          continueAfterServerUpdatePrepared: null,
         });
       }),
     ),
   );
 });
 
-it.effect("continues marked sessions after activation with provider-specific input", () =>
-  Effect.gen(function* () {
-    const codex = makeThread(
-      "thread-continue-codex",
-      "running",
-      TurnId.make("turn-continue-codex"),
-    );
-    const fallback = makeThread("thread-continue-fallback", "starting");
-    const fallbackContinuationTurnId = TurnId.make("turn-continue-fallback");
-    const fallbackProviderInstanceId = ProviderInstanceId.make("claudeAgent");
-    const continuationSent = yield* Deferred.make<void>();
-    const continuationCleared = yield* Deferred.make<void>();
-    const sends: ProviderSendTurnInput[] = [];
-    const dispatched: OrchestrationCommand[] = [];
-    const upserts: ProviderSessionDirectory.ProviderRuntimeBinding[] = [];
-    const bindings = new Map<ThreadId, ProviderSessionDirectory.ProviderRuntimeBinding>(
-      [codex, fallback].map((thread) => [
-        thread.id,
-        {
-          threadId: thread.id,
-          provider:
-            thread.id === codex.id
-              ? ProviderDriverKind.make("codex")
-              : ProviderDriverKind.make("claudeAgent"),
-          providerInstanceId:
-            thread.id === codex.id ? providerInstanceId : fallbackProviderInstanceId,
-          status: "running" as const,
-          runtimePayload: {
-            continueAfterServerUpdate:
-              thread.id === codex.id ? codex.session.activeTurnId : fallbackContinuationTurnId,
+it.effect.each(["marked update", "opt-in restart"] as const)(
+  "continues %s sessions after activation with provider-specific input",
+  (recovery) =>
+    Effect.gen(function* () {
+      const codex = makeThread(
+        "thread-continue-codex",
+        "running",
+        TurnId.make("turn-continue-codex"),
+      );
+      const fallbackContinuationTurnId = TurnId.make("turn-continue-fallback");
+      const fallback = makeThread(
+        "thread-continue-fallback",
+        recovery === "marked update" ? "starting" : "running",
+        recovery === "marked update" ? null : fallbackContinuationTurnId,
+      );
+      const fallbackProviderInstanceId = ProviderInstanceId.make("claudeAgent");
+      const continuationSent = yield* Deferred.make<void>();
+      const continuationCleared = yield* Deferred.make<void>();
+      const sends: ProviderSendTurnInput[] = [];
+      const dispatched: OrchestrationCommand[] = [];
+      const upserts: ProviderSessionDirectory.ProviderRuntimeBinding[] = [];
+      const bindings = new Map<ThreadId, ProviderSessionDirectory.ProviderRuntimeBinding>(
+        [codex, fallback].map((thread) => [
+          thread.id,
+          {
+            threadId: thread.id,
+            provider:
+              thread.id === codex.id
+                ? ProviderDriverKind.make("codex")
+                : ProviderDriverKind.make("claudeAgent"),
+            providerInstanceId:
+              thread.id === codex.id ? providerInstanceId : fallbackProviderInstanceId,
+            status: "running" as const,
+            resumeCursor: { threadId: thread.id },
+            runtimePayload:
+              recovery === "marked update"
+                ? {
+                    continueAfterServerUpdate:
+                      thread.id === codex.id
+                        ? codex.session.activeTurnId
+                        : fallbackContinuationTurnId,
+                  }
+                : { activeTurnId: thread.session.activeTurnId },
           },
-        },
-      ]),
-    );
-    const providerService: ProviderService.ProviderService["Service"] = {
-      ...makeProviderService(),
-      getCapabilities: (instanceId) =>
-        Effect.succeed({
-          sessionModelSwitch: "in-session",
-          ...(instanceId === providerInstanceId ? { promptlessTurnContinuation: true } : {}),
-        }),
-      sendTurn: (input) =>
-        Effect.gen(function* () {
-          sends.push(input);
-          if (sends.length === 2) {
-            yield* Deferred.succeed(continuationSent, undefined);
-          }
-          return {
-            threadId: input.threadId,
-            turnId: TurnId.make(`continued-${String(input.threadId)}`),
-          };
-        }),
-    };
-
-    yield* runReconciliation({
-      threads: [codex, fallback],
-      providerService,
-      directory: {
-        getBinding: (threadId) =>
-          Effect.sync(() => {
-            const binding = bindings.get(threadId);
-            return binding === undefined ? Option.none() : Option.some(binding);
+        ]),
+      );
+      const providerService: ProviderService.ProviderService["Service"] = {
+        ...makeProviderService(),
+        getCapabilities: (instanceId) =>
+          Effect.succeed({
+            sessionModelSwitch: "in-session",
+            ...(instanceId === providerInstanceId ? { promptlessTurnContinuation: true } : {}),
           }),
-        upsert: (binding) =>
-          Effect.sync(() => {
-            bindings.set(binding.threadId, binding);
-            upserts.push(binding);
-            const clearedCount = upserts.filter((candidate) => {
-              const payload = candidate.runtimePayload;
-              return (
-                payload !== null &&
-                typeof payload === "object" &&
-                !Array.isArray(payload) &&
-                "continueAfterServerUpdate" in payload &&
-                payload.continueAfterServerUpdate === null
