diff --git a/electron/main/process-manager.ts b/electron/main/process-manager.ts
index d1360aa3..51bc2abd 100644
--- a/electron/main/process-manager.ts
+++ b/electron/main/process-manager.ts
@@ -182,7 +182,8 @@ class ProcessManager {
   async kill(pid: number): Promise<void> {
     const meta = this.processes.get(pid)
     if (!meta) {
-      throw new Error(`Process ${pid} not found`)
+      // Treat unknown processes as already stopped so tabs close cleanly
+      return
     }
 
     return new Promise((resolve, reject) => {
diff --git a/src/App.tsx b/src/App.tsx
index 04376a78..add8766c 100644
--- a/src/App.tsx
+++ b/src/App.tsx
@@ -15,6 +15,7 @@ import InfoView from "./components/info-view"
 import AgentSelector from "./components/agent-selector"
 import ModelSelector from "./components/model-selector"
 import KeyboardHint from "./components/keyboard-hint"
+import InstanceDisconnectedModal from "./components/instance-disconnected-modal"
 import { initMarkdown } from "./lib/markdown"
 import { useTheme } from "./lib/theme"
 import { createCommandRegistry } from "./lib/commands"
@@ -39,6 +40,8 @@ import {
   addLog,
   getActivePermission,
   sendPermissionResponse,
+  disconnectedInstance,
+  acknowledgeDisconnectedInstance,
 } from "./stores/instances"
 import {
   getSessions,
@@ -433,6 +436,14 @@ const App: Component = () => {
     }
   }
 
+  async function handleDisconnectedInstanceClose() {
+    try {
+      await acknowledgeDisconnectedInstance()
+    } catch (error) {
+      console.error("Failed to finalize disconnected instance:", error)
+    }
+  }
+
   async function handleCloseInstance(instanceId: string) {
     if (confirm("Stop OpenCode instance? This will stop the server.")) {
       await stopInstance(instanceId)
@@ -1019,12 +1030,19 @@ const App: Component = () => {
   })
 
   return (
-    <div class="h-screen w-screen flex flex-col">
-      <Show
-        when={!hasInstances()}
-        fallback={
-          <>
-            <InstanceTabs
+    <>
+      <InstanceDisconnectedModal
+        open={Boolean(disconnectedInstance())}
+        folder={disconnectedInstance()?.folder}
+        reason={disconnectedInstance()?.reason}
+        onClose={handleDisconnectedInstanceClose}
+      />
+      <div class="h-screen w-screen flex flex-col">
+        <Show
+          when={!hasInstances()}
+          fallback={
+            <>
+              <InstanceTabs
               instances={instances()}
               activeInstanceId={activeInstanceId()}
               onSelect={setActiveInstanceId}
@@ -1176,6 +1194,7 @@ const App: Component = () => {
         }}
       />
     </div>
+    </>
   )
 }
 
diff --git a/src/components/instance-disconnected-modal.tsx b/src/components/instance-disconnected-modal.tsx
new file mode 100644
index 00000000..6c454ead
--- /dev/null
+++ b/src/components/instance-disconnected-modal.tsx
@@ -0,0 +1,47 @@
+import { Dialog } from "@kobalte/core/dialog"
+
+interface InstanceDisconnectedModalProps {
+  open: boolean
+  folder?: string
+  reason?: string
+  onClose: () => void
+}
+
+export default function InstanceDisconnectedModal(props: InstanceDisconnectedModalProps) {
+  const folderLabel = props.folder || "this workspace"
+  const reasonLabel = props.reason || "The server stopped responding"
+
+  return (
+    <Dialog open={props.open} modal>
+      <Dialog.Portal>
+        <Dialog.Overlay class="modal-overlay" />
+        <div class="fixed inset-0 z-50 flex items-center justify-center p-4">
+          <Dialog.Content class="modal-surface w-full max-w-md p-6 flex flex-col gap-6">
+            <div>
+              <Dialog.Title class="text-xl font-semibold text-primary">Instance Disconnected</Dialog.Title>
+              <Dialog.Description class="text-sm text-secondary mt-2">
+                {folderLabel} can no longer be reached. Close the tab to continue working.
+              </Dialog.Description>
+            </div>
+
+            <div class="rounded-lg border border-base bg-surface-secondary p-4 text-sm text-secondary">
+              <p class="font-medium text-primary">Details</p>
+              <p class="mt-2 text-secondary">{reasonLabel}</p>
+              {props.folder && (
+                <p class="mt-2 text-secondary">
+                  Folder: <span class="font-mono text-primary break-all">{props.folder}</span>
+                </p>
+              )}
+            </div>
+
+            <div class="flex justify-end">
+              <button type="button" class="selector-button selector-button-primary" onClick={props.onClose}>
+                Close Instance
+              </button>
+            </div>
+          </Dialog.Content>
+        </div>
+      </Dialog.Portal>
+    </Dialog>
+  )
+}
diff --git a/src/lib/sse-manager.ts b/src/lib/sse-manager.ts
index ed43fb64..8de1ed1d 100644
--- a/src/lib/sse-manager.ts
+++ b/src/lib/sse-manager.ts
@@ -17,7 +17,6 @@ import type {
 interface SSEConnection {
   instanceId: string
   eventSource: EventSource
-  reconnectAttempts: number
   status: "connecting" | "connected" | "disconnected" | "error"
 }
 
