diff --git a/packages/app/src/terminal/runtime/terminal-emulator-runtime.ts b/packages/app/src/terminal/runtime/terminal-emulator-runtime.ts
index f4a6df21c..3e33fc6ee 100644
--- a/packages/app/src/terminal/runtime/terminal-emulator-runtime.ts
+++ b/packages/app/src/terminal/runtime/terminal-emulator-runtime.ts
@@ -317,7 +317,9 @@ export class TerminalEmulatorRuntime {
         !shouldInterceptDomTerminalKey({
           key: normalizedKey,
           ctrlKey: event.ctrlKey,
+          shiftKey: event.shiftKey,
           altKey: event.altKey,
+          metaKey: event.metaKey,
           pendingModifiers: this.pendingModifiers,
         })
       ) {
diff --git a/packages/app/src/utils/terminal-keys.test.ts b/packages/app/src/utils/terminal-keys.test.ts
index 2a627d587..96ac8340e 100644
--- a/packages/app/src/utils/terminal-keys.test.ts
+++ b/packages/app/src/utils/terminal-keys.test.ts
@@ -57,7 +57,9 @@ describe("terminal key helpers", () => {
       shouldInterceptDomTerminalKey({
         key: "Escape",
         ctrlKey: false,
+        shiftKey: false,
         altKey: false,
+        metaKey: false,
         pendingModifiers: { ctrl: false, shift: false, alt: false },
       }),
     ).toBe(false);
@@ -65,7 +67,9 @@ describe("terminal key helpers", () => {
       shouldInterceptDomTerminalKey({
         key: "c",
         ctrlKey: true,
+        shiftKey: false,
         altKey: false,
+        metaKey: false,
         pendingModifiers: { ctrl: false, shift: false, alt: false },
       }),
     ).toBe(false);
@@ -73,7 +77,9 @@ describe("terminal key helpers", () => {
       shouldInterceptDomTerminalKey({
         key: "c",
         ctrlKey: false,
+        shiftKey: false,
         altKey: false,
+        metaKey: false,
         pendingModifiers: { ctrl: true, shift: false, alt: false },
       }),
     ).toBe(true);
@@ -81,12 +87,73 @@ describe("terminal key helpers", () => {
       shouldInterceptDomTerminalKey({
         key: "Escape",
         ctrlKey: false,
+        shiftKey: false,
         altKey: false,
+        metaKey: false,
         pendingModifiers: { ctrl: false, shift: false, alt: true },
       }),
     ).toBe(true);
   });
 
+  it("intercepts Enter with DOM shift modifier for CSI u encoding", () => {
+    expect(
+      shouldInterceptDomTerminalKey({
+        key: "Enter",
+        ctrlKey: false,
+        shiftKey: true,
+        altKey: false,
+        metaKey: false,
+        pendingModifiers: { ctrl: false, shift: false, alt: false },
+      }),
+    ).toBe(true);
+  });
+
+  it("intercepts Enter with any DOM modifier for CSI u encoding", () => {
+    expect(
+      shouldInterceptDomTerminalKey({
+        key: "Enter",
+        ctrlKey: true,
+        shiftKey: false,
+        altKey: false,
+        metaKey: false,
+        pendingModifiers: { ctrl: false, shift: false, alt: false },
+      }),
+    ).toBe(true);
+    expect(
+      shouldInterceptDomTerminalKey({
+        key: "Enter",
+        ctrlKey: false,
+        shiftKey: false,
+        altKey: true,
+        metaKey: false,
+        pendingModifiers: { ctrl: false, shift: false, alt: false },
+      }),
+    ).toBe(true);
+    expect(
+      shouldInterceptDomTerminalKey({
+        key: "Enter",
+        ctrlKey: false,
+        shiftKey: false,
+        altKey: false,
+        metaKey: true,
+        pendingModifiers: { ctrl: false, shift: false, alt: false },
+      }),
+    ).toBe(true);
+  });
+
+  it("does not intercept plain Enter without modifiers", () => {
+    expect(
+      shouldInterceptDomTerminalKey({
+        key: "Enter",
+        ctrlKey: false,
+        shiftKey: false,
+        altKey: false,
+        metaKey: false,
+        pendingModifiers: { ctrl: false, shift: false, alt: false },
+      }),
+    ).toBe(false);
+  });
+
   it("detects pending modifier state", () => {
     expect(hasPendingTerminalModifiers({ ctrl: false, shift: false, alt: false })).toBe(false);
     expect(hasPendingTerminalModifiers({ ctrl: true, shift: false, alt: false })).toBe(true);
diff --git a/packages/app/src/utils/terminal-keys.ts b/packages/app/src/utils/terminal-keys.ts
index 55c7c523a..bafd5d2e8 100644
--- a/packages/app/src/utils/terminal-keys.ts
+++ b/packages/app/src/utils/terminal-keys.ts
@@ -85,10 +85,21 @@ export function hasPendingTerminalModifiers(modifiers: PendingTerminalModifiers)
 export function shouldInterceptDomTerminalKey(args: {
   key: string;
   ctrlKey: boolean;
+  shiftKey: boolean;
   altKey: boolean;
+  metaKey: boolean;
   pendingModifiers: PendingTerminalModifiers;
 }): boolean {
-  return hasPendingTerminalModifiers(args.pendingModifiers);
+  if (hasPendingTerminalModifiers(args.pendingModifiers)) {
+    return true;
+  }
+  // xterm.js sends plain \r for Enter regardless of modifiers.
+  // Intercept modified Enter so it gets CSI u encoding (Kitty keyboard protocol),
+  // which Claude Code and other TUI apps use for Shift+Enter newlines.
+  if (args.key === "Enter" && (args.shiftKey || args.ctrlKey || args.altKey || args.metaKey)) {
+    return true;
+  }
+  return false;
 }
 
 export function mergeTerminalModifiers(args: {