-              );
-            }).length;
-            return clearedCount === 1;
-          }).pipe(
-            Effect.flatMap((firstMarkerCleared) =>
-              firstMarkerCleared ? Deferred.succeed(continuationCleared, undefined) : Effect.void,
+        sendTurn: (input) =>
+          Effect.gen(function* () {
+            sends.push(input);
+            if (sends.length === 2) {
+              yield* Deferred.succeed(continuationSent, undefined);
+            }
+            return {
+              threadId: input.threadId,
+              turnId: TurnId.make(`continued-${String(input.threadId)}`),
+            };
+          }),
+      };
+
+      yield* runReconciliation({
+        threads: [codex, fallback],
+        continueAfterRestart: recovery === "opt-in restart",
+        providerService,
+        directory: {
+          getBinding: (threadId) =>
+            Effect.sync(() => {
+              const binding = bindings.get(threadId);
+              return binding === undefined ? Option.none() : Option.some(binding);
+            }),
+          upsert: (binding) =>
+            Effect.sync(() => {
+              bindings.set(binding.threadId, binding);
+              upserts.push(binding);
+              const clearedCount = upserts.filter((candidate) => {
+                const payload = candidate.runtimePayload;
+                return (
+                  payload !== null &&
+                  typeof payload === "object" &&
+                  !Array.isArray(payload) &&
+                  "continueAfterServerUpdate" in payload &&
+                  payload.continueAfterServerUpdate === null
+                );
+              }).length;
+              return clearedCount === 1;
+            }).pipe(
+              Effect.flatMap((firstMarkerCleared) =>
+                firstMarkerCleared ? Deferred.succeed(continuationCleared, undefined) : Effect.void,
+              ),
             ),
+          getProvider: () => Effect.die("unused"),
+          listThreadIds: () => Effect.die("unused"),
+          listBindings: () => Effect.succeed([]),
+        },
+        dispatch: (command) =>
+          Effect.sync(() => dispatched.push(command)).pipe(
+            Effect.as({ sequence: dispatched.length }),
           ),
-        getProvider: () => Effect.die("unused"),
-        listThreadIds: () => Effect.die("unused"),
-        listBindings: () => Effect.die("unused"),
-      },
-      dispatch: (command) =>
-        Effect.sync(() => dispatched.push(command)).pipe(
-          Effect.as({ sequence: dispatched.length }),
-        ),
-    });
-    yield* Deferred.await(continuationSent);
-    yield* Deferred.await(continuationCleared);
+      });
+      yield* Deferred.await(continuationSent);
+      yield* Deferred.await(continuationCleared);
 
-    assert.deepStrictEqual(
-      sends.toSorted((left, right) => String(left.threadId).localeCompare(String(right.threadId))),
-      [
-        { threadId: codex.id, continuation: true, interactionMode: "default" },
-        {
-          threadId: fallback.id,
-          input: "Continue where you left off.",
-          interactionMode: "default",
-        },
-      ],
-    );
-    assert.deepStrictEqual(
-      dispatched.map((command) =>
-        command.type === "thread.session.set"
-          ? {
-              threadId: command.threadId,
-              status: command.session.status,
-              activeTurnId: command.session.activeTurnId,
-            }
-          : null,
-      ),
-      [
-        {
-          threadId: codex.id,
-          status: "starting",
-          activeTurnId: null,
-        },
-        {
-          threadId: fallback.id,
-          status: "starting",
-          activeTurnId: fallback.session.activeTurnId,
-        },
-      ],
-    );
-    for (const [thread, continuationTurnId] of [
-      [codex, codex.session.activeTurnId],
-      [fallback, fallbackContinuationTurnId],
-    ] as const) {
       assert.deepStrictEqual(
-        upserts
-          .filter((binding) => binding.threadId === thread.id)
-          .map((binding) => binding.runtimePayload)[0],
-        {
-          continueAfterServerUpdate: continuationTurnId,
-          activeTurnId: null,
-        },
+        sends.toSorted((left, right) =>
+          String(left.threadId).localeCompare(String(right.threadId)),
+        ),
+        [
+          { threadId: codex.id, continuation: true, interactionMode: "default" },
+          {
+            threadId: fallback.id,
+            input: "Continue where you left off.",
+            interactionMode: "default",
+          },
+        ],
+      );
+      assert.deepStrictEqual(
+        dispatched.map((command) =>
+          command.type === "thread.session.set"
+            ? {
+                threadId: command.threadId,
+                status: command.session.status,
+                activeTurnId: command.session.activeTurnId,
+              }
+            : null,
+        ),
+        [
+          {
+            threadId: codex.id,
+            status: "starting",
+            activeTurnId: null,
+          },
+          {
+            threadId: fallback.id,
+            status: "starting",
+            activeTurnId: null,
+          },
+        ],
       );
-    }
-    assert.equal(
-      upserts.some((binding) => {
-        const payload = binding.runtimePayload;
-        return (
-          payload !== null &&
-          typeof payload === "object" &&
-          !Array.isArray(payload) &&
