diff --git a/packages/app/e2e/browser/branch-switcher.spec.ts b/packages/app/e2e/browser/branch-switcher.spec.ts
index 9799242390..0f37f83b10 100644
--- a/packages/app/e2e/browser/branch-switcher.spec.ts
+++ b/packages/app/e2e/browser/branch-switcher.spec.ts
@@ -27,15 +27,22 @@ async function holdBranchSuggestions(page: Page) {
   await page.routeWebSocket(daemonWsRoutePattern(), (browser) => {
     const server = browser.connectToServer();
     browser.onMessage((message) => {
-      const envelope = JSON.parse(message.toString());
-      if (envelope.type === "session" && envelope.message?.type === "branch_suggestions_request")
-        requestCount++;
+      if (typeof message === "string") {
+        const envelope = JSON.parse(message);
+        if (envelope.type === "session" && envelope.message?.type === "branch_suggestions_request")
+          requestCount++;
+      }
       server.send(message);
     });
     server.onMessage(async (message) => {
-      const envelope = JSON.parse(message.toString());
-      if (envelope.type === "session" && envelope.message?.type === "branch_suggestions_response") {
-        await gate;
+      if (typeof message === "string") {
+        const envelope = JSON.parse(message);
+        if (
+          envelope.type === "session" &&
+          envelope.message?.type === "branch_suggestions_response"
+        ) {
+          await gate;
+        }
       }
       browser.send(message);
     });
diff --git a/packages/app/e2e/browser/changes-pane.spec.ts b/packages/app/e2e/browser/changes-pane.spec.ts
index 7137c903ff..026e2791c9 100644
--- a/packages/app/e2e/browser/changes-pane.spec.ts
+++ b/packages/app/e2e/browser/changes-pane.spec.ts
@@ -8,7 +8,11 @@ import { daemonWsRoutePattern } from "../support/helpers/daemon-port";
 import { getServerId } from "../support/helpers/server-id";
 import { connectSeedClient } from "../support/helpers/seed-client";
 import { createTempGitRepo } from "../support/helpers/workspace";
-import { openChangesPanel, waitForWorkspaceTabsVisible } from "../support/helpers/workspace-tabs";
+import {
+  openChangesPanel,
+  openChangesTreePanel,
+  waitForWorkspaceTabsVisible,
+} from "../support/helpers/workspace-tabs";
 
 interface DirtyWorkspace {
   id: string;
@@ -262,6 +266,126 @@ test.afterEach(async () => {
   }
 });
 
+test("Changes without a comparison base explains how to view pending changes", async ({ page }) => {
+  const workspace = await createWorkspaceWithManyTinyDiffs(2, "dev");
+  await openWorkspaceChangesTree(page, workspace);
+  await expect(
+    page.getByText("Comparison base is unavailable. Select Uncommitted to view pending changes."),
+  ).toBeVisible();
+  await selectChangesComparison(page, "Uncommitted");
+  await expect(changesTree(page).getByText("file-0000.ts", { exact: true })).toBeVisible();
+});
+async function openWorkspaceChangesTree(page: Page, workspace: DirtyWorkspace): Promise<void> {
+  await page.setViewportSize({ width: 1400, height: 900 });
+  await page.goto(buildHostWorkspaceRoute(getServerId(), workspace.id));
+  await waitForWorkspaceTabsVisible(page);
+  await openChangesTreePanel(page);
+}
+
+test("streamed Changes shows the tree before completion and applies a one-file refresh", async ({
+  page,
+}, testInfo) => {
+  test.setTimeout(120_000);
+  const workspace = await createLargeStreamedWorkspace();
+  await addOversizedSibling(workspace);
+  const stream = await holdDiffCompletion(page);
+  await openWorkspaceChangesSurface(page, workspace, 90_000);
+  await expectAnnouncedTreeAndLoader(page);
+  await page.screenshot({ path: testInfo.outputPath("tree-loading.png") });
+  stream.finish();
+  await expect.poll(() => stream.completed, { timeout: 60_000 }).toBeGreaterThan(0);
+  await expect(page.getByRole("progressbar", { name: "Loading..." })).toHaveCount(0);
+  const connections = stream.connections;
+  const panel = page.getByTestId("working-diff-panel").filter({ visible: true });
+  await expect(panel.getByTestId("diff-file-0")).toHaveAccessibleName("src/file-0000.ts, +90, -1");
+  await addOneLineToFirstFile(workspace);
+  await expect.poll(() => stream.changedBodies.at(-1), { timeout: 30_000 }).toBe(1);
+  await expect(panel.getByTestId("diff-file-0")).toHaveAccessibleName("src/file-0000.ts, +91, -1");
+  await expect(page.getByRole("progressbar", { name: "Loading..." })).toHaveCount(0);
+  expect(stream.connections).toBe(connections);
+  await page.screenshot({ path: testInfo.outputPath("refreshed.png") });
+});
+
+async function createLargeStreamedWorkspace(): Promise<DirtyWorkspace> {
+  const workspace = await createWorkspaceWithManyTinyDiffs(252);
+  await Promise.all(
+    Array.from({ length: 252 }, (_, file) =>
+      writeFile(
+        path.join(workspace.repoPath, `src/file-${String(file).padStart(4, "0")}.ts`),
+        Array.from(
+          { length: 90 },
+          (_unused, line) =>
+            `export const fn${line} = (param: string) => ({ key: param, value: ${file} });`,
+        ).join("\n") + "\n",
+      ),
+    ),
+  );
+  return workspace;
+}
+async function addOversizedSibling(workspace: DirtyWorkspace): Promise<void> {
+  await writeFile(path.join(workspace.repoPath, "zz-too-large.txt"), "x".repeat(1024 * 1024 + 1));
+}
+async function addOneLineToFirstFile(workspace: DirtyWorkspace): Promise<void> {
+  const file = path.join(workspace.repoPath, "src/file-0000.ts");
+  await writeFile(file, (await readFile(file, "utf8")) + "export const refreshed = true;\n");
+}
+async function holdDiffCompletion(page: Page) {
+  const { decodeDiffFrame, DiffOpcode } = await import("@getpaseo/protocol/binary-frames/index");
+  let holding = true;
+  let connections = 0;
+  let completed = 0;
+  const completions: Array<() => void> = [];
+  const changedBodies: number[] = [];
+  const bodyCounts = new Map<number, number>();
+  await page.routeWebSocket(daemonWsRoutePattern(), (browserSocket) => {
+    connections++;
+    const serverSocket = browserSocket.connectToServer();
+    browserSocket.onMessage((message) => serverSocket.send(message));
+    serverSocket.onMessage((message) => {
+      if (
+        typeof message !== "string" &&
+        message[0] >= DiffOpcode.Begin &&
+        message[0] <= DiffOpcode.End
+      ) {
+        const frame = decodeDiffFrame(message);
+        if (frame.opcode === DiffOpcode.Begin) bodyCounts.set(frame.slot, 0);
+        else if (frame.opcode === DiffOpcode.Bodies)
+          bodyCounts.set(frame.slot, (bodyCounts.get(frame.slot) ?? 0) + frame.files.length);
+        else {
+          completed++;
+          changedBodies.push(bodyCounts.get(frame.slot) ?? 0);
+        }
+      }
+      if (holding && typeof message !== "string" && message[0] === DiffOpcode.End) {
+        completions.push(() => browserSocket.send(message));
+        return;
+      }
+      browserSocket.send(message);
+    });
+  });
+  return {
+    changedBodies,
+    get connections() {
+      return connections;
+    },
+    get completed() {
+      return completed;
+    },
+    finish: () => {
+      holding = false;
+      completions.splice(0).forEach((send) => send());
+    },
+  };
+}
+async function expectWorkingDiffLoaded(page: Page, timeout: number): Promise<void> {
+  const panel = page.getByTestId("working-diff-panel").filter({ visible: true });
+  await expect(panel.getByTestId("diff-file-0")).toBeAttached({ timeout });
+}
+async function expectAnnouncedTreeAndLoader(page: Page): Promise<void> {
+  await expect(changesTree(page).first()).toBeVisible();
+  await expect(page.getByRole("progressbar", { name: "Loading..." }).first()).toBeVisible();
+}
+
 test("Changes opens All changes for a clean checkout", async ({ page }) => {
   const workspace = await createWorkspaceWithCommittedDiff();
 
@@ -499,6 +623,35 @@ test("an empty Changes comparison links to the populated comparison", async ({ p
   await expect(panel.getByTestId("diff-file-0")).toHaveAccessibleName("committed-only.ts, +1, -0");
 });
 
+test("legacy diff hosts keep All, Committed and Uncommitted comparisons", async ({ page }) => {
+  await useLegacyDiffHost(page);
+  const workspace = await createWorkspaceWithScrollableComparisons();
+  await openWorkspaceChangesSurface(page, workspace);
+  await expect(changesTree(page).getByText("committed", { exact: true })).toBeVisible();
+  await expect(changesTree(page).getByText("uncommitted", { exact: true })).toBeVisible();
+  await selectChangesComparison(page, "Committed");
+  await expectWorkingComparisonFiles(page, "committed");
+  await selectChangesComparison(page, "Uncommitted");
+  await expectWorkingComparisonFiles(page, "uncommitted");
+});
+async function useLegacyDiffHost(page: Page): Promise<void> {
+  await page.routeWebSocket(daemonWsRoutePattern(), (browserSocket) => {
+    const serverSocket = browserSocket.connectToServer();
+    browserSocket.onMessage((message) => serverSocket.send(message));
+    serverSocket.onMessage((message) => {
+      if (typeof message === "string") {
+        const envelope = JSON.parse(message);
+        if (envelope.message?.payload?.status === "server_info") {
+          delete envelope.message.payload.features.diffSubscription;
+          browserSocket.send(JSON.stringify(envelope));
+          return;
+        }
+      }
+      browserSocket.send(message);
+    });
+  });
+}
+
 test("Changes comparison controls the working diff and tree selection focuses its file", async ({
   page,
 }) => {
@@ -1311,11 +1464,13 @@ test("canvas diff uses the overlay scrollbar and its thumb controls vertical scr
 test("canvas headers keep a many-file diff bounded while scrolling end to end", async ({
   page,
 }) => {
-  test.setTimeout(180_000);
+  test.setTimeout(300_000);
   const workspace = await createWorkspaceWithManyTinyDiffs(2_000);
   await useUnwrappedDiffLines(page);
   await openWorkspaceChangesSurface(page, workspace, 90_000);
 
+  // Measure document bounds after delivery, independently of the cold Git read.
+  await expectWorkingDiffLoaded(page, 240_000);
   const root = page.getByTestId("git-diff-canvas-root");
   const scroller = page.getByTestId("git-diff-scroll");
   await expect(root.locator('[data-testid^="git-diff-sticky-header-"]')).toHaveCount(2);
@@ -1894,12 +2049,16 @@ async function createWorkspaceWithTwoSelectionDiffs(): Promise<DirtyWorkspace> {
   return { id: created.workspace.id, repoPath: repo.path };
 }
 
-async function createWorkspaceWithManyTinyDiffs(fileCount: number): Promise<DirtyWorkspace> {
+async function createWorkspaceWithManyTinyDiffs(
+  fileCount: number,
+  branch = "main",
+): Promise<DirtyWorkspace> {
   const files = Array.from({ length: fileCount }, (_, index) => ({
     path: `src/file-${String(index).padStart(4, "0")}.ts`,
     content: "export const value = 0;\n",
   }));
   const repo = await createTempGitRepo("changes-canvas-many-files-", { files });
+  if (branch !== "main") execFileSync("git", ["branch", "-m", branch], { cwd: repo.path });
   await Promise.all(
     files.map((file, index) =>
       writeFile(path.join(repo.path, file.path), `export const value = ${index + 1};\n`),
diff --git a/packages/app/e2e/browser/explorer-resize-performance.spec.ts b/packages/app/e2e/browser/explorer-resize-performance.spec.ts
index 33cf48c94c..ca2ec5bf13 100644
--- a/packages/app/e2e/browser/explorer-resize-performance.spec.ts
+++ b/packages/app/e2e/browser/explorer-resize-performance.spec.ts
@@ -79,6 +79,12 @@ async function previewExplorerResize(page: Page, distance: number) {
   return { ...measurement, width: after };
 }
 
+async function expectCleanChangesLoaded(page: Page): Promise<void> {
+  await expect(
+    page.getByTestId("changes-tree-panel").getByText("No changes to display", { exact: true }),
+  ).toBeVisible();
+}
+
 async function expectExplorerWidthSurvivesReload(page: Page, width: number): Promise<void> {
   await page.reload();
   const explorer = page.getByTestId("workspace-explorer-sidebar");
@@ -100,6 +106,7 @@ test("Explorer drag previews without rerendering panes or rewriting the shared s
   await runWorkspaceActionFromCommandCenter(page, "Split pane right");
   await page.getByTestId("workspace-explorer-toggle").first().click();
   await expect(page.getByTestId("workspace-explorer-sidebar")).toBeVisible();
+  await expectCleanChangesLoaded(page);
   // Verify that direct pane renders are being counted before resetting them.
   expect(
     await page.evaluate(() =>
diff --git a/packages/app/src/data/push-router.test.ts b/packages/app/src/data/push-router.test.ts
index d6d9011259..3590cfe30c 100644
--- a/packages/app/src/data/push-router.test.ts
+++ b/packages/app/src/data/push-router.test.ts
@@ -1,4 +1,4 @@
-import type { OwnedSubscription, SubscriptionObserver } from "@getpaseo/client";
+import type { DiffState, OwnedSubscription, SubscriptionObserver } from "@getpaseo/client";
 import { QueryClient, QueryObserver, skipToken } from "@tanstack/react-query";
 import { describe, expect, it } from "vitest";
 import type { MutableDaemonConfig, SessionOutboundMessage } from "@getpaseo/protocol/messages";
@@ -144,10 +144,21 @@ function createFakeClient(config: { rejectCheckoutDiffSubscribe?: boolean } = {}
           ["status", "providers_snapshot_update"],
           () => {},
         ),
-      observeCheckoutDiff(cwd, compare) {
+      observeDiff(input) {
+        const cwd = input.cwd;
+        let mode: "uncommitted" | "base" | "all" = "uncommitted";
+        if (input.head.kind === "rev") mode = "base";
+        else if (input.mergeBase) mode = "all";
+        const compare = {
+          mode,
+          ...(input.base.kind === "rev" && input.base.rev !== "HEAD"
+            ? { baseRef: input.base.rev }
+            : {}),
+          ignoreWhitespace: input.ignoreWhitespace,
+        };
         const subscriptionId = `server-diff-${subscribeCheckoutDiffCalls.length + 1}`;
         subscribeCheckoutDiffCalls.push({ cwd, compare, subscriptionId });
-        const handle = observe(
+        const handle = observe<SubscribeCheckoutDiffResponseMessage["payload"]>(
           { subscriptionId, cwd, files: [], error: null, requestId: "subscribe-checkout-diff" },
           ["checkout_diff_update", "subscribe_checkout_diff_response"],
           () => unsubscribeCheckoutDiffCalls.push(subscriptionId),
@@ -155,9 +166,43 @@ function createFakeClient(config: { rejectCheckoutDiffSubscribe?: boolean } = {}
             "subscriptionId" in message.payload &&
             message.payload.subscriptionId === subscriptionId,
         );
-        if (!config.rejectCheckoutDiffSubscribe) return handle;
-        return {
+        const modern: OwnedSubscription<DiffState> = {
           ...handle,
+          ready: Promise.resolve({
+            phase: "ready",
+            revision: 1,
+            resolved: { baseSha: "", headSha: "", mergeBaseSha: "" },
+            files: [],
+            diffTooLarge: false,
+            subscriptionId,
+          }),
+          subscribe: (observer) =>
+            handle.subscribe({
+              snapshot: (payload) =>
+                observer.snapshot({
+                  phase: "ready",
+                  revision: 1,
+                  resolved: { baseSha: "", headSha: "", mergeBaseSha: "" },
+                  files: payload.files,
+                  diffTooLarge: payload.diffTooLarge === true,
+                  subscriptionId,
+                }),
+              update: (message) => {
+                if (message.type === "checkout_diff_update")
+                  observer.snapshot({
+                    phase: "ready",
+                    revision: 2,
+                    resolved: { baseSha: "", headSha: "", mergeBaseSha: "" },
+                    files: message.payload.files,
+                    diffTooLarge: message.payload.diffTooLarge === true,
+                    subscriptionId,
+                  });
+              },
+            }),
+        };
+        if (!config.rejectCheckoutDiffSubscribe) return modern;
+        return {
+          ...modern,
           subscribe: (observer) => {
             queueMicrotask(() => observer.error?.(new Error("subscribe failed")));
             return () => {};
@@ -328,7 +373,7 @@ describe("server data push router", () => {
       const first = publish(files, "first");
       const same = publish(structuredClone(files), "reopen");
       expect(same.files).toBe(first.files);
-      expect(same.requestId).toBe("reopen");
+      expect(same.requestId).toBe("diff:1:ready");
       const changed = structuredClone(files);
       changed[0]!.hunks[0]!.lines[0]!.tokens![0]!.style = "variable";
       const next = publish(changed, "edit");
@@ -430,7 +475,7 @@ describe("server data push router", () => {
       files: [],
       error: null,
       diffTooLarge: true,
-      requestId: "diff-1",
+      requestId: "diff:1:ready",
     });
 
     fake.emit({
@@ -449,7 +494,7 @@ describe("server data push router", () => {
       files: [],
       error: null,
       diffTooLarge: true,
-      requestId: `subscription:${serverSubscriptionId}`,
+      requestId: "diff:2:ready",
     });
 
     unsubscribeObserver();
diff --git a/packages/app/src/data/push-router.ts b/packages/app/src/data/push-router.ts
index cc32f8f8e3..5e51ded0d4 100644
--- a/packages/app/src/data/push-router.ts
+++ b/packages/app/src/data/push-router.ts
@@ -1,3 +1,5 @@
+import { checkoutDiffSnapshot, type CheckoutDiffSnapshot } from "@/git/diff-snapshot";
+import type { DiffState } from "@getpaseo/client";
 import type { OwnedSubscription } from "@getpaseo/client";
 import type { ProviderSnapshotEntry } from "@getpaseo/protocol/agent-types";
 import type { Query, QueryCacheNotifyEvent, QueryClient, QueryKey } from "@tanstack/react-query";
@@ -23,14 +25,9 @@ type ProvidersSnapshotUpdateMessage = Extract<
   SessionOutboundMessage,
   { type: "providers_snapshot_update" }
 >;
-type SubscribeCheckoutDiffResponseMessage = Extract<
-  SessionOutboundMessage,
-  { type: "subscribe_checkout_diff_response" }
->;
 type StatusMessage = Extract<SessionOutboundMessage, { type: "status" }>;
 type TerminalsChangedMessage = Extract<SessionOutboundMessage, { type: "terminals_changed" }>;
-type CheckoutDiffResponsePayload = SubscribeCheckoutDiffResponseMessage["payload"];
-type CheckoutDiffCachePayload = Omit<CheckoutDiffResponsePayload, "subscriptionId">;
+type CheckoutDiffCachePayload = CheckoutDiffSnapshot;
 type ListTerminalsPayload = ListTerminalsResponse["payload"];
 
 interface CheckoutDiffCompare {
@@ -49,7 +46,7 @@ interface CheckoutDiffRoute {
 }
 
 interface CheckoutDiffRegistration extends CheckoutDiffRoute {
-  subscription: OwnedSubscription<CheckoutDiffResponsePayload>;
+  subscription: OwnedSubscription<DiffState>;
 }
 
 interface WorkspaceTerminalsRoute {
@@ -75,7 +72,7 @@ export type ProvidersSnapshotUpdate = ProvidersSnapshotUpdateMessage;
 interface ServerDataPushClient {
   getProvidersSnapshot: import("@getpaseo/client/internal/daemon-client").DaemonClient["getProvidersSnapshot"];
   observeEvents: import("@getpaseo/client/internal/daemon-client").DaemonClient["observeEvents"];
-  observeCheckoutDiff: import("@getpaseo/client/internal/daemon-client").DaemonClient["observeCheckoutDiff"];
+  observeDiff: import("@getpaseo/client/internal/daemon-client").DaemonClient["observeDiff"];
   observeTerminals: import("@getpaseo/client/internal/daemon-client").DaemonClient["observeTerminals"];
 }
 
@@ -339,34 +336,34 @@ function reconcileCheckoutDiffSubscriptions(input: {
   }
   for (const [key, desired] of input.desired) {
     if (input.active.has(key)) continue;
-    const subscription = input.client.observeCheckoutDiff(desired.cwd, desired.compare);
+    const { mode, baseRef, ignoreWhitespace } = desired.compare;
+    const revision = mode === "uncommitted" ? "HEAD" : baseRef;
+    if (!revision) continue;
+    const subscription = input.client.observeDiff({
+      cwd: desired.cwd,
+      base: { kind: "rev", rev: revision },
+      head: mode === "base" ? { kind: "rev", rev: "HEAD" } : { kind: "worktree" },
+      mergeBase: mode !== "uncommitted",
+      ignoreWhitespace,
+    });
     const registration = { ...desired, subscription };
     input.active.set(key, registration);
-    const apply = (
-      payload: Omit<CheckoutDiffResponsePayload, "requestId"> & { requestId?: string },
-    ) => {
-      if (input.active.get(key) !== registration) return;
-      const { subscriptionId, ...snapshot } = payload;
-      setCheckoutDiffPayload({
-        activeCheckoutDiffSubscriptions: input.active,
-        queryClient: input.queryClient,
-        serverId: input.serverId,
-        subscriptionId: key,
-        payload: {
-          ...snapshot,
-          files: orderCheckoutDiffFiles(payload.files),
-          requestId: payload.requestId ?? `subscription:${subscriptionId}`,
-        },
-      });
-    };
     subscription.subscribe({
-      snapshot: apply,
-      update: (message) => {
-        if (message.type === "checkout_diff_update") apply(message.payload);
+      snapshot: (state) => {
+        if (input.active.get(key) !== registration) return;
+        const snapshot = checkoutDiffSnapshot(desired.cwd, state);
+        setCheckoutDiffPayload({
+          activeCheckoutDiffSubscriptions: input.active,
+          queryClient: input.queryClient,
+          serverId: input.serverId,
+          subscriptionId: key,
+          payload: { ...snapshot, files: orderCheckoutDiffFiles(snapshot.files) },
+        });
       },
+      update: () => {},
       error: (error) => {
         if (input.active.get(key) === registration) input.active.delete(key);
-        console.error("[server-data] observeCheckoutDiff failed", {
+        console.error("[server-data] observeDiff failed", {
           serverId: input.serverId,
           cwd: desired.cwd,
           error,
diff --git a/packages/app/src/git/changed-files-tree.tsx b/packages/app/src/git/changed-files-tree.tsx
index 0b88d33e96..f020cfa101 100644
--- a/packages/app/src/git/changed-files-tree.tsx
+++ b/packages/app/src/git/changed-files-tree.tsx
@@ -13,10 +13,10 @@ import {
   type DiffTreeRow,
 } from "@/git/diff-tree";
 import { FileHeader } from "@/git/file-header";
-import type { ParsedDiffFile } from "@/git/use-diff-query";
+import type { DiffFileHeader } from "@/git/diff-snapshot";
 
 export interface ChangedFilesTreeProps {
-  files: ParsedDiffFile[];
+  files: DiffFileHeader[];
   mode: WorkingDiffMode;
   onSelectFile: (path: string) => void;
   collapsedFolderPaths: string[];
diff --git a/packages/app/src/git/diff-order.ts b/packages/app/src/git/diff-order.ts
index d57bb0ef29..0ad572866f 100644
--- a/packages/app/src/git/diff-order.ts
+++ b/packages/app/src/git/diff-order.ts
@@ -13,6 +13,6 @@ export function orderCheckoutDiffFiles(files: ParsedDiffFile[]): ParsedDiffFile[
   // chains, so it is skipped; the collapsed set is empty because the flat list
   // always carries every file, whatever the rail has collapsed.
   return flattenDiffTree(buildDiffTree(files), new Set()).flatMap((row) =>
-    row.kind === "file" ? [row.file] : [],
+    row.kind === "file" ? [files[row.fileIndex]] : [],
   );
 }
diff --git a/packages/app/src/git/diff-pane.tsx b/packages/app/src/git/diff-pane.tsx
index 59d3b49797..3581166980 100644
--- a/packages/app/src/git/diff-pane.tsx
+++ b/packages/app/src/git/diff-pane.tsx
@@ -1,3 +1,4 @@
+import type { DiffFileHeader } from "@/git/diff-snapshot";
 import { useSafeAreaInsets } from "react-native-safe-area-context";
 import { floatingActionsClearance } from "@/components/ui/floating-action-button";
 import { useState, useCallback, useMemo, type ReactElement, type ReactNode } from "react";
@@ -1094,6 +1095,7 @@ interface DiffBodyContentProps {
   emptyMessage: string;
   emptyAction: ChangesEmptyAction | null;
   children: ReactElement;
+  loadingLabel: string;
   checkingRepositoryLabel: string;
   notRepositoryLabel: string;
 }
@@ -1110,11 +1112,16 @@ function DiffBodyContent({
   emptyAction,
   children,
   checkingRepositoryLabel,
+  loadingLabel,
   notRepositoryLabel,
 }: DiffBodyContentProps) {
   if (isStatusLoading) {
     return (
-      <View style={styles.loadingContainer}>
+      <View
+        style={styles.loadingContainer}
+        accessibilityRole="progressbar"
+        accessibilityLabel={loadingLabel}
+      >
         <ThemedLoadingSpinner size="large" uniProps={foregroundMutedIconColorMapping} />
         <Text style={styles.loadingText}>{checkingRepositoryLabel}</Text>
       </View>
@@ -1136,12 +1143,16 @@ function DiffBodyContent({
   }
   if (isDiffLoading) {
     return (
-      <View style={styles.loadingContainer}>
+      <View
+        style={styles.loadingContainer}
+        accessibilityRole="progressbar"
+        accessibilityLabel={loadingLabel}
+      >
         <ThemedLoadingSpinner size="large" uniProps={foregroundMutedIconColorMapping} />
       </View>
     );
   }
-  if (diffTooLarge) {
+  if (diffTooLarge && !hasChanges) {
     return <DiffTooLargeState />;
   }
   if (diffErrorMessage) {
@@ -1320,7 +1331,7 @@ function ChangesTreeRail({
 }: {
   shown: boolean;
   children: ReactElement;
-  files: ParsedDiffFile[];
+  files: DiffFileHeader[];
   mode: WorkingDiffMode;
   onSelectFile: (path: string) => void;
   treeWidth?: number;
@@ -1360,7 +1371,7 @@ function ChangesBody({
   children: ReactElement;
   desktopTreeVisible: boolean;
   isMobile: boolean;
-  files: ParsedDiffFile[];
+  files: DiffFileHeader[];
   mode: WorkingDiffMode;
   onSelectFile: (path: string) => void;
   treeWidth?: number;
@@ -1585,6 +1596,7 @@ export function ChangesSurface({
     selectBase: handleSelectBase,
     selectAll: handleSelectAll,
     files,
+    treeFiles,
     diffPayloadError,
     diffTooLarge,
     isDiffLoading,
@@ -1834,6 +1846,7 @@ export function ChangesSurface({
         hasChanges={hasChanges}
         emptyMessage={emptyMessage}
         emptyAction={emptyAction}
+        loadingLabel={t("common.loading")}
         checkingRepositoryLabel={t("workspace.git.diff.checkingRepository")}
         notRepositoryLabel={t("workspace.git.diff.notRepository")}
       >
@@ -1864,7 +1877,7 @@ export function ChangesSurface({
       presentation={presentation}
       desktopTreeVisible={desktopTreeVisible}
       isMobile={isMobile}
-      files={files}
+      files={treeFiles}
       mode={workingMode}
       onSelectFile={handleSelectTreeFile}
       treeWidth={instanceState.treeWidth}
diff --git a/packages/app/src/git/diff-sharing.ts b/packages/app/src/git/diff-sharing.ts
index 6bdac10ddf..d426960d9f 100644
--- a/packages/app/src/git/diff-sharing.ts
+++ b/packages/app/src/git/diff-sharing.ts
@@ -1,7 +1,8 @@
 import { replaceEqualDeep } from "@tanstack/react-query";
-import type { ParsedDiffFile, SubscribeCheckoutDiffResponse } from "@getpaseo/protocol/messages";
+import type { CheckoutDiffSnapshot } from "./diff-snapshot";
+import type { ParsedDiffFile } from "@getpaseo/protocol/messages";
 
-type DiffPayload = Omit<SubscribeCheckoutDiffResponse["payload"], "subscriptionId">;
+type DiffPayload = CheckoutDiffSnapshot;
 
 /** File identity owns text-model reuse. Never reconstruct the hunk/token graph. */
 export function retainDiffFiles(
@@ -30,6 +31,7 @@ export function shareCheckoutDiff(previous: unknown, incoming: unknown): DiffPay
     error === old.error &&
     old.cwd === next.cwd &&
     old.requestId === next.requestId &&
+    old.entries === next.entries &&
     old.diffTooLarge === next.diffTooLarge
     ? old
     : { ...next, files, error };
diff --git a/packages/app/src/git/diff-snapshot.ts b/packages/app/src/git/diff-snapshot.ts
new file mode 100644
index 0000000000..84f650b588
--- /dev/null
+++ b/packages/app/src/git/diff-snapshot.ts
@@ -0,0 +1,74 @@
+import type { DiffState, DiffEntry } from "@getpaseo/client";
+import type {
+  DiffError,
+  ParsedDiffFile,
+  SubscribeCheckoutDiffRequest,
+} from "@getpaseo/protocol/messages";
+export type DiffFileHeader = Omit<ParsedDiffFile, "hunks">;
+export interface CheckoutDiffSnapshot {
+  requestId: string;
+  cwd: string;
+  files: ParsedDiffFile[];
+  entries?: DiffEntry[];
+  error: DiffError | null;
+  diffTooLarge?: boolean;
+}
+export function checkoutDiffSnapshot(cwd: string, state: DiffState): CheckoutDiffSnapshot {
+  const common = { cwd, requestId: `diff:${state.revision}:${state.phase}` };
+  if (state.phase === "loading")
+    return { ...common, files: [], entries: state.entries, error: null };
+  if (state.phase === "error") return { ...common, files: [], error: state.error };
+  return { ...common, files: state.files, error: null, diffTooLarge: state.diffTooLarge };
+}
+export function diffEntryHeaders(entries: DiffEntry[]): DiffFileHeader[] {
+  return entries.map((entry) => ({
+    path: entry.path,
+    ...(entry.oldPath === null ? {} : { oldPath: entry.oldPath }),
+    isNew: entry.change === "added",
+    isDeleted: entry.change === "deleted",
+    additions: entry.additions,
+    deletions: entry.deletions,
+    status: entry.content === "binary" ? "binary" : "ok",
+  }));
+}
+export interface CheckoutDiffResult {
+  files: ParsedDiffFile[];
+  entries: DiffEntry[] | null;
+  payloadError: CheckoutDiffSnapshot["error"];
+  diffTooLarge: boolean;
+  isLoading: boolean;
+  isFetching: boolean;
+  isError: boolean;
+  error: null;
+}
+
+/**
+ * The result derives from the payload alone. Until a payload arrives there is no
+ * diff to describe, so the boundary reports loading rather than an empty diff —
+ * whether the query is idle (an inactive retained panel), in flight, or the host
+ * is disconnected. Reporting `files: []` as settled made callers render "+0 -0"
+ * and "No changes" for a diff nobody has fetched yet.
+ */
+export function deriveCheckoutDiffResult(payload: CheckoutDiffSnapshot | null): CheckoutDiffResult {
+  const payloadError = payload?.error ?? null;
+  return {
+    files: payload?.files ?? [],
+    entries: payload?.entries ?? null,
+    payloadError,
+    diffTooLarge: payload?.diffTooLarge === true,
+    isLoading: payload === null || payload.entries !== undefined,
+    isFetching: false,
+    isError: Boolean(payloadError),
+    error: null,
+  };
+}
+
+export function checkoutDiffComparisonError(
+  compare: Pick<SubscribeCheckoutDiffRequest["compare"], "mode" | "baseRef">,
+): DiffError | null {
+  if (compare.mode === "uncommitted" || compare.baseRef?.trim()) return null;
+  return {
+    code: "INVALID_COMPARE",
+    message: "Comparison base is unavailable. Select Uncommitted to view pending changes.",
+  };
+}
diff --git a/packages/app/src/git/diff-tree.ts b/packages/app/src/git/diff-tree.ts
index 49709cd5e2..c3130b1cae 100644
--- a/packages/app/src/git/diff-tree.ts
+++ b/packages/app/src/git/diff-tree.ts
@@ -1,6 +1,6 @@
-import type { ParsedDiffFile } from "@/git/use-diff-query";
+import type { DiffFileHeader } from "@/git/diff-snapshot";
 
-// Builds a directory hierarchy from the `ParsedDiffFile[]` the Changes view
+// Builds a directory hierarchy from the `DiffFileHeader[]` the Changes view
 // renders. The tree renders on every form factor, consistent with the Files
 // explorer.
 //
@@ -17,7 +17,7 @@ import type { ParsedDiffFile } from "@/git/use-diff-query";
 
 export interface DiffTreeFileNode {
   kind: "file";
-  file: ParsedDiffFile;
+  file: DiffFileHeader;
   fileIndex: number;
   /** basename, e.g. "diff-pane.tsx" */
   name: string;
@@ -47,7 +47,7 @@ export interface DiffTreeFolderRow {
 
 export interface DiffTreeFileRow {
   kind: "file";
-  file: ParsedDiffFile;
+  file: DiffFileHeader;
   fileIndex: number;
   depth: number;
 }
@@ -73,7 +73,7 @@ function sortTree(node: DiffTreeDirNode): void {
 }
 
 /** Build the (uncompressed) directory tree. Returns the virtual root (dirPath ""). */
-export function buildDiffTree(files: ParsedDiffFile[]): DiffTreeDirNode {
+export function buildDiffTree(files: DiffFileHeader[]): DiffTreeDirNode {
   const root: DiffTreeDirNode = { kind: "dir", dirPath: "", name: "", children: [] };
   const dirByPath = new Map<string, DiffTreeDirNode>([["", root]]);
 
diff --git a/packages/app/src/git/file-header.tsx b/packages/app/src/git/file-header.tsx
index d19d58cbf2..39427a612b 100644
--- a/packages/app/src/git/file-header.tsx
+++ b/packages/app/src/git/file-header.tsx
@@ -28,11 +28,11 @@ import {
   fileNameForPath,
   formatDiffCount,
 } from "@/git/file-header-presentation";
-import type { ParsedDiffFile } from "@/git/use-diff-query";
+import type { DiffFileHeader } from "@/git/diff-snapshot";
 import { inlineUnistylesStyle } from "@/styles/unistyles-inline-style";
 
 export interface FileHeaderProps {
-  file: ParsedDiffFile;
+  file: DiffFileHeader;
   workspaceFileDragScope?: { serverId: string; workspaceId: string };
   bodyVisible: boolean;
   showsBodyState?: boolean;
@@ -73,7 +73,7 @@ function expandedAriaValue(showsBodyState: boolean, bodyVisible: boolean): boole
   return showsBodyState ? bodyVisible : undefined;
 }
 
