diff --git a/packages/server/src/server/agent/providers/acp-agent.test.ts b/packages/server/src/server/agent/providers/acp-agent.test.ts
index 3deaa60c11..e902493dcb 100644
--- a/packages/server/src/server/agent/providers/acp-agent.test.ts
+++ b/packages/server/src/server/agent/providers/acp-agent.test.ts
@@ -811,6 +811,46 @@ describe("ACPAgentSession terminal tools", () => {
       truncated: false,
     });
   });
+
+  test("trims large terminal output without rescanning the retained suffix", async () => {
+    const session = createSession();
+    const terminal = await session.createTerminal({
+      sessionId: "session-1",
+      command: process.execPath,
+      args: ["-e", 'process.stdout.write("x".repeat(1024 * 1024))'],
+      cwd: process.cwd(),
+      outputByteLimit: 1024,
+    });
+    await session.waitForTerminalExit({ sessionId: "session-1", terminalId: terminal.terminalId });
+
+    await expect(
+      session.terminalOutput({ sessionId: "session-1", terminalId: terminal.terminalId }),
+    ).resolves.toEqual({
+      output: "x".repeat(1024),
+      truncated: true,
+      exitStatus: { exitCode: 0, signal: null },
+    });
+  }, 1000);
+
+  test("trims terminal output at a UTF-8 character boundary", async () => {
+    const session = createSession();
+    const terminal = await session.createTerminal({
+      sessionId: "session-1",
+      command: process.execPath,
+      args: ["-e", 'process.stdout.write("😀ab")'],
+      cwd: process.cwd(),
+      outputByteLimit: 3,
+    });
+    await session.waitForTerminalExit({ sessionId: "session-1", terminalId: terminal.terminalId });
+
+    await expect(
+      session.terminalOutput({ sessionId: "session-1", terminalId: terminal.terminalId }),
+    ).resolves.toEqual({
+      output: "ab",
+      truncated: true,
+      exitStatus: { exitCode: 0, signal: null },
+    });
+  });
 });
 
 describe("mapACPUsage", () => {
diff --git a/packages/server/src/server/agent/providers/acp-agent.ts b/packages/server/src/server/agent/providers/acp-agent.ts
index ae765ecd2e..e26b6e4ade 100644
--- a/packages/server/src/server/agent/providers/acp-agent.ts
+++ b/packages/server/src/server/agent/providers/acp-agent.ts
@@ -4093,10 +4093,16 @@ function appendTerminalOutput(entry: TerminalEntry, chunk: string): void {
   if (!limit) {
     return;
   }
-  while (Buffer.byteLength(entry.output, "utf8") > limit && entry.output.length > 0) {
-    entry.output = entry.output.slice(1);
-    entry.truncated = true;
+  const output = Buffer.from(entry.output, "utf8");
+  if (output.length <= limit) {
+    return;
   }
+  let start = output.length - limit;
+  while (start < output.length && (output[start] & 0xc0) === 0x80) {
+    start += 1;
+  }
+  entry.output = output.subarray(start).toString("utf8");
+  entry.truncated = true;
 }
 
 function readRecord(value: unknown): Record<string, unknown> | null {