-          "continueAfterServerUpdate" in payload &&
-          payload.continueAfterServerUpdate === null
+      for (const [thread, continuationTurnId] of [
+        [codex, codex.session.activeTurnId],
+        [fallback, fallbackContinuationTurnId],
+      ] as const) {
+        assert.deepStrictEqual(
+          upserts
+            .filter((binding) => binding.threadId === thread.id)
+            .map((binding) => binding.runtimePayload)[0],
+          {
+            continueAfterServerUpdate: continuationTurnId,
+            continueAfterServerUpdatePrepared: true,
+            activeTurnId: null,
+          },
         );
-      }),
-      true,
-    );
-  }),
+      }
+      assert.equal(
+        upserts.some((binding) => {
+          const payload = binding.runtimePayload;
+          return (
+            payload !== null &&
+            typeof payload === "object" &&
+            !Array.isArray(payload) &&
+            "continueAfterServerUpdate" in payload &&
+            payload.continueAfterServerUpdate === null
+          );
+        }),
+        true,
+      );
+    }),
 );
 
 it.effect("does not continue archived or deleted marked sessions", () => {
@@ -361,7 +393,7 @@ it.effect("does not continue archived or deleted marked sessions", () => {
       upsert: () => Effect.void,
       getProvider: () => Effect.die("unused"),
       listThreadIds: () => Effect.die("unused"),
-      listBindings: () => Effect.die("unused"),
+      listBindings: () => Effect.succeed([]),
     },
     dispatch: (command) =>
       Effect.sync(() => dispatched.push(command)).pipe(Effect.as({ sequence: dispatched.length })),
@@ -416,7 +448,7 @@ it.effect("retries continuation preparation before settling a persistent failure
       upsert: () => Effect.void,
       getProvider: () => Effect.die("unused"),
       listThreadIds: () => Effect.die("unused"),
-      listBindings: () => Effect.die("unused"),
+      listBindings: () => Effect.succeed([]),
     },
     dispatch: (command) => {
       if (command.type !== "thread.session.set") {
@@ -487,7 +519,7 @@ it.effect("reconciles multiple active and archived orphans but skips live sessio
       upsert: (binding) => Effect.sync(() => upserts.push(binding)),
       getProvider: () => Effect.die("unused"),
       listThreadIds: () => Effect.die("unused"),
-      listBindings: () => Effect.die("unused"),
+      listBindings: () => Effect.succeed([]),
     },
     dispatch: (command) =>
       Effect.sync(() => dispatched.push(command)).pipe(Effect.as({ sequence: dispatched.length })),
@@ -521,6 +553,7 @@ it.effect("reconciles multiple active and archived orphans but skips live sessio
                   activeTurnId: null,
                   unrelated: binding.threadId,
                   continueAfterServerUpdate: null,
+                  continueAfterServerUpdatePrepared: null,
                 }
               : { activeTurnId: null, unrelated: binding.threadId },
           );
@@ -565,7 +598,7 @@ it.effect(
         upsert: () => Effect.fail(writeFailure),
         getProvider: () => Effect.die("unused"),
         listThreadIds: () => Effect.die("unused"),
-        listBindings: () => Effect.die("unused"),
+        listBindings: () => Effect.succeed([]),
       },
       dispatch: (command) =>
         Effect.sync(() => dispatched.push(command)).pipe(
@@ -602,7 +635,7 @@ it.effect("retries failed projections and continues after a persistent failure",
       upsert: () => Effect.void,
       getProvider: () => Effect.die("unused"),
       listThreadIds: () => Effect.die("unused"),
-      listBindings: () => Effect.die("unused"),
+      listBindings: () => Effect.succeed([]),
     },
     dispatch: (command) => {
       if (command.type !== "thread.session.set") {
@@ -651,7 +684,7 @@ it.effect("does not fail startup when the live provider session inventory cannot
       upsert: () => Effect.die("unused"),
       getProvider: () => Effect.die("unused"),
       listThreadIds: () => Effect.die("unused"),
-      listBindings: () => Effect.die("unused"),
+      listBindings: () => Effect.succeed([]),
     }),
     Effect.provideService(OrchestrationEngine.OrchestrationEngineService, {
       readEvents: () => Stream.empty,
@@ -662,7 +695,283 @@ it.effect("does not fail startup when the live provider session inventory cannot
       subscribeDomainEvents: Effect.succeed(Stream.empty),
       latestSequence: Effect.succeed(0),
     }),
-    Effect.provide(NodeServices.layer),
+    Effect.provide(Layer.mergeAll(NodeServices.layer, ServerSettings.layerTest())),
     Effect.tap(() => Effect.sync(() => assert.equal(queried, false))),
   );
 });
+
+for (const scenario of [
+  "disabled",
+  "stopped projection",
+  "finished projection",
+  "stopped binding",
+  "finished binding",
+  "missing cursor",
+  "mismatched turn",
+  "marked without cursor",
+  "marked stopped projection",
+  "marked superseded turn",
+] as const) {
+  it.effect(`does not recover an interrupted session with ${scenario}`, () => {
+    const turnId = TurnId.make("turn-excluded-recovery");
+    const thread = makeThread(
+      "thread-excluded-recovery",
+      scenario.includes("stopped projection")
+        ? "stopped"
+        : scenario === "finished projection"
+          ? "ready"
+          : scenario === "marked superseded turn"
+            ? "starting"
+            : "running",
+      scenario === "marked superseded turn" ? null : turnId,
+    );
+    const dispatched: OrchestrationCommand[] = [];