-function fileHeaderAccessibilityLabel(canvasRendered: boolean, file: ParsedDiffFile) {
+function fileHeaderAccessibilityLabel(canvasRendered: boolean, file: DiffFileHeader) {
   if (!canvasRendered) return undefined;
   return `${file.path}, +${formatDiffCount(file.additions)}, -${formatDiffCount(file.deletions)}`;
 }
@@ -130,7 +130,7 @@ function fileHeaderNameStyle(showsBodyState: boolean, isHovered: boolean) {
   ];
 }
 
-function fileChange(file: ParsedDiffFile): "added" | "deleted" | "modified" {
+function fileChange(file: DiffFileHeader): "added" | "deleted" | "modified" {
   return diffFileChangeKind(file);
 }
 
diff --git a/packages/app/src/git/use-diff-query.test.ts b/packages/app/src/git/use-diff-query.test.ts
index 94b18a7d16..809319bca4 100644
--- a/packages/app/src/git/use-diff-query.test.ts
+++ b/packages/app/src/git/use-diff-query.test.ts
@@ -1,6 +1,6 @@
 import { describe, expect, it } from "vitest";
 import type { ParsedDiffFile } from "@getpaseo/protocol/messages";
-import { deriveCheckoutDiffResult } from "./use-diff-query";
+import { deriveCheckoutDiffResult } from "./diff-snapshot";
 
 function createParsedDiffFile(path: string): ParsedDiffFile {
   return {
@@ -59,6 +59,7 @@ describe("deriveCheckoutDiffResult", () => {
 
     expect(result).toEqual({
       files: [],
+      entries: null,
       payloadError: error,
       diffTooLarge: true,
       isLoading: false,
@@ -68,3 +69,27 @@ describe("deriveCheckoutDiffResult", () => {
     });
   });
 });
+
+it("shows the announced tree while file bodies are still loading", () => {
+  const entries = [
+    {
+      path: "src/app.ts",
+      oldPath: null,
+      change: "modified",
+      content: "text",
+      additions: 3,
+      deletions: 1,
+    },
+  ] as const;
+  const result = deriveCheckoutDiffResult({ ...createPayload([]), entries: [...entries] });
+  expect(result.isLoading).toBe(true);
+  expect(result.entries).toEqual(entries);
+  expect(result.files).toEqual([]);
+});
+
+it("settles a comparison without a base and leaves Uncommitted available", async () => {
+  const { checkoutDiffComparisonError } = await import("./diff-snapshot");
+  expect(checkoutDiffComparisonError({ mode: "all" })).toMatchObject({ code: "INVALID_COMPARE" });
+  expect(checkoutDiffComparisonError({ mode: "base" })).toMatchObject({ code: "INVALID_COMPARE" });
+  expect(checkoutDiffComparisonError({ mode: "uncommitted" })).toBeNull();
+});
diff --git a/packages/app/src/git/use-diff-query.ts b/packages/app/src/git/use-diff-query.ts
index ebfcd4c354..6ba1202bb7 100644
--- a/packages/app/src/git/use-diff-query.ts
+++ b/packages/app/src/git/use-diff-query.ts
@@ -5,7 +5,13 @@ import { useRetainedPanelActive } from "@/components/retained-panel";
 import { useReplicaQuery } from "@/data/query";
 import { checkoutDiffPushRoute } from "@/data/push-router";
 import { useHostRuntimeIsConnected } from "@/runtime/host-runtime";
-import type { ParsedDiffFile, SubscribeCheckoutDiffResponse } from "@getpaseo/protocol/messages";
+import {
+  checkoutDiffComparisonError,
+  deriveCheckoutDiffResult,
+  type CheckoutDiffSnapshot,
+} from "./diff-snapshot";
+export { deriveCheckoutDiffResult } from "./diff-snapshot";
+import type { ParsedDiffFile } from "@getpaseo/protocol/messages";
 import { checkoutDiffQueryKey } from "@/git/query-keys";
 
 interface UseCheckoutDiffQueryOptions {
@@ -18,7 +24,7 @@ interface UseCheckoutDiffQueryOptions {
   queryScope?: string;
 }
 
-type CheckoutDiffQueryPayload = Omit<SubscribeCheckoutDiffResponse["payload"], "subscriptionId">;
+type CheckoutDiffQueryPayload = CheckoutDiffSnapshot;
 
 // Re-export the canonical protocol type so all consumers share one definition.
 export type { ParsedDiffFile };
@@ -77,7 +83,11 @@ export function useCheckoutDiffQuery({
     return normalizedScope ? [...comparisonKey, "scope", normalizedScope] : comparisonKey;
   }, [serverId, cwd, compareMode, compareBaseRef, compareIgnoreWhitespace, queryScope]);
   const subscriptionId = useMemo(() => `checkoutDiff:${JSON.stringify(queryKey)}`, [queryKey]);
-  const routeEnabled = Boolean(queryEnabled && isConnected && cwd && !requiresUpdate);
+  const comparisonError =
+    queryEnabled && isConnected ? checkoutDiffComparisonError(normalizedCompare) : null;
+  const routeEnabled = Boolean(
+    queryEnabled && isConnected && cwd && !requiresUpdate && !comparisonError,
+  );
 
   const query = useReplicaQuery<CheckoutDiffQueryPayload>({
     queryKey,
@@ -97,46 +107,13 @@ export function useCheckoutDiffQuery({
     }),
   });
 
-  return deriveCheckoutDiffResult(
+  const boundaryError =
     requiresUpdate && isConnected
-      ? {
-          requestId: "unsupported",
-          cwd,
-          files: [],
-          error: { code: "UNKNOWN", message: "Update the host to view All changes" },
-        }
+      ? { code: "UNKNOWN" as const, message: "Update the host to view All changes" }
+      : comparisonError;
+  return deriveCheckoutDiffResult(
+    boundaryError
+      ? { requestId: "unavailable", cwd, files: [], error: boundaryError }
       : (query.data ?? null),
   );
 }
-
-export interface CheckoutDiffResult {
-  files: ParsedDiffFile[];
-  payloadError: CheckoutDiffQueryPayload["error"];
-  diffTooLarge: boolean;
-  isLoading: boolean;
-  isFetching: boolean;
-  isError: boolean;
-  error: null;
-}
-
-/**
- * The result derives from the payload alone. Until a payload arrives there is no
- * diff to describe, so the boundary reports loading rather than an empty diff —
- * whether the query is idle (an inactive retained panel), in flight, or the host
- * is disconnected. Reporting `files: []` as settled made callers render "+0 -0"
- * and "No changes" for a diff nobody has fetched yet.
- */
-export function deriveCheckoutDiffResult(
-  payload: CheckoutDiffQueryPayload | null,
-): CheckoutDiffResult {
-  const payloadError = payload?.error ?? null;
-  return {
-    files: payload?.files ?? [],
-    payloadError,
-    diffTooLarge: payload?.diffTooLarge === true,
-    isLoading: payload === null,
-    isFetching: false,
-    isError: Boolean(payloadError),
-    error: null,
-  };
-}
diff --git a/packages/app/src/git/use-working-diff.ts b/packages/app/src/git/use-working-diff.ts
index f835d44f53..9f32ce8819 100644
--- a/packages/app/src/git/use-working-diff.ts
+++ b/packages/app/src/git/use-working-diff.ts
@@ -9,6 +9,8 @@ import {
   useReviewAttachmentSnapshot,
   useReviewFeedback,
 } from "@/review";
+import { useSessionStore } from "@/stores/session-store";
+import { diffEntryHeaders } from "./diff-snapshot";
 import { useCheckoutDiffQuery } from "@/git/use-diff-query";
 import { useCheckoutStatusQuery } from "@/git/use-status-query";
 import { useWorkingDiffComparison } from "@/git/working-diff-comparison";
@@ -44,7 +46,11 @@ export function useWorkingDiff({
   const statusErrorMessage =
     status?.error?.message ??
     (isStatusError && statusError instanceof Error ? statusError.message : null);
-  const baseRef = gitStatus?.baseRef ?? undefined;
+  const modernDiff = useSessionStore(
+    (state) => state.sessions[serverId]?.serverInfo?.features?.diffSubscription === true,
+  );
+  // COMPAT(diffSubscription): added in v0.15.0, remove after 2027-05-06.
+  const baseRef = (modernDiff ? gitStatus?.comparisonBaseRef : gitStatus?.baseRef) ?? undefined;
   const currentBranchName =
     gitStatus?.currentBranch && gitStatus.currentBranch !== "HEAD" ? gitStatus.currentBranch : null;
 
@@ -59,6 +65,7 @@ export function useWorkingDiff({
 
   const {
     files,
+    entries,
     payloadError: diffPayloadError,
     diffTooLarge,
     isLoading: isDiffLoading,
@@ -71,6 +78,7 @@ export function useWorkingDiff({
     enabled: enabled && isGit,
     queryScope,
   });
+  const treeFiles = useMemo(() => (entries ? diffEntryHeaders(entries) : files), [entries, files]);
   const reviewDraftKey = useMemo(
     () =>
       buildReviewDraftKey({
@@ -112,6 +120,7 @@ export function useWorkingDiff({
     selectBase,
     selectAll,
     files,
+    treeFiles,
     diffPayloadError,
     diffTooLarge,
     isDiffLoading,
diff --git a/packages/client/package.json b/packages/client/package.json
index 810cb8b0c9..d128a3f007 100644
--- a/packages/client/package.json
+++ b/packages/client/package.json
@@ -45,7 +45,8 @@
     "prepack": "npm run build:clean",
     "typecheck": "tsgo --noEmit",
     "typecheck:examples": "tsgo -p tsconfig.examples.json --noEmit",
-    "test": "vitest run"
+    "test": "vitest run",
+    "measure:diff-materialization": "tsx scripts/measure-diff-materialization.ts"
   },
   "dependencies": {
     "@getpaseo/protocol": "0.15.3",
diff --git a/packages/client/scripts/measure-diff-materialization.ts b/packages/client/scripts/measure-diff-materialization.ts
new file mode 100644
index 0000000000..54f7b1f53a
--- /dev/null
+++ b/packages/client/scripts/measure-diff-materialization.ts
@@ -0,0 +1,38 @@
+import { readFile, writeFile } from "node:fs/promises";
+import { resolve } from "node:path";
+import { performance } from "node:perf_hooks";
+import { decodeDiffFrame } from "@getpaseo/protocol/binary-frames/index";
+import { validateWSOutboundMessage } from "@getpaseo/protocol/validation/ws-outbound";
+import { DiffStream } from "../src/diff/stream.js";
+const artifacts = resolve(import.meta.dirname, "../../../.artifacts/diff-subscription");
+const results = [];
+for (const count of [1, 30]) {
+  const corpus = JSON.parse(await readFile(resolve(artifacts, `corpus-${count}.json`), "utf8")) as {
+    frames: string[];
+    legacy: string;
+  };
+  const frames = corpus.frames.map((value) => Buffer.from(value, "base64"));
+  const binary: number[] = [];
+  const json: number[] = [];
+  for (let iteration = 0; iteration < 15; iteration++) {
+    let files = 0;
+    const stream = new DiffStream((state) => {
+      if (state.phase === "ready") files = state.files.length;
+    });
+    let start = performance.now();
+    for (const frame of frames) stream.receive(decodeDiffFrame(frame));
+    binary.push(performance.now() - start);
+    start = performance.now();
+    validateWSOutboundMessage(JSON.parse(corpus.legacy));
+    json.push(performance.now() - start);
+    if (!files) throw new Error("No materialized files");
+  }
+  const median = (values: number[]) =>
+    values.slice(3).sort((a, b) => a - b)[Math.floor((values.length - 3) / 2)];
+  const result = { count, materializationMs: median(binary), jsonParseValidationMs: median(json) };
+  results.push(result);
+  console.log(JSON.stringify(result));
+}
+await writeFile(resolve(artifacts, "client-metrics.json"), JSON.stringify(results, null, 2));
+if (results.some((result) => result.materializationMs > result.jsonParseValidationMs))
+  process.exitCode = 1;
diff --git a/packages/client/src/daemon-client.ts b/packages/client/src/daemon-client.ts
index c8fbff81e1..b70a0e991f 100644
--- a/packages/client/src/daemon-client.ts
+++ b/packages/client/src/daemon-client.ts
@@ -1,3 +1,9 @@
+import {
+  DiffStreamRouter,
+  DiffSubscriptionError,
+  type DiffCompare,
+  type DiffState,
+} from "./diff/index.js";
 import {
   ChunkedTransport,
   ChunkedTransportProtocolError,
@@ -1414,6 +1420,20 @@ export class DaemonClient {
   private connectionFailure: Error | undefined;
   private authFailureReasonValue: DaemonAuthFailureReason | null = null;
   private connectionState: ConnectionState = { status: "idle" };
+  private readonly diffStreams = new DiffStreamRouter({
+    modern: (compare) =>
+      this.observe(
+        "diff.subscribe.response",
+        { type: "diff.subscribe.request", ...compare },
+        {
+          validateSnapshot: (payload) => {
+            if (payload.error) throw new DiffSubscriptionError(payload.error);
+          },
+        },
+      ),
+    legacy: (cwd, compare) => this.observeCheckoutDiff(cwd, compare),
+    failed: (error) => this.logger.error({ err: error }, "Diff observer failed"),
+  });
   private readonly terminalStreams = new TerminalStreamRouter();
   private pendingBinaryFileReads = new Map<string, PendingBinaryFileRead>();
   private activeBinaryFileTransfers = new Map<string, BinaryFileTransferState>();
@@ -1763,6 +1783,7 @@ export class DaemonClient {
     this.disposeTransport(1000, "Client closed");
     this.providerSnapshotUpdates.clear();
     this.clearWaiters(new Error("Daemon client closed"));
+    await this.diffStreams.close();
     await this.owned.close();
     this.creations.close();
     this.rejectPendingSendQueue(new Error("Daemon client closed"));
@@ -2666,7 +2687,12 @@ export class DaemonClient {
   private observe<T extends CorrelatedResponseType>(
     responseType: T,
     message: { type: SessionInboundMessage["type"] } & Record<string, unknown>,
-    options?: { requestId?: string; timeout?: number; signal?: AbortSignal },
+    options?: {
+      requestId?: string;
+      timeout?: number;
+      signal?: AbortSignal;
+      validateSnapshot?: (payload: CorrelatedResponsePayload<T>) => void;
+    },
   ): OwnedSubscription<CorrelatedResponsePayload<T>> {
     let resetSource = false;
     return this.owned.observeRequest<CorrelatedResponsePayload<T>>(
@@ -2692,12 +2718,16 @@ export class DaemonClient {
                   requestType: message.type,
                   error: payload.error,
                 });
+              options?.validateSnapshot?.(payload);
               accept(payload);
               return payload;
             },
           });
         } catch (error) {
-          resetSource = !(error instanceof DaemonRpcError) && this.isConnected;
+          resetSource =
+            !(error instanceof DaemonRpcError) &&
+            !(error instanceof DiffSubscriptionError) &&
+            this.isConnected;
           throw error;
         }
       },
@@ -4732,6 +4762,26 @@ export class DaemonClient {
     });
   }
 
+  observeDiff(compare: DiffCompare): OwnedSubscription<DiffState> {
+    return this.diffStreams.observe(compare);
+  }
+
+  async readDiff(compare: DiffCompare): Promise<DiffState> {
+    const observation = this.observeDiff(compare);
+    try {
+      return await new Promise<DiffState>((resolve) => {
+        observation.subscribe({
+          snapshot: (state) => {
+            if (state.phase !== "loading") resolve(state);
+          },
+          update: () => {},
+        });
+      });
+    } finally {
+      await observation.release();
+    }
+  }
+
   observeCheckoutDiff(
     cwd: string,
     compare: { mode: "uncommitted" | "base" | "all"; baseRef?: string; ignoreWhitespace?: boolean },
@@ -7014,6 +7064,7 @@ export class DaemonClient {
     this.chunkedTransport?.close();
     this.chunkedTransport = null;
     this.owned.disconnected();
+    this.diffStreams.disconnected();
     this.providerSnapshotUpdates.clear();
     this.stopLivenessHeartbeat();
     this.cleanupTransport();
@@ -7204,6 +7255,10 @@ export class DaemonClient {
       for (const handler of this.hostFrameListeners) handler(hostFrame);
       return true;
     }
+    if (rawBytes[0] >= 0x40 && rawBytes[0] <= 0x4f) {
+      this.diffStreams.receive(rawBytes);
+      return true;
+    }
     if (isPluginFrameOpcode(rawBytes[0])) {
       this.handlePluginFrame(rawBytes);
       return true;
@@ -7404,6 +7459,7 @@ export class DaemonClient {
     }
 
     this.owned.disconnected();
+    this.diffStreams.disconnected();
     this.providerSnapshotUpdates.clear();
 
     // Clear all pending waiters and queued sends since the connection was lost
@@ -7563,6 +7619,7 @@ export class DaemonClient {
           this.reconnectAttempt = 0;
           this.updateConnectionState({ status: "connected" }, { event: "HELLO_SERVER_INFO" });
           this.startLivenessHeartbeat();
+          this.diffStreams.connected(serverInfo.features?.diffSubscription === true);
           this.owned.restore(serverInfo, {
             ...DEFAULT_CLIENT_CAPABILITIES,
             ...this.config.capabilities,
@@ -7839,3 +7896,5 @@ function resolveAgentConfig(options: CreateAgentRequestOptions): AgentSessionCon
     cwd: merged.cwd,
   };
 }
+
+export type { DiffCompare, DiffState, DiffEntry, ResolvedShas } from "./diff/index.js";
diff --git a/packages/client/src/diff/client.test.ts b/packages/client/src/diff/client.test.ts
new file mode 100644
index 0000000000..04f06d227f
--- /dev/null
+++ b/packages/client/src/diff/client.test.ts
@@ -0,0 +1,210 @@
+import { expect, test } from "vitest";
+import { DaemonClient, type DaemonTransport } from "../daemon-client.js";
+import {
+  encodeDiffFrame,
+  DiffOpcode,
+  type DiffFrame,
+} from "@getpaseo/protocol/binary-frames/index";
+import type { DiffState } from "./index.js";
+function socket() {
+  let message: (data: unknown, binary?: boolean) => void = () => {};
+  let open: () => void = () => {};
+  let close: (event?: unknown) => void = () => {};
+  const sent: Record<string, unknown>[] = [];
+  const transport: DaemonTransport = {
+    send: (data) => {
+      if (typeof data === "string") {
+        const value = JSON.parse(data);
+        if (value.type === "session") {
+          sent.push(value.message);
+          if (value.message.type === "subscription.release.request")
+            queueMicrotask(() =>
+              receive({
+                type: "subscription.release.response",
+                payload: {
+                  requestId: value.message.requestId,
+                  subscriptionId: value.message.subscriptionId,
+                  released: true,
+                },
+              }),
+            );
+        }
+      }
+    },
+    close: () => {},
+    onMessage: (handler) => {
+      message = handler;
+      return () => {};
+    },
+    onOpen: (handler) => {
+      open = handler;
+      return () => {};
+    },
+    onClose: (handler) => {
+      close = handler;
+      return () => {};
+    },
+    onError: () => () => {},
+  };
+  const receive = (value: unknown) =>
+    message(JSON.stringify({ type: "session", message: value }), false);
+  return {
+    transport,
+    sent,
+    receive,
+    raw: (bytes: Uint8Array) => message(bytes, true),
+    frame: (frame: DiffFrame) => message(encodeDiffFrame(frame), true),
+    disconnect: () => close({ code: 1001 }),
+    open: (modern = true) => {
+      open();
+      receive({
+        type: "status",
+        payload: {
+          status: "server_info",
+          serverId: "srv_test",
+          hostname: null,
+          version: null,
+          features: { ownedSubscriptions: true, diffSubscription: modern, checkoutDiffAll: true },
+        },
+      });
+    },
+  };
+}
+const compare = {
+  cwd: "/repo",
+  base: { kind: "rev", rev: "HEAD" },
+  head: { kind: "worktree" },
+} as const;
+const begin: DiffFrame = {
+  opcode: DiffOpcode.Begin,
+  slot: 3,
+  revision: 1,
+  baseRevision: 0,
+  baseSha: "a",
+  headSha: "b",
+  mergeBaseSha: "",
+  entries: [],
+};
+const end: DiffFrame = {
+  opcode: DiffOpcode.End,
+  slot: 3,
+  revision: 1,
+  diffTooLarge: false,
+  omitted: [],
+  error: null,
+};
+async function setup(modern = true) {
+  const wire = socket();
+  const client = new DaemonClient({
+    url: "ws://test",
+    clientId: "diff-test",
+    transportFactory: () => wire.transport,
+    reconnect: { enabled: false },
+  });
+  const connecting = client.connect();
+  wire.open(modern);
+  await connecting;
+  return { wire, client };
+}
+function acknowledge(wire: ReturnType<typeof socket>, ordinal = 1) {
+  const request = wire.sent.findLast((value) => value.type === "diff.subscribe.request");
+  wire.receive({
+    type: "diff.subscribe.response",
+    payload: {
+      requestId: request?.requestId,
+      subscriptionId: `diff-${ordinal}`,
+      slot: 3,
+      error: null,
+    },
+  });
+}
+test("attaches binary routing during handshake and resubscribes with a full state on reconnect", async () => {
+  const { wire, client } = await setup();
+  try {
+    const states: DiffState[] = [];
+    const observation = client.observeDiff(compare);
+    observation.subscribe({ snapshot: (state) => states.push(state), update: () => {} });
+    acknowledge(wire);
+    wire.frame(begin);
+    wire.frame(end);
+    expect(states.map((state) => state.phase)).toEqual(["loading", "ready"]);
+    wire.disconnect();
+    const connected = client.connect();
+    wire.open();
+    await connected;
+    acknowledge(wire, 2);
+    wire.frame(begin);
+    wire.frame(end);
+    expect(states.map((state) => state.phase)).toEqual(["loading", "ready", "loading", "ready"]);
+    await observation.release();
+  } finally {
+    await client.close();
+  }
+});
+test("an unknown version fails only its subscription and readDiff resolves typed subscribe errors", async () => {
+  const { wire, client } = await setup();
+  try {
+    const observation = client.observeDiff(compare);
+    const states: DiffState[] = [];
+    observation.subscribe({ snapshot: (state) => states.push(state), update: () => {} });
+    acknowledge(wire);
+    const malformed = { ...begin, slot: 3 };
+    const bytes = encodeDiffFrame(malformed);
+    bytes[2] = 255;
+    wire.raw(bytes);
+    expect(states.at(-1)).toMatchObject({ phase: "error", error: { code: "UNKNOWN" } });
+    const next = client.readDiff(compare);
+    const request = wire.sent.findLast((value) => value.type === "diff.subscribe.request");
+    wire.receive({
+      type: "diff.subscribe.response",
+      payload: {
+        requestId: request?.requestId,
+        subscriptionId: "",
+        slot: 0,
+        error: { code: "INVALID_COMPARE", message: "invalid" },
+      },
+    });
+    expect(await next).toMatchObject({ phase: "error", error: { code: "INVALID_COMPARE" } });
+    expect(client.isConnected).toBe(true);
+    await observation.release();
+  } finally {
+    await client.close();
+  }
+});
+test.each(["uncommitted", "base", "all"] as const)(
+  "old hosts serve the %s comparison through the tagged compatibility route",
+  async (mode) => {
+    const { wire, client } = await setup(false);
+    try {
+      const comparison =
+        mode === "uncommitted"
+          ? compare
+          : {
+              ...compare,
+              base: { kind: "rev", rev: "refs/tags/v1" } as const,
+              head: mode === "base" ? ({ kind: "rev", rev: "HEAD" } as const) : compare.head,
+              mergeBase: true,
+            };
+      const result = client.readDiff(comparison);
+      const request = wire.sent.find((value) => value.type === "subscribe_checkout_diff_request");
+      expect(request?.compare).toMatchObject({ mode });
+      wire.receive({
+        type: "subscribe_checkout_diff_response",
+        payload: {
+          requestId: request?.requestId,
+          subscriptionId: "legacy",
+          cwd: "/repo",
+          files: [],
+          error: null,
+        },
+      });
+      wire.receive({
+        type: "checkout_diff_update",
+        payload: { subscriptionId: "legacy", cwd: "/repo", files: [], error: null },
+      });
+      expect(await result).toMatchObject({ phase: "ready", files: [] });
+    } finally {
+      await client.close();
+    }
+  },
+);
diff --git a/packages/client/src/diff/index.ts b/packages/client/src/diff/index.ts
new file mode 100644
index 0000000000..31fe4394a6
--- /dev/null
+++ b/packages/client/src/diff/index.ts
@@ -0,0 +1,246 @@
+import {
+  decodeDiffFrame,
+  type DiffEntry as WireEntry,
+  type DiffBegin,
+} from "@getpaseo/protocol/binary-frames/index";
+import type {
+  DiffSubscribeRequest,
+  SubscribeCheckoutDiffRequest,
+  DiffError,
+  DiffSubscribeResponse,
+  SubscribeCheckoutDiffResponse,
+  ParsedDiffFile,
+} from "@getpaseo/protocol/messages";
+import type { OwnedSubscription, SubscriptionObserver } from "../connection/index.js";
+import { DiffStream } from "./stream.js";
+export type { DiffEndpoint } from "@getpaseo/protocol/messages";
+export type DiffCompare = Omit<DiffSubscribeRequest, "type" | "requestId">;
+
+export type DiffEntry = Omit<WireEntry, "body">;
+export type ResolvedShas = Pick<DiffBegin, "baseSha" | "headSha" | "mergeBaseSha">;
+
+export type DiffState =
+  | { phase: "loading"; revision: number; entries: DiffEntry[] }
+  | {
+      phase: "ready";
+      revision: number;
+      resolved: ResolvedShas;
+      diffTooLarge: boolean;
+      files: ParsedDiffFile[];
+    }
+  | { phase: "error"; revision: number; error: DiffError };
+type LegacyCompare = SubscribeCheckoutDiffRequest["compare"];
+
+interface Port {
+  modern(compare: DiffCompare): OwnedSubscription<DiffSubscribeResponse["payload"]>;
+  legacy(
+    cwd: string,
+    compare: LegacyCompare,
+  ): OwnedSubscription<SubscribeCheckoutDiffResponse["payload"]>;
+  failed(error: unknown): void;
+}
+export class DiffSubscriptionError extends Error {
+  constructor(readonly detail: DiffError) {
+    super(detail.message);
+  }
+}
+interface Registration {
+  start(modern: boolean): void;
+  disconnected(): void;
+  release(): Promise<void>;
+}
+/** Capability selection, slot ownership and reconnect belong to this domain. */
+export class DiffStreamRouter {
+  private registrations = new Set<Registration>();
+  private slots = new Map<number, { receive(bytes: Uint8Array): void }>();
+  private mode: boolean | null = null;
+  constructor(private port: Port) {}
+  connected(modern: boolean): void {
+    this.mode = modern;
+    for (const registration of this.registrations) registration.start(modern);
+  }
+  disconnected(): void {
+    this.mode = null;
+    this.slots.clear();
+    for (const registration of this.registrations) registration.disconnected();
+  }
+  async close(): Promise<void> {
+    await Promise.all([...this.registrations].map((registration) => registration.release()));
+  }
+  receive(bytes: Uint8Array): void {
+    const owner = this.slots.get(bytes[1]);
+    owner?.receive(bytes);
+  }
+  private releaseBackend(backend: OwnedSubscription<unknown> | null): void {
+    void backend?.release().catch(this.port.failed);
+  }
+  observe(compare: DiffCompare): OwnedSubscription<DiffState> {
+    let backend: OwnedSubscription<unknown> | null = null;
+    let state: (DiffState & { subscriptionId: string }) | null = null;
+    let slot: number | null = null;
+    let released = false;
+    let generation = 0;
+    let stream: DiffStream;
+    const observers = new Set<SubscriptionObserver<DiffState & { subscriptionId: string }>>();
+    let resolve!: (state: DiffState & { subscriptionId: string }) => void;
+    const ready = new Promise<DiffState & { subscriptionId: string }>((accept) => {
+      resolve = accept;
+    });
+    const publish = (value: DiffState) => {
+      if (released) return;
+      state = { ...value, subscriptionId: backend?.subscriptionId ?? "" };
+      resolve(state);
+      for (const observer of observers) {
+        try {
+          observer.snapshot(state);
+        } catch (error) {
+          this.port.failed(error);
+        }
+      }
+    };
+    const detach = () => {
+      if (slot !== null) this.slots.delete(slot);
+      slot = null;
+    };
+    const fail = (error: unknown) => {
+      detach();
+      publish({
+        phase: "error",
+        revision: 0,
+        error:
+          error instanceof DiffSubscriptionError
+            ? error.detail
+            : { code: "UNKNOWN", message: error instanceof Error ? error.message : String(error) },
+      });
+      this.releaseBackend(backend);
+    };
+    const registration: Registration = {
+      start: (modern) => {
+        if (released || backend) return;
+        const current = ++generation;
+        const failed = (error: unknown) => {
+          if (current === generation) fail(error);
+        };
+        stream = new DiffStream(publish);
+        if (modern) {
+          const observation = this.port.modern(compare);
+          backend = observation;
+          observation.subscribe({
+            snapshot: (payload) => {
+              if (current !== generation) return;
+              detach();
+              if (payload.error) {
+                fail(new DiffSubscriptionError(payload.error));
+                return;
+              }
+              slot = payload.slot;
+              const owner = {
+                receive: (bytes: Uint8Array) => {
+                  try {
+                    stream.receive(decodeDiffFrame(bytes));
+                  } catch (error) {
+                    fail(error);
+                  }
+                },
+              };
+              this.slots.set(slot, owner);
+            },
+            update: () => {},
+            error: failed,
+          });
+          void observation.ready.catch(failed);
+        } else {
+          // COMPAT(diffSubscription): added in v0.15.0, remove after 2027-05-06.
+          const legacy = legacyCompare(compare);
+          if (!legacy) {
+            fail(
+              new DiffSubscriptionError({
+                code: "INVALID_COMPARE",
+                message: "Update the host to use this comparison",
+              }),
+            );
+            return;
+          }
+          const observation = this.port.legacy(compare.cwd, legacy);
+          backend = observation;
+          const apply = (
+            payload: Pick<
+              SubscribeCheckoutDiffResponse["payload"],
+              "files" | "error" | "diffTooLarge"
+            >,
+          ) => {
+            if (current !== generation) return;
+            if (payload.error)
+              publish({
+                phase: "error",
+                revision: 0,
+                error: {
+                  code: payload.error.code === "NOT_GIT_REPO" ? "NOT_GIT_REPO" : "UNKNOWN",
+                  message: payload.error.message,
+                },
+              });
+            else
+              publish({
+                phase: "ready",
+                revision: (state?.revision ?? 0) + 1,
+                resolved: { baseSha: "", headSha: "", mergeBaseSha: "" },
+                diffTooLarge: payload.diffTooLarge === true,
+                files: payload.files,
+              });
+          };
+          observation.subscribe({
+            snapshot: apply,
+            update: (message) => {
+              if (message.type === "checkout_diff_update") apply(message.payload);
+            },
+            error: failed,
+          });
+          void observation.ready.catch(failed);
+        }
+      },
+      disconnected: () => {
+        generation++;
+        detach();
+        state = null;
+        const old = backend;
+        backend = null;
+        void old?.release().catch(this.port.failed);
+      },
+      release: async () => {
+        if (released) return;
+        released = true;
+        generation++;
+        detach();
+        this.registrations.delete(registration);
+        await backend?.release();
+        observers.clear();
+      },
+    };
+    this.registrations.add(registration);
+    if (this.mode !== null) registration.start(this.mode);
+    return {
+      get subscriptionId() {
+        return backend?.subscriptionId ?? null;
+      },
+      ready,
+      subscribe: (observer) => {
+        observers.add(observer);
+        if (state) observer.snapshot(state);
+        return () => observers.delete(observer);
+      },
+      release: () => registration.release(),
+    };
+  }
+}
+function legacyCompare(compare: DiffCompare): LegacyCompare | null {
+  if (compare.highlight === false) return null;
+  const { base, head } = compare;
+  if (base.kind !== "rev") return null;
+  if (base.rev === "HEAD" && head.kind === "worktree")
+    return { mode: "uncommitted", ignoreWhitespace: compare.ignoreWhitespace };
+  if (compare.mergeBase && head.kind === "rev" && head.rev === "HEAD")
+    return { mode: "base", baseRef: base.rev, ignoreWhitespace: compare.ignoreWhitespace };
+  if (compare.mergeBase && head.kind === "worktree")
+    return { mode: "all", baseRef: base.rev, ignoreWhitespace: compare.ignoreWhitespace };
+  return null;
+}
diff --git a/packages/client/src/diff/stream.test.ts b/packages/client/src/diff/stream.test.ts
new file mode 100644
index 0000000000..b740469029
--- /dev/null
+++ b/packages/client/src/diff/stream.test.ts
@@ -0,0 +1,86 @@
+import { expect, test } from "vitest";
+import { DiffStream } from "./stream.js";
+import { DiffOpcode, type DiffBegin } from "@getpaseo/protocol/binary-frames/index";
+import type { DiffState } from "./index.js";
+const entry = {
+  path: "a.ts",
+  oldPath: null,
+  change: "modified" as const,
+  content: "text" as const,
+  additions: 1,
+  deletions: 0,
+  body: true,
+};
+const begin = (revision: number, baseRevision = 0): DiffBegin => ({
+  opcode: DiffOpcode.Begin,
+  slot: 0,
+  revision,
+  baseRevision,
+  baseSha: "a",
+  headSha: "b",
+  mergeBaseSha: "",
+  entries: [entry],
+});
+const end = (revision: number) =>
+  ({
+    opcode: DiffOpcode.End,
+    slot: 0,
+    revision,
+    diffTooLarge: false,
+    omitted: [],
+    error: null,
+  }) as const;
+test("publishes the initial tree, commits on End and buffers refreshes with stable equal files", () => {
+  const states: DiffState[] = [];
+  const stream = new DiffStream((state) => states.push(state));
+  stream.receive(begin(1));
+  expect(states[0]).toMatchObject({ phase: "loading", entries: [{ path: "a.ts" }] });
+  stream.receive({
+    opcode: DiffOpcode.Bodies,
+    slot: 0,
+    revision: 1,
+    files: [{ path: "a.ts", hunks: [] }],
+  });
+  expect(states).toHaveLength(1);
+  stream.receive(end(1));
+  const ready = states[1];
+  if (ready.phase !== "ready") throw new Error("Expected ready");
+  stream.receive(begin(2, 1));
+  stream.receive({
+    opcode: DiffOpcode.Bodies,
+    slot: 0,
+    revision: 2,
+    files: [{ path: "a.ts", hunks: [] }],
+  });
+  expect(states).toHaveLength(2);
+  stream.receive(end(2));
+  const refreshed = states[2];
+  if (refreshed.phase !== "ready") throw new Error("Expected ready");
+  expect(refreshed.files[0]).toBe(ready.files[0]);
+});
+test("superseded and stale frames cannot leave the client loading; End is authoritative", () => {
+  const states: DiffState[] = [];
+  const stream = new DiffStream((s) => states.push(s));
+  stream.receive(begin(1));
+  stream.receive(begin(2));
+  stream.receive(end(1));
+  expect(() => stream.receive(end(2))).toThrow(/Missing/);
+  stream.receive(begin(3));
+  stream.receive({ ...end(3), error: { code: "REF_NOT_FOUND", message: "gone" } });
+  expect(states.at(-1)).toMatchObject({ phase: "error", error: { code: "REF_NOT_FOUND" } });
+  stream.receive({ ...begin(4), entries: [] });
+  stream.receive(end(4));
+  expect(states.at(-1)).toMatchObject({ phase: "ready", files: [] });
+});
+test("unchanged entries retain hunks, omissions override cache, removed paths disappear", () => {
+  const states: DiffState[] = [];
+  const stream = new DiffStream((s) => states.push(s));
+  stream.receive(begin(1));
+  stream.receive({ ...end(1), omitted: ["a.ts"], diffTooLarge: true });
+  stream.receive({ ...begin(2, 1), entries: [{ ...entry, body: false }] });
+  stream.receive(end(2));
+  expect(states.at(-1)).toMatchObject({ phase: "ready", files: [{ status: "too_large" }] });
+  stream.receive({ ...begin(3, 2), entries: [] });
+  stream.receive(end(3));
+  expect(states.at(-1)).toMatchObject({ phase: "ready", files: [] });
+});
diff --git a/packages/client/src/diff/stream.ts b/packages/client/src/diff/stream.ts
new file mode 100644
index 0000000000..ac55f681ec
--- /dev/null
+++ b/packages/client/src/diff/stream.ts
@@ -0,0 +1,94 @@
+import {
+  DiffOpcode,
+  materializeDiffFile,
+  type DiffBegin,
+  type DiffBody,
+  type DiffFrame,
+} from "@getpaseo/protocol/binary-frames/index";
+import type { ParsedDiffFile } from "@getpaseo/protocol/messages";
+import type { DiffState } from "./index.js";
+
+/** Owns revision assembly. End, rather than a local body count, commits the snapshot. */
+export class DiffStream {
+  private pending: { begin: DiffBegin; bodies: Map<string, DiffBody> } | null = null;
+  private committed: Extract<DiffState, { phase: "ready" }> | null = null;
+  constructor(private publish: (state: DiffState) => void) {}
+  receive(frame: DiffFrame): void {
+    if (frame.opcode === DiffOpcode.Begin) {
+      if (frame.baseRevision !== 0 && frame.baseRevision !== this.committed?.revision)
+        throw new Error("Unknown diff base revision");
+      if (new Set(frame.entries.map((entry) => entry.path)).size !== frame.entries.length)
+        throw new Error("Duplicate diff entry");
+      this.pending = { begin: frame, bodies: new Map() };
+      if (!this.committed)
+        this.publish({
+          phase: "loading",
+          revision: frame.revision,
+          entries: frame.entries.map(({ body: _body, ...entry }) => entry),
+        });
+      return;
+    }
+    const pending = this.pending;
+    if (!pending || frame.revision !== pending.begin.revision) return;
+    if (frame.opcode === DiffOpcode.Bodies) {
+      for (const body of frame.files) {
+        if (pending.bodies.has(body.path)) throw new Error("Duplicate diff body");
+        const entry = pending.begin.entries.find((candidate) => candidate.path === body.path);
+        if (!entry?.body) throw new Error("Unexpected diff body");
+        pending.bodies.set(body.path, body);
+      }
+      return;
+    }
+    this.pending = null;
+    if (frame.error) {
+      this.committed = null;
+      this.publish({ phase: "error", revision: frame.revision, error: frame.error });
+      return;
+    }
+    const previous = new Map(this.committed?.files.map((file) => [file.path, file]));
+    const omitted = new Set(frame.omitted);
+    for (const path of omitted)
+      if (!pending.begin.entries.some((entry) => entry.path === path))
+        throw new Error("Unknown omitted diff path");
+    const files = pending.begin.entries.map((entry) => {
+      const old = previous.get(entry.path);
+      const body = pending.bodies.get(entry.path);
+      if (entry.content === "text" && !omitted.has(entry.path) && entry.body && !body)
+        throw new Error(`Missing diff body: ${entry.path}`);
+      if (
+        entry.content === "text" &&
+        !entry.body &&
+        !omitted.has(entry.path) &&
+        (!old || pending.begin.baseRevision === 0)
+      )
+        throw new Error(`Missing inherited diff: ${entry.path}`);
+      let file = materializeDiffFile(entry, body ?? null, omitted.has(entry.path));
+      if (entry.content === "text" && !entry.body && !omitted.has(entry.path) && old)
+        file = { ...file, hunks: old.hunks, status: old.status };
+      return old && sameFile(old, file) ? old : file;
+    });
+    const { revision, baseSha, headSha, mergeBaseSha } = pending.begin;
+    this.committed = {
+      phase: "ready",
+      revision,
+      resolved: { baseSha, headSha, mergeBaseSha },
+      files,
+      diffTooLarge: frame.diffTooLarge,
+    };
+    this.publish(this.committed);
+  }
+}
+function sameFile(a: ParsedDiffFile, b: ParsedDiffFile): boolean {
+  if (
+    a.path !== b.path ||
+    a.oldPath !== b.oldPath ||
+    a.isNew !== b.isNew ||
+    a.isDeleted !== b.isDeleted ||
+    a.additions !== b.additions ||
+    a.deletions !== b.deletions ||
+    a.status !== b.status
+  )
+    return false;
+  if (a.hunks === b.hunks) return true;
+  return JSON.stringify(a.hunks) === JSON.stringify(b.hunks);
+}
diff --git a/packages/client/src/index.ts b/packages/client/src/index.ts
index 390c9310f3..356613cb2b 100644
--- a/packages/client/src/index.ts
+++ b/packages/client/src/index.ts
@@ -1300,6 +1300,8 @@ function createGeneratedClientId(): string {
   return `paseo-sdk-${randomId}`;
 }
 
