diff --git a/apps/server/src/terminal/Manager.test.ts b/apps/server/src/terminal/Manager.test.ts
index 60cbd0dc52729..5677e841d18cf 100644
--- a/apps/server/src/terminal/Manager.test.ts
+++ b/apps/server/src/terminal/Manager.test.ts
@@ -1946,6 +1946,32 @@ it.layer(
     }),
   );
 
+  it.effect("starts a $SHELL whose path contains a space", () =>
+    Effect.gen(function* () {
+      const { manager, ptyAdapter } = yield* createManager(5, {
+        env: { SHELL: "/Users/Jane Doe/.local/bin/fish" },
+      }).pipe(Effect.provide(layerWithHostPlatform("darwin")));
+
+      yield* manager.open(openInput());
+
+      expect(ptyAdapter.spawnInputs.map((input) => input.shell)).toEqual([
+        "/Users/Jane Doe/.local/bin/fish",
+      ]);
+    }),
+  );
+
+  it.effect("starts a quoted $SHELL whose path contains a space and a dash", () =>
+    Effect.gen(function* () {
+      const { manager, ptyAdapter } = yield* createManager(5, {
+        env: { SHELL: '"/opt/my -shell/fish" -l' },
+      }).pipe(Effect.provide(layerWithHostPlatform("darwin")));
+
+      yield* manager.open(openInput());
+
+      expect(ptyAdapter.spawnInputs.map((input) => input.shell)).toEqual(["/opt/my -shell/fish"]);
+    }),
+  );
+
   it.effect(
     "writes completion syntax for the fallback shell instead of the configured fish shell",
     () =>
diff --git a/apps/server/src/terminal/Manager.ts b/apps/server/src/terminal/Manager.ts
index 3f1b63255cbb3..799354d5e2e25 100644
--- a/apps/server/src/terminal/Manager.ts
+++ b/apps/server/src/terminal/Manager.ts
@@ -539,9 +539,11 @@ function normalizeShellCommand(
     return trimmed;
   }
 
-  const firstToken = trimmed.split(/\s+/g)[0]?.trim();
-  if (!firstToken) return null;
-  return firstToken.replace(/^['"]|['"]$/g, "");
+  // A shell path can contain spaces, so only text from the first flag (`bash -l`) is dropped,
+  // and a quoted path is kept whole even when it contains " -".
+  const quoted = /^(['"])(.*?)\1(?:\s|$)/.exec(trimmed);
+  const command = quoted ? quoted[2] : trimmed.split(/\s+(?=-)/)[0]?.replace(/^['"]|['"]$/g, "");
+  return command || null;
 }
 
 function basenameForPlatform(command: string, platform: NodeJS.Platform): string {