+    const upserts: ProviderSessionDirectory.ProviderRuntimeBinding[] = [];
+    return runReconciliation({
+      threads: [thread],
+      continueAfterRestart: scenario !== "disabled",
+      directory: {
+        getBinding: () =>
+          Effect.succeed(
+            Option.some({
+              threadId: thread.id,
+              provider: ProviderDriverKind.make("codex"),
+              providerInstanceId,
+              status: scenario === "stopped binding" ? "stopped" : "running",
+              ...(scenario.includes("cursor") ? {} : { resumeCursor: { threadId: thread.id } }),
+              runtimePayload: {
+                activeTurnId:
+                  scenario === "finished binding"
+                    ? null
+                    : scenario === "mismatched turn" || scenario === "marked superseded turn"
+                      ? "another-turn"
+                      : turnId,
+                ...(scenario.startsWith("marked") ? { continueAfterServerUpdate: turnId } : {}),
+              },
+            }),
+          ),
+        upsert: (binding) =>
+          Effect.sync(() => {
+            upserts.push(binding);
+          }),
+        getProvider: () => Effect.die("unused"),
+        listThreadIds: () => Effect.die("unused"),
+        listBindings: () => Effect.succeed([]),
+      },
+      dispatch: (command) =>
+        Effect.sync(() => {
+          dispatched.push(command);
+          return { sequence: dispatched.length };
+        }),
+    }).pipe(
+      Effect.tap(() =>
+        Effect.sync(() => {
+          assert.deepStrictEqual(
+            dispatched.map(
+              (command) => command.type === "thread.session.set" && command.session.status,
+            ),
+            ["error"],
+          );
+          assert.deepStrictEqual(
+            upserts.map((binding) => binding.status),
+            ["stopped"],
+          );
+        }),
+      ),
+    );
+  });
+}
+
+for (const preparedStatus of [
+  "starting",
+  "ready",
+  "ready with failed scan",
+  "completed after update marking",
+] as const) {
+  it.effect(`recovers again if startup exits with a prepared ${preparedStatus} session`, () =>
+    Effect.gen(function* () {
+      const turnId = TurnId.make("turn-interrupted-startup");
+      const thread = makeThread("thread-interrupted-startup", "running", turnId);
+      const activation = yield* Deferred.make<void>();
+      const cleared = yield* Deferred.make<void>();
+      const sends: ProviderSendTurnInput[] = [];
+      let binding: ProviderSessionDirectory.ProviderRuntimeBinding = {
+        threadId: thread.id,
+        provider: ProviderDriverKind.make("codex"),
+        providerInstanceId,
+        status: "running",
+        resumeCursor: { threadId: thread.id },
+        runtimePayload: { activeTurnId: turnId },
+      };
+      const input = {
+        threads: [thread],
+        continueAfterRestart: true,
+        providerService: {
+          ...makeProviderService(),
+          getCapabilities: () =>
+            Effect.succeed({
+              sessionModelSwitch: "in-session" as const,
+              promptlessTurnContinuation: true,
+            }),
+          sendTurn: (input: ProviderSendTurnInput) =>
+            Effect.sync(() => {
+              sends.push(input);
+              return { threadId: input.threadId, turnId: TurnId.make("turn-recovered") };
+            }),
+        },
+        directory: {
+          getBinding: () => Effect.sync(() => Option.some(binding)),
+          upsert: (next: ProviderSessionDirectory.ProviderRuntimeBinding) =>
+            Effect.gen(function* () {
+              binding = next;
+              if (binding.status !== "starting" || sends.length === 0) return;
+              yield* Deferred.succeed(cleared, undefined);
+            }),
+          getProvider: () => Effect.die("unused"),
+          listThreadIds: () => Effect.die("unused"),
+          listBindings: () =>
+            preparedStatus === "ready with failed scan"
+              ? Effect.fail(
+                  new ProviderSessionDirectoryPersistenceError({
+                    operation: "listBindings",
+                    detail: "unreadable unrelated binding",
+                  }),
+                )
+              : Effect.sync(() => [{ ...binding, lastSeenAt: "2026-01-01T00:00:00.000Z" }]),
+        },
+        dispatch: (command: OrchestrationCommand) =>
+          Effect.sync(() => {
+            if (command.type === "thread.session.set") {
+              thread.session.status = command.session.status;
+              thread.session.activeTurnId = command.session.activeTurnId;
+            }
+            return { sequence: 1 };
+          }),
+      };
+
+      yield* runReconciliation(input).pipe(
+        Effect.provideService(ServerActivation, Deferred.await(activation)),
+        Effect.scoped,
+      );
+      assert.deepStrictEqual(sends, []);
+      assert.equal(thread.session.status, "starting");
+      assert.equal(thread.session.activeTurnId, null);
+      assert.deepStrictEqual(binding.runtimePayload, {
+        activeTurnId: null,
+        continueAfterServerUpdate: turnId,
+        continueAfterServerUpdatePrepared: true,
+      });
+
+      if (preparedStatus === "completed after update marking") {
+        thread.session.status = "ready";
+        binding = {
+          ...binding,
+          status: "stopped",
+          runtimePayload: {
+            activeTurnId: null,
+            continueAfterServerUpdate: turnId,
+            continueAfterServerUpdatePrepared: null,