+export type { DiffCompare, DiffState, DiffEntry, ResolvedShas } from "./diff/index.js";
+
 interface WorkspaceLabelAssignment {
   client: DaemonClient;
   workspaceId: string;
diff --git a/packages/protocol/src/binary-frames/demux.ts b/packages/protocol/src/binary-frames/demux.ts
index 1a7617e35b..b21118d301 100644
--- a/packages/protocol/src/binary-frames/demux.ts
+++ b/packages/protocol/src/binary-frames/demux.ts
@@ -1,3 +1,4 @@
+import { decodeDiffFrame, DiffOpcode, type DiffFrame } from "./diff.js";
 import { HOST_ROUTE_OPCODE, decodeHostRouteFrame, type HostRouteFrame } from "./host-route.js";
 import {
   decodeFileTransferFrame,
@@ -12,12 +13,20 @@ import {
 } from "./terminal.js";
 
 export type BinaryFrame =
+  | { kind: "diff"; frame: DiffFrame }
   | { kind: "host_route"; frame: HostRouteFrame }
   | { kind: "terminal"; frame: TerminalStreamFrame }
   | { kind: "file_transfer"; frame: FileTransferFrame }
   | { kind: "plugin"; frame: PluginFrame };
 
 export function decodeBinaryFrame(bytes: Uint8Array): BinaryFrame | null {
+  if (Object.values(DiffOpcode).some((opcode) => opcode === bytes[0])) {
+    return { kind: "diff", frame: decodeDiffFrame(bytes) };
+  }
+  return decodeExistingBinaryFrame(bytes);
+}
+
+function decodeExistingBinaryFrame(bytes: Uint8Array): BinaryFrame | null {
   switch (bytes[0]) {
     case HOST_ROUTE_OPCODE: {
       const frame = decodeHostRouteFrame(bytes);
diff --git a/packages/protocol/src/binary-frames/diff.test.ts b/packages/protocol/src/binary-frames/diff.test.ts
new file mode 100644
index 0000000000..fcc2885521
--- /dev/null
+++ b/packages/protocol/src/binary-frames/diff.test.ts
@@ -0,0 +1,270 @@
+import { expect, test } from "vitest";
+import { decodeDiffFrame, encodeDiffFrame } from "./diff.js";
+import { decodeBinaryFrame } from "./demux.js";
+import { decodePluginFrame } from "./plugin.js";
+
+test("routes diff revisions independently of plugin frames", () => {
+  const frame = {
+    opcode: 0x40 as const,
+    slot: 0,
+    revision: 1,
+    baseRevision: 0,
+    baseSha: "",
+    headSha: "",
+    mergeBaseSha: "",
+    entries: [],
+  };
+  const bytes = encodeDiffFrame(frame);
+  expect([...bytes]).toEqual([64, 0, 1, 1, 0, 0, 0, 0, 0]);
+  expect(decodeDiffFrame(bytes)).toEqual(frame);
+  expect(decodeBinaryFrame(bytes)).toEqual({ kind: "diff", frame });
+  expect(decodePluginFrame(bytes)).toBeNull();
+});
+
+test("roundtrips Unicode runs and materializes the existing file shape", async () => {
+  const { materializeDiffFile } = await import("./diff.js");
+  const frame = {
+    opcode: 0x41 as const,
+    slot: 255,
+    revision: 128,
+    files: [
+      {
+        path: "é.ts",
+        hunks: [
+          {
+            oldStart: 1,
+            oldCount: 1,
+            newStart: 1,
+            newCount: 1,
+            lines: [
+              {
+                type: "add" as const,
+                content: "😀é",
+                runs: [
+                  { style: "string", length: 2 },
+                  { style: null, length: 2 },
+                ],
+              },
+            ],
+          },
+        ],
+      },
+    ],
+  };
+  expect(decodeDiffFrame(encodeDiffFrame(frame))).toEqual(frame);
+  const file = materializeDiffFile(
+    {
+      path: "é.ts",
+      oldPath: null,
+      change: "modified",
+      content: "text",
+      additions: 1,
+      deletions: 1,
+      body: true,
+    },
+    frame.files[0],
+    false,
+  );
+  expect(file.hunks[0].lines[0].tokens).toEqual([
+    { text: "😀", style: "string" },
+    { text: "é", style: null },
+  ]);
+});
+
+test("preserves binary additions, modifications, deletions and mode-only text", async () => {
+  const { materializeDiffFile } = await import("./diff.js");
+  for (const change of ["added", "modified", "deleted"] as const) {
+    const entry = {
+      path: "image.png",
+      oldPath: null,
+      change,
+      content: "binary" as const,
+      additions: 0,
+      deletions: 0,
+      body: false,
+    };
+    const begin = {
+      opcode: 0x40 as const,
+      slot: 1,
+      revision: 1,
+      baseRevision: 0,
+      baseSha: "",
+      headSha: "",
+      mergeBaseSha: "",
+      entries: [entry],
+    };
+    expect(decodeDiffFrame(encodeDiffFrame(begin))).toEqual(begin);
+    expect(materializeDiffFile(entry, null, false)).toEqual({
+      path: "image.png",
+      isNew: change === "added",
+      isDeleted: change === "deleted",
+      additions: 0,
+      deletions: 0,
+      status: "binary",
+      hunks: [],
+    });
+  }
+  expect(
+    materializeDiffFile(
+      {
+        path: "script",
+        oldPath: null,
+        change: "modified",
+        content: "text",
+        additions: 0,
+        deletions: 0,
+        body: true,
+      },
+      { path: "script", hunks: [] },
+      false,
+    ),
+  ).toEqual({
+    path: "script",
+    isNew: false,
+    isDeleted: false,
+    additions: 0,
+    deletions: 0,
+    status: "ok",
+    hunks: [],
+  });
+});
+
+test("rejects every truncated prefix, unknown version, trailing data, and invalid coverage", () => {
+  const end = {
+    opcode: 0x42 as const,
+    slot: 1,
+    revision: 9007199254740991,
+    diffTooLarge: true,
+    omitted: ["a.ts"],
+    error: { code: "REF_NOT_FOUND" as const, message: "missing" },
+  };
+  const bytes = encodeDiffFrame(end);
+  expect(decodeDiffFrame(bytes)).toEqual(end);
+  for (let length = 0; length < bytes.length; length++)
+    expect(() => decodeDiffFrame(bytes.slice(0, length))).toThrow();
+  const version = bytes.slice();
+  version[2] = 2;
+  expect(() => decodeDiffFrame(version)).toThrow("version");
+  expect(() => decodeDiffFrame(Uint8Array.from([...bytes, 0]))).toThrow("Trailing");
+  expect(() =>
+    encodeDiffFrame({
+      opcode: 0x41,
+      slot: 1,
+      revision: 1,
+      files: [
+        {
+          path: "x",
+          hunks: [
+            {
+              oldStart: 0,
+              oldCount: 0,
+              newStart: 1,
+              newCount: 1,
+              lines: [{ type: "add", content: "😀", runs: [{ style: null, length: 1 }] }],
+            },
+          ],
+        },
+      ],
+    }),
+  ).toThrow("cover");
+});
+
+test("uses fixed UTF-8 byte vectors while runs count UTF-16 units", () => {
+  const bytes = Uint8Array.from([
+    65, 0, 1, 1, 1, 1, 120, 1, 0, 0, 1, 1, 1, 129, 7, 240, 159, 152, 128, 101, 204, 129, 1, 3, 4,
+  ]);
+  const frame = {
+    opcode: 0x41 as const,
+    slot: 0,
+    revision: 1,
+    files: [
+      {
+        path: "x",
+        hunks: [
+          {
+            oldStart: 0,
+            oldCount: 0,
+            newStart: 1,
+            newCount: 1,
+            lines: [
+              { type: "add" as const, content: "😀é", runs: [{ style: "string", length: 4 }] },
+            ],
+          },
+        ],
+      },
+    ],
+  };
+  expect(encodeDiffFrame(frame)).toEqual(bytes);
+  expect(decodeDiffFrame(bytes)).toEqual(frame);
+  const unknownStyle = bytes.slice();
+  unknownStyle[23] = 255;
+  expect(decodeDiffFrame(unknownStyle)).toEqual({
+    ...frame,
+    files: [
+      {
+        ...frame.files[0],
+        hunks: [
+          {
+            ...frame.files[0].hunks[0],
+            lines: [{ type: "add", content: "😀é", runs: [{ style: null, length: 4 }] }],
+          },
+        ],
+      },
+    ],
+  });
+});
+
+test("roundtrips generated entry lists across varint boundaries", () => {
+  for (const revision of [0, 1, 127, 128, 16383, 16384, 4294967296, Number.MAX_SAFE_INTEGER]) {
+    const entries = Array.from({ length: 130 }, (_, index) => ({
+      path: `src/${index}-😀.ts`,
+      oldPath: `old/${index}.ts`,
+      change: "renamed" as const,
+      content: "text" as const,
+      additions: index * 128,
+      deletions: index,
+      body: true,
+    }));
+    const begin = {
+      opcode: 0x40 as const,
+      slot: 255,
+      revision,
+      baseRevision: 0,
+      baseSha: "base",
+      headSha: "head",
+      mergeBaseSha: "merge",
+      entries,
+    };
+    expect(decodeDiffFrame(encodeDiffFrame(begin))).toEqual(begin);
+  }
+});
+
+test.each([true, false])(
+  "preserves BOM-prefixed paths and source lines with runs=%s",
+  (highlight) => {
+    const frame = {
+      opcode: 0x41 as const,
+      slot: 0,
+      revision: 1,
+      files: [
+        {
+          path: "\uFEFFbom.ts",
+          hunks: [
+            {
+              oldStart: 1,
+              oldCount: 1,
+              newStart: 1,
+              newCount: 1,
+              lines: (["add", "remove", "context"] as const).map((type) => ({
+                type,
+                content: "\uFEFFvalue",
+                runs: highlight ? [{ style: null, length: 6 }] : undefined,
+              })),
+            },
+          ],
+        },
+      ],
+    };
+    expect(decodeDiffFrame(encodeDiffFrame(frame))).toEqual(frame);
+  },
+);
diff --git a/packages/protocol/src/binary-frames/diff.ts b/packages/protocol/src/binary-frames/diff.ts
new file mode 100644
index 0000000000..9f11450b7d
--- /dev/null
+++ b/packages/protocol/src/binary-frames/diff.ts
@@ -0,0 +1,360 @@
+import type { ParsedDiffFile } from "../messages.js";
+
+// Opcodes 0x40–0x4f are reserved for diff revisions. Plugins own 0x20–0x2f.
+export const DiffOpcode = { Begin: 0x40, Bodies: 0x41, End: 0x42 } as const;
+export const DIFF_HIGHLIGHT_STYLES = [
+  null,
+  "keyword",
+  "comment",
+  "string",
+  "number",
+  "literal",
+  "function",
+  "definition",
+  "class",
+  "type",
+  "tag",
+  "attribute",
+  "property",
+  "variable",
+  "operator",
+  "punctuation",
+  "regexp",
+  "escape",
+  "meta",
+  "heading",
+  "link",
+] as const;
+const CHANGES = ["added", "modified", "deleted", "renamed"] as const;
+const CONTENTS = ["text", "binary"] as const;
+const KINDS = ["context", "add", "remove", "header"] as const;
+const ERRORS = [
+  null,
+  "NOT_GIT_REPO",
+  "REF_NOT_FOUND",
+  "INVALID_COMPARE",
+  "TOO_MANY_SUBSCRIPTIONS",
+  "UNKNOWN",
+] as const;
+export interface DiffEntry {
+  path: string;
+  oldPath: string | null;
+  change: (typeof CHANGES)[number];
+  content: (typeof CONTENTS)[number];
+  additions: number;
+  deletions: number;
+  body: boolean;
+}
+export interface DiffRun {
+  style: string | null;
+  length: number;
+}
+export interface DiffStreamLine {
+  type: (typeof KINDS)[number];
+  content: string;
+  runs?: DiffRun[];
+}
+export interface DiffStreamHunk {
+  oldStart: number;
+  oldCount: number;
+  newStart: number;
+  newCount: number;
+  lines: DiffStreamLine[];
+}
+export interface DiffBody {
+  path: string;
+  hunks: DiffStreamHunk[];
+}
+export interface DiffBegin {
+  opcode: typeof DiffOpcode.Begin;
+  slot: number;
+  revision: number;
+  baseRevision: number;
+  baseSha: string;
+  headSha: string;
+  mergeBaseSha: string;
+  entries: DiffEntry[];
+}
+export interface DiffBodies {
+  opcode: typeof DiffOpcode.Bodies;
+  slot: number;
+  revision: number;
+  files: DiffBody[];
+}
+export interface DiffEnd {
+  opcode: typeof DiffOpcode.End;
+  slot: number;
+  revision: number;
+  diffTooLarge: boolean;
+  omitted: string[];
+  error: { code: NonNullable<(typeof ERRORS)[number]>; message: string } | null;
+}
+export type DiffFrame = DiffBegin | DiffBodies | DiffEnd;
+export class InvalidDiffFrameError extends Error {}
+
+const textEncoder = new TextEncoder();
+const textDecoder = new TextDecoder("utf-8", { fatal: true, ignoreBOM: true });
+
+class Writer {
+  private bytes: number[] = [];
+  byte(value: number): void {
+    if (!Number.isInteger(value) || value < 0 || value > 255)
+      throw new InvalidDiffFrameError("Invalid byte");
+    this.bytes.push(value);
+  }
+  uint(value: number): void {
+    if (!Number.isSafeInteger(value) || value < 0)
+      throw new InvalidDiffFrameError("Invalid unsigned integer");
+    do {
+      const next = value % 128;
+      value = Math.floor(value / 128);
+      this.byte(next + (value ? 128 : 0));
+    } while (value);
+  }
+  str(value: string): void {
+    const bytes = textEncoder.encode(value);
+    this.uint(bytes.length);
+    for (const byte of bytes) this.byte(byte);
+  }
+  finish(): Uint8Array {
+    return Uint8Array.from(this.bytes);
+  }
+}
+class Reader {
+  private offset = 0;
+  constructor(private bytes: Uint8Array) {}
+  byte(): number {
+    if (this.offset >= this.bytes.length) throw new InvalidDiffFrameError("Truncated diff frame");
+    return this.bytes[this.offset++];
+  }
+  uint(): number {
+    let value = 0;
+    let factor = 1;
+    for (let index = 0; index < 8; index++) {
+      const byte = this.byte();
+      value += (byte & 127) * factor;
+      if (!Number.isSafeInteger(value)) throw new InvalidDiffFrameError("Integer overflow");
+      if (byte < 128) return value;
+      factor *= 128;
+    }
+    throw new InvalidDiffFrameError("Invalid varint");
+  }
+  count(): number {
+    const value = this.uint();
+    if (value > this.bytes.length - this.offset)
+      throw new InvalidDiffFrameError("Count exceeds frame");
+    return value;
+  }
+  str(): string {
+    const size = this.count();
+    const start = this.offset;
+    this.offset += size;
+    try {
+      return textDecoder.decode(this.bytes.subarray(start, this.offset));
+    } catch {
+      throw new InvalidDiffFrameError("Invalid UTF-8");
+    }
+  }
+  done(): void {
+    if (this.offset !== this.bytes.length) throw new InvalidDiffFrameError("Trailing bytes");
+  }
+}
+function enumAt<T>(values: readonly T[], index: number): T {
+  if (index >= values.length) throw new InvalidDiffFrameError("Unknown enum value");
+  return values[index];
+}
+function validateRuns(line: DiffStreamLine): void {
+  if (!line.runs) return;
+  let length = 0;
+  for (const run of line.runs) {
+    if (!Number.isSafeInteger(run.length) || run.length <= 0)
+      throw new InvalidDiffFrameError("Invalid run length");
+    length += run.length;
+  }
+  if (length !== line.content.length) throw new InvalidDiffFrameError("Runs do not cover line");
+}
+function writeLine(writer: Writer, line: DiffStreamLine): void {
+  validateRuns(line);
+  writer.byte(KINDS.indexOf(line.type) | (line.runs ? 128 : 0));
+  writer.str(line.content);
+  writer.uint(line.runs ? line.runs.length : 0);
+  for (const run of line.runs ?? []) {
+    const style = DIFF_HIGHLIGHT_STYLES.findIndex((value) => value === run.style);
+    writer.byte(Math.max(0, style));
+    writer.uint(run.length);
+  }
+}
+function readLine(reader: Reader): DiffStreamLine {
+  const flags = reader.byte();
+  const type = enumAt(KINDS, flags & 127);
+  const content = reader.str();
+  const count = reader.count();
+  const runs: DiffRun[] = [];
+  for (let index = 0; index < count; index++) {
+    const styleIndex = reader.byte();
+    const style = DIFF_HIGHLIGHT_STYLES[styleIndex] ?? null;
+    runs.push({ style, length: reader.uint() });
+  }
+  if (!(flags & 128)) {
+    if (count) throw new InvalidDiffFrameError("Runs without flag");
+    return { type, content };
+  }
+  const line = { type, content, runs };
+  validateRuns(line);
+  return line;
+}
+export function encodeDiffFrame(frame: DiffFrame): Uint8Array {
+  const writer = new Writer();
+  writer.byte(frame.opcode);
+  writer.byte(frame.slot);
+  writer.byte(1);
+  writer.uint(frame.revision);
+  if (frame.opcode === DiffOpcode.Begin) {
+    writer.uint(frame.baseRevision);
+    writer.str(frame.baseSha);
+    writer.str(frame.headSha);
+    writer.str(frame.mergeBaseSha);
+    writer.uint(frame.entries.length);
+    for (const entry of frame.entries) {
+      if (entry.content === "binary" && entry.body)
+        throw new InvalidDiffFrameError("Binary entry has a body");
+      writer.str(entry.path);
+      writer.str(entry.oldPath ?? "");
+      writer.byte(CHANGES.indexOf(entry.change));
+      writer.byte(CONTENTS.indexOf(entry.content));
+      writer.uint(entry.additions);
+      writer.uint(entry.deletions);
+      writer.byte(Number(entry.body));
+    }
+  } else if (frame.opcode === DiffOpcode.Bodies) {
+    writer.uint(frame.files.length);
+    for (const file of frame.files) {
+      writer.str(file.path);
+      writer.uint(file.hunks.length);
+      for (const hunk of file.hunks) {
+        writer.uint(hunk.oldStart);
+        writer.uint(hunk.oldCount);
+        writer.uint(hunk.newStart);
+        writer.uint(hunk.newCount);
+        writer.uint(hunk.lines.length);
+        for (const line of hunk.lines) writeLine(writer, line);
+      }
+    }
+  } else {
+    writer.byte(Number(frame.diffTooLarge));
+    writer.uint(frame.omitted.length);
+    for (const path of frame.omitted) writer.str(path);
+    writer.byte(frame.error ? ERRORS.indexOf(frame.error.code) : 0);
+    writer.str(frame.error ? frame.error.message : "");
+  }
+  return writer.finish();
+}
+export function decodeDiffFrame(bytes: Uint8Array): DiffFrame {
+  const reader = new Reader(bytes);
+  const opcode = reader.byte();
+  const slot = reader.byte();
+  if (reader.byte() !== 1) throw new InvalidDiffFrameError("Unknown diff version");
+  const revision = reader.uint();
+  let frame: DiffFrame;
+  if (opcode === DiffOpcode.Begin) {
+    const baseRevision = reader.uint();
+    const baseSha = reader.str();
+    const headSha = reader.str();
+    const mergeBaseSha = reader.str();
+    const count = reader.count();
+    const entries: DiffEntry[] = [];
+    for (let index = 0; index < count; index++) {
+      const path = reader.str();
+      const oldPath = reader.str() || null;
+      const change = enumAt(CHANGES, reader.byte());
+      const content = enumAt(CONTENTS, reader.byte());
+      const additions = reader.uint();
+      const deletions = reader.uint();
+      const bodyByte = reader.byte();
+      if (bodyByte > 1 || (content === "binary" && bodyByte))
+        throw new InvalidDiffFrameError("Invalid entry body");
+      entries.push({ path, oldPath, change, content, additions, deletions, body: bodyByte === 1 });
+    }
+    frame = { opcode, slot, revision, baseRevision, baseSha, headSha, mergeBaseSha, entries };
+  } else if (opcode === DiffOpcode.Bodies) {
+    const count = reader.count();
+    const files: DiffBody[] = [];
+    for (let index = 0; index < count; index++) {
+      const path = reader.str();
+      const hunkCount = reader.count();
+      const hunks: DiffStreamHunk[] = [];
+      for (let h = 0; h < hunkCount; h++) {
+        const oldStart = reader.uint();
+        const oldCount = reader.uint();
+        const newStart = reader.uint();
+        const newCount = reader.uint();
+        const lineCount = reader.count();
+        const lines: DiffStreamLine[] = [];
+        for (let l = 0; l < lineCount; l++) lines.push(readLine(reader));
+        hunks.push({ oldStart, oldCount, newStart, newCount, lines });
+      }
+      files.push({ path, hunks });
+    }
+    frame = { opcode, slot, revision, files };
+  } else if (opcode === DiffOpcode.End) {
+    const flags = reader.byte();
+    if (flags > 1) throw new InvalidDiffFrameError("Unknown flags");
+    const count = reader.count();
+    const omitted: string[] = [];
+    for (let index = 0; index < count; index++) omitted.push(reader.str());
+    const code = enumAt(ERRORS, reader.byte());
+    const message = reader.str();
+    frame = {
+      opcode,
+      slot,
+      revision,
+      diffTooLarge: flags === 1,
+      omitted,
+      error: code ? { code, message } : null,
+    };
+  } else {
+    throw new InvalidDiffFrameError("Unknown diff opcode");
+  }
+  reader.done();
+  return frame;
+}
+export function runsToTokens(
+  line: DiffStreamLine,
+): NonNullable<ParsedDiffFile["hunks"][number]["lines"][number]["tokens"]> {
+  let offset = 0;
+  return (line.runs ?? []).map((run) => {
+    const text = line.content.slice(offset, offset + run.length);
+    offset += run.length;
+    return { text, style: run.style };
+  });
+}
+export function materializeDiffFile(
+  entry: DiffEntry,
+  body: DiffBody | null,
+  omitted: boolean,
+): ParsedDiffFile {
+  let status: "ok" | "binary" | "too_large" = "ok";
+  if (entry.content === "binary") status = "binary";
+  else if (omitted) status = "too_large";
+  const hunks = body
+    ? body.hunks.map((hunk) => ({
+        ...hunk,
+        lines: hunk.lines.map((line) => {
+          if (line.runs)
+            return { type: line.type, content: line.content, tokens: runsToTokens(line) };
+          return { type: line.type, content: line.content };
+        }),
+      }))
+    : [];
+  const file: ParsedDiffFile = {
+    path: entry.path,
+    isNew: entry.change === "added",
+    isDeleted: entry.change === "deleted",
+    additions: entry.additions,
+    deletions: entry.deletions,
+    hunks,
+    status,
+  };
+  if (entry.oldPath !== null) file.oldPath = entry.oldPath;
+  return file;
+}
diff --git a/packages/protocol/src/binary-frames/index.ts b/packages/protocol/src/binary-frames/index.ts
index bb2e7e002d..946a1c7051 100644
--- a/packages/protocol/src/binary-frames/index.ts
+++ b/packages/protocol/src/binary-frames/index.ts
@@ -3,3 +3,4 @@ export * from "./file-transfer.js";
 export * from "./terminal.js";
 export * from "./host-route.js";
 export * from "./plugin.js";
+export * from "./diff.js";
diff --git a/packages/protocol/src/messages.diff.test.ts b/packages/protocol/src/messages.diff.test.ts
new file mode 100644
index 0000000000..f2831ab147
--- /dev/null
+++ b/packages/protocol/src/messages.diff.test.ts
@@ -0,0 +1,24 @@
+import { expect, test } from "vitest";
+import { DiffSubscribeRequestSchema, DiffSubscribeResponseSchema } from "./messages.js";
+
+test("accepts explicit endpoints without changing legacy schemas", () => {
+  const request = {
+    type: "diff.subscribe.request",
+    requestId: "r",
+    cwd: "/repo",
+    base: { kind: "rev", rev: "v1" },
+    head: { kind: "worktree" },
+    mergeBase: true,
+    highlight: false,
+  };
+  expect(DiffSubscribeRequestSchema.parse(request)).toEqual(request);
+  expect(
+    DiffSubscribeRequestSchema.safeParse({ ...request, base: { kind: "unknown" } }).success,
+  ).toBe(false);
+  expect(
+    DiffSubscribeResponseSchema.safeParse({
+      type: "diff.subscribe.response",
+      payload: { requestId: "r", subscriptionId: "s", slot: 256, error: null },
+    }).success,
+  ).toBe(false);
+});
diff --git a/packages/protocol/src/messages.ts b/packages/protocol/src/messages.ts
index a6d05ca509..c7d14f5ce8 100644
--- a/packages/protocol/src/messages.ts
+++ b/packages/protocol/src/messages.ts
@@ -2322,6 +2322,51 @@ const CheckoutDiffCompareSchema = z.object({
   ignoreWhitespace: z.boolean().optional(),
 });
 
