diff --git a/src/main/daemon/osc7-file-uri-sender-formats.test.ts b/src/main/daemon/osc7-file-uri-sender-formats.test.ts
index afd16a5d1b6..8d396d40eca 100644
--- a/src/main/daemon/osc7-file-uri-sender-formats.test.ts
+++ b/src/main/daemon/osc7-file-uri-sender-formats.test.ts
@@ -4,7 +4,11 @@ import {
   parseFileUriPathParts,
   type ParseFileUriPathOptions
 } from './osc7-file-uri'
-import { OSC7_PARSER_AGREEMENT_CASES } from '../../shared/osc7-parser-agreement-cases'
+import {
+  OSC7_KEEPS_FOLDER,
+  OSC7_PARSER_AGREEMENT_CASES
+} from '../../shared/osc7-parser-agreement-cases'
+import { TerminalOscCwdTitleScanner } from './terminal-osc-cwd-title-scanner'
 
 const FLAVORS: Record<string, ParseFileUriPathOptions> = {
   posix: { pathFlavor: 'posix' },
@@ -291,7 +295,19 @@ describe('OSC 7 file URIs from nushell', () => {
 })
 
 describe('OSC 7 file URIs both parsers must agree on (daemon side)', () => {
-  it.each(OSC7_PARSER_AGREEMENT_CASES)('%s', (_case, uri, path) => {
-    expect(parseFileUriPath(uri, { pathFlavor: 'posix' })).toBe(path)
+  it.each(OSC7_PARSER_AGREEMENT_CASES)('$name, as a payload', ({ uri, folder }) => {
+    expect(parseFileUriPath(uri, { pathFlavor: 'posix' })).toBe(folder)
   })
+
+  // Real traffic: the daemon tracks the pane's folder from raw PTY bytes through this scanner.
+  it.each(OSC7_PARSER_AGREEMENT_CASES)(
+    '$name, through the PTY scanner',
+    ({ uri, folder, viaScanner }) => {
+      const scanner = new TerminalOscCwdTitleScanner({ pathFlavor: 'posix' })
+      scanner.scan('\x1b]7;file:///before\x07')
+      scanner.scan(`\x1b]7;${uri}\x07`)
+      const kept = viaScanner === OSC7_KEEPS_FOLDER || folder === null
+      expect(scanner.cwd).toBe(kept ? '/before' : folder)
+    }
+  )
 })
diff --git a/src/renderer/src/components/terminal-pane/parse-osc7.test.ts b/src/renderer/src/components/terminal-pane/parse-osc7.test.ts
index 5d14041c02c..36733afcb0e 100644
--- a/src/renderer/src/components/terminal-pane/parse-osc7.test.ts
+++ b/src/renderer/src/components/terminal-pane/parse-osc7.test.ts
@@ -1,4 +1,5 @@
 import { describe, it, expect } from 'vitest'
+import { Terminal } from '@xterm/headless'
 import { OSC7_PARSER_AGREEMENT_CASES } from '../../../../shared/osc7-parser-agreement-cases'
 import { parseOsc7 } from './parse-osc7'
 
@@ -68,7 +69,29 @@ describe('parseOsc7', () => {
 })
 