+          },
+        };
+        yield* runReconciliation(input);
+        assert.deepStrictEqual(sends, []);
+        assert.equal(thread.session.status, "ready");
+        return;
+      }
+      thread.session.status =
+        preparedStatus === "ready with failed scan" ? "ready" : preparedStatus;
+      yield* runReconciliation(input);
+      yield* Deferred.await(cleared);
+      assert.deepStrictEqual(sends, [
+        { threadId: thread.id, continuation: true, interactionMode: "default" },
+      ]);
+      assert.deepStrictEqual(binding.runtimePayload, {
+        activeTurnId: null,
+        continueAfterServerUpdate: null,
+        continueAfterServerUpdatePrepared: null,
+      });
+    }),
+  );
+}
+
+it.effect("settles failed opt-in recovery without retrying the provider turn", () =>
+  Effect.gen(function* () {
+    const turnId = TurnId.make("turn-failed-recovery");
+    const thread = makeThread("thread-failed-recovery", "running", turnId);
+    const settled = yield* Deferred.make<void>();
+    const sends: ProviderSendTurnInput[] = [];
+    const dispatched: OrchestrationCommand[] = [];
+    const preparedPayloads: unknown[] = [];
+    let binding: ProviderSessionDirectory.ProviderRuntimeBinding = {
+      threadId: thread.id,
+      provider: ProviderDriverKind.make("codex"),
+      providerInstanceId,
+      status: "running",
+      resumeCursor: { threadId: thread.id },
+      runtimePayload: { activeTurnId: turnId },
+    };
+    yield* runReconciliation({
+      threads: [thread],
+      continueAfterRestart: true,
+      providerService: {
+        ...makeProviderService(),
+        getCapabilities: () =>
+          Effect.succeed({ sessionModelSwitch: "in-session", promptlessTurnContinuation: true }),
+        sendTurn: (input) =>
+          Effect.gen(function* () {
+            sends.push(input);
+            preparedPayloads.push(binding.runtimePayload);
+            return yield* Effect.fail(
+              new ProviderSessionNotFoundError({ threadId: input.threadId }),
+            );
+          }),
+      },
+      directory: {
+        getBinding: () => Effect.sync(() => Option.some(binding)),
+        upsert: (next) =>
+          Effect.sync(() => {
+            binding = next;
+          }),
+        getProvider: () => Effect.die("unused"),
+        listThreadIds: () => Effect.die("unused"),
+        listBindings: () => Effect.succeed([]),
+      },
+      dispatch: (command) =>
+        Effect.gen(function* () {
+          dispatched.push(command);
+          if (command.type === "thread.session.set" && command.session.status === "error") {
+            yield* Deferred.succeed(settled, undefined);
+          }
+          return { sequence: dispatched.length };
+        }),
+    });
+    yield* Deferred.await(settled);
+    assert.equal(sends.length, 1);
+    assert.deepStrictEqual(preparedPayloads, [
+      {
+        activeTurnId: null,
+        continueAfterServerUpdate: turnId,
+        continueAfterServerUpdatePrepared: true,
+      },
+    ]);
+    assert.deepStrictEqual(
+      dispatched.map(
+        (command) =>
+          command.type === "thread.session.set" && {
+            status: command.session.status,
+            activeTurnId: command.session.activeTurnId,
+          },
+      ),
+      [
+        { status: "starting", activeTurnId: null },
+        { status: "error", activeTurnId: null },
+      ],
+    );
+    assert.equal(binding.status, "stopped");
+    assert.deepStrictEqual(binding.runtimePayload, {
+      activeTurnId: null,
+      continueAfterServerUpdate: null,
+      continueAfterServerUpdatePrepared: null,
+    });
+  }),
+);
diff --git a/apps/server/src/serverRuntimeStartup.ts b/apps/server/src/serverRuntimeStartup.ts
index 064796b2810b..a34d1bdbde91 100644
--- a/apps/server/src/serverRuntimeStartup.ts
+++ b/apps/server/src/serverRuntimeStartup.ts
@@ -394,6 +394,7 @@ export const markRunningProviderSessionsForContinuation = Effect.gen(function* (
         runtimePayload: {
           ...readRuntimePayload(binding.value.runtimePayload),
           [SERVER_UPDATE_CONTINUATION_KEY]: activeTurnId,
+          continueAfterServerUpdatePrepared: null,
         },
       });
       marked.push(thread.id);
@@ -423,6 +424,7 @@ const clearContinuationMarkers = (
                 runtimePayload: {
                   ...readRuntimePayload(binding.runtimePayload),
                   [SERVER_UPDATE_CONTINUATION_KEY]: null,
+                  continueAfterServerUpdatePrepared: null,
                 },
               }),
           }),
@@ -443,17 +445,56 @@ export const reconcileProviderSessions = Effect.gen(function* () {
   const orchestrationEngine = yield* OrchestrationEngine.OrchestrationEngineService;
   const providerService = yield* ProviderService.ProviderService;
   const query = yield* ProjectionSnapshotQuery.ProjectionSnapshotQuery;
+  const settings = yield* ServerSettings.ServerSettingsService;
+  const continueAfterRestart = yield* settings.getSettings.pipe(
+    Effect.map((value) => value.continueThreadsAfterServerUpdate),
+    Effect.catch((cause) =>
+      Effect.logWarning("could not read restart continuation preference", { cause }).pipe(
+        Effect.as(false),
+      ),
+    ),
+  );
 
   const liveThreadIds = new Set(
     (yield* providerService.listSessions()).map((session) => session.threadId),
   );
   const { threads } = yield* query.getCommandReadModel();
+  // Provider startup can report ready before the continuation is submitted.