+export const DiffEndpointSchema = z.discriminatedUnion("kind", [
+  z.object({ kind: z.literal("rev"), rev: z.string() }),
+  z.object({ kind: z.literal("index") }),
+  z.object({ kind: z.literal("worktree") }),
+  z.object({ kind: z.literal("empty") }),
+]);
+export const DiffErrorSchema = z.object({
+  code: z.enum([
+    "NOT_GIT_REPO",
+    "REF_NOT_FOUND",
+    "INVALID_COMPARE",
+    "TOO_MANY_SUBSCRIPTIONS",
+    "UNKNOWN",
+  ]),
+  message: z.string(),
+});
+export const DiffSubscribeRequestSchema = z.object({
+  type: z.literal("diff.subscribe.request"),
+  requestId: z.string(),
+  cwd: z.string(),
+  base: DiffEndpointSchema,
+  head: DiffEndpointSchema,
+  mergeBase: z.boolean().optional(),
+  ignoreWhitespace: z.boolean().optional(),
+  highlight: z.boolean().optional(),
+});
+// Unsubscribe is fire-and-forget; release has no correlated response.
+export const DiffUnsubscribeRequestSchema = z.object({
+  type: z.literal("diff.unsubscribe.request"),
+  subscriptionId: z.string(),
+});
+export const DiffSubscribeResponseSchema = z.object({
+  type: z.literal("diff.subscribe.response"),
+  payload: z.object({
+    requestId: z.string(),
+    subscriptionId: z.string(),
+    slot: z.number().int().min(0).max(255),
+    error: DiffErrorSchema.nullable(),
+  }),
+});
+export type DiffEndpoint = z.infer<typeof DiffEndpointSchema>;
+export type DiffError = z.infer<typeof DiffErrorSchema>;
+export type DiffSubscribeRequest = z.infer<typeof DiffSubscribeRequestSchema>;
+export type DiffSubscribeResponse = z.infer<typeof DiffSubscribeResponseSchema>;
+
 export const CheckoutStatusRequestSchema = z.object({
   type: z.literal("checkout_status_request"),
   cwd: z.string(),
@@ -3466,6 +3511,8 @@ export const SessionInboundMessageSchema = z.discriminatedUnion("type", [
   AgentDetachRequestMessageSchema,
   AgentRewindRequestMessageSchema,
   AgentPermissionResponseMessageSchema,
+  DiffSubscribeRequestSchema,
+  DiffUnsubscribeRequestSchema,
   CheckoutStatusRequestSchema,
   CheckoutDiffGetRequestSchema,
   SubscribeCheckoutDiffRequestSchema,
@@ -3932,6 +3979,7 @@ export const ServerInfoStatusPayloadSchema = z
         selectiveAgentTimeline: z.boolean().optional(),
         explicitEventSubscriptions: z.boolean().optional(),
         ownedSubscriptions: z.boolean().optional(),
+        diffSubscription: z.boolean().optional(),
         binaryChunkingV1: z.boolean().optional(),
         workspaceSetupObservation: z.boolean().optional(),
         workspaceSortTimes: z.boolean().optional(),
@@ -5522,6 +5570,7 @@ const CheckoutStatusCommonSchema = z.object({
   error: CheckoutErrorSchema.nullable(),
   requestId: z.string(),
   baseRefExact: z.string().nullable().optional(),
+  comparisonBaseRef: z.string().nullable().optional(),
   // The full ref currentBranch tracks, as git resolves `<branch>@{upstream}`:
   // "refs/remotes/origin/main", "refs/remotes/upstream/main" on a fork, or a
   // "refs/heads/..." ref for a branch tracking a local branch. Null when there is no
@@ -7335,6 +7384,7 @@ export const SessionOutboundMessageSchema = z.discriminatedUnion("type", [
   AgentDeletedMessageSchema,
   AgentArchivedMessageSchema,
   CloseItemsResponseSchema,
+  DiffSubscribeResponseSchema,
   CheckoutStatusResponseSchema,
   CheckoutStatusUpdateSchema,
   CheckoutDiffGetResponseSchema,
diff --git a/packages/server/package.json b/packages/server/package.json
index 0733102d65..922e611733 100644
--- a/packages/server/package.json
+++ b/packages/server/package.json
@@ -102,7 +102,8 @@
     "test:e2e:real": "npm run test:integration:real",
     "test:e2e:local": "npm run test:integration:local",
     "test:e2e:relay:live": "cross-env RUN_LIVE_RELAY_E2E=1 vitest run src/server/daemon-e2e/live-relay.real.e2e.test.ts --maxWorkers=1",
-    "test:e2e:ui": "vitest --ui e2e.test.ts"
+    "test:e2e:ui": "vitest --ui e2e.test.ts",
+    "measure:diff-subscriptions": "tsx scripts/measure-diff-subscriptions.ts"
   },
   "dependencies": {
     "@agentclientprotocol/sdk": "^0.17.1",
diff --git a/packages/server/scripts/measure-diff-subscriptions.ts b/packages/server/scripts/measure-diff-subscriptions.ts
new file mode 100644
index 0000000000..e8e058708e
--- /dev/null
+++ b/packages/server/scripts/measure-diff-subscriptions.ts
@@ -0,0 +1,111 @@
+import { performance } from "node:perf_hooks";
+import { mkdir, writeFile } from "node:fs/promises";
+import { resolve } from "node:path";
+import {
+  encodeDiffFrame,
+  DiffOpcode,
+  type DiffFrame,
+} from "@getpaseo/protocol/binary-frames/index";
+import { DiffSubscriptions } from "../src/server/diff/index.js";
+import { createFileObserver } from "../src/server/file-observer/index.js";
+import { runGitCommand } from "../src/utils/run-git-command.js";
+import { parseAndHighlightDiff } from "../src/server/utils/diff-highlighter.js";
+import { validateWSOutboundMessage } from "@getpaseo/protocol/validation/ws-outbound";
+
+const cwd = resolve(import.meta.dirname, "../../..");
+const artifacts = resolve(cwd, ".artifacts/diff-subscription");
+await mkdir(artifacts, { recursive: true });
+const pinnedHead = "3ed57e9dd";
+const observer = createFileObserver();
+const engine = new DiffSubscriptions({
+  async requestWorkingTreeWatch(root, changed) {
+    const watch = await observer.subscribe(root, () => changed(), {
+      ignore: [resolve(root, ".git")],
+    });
+    return {
+      repoRoot: root,
+      unsubscribe: async () => {
+        await watch.unsubscribe();
+      },
+    };
+  },
+});
+try {
+  for (const count of [1, 30]) {
+    const [base, head] = await Promise.all([
+      runGitCommand(["rev-parse", `${pinnedHead}~${count}`], { cwd }),
+      runGitCommand(["rev-parse", pinnedHead], { cwd }),
+    ]);
+    const started = performance.now();
+    const frames: DiffFrame[] = [];
+    const encoded: Uint8Array[] = [];
+    const subscription = await engine.subscribe(
+      {
+        cwd,
+        base: { kind: "rev", rev: base.stdout.trim() },
+        head: { kind: "rev", rev: head.stdout.trim() },
+      },
+      async (frame) => {
+        frames.push(frame);
+        encoded.push(encodeDiffFrame(frame));
+      },
+    );
+    await subscription.start();
+    const coldMs = performance.now() - started;
+    await subscription.release();
+    const raw = await runGitCommand(["diff", base.stdout.trim(), head.stdout.trim()], {
+      cwd,
+      maxOutputBytes: 50 * 1024 * 1024,
+    });
+    const contentAt = async (sha: string, path: string) => {
+      const result = await runGitCommand(["show", `${sha}:${path}`], {
+        cwd,
+        acceptExitCodes: [0, 128],
+      });
+      return result.exitCode === 0 ? result.stdout : null;
+    };
+    const legacyFiles = await parseAndHighlightDiff(raw.stdout, cwd, {
+      getOldFileContent: (file) => contentAt(base.stdout.trim(), file.path),
+      getNewFileContent: (file) => contentAt(head.stdout.trim(), file.path),
+    });
+    const legacy = JSON.stringify({
+      type: "session",
+      message: {
+        type: "checkout_diff_update",
+        payload: { cwd, subscriptionId: "benchmark", files: legacyFiles, error: null },
+      },
+    });
+    const parseStart = performance.now();
+    const validation = validateWSOutboundMessage(JSON.parse(legacy));
+    if (!validation.success) throw validation.error;
+    const jsonParseValidationMs = performance.now() - parseStart;
+    const begin = frames.find((frame) => frame.opcode === DiffOpcode.Begin);
+    const end = frames.findLast((frame) => frame.opcode === DiffOpcode.End);
+    if (!begin || begin.opcode !== DiffOpcode.Begin || !end || end.opcode !== DiffOpcode.End)
+      throw new Error("Revision was not delimited");
+    if (end.error) throw new Error(end.error.message);
+    const metrics = {
+      pinnedHead: head.stdout.trim(),
+      count,
+      files: begin.entries.length,
+      rawPatchBytes: Buffer.byteLength(raw.stdout),
+      encodedBytes: encoded.reduce((sum, bytes) => sum + bytes.length, 0),
+      legacyJsonBytes: Buffer.byteLength(legacy),
+      coldMs,
+      jsonParseValidationMs,
+      omitted: end.omitted,
+    };
+    console.log(JSON.stringify(metrics));
+    await writeFile(
+      resolve(artifacts, `corpus-${count}.json`),
+      JSON.stringify({
+        metrics,
+        legacy,
+        frames: encoded.map((bytes) => Buffer.from(bytes).toString("base64")),
+      }),
+    );
+  }
+} finally {
+  await engine.close();
+  await observer.close();
+}
diff --git a/packages/server/src/server/authorization/operation-permissions.ts b/packages/server/src/server/authorization/operation-permissions.ts
index 728057e6b7..dfe7393ee7 100644
--- a/packages/server/src/server/authorization/operation-permissions.ts
+++ b/packages/server/src/server/authorization/operation-permissions.ts
@@ -196,6 +196,8 @@ const INBOUND_PERMISSION = {
   stash_pop_request: "workspace.write",
   stash_save_request: "workspace.write",
   "checkout.diff.get.request": "workspace.read",
+  "diff.subscribe.request": "workspace.read",
+  "diff.unsubscribe.request": "workspace.read",
   subscribe_checkout_diff_request: "workspace.read",
   subscribe_terminal_request: "workspace.read",
   subscribe_terminals_request: "workspace.read",
@@ -443,6 +445,7 @@ const OUTBOUND_PERMISSION = {
   stash_save_response: "workspace.read",
   status: "daemon.read",
   "checkout.diff.get.response": "workspace.read",
+  "diff.subscribe.response": "workspace.read",
   subscribe_checkout_diff_response: "workspace.read",
   subscribe_terminal_response: "workspace.read",
   "terminal.rename.response": "workspace.write",
diff --git a/packages/server/src/server/checkout-diff-manager.test.ts b/packages/server/src/server/checkout-diff-manager.test.ts
index d55171831b..da2947c24d 100644
--- a/packages/server/src/server/checkout-diff-manager.test.ts
+++ b/packages/server/src/server/checkout-diff-manager.test.ts
@@ -1,488 +1,253 @@
+import { execFileSync } from "node:child_process";
+import { mkdtemp, writeFile, rm, mkdir } from "node:fs/promises";
+import { join } from "node:path";
+import { tmpdir } from "node:os";
+import pino from "pino";
+import { expect, test } from "vitest";
+import { CheckoutDiffManager, type CheckoutDiffSnapshotPayload } from "./checkout-diff-manager.js";
 import { createWorkspaceRuntimeStore } from "./workspace-runtime-store/index.js";
-import { afterEach, beforeEach, describe, expect, test, vi } from "vitest";
+import { createFileObserver } from "./file-observer/index.js";
 
-const { toCheckoutErrorMock } = vi.hoisted(() => ({
-  toCheckoutErrorMock: vi.fn((error: unknown) => ({
-    message: error instanceof Error ? error.message : String(error),
-  })),
-}));
-
-vi.mock("./checkout-git-utils.js", () => ({
-  toCheckoutError: toCheckoutErrorMock,
-}));
-
-import type pino from "pino";
-import { CheckoutDiffManager } from "./checkout-diff-manager.js";
-import type { WorkspaceGitRuntimeSnapshot, WorkspaceGitService } from "./workspace-git-service.js";
-
-interface Deferred<T> {
-  promise: Promise<T>;
-  resolve(value: T): void;
-}
-
-function createDeferred<T>(): Deferred<T> {
-  let resolve!: (value: T) => void;
-  const promise = new Promise<T>((resolvePromise) => {
-    resolve = resolvePromise;
-  });
-  return { promise, resolve };
-}
-
-function createWorkspaceSnapshot(
-  overrides?: Partial<WorkspaceGitRuntimeSnapshot["git"]>,
-): WorkspaceGitRuntimeSnapshot {
-  return {
-    cwd: "/tmp/repo",
-    git: {
-      isGit: true,
-      repoRoot: "/tmp/repo",
-      mainRepoRoot: null,
-      currentBranch: "feature",
-      remoteUrl: "https://github.com/acme/repo.git",
-      isPaseoOwnedWorktree: false,
-      isDirty: false,
-      baseRef: "main",
-      aheadBehind: { ahead: 1, behind: 0 },
-      aheadOfOrigin: 1,
-      behindOfOrigin: 0,
-      hasRemote: true,
-      diffStat: { additions: 1, deletions: 0 },
-      ...overrides,
-    },
-    forge: {
-      featuresEnabled: false,
-      authState: "no_remote",
-      pullRequest: null,
-      error: null,
-    },
-  };
-}
-
-function createPendingManager() {
-  const watches: Array<{
+async function withCheckout(
+  run: (input: {
     cwd: string;
-    onChange: () => void;
-    unsubscribeCalls: number;
-    resolve(): void;
-  }> = [];
-  const workspaceGitService = {
-    getCheckoutDiff: async () => ({ diff: "", structured: [] }),
-    getSnapshot: async () => createWorkspaceSnapshot(),
-
-    registerWorkspace: () => ({ unsubscribe: () => {} }),
-    requestWorkingTreeWatch: (cwd: string, onChange: () => void) => {
-      const pending = createDeferred<{ repoRoot: string | null; unsubscribe: () => void }>();
-      const watch = {
-        cwd,
-        onChange,
-        unsubscribeCalls: 0,
-        resolve: () => {
-          pending.resolve({
-            repoRoot: "/tmp/repo",
-            unsubscribe: () => {
-              watch.unsubscribeCalls += 1;
-            },
-          });
-        },
-      };
-      watches.push(watch);
-      return pending.promise;
-    },
-  };
-  const logger = { child: () => logger, warn: () => {} };
+    manager: CheckoutDiffManager;
+    git(...args: string[]): string;
+  }) => Promise<void>,
+): Promise<void> {
+  const cwd = await mkdtemp(join(tmpdir(), "legacy-diff-adapter-"));
+  const observer = createFileObserver();
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
   const manager = new CheckoutDiffManager({
+    logger: pino({ level: "silent" }),
+    paseoHome: cwd,
     workspaceRuntimeStore: createWorkspaceRuntimeStore(),
-    logger: logger as unknown as pino.Logger,
-    paseoHome: "/tmp/paseo-test",
-    workspaceGitService,
+    workspaceGitService: {
+      async requestWorkingTreeWatch(root, onChange) {
+        const subscription = await observer.subscribe(root, () => onChange(), {
+          ignore: [join(root, ".git")],
+        });
+        return {
+          repoRoot: root,
+          unsubscribe: async () => {
+            await subscription.unsubscribe();
+          },
+        };
+      },
+    },
   });
-  return { manager, watches };
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "README"), "base\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    await run({ cwd, manager, git });
+  } finally {
+    await manager.dispose();
+    await observer.close();
+    await rm(cwd, { recursive: true, force: true });
+  }
 }
 
-describe("CheckoutDiffManager", () => {
-  beforeEach(() => {
-    vi.useFakeTimers();
-    toCheckoutErrorMock.mockClear();
-  });
-
-  afterEach(() => {
-    vi.useRealTimers();
-  });
-
-  function createManager(options?: {
-    repoRoot?: string | null;
-    getCheckoutDiffImplementation?: ReturnType<typeof vi.fn>;
-  }) {
-    const unsubscribe = vi.fn();
-    const workspaceUnsubscribe = vi.fn();
-    let onChange: (() => void) | null = null;
-    let onWorkspaceSnapshot: ((snapshot: WorkspaceGitRuntimeSnapshot) => void) | null = null;
-    const mockRequestWorkingTreeWatch = vi.fn(async (_cwd: string, listener: () => void) => {
-      onChange = listener;
-      return {
-        repoRoot: options?.repoRoot === undefined ? "/tmp/repo" : options.repoRoot,
-        unsubscribe,
-      };
-    });
-
-    const workspaceGitService = {
-      subscribe: vi.fn(),
-
-      registerWorkspace: vi.fn(
-        (_params: { cwd: string }, listener: (snapshot: WorkspaceGitRuntimeSnapshot) => void) => {
-          onWorkspaceSnapshot = listener;
-          return { unsubscribe: workspaceUnsubscribe };
-        },
+test("legacy callers share one live comparison, receive edits, and release it", async () => {
+  await withCheckout(async ({ cwd, manager }) => {
+    await mkdir(join(cwd, "sub"));
+    await writeFile(join(cwd, "x.ts"), "const value = 1;\n");
+    const first: CheckoutDiffSnapshotPayload[] = [];
+    const second: CheckoutDiffSnapshotPayload[] = [];
+    const [a, b] = await Promise.all([
+      manager.subscribe({ cwd: join(cwd, "sub"), compare: { mode: "uncommitted" } }, (snapshot) =>
+        first.push(snapshot),
       ),
-      getSnapshot: vi.fn(async () => createWorkspaceSnapshot()),
-      getCheckoutDiff:
-        options?.getCheckoutDiffImplementation ?? vi.fn(async () => ({ diff: "", structured: [] })),
-      refresh: vi.fn(),
-      scheduleRefreshForCwd: vi.fn(),
-      requestWorkingTreeWatch: mockRequestWorkingTreeWatch,
-      dispose: vi.fn(),
-    };
-
-    const logger = {
-      child: () => logger,
-      warn: vi.fn(),
-    };
-
-    const manager = new CheckoutDiffManager({
-      workspaceRuntimeStore: createWorkspaceRuntimeStore(),
-      logger: logger as unknown as pino.Logger,
-      paseoHome: "/tmp/paseo-test",
-      workspaceGitService: workspaceGitService as unknown as WorkspaceGitService,
+      manager.subscribe({ cwd, compare: { mode: "uncommitted" } }, (snapshot) =>
+        second.push(snapshot),
+      ),
+    ]);
+    expect(a.initial.cwd).toBe(join(cwd, "sub"));
+    expect(a.initial.files).toEqual(b.initial.files);
+    expect(a.initial.files.map((file) => file.path)).toEqual(["x.ts"]);
+    expect(manager.getMetrics()).toMatchObject({
+      checkoutDiffTargetCount: 1,
+      checkoutDiffSubscriptionCount: 2,
     });
+    await writeFile(join(cwd, "x.ts"), "const value = 2;\n");
+    await expect.poll(() => first.length, { timeout: 10000 }).toBeGreaterThan(0);
+    expect(first.at(-1)?.files).toEqual(second.at(-1)?.files);
+    await a.unsubscribe();
+    await b.unsubscribe();
+    expect(manager.getMetrics().checkoutDiffTargetCount).toBe(0);
+  });
+}, 30_000);
 
-    return {
-      manager,
-      workspaceGitService,
-      mockRequestWorkingTreeWatch,
-      unsubscribe,
-      getOnChange: () => onChange,
-      getOnWorkspaceSnapshot: () => onWorkspaceSnapshot,
-      workspaceUnsubscribe,
-    };
-  }
-
-  test("subscribe requests a working tree watch with the correct cwd", async () => {
-    const { manager, mockRequestWorkingTreeWatch } = createManager();
-
-    await manager.subscribe(
-      {
-        cwd: "/tmp/repo/packages/server",
-        compare: { mode: "uncommitted" },
-      },
-      () => {},
+test("Committed ignores working-tree edits while All and Uncommitted include them", async () => {
+  await withCheckout(async ({ cwd, manager, git }) => {
+    git("checkout", "-b", "feature");
+    await writeFile(join(cwd, "x.ts"), "const value = 1;\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "feature");
+    await writeFile(join(cwd, "x.ts"), "const value = 2;\n");
+    const committed = await manager.read({ cwd, compare: { mode: "base", baseRef: "main" } });
+    const all = await manager.read({ cwd, compare: { mode: "all", baseRef: "main" } });
+    const uncommitted = await manager.read({ cwd, compare: { mode: "uncommitted" } });
+    expect(committed.files[0].hunks[0].lines).toContainEqual(
+      expect.objectContaining({ type: "add", content: "const value = 1;" }),
     );
-
-    expect(mockRequestWorkingTreeWatch).toHaveBeenCalledWith(
-      "/tmp/repo/packages/server",
-      expect.any(Function),
+    expect(all.files[0].hunks[0].lines).toContainEqual(
+      expect.objectContaining({ type: "add", content: "const value = 2;" }),
+    );
+    expect(uncommitted.files[0].hunks[0].lines).toContainEqual(
+      expect.objectContaining({ type: "remove", content: "const value = 1;" }),
     );
   });
+}, 30_000);
 
-  test("unsubscribe calls the working tree watch unsubscribe", async () => {
-    const { manager, unsubscribe } = createManager();
-
-    const subscription = await manager.subscribe(
-      {
-        cwd: "/tmp/repo/packages/server",
-        compare: { mode: "uncommitted" },
-      },
-      () => {},
-    );
-
-    subscription.unsubscribe();
-
-    expect(unsubscribe).toHaveBeenCalledTimes(1);
-  });
-
-  test("cancels a subscription while its working tree watch is still opening", async () => {
-    const { manager, watches } = createPendingManager();
+test("cancelling a legacy subscriber during a shared revision does not revive it", async () => {
+  await withCheckout(async ({ cwd, manager }) => {
+    await writeFile(join(cwd, "x.ts"), "export const value = 1;\n");
     const abort = new AbortController();
-
-    const pendingSubscription = manager.subscribe(
-      {
-        cwd: "/tmp/repo/packages/server",
-        compare: { mode: "uncommitted" },
-        signal: abort.signal,
+    let cancelled = false;
+    const modern = await manager.streams.subscribe(
+      { cwd, base: { kind: "rev", rev: "HEAD" }, head: { kind: "worktree" } },
+      async (frame) => {
+        if (frame.opcode !== 0x40 || cancelled) return;
+        await waitForSubscriberCount(manager, 2);
+        cancelled = true;
+        abort.abort();
       },
-      () => {},
     );
-    abort.abort();
-    watches[0].resolve();
-    await pendingSubscription;
-
-    expect(watches[0].unsubscribeCalls).toBe(1);
-    expect(manager.getMetrics()).toEqual({
-      checkoutDiffTargetCount: 0,
-      checkoutDiffSubscriptionCount: 0,
-      checkoutDiffWatcherCount: 0,
-      checkoutDiffFallbackRefreshTargetCount: 0,
-    });
-  });
-
-  test("shares one opening target between concurrent subscriptions", async () => {
-    const { manager, watches } = createPendingManager();
-
-    const firstSubscription = manager.subscribe(
-      { cwd: "/tmp/repo/packages/server", compare: { mode: "uncommitted" } },
-      () => {},
-    );
-    const secondSubscription = manager.subscribe(
-      { cwd: "/tmp/repo/packages/server", compare: { mode: "uncommitted" } },
-      () => {},
-    );
-
-    expect(watches).toHaveLength(1);
-    watches[0].resolve();
-    const [first, second] = await Promise.all([firstSubscription, secondSubscription]);
-    expect(manager.getMetrics().checkoutDiffSubscriptionCount).toBe(2);
-
-    first.unsubscribe();
-    expect(watches[0].unsubscribeCalls).toBe(0);
-    second.unsubscribe();
-    expect(watches[0].unsubscribeCalls).toBe(1);
-  });
-
-  test("diffCwd uses repoRoot from the working tree watch result", async () => {
-    const { manager, workspaceGitService } = createManager({ repoRoot: "/tmp/repo" });
-
-    await manager.subscribe(
-      {
-        cwd: "/tmp/repo/packages/server",
-        compare: { mode: "uncommitted" },
+    const legacy = manager.subscribe(
+      { cwd, compare: { mode: "uncommitted" }, signal: abort.signal },
+      () => {
+        throw new Error("Cancelled subscriber received an update");
       },
-      () => {},
     );
-
-    expect(workspaceGitService.getCheckoutDiff).toHaveBeenCalledWith(
-      "/tmp/repo",
-      expect.objectContaining({ mode: "uncommitted", includeStructured: true }),
-      undefined,
-    );
-  });
-
-  test("diff refresh is triggered when the working tree watch callback fires", async () => {
-    const getCheckoutDiff = vi
-      .fn()
-      .mockResolvedValueOnce({
-        diff: "",
-        structured: [{ path: "a.ts", additions: 1, deletions: 0, status: "modified" }],
-      })
-      .mockResolvedValueOnce({
-        diff: "",
-        structured: [{ path: "b.ts", additions: 2, deletions: 0, status: "modified" }],
+    try {
+      await modern.start();
+      const result = await legacy;
+      expect(result.initial).toMatchObject({
+        files: [],
+        error: { message: "Diff subscription cancelled" },
       });
-
-    const { manager, getOnChange } = createManager({
-      getCheckoutDiffImplementation: getCheckoutDiff,
-    });
-    const listener = vi.fn();
-
-    await manager.subscribe(
-      {
-        cwd: "/tmp/repo/packages/server",
-        compare: { mode: "uncommitted" },
-      },
-      listener,
-    );
-
-    const onChange = getOnChange();
-    expect(onChange).toBeTypeOf("function");
-
-    onChange?.();
-    await vi.advanceTimersByTimeAsync(150);
-
-    expect(listener).toHaveBeenCalledTimes(1);
-    expect(listener).toHaveBeenCalledWith({
-      cwd: "/tmp/repo/packages/server",
-      files: [{ path: "b.ts", additions: 2, deletions: 0, status: "modified" }],
-      error: null,
-    });
-  });
-
-  test("watch-triggered refresh forces a cache bypass on getCheckoutDiff", async () => {
-    const getCheckoutDiff = vi
-      .fn()
-      .mockResolvedValueOnce({
-        diff: "",
-        structured: [{ path: "a.ts", additions: 1, deletions: 0, status: "modified" }],
-      })
-      .mockResolvedValueOnce({
-        diff: "",
-        structured: [{ path: "b.ts", additions: 2, deletions: 0, status: "modified" }],
-      });
-
-    const { manager, getOnChange } = createManager({
-      getCheckoutDiffImplementation: getCheckoutDiff,
-    });
-
-    await manager.subscribe(
-      {
-        cwd: "/tmp/repo/packages/server",
-        compare: { mode: "uncommitted" },
-      },
-      vi.fn(),
-    );
-
-    expect(getCheckoutDiff).toHaveBeenNthCalledWith(
-      1,
-      "/tmp/repo",
-      expect.objectContaining({ mode: "uncommitted" }),
-      undefined,
-    );
-
-    const onChange = getOnChange();
-    onChange?.();
-    await vi.advanceTimersByTimeAsync(150);
-
-    expect(getCheckoutDiff).toHaveBeenCalledTimes(2);
-    const watchFiredCall = getCheckoutDiff.mock.calls[1];
-    expect(watchFiredCall[2]).toEqual({
-      force: true,
-      reason: expect.stringContaining("working-tree"),
-    });
-  });
-
-  test("an edit during an in-flight diff refresh produces one final follow-up", async () => {
-    const inFlightDiff = createDeferred<{
-      diff: string;
-      structured: Array<{
-        path: string;
-        additions: number;
-        deletions: number;
-        status: "modified";
-      }>;
-    }>();
-    const getCheckoutDiff = vi
-      .fn()
-      .mockResolvedValueOnce({
-        diff: "",
-        structured: [{ path: "tracked.ts", additions: 1, deletions: 0, status: "modified" }],
-      })
-      .mockImplementationOnce(() => inFlightDiff.promise)
-      .mockResolvedValue({
-        diff: "",
-        structured: [{ path: "tracked.ts", additions: 100, deletions: 25, status: "modified" }],
-      });
-    const { manager, getOnChange } = createManager({
-      getCheckoutDiffImplementation: getCheckoutDiff,
-    });
-    const listener = vi.fn();
-
-    await manager.subscribe({ cwd: "/tmp/repo", compare: { mode: "uncommitted" } }, listener);
-    getOnChange()?.();
-    await vi.advanceTimersByTimeAsync(150);
-    expect(getCheckoutDiff).toHaveBeenCalledTimes(2);
-
-    for (let event = 0; event < 100; event += 1) {
-      getOnChange()?.();
+      await result.unsubscribe();
+    } finally {
+      await modern.release();
     }
-    await vi.advanceTimersByTimeAsync(150);
-    expect(getCheckoutDiff).toHaveBeenCalledTimes(2);
-
-    inFlightDiff.resolve({
-      diff: "",
-      structured: [{ path: "tracked.ts", additions: 2, deletions: 1, status: "modified" }],
-    });
-    await vi.waitFor(() => {
-      expect(getCheckoutDiff).toHaveBeenCalledTimes(3);
-      expect(listener).toHaveBeenLastCalledWith({
-        cwd: "/tmp/repo",
-        files: [{ path: "tracked.ts", additions: 100, deletions: 25, status: "modified" }],
-        error: null,
-      });
-    });
   });
+}, 30_000);
 
-  test("base diff subscriptions ignore ordinary working tree edits", async () => {
-    const getCheckoutDiff = vi.fn(async () => ({
-      diff: "",
-      structured: [{ path: "committed.ts", additions: 1, deletions: 0, status: "modified" }],
-    }));
-    const { manager, getOnChange, mockRequestWorkingTreeWatch } = createManager({
-      getCheckoutDiffImplementation: getCheckoutDiff,
+async function waitForSubscriberCount(manager: CheckoutDiffManager, count: number): Promise<void> {
+  await expect
+    .poll(() => manager.getMetrics().checkoutDiffSubscriptionCount, { timeout: 10_000 })
+    .toBe(count);
+}
+
+test("moving a tag refreshes binary file metadata even though binary files have no bodies", async () => {
+  await withCheckout(async ({ cwd, manager, git }) => {
+    git("tag", "v1");
+    await writeFile(join(cwd, "image.bin"), Buffer.from([0, 1]));
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "binary");
+    await writeFile(join(cwd, "image.bin"), Buffer.from([0, 2]));
+    const updates: CheckoutDiffSnapshotPayload[] = [];
+    const subscription = await manager.subscribe(
+      { cwd, compare: { mode: "all", baseRef: "v1" } },
+      (snapshot) => updates.push(snapshot),
+    );
+    expect(subscription.initial.files[0]).toMatchObject({
+      path: "image.bin",
+      isNew: true,
+      status: "binary",
     });
-
-    await manager.subscribe(
-      { cwd: "/tmp/repo", compare: { mode: "base", baseRef: "main" } },
-      vi.fn(),
-    );
-    getOnChange()?.();
-    await vi.advanceTimersByTimeAsync(150);
-
-    expect(getCheckoutDiff).toHaveBeenCalledTimes(1);
-    expect(mockRequestWorkingTreeWatch).not.toHaveBeenCalled();
+    git("update-ref", "refs/tags/v1", "HEAD");
+    await expect.poll(() => updates.at(-1)?.files[0]?.isNew, { timeout: 10000 }).toBe(false);
+    await subscription.unsubscribe();
   });
+}, 30000);
 
-  test("base diff subscriptions ignore worktree-only workspace snapshot updates", async () => {
-    const getCheckoutDiff = vi.fn(async () => ({ diff: "", structured: [] }));
-    const { manager, getOnWorkspaceSnapshot } = createManager({
-      getCheckoutDiffImplementation: getCheckoutDiff,
+test("legacy diffs retain successful bodies when an oversized sibling is removed", async () => {
+  await withCheckout(async ({ cwd, manager }) => {
+    await writeFile(join(cwd, "a.ts"), "const value = 1;\n");
+    await writeFile(join(cwd, "b.txt"), "x".repeat(1024 * 1024 + 1));
+    const updates: CheckoutDiffSnapshotPayload[] = [];
+    const subscription = await manager.subscribe(
+      { cwd, compare: { mode: "uncommitted" } },
+      (snapshot) => updates.push(snapshot),
+    );
+    expect(subscription.initial.files).toMatchObject([
+      { path: "a.ts", status: "ok" },
+      { path: "b.txt", status: "too_large" },
+    ]);
+    await rm(join(cwd, "b.txt"));
+    await manager.scheduleRefreshForCwd(cwd);
+    await expect.poll(() => updates.at(-1)?.error).toBeNull();
+    expect(updates.at(-1)?.files[0]).toMatchObject({
+      path: "a.ts",
+      hunks: [
+        {
+          lines: expect.arrayContaining([expect.objectContaining({ content: "const value = 1;" })]),
+        },
+      ],
     });
-
-    await manager.subscribe(
-      { cwd: "/tmp/repo", compare: { mode: "base", baseRef: "main" } },
-      vi.fn(),
-    );
-
-    getOnWorkspaceSnapshot()?.(
-      createWorkspaceSnapshot({
-        isDirty: true,
-        diffStat: { additions: 5, deletions: 2 },
-      }),
-    );
-    await vi.advanceTimersByTimeAsync(150);
-
-    expect(getCheckoutDiff).toHaveBeenCalledTimes(1);
-  });
-
-  test("base diff subscriptions refresh for structural workspace changes", async () => {
-    const getCheckoutDiff = vi.fn(async () => ({ diff: "", structured: [] }));
-    const { manager, getOnWorkspaceSnapshot, workspaceGitService } = createManager({
-      getCheckoutDiffImplementation: getCheckoutDiff,
-    });
-
-    await manager.subscribe(
-      { cwd: "/tmp/repo", compare: { mode: "base", baseRef: "main" } },
-      vi.fn(),
-    );
-
-    expect(workspaceGitService.registerWorkspace).toHaveBeenCalledTimes(1);
-    getOnWorkspaceSnapshot()?.(
-      createWorkspaceSnapshot({
-        currentBranch: "feature-2",
-        isDirty: true,
-        diffStat: { additions: 5, deletions: 2 },
-      }),
-    );
-    await vi.advanceTimersByTimeAsync(150);
-    expect(getCheckoutDiff).toHaveBeenCalledTimes(2);
-    expect(getCheckoutDiff.mock.calls[1]?.[2]).toBeUndefined();
-
-    getOnWorkspaceSnapshot()?.(createWorkspaceSnapshot({ aheadBehind: { ahead: 2, behind: 0 } }));
-    await vi.advanceTimersByTimeAsync(150);
-    expect(getCheckoutDiff).toHaveBeenCalledTimes(3);
-  });
-
-  test("falls back to cwd when the working tree watch returns no repo root", async () => {
-    const { manager, workspaceGitService } = createManager({ repoRoot: null });
-
-    await manager.subscribe(
-      {
-        cwd: "/tmp/plain",
-        compare: { mode: "uncommitted" },
-      },
-      () => {},
-    );
-
-    expect(workspaceGitService.getCheckoutDiff).toHaveBeenCalledWith(
-      "/tmp/plain",
-      expect.objectContaining({ mode: "uncommitted", includeStructured: true }),
-      undefined,
-    );
+    subscription.unsubscribe();
   });
 });
+
+test("legacy subscriptions reselect the preferred base when a remote ref appears", async () => {
+  await withCheckout(async ({ cwd, manager, git }) => {
+    git("checkout", "-b", "feature");
+    await writeFile(join(cwd, "b.ts"), "export const b = 1;\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "feature");
+    const updates: CheckoutDiffSnapshotPayload[] = [];
+    const params = { cwd, compare: { mode: "base" as const, baseRef: "main" } };
+    const subscription = await manager.subscribe(params, (snapshot) => updates.push(snapshot));
+    try {
+      expect(subscription.initial.files.map((file) => file.path)).toEqual(["b.ts"]);
+      git("update-ref", "refs/remotes/origin/main", "HEAD");
+      await manager.scheduleRefreshForCwd(cwd);
+      await expect.poll(() => updates.at(-1)?.files.length, { timeout: 5000 }).toBe(0);
+      expect(updates.at(-1)).toEqual(await manager.read(params));
+    } finally {
+      await subscription.unsubscribe();
+    }
+  });
+});
+
+test("cold many-file reads batch Git patches while matching the legacy reader", async () => {
+  const { getCheckoutDiff } = await import("../utils/checkout-git.js");
+  const { startGitCommandMetrics, stopGitCommandMetrics } =
+    await import("../utils/run-git-command.js");
+  await withCheckout(async ({ cwd, manager, git }) => {
+    const count = 1000;
+    for (let index = 0; index < count; index++)
+      await writeFile(join(cwd, `file-${index}.ts`), "export const value = 0;\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "many files");
+    for (let index = 0; index < count; index++)
+      await writeFile(join(cwd, `file-${index}.ts`), "export const value = 1;\n");
+    const legacyStart = performance.now();
+    const legacy = await getCheckoutDiff(cwd, { mode: "uncommitted", includeStructured: true });
+    const legacyMs = performance.now() - legacyStart;
+    startGitCommandMetrics();
+    const streamedStart = performance.now();
+    const streamed = await manager.read({ cwd, compare: { mode: "uncommitted" } });
+    const streamedMs = performance.now() - streamedStart;
+    const metrics = stopGitCommandMetrics();
+    const patches = metrics.commands.filter((command) => command.args.includes("--patch"));
+    const artifactDirectory = join(import.meta.dirname, "../../../../.artifacts/diff-subscription");
+    await mkdir(artifactDirectory, { recursive: true });
+    await writeFile(
+      join(artifactDirectory, "cold-many-file-metrics.json"),
+      JSON.stringify({ count, legacyMs, streamedMs, patchCommands: patches.length }, null, 2),
+    );
+    expect(streamed.error).toBeNull();
+    expect(streamed.files).toHaveLength(count);
+    expect(legacy.structured).toHaveLength(count);
+    expect(streamed.files.map((file) => [file.path, file.hunks])).toEqual(
+      legacy.structured?.map((file) => [file.path, file.hunks]),
+    );
+    expect(patches.length).toBeLessThanOrEqual(Math.ceil(count / 64));
+  });
+}, 60000);
diff --git a/packages/server/src/server/checkout-diff-manager.ts b/packages/server/src/server/checkout-diff-manager.ts
index 8293ce965f..921934e70e 100644
--- a/packages/server/src/server/checkout-diff-manager.ts
+++ b/packages/server/src/server/checkout-diff-manager.ts
@@ -1,400 +1,201 @@
-import { type WorkspaceRuntimeStore } from "./workspace-runtime-store/index.js";
 import type pino from "pino";
 import type { SubscribeCheckoutDiffRequest, SessionOutboundMessage } from "./messages.js";
-import type { WorkspaceGitRuntimeSnapshot, WorkspaceGitService } from "./workspace-git-service.js";
+import type { WorkspaceGitService } from "./workspace-git-service.js";
+import type { WorkspaceRuntimeStore } from "./workspace-runtime-store/index.js";
+import { DiffSubscriptions, type CommitFileRead } from "./diff/index.js";
+import {
+  DiffOpcode,
+  materializeDiffFile,
+  type DiffFrame,
+  type DiffBegin,
+  type DiffBody,
+} from "@getpaseo/protocol/binary-frames/index";
+import type { ParsedDiffFile } from "@getpaseo/protocol/messages";
+import {
+  CHECKOUT_DIFF_MAX_STRUCTURED_BYTES,
+  resolveCheckoutDiffBase,
+} from "../utils/checkout-git.js";
 import { expandTilde } from "../utils/path.js";
 import { toCheckoutError } from "./checkout-git-utils.js";
 