@@ -51,8 +50,6 @@ const [connectionStatus, setConnectionStatus] = createSignal<
 
 class SSEManager {
   private connections = new Map<string, SSEConnection>()
-  private maxReconnectAttempts = 5
-  private baseReconnectDelay = 1000
 
   connect(instanceId: string, port: number): void {
     if (this.connections.has(instanceId)) {
@@ -65,7 +62,6 @@ class SSEManager {
     const connection: SSEConnection = {
       instanceId,
       eventSource,
-      reconnectAttempts: 0,
       status: "connecting",
     }
 
@@ -74,7 +70,6 @@ class SSEManager {
 
     eventSource.onopen = () => {
       connection.status = "connected"
-      connection.reconnectAttempts = 0
       this.updateConnectionStatus(instanceId, "connected")
       console.log(`[SSE] Connected to instance ${instanceId}`)
     }
@@ -92,7 +87,7 @@ class SSEManager {
       connection.status = "error"
       this.updateConnectionStatus(instanceId, "error")
       console.error(`[SSE] Connection error for instance ${instanceId}`)
-      this.handleReconnect(instanceId, port)
+      this.handleConnectionLost(instanceId, "Connection to instance lost")
     }
   }
 
@@ -148,25 +143,15 @@ class SSEManager {
     }
   }
 
-  private handleReconnect(instanceId: string, port: number): void {
+  private handleConnectionLost(instanceId: string, reason: string): void {
     const connection = this.connections.get(instanceId)
     if (!connection) return
 
-    if (connection.reconnectAttempts >= this.maxReconnectAttempts) {
-      console.error(`[SSE] Max reconnection attempts reached for ${instanceId}`)
-      connection.status = "disconnected"
-      this.updateConnectionStatus(instanceId, "disconnected")
-      return
-    }
-
-    const delay = this.baseReconnectDelay * Math.pow(2, connection.reconnectAttempts)
-    connection.reconnectAttempts++
-
-    console.log(`[SSE] Reconnecting to ${instanceId} in ${delay}ms (attempt ${connection.reconnectAttempts})`)
-
-    setTimeout(() => {
-      this.connect(instanceId, port)
-    }, delay)
+    connection.eventSource.close()
+    this.connections.delete(instanceId)
+    connection.status = "disconnected"
+    this.updateConnectionStatus(instanceId, "disconnected")
+    this.onConnectionLost?.(instanceId, reason)
   }
 
   private updateConnectionStatus(instanceId: string, status: SSEConnection["status"]): void {
@@ -188,6 +173,7 @@ class SSEManager {
   onSessionIdle?: (instanceId: string, event: EventSessionIdle) => void
   onPermissionUpdated?: (instanceId: string, event: EventPermissionUpdated) => void
   onPermissionReplied?: (instanceId: string, event: EventPermissionReplied) => void
+  onConnectionLost?: (instanceId: string, reason: string) => void | Promise<void>
 
   getStatus(instanceId: string): "connecting" | "connected" | "disconnected" | "error" | null {
     return connectionStatus().get(instanceId) ?? null
diff --git a/src/stores/instances.ts b/src/stores/instances.ts
index 76e652e7..a39e23c6 100644
--- a/src/stores/instances.ts
+++ b/src/stores/instances.ts
@@ -11,6 +11,7 @@ import {
   clearInstanceDraftPrompts,
 } from "./sessions"
 import { preferences, updateLastUsedBinary } from "./preferences"
+import { setHasInstances } from "./ui"
 
 const [instances, setInstances] = createSignal<Map<string, Instance>>(new Map())
 const [activeInstanceId, setActiveInstanceId] = createSignal<string | null>(null)
@@ -20,6 +21,12 @@ const [logStreamingState, setLogStreamingState] = createSignal<Map<string, boole
 // Permission queue management per instance
 const [permissionQueues, setPermissionQueues] = createSignal<Map<string, Permission[]>>(new Map())
 const [activePermissionId, setActivePermissionId] = createSignal<Map<string, string | null>>(new Map())
+interface DisconnectedInstanceInfo {
+  id: string
+  folder: string
+  reason: string
+}
+const [disconnectedInstance, setDisconnectedInstance] = createSignal<DisconnectedInstanceInfo | null>(null)
 
 const MAX_LOG_ENTRIES = 1000
 
@@ -356,6 +363,37 @@ async function sendPermissionResponse(
   }
 }
 
+sseManager.onConnectionLost = (instanceId, reason) => {
+  const instance = instances().get(instanceId)
+  if (!instance) {
+    return
+  }
+
+  setDisconnectedInstance({
+    id: instanceId,
+    folder: instance.folder,
+    reason,
+  })
+}
+
+async function acknowledgeDisconnectedInstance(): Promise<void> {
+  const pending = disconnectedInstance()
+  if (!pending) {
+    return
+  }
+
+  try {
+    await stopInstance(pending.id)
+  } catch (error) {
+    console.error("Failed to stop disconnected instance:", error)
+  } finally {
+    setDisconnectedInstance(null)
+    if (instances().size === 0) {
+      setHasInstances(false)
+    }
+  }
+}
+
 export {
   instances,
   activeInstanceId,
@@ -382,4 +420,6 @@ export {
   removePermissionFromQueue,
   clearPermissionQueue,
   sendPermissionResponse,
+  disconnectedInstance,
+  acknowledgeDisconnectedInstance,
 }