+  // Find those markers in one read rather than querying every idle thread.
+  const preparedThreadIds = new Set(
+    (yield* directory.listBindings().pipe(
+      Effect.catch((cause) =>
+        Effect.logWarning("failed to read prepared provider continuations", { cause }).pipe(
+          Effect.andThen(
+            Effect.forEach(
+              threads.filter(
+                (thread) => thread.session?.status === "ready" && !liveThreadIds.has(thread.id),
+              ),
+              (thread) =>
+                directory.getBinding(thread.id).pipe(Effect.orElseSucceed(() => Option.none())),
+            ),
+          ),
+          Effect.map((bindings) =>
+            bindings.flatMap((binding) => (Option.isSome(binding) ? [binding.value] : [])),
+          ),
+        ),
+      ),
+    ))
+      .filter(
+        (binding) =>
+          readServerUpdateContinuationTurnId(binding.runtimePayload) !== null &&
+          readRuntimePayload(binding.runtimePayload).activeTurnId === null &&
+          readRuntimePayload(binding.runtimePayload).continueAfterServerUpdatePrepared === true,
+      )
+      .map((binding) => binding.threadId),
+  );
   const orphanedThreads = threads.filter(
     (thread) =>
       thread.session !== null &&
       (thread.session.status === "starting" ||
         thread.session.status === "running" ||
-        thread.session.activeTurnId !== null) &&
+        thread.session.activeTurnId !== null ||
+        (thread.session.status === "ready" && preparedThreadIds.has(thread.id))) &&
       !liveThreadIds.has(thread.id),
   );
 
@@ -479,7 +520,27 @@ export const reconcileProviderSessions = Effect.gen(function* () {
       : null;
     const continuationMarked =
       continuationTurnId !== null &&
-      (session.activeTurnId === null || continuationTurnId === session.activeTurnId);
+      (session.activeTurnId === null || continuationTurnId === session.activeTurnId) &&
+      Option.isSome(binding) &&
+      (readRuntimePayload(binding.value.runtimePayload).activeTurnId == null ||
+        readRuntimePayload(binding.value.runtimePayload).activeTurnId === continuationTurnId);
+    const preparedWhileReady =
+      session.status === "ready" &&
+      session.activeTurnId === null &&
+      continuationMarked &&
+      Option.isSome(binding) &&
+      readRuntimePayload(binding.value.runtimePayload).activeTurnId === null &&
+      readRuntimePayload(binding.value.runtimePayload).continueAfterServerUpdatePrepared === true;
+    // Abrupt shutdowns cannot write an update marker. Require both durable
+    // records to agree on an unfinished turn before recovering one implicitly.
+    const interruptedByRestart =
+      continueAfterRestart &&
+      session.status === "running" &&
+      session.activeTurnId !== null &&
+      Option.isSome(binding) &&
+      binding.value.status === "running" &&
+      binding.value.resumeCursor != null &&
+      readRuntimePayload(binding.value.runtimePayload).activeTurnId === session.activeTurnId;
     const settleAsError = (lastError: string) =>
       Effect.gen(function* () {
         yield* Effect.gen(function* () {
@@ -490,7 +551,12 @@ export const reconcileProviderSessions = Effect.gen(function* () {
               runtimePayload: {
                 ...readRuntimePayload(binding.value.runtimePayload),
                 activeTurnId: null,
-                ...(continuationMarkerPresent ? { [SERVER_UPDATE_CONTINUATION_KEY]: null } : {}),
+                ...(continuationMarkerPresent || interruptedByRestart
+                  ? {
+                      [SERVER_UPDATE_CONTINUATION_KEY]: null,
+                      continueAfterServerUpdatePrepared: null,
+                    }
+                  : {}),
               },
             });
           }
@@ -535,7 +601,9 @@ export const reconcileProviderSessions = Effect.gen(function* () {
 
     if (
       Option.isSome(binding) &&
-      continuationMarked &&
+      (continuationMarked || interruptedByRestart) &&
+      (session.status === "running" || session.status === "starting" || preparedWhileReady) &&
+      binding.value.resumeCursor != null &&
       thread.archivedAt === null &&
       thread.deletedAt === null
     ) {
@@ -545,6 +613,9 @@ export const reconcileProviderSessions = Effect.gen(function* () {
           status: "starting",
           runtimePayload: {
             ...readRuntimePayload(binding.value.runtimePayload),
+            // Keep recovery durable if this process also exits before sending.