-const CHECKOUT_DIFF_WATCH_DEBOUNCE_MS = 150;
-
-type CheckoutDiffWorkspace = Pick<
-  WorkspaceGitService,
-  "getCheckoutDiff" | "getSnapshot" | "registerWorkspace" | "requestWorkingTreeWatch"
->;
-
 export type CheckoutDiffCompareInput = SubscribeCheckoutDiffRequest["compare"];
-
 export type CheckoutDiffSnapshotPayload = Omit<
   Extract<SessionOutboundMessage, { type: "checkout_diff_update" }>["payload"],
   "subscriptionId"
 >;
-
 export interface CheckoutDiffMetrics {
   checkoutDiffTargetCount: number;
   checkoutDiffSubscriptionCount: number;
   checkoutDiffWatcherCount: number;
   checkoutDiffFallbackRefreshTargetCount: number;
 }
-
-interface CheckoutDiffWatchTarget {
-  key: string;
-  cwd: string;
-  diffCwd: string;
-  compare: CheckoutDiffCompareInput;
-  listeners: Set<(snapshot: CheckoutDiffSnapshotPayload) => void>;
-  workingTreeWatchUnsubscribe: (() => void) | null;
-  workspaceGitUnsubscribe: (() => void) | null;
-  latestWorkspaceStructureFingerprint: string | null;
-  latestWorkspaceWorktreeFingerprint: string | null;
-  latestWorkspaceForgeFingerprint: string | null;
-  debounceTimer: NodeJS.Timeout | null;
-  pendingDebounceForce: boolean;
-  refreshPromise: Promise<void> | null;
-  refreshQueued: boolean;
-  refreshQueuedForce: boolean;
-  latestPayload: CheckoutDiffSnapshotPayload | null;
-  latestFingerprint: string | null;
-  openPromise: Promise<void> | null;
-}
-
 export interface CheckoutDiffSubscriptionRequest {
   cwd: string;
   compare: CheckoutDiffCompareInput;
   signal?: AbortSignal;
 }
-
 export interface CheckoutDiffSubscription {
   initial: CheckoutDiffSnapshotPayload;
-  unsubscribe: () => void;
+  unsubscribe(): void;
 }
 
+// COMPAT(diffSubscription): added in v0.15.0, remove after 2027-05-06.
+// Old clients receive the same JSON snapshot while the shared engine owns reads and observation.
 export class CheckoutDiffManager {
-  private readonly workspaceGitService: CheckoutDiffWorkspace;
-  private readonly workspaceRuntimeStore: WorkspaceRuntimeStore;
-  private readonly targets = new Map<string, CheckoutDiffWatchTarget>();
-
+  readonly streams: DiffSubscriptions;
+  private readonly paseoHome: string;
   constructor(options: {
     logger: pino.Logger;
     paseoHome: string;
-    workspaceGitService: CheckoutDiffWorkspace;
+    workspaceGitService: Pick<WorkspaceGitService, "requestWorkingTreeWatch">;
     workspaceRuntimeStore: WorkspaceRuntimeStore;
   }) {
-    this.workspaceGitService = options.workspaceGitService;
-    this.workspaceRuntimeStore = options.workspaceRuntimeStore;
+    this.streams = new DiffSubscriptions(options.workspaceGitService);
+    this.paseoHome = options.paseoHome;
+  }
+  readCommitFile(input: CommitFileRead) {
+    return this.streams.readCommitFile(input);
   }
-
   async read(
     params: Omit<CheckoutDiffSubscriptionRequest, "signal">,
   ): Promise<CheckoutDiffSnapshotPayload> {
-    return this.computeCheckoutDiffSnapshot(params.cwd, this.normalizeCompare(params.compare));
+    const subscription = await this.subscribe(params, () => {});
+    await subscription.unsubscribe();
+    return subscription.initial;
   }
-
   async subscribe(
     params: CheckoutDiffSubscriptionRequest,
     listener: (snapshot: CheckoutDiffSnapshotPayload) => void,
   ): Promise<CheckoutDiffSubscription> {
-    const cwd = params.cwd;
-    const compare = this.normalizeCompare(params.compare);
-    const target = this.ensureTarget(cwd, compare);
-    target.listeners.add(listener);
-    target.openPromise ??= this.openTarget(target);
-
-    let isSubscribed = true;
-    const unsubscribe = () => {
-      if (!isSubscribed) {
+    const cwd = expandTilde(params.cwd);
+    let resolveInitial!: (snapshot: CheckoutDiffSnapshotPayload) => void;
+    const initial = new Promise<CheckoutDiffSnapshotPayload>((resolve) => {
+      resolveInitial = resolve;
+    });
+    let delivered = false;
+    let pending: DiffBegin | null = null;
+    let files = new Map<string, ParsedDiffFile>();
+    let bodies = new Map<string, DiffBody>();
+    const receive = async (frame: DiffFrame) => {
+      if (params.signal?.aborted) return;
+      if (frame.opcode === DiffOpcode.Begin) {
+        pending = frame;
+        bodies = new Map();
         return;
       }
-      isSubscribed = false;
-      params.signal?.removeEventListener("abort", unsubscribe);
-      this.removeListener(target, listener);
-    };
-    params.signal?.addEventListener("abort", unsubscribe, { once: true });
-    if (params.signal?.aborted) {
-      unsubscribe();
-    }
-
-    try {
-      await target.openPromise;
-      const initial =
-        target.latestPayload ??
-        (await this.computeCheckoutDiffSnapshot(target.cwd, target.compare, {
-          diffCwd: target.diffCwd,
-        }));
-      target.latestPayload = initial;
-      target.latestFingerprint = JSON.stringify(initial);
-      return { initial, unsubscribe };
-    } catch (error) {
-      unsubscribe();
-      throw error;
-    }
-  }
-
-  scheduleRefreshForCwd(cwd: string): void {
-    const resolvedCwd = expandTilde(cwd);
-    for (const target of this.targets.values()) {
-      if (target.cwd !== resolvedCwd && target.diffCwd !== resolvedCwd) {
-        continue;
+      if (!pending || frame.revision !== pending.revision) return;
+      if (frame.opcode === DiffOpcode.Bodies) {
+        for (const body of frame.files) bodies.set(body.path, body);
+        return;
       }
-      this.scheduleTargetRefresh(target);
+      let payload: CheckoutDiffSnapshotPayload;
+      if (frame.error) {
+        const message = frame.error.message;
+        payload = {
+          cwd,
+          files: [],
+          error: toCheckoutError(new Error(message)),
+          diffTooLarge: frame.diffTooLarge,
+        };
+        files.clear();
+      } else {
+        const next = new Map<string, ParsedDiffFile>();
+        const omitted = new Set(frame.omitted);
+        for (const entry of pending.entries) {
+          const previous = pending.baseRevision ? files.get(entry.path) : undefined;
+          const body = bodies.get(entry.path) ?? null;
+          const file = materializeDiffFile(entry, body, omitted.has(entry.path));
+          if (!entry.body && previous && entry.content === "text" && !omitted.has(entry.path))
+            file.hunks = previous.hunks;
+          next.set(entry.path, file);
+        }
+        files = next;
+        // Stream omissions remain file placeholders; the JSON budget rejects a legacy snapshot.
+        payload = legacySnapshot(cwd, [...next.values()]);
+      }
+      pending = null;
+      if (delivered) listener(payload);
+      else {
+        delivered = true;
+        resolveInitial(payload);
+      }
+    };
+    try {
+      const baseRef = await resolveCheckoutDiffBase(cwd, params.compare, {
+        paseoHome: this.paseoHome,
+      });
+      if (!baseRef) return { initial: { cwd, files: [], error: null }, unsubscribe() {} };
+      const subscription = await this.streams.subscribe(
+        {
+          cwd,
+          base: { kind: "rev", rev: baseRef },
+          checkoutBase:
+            params.compare.mode === "uncommitted"
+              ? undefined
+              : { compare: params.compare, paseoHome: this.paseoHome },
+          head:
+            params.compare.mode === "base" ? { kind: "rev", rev: "HEAD" } : { kind: "worktree" },
+          mergeBase: params.compare.mode !== "uncommitted",
+          ignoreWhitespace: params.compare.ignoreWhitespace,
+        },
+        receive,
+      );
+      const unsubscribe = async () => {
+        if (!delivered) {
+          delivered = true;
+          resolveInitial({
+            cwd,
+            files: [],
+            error: toCheckoutError(new Error("Diff subscription cancelled")),
+          });
+        }
+        params.signal?.removeEventListener("abort", unsubscribe);
+        await subscription.release();
+      };
+      params.signal?.addEventListener("abort", unsubscribe, { once: true });
+      if (params.signal?.aborted) {
+        await subscription.release();
+        throw new Error("Diff subscription cancelled");
+      }
+      await subscription.start();
+      return { initial: await initial, unsubscribe };
+    } catch (error) {
+      return { initial: { cwd, files: [], error: toCheckoutError(error) }, unsubscribe() {} };
     }
   }
-
+  scheduleRefreshForCwd(cwd: string): Promise<void> {
+    return this.streams.invalidateForCwd(expandTilde(cwd));
+  }
   getMetrics(): CheckoutDiffMetrics {
-    let checkoutDiffSubscriptionCount = 0;
-
-    for (const target of this.targets.values()) {
-      checkoutDiffSubscriptionCount += target.listeners.size;
-    }
-
+    const metrics = this.streams.getMetrics();
     return {
-      checkoutDiffTargetCount: this.targets.size,
-      checkoutDiffSubscriptionCount,
-      checkoutDiffWatcherCount: 0,
+      checkoutDiffTargetCount: metrics.targets,
+      checkoutDiffSubscriptionCount: metrics.subscriptions,
+      checkoutDiffWatcherCount: metrics.metadataObservers,
       checkoutDiffFallbackRefreshTargetCount: 0,
     };
   }
-
-  dispose(): void {
-    for (const target of this.targets.values()) {
-      this.closeTarget(target);
-    }
-    this.targets.clear();
-  }
-
-  private normalizeCompare(compare: CheckoutDiffCompareInput): CheckoutDiffCompareInput {
-    const ignoreWhitespace = compare.ignoreWhitespace === true;
-    if (compare.mode === "uncommitted") {
-      return { mode: "uncommitted", ignoreWhitespace };
-    }
-    const trimmedBaseRef = compare.baseRef?.trim();
-    return trimmedBaseRef
-      ? { mode: compare.mode, baseRef: trimmedBaseRef, ignoreWhitespace }
-      : { mode: compare.mode, ignoreWhitespace };
-  }
-
-  private buildTargetKey(cwd: string, compare: CheckoutDiffCompareInput): string {
-    return JSON.stringify([
-      cwd,
-      compare.mode,
-      compare.mode !== "uncommitted" ? (compare.baseRef ?? "") : "",
-      compare.ignoreWhitespace === true,
-    ]);
-  }
-
-  private closeTarget(target: CheckoutDiffWatchTarget): void {
-    if (target.debounceTimer) {
-      clearTimeout(target.debounceTimer);
-      target.debounceTimer = null;
-    }
-    target.workingTreeWatchUnsubscribe?.();
-    target.workingTreeWatchUnsubscribe = null;
-    target.workspaceGitUnsubscribe?.();
-    target.workspaceGitUnsubscribe = null;
-    target.listeners.clear();
-  }
-
-  private rememberWorkspaceSnapshot(
-    target: CheckoutDiffWatchTarget,
-    snapshot: WorkspaceGitRuntimeSnapshot,
-  ): void {
-    const structureFingerprint = JSON.stringify({
-      isGit: snapshot.git.isGit,
-      repoRoot: snapshot.git.repoRoot,
-      mainRepoRoot: snapshot.git.mainRepoRoot,
-      currentBranch: snapshot.git.currentBranch,
-      remoteUrl: snapshot.git.remoteUrl,
-      isPaseoOwnedWorktree: snapshot.git.isPaseoOwnedWorktree,
-      baseRef: snapshot.git.baseRef,
-      baseRefExact: snapshot.git.baseRefExact,
-      aheadBehind: snapshot.git.aheadBehind,
-      aheadOfOrigin: snapshot.git.aheadOfOrigin,
-      behindOfOrigin: snapshot.git.behindOfOrigin,
-      hasRemote: snapshot.git.hasRemote,
-    });
-    const worktreeFingerprint = JSON.stringify({
-      isDirty: snapshot.git.isDirty,
-      diffStat: snapshot.git.diffStat,
-    });
-    const forgeFingerprint = JSON.stringify(snapshot.forge);
-    const previousStructureFingerprint = target.latestWorkspaceStructureFingerprint;
-    const previousWorktreeFingerprint = target.latestWorkspaceWorktreeFingerprint;
-    const previousForgeFingerprint = target.latestWorkspaceForgeFingerprint;
-    target.latestWorkspaceStructureFingerprint = structureFingerprint;
-    target.latestWorkspaceWorktreeFingerprint = worktreeFingerprint;
-    target.latestWorkspaceForgeFingerprint = forgeFingerprint;
-
-    if (previousStructureFingerprint === null) {
-      return;
-    }
-    const structureChanged = structureFingerprint !== previousStructureFingerprint;
-    const worktreeChanged = worktreeFingerprint !== previousWorktreeFingerprint;
-    const forgeChanged = forgeFingerprint !== previousForgeFingerprint;
-    if (structureChanged || (!worktreeChanged && !forgeChanged)) {
-      this.scheduleTargetRefresh(target, false);
-    }
-  }
-
-  private removeListener(
-    target: CheckoutDiffWatchTarget,
-    listener: (snapshot: CheckoutDiffSnapshotPayload) => void,
-  ): void {
-    target.listeners.delete(listener);
-    if (target.listeners.size > 0) {
-      return;
-    }
-    this.closeTarget(target);
-    if (this.targets.get(target.key) === target) {
-      this.targets.delete(target.key);
-    }
-  }
-
-  private scheduleTargetRefresh(target: CheckoutDiffWatchTarget, force = true): void {
-    target.pendingDebounceForce ||= force;
-    if (target.debounceTimer) {
-      clearTimeout(target.debounceTimer);
-    }
-    target.debounceTimer = setTimeout(() => {
-      target.debounceTimer = null;
-      const pendingForce = target.pendingDebounceForce;
-      target.pendingDebounceForce = false;
-      void this.refreshTarget(target, pendingForce);
-    }, CHECKOUT_DIFF_WATCH_DEBOUNCE_MS);
-  }
-
-  private async computeCheckoutDiffSnapshot(
-    cwd: string,
-    compare: CheckoutDiffCompareInput,
-    options?: { diffCwd?: string; force?: boolean; reason?: string },
-  ): Promise<CheckoutDiffSnapshotPayload> {
-    const diffCwd = options?.diffCwd ?? cwd;
-    try {
-      const diffResult = await this.workspaceGitService.getCheckoutDiff(
-        diffCwd,
-        {
-          mode: compare.mode,
-          baseRef: compare.baseRef,
-          ignoreWhitespace: compare.ignoreWhitespace,
-          includeStructured: true,
-        },
-        options?.force
-          ? { force: true, reason: options.reason ?? "checkout-diff-refresh" }
-          : undefined,
-      );
-      if (diffResult.diffTooLarge) {
-        return {
-          cwd,
-          files: [],
-          diffTooLarge: true,
-          error: toCheckoutError(new Error("Diff too large to display")),
-        };
-      }
-      const files = [...(diffResult.structured ?? [])];
-      files.sort((a, b) => {
-        if (a.path === b.path) return 0;
-        return a.path < b.path ? -1 : 1;
-      });
-      return {
-        cwd,
-        files,
-        error: null,
-      };
-    } catch (error) {
-      return {
-        cwd,
-        files: [],
-        error: toCheckoutError(error),
-      };
-    }
-  }
-
-  private async refreshTarget(target: CheckoutDiffWatchTarget, force: boolean): Promise<void> {
-    if (target.refreshPromise) {
-      target.refreshQueued = true;
-      target.refreshQueuedForce ||= force;
-      return;
-    }
-
-    target.refreshPromise = (async () => {
-      let currentForce = force;
-      do {
-        target.refreshQueued = false;
-        target.refreshQueuedForce = false;
-        const snapshot = await this.computeCheckoutDiffSnapshot(target.cwd, target.compare, {
-          diffCwd: target.diffCwd,
-          force: currentForce,
-          ...(currentForce ? { reason: "working-tree-watch" } : {}),
-        });
-        target.latestPayload = snapshot;
-        const fingerprint = JSON.stringify(snapshot);
-        if (fingerprint !== target.latestFingerprint) {
-          target.latestFingerprint = fingerprint;
-          for (const listener of target.listeners) {
-            listener(snapshot);
-          }
-        }
-        currentForce = target.refreshQueuedForce;
-      } while (target.refreshQueued);
-    })();
-
-    try {
-      await target.refreshPromise;
-    } finally {
-      target.refreshPromise = null;
-    }
-  }
-
-  private ensureTarget(cwd: string, compare: CheckoutDiffCompareInput): CheckoutDiffWatchTarget {
-    const targetKey = this.buildTargetKey(cwd, compare);
-    const existing = this.targets.get(targetKey);
-    if (existing) {
-      return existing;
-    }
-
-    const target: CheckoutDiffWatchTarget = {
-      key: targetKey,
-      cwd,
-      diffCwd: cwd,
-      compare,
-      listeners: new Set(),
-      workingTreeWatchUnsubscribe: null,
-      workspaceGitUnsubscribe: null,
-      latestWorkspaceStructureFingerprint: null,
-      latestWorkspaceWorktreeFingerprint: null,
-      latestWorkspaceForgeFingerprint: null,
-      debounceTimer: null,
-      pendingDebounceForce: false,
-      refreshPromise: null,
-      refreshQueued: false,
-      refreshQueuedForce: false,
-      latestPayload: null,
-      latestFingerprint: null,
-      openPromise: null,
-    };
-    this.targets.set(targetKey, target);
-    return target;
-  }
-
-  private async openTarget(target: CheckoutDiffWatchTarget): Promise<void> {
-    if (target.compare.mode !== "uncommitted") {
-      const snapshot =
-        this.workspaceRuntimeStore.get(target.cwd) ??
-        (await this.workspaceGitService.getSnapshot(target.cwd, { includeForge: false }));
-      target.diffCwd = snapshot.git.repoRoot ?? target.cwd;
-      if (this.targets.get(target.key) !== target || target.listeners.size === 0) {
-        return;
-      }
-      this.rememberWorkspaceSnapshot(target, snapshot);
-      const workspaceSubscription = this.workspaceGitService.registerWorkspace(
-        { cwd: target.cwd },
-        (nextSnapshot) => this.rememberWorkspaceSnapshot(target, nextSnapshot),
-      );
-      if (this.targets.get(target.key) !== target || target.listeners.size === 0) {
-        workspaceSubscription.unsubscribe();
-        return;
-      }
-      target.workspaceGitUnsubscribe = workspaceSubscription.unsubscribe;
-      if (target.compare.mode === "base") return;
-    }
-
-    const { repoRoot, unsubscribe } = await this.workspaceGitService.requestWorkingTreeWatch(
-      target.cwd,
-      () => this.scheduleTargetRefresh(target),
-    );
-    target.diffCwd = repoRoot ?? target.cwd;
-    if (this.targets.get(target.key) !== target || target.listeners.size === 0) {
-      unsubscribe();
-      return;
-    }
-    target.workingTreeWatchUnsubscribe = unsubscribe;
+  async dispose(): Promise<void> {
+    await this.streams.close();
   }
 }
+
+function legacySnapshot(cwd: string, files: ParsedDiffFile[]): CheckoutDiffSnapshotPayload {
+  let bytes = 2;
+  for (let index = 0; index < files.length; index++) {
+    bytes += Buffer.byteLength(JSON.stringify(files[index])) + Number(index > 0);
+    if (bytes > CHECKOUT_DIFF_MAX_STRUCTURED_BYTES) {
+      return legacyTooLarge(cwd);
+    }
+  }
+  return { cwd, files, error: null };
+}
+
+function legacyTooLarge(cwd: string): CheckoutDiffSnapshotPayload {
+  return {
+    cwd,
+    files: [],
+    diffTooLarge: true,
+    error: toCheckoutError(new Error("Diff too large to display")),
+  };
+}
diff --git a/packages/server/src/server/checkout/status-projection.ts b/packages/server/src/server/checkout/status-projection.ts
index 90c900435c..93242cb941 100644
--- a/packages/server/src/server/checkout/status-projection.ts
+++ b/packages/server/src/server/checkout/status-projection.ts
@@ -62,6 +62,7 @@ export function buildCheckoutStatusPayloadFromSnapshot({
       isDirty: snapshot.git.isDirty,
       baseRef: snapshot.git.baseRef,
       baseRefExact: snapshot.git.baseRefExact,
+      comparisonBaseRef: snapshot.git.comparisonBaseRef,
       aheadBehind: snapshot.git.aheadBehind ?? null,
       upstreamRef: snapshot.git.upstreamRef ?? null,
       aheadOfOrigin: snapshot.git.aheadOfOrigin ?? null,
@@ -83,6 +84,7 @@ export function buildCheckoutStatusPayloadFromSnapshot({
     isDirty: snapshot.git.isDirty,
     baseRef: snapshot.git.baseRef ?? null,
     baseRefExact: snapshot.git.baseRefExact,
+    comparisonBaseRef: snapshot.git.comparisonBaseRef,
     aheadBehind: snapshot.git.aheadBehind ?? null,
     upstreamRef: snapshot.git.upstreamRef ?? null,
     aheadOfOrigin: snapshot.git.aheadOfOrigin ?? null,
diff --git a/packages/server/src/server/daemon-e2e/checkout-diff-content.e2e.test.ts b/packages/server/src/server/daemon-e2e/checkout-diff-content.e2e.test.ts
index 56e7cdefb8..b297d07b5a 100644
--- a/packages/server/src/server/daemon-e2e/checkout-diff-content.e2e.test.ts
+++ b/packages/server/src/server/daemon-e2e/checkout-diff-content.e2e.test.ts
@@ -293,3 +293,263 @@ test("large source diffs stay renderable for reads, subscriptions, and commit fi
     await rm(cwd, { recursive: true, force: true, maxRetries: 10, retryDelay: 100 });
   }
 }, 60_000);
+
+test("streams whole-file batches and answers a same-socket ping before the revision ends", async () => {
+  const ctx = await createDaemonTestContext();
+  const cwd = mkdtempSync(join(tmpdir(), "diff-stream-wire-"));
+  let probe: Awaited<ReturnType<typeof openDiffWireProbe>> | null = null;
+  try {
+    git(cwd, "init", "-b", "main");
+    git(cwd, "config", "user.name", "Test");
+    git(cwd, "config", "user.email", "test@example.com");
+    writeFileSync(join(cwd, "README"), "base\n");
+    git(cwd, "add", ".");
+    git(cwd, "-c", "commit.gpgsign=false", "commit", "-m", "base");
+    for (let file = 0; file < 252; file++) {
+      const content =
+        Array.from(
+          { length: 80 },
+          (_, line) =>
+            `export const fn${line} = (param: string) => ({ key: param, value: ${file} });`,
+        ).join("\n") + "\n";
+      writeFileSync(join(cwd, `${file}.ts`), content);
+    }
+    expect(ctx.client.getLastServerInfoMessage()).toMatchObject({
+      features: { diffSubscription: true },
+    });
+    const legacy = await ctx.client.getCheckoutDiff(cwd, { mode: "uncommitted" });
+    const legacyJsonBytes = Buffer.byteLength(JSON.stringify(legacy.files));
+    expect(legacyJsonBytes).toBeGreaterThanOrEqual(10 * 1024 * 1024);
+    probe = await openDiffWireProbe(ctx.daemon.port, cwd);
+    const { encodedBytes, bodyFrames, pongDuringRevision, entryCount } = await probe.done;
+    expect(entryCount).toBe(252);
+    expect(bodyFrames).toBeGreaterThan(1);
+    expect(pongDuringRevision).toBe(true);
+    const artifactDirectory = join(
+      import.meta.dirname,
+      "../../../../../.artifacts/diff-subscription",
+    );
+    mkdirSync(artifactDirectory, { recursive: true });
+    writeFileSync(
+      join(artifactDirectory, "wire-metrics.json"),
+      JSON.stringify({ legacyJsonBytes, encodedBytes, bodyFrames, pongDuringRevision }, null, 2),
+    );
+  } finally {
+    probe?.socket.terminate();
+    await ctx.cleanup();
+    rmSync(cwd, { recursive: true, force: true });
+  }
+}, 60_000);
+
+interface DiffWireResult {
+  encodedBytes: number;
+  bodyFrames: number;
+  pongDuringRevision: boolean;
+  entryCount: number;
+}
+async function openDiffWireProbe(port: number, cwd: string) {
+  const { WebSocket } = await import("ws");
+  const { decodeDiffFrame, DiffOpcode } = await import("@getpaseo/protocol/binary-frames/index");
+  const activeSocket = new WebSocket(`ws://127.0.0.1:${port}/ws`);
+  await new Promise<void>((resolve, reject) => {
+    activeSocket.once("open", resolve);
+    activeSocket.once("error", reject);
+  });
+  let encodedBytes = 0;
+  let endReceived = false;
+  let pingSent = false;
+  let pongDuringRevision = false;
+  let bodyFrames = 0;
+  let entryCount = 0;
+  const done = new Promise<DiffWireResult>((resolve, reject) => {
+    activeSocket.on("message", (data, binary) => {
+      try {
+        if (binary) {
+          if (!Buffer.isBuffer(data)) throw new Error("Expected buffer");
+          encodedBytes += data.byteLength;
+          const frame = decodeDiffFrame(new Uint8Array(data));
+          if (frame.opcode === DiffOpcode.Begin) entryCount = frame.entries.length;
+          if (frame.opcode === DiffOpcode.Bodies) {
+            bodyFrames++;
+            if (!pingSent) {
+              pingSent = true;
+              activeSocket.send(
+                JSON.stringify({
+                  type: "session",
+                  message: { type: "ping", requestId: "mid-revision", clientSentAt: 1 },
+                }),
+              );
+            }
+          }
+          if (frame.opcode === DiffOpcode.End) {
+            expect(frame.error).toBeNull();
+            endReceived = true;
+            resolve({ encodedBytes, bodyFrames, pongDuringRevision, entryCount });
+          }
+        } else {
+          const envelope = JSON.parse(data.toString());
+          if (
+            envelope.message?.type === "pong" &&
+            envelope.message.payload.requestId === "mid-revision"
+          )
+            pongDuringRevision = !endReceived;
+          if (envelope.message?.payload?.status === "server_info")
+            activeSocket.send(
+              JSON.stringify({
+                type: "session",
+                message: {
+                  type: "diff.subscribe.request",
+                  requestId: "stream-diff",
+                  cwd,
+                  base: { kind: "rev", rev: "HEAD" },
+                  head: { kind: "worktree" },
+                },
+              }),
+            );
+          if (envelope.message?.type === "diff.subscribe.response")
+            expect(envelope.message.payload.error).toBeNull();
+        }
+      } catch (error) {
+        reject(error);
+      }
+    });
+    activeSocket.once("error", reject);
+  });
+  activeSocket.send(
+    JSON.stringify({
+      type: "hello",
+      clientId: "diff-wire-test",
+      clientType: "browser",
+      protocolVersion: 1,
+      capabilities: { owned_subscriptions: true },
+    }),
+  );
+  return { socket: activeSocket, done };
+}
+
+test("SDK diff journey publishes a tag tree, commits a one-file refresh and shares two sockets", async () => {
+  const ctx = await createDaemonTestContext();
+  const cwd = mkdtempSync(join(tmpdir(), "sdk-stream-diff-"));
+  const { DaemonClient } = await import("../test-utils/daemon-client.js");
+  const { startGitCommandMetrics, stopGitCommandMetrics } =
+    await import("../../utils/run-git-command.js");
+  const second = new DaemonClient({ url: `ws://127.0.0.1:${ctx.daemon.port}/ws` });
+  try {
+    git(cwd, "init", "-b", "main");
+    git(cwd, "config", "user.name", "Test");
+    git(cwd, "config", "user.email", "test@example.com");
+    writeFileSync(join(cwd, "a.ts"), "export const a = 1;\n");
+    writeFileSync(join(cwd, "b.ts"), "export const b = 1;\n");
+    git(cwd, "add", ".");
+    git(cwd, "-c", "commit.gpgsign=false", "commit", "-m", "base");
+    git(cwd, "tag", "v1");
+    writeFileSync(join(cwd, "a.ts"), "export const a = 2;\n");
+    writeFileSync(join(cwd, "b.ts"), "export const b = 2;\n");
+    const compare = {
+      cwd,
+      base: { kind: "rev", rev: "refs/tags/v1" },
+      head: { kind: "worktree" },
+      mergeBase: true,
+    } as const;
+    const states: import("@getpaseo/client").DiffState[] = [];
+    const observation = ctx.client.observeDiff(compare);
+    observation.subscribe({ snapshot: (state) => states.push(state), update: () => {} });
+    await expect.poll(() => states.at(-1)?.phase, { timeout: 15000 }).toBe("ready");
+    expect(states[0]).toMatchObject({
+      phase: "loading",
+      entries: [{ path: "a.ts" }, { path: "b.ts" }],
+    });
+    const initial = states.at(-1);
+    if (initial?.phase !== "ready") throw new Error("Expected ready");
+    const initialStateCount = states.length;
+    await second.connect();
+    startGitCommandMetrics();
+    const duplicateStates: import("@getpaseo/client").DiffState[] = [];
+    const duplicate = second.observeDiff(compare);
+    duplicate.subscribe({ snapshot: (state) => duplicateStates.push(state), update: () => {} });
+    await expect.poll(() => duplicateStates.at(-1)?.phase).toBe("ready");
+    const metrics = stopGitCommandMetrics();
+    expect(duplicateStates.at(-1)).toMatchObject({
+      phase: "ready",
+      files: [{ path: "a.ts" }, { path: "b.ts" }],
+    });
+    expect(metrics.commands.filter((command) => command.args.includes("--raw"))).toHaveLength(0);
+    startGitCommandMetrics();
+    writeFileSync(join(cwd, "a.ts"), "export const a = 3;\n");
+    await expect
+      .poll(() => states.at(-1)?.revision, { timeout: 15000 })
+      .toBeGreaterThan(initial.revision);
+    await expect.poll(() => duplicateStates.at(-1)?.revision).toBeGreaterThan(initial.revision);
+    const refreshMetrics = stopGitCommandMetrics();
+    expect(
+      refreshMetrics.commands.filter((command) => command.args.includes("--raw")),
+    ).toHaveLength(1);
+    const refreshed = states.at(-1);
+    if (refreshed?.phase !== "ready") throw new Error("Expected ready");
+    expect(refreshed.files[0]).not.toBe(initial.files[0]);
+    expect(refreshed.files[1]).toBe(initial.files[1]);
+    expect(states.slice(initialStateCount).map((state) => state.phase)).not.toContain("loading");
+    expect(states.map((state) => state.phase)).not.toContain("error");
+    await duplicate.release();
+    await observation.release();
+  } finally {
+    await second.close();
+    await ctx.cleanup();
+    rmSync(cwd, { recursive: true, force: true });
+  }
+}, 45000);
+
+test("commit-file RPC keeps the existing read ceiling for patches larger than one MiB", async () => {
+  const ctx = await createDaemonTestContext();
+  const cwd = mkdtempSync(join(tmpdir(), "commit-file-budget-"));
+  try {
+    git(cwd, "init", "-b", "main");
+    git(cwd, "config", "user.name", "Test");
+    git(cwd, "config", "user.email", "test@example.com");
+    writeFileSync(join(cwd, "large.txt"), "base\n");
+    git(cwd, "add", ".");
+    git(cwd, "-c", "commit.gpgsign=false", "commit", "-m", "base");
+    writeFileSync(join(cwd, "large.txt"), ("x".repeat(100) + "\n").repeat(11000));
+    git(cwd, "add", ".");
+    git(cwd, "-c", "commit.gpgsign=false", "commit", "-m", "large change");
+    const sha = git(cwd, "rev-parse", "HEAD").trim();
+    const { getCommitFileDiff } = await import("../../utils/checkout-git.js");
+    const expected = await getCommitFileDiff({ cwd, sha, path: "large.txt" });
+    const actual = await ctx.client.getCommitFileDiff(cwd, sha, "large.txt");
+    expect(expected?.hunks.length).toBeGreaterThan(0);
+    expect(actual.file?.hunks).toEqual(expected?.hunks);
+  } finally {
+    await ctx.cleanup();
+    rmSync(cwd, { recursive: true, force: true });
+  }
+}, 30000);
+
+test("commit-file RPC selects renamed content when the source path becomes a directory", async () => {
+  const ctx = await createDaemonTestContext();
+  const cwd = mkdtempSync(join(tmpdir(), "commit-rename-directory-"));
+  try {
+    git(cwd, "init", "-b", "main");
+    git(cwd, "config", "user.name", "Test");
+    git(cwd, "config", "user.email", "test@example.com");
+    writeFileSync(join(cwd, "a.txt"), "original line\n".repeat(16));
+    git(cwd, "add", ".");
+    git(cwd, "-c", "commit.gpgsign=false", "commit", "-m", "base");
+    git(cwd, "mv", "a.txt", "z.txt");
+    writeFileSync(join(cwd, "z.txt"), "original line\n".repeat(16) + "renamed line\n");
+    mkdirSync(join(cwd, "a.txt"));
+    writeFileSync(join(cwd, "a.txt", "child.txt"), "replacement line\n");
+    git(cwd, "add", ".");
+    git(cwd, "-c", "commit.gpgsign=false", "commit", "-m", "rename");
+    const sha = git(cwd, "rev-parse", "HEAD").trim();
+    const { getCommitFileDiff } = await import("../../utils/checkout-git.js");
+    const expected = await getCommitFileDiff({ cwd, sha, path: "z.txt" });
+    const actual = await ctx.client.getCommitFileDiff(cwd, sha, "z.txt");
+    expect(expected?.hunks.flatMap((hunk) => hunk.lines.map((line) => line.content))).toContain(
+      "renamed line",
+    );
+    expect(actual.file?.hunks).toEqual(expected?.hunks);
+  } finally {
+    await ctx.cleanup();
+    rmSync(cwd, { recursive: true, force: true });
+  }
+}, 30000);
diff --git a/packages/server/src/server/daemon-e2e/checkout-diff-subscription.e2e.test.ts b/packages/server/src/server/daemon-e2e/checkout-diff-subscription.e2e.test.ts
index 3af53a9133..40d410f6c1 100644
--- a/packages/server/src/server/daemon-e2e/checkout-diff-subscription.e2e.test.ts
+++ b/packages/server/src/server/daemon-e2e/checkout-diff-subscription.e2e.test.ts
@@ -142,7 +142,8 @@ test("keeps the socket usable after rejecting an oversized structured diff", asy
     commitFile(cwd, "large-b.js", "const value = 0;\n");
     // Short lines stay eligible for highlighting; a giant single line is skipped
     // before token expansion and cannot exercise the structured-payload limit.
-    const denseExpression = `const value = ${"a+".repeat(100)}a;\n`.repeat(4_000);
+    // Stay below the full-source highlighting budget as well.
+    const denseExpression = `const value = ${"a+".repeat(100)}a;\n`.repeat(3_500);
     writeFileSync(path.join(cwd, "large-a.js"), denseExpression);
     writeFileSync(path.join(cwd, "large-b.js"), denseExpression);
 
