diff --git a/packages/cli/src/commands/agent/run.test.ts b/packages/cli/src/commands/agent/run.test.ts
index 755638d4d..5f6397af3 100644
--- a/packages/cli/src/commands/agent/run.test.ts
+++ b/packages/cli/src/commands/agent/run.test.ts
@@ -26,6 +26,7 @@ describe("existing run workspace resolution", () => {
     await expect(resolveExistingRunWorkspace({ fetchWorkspaces }, "workspace-2")).resolves.toEqual({
       id: "workspace-2",
       cwd: "/workspace/two",
+      createdForRun: false,
     });
     expect(fetchWorkspaces).toHaveBeenCalledWith({
       filter: { query: "workspace-2" },
diff --git a/packages/cli/src/commands/agent/run.ts b/packages/cli/src/commands/agent/run.ts
index 14e494c56..7607bfe61 100644
--- a/packages/cli/src/commands/agent/run.ts
+++ b/packages/cli/src/commands/agent/run.ts
@@ -504,6 +504,32 @@ async function connectToDaemonOrThrow(
 interface RunWorkspace {
   id?: string;
   cwd: string;
+  createdForRun: boolean;
+}
+
+type CreateRunAgentInput = Parameters<ConnectedDaemonClient["createAgent"]>[0];
+
+async function createAgentInRunWorkspace(
+  client: ConnectedDaemonClient,
+  workspace: RunWorkspace,
+  input: CreateRunAgentInput,
+): Promise<AgentSnapshotPayload> {
+  try {
+    return await client.createAgent(input);
+  } catch (error) {
+    if (workspace.createdForRun && workspace.id) {
+      try {
+        const archived = await client.archiveWorkspace(workspace.id);
+        if (archived.error) {
+          console.error(`Warning: failed to clean up workspace ${workspace.id}: ${archived.error}`);
+        }
+      } catch (cleanupError) {
+        const message = cleanupError instanceof Error ? cleanupError.message : String(cleanupError);
+        console.error(`Warning: failed to clean up workspace ${workspace.id}: ${message}`);
+      }
+    }
+    throw error;
+  }
 }
 
 export interface RunWorkspaceLookupClient {
@@ -523,7 +549,7 @@ export async function resolveExistingRunWorkspace(
   });
   const workspace = result.entries.find((entry) => entry.id === workspaceId);
   if (workspace) {
-    return { id: workspace.id, cwd: workspace.workspaceDirectory };
+    return { id: workspace.id, cwd: workspace.workspaceDirectory, createdForRun: false };
   }
 
   throw {
@@ -551,7 +577,7 @@ async function resolveRunWorkspace(
   }
 
   if (!newWorkspace && resolveRunCallerAgentId()) {
-    return { cwd };
+    return { cwd, createdForRun: false };
   }
 
   const ambientWorkspaceId = newWorkspace ? undefined : process.env.PASEO_WORKSPACE_ID?.trim();
@@ -578,7 +604,11 @@ async function resolveRunWorkspace(
   console.error(
     "Tip: pass --workspace <id> (or set PASEO_WORKSPACE_ID) to run in an existing workspace.",
   );
-  return { id: result.workspace.id, cwd: result.workspace.workspaceDirectory ?? cwd };
+  return {
+    id: result.workspace.id,
+    cwd: result.workspace.workspaceDirectory ?? cwd,
+    createdForRun: true,
+  };
 }
 
 export async function runRunCommand(
@@ -627,7 +657,7 @@ export async function runRunCommand(
 
       const callStructuredTurn = async (structuredPrompt: string): Promise<string> => {
         if (!structuredAgent) {
-          structuredAgent = await client.createAgent({
+          structuredAgent = await createAgentInRunWorkspace(client, workspace, {
             provider: resolvedProviderModel.provider,
             cwd: runCwd,
             workspaceId,
@@ -698,7 +728,7 @@ export async function runRunCommand(
     }
 
     // Create the agent
-    const agent = await client.createAgent({
+    const agent = await createAgentInRunWorkspace(client, workspace, {
       provider: resolvedProviderModel.provider,
       cwd: runCwd,
       workspaceId,
diff --git a/packages/cli/tests/05-agent-run.test.ts b/packages/cli/tests/05-agent-run.test.ts
index 0af2a6ec7..045030bcf 100644
--- a/packages/cli/tests/05-agent-run.test.ts
+++ b/packages/cli/tests/05-agent-run.test.ts
@@ -25,6 +25,7 @@ import { $ } from "zx";
 import { mkdtemp, rm, writeFile } from "fs/promises";
 import { tmpdir } from "os";
 import { join } from "path";
+import { createE2ETestContext } from "./helpers/test-daemon.ts";
 
 $.verbose = false;
 
@@ -268,6 +269,56 @@ try {
     assert(output.includes("unknown option"), "should report unknown option for --isolation");
     console.log("✓ run --isolation is rejected\n");
   }
+
+  // Test 17: failed agent creation does not leave the run's workspace behind
+  {
+    console.log("Test 17: failed agent creation cleans up its workspace");
+    const ctx = await createE2ETestContext({ timeout: 45000 });
+    try {
+      await $({ cwd: ctx.workDir })`git init -b main`;
+      await $({ cwd: ctx.workDir })`git config user.email test@getpaseo.local`;
+      await $({ cwd: ctx.workDir })`git config user.name "Paseo Test"`;
+      await $({ cwd: ctx.workDir })`git commit --allow-empty -m initial`;
+
+      const before = await ctx.paseo(["workspace", "ls", "--json"]);
+      assert.strictEqual(before.exitCode, 0, before.stderr);
+
+      const result = await ctx.paseo(
+        [
+          "run",
+          "--provider",
+          "claude",
+          "--mode",
+          "bypass",
+          "--new-workspace",
+          "worktree",
+          "--worktree-mode",
+          "branch-off",
+          "--new-branch",
+          "failed-run-workspace",
+          "--base",
+          "main",
+          "--background",
+          "do something",
+        ],
+        {
+          env: { PASEO_AGENT_ID: "", PASEO_WORKSPACE_ID: "" },
+        },
+      );
+      assert.notStrictEqual(result.exitCode, 0, "invalid mode should reject agent creation");
+      assert(
+        `${result.stdout}\n${result.stderr}`.includes("Invalid mode 'bypass'"),
+        `failure should reach provider mode validation\nstdout:\n${result.stdout}\nstderr:\n${result.stderr}`,
+      );
+
+      const after = await ctx.paseo(["workspace", "ls", "--json"]);
+      assert.strictEqual(after.exitCode, 0, after.stderr);
+      assert.deepStrictEqual(JSON.parse(after.stdout), JSON.parse(before.stdout));
+    } finally {
+      await ctx.stop();
+    }
+    console.log("✓ failed agent creation cleans up its workspace\n");
+  }
 } finally {
   // Clean up temp directory
   await rm(paseoHome, { recursive: true, force: true });