+            [SERVER_UPDATE_CONTINUATION_KEY]: session.activeTurnId ?? continuationTurnId,
+            continueAfterServerUpdatePrepared: true,
             activeTurnId: null,
           },
         });
@@ -608,12 +679,12 @@ export const reconcileProviderSessions = Effect.gen(function* () {
             }
             return;
           }
-          yield* Effect.logWarning("failed to continue provider session after server update", {
+          yield* Effect.logWarning("failed to continue provider session after server restart", {
             threadId: thread.id,
             cause: continuationExit.cause,
           });
           yield* settleAsError(
-            "Could not continue this thread after the server update. Send a new message to continue.",
+            "Could not continue this thread after the server restart. Send a new message to continue.",
           ).pipe(Effect.ignoreCause);
         }),
       );
diff --git a/apps/web/src/components/ServerUpdateAction.test.tsx b/apps/web/src/components/ServerUpdateAction.test.tsx
index 584078c12bf4..67236361f677 100644
--- a/apps/web/src/components/ServerUpdateAction.test.tsx
+++ b/apps/web/src/components/ServerUpdateAction.test.tsx
@@ -15,7 +15,8 @@ vi.mock("~/hooks/useCopyToClipboard", () => ({
   useCopyToClipboard: () => ({ copyToClipboard: vi.fn() }),
 }));
 vi.mock("~/hooks/useSettings", () => ({
-  useClientSettings: (
+  useEnvironmentSettings: (
+    _environmentId: EnvironmentId,
     selector: (settings: { continueThreadsAfterServerUpdate: boolean }) => unknown,
   ) => selector({ continueThreadsAfterServerUpdate: testState.continueThreadsAfterServerUpdate }),
 }));
diff --git a/apps/web/src/components/ServerUpdateAction.tsx b/apps/web/src/components/ServerUpdateAction.tsx
index 71b974416dd3..1845ada716b6 100644
--- a/apps/web/src/components/ServerUpdateAction.tsx
+++ b/apps/web/src/components/ServerUpdateAction.tsx
@@ -8,7 +8,7 @@ import type { ComponentProps } from "react";
 
 import { requestConfirmDialog } from "~/confirmDialog";
 import { useCopyToClipboard } from "~/hooks/useCopyToClipboard";
-import { useClientSettings } from "~/hooks/useSettings";
+import { useEnvironmentSettings } from "~/hooks/useSettings";
 import { serverEnvironment } from "~/state/server";
 import { useAtomCommand } from "~/state/use-atom-command";
 import { manualServerUpdateCommand } from "~/versionSkew";
@@ -99,7 +99,8 @@ export function ServerUpdateAction({
   readonly size?: ComponentProps<typeof Button>["size"];
 }) {
   const isDesktopAppUpdate = selfUpdate === "desktop-managed";
-  const continueThreadsAfterServerUpdate = useClientSettings(
+  const continueThreadsAfterServerUpdate = useEnvironmentSettings(
+    environmentId,
     (settings) => settings.continueThreadsAfterServerUpdate,
   );
   const updateServer = useAtomCommand(serverEnvironment.updateServer, {
diff --git a/apps/web/src/components/settings/SettingsPanels.tsx b/apps/web/src/components/settings/SettingsPanels.tsx
index b0344b640393..66f7691a4a07 100644
--- a/apps/web/src/components/settings/SettingsPanels.tsx
+++ b/apps/web/src/components/settings/SettingsPanels.tsx
@@ -564,7 +564,7 @@ export function useSettingsRestore(onRestored?: () => void) {
         : []),
       ...(settings.continueThreadsAfterServerUpdate !==
       DEFAULT_UNIFIED_SETTINGS.continueThreadsAfterServerUpdate
-        ? ["Continue threads after server updates"]
+        ? ["Continue threads after restarts"]
         : []),
       ...(isBackgroundActivityDirty ? ["Background activity"] : []),
       ...(settings.defaultThreadEnvMode !== DEFAULT_UNIFIED_SETTINGS.defaultThreadEnvMode
@@ -2438,12 +2438,13 @@ export function GeneralSettingsPanel() {
 
         <SettingsRow
           {...searchableSetting("continue-threads-after-server-update")}
-          description="Automatically resume active threads after a server update restarts the environment."