diff --git a/packages/server/src/server/daemon-e2e/filesystem.e2e.test.ts b/packages/server/src/server/daemon-e2e/filesystem.e2e.test.ts
index da52c4dac4..068e0628d0 100644
--- a/packages/server/src/server/daemon-e2e/filesystem.e2e.test.ts
+++ b/packages/server/src/server/daemon-e2e/filesystem.e2e.test.ts
@@ -690,6 +690,7 @@ describe("commit file diffs", () => {
     expect(result).toEqual({
       file: {
         path: filePath,
+        status: "ok",
         isNew: false,
         isDeleted: false,
         additions: 1,
diff --git a/packages/server/src/server/diff/batches.ts b/packages/server/src/server/diff/batches.ts
new file mode 100644
index 0000000000..25628eed57
--- /dev/null
+++ b/packages/server/src/server/diff/batches.ts
@@ -0,0 +1,30 @@
+import { encodeDiffFrame, DiffOpcode, type DiffBody } from "@getpaseo/protocol/binary-frames/index";
+
+export async function* packBodies(
+  files: AsyncIterable<DiffBody> | Iterable<DiffBody>,
+  revision: number,
+): AsyncGenerator<DiffBody[]> {
+  let batch: DiffBody[] = [];
+  let size = 0;
+  for await (const file of files) {
+    const bytes = encodeDiffFrame({
+      opcode: DiffOpcode.Bodies,
+      slot: 0,
+      revision,
+      files: [file],
+    }).length;
+    if (batch.length && size + bytes > 256 * 1024) {
+      yield batch;
+      batch = [];
+      size = 0;
+    }
+    batch.push(file);
+    size += bytes;
+    if (size >= 256 * 1024) {
+      yield batch;
+      batch = [];
+      size = 0;
+    }
+  }
+  if (batch.length) yield batch;
+}
diff --git a/packages/server/src/server/diff/dependencies.ts b/packages/server/src/server/diff/dependencies.ts
new file mode 100644
index 0000000000..81b9cd194b
--- /dev/null
+++ b/packages/server/src/server/diff/dependencies.ts
@@ -0,0 +1,92 @@
+import {
+  affectsGitDiffInterpretation,
+  classifyGitMetadataPath,
+  type GitMetadataScope,
+} from "../git-metadata-event-rules.js";
+import { resolve } from "node:path";
+import { runGitCommand } from "../../utils/run-git-command.js";
+import type { WorkspaceGitService } from "../workspace-git-service.js";
+import { createFileObserver, type FileObserverSubscription } from "../file-observer/index.js";
+
+export interface DiffDependencies {
+  cwd: string;
+  refs: string[];
+  index: boolean;
+  worktree: boolean;
+}
+// Own metadata observations here; comparison managers declare inputs rather than watching paths.
+export class DiffDependencyObserver {
+  private observer = createFileObserver();
+  constructor(private workspaceGit: Pick<WorkspaceGitService, "requestWorkingTreeWatch">) {}
+  async declareDependencies(
+    input: DiffDependencies,
+    changed: (kind: "endpoints" | "interpretation") => void,
+  ): Promise<() => Promise<void>> {
+    const hasMutableEndpoints = input.refs.length > 0 || input.index || input.worktree;
+    let polling: ReturnType<typeof setInterval> | null = null;
+    const subscriptions: FileObserverSubscription[] = [];
+    let workingTree: Awaited<ReturnType<WorkspaceGitService["requestWorkingTreeWatch"]>> | null =
+      null;
+    try {
+      const paths = await runGitCommand(["rev-parse", "--absolute-git-dir", "--git-common-dir"], {
+        cwd: input.cwd,
+      });
+      const [gitDir, commonDir] = paths.stdout.split(/\r?\n/);
+      if (!gitDir || !commonDir) throw new Error("Git returned incomplete metadata roots");
+      const roots = new Map<string, GitMetadataScope[]>();
+      for (const [directory, scope] of [
+        [gitDir, "worktree"],
+        [commonDir, "common"],
+      ] as const) {
+        const root = resolve(input.cwd, directory);
+        const scopes = roots.get(root) ?? [];
+        scopes.push(scope);
+        roots.set(root, scopes);
+      }
+      for (const [root, scopes] of roots) {
+        const subscription = await this.observer.subscribe(
+          root,
+          (error, events) => {
+            if (error) {
+              changed("endpoints");
+              polling ??= setInterval(() => changed("endpoints"), 5000);
+              return;
+            }
+            let interpretation = false;
+            const endpoints = events.some((event) => {
+              const path = event.path.slice(root.length + 1).replaceAll("\\", "/");
+              if (scopes.some((scope) => affectsGitDiffInterpretation(scope, path)))
+                interpretation = true;
+              if (!hasMutableEndpoints) return false;
+              if (path === "index") return input.index;
+              return scopes.some((scope) => classifyGitMetadataPath(scope, path).kind !== "ignore");
+            });
+            if (endpoints) changed("endpoints");
+            else if (interpretation) changed("interpretation");
+          },
+          { ignore: [resolve(root, "objects"), resolve(root, "logs"), resolve(root, "hooks")] },
+        );
+        subscriptions.push(subscription);
+      }
+      workingTree = await this.workspaceGit.requestWorkingTreeWatch(input.cwd, () =>
+        changed(input.worktree ? "endpoints" : "interpretation"),
+      );
+      return async () => {
+        if (polling) clearInterval(polling);
+        await workingTree?.unsubscribe();
+        await Promise.all(subscriptions.map((subscription) => subscription.unsubscribe()));
+      };
+    } catch (error) {
+      if (polling) clearInterval(polling);
+      await workingTree?.unsubscribe();
+      await Promise.all(subscriptions.map((subscription) => subscription.unsubscribe()));
+      throw error;
+    }
+  }
+  getObservationCount(): number {
+    return this.observer.getDiagnostics().activeObservationCount;
+  }
+  async close(): Promise<void> {
+    await this.observer.close();
+  }
+}
diff --git a/packages/server/src/server/diff/git.test.ts b/packages/server/src/server/diff/git.test.ts
new file mode 100644
index 0000000000..5c77f80e45
--- /dev/null
+++ b/packages/server/src/server/diff/git.test.ts
@@ -0,0 +1,719 @@
+import { execFileSync } from "node:child_process";
+import { mkdtemp, writeFile, rm, readFile, lstat } from "node:fs/promises";
+import { join } from "node:path";
+import { tmpdir } from "node:os";
+import { expect, test } from "vitest";
+import { listComparison, type Comparison } from "./git.js";
+
+test("working tree comparisons preserve staged deletions whose file remains on disk", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-comparison-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "x.ts"), "const value = 1;\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    git("rm", "--cached", "x.ts");
+    await writeFile(join(cwd, "x.ts"), "const value = 2;\n");
+    const comparison = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "worktree" },
+      highlight: false,
+    });
+    expect(comparison.files.map((file) => file.entry)).toEqual([
+      {
+        path: "x.ts",
+        oldPath: null,
+        change: "modified",
+        content: "text",
+        additions: 1,
+        deletions: 1,
+        body: true,
+      },
+    ]);
+    const body = await readBody(comparison);
+    expect(body.body.hunks[0].lines).toEqual([
+      { type: "header", content: "@@ -1 +1 @@" },
+      { type: "remove", content: "const value = 1;" },
+      { type: "add", content: "const value = 2;" },
+    ]);
+    expect(comparison.metrics.highlightCalls).toBe(0);
+    await comparison.close();
+    expect(git("diff", "--cached", "--name-status")).toBe("D\tx.ts");
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test("supports empty trees, unborn HEAD, staged and unstaged comparisons", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-endpoints-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "x.ts"), "const value = 1;\n");
+    const unborn = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "worktree" },
+    });
+    expect(unborn.files.map((file) => file.entry.path)).toEqual(["x.ts"]);
+    await unborn.close();
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    const empty = await listComparison({
+      cwd,
+      base: { kind: "empty" },
+      head: { kind: "rev", rev: "HEAD" },
+    });
+    expect(empty.files[0].entry.change).toBe("added");
+    await empty.close();
+    await writeFile(join(cwd, "x.ts"), "const value = 2;\n");
+    git("add", ".");
+    const indexPath = join(cwd, ".git", "index");
+    const originalIndex = await readFile(indexPath);
+    const originalMtime = (await lstat(indexPath, { bigint: true })).mtimeNs;
+    const staged = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "index" },
+      highlight: false,
+    });
+    expect(await readFile(indexPath)).toEqual(originalIndex);
+    expect((await lstat(indexPath, { bigint: true })).mtimeNs).toBe(originalMtime);
+    const stagedSha = staged.headSha;
+    expect(staged.files[0].entry).toMatchObject({ additions: 1, deletions: 1 });
+    await staged.close();
+    await writeFile(join(cwd, "x.ts"), "const value = 3;\n");
+    const unstaged = await listComparison({
+      cwd,
+      base: { kind: "index" },
+      head: { kind: "worktree" },
+      highlight: false,
+    });
+    expect(unstaged.baseSha).toBe(stagedSha);
+    const record = await readBody(unstaged);
+    expect(record.body.hunks[0].lines).toContainEqual({
+      type: "remove",
+      content: "const value = 2;",
+    });
+    await unstaged.close();
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test("lists oversized untracked files without treating their truncated contents as additions", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-large-file-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "README"), "base\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    await writeFile(join(cwd, "huge.ts"), Buffer.alloc(2 * 1024 * 1024, 120));
+    const comparison = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "worktree" },
+    });
+    expect(comparison.files[0].entry).toMatchObject({
+      path: "huge.ts",
+      additions: 0,
+      deletions: 0,
+      content: "text",
+    });
+    expect(await comparison.read(comparison.files[0])).toEqual({ kind: "too_large" });
+    await comparison.close();
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test("preserves highlighting context outside the emitted hunks", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-highlight-context-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    const lines = [
+      "/*",
+      ...Array.from({ length: 30 }, (_, index) => `comment ${index}`),
+      "*/",
+      "export const value = 1;",
+    ];
+    await writeFile(join(cwd, "x.ts"), lines.join("\n") + "\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    lines[15] = "new comment";
+    await writeFile(join(cwd, "x.ts"), lines.join("\n") + "\n");
+    const comparison = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "worktree" },
+    });
+    const record = await readBody(comparison);
+    expect(record.body.hunks[0].lines.find((line) => line.type === "add")).toMatchObject({
+      content: "new comment",
+      runs: [{ style: "comment", length: 11 }],
+    });
+    await comparison.close();
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test("reads patches independently of repository color and prefix presentation settings", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-presentation-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "x.ts"), "before\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    git("config", "color.ui", "always");
+    git("config", "diff.noprefix", "true");
+    await writeFile(join(cwd, "x.ts"), "after\n");
+    const comparison = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "worktree" },
+      highlight: false,
+    });
+    const record = await readBody(comparison);
+    expect(record.body.hunks).toHaveLength(1);
+    expect(record.body.hunks[0].lines).toContainEqual({ type: "add", content: "after" });
+    await comparison.close();
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test("merge-base index comparisons resolve against HEAD while reporting both endpoint SHAs", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-index-merge-base-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "README"), "base\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    const common = git("rev-parse", "HEAD");
+    git("checkout", "-b", "side");
+    await writeFile(join(cwd, "side.txt"), "side\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "side");
+    const side = git("rev-parse", "HEAD");
+    git("checkout", "main");
+    await writeFile(join(cwd, "main.txt"), "main\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "main");
+    await writeFile(join(cwd, "staged.txt"), "staged\n");
+    git("add", "staged.txt");
+    const comparison = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "side" },
+      head: { kind: "index" },
+      mergeBase: true,
+    });
+    expect(comparison.baseSha).toBe(side);
+    expect(comparison.mergeBaseSha).toBe(common);
+    expect(comparison.files.map((file) => file.entry.path)).toEqual(["main.txt", "staged.txt"]);
+    await comparison.close();
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+async function readBody(comparison: Comparison) {
+  const record = await comparison.read(comparison.files[0]);
+  if (record.kind !== "ready") throw new Error("Expected a readable file body");
+  return record;
+}
+
+test.each(["worktree", "index", "rev"] as const)(
+  "%s whitespace filtering omits spacing-only edits and retains meaningful edits",
+  async (headKind) => {
+    const cwd = await mkdtemp(join(tmpdir(), "diff-whitespace-"));
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" });
+    try {
+      git("init", "-b", "main");
+      git("config", "user.email", "test@example.com");
+      git("config", "user.name", "Test");
+      await writeFile(join(cwd, "a.ts"), "const x = 1;\n");
+      await writeFile(join(cwd, "b.txt"), "before\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      const base = git("rev-parse", "HEAD").trim();
+      await writeFile(join(cwd, "a.ts"), "const  x = 1;\n");
+      await writeFile(join(cwd, "b.txt"), "after\n");
+      if (headKind !== "worktree") git("add", ".");
+      if (headKind === "rev") git("-c", "commit.gpgsign=false", "commit", "-m", "edit");
+      const head = headKind === "rev" ? { kind: "rev" as const, rev: "HEAD" } : { kind: headKind };
+      const comparison = await listComparison({
+        cwd,
+        base: { kind: "rev", rev: base },
+        head,
+        ignoreWhitespace: true,
+        highlight: false,
+      });
+      expect(comparison.files.map((file) => file.entry.path)).toEqual(["b.txt"]);
+      await comparison.close();
+    } finally {
+      await rm(cwd, { recursive: true, force: true });
+    }
+  },
+);
+
+test.skipIf(process.platform === "win32")(
+  "comparison roots preserve trailing folder spaces",
+  async () => {
+    const root = await mkdtemp(join(tmpdir(), "diff-space-"));
+    const cwd = join(root, "repo ");
+    const { mkdir } = await import("node:fs/promises");
+    await mkdir(cwd);
+    try {
+      execFileSync("git", ["init", "-b", "main"], { cwd });
+      const { worktreeRoot } = await import("./git.js");
+      expect(await worktreeRoot(cwd)).toBe(cwd);
+    } finally {
+      await rm(root, { recursive: true, force: true });
+    }
+  },
+);
+
+test.each(["worktree", "index", "rev"] as const)(
+  "%s rename reads select the destination when the old path becomes a directory",
+  async (headKind) => {
+    const cwd = await mkdtemp(join(tmpdir(), "diff-rename-directory-"));
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+    const { mkdir } = await import("node:fs/promises");
+    try {
+      git("init", "-b", "main");
+      git("config", "user.name", "Test");
+      git("config", "user.email", "test@example.com");
+      await writeFile(join(cwd, "a.txt"), "original line\n".repeat(16));
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      const base = git("rev-parse", "HEAD");
+      git("mv", "a.txt", "z.txt");
+      await writeFile(join(cwd, "z.txt"), "original line\n".repeat(16) + "renamed line\n");
+      await mkdir(join(cwd, "a.txt"));
+      await writeFile(join(cwd, "a.txt", "child.txt"), "replacement line\n");
+      git("add", ".");
+      if (headKind === "rev") git("-c", "commit.gpgsign=false", "commit", "-m", "rename");
+      const head = headKind === "rev" ? { kind: "rev" as const, rev: "HEAD" } : { kind: headKind };
+      const comparison = await listComparison({
+        cwd,
+        base: { kind: "rev", rev: base },
+        head,
+        highlight: false,
+      });
+      try {
+        const file = comparison.files.find((candidate) => candidate.entry.path === "z.txt");
+        if (!file) throw new Error("Missing rename");
+        expect(file.entry.oldPath).toBe("a.txt");
+        const record = await comparison.read(file);
+        if (record.kind !== "ready") throw new Error("Expected readable rename");
+        const lines = record.body.hunks.flatMap((hunk) => hunk.lines.map((line) => line.content));
+        expect(lines).toContain("renamed line");
+        expect(lines).not.toContain("replacement line");
+      } finally {
+        await comparison.close();
+      }
+    } finally {
+      await rm(cwd, { recursive: true, force: true });
+    }
+  },
+);
+
+test.skipIf(process.platform === "win32")(
+  "a dangling untracked symlink exposes its target text alongside tracked changes",
+  async () => {
+    const cwd = await mkdtemp(join(tmpdir(), "diff-dangling-link-"));
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" });
+    const { symlink } = await import("node:fs/promises");
+    try {
+      git("init", "-b", "main");
+      git("config", "user.name", "Test");
+      git("config", "user.email", "test@example.com");
+      await writeFile(join(cwd, "a.txt"), "before\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      await writeFile(join(cwd, "a.txt"), "after\n");
+      await symlink("not-created-yet", join(cwd, "link"));
+      const comparison = await listComparison({
+        cwd,
+        base: { kind: "rev", rev: "HEAD" },
+        head: { kind: "worktree" },
+        highlight: false,
+      });
+      try {
+        expect(comparison.files.map((file) => file.entry.path)).toEqual(["a.txt", "link"]);
+        const record = await comparison.read(comparison.files[1]);
+        if (record.kind !== "ready") throw new Error("Expected link body");
+        expect(record.body.hunks.flatMap((hunk) => hunk.lines)).toContainEqual({
+          type: "add",
+          content: "not-created-yet",
+        });
+      } finally {
+        await comparison.close();
+      }
+    } finally {
+      await rm(cwd, { recursive: true, force: true });
+    }
+  },
+);
+
+test("untracked nested repositories do not hide tracked edits", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-nested-repository-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" });
+  const { mkdir } = await import("node:fs/promises");
+  try {
+    git("init", "-b", "main");
+    git("config", "user.name", "Test");
+    git("config", "user.email", "test@example.com");
+    await writeFile(join(cwd, "a.txt"), "before\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    await writeFile(join(cwd, "a.txt"), "after\n");
+    await mkdir(join(cwd, "nested"));
+    git("-C", "nested", "init");
+    const comparison = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "worktree" },
+      highlight: false,
+    });
+    try {
+      expect(comparison.files.map((file) => file.entry.path)).toEqual(["a.txt"]);
+      const record = await readBody(comparison);
+      expect(record.body.hunks.flatMap((hunk) => hunk.lines)).toContainEqual({
+        type: "add",
+        content: "after",
+      });
+    } finally {
+      await comparison.close();
+    }
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test.each(["worktree", "index", "rev"] as const)(
+  "%s preserves hunks for paths containing a patch prefix delimiter",
+  async (headKind) => {
+    const cwd = await mkdtemp(join(tmpdir(), "diff-path-delimiter-"));
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+    const { mkdir } = await import("node:fs/promises");
+    try {
+      git("init", "-b", "main");
+      git("config", "user.name", "Test");
+      git("config", "user.email", "test@example.com");
+      await mkdir(join(cwd, "dir b"));
+      await writeFile(join(cwd, "dir b", "file.txt"), "before\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      const base = git("rev-parse", "HEAD");
+      await writeFile(join(cwd, "dir b", "file.txt"), "after\n");
+      if (headKind !== "worktree") git("add", ".");
+      if (headKind === "rev") git("-c", "commit.gpgsign=false", "commit", "-m", "edit");
+      const head = headKind === "rev" ? { kind: "rev" as const, rev: "HEAD" } : { kind: headKind };
+      const comparison = await listComparison({
+        cwd,
+        base: { kind: "rev", rev: base },
+        head,
+        highlight: false,
+      });
+      try {
+        expect(comparison.files[0].entry.path).toBe("dir b/file.txt");
+        const record = await readBody(comparison);
+        expect(record.body.hunks.flatMap((hunk) => hunk.lines)).toContainEqual({
+          type: "add",
+          content: "after",
+        });
+      } finally {
+        await comparison.close();
+      }
+    } finally {
+      await rm(cwd, { recursive: true, force: true });
+    }
+  },
+);
+
+test("highlighted BOM source content survives the production frame codec", async () => {
+  const { encodeDiffFrame, decodeDiffFrame } =
+    await import("@getpaseo/protocol/binary-frames/index");
+  const cwd = await mkdtemp(join(tmpdir(), "diff-bom-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" });
+  try {
+    git("init", "-b", "main");
+    await writeFile(join(cwd, "bom.ts"), "\uFEFFexport const value = 1;\n");
+    const comparison = await listComparison({
+      cwd,
+      base: { kind: "empty" },
+      head: { kind: "worktree" },
+    });
+    try {
+      const record = await readBody(comparison);
+      const frame = { opcode: 0x41 as const, slot: 0, revision: 1, files: [record.body] };
+      expect(decodeDiffFrame(encodeDiffFrame(frame))).toEqual(frame);
+      expect(
+        record.body.hunks
+          .flatMap((hunk) => hunk.lines)
+          .some((line) => line.content.startsWith("\uFEFF")),
+      ).toBe(true);
+    } finally {
+      await comparison.close();
+    }
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test.skipIf(process.platform === "win32")(
+  "symlink replacement retains both patch sections",
+  async () => {
+    const cwd = await mkdtemp(join(tmpdir(), "diff-type-change-"));
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" });
+    const { symlink, unlink } = await import("node:fs/promises");
+    try {
+      git("init", "-b", "main");
+      git("config", "user.name", "Test");
+      git("config", "user.email", "test@example.com");
+      await symlink("old-target", join(cwd, "file.txt"));
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      await unlink(join(cwd, "file.txt"));
+      await writeFile(join(cwd, "file.txt"), "replacement contents\n");
+      const comparison = await listComparison({
+        cwd,
+        base: { kind: "rev", rev: "HEAD" },
+        head: { kind: "worktree" },
+        highlight: false,
+      });
+      try {
+        expect(comparison.files[0].entry).toMatchObject({ additions: 1, deletions: 1 });
+        const record = await readBody(comparison);
+        expect(record.body.hunks.flatMap((hunk) => hunk.lines)).toEqual(
+          expect.arrayContaining([
+            { type: "remove", content: "old-target" },
+            { type: "add", content: "replacement contents" },
+          ]),
+        );
+      } finally {
+        await comparison.close();
+      }
+    } finally {
+      await rm(cwd, { recursive: true, force: true });
+    }
+  },
+);
+
+test.skipIf(process.platform === "win32")(
+  "highlighted symlink replacements use stored link text instead of target contents",
+  async () => {
+    const { encodeDiffFrame, decodeDiffFrame } =
+      await import("@getpaseo/protocol/binary-frames/index");
+    const cwd = await mkdtemp(join(tmpdir(), "diff-highlighted-link-"));
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" });
+    const { symlink, unlink } = await import("node:fs/promises");
+    try {
+      git("init", "-b", "main");
+      git("config", "user.name", "Test");
+      git("config", "user.email", "test@example.com");
+      await writeFile(join(cwd, "file.ts"), "export const old = 1;\n");
+      await writeFile(join(cwd, "target.ts"), "export const entirelyDifferentLength = 2;\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      await unlink(join(cwd, "file.ts"));
+      await symlink("target.ts", join(cwd, "file.ts"));
+      const comparison = await listComparison({
+        cwd,
+        base: { kind: "rev", rev: "HEAD" },
+        head: { kind: "worktree" },
+      });
+      try {
+        const record = await readBody(comparison);
+        expect(record.body.hunks.flatMap((hunk) => hunk.lines)).toContainEqual(
+          expect.objectContaining({ type: "add", content: "target.ts" }),
+        );
+        const frame = { opcode: 0x41 as const, slot: 0, revision: 1, files: [record.body] };
+        expect(decodeDiffFrame(encodeDiffFrame(frame))).toEqual(frame);
+      } finally {
+        await comparison.close();
+      }
+    } finally {
+      await rm(cwd, { recursive: true, force: true });
+    }
+  },
+);
+
+test("files removed between listing and highlighting retain their deletion patch", async () => {
+  const { encodeDiffFrame, decodeDiffFrame } =
+    await import("@getpaseo/protocol/binary-frames/index");
+  const cwd = await mkdtemp(join(tmpdir(), "diff-source-disappeared-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" });
+  try {
+    git("init", "-b", "main");
+    git("config", "user.name", "Test");
+    git("config", "user.email", "test@example.com");
+    await writeFile(join(cwd, "a.ts"), "export const old = 1;\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    await writeFile(join(cwd, "a.ts"), "export const old = 2;\n");
+    const comparison = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "worktree" },
+    });
+    try {
+      expect(comparison.files[0].entry.change).toBe("modified");
+      await rm(join(cwd, "a.ts"));
+      const record = await readBody(comparison);
+      expect(record.body.hunks.flatMap((hunk) => hunk.lines)).toContainEqual(
+        expect.objectContaining({ type: "remove", content: "export const old = 1;" }),
+      );
+      const frame = { opcode: 0x41 as const, slot: 0, revision: 1, files: [record.body] };
+      expect(decodeDiffFrame(encodeDiffFrame(frame))).toEqual(frame);
+    } finally {
+      await comparison.close();
+    }
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test("a batched oversized tracked patch does not hide its small sibling", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-batch-budget-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" });
+  try {
+    git("init", "-b", "main");
+    git("config", "user.name", "Test");
+    git("config", "user.email", "test@example.com");
+    await writeFile(join(cwd, "a.txt"), "before\n");
+    await writeFile(join(cwd, "b.txt"), "before\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    await writeFile(join(cwd, "a.txt"), "oversized\n".repeat(1024 * 1024));
+    await writeFile(join(cwd, "b.txt"), "after\n");
+    const comparison = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "worktree" },
+      highlight: false,
+    });
+    try {
+      expect(await comparison.read(comparison.files[0])).toEqual({ kind: "too_large" });
+      const sibling = await comparison.read(comparison.files[1]);
+      if (sibling.kind !== "ready") throw new Error("Expected readable sibling");
+      expect(sibling.body.hunks.flatMap((hunk) => hunk.lines)).toContainEqual({
+        type: "add",
+        content: "after",
+      });
+    } finally {
+      await comparison.close();
+    }
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test("replacing a submodule with a regular file preserves its replacement body", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-gitlink-replacement-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" });
+  const { mkdir } = await import("node:fs/promises");
+  try {
+    git("init", "-b", "main");
+    git("config", "user.name", "Test");
+    git("config", "user.email", "test@example.com");
+    await mkdir(join(cwd, "sub"));
+    git("-C", "sub", "init", "-b", "main");
+    git("-C", "sub", "config", "user.name", "Test");
+    git("-C", "sub", "config", "user.email", "test@example.com");
+    await writeFile(join(cwd, "sub", "a.txt"), "base\n");
+    git("-C", "sub", "add", ".");
+    git("-C", "sub", "-c", "commit.gpgsign=false", "commit", "-m", "base");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "record submodule");
+    await rm(join(cwd, "sub"), { recursive: true, force: true });
+    await writeFile(join(cwd, "sub"), "replacement contents\n");
+    const comparison = await listComparison({
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "worktree" },
+    });
+    try {
+      const record = await readBody(comparison);
+      expect(record.body.hunks.flatMap((hunk) => hunk.lines)).toContainEqual(
+        expect.objectContaining({ type: "add", content: "replacement contents" }),
+      );
+    } finally {
+      await comparison.close();
+    }
+  } finally {
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test.each([
+  { ignoreWhitespace: false, after: "export const value = 2;\n", files: ["a.ts"] },
+  { ignoreWhitespace: true, after: "export  const value = 1;\n", files: [] },
+])(
+  "interpretation checks ignore content edits but detect new binary attributes, whitespace=$ignoreWhitespace",
+  async ({ ignoreWhitespace, after, files }) => {
+    const cwd = await mkdtemp(join(tmpdir(), "diff-interpretation-check-"));
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+    try {
+      git("init", "-b", "main");
+      git("config", "user.name", "Test");
+      git("config", "user.email", "test@example.com");
+      git("config", "core.autocrlf", "false");
+      await writeFile(join(cwd, "a.ts"), "export const value = 1;\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      const base = git("rev-parse", "HEAD");
+      await writeFile(join(cwd, "a.ts"), after);
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "edit");
+      const compare = {
+        cwd,
+        base: { kind: "rev" as const, rev: base },
+        head: { kind: "rev" as const, rev: git("rev-parse", "HEAD") },
+        ignoreWhitespace,
+        highlight: false,
+      };
+      const comparison = await listComparison(compare);
+      try {
+        expect(comparison.files.map((file) => file.entry.path)).toEqual(files);
+        expect(await comparison.hasInterpretationChanged()).toBe(false);
+        await writeFile(join(cwd, "a.ts"), "uncommitted content\n");
+        expect(await comparison.hasInterpretationChanged()).toBe(false);
+        await writeFile(join(cwd, ".gitattributes"), "a.ts -diff\n");
+        expect(await comparison.hasInterpretationChanged()).toBe(true);
+        const fresh = await listComparison(compare);
+        try {
+          expect(fresh.files.map((file) => file.entry)).toEqual([
+            expect.objectContaining({ path: "a.ts", content: "binary" }),
+          ]);
+        } finally {
+          await fresh.close();
+        }
+      } finally {
+        await comparison.close();
+      }
+    } finally {
+      await rm(cwd, { recursive: true, force: true });
+    }
+  },
+);
diff --git a/packages/server/src/server/diff/git.ts b/packages/server/src/server/diff/git.ts
new file mode 100644
index 0000000000..c58c1de181
--- /dev/null
+++ b/packages/server/src/server/diff/git.ts
@@ -0,0 +1,431 @@
+import { parseGitRevParsePath } from "../../utils/git-rev-parse-path.js";
+import { readGitInputs } from "./inputs.js";
+import { Patches } from "./patches.js";
+import { HighlightSources } from "./sources.js";
+import {
+  prepareAllChangesIndex,
+  PER_FILE_DIFF_MAX_BYTES,
+  GIT_PATCH_FORMAT_ARGS,
+  inspectUntrackedFile,
+  snapshotComparisonIndex,
+  resolveCheckoutDiffBase,
+  type CheckoutDiffCompare,
+} from "../../utils/checkout-git.js";
+import { lstat, readFile, readlink } from "node:fs/promises";
+import type { BigIntStats } from "node:fs";
+import { resolve } from "node:path";
+import type { DiffEndpoint, DiffSubscribeRequest } from "@getpaseo/protocol/messages";
+import type { DiffEntry, DiffBody } from "@getpaseo/protocol/binary-frames/index";
+import { runGitCommand, type GitCommandOptions } from "../../utils/run-git-command.js";
+import { parseDiff, highlightDiffWithFileContent } from "../utils/diff-highlighter.js";
+
+export type Compare = Omit<DiffSubscribeRequest, "type" | "requestId"> & {
+  checkoutBase?: { compare: CheckoutDiffCompare; paseoHome: string };
+};
+export interface ListedFile {
+  entry: DiffEntry;
+  identity: string;
+  source: { kind: "tracked" } | { kind: "untracked"; size: number };
+}
+interface ResolvedComparison {
+  baseSha: string;
+  headSha: string;
+  mergeBaseSha: string;
+  comparisonBaseSha: string;
+}
+export type DiffFileRead = { kind: "ready"; body: DiffBody; bytes: number } | { kind: "too_large" };
+export interface Comparison extends Pick<
+  ResolvedComparison,
+  "baseSha" | "headSha" | "mergeBaseSha"
+> {
+  files: ListedFile[];
+  metrics: { highlightCalls: number };
+  close(): Promise<void>;
+  selectBodies(paths: ReadonlySet<string>): void;
+  hasInterpretationChanged(): Promise<boolean>;
+  read(
+    file: ListedFile,
+    budget?: { remainingBytes?: number; maxPatchBytes?: number },
+  ): Promise<DiffFileRead>;
+}
+export class DiffReadError extends Error {
+  constructor(
+    readonly code: "INVALID_COMPARE" | "NOT_GIT_REPO" | "REF_NOT_FOUND",
+    message: string,
+  ) {
+    super(message);
+  }
+}
+const EMPTY = "4b825dc642cb6eb9a060e54bf8d69288fbee4904";
+export function validateCompare(compare: Compare): void {
+  if (compare.head.kind === "empty")
+    throw new DiffReadError("INVALID_COMPARE", "The head cannot be empty");
+  if (compare.base.kind === "worktree")
+    throw new DiffReadError("INVALID_COMPARE", "The working tree cannot be the base");
+  if (compare.base.kind === "index" && compare.head.kind !== "worktree")
+    throw new DiffReadError("INVALID_COMPARE", "An index base requires a working tree head");
+  if (compare.mergeBase && compare.base.kind !== "rev")
+    throw new DiffReadError("INVALID_COMPARE", "Merge base requires a revision base");
+}
+export async function worktreeRoot(cwd: string): Promise<string> {
+  const result = await runGitCommand(["rev-parse", "--show-toplevel"], {
+    cwd,
+    acceptExitCodes: [0, 128],
+  });
+  if (result.exitCode !== 0) throw new DiffReadError("NOT_GIT_REPO", "Not a git repository");
+  const root = parseGitRevParsePath(result.stdout);
+  if (root === null) throw new DiffReadError("NOT_GIT_REPO", "Git returned no working tree root");
+  return resolve(root);
+}
+async function resolveEndpoint(
+  cwd: string,
+  endpoint: DiffEndpoint,
+  indexFile: string | null,
+): Promise<string> {
+  if (endpoint.kind === "empty") return EMPTY;
+  if (endpoint.kind === "index") {
+    if (indexFile === null) throw new Error("Index comparisons require an index snapshot");
+    const result = await runGitCommand(["write-tree"], {
+      cwd,
+      envOverlay: { GIT_INDEX_FILE: indexFile },
+    });
+    return result.stdout.trim();
+  }
+  const ref = endpoint.kind === "rev" ? endpoint.rev : "HEAD";
+  const result = await runGitCommand(
+    ["rev-parse", "--verify", "--end-of-options", `${ref}^{commit}`],
+    {
+      cwd,
+      acceptExitCodes: [0, 128],
+    },
+  );
+  if (result.exitCode === 0) return result.stdout.trim();
+  if (ref === "HEAD") {
+    const unborn = await runGitCommand(["rev-parse", "--verify", "HEAD"], {
+      cwd,
+      acceptExitCodes: [0, 128],