 describe('OSC 7 payloads both parsers must agree on (renderer side)', () => {
-  it.each(OSC7_PARSER_AGREEMENT_CASES)('%s', (_case, uri, path) => {
-    expect(parseOsc7(uri)).toBe(path)
+  it.each(OSC7_PARSER_AGREEMENT_CASES)('$name, as a payload', ({ uri, folder }) => {
+    expect(parseOsc7(uri)).toBe(folder)
   })
+
+  // Real traffic: the renderer only sees what xterm's OSC parser delivers.
+  it.each(OSC7_PARSER_AGREEMENT_CASES)(
+    '$name, through xterm',
+    async ({ uri, folder, viaXterm, xtermCancels }) => {
+      const term = new Terminal({ allowProposedApi: true })
+      const payloads: string[] = []
+      term.parser.registerOscHandler(7, (data) => {
+        payloads.push(data)
+        return true
+      })
+      await new Promise<void>((resolve) => term.write(`\x1b]7;${uri}\x07`, resolve))
+      term.dispose()
+      if (xtermCancels) {
+        expect(payloads).toEqual([])
+        return
+      }
+      expect(payloads.map((data) => parseOsc7(data))).toEqual([
+        viaXterm === undefined ? folder : viaXterm
+      ])
+    }
+  )
 })
diff --git a/src/shared/osc7-parser-agreement-cases.ts b/src/shared/osc7-parser-agreement-cases.ts
index bdf6f30b202..9d7ddfef2ea 100644
--- a/src/shared/osc7-parser-agreement-cases.ts
+++ b/src/shared/osc7-parser-agreement-cases.ts
@@ -1,17 +1,69 @@
-// One report must name one folder in both OSC 7 parsers: the daemon's (checkpoints, restores) and
-// the renderer's (split, new terminal). Each side's tests run these cases, including what nushell
-// sends raw.
-export const OSC7_PARSER_AGREEMENT_CASES: readonly [string, string, string | null][] = [
-  ['a raw tab', 'file://Desktop/tmp/a\tb', '/tmp/a\tb'],
-  ['a raw newline', 'file://Desktop/tmp/a\nb', '/tmp/a\nb'],
-  ['a raw carriage return', 'file://Desktop/tmp/a\rb', '/tmp/a\rb'],
-  ['a trailing space', 'file://Desktop/tmp/a ', '/tmp/a '],
-  ['a space inside', 'file://Desktop/tmp/a b', '/tmp/a b'],
-  ['a lone %', 'file://Desktop/tmp/100%', '/tmp/100%'],
-  ['a # and ?', 'file://Desktop/tmp/h#a?b', '/tmp/h#a?b'],
-  ['an encoded newline', 'file:///tmp/a%0Ab', '/tmp/a\nb'],
-  ['a leading raw NUL', 'file:///\u0000tmp', null],
-  ['a trailing raw NUL', 'file:///tmp/a\u0000', null],
-  ['an encoded NUL', 'file:///tmp/%00', null],
-  ['non-UTF-8 hex', 'file:///tmp/%FF', null]
+// One report must name one folder in both OSC 7 parsers: the daemon's (checkpoints, restores) reads
+// raw PTY bytes; the renderer's (split, new terminal) reads what xterm's OSC parser hands it. Each
+// side's tests run these cases, including what nushell sends raw.
+/** No report reached the parser, or it was refused: the pane keeps the folder it had. */
+export const OSC7_KEEPS_FOLDER = 'keeps-folder'
+
+export type Osc7AgreementCase = {
+  name: string
+  /** The report as the shell writes it, between `ESC ]7;` and BEL. */
+  uri: string
+  /** What both parsers name for this payload, or null when they refuse it. */
+  folder: string | null
+  /**
+   * Known renderer gap: xterm's OSC parser drops raw C0 bytes, ends the sequence at a raw ESC and
+   * cancels it at CAN or SUB, before the renderer sees the payload.
+   */
+  viaXterm?: string | null
+  /** xterm cancels the sequence (CAN, SUB), so the renderer's OSC 7 handler never runs. */
+  xtermCancels?: true
+  /**
+   * The daemon's PTY scanner, when it differs from `folder`: a raw ESC that is not ST invalidates
+   * the report.
+   */
+  viaScanner?: typeof OSC7_KEEPS_FOLDER
+}
+
+export const OSC7_PARSER_AGREEMENT_CASES: readonly Osc7AgreementCase[] = [
+  { name: 'a raw tab', uri: 'file://Desktop/tmp/a\tb', folder: '/tmp/a\tb', viaXterm: '/tmp/ab' },
+  {
+    name: 'a raw newline',
+    uri: 'file://Desktop/tmp/a\nb',
+    folder: '/tmp/a\nb',
+    viaXterm: '/tmp/ab'
+  },
+  {
+    name: 'a raw carriage return',
+    uri: 'file://Desktop/tmp/a\rb',
+    folder: '/tmp/a\rb',
+    viaXterm: '/tmp/ab'
+  },
+  { name: 'a trailing space', uri: 'file://Desktop/tmp/a ', folder: '/tmp/a ' },
+  { name: 'a space inside', uri: 'file://Desktop/tmp/a b', folder: '/tmp/a b' },
+  { name: 'a lone %', uri: 'file://Desktop/tmp/100%', folder: '/tmp/100%' },
+  { name: 'a # and ?', uri: 'file://Desktop/tmp/h#a?b', folder: '/tmp/h#a?b' },
+  { name: 'an encoded newline', uri: 'file:///tmp/a%0Ab', folder: '/tmp/a\nb' },
+  { name: 'a leading raw NUL', uri: 'file:///\u0000tmp', folder: null, viaXterm: '/tmp' },
+  { name: 'a trailing raw NUL', uri: 'file:///tmp/a\u0000', folder: null, viaXterm: '/tmp/a' },
+  { name: 'an encoded NUL', uri: 'file:///tmp/%00', folder: null },
+  { name: 'non-UTF-8 hex', uri: 'file:///tmp/%FF', folder: null },
+  {
+    name: 'a raw ESC',
+    uri: 'file:///tmp/a\u001bb',
+    folder: '/tmp/a\u001bb',
+    viaXterm: '/tmp/a',
+    viaScanner: OSC7_KEEPS_FOLDER
+  },
+  {
+    name: 'a raw CAN',
+    uri: 'file:///tmp/a\u0018b',
+    folder: '/tmp/a\u0018b',
+    xtermCancels: true
+  },
+  {
+    name: 'a raw SUB',
+    uri: 'file:///tmp/a\u001ab',
+    folder: '/tmp/a\u001ab',
+    xtermCancels: true
+  }
 ]