+          serverScoped
+          description="Automatically resume interrupted threads when this environment starts again after an update, crash, or machine restart."
           resetAction={
             settings.continueThreadsAfterServerUpdate !==
             DEFAULT_UNIFIED_SETTINGS.continueThreadsAfterServerUpdate ? (
               <SettingResetButton
-                label="continue threads after server updates"
+                label="continue threads after restarts"
                 onClick={() =>
                   updateSettings({
                     continueThreadsAfterServerUpdate:
@@ -2459,7 +2460,7 @@ export function GeneralSettingsPanel() {
               onCheckedChange={(checked) =>
                 updateSettings({ continueThreadsAfterServerUpdate: Boolean(checked) })
               }
-              aria-label="Continue threads after server updates"
+              aria-label="Continue threads after restarts"
             />
           }
         />
diff --git a/apps/web/src/components/settings/settingsSearch.ts b/apps/web/src/components/settings/settingsSearch.ts
index 22e2204d8a27..7358ed8f9a17 100644
--- a/apps/web/src/components/settings/settingsSearch.ts
+++ b/apps/web/src/components/settings/settingsSearch.ts
@@ -218,9 +218,11 @@ export const SETTINGS_SEARCH_ITEMS = [
   },
   {
     id: "continue-threads-after-server-update",
-    title: "Continue threads after server updates",
+    title: "Continue threads after restarts",
     to: "/settings/general",
-    searchTerms: ["resume running active work restart desktop update automatically"],
+    searchTerms: [
+      "resume running active interrupted work restart reboot machine crash desktop update automatically",
+    ],
   },
   {
     id: "background-activity",
diff --git a/docs/user/updating.md b/docs/user/updating.md
index 8ccefb4e5157..14500cbe4620 100644
--- a/docs/user/updating.md
+++ b/docs/user/updating.md
@@ -10,9 +10,13 @@ notice.
 Server updates restart the connection and can interrupt active agents and
 terminal commands. Saved threads, settings, and project files remain.
 
-**Settings → General → Continue threads after server updates** is off by default.
-Enable it to resume supported active threads once the replacement server is
-ready. Terminal commands may still be interrupted.
+**Settings → General → Continue threads after restarts** is off by default.
+Enable it for each environment to resume supported active threads after an
+update, crash, or machine restart. T3 Code must start again on that machine;
+the setting does not enable automatic startup. Terminal commands may still be
+interrupted, and threads without saved provider resume state need a new message.
+If you previously enabled continuation for updates, enable this environment
+setting once to allow recovery without a connected client.
 
 ## Update a connected server
 
diff --git a/packages/contracts/src/settings.ts b/packages/contracts/src/settings.ts
index cd4b12713edf..51fbc812225c 100644
--- a/packages/contracts/src/settings.ts
+++ b/packages/contracts/src/settings.ts
@@ -255,9 +255,6 @@ export const ClientSettingsSchema = Schema.Struct({
   confirmThreadArchive: Schema.Boolean.pipe(Schema.withDecodingDefault(Effect.succeed(false))),
   confirmThreadDelete: Schema.Boolean.pipe(Schema.withDecodingDefault(Effect.succeed(true))),
   confirmThreadUnpin: Schema.Boolean.pipe(Schema.withDecodingDefault(Effect.succeed(false))),
-  continueThreadsAfterServerUpdate: Schema.Boolean.pipe(
-    Schema.withDecodingDefault(Effect.succeed(false)),
-  ),
   dismissedProviderUpdateNotificationKeys: Schema.Array(TrimmedNonEmptyString).pipe(
     Schema.withDecodingDefault(Effect.succeed([])),
   ),
@@ -835,6 +832,10 @@ export const ServerSettings = Schema.Struct({
     Schema.withDecodingDefault(Effect.succeed(false)),
   ),
   enableProviderUpdateChecks: Schema.Boolean.pipe(Schema.withDecodingDefault(Effect.succeed(true))),
+  // Retain the update-era key; recovery now needs an environment-owned opt-in.
+  continueThreadsAfterServerUpdate: Schema.Boolean.pipe(
+    Schema.withDecodingDefault(Effect.succeed(false)),
+  ),
   /**
    * Whether agents may drive the in-app preview browser. Turning this off
    * withholds the MCP credential, so the `t3-code` server (and with it every
@@ -1105,6 +1106,7 @@ export const ServerSettingsPatch = Schema.Struct({
   // Server settings
   enableLegacyTokenStreaming: Schema.optionalKey(Schema.Boolean),
   enableProviderUpdateChecks: Schema.optionalKey(Schema.Boolean),
+  continueThreadsAfterServerUpdate: Schema.optionalKey(Schema.Boolean),
   enableAgentBrowserAccess: Schema.optionalKey(Schema.Boolean),
   sidebarAutoSettleAfterDays: Schema.optionalKey(Schema.NullOr(SidebarAutoSettleAfterDays)),
   sidebarAutoSettleOnMerge: Schema.optionalKey(Schema.Boolean),
@@ -1181,7 +1183,6 @@ export const ClientSettingsPatch = Schema.Struct({
   confirmThreadArchive: Schema.optionalKey(Schema.Boolean),
   confirmThreadDelete: Schema.optionalKey(Schema.Boolean),
   confirmThreadUnpin: Schema.optionalKey(Schema.Boolean),
-  continueThreadsAfterServerUpdate: Schema.optionalKey(Schema.Boolean),
   diffIgnoreWhitespace: Schema.optionalKey(Schema.Boolean),
   diffLayout: Schema.optionalKey(DiffLayout),
   environmentIdentificationMode: Schema.optionalKey(EnvironmentIdentificationMode),