+    });
+    if (unborn.exitCode !== 0) return EMPTY;
+  }
+  throw new DiffReadError("REF_NOT_FOUND", `Revision not found: ${ref}`);
+}
+function parseStats(
+  text: string,
+): Map<string, { additions: number; deletions: number; binary: boolean }> {
+  const fields = text.split("\0");
+  const stats = new Map<string, { additions: number; deletions: number; binary: boolean }>();
+  for (let index = 0; index < fields.length - 1; index++) {
+    const line = fields[index];
+    const tab = line.indexOf("\t");
+    const second = line.indexOf("\t", tab + 1);
+    const add = line.slice(0, tab);
+    const del = line.slice(tab + 1, second);
+    let path = line.slice(second + 1);
+    if (!path) {
+      index++;
+      path = fields[++index];
+    }
+    stats.set(path, {
+      additions: Number(add) || 0,
+      deletions: Number(del) || 0,
+      binary: add === "-",
+    });
+  }
+  return stats;
+}
+export async function listComparison(compare: Compare): Promise<Comparison> {
+  if (compare.checkoutBase) {
+    const selected = await resolveCheckoutDiffBase(compare.cwd, compare.checkoutBase.compare, {
+      paseoHome: compare.checkoutBase.paseoHome,
+    });
+    if (!selected) throw new DiffReadError("REF_NOT_FOUND", "Comparison base is unavailable");
+    compare = { ...compare, base: { kind: "rev", rev: selected } };
+  }
+  validateCompare(compare);
+  const cwd = compare.cwd;
+  let privateIndex: Awaited<ReturnType<typeof prepareAllChangesIndex>> = null;
+  try {
+    if (compare.base.kind === "index" || compare.head.kind === "index")
+      privateIndex = await snapshotComparisonIndex(cwd);
+    const indexFile = privateIndex ? privateIndex.indexFile : null;
+    const baseSha = await resolveEndpoint(cwd, compare.base, indexFile);
+    const headSha = await resolveEndpoint(cwd, compare.head, indexFile);
+    let mergeBaseSha = "";
+    let comparisonBaseSha = baseSha;
+    if (compare.mergeBase) {
+      const headCommit =
+        compare.head.kind === "index"
+          ? await resolveEndpoint(cwd, { kind: "rev", rev: "HEAD" }, indexFile)
+          : headSha;
+      if (headCommit === EMPTY) comparisonBaseSha = EMPTY;
+      else if (baseSha !== EMPTY) {
+        const result = await runGitCommand(["merge-base", baseSha, headCommit], {
+          cwd,
+          acceptExitCodes: [0, 1],
+        });
+        mergeBaseSha = result.stdout.trim();
+        if (mergeBaseSha) comparisonBaseSha = mergeBaseSha;
+      }
+    }
+    if (compare.head.kind === "worktree" && compare.base.kind !== "index")
+      privateIndex = await prepareAllChangesIndex(cwd, comparisonBaseSha);
+    return await readComparisonList(
+      compare,
+      { baseSha, headSha, mergeBaseSha, comparisonBaseSha },
+      privateIndex,
+    );
+  } catch (error) {
+    await privateIndex?.cleanup();
+    throw error;
+  }
+}
+
+async function readComparisonList(
+  compare: Compare,
+  resolved: ResolvedComparison,
+  privateIndex: Awaited<ReturnType<typeof prepareAllChangesIndex>>,
+): Promise<Comparison> {
+  const { baseSha, headSha, mergeBaseSha, comparisonBaseSha } = resolved;
+  const cwd = compare.cwd;
+  const args = diffArguments(compare, comparisonBaseSha, headSha);
+  const options: GitCommandOptions = {
+    cwd,
+    envOverlay: {
+      GIT_OPTIONAL_LOCKS: "0",
+      ...(privateIndex ? { GIT_INDEX_FILE: privateIndex.indexFile } : {}),
+    },
+  };
+  const { files, worktreeFiles, interpretationPaths } = await readTrackedFiles(
+    compare,
+    args,
+    options,
+  );
+  if (compare.head.kind === "worktree") files.push(...(await listUntrackedFiles(options)));
+  files.sort((a, b) => a.entry.path.localeCompare(b.entry.path));
+  for (const file of files) interpretationPaths.add(file.entry.path);
+  const gitInputs = await readGitInputs([...interpretationPaths].sort(), worktreeFiles, options);
+  for (const file of files)
+    file.identity += JSON.stringify([
+      gitInputs.identities.get(file.entry.path),
+      gitInputs.identities.get(file.entry.oldPath ?? file.entry.path),
+    ]);
+  const metrics = { highlightCalls: 0 };
+  const patches = new Patches(args, options, files);
+  const sources = new HighlightSources({
+    cwd,
+    baseSha: comparisonBaseSha,
+    headSha: compare.head.kind === "worktree" ? null : headSha,
+    files,
+  });
+  return {
+    baseSha,
+    headSha,
+    mergeBaseSha,
+    files,
+    metrics,
+    selectBodies: (paths) => patches.select(paths),
+    hasInterpretationChanged: gitInputs.hasInterpretationChanged,
+    close: async () => {
+      await privateIndex?.cleanup();
+    },
+    async read(file, budget = {}) {
+      const maxPatchBytes = budget.maxPatchBytes ?? PER_FILE_DIFF_MAX_BYTES;
+      const remainingBytes = budget.remainingBytes ?? maxPatchBytes;
+      if (file.source.kind === "untracked" && file.source.size > maxPatchBytes) {
+        return { kind: "too_large" };
+      }
+      const result =
+        file.source.kind === "untracked"
+          ? await runGitCommand(
+              ["diff", "--no-index", ...GIT_PATCH_FORMAT_ARGS, "--", "/dev/null", file.entry.path],
+              {
+                ...options,
+                acceptExitCodes: [0, 1],
+                maxOutputBytes: maxPatchBytes + 1,
+              },
+            )
+          : await patches.read(file, maxPatchBytes);
+      const bytes = Buffer.byteLength(result.stdout);
+      if (result.truncated || bytes > remainingBytes || bytes > maxPatchBytes)
+        return { kind: "too_large" };
+      // File-type changes have a deletion and addition section for the same path.
+      const sections = parseDiff(result.stdout).filter(
+        (candidate) => candidate.path === file.entry.path,
+      );
+      if (!sections.length)
+        return { kind: "ready", body: { path: file.entry.path, hunks: [] }, bytes };
+      const parsed = {
+        path: file.entry.path,
+        isNew: file.entry.change === "added",
+        isDeleted: file.entry.change === "deleted",
+        additions: file.entry.additions,
+        deletions: file.entry.deletions,
+        hunks: sections.flatMap((section) => section.hunks),
+      };
+      let highlighted = parsed;
+      if (compare.highlight !== false) {
+        metrics.highlightCalls++;
+        const context = await sources.read(file);
+        highlighted = await highlightDiffWithFileContent(parsed, cwd, context);
+      }
+      const hunks = highlighted.hunks.map((hunk) => ({
+        oldStart: hunk.oldStart,
+        oldCount: hunk.oldCount,
+        newStart: hunk.newStart,
+        newCount: hunk.newCount,
+        lines: hunk.lines.map((line) => {
+          if (!line.tokens) return { type: line.type, content: line.content };
+          return {
+            type: line.type,
+            content: line.content,
+            runs: line.tokens
+              .filter((token) => token.text.length > 0)
+              .map((token) => ({ style: token.style, length: token.text.length })),
+          };
+        }),
+      }));
+      return { kind: "ready", body: { path: file.entry.path, hunks }, bytes };
+    },
+  };
+}
+
+async function readTrackedFiles(
+  compare: Compare,
+  args: string[],
+  options: GitCommandOptions,
+): Promise<{ files: ListedFile[]; worktreeFiles: Set<string>; interpretationPaths: Set<string> }> {
+  const [raw, stat] = await Promise.all([
+    runGitCommand([...args.filter((arg) => arg !== "-w"), "--raw", "--no-abbrev", "-z"], options),
+    runGitCommand([...args, "--numstat", "-z"], options),
+  ]);
+  if (raw.truncated || stat.truncated)
+    throw new Error("Diff entry list exceeded the git output budget");
+  const stats = parseStats(stat.stdout);
+  const fields = raw.stdout.split("\0");
+  const files: ListedFile[] = [];
+  const worktreeFiles = new Set<string>();
+  const interpretationPaths = new Set<string>();
+  for (let index = 0; index < fields.length - 1; index++) {
+    const header = fields[index].split(" ");
+    const code = header[4]?.[0];
+    let path = fields[++index];
+    let oldPath: string | null = null;
+    if (code === "R" || code === "C") {
+      oldPath = path;
+      path = fields[++index];
+    }
+    interpretationPaths.add(path);
+    if (oldPath !== null) interpretationPaths.add(oldPath);
+    const counts = stats.get(path);
+    // With -w, a raw metadata entry need not have a numstat record.
+    if (!counts && compare.ignoreWhitespace) continue;
+    if (!counts) throw new Error(`Missing diff statistics for ${path}`);
+    let change: DiffEntry["change"] = "modified";
+    if (code === "A") change = "added";
+    else if (code === "D") change = "deleted";
+    else if (oldPath !== null) change = "renamed";
+    let identity = header.join(" ");
+    if (compare.head.kind === "worktree" && code !== "D") {
+      const worktree = await readWorktreeIdentity(path, header, options);
+      identity += `:${worktree.identity}`;
+      if (worktree.regular && !counts.binary) worktreeFiles.add(path);
+    }
+
+    files.push({
+      entry: {
+        path,
+        oldPath,
+        change,
+        content: counts.binary ? "binary" : "text",
+        additions: counts.additions,
+        deletions: counts.deletions,
+        body: !counts.binary,
+      },
+      identity,
+      source: { kind: "tracked" },
+    });
+  }
+  return { files, worktreeFiles, interpretationPaths };
+}
+
+async function readWorktreeIdentity(
+  path: string,
+  header: string[],
+  options: GitCommandOptions,
+): Promise<{ identity: string; regular: boolean }> {
+  const value = await lstat(resolve(options.cwd, path), { bigint: true });
+  let identity = fileStatIdentity(value);
+  if (value.isDirectory() && (header[0] === ":160000" || header[1] === "160000")) {
+    const submodule = await runGitCommand(
+      ["status", "--porcelain=v2", "--branch", "--untracked-files=normal"],
+      { cwd: resolve(options.cwd, path), envOverlay: { GIT_OPTIONAL_LOCKS: "0" } },
+    );
+    identity += `:${submodule.stdout}`;
+  }
+  return { identity, regular: value.isFile() };
+}
+
+function diffArguments(compare: Compare, baseSha: string, headSha: string): string[] {
+  const revisions: string[] = [];
+  if (compare.base.kind !== "index") revisions.push(baseSha);
+  if (compare.head.kind === "rev") revisions.push(headSha);
+  if (compare.head.kind === "index") revisions.unshift("--cached");
+  const args = ["diff", ...GIT_PATCH_FORMAT_ARGS, "--no-textconv", "-M", ...revisions];
+  if (compare.ignoreWhitespace) args.push("-w");
+  return args;
+}
+
+async function readUntrackedText(
+  path: string,
+  symlink: boolean,
+  omitted: boolean,
+): Promise<Buffer> {
+  if (symlink) return Buffer.from(await readlink(path));
+  if (omitted) return Buffer.alloc(0);
+  return readFile(path);
+}
+
+async function listUntrackedFiles(options: GitCommandOptions): Promise<ListedFile[]> {
+  const cwd = options.cwd;
+  const files: ListedFile[] = [];
+  const untracked = await runGitCommand(
+    ["ls-files", "--others", "--exclude-standard", "-z"],
+    options,
+  );
+  for (const path of untracked.stdout.split("\0").filter(Boolean)) {
+    const value = await lstat(resolve(cwd, path), { bigint: true });
+    if (!value.isFile() && !value.isSymbolicLink()) continue;
+    const symlink = value.isSymbolicLink();
+    let binary = false;
+    let omitted = false;
+    if (!symlink) {
+      const inspected = await inspectUntrackedFile(cwd, path);
+      binary = inspected.stat?.isBinary === true;
+      omitted = inspected.truncated;
+    }
+    const content = await readUntrackedText(resolve(cwd, path), symlink, binary || omitted);
+    const additions =
+      binary || content.length === 0
+        ? 0
+        : content.toString("utf8").split("\n").length - Number(content.at(-1) === 10);
+    files.push({
+      entry: {
+        path,
+        oldPath: null,
+        change: "added",
+        content: binary ? "binary" : "text",
+        additions,
+        deletions: 0,
+        body: !binary,
+      },
+      identity: fileStatIdentity(value),
+      source: { kind: "untracked", size: Number(value.size) },
+    });
+  }
+  return files;
+}
+
+function fileStatIdentity(value: BigIntStats): string {
+  // Timestamp-preserving copies still change file status or replace the inode.
+  return `${value.dev}:${value.ino}:${value.size}:${value.mtimeNs}:${value.ctimeNs}`;
+}
diff --git a/packages/server/src/server/diff/index.ts b/packages/server/src/server/diff/index.ts
new file mode 100644
index 0000000000..6c9a537f86
--- /dev/null
+++ b/packages/server/src/server/diff/index.ts
@@ -0,0 +1,487 @@
+import { TOTAL_DIFF_MAX_BYTES } from "../../utils/checkout-git.js";
+import { DEFAULT_MAX_OUTPUT_BYTES, runGitCommand } from "../../utils/run-git-command.js";
+import { expandTilde, createRealpathAwarePathMatcher } from "../../utils/path.js";
+import { packBodies } from "./batches.js";
+import { setImmediate } from "node:timers/promises";
+import {
+  DiffOpcode,
+  materializeDiffFile,
+  type DiffFrame,
+  type DiffEntry,
+  type DiffBody,
+} from "@getpaseo/protocol/binary-frames/index";
+import type {
+  DiffError,
+  DiffEndpoint,
+  ParsedDiffFile,
+  CheckoutCommitFileDiffRequest,
+} from "@getpaseo/protocol/messages";
+import type { WorkspaceGitService } from "../workspace-git-service.js";
+import {
+  listComparison,
+  validateCompare,
+  worktreeRoot,
+  DiffReadError,
+  type Compare,
+  type Comparison,
+} from "./git.js";
+import { DiffDependencyObserver } from "./dependencies.js";
+
+interface RecordCache {
+  identity: string;
+  body: DiffBody;
+  bytes: number;
+}
+interface Listener {
+  emit(frame: DiffFrame): Promise<void>;
+  active: boolean;
+  delivery: Promise<void>;
+}
+interface Target {
+  key: string;
+  compare: Compare;
+  listeners: Set<Listener>;
+  revision: number;
+  committed: number;
+  cache: Map<string, RecordCache>;
+  entries: DiffEntry[];
+  resolved: Pick<Comparison, "baseSha" | "headSha" | "mergeBaseSha">;
+  error: DiffError | null;
+  omitted: string[];
+  refresh: Promise<void> | null;
+  dirty: boolean;
+  checkInterpretation: (() => Promise<boolean>) | null;
+  interpretationCheck: Promise<void> | null;
+  interpretationDirty: boolean;
+  release: (() => Promise<void>) | null;
+  opening: Promise<void> | null;
+  closed: boolean;
+  timer: ReturnType<typeof setTimeout> | null;
+}
+export interface CommitFileRead extends Pick<
+  CheckoutCommitFileDiffRequest,
+  "cwd" | "sha" | "path"
+> {
+  signal?: AbortSignal;
+}
+export interface DiffSubscription {
+  start(): Promise<void>;
+  release(): Promise<void>;
+}
+export class DiffSubscriptions {
+  private targets = new Map<string, Target>();
+  private dependencies: DiffDependencyObserver;
+  private computations = 0;
+  private highlightCalls = 0;
+  constructor(workspaceGit: Pick<WorkspaceGitService, "requestWorkingTreeWatch">) {
+    this.dependencies = new DiffDependencyObserver(workspaceGit);
+  }
+  getMetrics() {
+    return {
+      targets: this.targets.size,
+      subscriptions: [...this.targets.values()].reduce(
+        (sum, target) => sum + target.listeners.size,
+        0,
+      ),
+      computations: this.computations,
+      highlightCalls: this.highlightCalls,
+      metadataObservers: this.dependencies.getObservationCount(),
+    };
+  }
+  async readCommitFile(input: CommitFileRead): Promise<ParsedDiffFile | null> {
+    input.signal?.throwIfAborted();
+    const cwd = await worktreeRoot(expandTilde(input.cwd));
+    const result = await runGitCommand(
+      ["rev-list", "--parents", "--max-count=1", "--end-of-options", input.sha],
+      { cwd },
+    );
+    const [head, parent] = result.stdout.trim().split(" ");
+    if (!head) throw new DiffReadError("REF_NOT_FOUND", `Revision not found: ${input.sha}`);
+    const base: DiffEndpoint = parent ? { kind: "rev", rev: parent } : { kind: "empty" };
+    const comparison = await listComparison({ cwd, base, head: { kind: "rev", rev: head } });
+    try {
+      input.signal?.throwIfAborted();
+      const file = comparison.files.find((candidate) => candidate.entry.path === input.path);
+      if (!file || file.entry.content === "binary") return null;
+      comparison.selectBodies(new Set([file.entry.path]));
+      const record = await comparison.read(file, { maxPatchBytes: DEFAULT_MAX_OUTPUT_BYTES });
+      input.signal?.throwIfAborted();
+      return materializeDiffFile(
+        file.entry,
+        record.kind === "ready" ? record.body : null,
+        record.kind === "too_large",
+      );
+    } finally {
+      await comparison.close();
+    }
+  }
+  async subscribe(compare: Compare, emit: Listener["emit"]): Promise<DiffSubscription> {
+    validateCompare(compare);
+    compare = {
+      ...compare,
+      cwd: await worktreeRoot(expandTilde(compare.cwd)),
+      mergeBase: compare.mergeBase === true,
+      ignoreWhitespace: compare.ignoreWhitespace === true,
+      highlight: compare.highlight !== false,
+    };
+    const key = JSON.stringify([
+      compare.cwd,
+      compare.checkoutBase
+        ? ["checkout", JSON.stringify(compare.checkoutBase)]
+        : endpointKey(compare.base),
+      endpointKey(compare.head),
+      compare.mergeBase,
+      compare.ignoreWhitespace,
+      compare.highlight,
+    ]);
+    let target = this.targets.get(key);
+    if (!target) {
+      target = {
+        key,
+        compare,
+        listeners: new Set(),
+        revision: 0,
+        committed: 0,
+        cache: new Map(),
+        entries: [],
+        resolved: { baseSha: "", headSha: "", mergeBaseSha: "" },
+        error: null,
+        omitted: [],
+        refresh: null,
+        dirty: false,
+        checkInterpretation: null,
+        interpretationCheck: null,
+        interpretationDirty: false,
+        release: null,
+        opening: null,
+        closed: false,
+        timer: null,
+      };
+      this.targets.set(key, target);
+      const captured = target;
+      try {
+        target.opening = this.dependencies
+          .declareDependencies(
+            {
+              cwd: compare.cwd,
+              refs: [compare.base, compare.head].flatMap((endpoint) =>
+                endpoint.kind === "rev" && !/^[a-f0-9]{40,64}$/.test(endpoint.rev)
+                  ? [endpoint.rev]
+                  : [],
+              ),
+              index: compare.base.kind === "index" || compare.head.kind !== "rev",
+              worktree: compare.head.kind === "worktree",
+            },
+            (kind) => {
+              if (kind === "interpretation") this.invalidateInterpretation(captured);
+              else this.invalidate(captured);
+            },
+          )
+          .then((release) => {
+            captured.release = release;
+            return undefined;
+          });
+      } catch (error) {
+        this.targets.delete(key);
+        throw error;
+      }
+    }
+    try {
+      await target.opening;
+    } catch (error) {
+      target.closed = true;
+      this.targets.delete(key);
+      throw error;
+    }
+    if (target.closed) throw new Error("Diff subscription cancelled");
+    const current = target;
+    const listener: Listener = { emit, active: false, delivery: Promise.resolve() };
+    current.listeners.add(listener);
+    let released = false;
+    return {
+      start: async () => {
+        while (current.refresh) await current.refresh;
+        if (current.closed || released) return;
+        listener.active = true;
+        if (!current.committed) await this.refresh(current);
+        else {
+          const replay = this.replay(current, listener);
+          listener.delivery = replay.catch(() => {});
+          await replay;
+        }
+      },
+      release: async () => {
+        if (released) return;
+        released = true;
+        listener.active = false;
+        current.listeners.delete(listener);
+        if (current.listeners.size) return;
+        current.closed = true;
+        if (current.timer) clearTimeout(current.timer);
+        this.targets.delete(key);
+        await current.release?.();
+        await current.refresh;
+        await current.interpretationCheck;
+      },
+    };
+  }
+  async invalidateForCwd(cwd: string): Promise<void> {
+    let root: string;
+    try {
+      root = await worktreeRoot(expandTilde(cwd));
+    } catch (error) {
+      if (error instanceof DiffReadError && error.code === "NOT_GIT_REPO") return;
+      throw error;
+    }
+    const matches = createRealpathAwarePathMatcher(root);
+    for (const target of this.targets.values())
+      if (matches(target.compare.cwd)) this.invalidate(target);
+  }
+  private invalidateInterpretation(target: Target): void {
+    if (target.closed) return;
+    target.interpretationDirty = true;
+    target.interpretationCheck ??= this.checkInterpretation(target).finally(() => {
+      target.interpretationCheck = null;
+    });
+  }
+  private async checkInterpretation(target: Target): Promise<void> {
+    do {
+      target.interpretationDirty = false;
+      try {
+        if (!target.checkInterpretation || (await target.checkInterpretation())) {
+          this.invalidate(target);
+          return;
+        }
+      } catch {
+        // A normal revision owns error delivery and recovery.
+        this.invalidate(target);
+        return;
+      }
+    } while (target.interpretationDirty && !target.closed);
+  }
+  private invalidate(target: Target): void {
+    if (target.closed) return;
+    target.dirty = true;
+    if (target.listeners.size === 0) return;
+    if (target.timer) clearTimeout(target.timer);
+    target.timer = setTimeout(() => {
+      target.timer = null;
+      void this.refresh(target);
+    }, 150);
+  }
+  private async emit(target: Target, frame: DiffFrame): Promise<void> {
+    await Promise.all(
+      [...target.listeners]
+        .filter((listener) => listener.active)
+        .map((listener) => {
+          const sent = listener.delivery.then(() => listener.emit(frame));
+          listener.delivery = sent.catch(() => {});
+          return sent;
+        }),
+    );
+    await setImmediate();
+  }
+  private async replay(target: Target, listener: Listener): Promise<void> {
+    const entries = target.entries.map((entry) => ({ ...entry, body: entry.content !== "binary" }));
+    await listener.emit({
+      opcode: DiffOpcode.Begin,
+      slot: 0,
+      revision: target.committed,
+      baseRevision: 0,
+      ...target.resolved,
+      entries,
+    });
+    const bodies: DiffBody[] = [];
+    for (const entry of entries) {
+      const cached = target.cache.get(entry.path);
+      if (entry.body && cached) bodies.push(cached.body);
+    }
+    for await (const files of packBodies(bodies, target.committed)) {
+      await listener.emit({
+        opcode: DiffOpcode.Bodies,
+        slot: 0,
+        revision: target.committed,
+        files,
+      });
+      await setImmediate();
+    }
+    await listener.emit({
+      opcode: DiffOpcode.End,
+      slot: 0,
+      revision: target.committed,
+      diffTooLarge: target.omitted.length > 0,
+      omitted: target.omitted,
+      error: target.error,
+    });
+  }
+  private async refresh(target: Target): Promise<void> {
+    if (target.refresh || target.closed) return target.refresh ?? undefined;
+    target.refresh = this.run(target).finally(() => {
+      target.refresh = null;
+    });
+    return target.refresh;
+  }
+  private async run(target: Target): Promise<void> {
+    do {
+      target.dirty = false;
+      const revision = ++target.revision;
+      let comparison: Comparison | null = null;
+      let began = false;
+      try {
+        this.computations++;
+        comparison = await listComparison(target.compare);
+        target.checkInterpretation = comparison.hasInterpretationChanged;
+        const resolved = {
+          baseSha: comparison.baseSha,
+          headSha: comparison.headSha,
+          mergeBaseSha: comparison.mergeBaseSha,
+        };
+        const tooManyFiles = comparison.files.length > 10000;
+        const entries = comparison.files.map((file) => ({
+          ...file.entry,
+          body: tooManyFiles
+            ? file.entry.content === "text"
+            : needsBody(target, file.entry, file.identity),
+        }));
+        await this.emit(target, {
+          opcode: DiffOpcode.Begin,
+          slot: 0,
+          revision,
+          baseRevision: target.error ? 0 : target.committed,
+          ...resolved,
+          entries,
+        });
+        began = true;
+        const cache = new Map<string, RecordCache>();
+        const omitted: string[] = [];
+        const state = { cache, omitted, total: 0 };
+        const records = this.readBodies(target, comparison, entries, state);
+        for await (const files of packBodies(records, revision)) {
+          if (isInterrupted(target)) break;
+          await this.emit(target, { opcode: DiffOpcode.Bodies, slot: 0, revision, files });
+        }
+        if (isInterrupted(target)) continue;
+        await this.emit(target, {
+          opcode: DiffOpcode.End,
+          slot: 0,
+          revision,
+          omitted,
+          diffTooLarge: omitted.length > 0,
+          error: null,
+        });
+        target.committed = revision;
+        target.resolved = resolved;
+        target.entries = entries;
+        target.cache = cache;
+        target.omitted = omitted;
+        target.error = null;
+      } catch (error) {
+        const failure = diffError(error);
+        if (!began)
+          await this.emit(target, {
+            opcode: DiffOpcode.Begin,
+            slot: 0,
+            revision,
+            baseRevision: 0,
+            baseSha: "",
+            headSha: "",
+            mergeBaseSha: "",
+            entries: [],
+          });
+        await this.emit(target, {
+          opcode: DiffOpcode.End,
+          slot: 0,
+          revision,
+          diffTooLarge: false,
+          omitted: [],
+          error: failure,
+        });
+        target.error = failure;
+        target.committed = revision;
+        target.entries = [];
+        target.cache.clear();
+        target.omitted = [];
+      } finally {
+        if (comparison) this.highlightCalls += comparison.metrics.highlightCalls;
+        await comparison?.close();
+      }
+    } while (target.dirty && !target.closed);
+  }
+  private async *readBodies(
+    target: Target,
+    comparison: Comparison,
+    entries: DiffEntry[],
+    state: { cache: Map<string, RecordCache>; omitted: string[]; total: number },
+  ): AsyncGenerator<DiffBody> {
+    if (entries.length > 10000) {
+      for (const entry of entries) if (entry.content === "text") state.omitted.push(entry.path);
+      return;
+    }
+    comparison.selectBodies(
+      new Set(entries.filter((entry) => entry.body).map((entry) => entry.path)),
+    );
+    for (let index = 0; index < comparison.files.length; index++) {
+      if (isInterrupted(target)) return;
+      const file = comparison.files[index];
+      const entry = entries[index];
+      if (entry.content === "binary") continue;
+      let record = target.cache.get(entry.path);
+      if (entry.body || !record) {
+        const read = await comparison.read(file, {
+          remainingBytes: TOTAL_DIFF_MAX_BYTES - state.total,
+        });
+        if (read.kind === "too_large") {
+          state.omitted.push(entry.path);
+          continue;
+        }
+        record = { identity: file.identity, body: read.body, bytes: read.bytes };
+      }
+      if (exceedsBudget(state.total, record.bytes)) {
+        state.omitted.push(entry.path);
+        continue;
+      }
+      state.total += record.bytes;
+      state.cache.set(entry.path, record);
+      if (entry.body) yield record.body;
+    }
+  }
+  async close(): Promise<void> {
+    for (const target of this.targets.values()) {
+      target.closed = true;
+      if (target.timer) clearTimeout(target.timer);
+      await target.opening;
+      await target.release?.();
+      await target.refresh;
+      await target.interpretationCheck;
+    }
+    this.targets.clear();
+    await this.dependencies.close();
+  }
+}
+
+function isInterrupted(target: Target): boolean {
+  return target.closed || target.dirty;
+}
+function exceedsBudget(total: number, bytes: number): boolean {
+  return total + bytes > TOTAL_DIFF_MAX_BYTES;
+}
+function needsBody(target: Target, entry: DiffEntry, identity: string): boolean {
+  return (
+    entry.content === "text" &&
+    (target.error !== null || target.cache.get(entry.path)?.identity !== identity)
+  );
+}
+
+function diffError(error: unknown): DiffError {
+  return {
+    code: error instanceof DiffReadError ? error.code : "UNKNOWN",
+    message: error instanceof Error ? error.message : String(error),
+  };
+}
+
+export { DiffSession } from "./session.js";
+
+function endpointKey(endpoint: DiffEndpoint): string[] {
+  if (endpoint.kind === "rev") return [endpoint.kind, endpoint.rev];
+  return [endpoint.kind];
+}
diff --git a/packages/server/src/server/diff/inputs.ts b/packages/server/src/server/diff/inputs.ts
new file mode 100644
index 0000000000..84a5a7f446
--- /dev/null
+++ b/packages/server/src/server/diff/inputs.ts
@@ -0,0 +1,110 @@
+import { createHash } from "node:crypto";
+import { runGitCommand, type GitCommandOptions } from "../../utils/run-git-command.js";
+
+interface Interpretation {
+  config: string;
+  attributes: Map<string, string[]>;
+  fingerprint: string;
+}
+
+// Reuse depends on Git's interpretation, not just filesystem metadata. Ask Git
+// for effective attributes/config and filtered blob identities without writing objects.
+export async function readGitInputs(
+  paths: string[],
+  worktreeFiles: Set<string>,
+  options: GitCommandOptions,
+) {
+  const regular = paths.filter((path) => worktreeFiles.has(path));
+  const [interpretation, blobs] = await Promise.all([
+    readInterpretation(paths, options),
+    regular.length
+      ? runGitCommand(["hash-object", "--stdin-paths"], {
+          ...options,
+          input: regular.map(quotePath).join("\n") + "\n",
+        })
+      : null,
+  ]);
+  if (blobs?.truncated) throw new Error("Git input identity exceeded the output budget");
+  const hashes = blobs?.stdout.trim().split(/\r?\n/) ?? [];
+  if (hashes.length !== regular.length) throw new Error("Git returned incomplete blob identities");
+  const blobByPath = new Map(regular.map((path, index) => [path, hashes[index]]));
+  const identities = new Map(
+    paths.map((path) => [
+      path,
+      fingerprint([
+        interpretation.config,
+        interpretation.attributes.get(path) ?? [],
+        blobByPath.get(path) ?? null,
+      ]),
+    ]),
+  );
+  return {
+    identities,
+    hasInterpretationChanged: interpretationCheck(paths, options.cwd, interpretation.fingerprint),
+  };
+}
+
+function interpretationCheck(
+  paths: string[],
+  cwd: string,
+  baseline: string,
+): () => Promise<boolean> {
+  // Retain only the input description, never a comparison's patch/source pages.
+  return async () => {
+    const current = await readInterpretation(paths, {
+      cwd,
+      envOverlay: { GIT_OPTIONAL_LOCKS: "0" },
+    });
+    return current.fingerprint !== baseline;
+  };
+}
+
+async function readInterpretation(
+  paths: string[],
+  options: GitCommandOptions,
+): Promise<Interpretation> {
+  if (!paths.length) return { config: "", attributes: new Map(), fingerprint: "" };
+  const [config, result] = await Promise.all([
+    runGitCommand(["config", "--null", "--list"], options),
+    runGitCommand(["check-attr", "--all", "-z", "--stdin"], {
+      ...options,
+      input: paths.join("\0") + "\0",
+    }),
+  ]);
+  if (config.truncated || result.truncated)
+    throw new Error("Git input identity exceeded the output budget");
+  const attributes = new Map<string, string[]>();
+  const fields = result.stdout.split("\0");
+  if (fields.at(-1) === "") fields.pop();
+  if (fields.length % 3) throw new Error("Git returned invalid attributes");
+  for (let index = 0; index < fields.length; index += 3) {
+    const values = attributes.get(fields[index]) ?? [];
+    values.push(JSON.stringify([fields[index + 1], fields[index + 2]]));
+    attributes.set(fields[index], values);
+  }
+  for (const values of attributes.values()) values.sort();
+  const configIdentity = createHash("sha256").update(config.stdout).digest("hex");
+  return {
+    config: configIdentity,
+    attributes,
+    fingerprint: fingerprint([
+      configIdentity,
+      paths.map((path) => [path, attributes.get(path) ?? []]),
+    ]),
+  };
+}
+
+function fingerprint(value: unknown): string {
+  return createHash("sha256").update(JSON.stringify(value)).digest("hex");
+}
+
+function quotePath(path: string): string {
+  let quoted = '"';
+  for (const byte of Buffer.from(path)) {
+    quoted +=
+      byte >= 32 && byte <= 126 && byte !== 34 && byte !== 92
+        ? String.fromCharCode(byte)
+        : `\\${byte.toString(8).padStart(3, "0")}`;
+  }
+  return quoted + '"';
+}
diff --git a/packages/server/src/server/diff/patches.ts b/packages/server/src/server/diff/patches.ts
new file mode 100644
index 0000000000..ef5dbc08c1
--- /dev/null
+++ b/packages/server/src/server/diff/patches.ts
@@ -0,0 +1,80 @@
+import { runGitCommand, type GitCommandOptions } from "../../utils/run-git-command.js";
+import { parseDiff } from "../utils/diff-highlighter.js";
+import type { ListedFile } from "./git.js";
+
+interface Patch {
+  stdout: string;
+  truncated: boolean;
+}
+
+// Acquire one bounded page lazily. Highlighting and delivery remain per file.
+export class Patches {
+  private files: ListedFile[];
+  private pending = new Map<string, Promise<Map<string, Patch>>>();
+  constructor(
+    private args: string[],
+    private options: GitCommandOptions,
+    files: ListedFile[],
+  ) {
+    this.files = files.filter((file) => file.source.kind === "tracked" && file.entry.body);
+  }
+  select(paths: ReadonlySet<string>): void {
+    this.files = this.files.filter((file) => paths.has(file.entry.path));
+  }
+  async read(file: ListedFile, maxBytes: number): Promise<Patch> {
+    const existing = this.pending.get(file.entry.path);
+    if (existing) return (await existing).get(file.entry.path) ?? { stdout: "", truncated: false };
+    const renamed = file.entry.oldPath !== null;
+    const candidates = this.files.filter(
+      (candidate) => (candidate.entry.oldPath !== null) === renamed,
+    );
+    const index = candidates.indexOf(file);
+    const page = renamed || index < 0 ? [file] : candidates.slice(index, index + 64);
+    this.pending.clear();
+    const reading = this.load(page, maxBytes);
+    for (const candidate of page) this.pending.set(candidate.entry.path, reading);
+    return (await reading).get(file.entry.path) ?? { stdout: "", truncated: false };
+  }
+
+  private async load(files: ListedFile[], maxBytes: number): Promise<Map<string, Patch>> {
+    const paths = [
+      ...new Set(
+        files.flatMap((file) =>
+          file.entry.oldPath === null ? [file.entry.path] : [file.entry.oldPath, file.entry.path],
+        ),
+      ),
+    ];
+    const result = await runGitCommand(
+      [
+        ...this.args,
+        ...(files[0].entry.oldPath !== null ? ["--diff-filter=RC"] : []),
+        "--patch",
+        "--",
+        ...paths.map((path) => `:(literal)${path}`),
+      ],
+      {
+        ...this.options,
+        acceptExitCodes: [0, 1],
+        maxOutputBytes: (files.length === 1 ? maxBytes : 8 * maxBytes) + 1,
+      },
+    );
+    if (files.length === 1) return new Map([[files[0].entry.path, result]]);
+    if (result.truncated) {
+      const middle = Math.ceil(files.length / 2);
+      return new Map([
+        ...(await this.load(files.slice(0, middle), maxBytes)),
+        ...(await this.load(files.slice(middle), maxBytes)),
+      ]);
+    }
+    const patches = new Map<string, Patch>();
+    for (const section of result.stdout.split(/(?=^diff --git )/m).filter(Boolean)) {
+      const hunkStart = section.indexOf("\n@@ ");
+      const parsed = parseDiff(hunkStart < 0 ? section : section.slice(0, hunkStart))[0];
+      if (!parsed) throw new Error("Git returned an invalid patch header");
+      const previous = patches.get(parsed.path)?.stdout ?? "";
+      const stdout = previous + section;
+      patches.set(parsed.path, { stdout, truncated: Buffer.byteLength(stdout) > maxBytes });
+    }
+    return patches;
+  }
+}
diff --git a/packages/server/src/server/diff/session.test.ts b/packages/server/src/server/diff/session.test.ts
new file mode 100644
index 0000000000..3ffc0a40e5
--- /dev/null
+++ b/packages/server/src/server/diff/session.test.ts
@@ -0,0 +1,96 @@
+import { execFileSync } from "node:child_process";
+import { mkdtemp, writeFile, rm } from "node:fs/promises";
+import { join } from "node:path";
+import { tmpdir } from "node:os";
+import pino from "pino";
+import { expect, test } from "vitest";
+import {
+  decodeDiffFrame,
+  DiffOpcode,
+  type DiffFrame,
+} from "@getpaseo/protocol/binary-frames/index";
+import { DiffSession, DiffSubscriptions } from "./index.js";
+import { createFileObserver } from "../file-observer/index.js";
+import { SessionDelivery } from "../session/owned-subscriptions/index.js";
+
+test("a failed physical send releases that subscriber while its sibling completes the revision", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-send-failure-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  const observer = createFileObserver();
+  const subscriptions = new DiffSubscriptions({
+    async requestWorkingTreeWatch(root, changed) {
+      const watch = await observer.subscribe(root, () => changed(), {
+        ignore: [join(root, ".git")],
+      });
+      return {
+        repoRoot: root,
+        unsubscribe: async () => {
+          await watch.unsubscribe();
+        },
+      };
+    },
+  });
+  const first = {};
+  const second = {};
+  let failFirst = false;
+  const firstFrames: DiffFrame[] = [];
+  const secondFrames: DiffFrame[] = [];
+  const delivery = new SessionDelivery(
+    () => {},
+    async (source, bytes) => {
+      if (source === first && failFirst) throw new Error("Physical send failed");
+      const frame = decodeDiffFrame(bytes);
+      const received = source === first ? firstFrames : secondFrames;
+      received.push(frame);
+    },
+  );
+  delivery.attach(first, true);
+  delivery.attach(second, true);
+  const session = new DiffSession(subscriptions, pino({ level: "silent" }));
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "README"), "base\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    await writeFile(join(cwd, "x.ts"), "export const value = 1;\n");
+    for (const [source, requestId] of [
+      [first, "first"],
+      [second, "second"],
+    ] as const) {
+      const message = {
+        type: "diff.subscribe.request" as const,
+        requestId,
+        cwd,
+        base: { kind: "rev" as const, rev: "HEAD" },
+        head: { kind: "worktree" as const },
+      };
+      await delivery.request(source, message, () => session.subscribe(message, delivery, () => {}));
+      const received = source === first ? firstFrames : secondFrames;
+      await waitForEnd(received);
+    }
+    secondFrames.length = 0;
+    failFirst = true;
+    await writeFile(join(cwd, "x.ts"), "export const value = 2;\n");
+    await waitForEnd(secondFrames);
+    const begins = secondFrames
+      .filter((frame) => frame.opcode === DiffOpcode.Begin)
+      .map((frame) => frame.revision);
+    expect(new Set(begins).size).toBe(begins.length);
+    expect(secondFrames.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null });
+    expect(delivery.subscriptionIds(first, "diffs")).toEqual([]);
+    expect(delivery.subscriptionIds(second, "diffs")).toHaveLength(1);
+  } finally {
+    await delivery.close();
+    await subscriptions.close();
+    await observer.close();
+    await rm(cwd, { recursive: true, force: true });
+  }
+}, 30000);
+
+async function waitForEnd(frames: DiffFrame[]): Promise<void> {
+  await expect
+    .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+    .toBe(true);
+}
diff --git a/packages/server/src/server/diff/session.ts b/packages/server/src/server/diff/session.ts
new file mode 100644
index 0000000000..a965b2fa91
--- /dev/null
+++ b/packages/server/src/server/diff/session.ts
@@ -0,0 +1,86 @@
+import type { Logger } from "pino";
+import { encodeDiffFrame } from "@getpaseo/protocol/binary-frames/index";
+import type {
+  DiffSubscribeRequest,
+  SessionOutboundMessage,
+  DiffError,
+} from "@getpaseo/protocol/messages";
+import type { SessionDelivery, OwnedSubscription } from "../session/owned-subscriptions/index.js";
+import { DiffReadError } from "./git.js";
+import type { DiffSubscriptions, DiffSubscription } from "./index.js";
+
+export class DiffSession {
+  private slots = new Set<number>();
+  constructor(
+    private subscriptions: DiffSubscriptions,
+    private logger: Pick<Logger, "debug" | "error">,
+  ) {}
+  async subscribe(
+    msg: DiffSubscribeRequest,
+    ownership: SessionDelivery,
+    emit: (message: SessionOutboundMessage) => void,
+  ): Promise<void> {
+    const slot = Array.from({ length: 256 }, (_, value) => value).find(
+      (value) => !this.slots.has(value),
+    );
+    if (slot === undefined) {
+      this.reject(msg, emit, {
+        code: "TOO_MANY_SUBSCRIPTIONS",
+        message: "Too many diff subscriptions",
+      });
+      return;
+    }
+    this.slots.add(slot);
+    let subscription: DiffSubscription | null = null;
+    const owner = ownership.begin("diffs", undefined, async () => {
+      this.slots.delete(slot);
+      await subscription?.release();
+    });
+    try {
+      subscription = await this.subscriptions.subscribe(msg, async (frame) => {
+        if (owner.signal.aborted) return;
+        const bytes = encodeDiffFrame({ ...frame, slot });
+        try {
+          await owner.emitBinaryAndWait(bytes);
+        } catch (error) {
+          void this.stopFailedSource(owner, error);
+        }
+      });
+      if (owner.signal.aborted) {
+        await subscription.release();
+        return;
+      }
+      emit({
+        type: "diff.subscribe.response",
+        payload: { requestId: msg.requestId, subscriptionId: owner.responseId, slot, error: null },
+      });
+      // Start outside the request context: the owned subscription carries delivery authority.
+      void subscription.start().catch((error) => this.stopFailedSource(owner, error));
+    } catch (error) {
+      await owner.release();
+      const code = error instanceof DiffReadError ? error.code : "UNKNOWN";
+      this.reject(msg, emit, {
+        code,
+        message: error instanceof Error ? error.message : String(error),
+      });
+    }
+  }
+  private async stopFailedSource(owner: OwnedSubscription, error: unknown): Promise<void> {
+    if (!owner.signal.aborted) this.logger.debug({ err: error }, "Diff frame delivery failed");
+    try {
+      await owner.release();
+    } catch (failure) {
+      this.logger.error({ err: failure }, "Failed to release diff subscription");
+    }
+  }
+  private reject(
+    msg: DiffSubscribeRequest,
+    emit: (message: SessionOutboundMessage) => void,
+    error: DiffError,
+  ): void {
+    emit({
+      type: "diff.subscribe.response",
+      payload: { requestId: msg.requestId, subscriptionId: "", slot: 0, error },
+    });
+  }
+}
diff --git a/packages/server/src/server/diff/sources.ts b/packages/server/src/server/diff/sources.ts
new file mode 100644
index 0000000000..776303a9eb
--- /dev/null
+++ b/packages/server/src/server/diff/sources.ts
@@ -0,0 +1,76 @@
+import { lstat, readlink } from "node:fs/promises";
+import { resolve } from "node:path";
+import { readGitFileContents, readGitFileContentAtRef } from "../../utils/git-file-contents.js";
+import type { ListedFile } from "./git.js";
+
+interface SourceOptions {
+  cwd: string;
+  baseSha: string;
+  headSha: string | null;
+  files: ListedFile[];
+}
+interface HighlightContext {
+  oldFileContent: string | null;
+  newFileContent: string | null | undefined;
+}
+
+// Keep one bounded page of source text; bodies are still highlighted only when requested.
+export class HighlightSources {
+  private indices: Map<string, number>;
+  private page = -1;
+  private pending: Promise<Map<string, string | null> | null> | null = null;
+  constructor(private options: SourceOptions) {
+    this.indices = new Map(options.files.map((file, index) => [file.entry.path, index]));
+  }
+  async read(file: ListedFile): Promise<HighlightContext> {
+    const index = this.indices.get(file.entry.path);
+    if (index === undefined) throw new Error("Unknown comparison file");
+    const page = Math.floor(index / 64) * 64;
+    if (this.pending === null || this.page !== page) {
+      this.page = page;
+      this.pending = this.load(page);
+    }
+    const contents = await this.pending;
+    const oldFileContent =
+      file.entry.change === "added"
+        ? null
+        : await this.content(contents, this.options.baseSha, file.entry.oldPath ?? file.entry.path);
+    let newFileContent: string | null | undefined;
+    if (this.options.headSha !== null) {
+      newFileContent = await this.content(contents, this.options.headSha, file.entry.path);
+    } else if (file.entry.change !== "deleted") {
+      const path = resolve(this.options.cwd, file.entry.path);
+      newFileContent = await readWorktreeLink(path);
+    }
+    return { oldFileContent, newFileContent };
+  }
+  private async load(start: number): Promise<Map<string, string | null> | null> {
+    const specs: string[] = [];
+    for (const file of this.options.files.slice(start, start + 64)) {
+      if (file.entry.content === "binary") continue;
+      if (file.entry.change !== "added")
+        specs.push(`${this.options.baseSha}:${file.entry.oldPath ?? file.entry.path}`);
+      if (this.options.headSha !== null) specs.push(`${this.options.headSha}:${file.entry.path}`);
+    }
+    return readGitFileContents(this.options.cwd, specs);
+  }
+  private async content(
+    contents: Map<string, string | null> | null,
+    ref: string,
+    path: string,
+  ): Promise<string | null> {
+    if (contents === null) return readGitFileContentAtRef(this.options.cwd, ref, path);
+    const content = contents.get(`${ref}:${path}`);
+    if (content === undefined) throw new Error("Missing comparison source");
+    return content;
+  }
+}
+
+async function readWorktreeLink(path: string): Promise<string | undefined> {
+  try {
+    if ((await lstat(path)).isSymbolicLink()) return await readlink(path);
+  } catch {
+    // Source context is optional; files can disappear after Git reads the patch.
+  }
+  return undefined;
+}
diff --git a/packages/server/src/server/diff/subscriptions.test.ts b/packages/server/src/server/diff/subscriptions.test.ts
new file mode 100644
index 0000000000..69457d2be7
--- /dev/null
+++ b/packages/server/src/server/diff/subscriptions.test.ts
@@ -0,0 +1,936 @@
+import { execFileSync } from "node:child_process";
+import { mkdtemp, writeFile, rm, mkdir } from "node:fs/promises";
+import { join } from "node:path";
+import { tmpdir } from "node:os";
+import { expect, test } from "vitest";
+import { DiffOpcode, type DiffFrame } from "@getpaseo/protocol/binary-frames/index";
+import { DiffSubscriptions } from "./index.js";
+import { createFileObserver } from "../file-observer/index.js";
+
+test("shares computation, highlights only the changed file, recovers refs and releases observations", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-subscriptions-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  const observer = createFileObserver();
+  const subscriptions = new DiffSubscriptions({
+    async requestWorkingTreeWatch(root, onChange) {
+      const subscription = await observer.subscribe(root, () => onChange(), {
+        ignore: [join(root, ".git")],
+      });
+      return {
+        repoRoot: root,
+        unsubscribe: () => {
+          void subscription.unsubscribe();
+        },
+      };
+    },
+  });
+  const first: DiffFrame[] = [];
+  const second: DiffFrame[] = [];
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "README"), "base\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    for (let index = 0; index < 252; index++)
+      await writeFile(join(cwd, `${index}.ts`), `const value = ${index};\n`);
+    const compare = {
+      cwd,
+      base: { kind: "rev" as const, rev: "HEAD" },
+      head: { kind: "worktree" as const },
+      highlight: true,
+    };
+    const coldStarted = performance.now();
+    let lastEndAt = coldStarted;
+    const a = await subscriptions.subscribe(compare, async (frame) => {
+      first.push(frame);
+      if (frame.opcode === DiffOpcode.End) lastEndAt = performance.now();
+    });
+    await a.start();
+    const coldMs = lastEndAt - coldStarted;
+    const before = subscriptions.getMetrics().computations;
+    const previousHighlightCalls = subscriptions.getMetrics().highlightCalls;
+    const b = await subscriptions.subscribe(compare, async (frame) => {
+      second.push(frame);
+    });
+    await b.start();
+    expect(subscriptions.getMetrics()).toEqual({
+      targets: 1,
+      subscriptions: 2,
+      computations: before,
+      highlightCalls: previousHighlightCalls,
+      metadataObservers: 1,
+    });
+    first.length = 0;
+    second.length = 0;
+    const refreshStarted = performance.now();
+    await writeFile(join(cwd, "9.ts"), "const value = 999;\n");
+    await expect
+      .poll(() => first.filter((frame) => frame.opcode === DiffOpcode.End).length, {
+        timeout: 10000,
+      })
+      .toBeGreaterThan(0);
+    const begin = first.find((frame) => frame.opcode === DiffOpcode.Begin);
+    if (!begin || begin.opcode !== DiffOpcode.Begin) throw new Error("Missing begin");
+    expect(begin.entries.filter((entry) => entry.body).map((entry) => entry.path)).toEqual([
+      "9.ts",
+    ]);
+    const bodies = first.filter((frame) => frame.opcode === DiffOpcode.Bodies);
+    expect(bodies).toHaveLength(1);
+    expect(second).toEqual(first);
+    await expect
+      .poll(() => subscriptions.getMetrics().highlightCalls, { timeout: 10000 })
+      .toBe(previousHighlightCalls + 1);
+    const artifactDirectory = join(
+      import.meta.dirname,
+      "../../../../../.artifacts/diff-subscription",
+    );
+    await mkdir(artifactDirectory, { recursive: true });
+    await writeFile(
+      join(artifactDirectory, "refresh-metrics.json"),
+      JSON.stringify(
+        {
+          files: 252,
+          coldMs,
+          oneFileRefreshMs: lastEndAt - refreshStarted,
+          changedBodies: bodies.length,
+          highlightCalls: subscriptions.getMetrics().highlightCalls - previousHighlightCalls,
+        },
+        null,
+        2,
+      ),
+    );
+    await a.release();
+    await b.release();
+    expect(subscriptions.getMetrics().targets).toBe(0);
+    expect(subscriptions.getMetrics().metadataObservers).toBe(0);
+    const missing: DiffFrame[] = [];
+    const recovery = await subscriptions.subscribe(
+      {
+        ...compare,
+        base: { kind: "rev", rev: "refs/tags/later" },
+        head: { kind: "rev", rev: "HEAD" },
+      },
+      async (frame) => {
+        missing.push(frame);
+      },
+    );
+    await recovery.start();
+    expect(missing.at(-1)).toMatchObject({
+      opcode: DiffOpcode.End,
+      error: { code: "REF_NOT_FOUND" },
+    });
+    missing.length = 0;
+    git("update-ref", "refs/tags/later", "HEAD");
+    await expect
+      .poll(
+        () => missing.some((frame) => frame.opcode === DiffOpcode.End && frame.error === null),
+        { timeout: 10_000 },
+      )
+      .toBe(true);
+    await recovery.release();
+  } finally {
+    await subscriptions.close();
+    await observer.close();
+    await rm(cwd, { recursive: true, force: true });
+  }
+}, 60_000);
+
+test("supersedes an in-flight revision at a batch boundary and ends the replacement", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-supersede-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  const observer = createFileObserver();
+  const subscriptions = new DiffSubscriptions({
+    async requestWorkingTreeWatch(root, onChange) {
+      const watch = await observer.subscribe(root, () => onChange(), {
+        ignore: [join(root, ".git")],
+      });
+      return {
+        repoRoot: root,
+        unsubscribe: async () => {
+          await watch.unsubscribe();
+        },
+      };
+    },
+  });
+  const frames: DiffFrame[] = [];
+  let interrupted = false;
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "README"), "base\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    const content =
+      Array.from(
+        { length: 100 },
+        (_, index) => `export const fn${index} = (value: string) => ({ value, count: ${index} });`,
+      ).join("\n") + "\n";
+    for (let index = 0; index < 80; index++) await writeFile(join(cwd, `${index}.ts`), content);
+    const subscription = await subscriptions.subscribe(
+      { cwd, base: { kind: "rev", rev: "HEAD" }, head: { kind: "worktree" } },
+      async (frame) => {
+        frames.push(frame);
+        if (frame.opcode === DiffOpcode.Bodies && !interrupted) {
+          interrupted = true;
+          await writeFile(join(cwd, "0.ts"), content + "export const added = true;\n");
+          await subscriptions.invalidateForCwd(cwd);
+        }
+      },
+    );
+    await subscription.start();
+    const begins = frames.filter((frame) => frame.opcode === DiffOpcode.Begin);
+    expect(interrupted).toBe(true);
+    expect(begins.length).toBeGreaterThan(1);
+    for (let index = 0; index < begins.length - 1; index++) {
+      const revision = begins[index].revision;
+      const ended = frames.some(
+        (frame) => frame.opcode === DiffOpcode.End && frame.revision === revision,
+      );
+      const superseded = begins[index + 1].revision > revision;
+      expect(ended || superseded).toBe(true);
+    }
+    expect(frames.at(-1)).toMatchObject({
+      opcode: DiffOpcode.End,
+      revision: begins.at(-1)?.revision,
+      error: null,
+    });
+    await subscription.release();
+  } finally {
+    await subscriptions.close();
+    await observer.close();
+    await rm(cwd, { recursive: true, force: true });
+  }
+}, 30_000);
+
+test("moving, deleting and recreating a branch recovers, and staging changes the resolved index SHA", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-ref-index-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  const observer = createFileObserver();
+  const subscriptions = new DiffSubscriptions({
+    async requestWorkingTreeWatch(root, changed) {
+      const watch = await observer.subscribe(root, () => changed(), {
+        ignore: [join(root, ".git")],
+      });
+      return {
+        repoRoot: root,
+        unsubscribe: async () => {
+          await watch.unsubscribe();
+        },
+      };
+    },
+  });
+  const frames: DiffFrame[] = [];
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "README"), "base\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    git("branch", "compare");
+    await writeFile(join(cwd, "x.ts"), "export const value = 1;\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "feature");
+    const head = git("rev-parse", "HEAD");
+    const branch = await subscriptions.subscribe(
+      { cwd, base: { kind: "rev", rev: "refs/heads/compare" }, head: { kind: "rev", rev: "HEAD" } },
+      async (frame) => {
+        frames.push(frame);
+      },
+    );
+    await branch.start();
+    frames.length = 0;
+    git("update-ref", "refs/heads/compare", head);
+    await expect
+      .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+      .toBe(true);
+    expect(frames.find((frame) => frame.opcode === DiffOpcode.Begin)).toMatchObject({
+      baseSha: head,
+      entries: [],
+    });
+    frames.length = 0;
+    git("update-ref", "-d", "refs/heads/compare");
+    await expect
+      .poll(
+        () =>
+          frames.some(
+            (frame) => frame.opcode === DiffOpcode.End && frame.error?.code === "REF_NOT_FOUND",
+          ),
+        { timeout: 10000 },
+      )
+      .toBe(true);
+    frames.length = 0;
+    git("update-ref", "refs/heads/compare", head);
+    await expect
+      .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End && frame.error === null), {
+        timeout: 10000,
+      })
+      .toBe(true);
+    await branch.release();
+    frames.length = 0;
+    const staged = await subscriptions.subscribe(
+      { cwd, base: { kind: "rev", rev: "HEAD" }, head: { kind: "index" } },
+      async (frame) => {
+        frames.push(frame);
+      },
+    );
+    await staged.start();
+    const old = frames.find((frame) => frame.opcode === DiffOpcode.Begin);
+    if (!old || old.opcode !== DiffOpcode.Begin) throw new Error("Missing initial index revision");
+    frames.length = 0;
+    await writeFile(join(cwd, "staged.ts"), "export const staged = true;\n");
+    git("add", "staged.ts");
+    await expect
+      .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+      .toBe(true);
+    const changed = frames.find((frame) => frame.opcode === DiffOpcode.Begin);
+    if (!changed || changed.opcode !== DiffOpcode.Begin) throw new Error("Missing staged revision");
+    expect(changed.headSha).not.toBe(old.headSha);
+    expect(changed.entries.map((entry) => entry.path)).toEqual(["staged.ts"]);
+    await staged.release();
+  } finally {
+    await subscriptions.close();
+    await observer.close();
+    await rm(cwd, { recursive: true, force: true });
+  }
+}, 30000);
+
+test("a cached replay completes before a live refresh can depend on it", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-replay-order-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" });
+  const subscriptions = new DiffSubscriptions({
+    async requestWorkingTreeWatch() {
+      return { repoRoot: cwd, unsubscribe: async () => {} };
+    },
+  });
+  let resume!: () => void;
+  let began!: () => void;
+  const paused = new Promise<void>((resolve) => {
+    resume = resolve;
+  });
+  const replayBegan = new Promise<void>((resolve) => {
+    began = resolve;
+  });
+  const frames: DiffFrame[] = [];
+  try {
+    git("init", "-b", "main");
+    git("config", "user.email", "test@example.com");
+    git("config", "user.name", "Test");
+    await writeFile(join(cwd, "a.txt"), "base\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    await writeFile(join(cwd, "a.txt"), "first\n");
+    const compare = {
+      cwd,
+      base: { kind: "rev", rev: "HEAD" },
+      head: { kind: "worktree" },
+      highlight: false,
+    } as const;
+    const first = await subscriptions.subscribe(compare, async () => {});
+    await first.start();
+    const second = await subscriptions.subscribe(compare, async (frame) => {
+      frames.push(frame);
+      if (frames.length === 1) {
+        began();
+        await paused;
+      }
+    });
+    const replay = second.start();
+    await replayBegan;
+    await writeFile(join(cwd, "a.txt"), "second\n");
+    await subscriptions.invalidateForCwd(cwd);
+    await new Promise((resolve) => setTimeout(resolve, 250));
+    resume();
+    await replay;
+    await expect
+      .poll(() => frames.filter((frame) => frame.opcode === DiffOpcode.End).length, {
+        timeout: 10000,
+      })
+      .toBe(2);
+    let committed = 0;
+    for (const frame of frames) {
+      if (frame.opcode === DiffOpcode.Begin) expect([0, committed]).toContain(frame.baseRevision);
+      if (frame.opcode === DiffOpcode.End) committed = frame.revision;
+    }
+    await second.release();
+    await first.release();
+  } finally {
+    resume();
+    await subscriptions.close();
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test("submodule commits invalidate cached worktree gitlink bodies", async () => {
+  const { lstat } = await import("node:fs/promises");
+  const cwd = await mkdtemp(join(tmpdir(), "diff-gitlink-cache-"));
+  const sub = join(cwd, "sub");
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  const streams = new DiffSubscriptions({
+    async requestWorkingTreeWatch(root) {
+      return { repoRoot: root, unsubscribe: async () => {} };
+    },
+  });
+  const frames: DiffFrame[] = [];
+  try {
+    git("init", "-b", "main");
+    git("config", "user.name", "Test");
+    git("config", "user.email", "test@example.com");
+    await mkdir(sub);
+    git("-C", "sub", "init", "-b", "main");
+    git("-C", "sub", "config", "user.name", "Test");
+    git("-C", "sub", "config", "user.email", "test@example.com");
+    await writeFile(join(sub, "a.txt"), "A\n");
+    git("-C", "sub", "add", ".");
+    git("-C", "sub", "-c", "commit.gpgsign=false", "commit", "-m", "A");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "record A");
+    await writeFile(join(sub, "a.txt"), "B\n");
+    git("-C", "sub", "-c", "commit.gpgsign=false", "commit", "-am", "B");
+    const before = await lstat(sub, { bigint: true });
+    const subscription = await streams.subscribe(
+      { cwd, base: { kind: "rev", rev: "HEAD" }, head: { kind: "worktree" } },
+      async (frame) => {
+        frames.push(frame);
+      },
+    );
+    await subscription.start();
+    expect(frames.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null });
+    frames.length = 0;
+    await writeFile(join(sub, "a.txt"), "C\n");
+    git("-C", "sub", "-c", "commit.gpgsign=false", "commit", "-am", "C");
+    const sha = git("-C", "sub", "rev-parse", "HEAD");
+    expect((await lstat(sub, { bigint: true })).mtimeNs).toBe(before.mtimeNs);
+    await streams.invalidateForCwd(cwd);
+    await expect
+      .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 5000 })
+      .toBe(true);
+    const bodies = frames.flatMap((frame) =>
+      frame.opcode === DiffOpcode.Bodies ? frame.files : [],
+    );
+    expect(bodies.flatMap((file) => file.hunks.flatMap((hunk) => hunk.lines))).toContainEqual(
+      expect.objectContaining({ type: "add", content: `Subproject commit ${sha}` }),
+    );
+    await subscription.release();
+  } finally {
+    await streams.close();
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test.each([true, false])(
+  "tracked=%s timestamp-preserving replacements refresh cached bodies",
+  async (tracked) => {
+    const { lstat, utimes } = await import("node:fs/promises");
+    const cwd = await mkdtemp(join(tmpdir(), "diff-preserved-time-"));
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+    const streams = new DiffSubscriptions({
+      async requestWorkingTreeWatch(root) {
+        return { repoRoot: root, unsubscribe: async () => {} };
+      },
+    });
+    const frames: DiffFrame[] = [];
+    const path = join(cwd, "file.txt");
+    const timestamp = new Date("2000-01-01T00:00:00Z");
+    try {
+      git("init", "-b", "main");
+      git("config", "user.name", "Test");
+      git("config", "user.email", "test@example.com");
+      await writeFile(join(cwd, "README"), "base\n");
+      if (tracked) await writeFile(path, "base\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      await writeFile(path, "first\n");
+      await utimes(path, timestamp, timestamp);
+      const compare = {
+        cwd,
+        base: { kind: "rev" as const, rev: "HEAD" },
+        head: { kind: "worktree" as const },
+      };
+      const subscription = await streams.subscribe(compare, async (frame) => {
+        frames.push(frame);
+      });
+      await subscription.start();
+      expect(frames.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null });
+      const before = await lstat(path, { bigint: true });
+      frames.length = 0;
+      await writeFile(path, "later\n");
+      await utimes(path, timestamp, timestamp);
+      const after = await lstat(path, { bigint: true });
+      expect(after.mtimeNs).toBe(before.mtimeNs);
+      expect(after.size).toBe(before.size);
+      expect(after.ctimeNs).not.toBe(before.ctimeNs);
+      await streams.invalidateForCwd(cwd);
+      await expect
+        .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 5000 })
+        .toBe(true);
+      const files = frames.flatMap((frame) =>
+        frame.opcode === DiffOpcode.Bodies ? frame.files : [],
+      );
+      expect(files.flatMap((file) => file.hunks.flatMap((hunk) => hunk.lines))).toContainEqual(
+        expect.objectContaining({ type: "add", content: "later" }),
+      );
+      const { listComparison } = await import("./git.js");
+      const fresh = await listComparison(compare);
+      try {
+        const record = await fresh.read(fresh.files[0]);
+        if (record.kind !== "ready") throw new Error("Expected readable replacement");
+        expect(files).toEqual([record.body]);
+      } finally {
+        await fresh.close();
+      }
+      await subscription.release();
+    } finally {
+      await streams.close();
+      await rm(cwd, { recursive: true, force: true });
+    }
+  },
+);
+
+test.each([true, false])(
+  "autocrlf=%s highlighted CRLF worktrees keep the revision readable",
+  async (autocrlf) => {
+    const cwd = await mkdtemp(join(tmpdir(), "diff-crlf-"));
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+    const streams = new DiffSubscriptions({
+      async requestWorkingTreeWatch(root) {
+        return { repoRoot: root, unsubscribe: async () => {} };
+      },
+    });
+    const frames: DiffFrame[] = [];
+    try {
+      git("init", "-b", "main");
+      git("config", "user.name", "Test");
+      git("config", "user.email", "test@example.com");
+      git("config", "core.autocrlf", String(autocrlf));
+      await writeFile(join(cwd, "a.ts"), "export const value = 1;\r\n");
+      await writeFile(join(cwd, "b.txt"), "before\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      await writeFile(join(cwd, "a.ts"), "export const value = 2;\r\n");
+      await writeFile(join(cwd, "b.txt"), "after\n");
+      const subscription = await streams.subscribe(
+        { cwd, base: { kind: "rev", rev: "HEAD" }, head: { kind: "worktree" } },
+        async (frame) => {
+          frames.push(frame);
+        },
+      );
+      await subscription.start();
+      expect(frames.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null });
+      const files = frames.flatMap((frame) =>
+        frame.opcode === DiffOpcode.Bodies ? frame.files : [],
+      );
+      expect(files.map((file) => file.path)).toEqual(["a.ts", "b.txt"]);
+      const line = files[0].hunks
+        .flatMap((hunk) => hunk.lines)
+        .find((candidate) => candidate.type === "add");
+      expect(line?.content).toBe(`export const value = 2;${autocrlf ? "" : "\r"}`);
+      expect(line?.runs?.reduce((length, run) => length + run.length, 0)).toBe(
+        line?.content.length,
+      );
+      await subscription.release();
+    } finally {
+      await streams.close();
+      await rm(cwd, { recursive: true, force: true });
+    }
+  },
+);
+
+test("explicit refresh accepts an equivalent worktree path alias", async () => {
+  const { symlink } = await import("node:fs/promises");
+  const root = await mkdtemp(join(tmpdir(), "diff-refresh-alias-"));
+  const cwd = join(root, "repo");
+  const alias = join(root, "alias");
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  const streams = new DiffSubscriptions({
+    async requestWorkingTreeWatch(directory) {
+      return { repoRoot: directory, unsubscribe: async () => {} };
+    },
+  });
+  const frames: DiffFrame[] = [];
+  try {
+    await mkdir(cwd);
+    await symlink(cwd, alias, "junction");
+    git("init", "-b", "main");
+    git("config", "user.name", "Test");
+    git("config", "user.email", "test@example.com");
+    await writeFile(join(cwd, "a.txt"), "base\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    const base = git("rev-parse", "HEAD");
+    await writeFile(join(cwd, "a.txt"), "first\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "edit");
+    const head = git("rev-parse", "HEAD");
+    const subscription = await streams.subscribe(
+      { cwd, base: { kind: "rev", rev: base }, head: { kind: "rev", rev: head } },
+      async (frame) => {
+        frames.push(frame);
+      },
+    );
+    await subscription.start();
+    frames.length = 0;
+    await streams.invalidateForCwd(alias);
+    await expect
+      .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+      .toBe(true);
+    expect(frames.at(-1)).toMatchObject({ opcode: DiffOpcode.End, revision: 2, error: null });
+    await subscription.release();
+  } finally {
+    await streams.close();
+    await rm(root, { recursive: true, force: true });
+  }
+});
+
+test("attribute changes refresh interpreted content without rewriting the tracked file", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-attribute-input-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  const streams = new DiffSubscriptions({
+    async requestWorkingTreeWatch(root) {
+      return { repoRoot: root, unsubscribe: async () => {} };
+    },
+  });
+  const frames: DiffFrame[] = [];
+  try {
+    git("init", "-b", "main");
+    git("config", "user.name", "Test");
+    git("config", "user.email", "test@example.com");
+    git("config", "core.autocrlf", "false");
+    await writeFile(join(cwd, "file.txt"), "base\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    await writeFile(join(cwd, "file.txt"), "first\r\n");
+    const compare = {
+      cwd,
+      base: { kind: "rev" as const, rev: "HEAD" },
+      head: { kind: "worktree" as const },
+    };
+    const subscription = await streams.subscribe(compare, async (frame) => {
+      frames.push(frame);
+    });
+    await subscription.start();
+    frames.length = 0;
+    await writeFile(join(cwd, ".git", "info", "attributes"), "file.txt text eol=lf\n");
+    await streams.invalidateForCwd(cwd);
+    await expect
+      .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+      .toBe(true);
+    const files = frames.flatMap((frame) =>
+      frame.opcode === DiffOpcode.Bodies ? frame.files : [],
+    );
+    expect(files.flatMap((file) => file.hunks.flatMap((hunk) => hunk.lines))).toContainEqual(
+      expect.objectContaining({ type: "add", content: "first" }),
+    );
+    const { listComparison } = await import("./git.js");
+    const fresh = await listComparison(compare);
+    try {
+      const record = await fresh.read(fresh.files[0]);
+      if (record.kind !== "ready") throw new Error("Expected interpreted body");
+      expect(files).toEqual([record.body]);
+    } finally {
+      await fresh.close();
+    }
+    await subscription.release();
+  } finally {
+    await streams.close();
+    await rm(cwd, { recursive: true, force: true });
+  }
+});
+
+test("explicit refresh resolves subdirectories without refreshing a nested repository's parent", async () => {
+  const root = await mkdtemp(join(tmpdir(), "diff-refresh-directory-"));
+  const cwd = join(root, "repo");
+  const directory = join(cwd, "workspace");
+  const nested = join(directory, "nested");
+  const git = (at: string, ...args: string[]) =>
+    execFileSync("git", args, { cwd: at, encoding: "utf8" }).trim();
+  const streams = new DiffSubscriptions({
+    async requestWorkingTreeWatch(at) {
+      return { repoRoot: at, unsubscribe: async () => {} };
+    },
+  });
+  const frames: DiffFrame[] = [];
+  try {
+    await mkdir(nested, { recursive: true });
+    git(cwd, "init", "-b", "main");
+    git(cwd, "config", "user.name", "Test");
+    git(cwd, "config", "user.email", "test@example.com");
+    await writeFile(join(cwd, "file.txt"), "before\n");
+    git(cwd, "add", ".");
+    git(cwd, "-c", "commit.gpgsign=false", "commit", "-m", "base");
+    const base = git(cwd, "rev-parse", "HEAD");
+    await writeFile(join(cwd, "file.txt"), "after\n");
+    git(cwd, "add", ".");
+    git(cwd, "-c", "commit.gpgsign=false", "commit", "-m", "edit");
+    const head = git(cwd, "rev-parse", "HEAD");
+    git(nested, "init", "-b", "main");
+    git(nested, "config", "user.name", "Test");
+    git(nested, "config", "user.email", "test@example.com");
+    await writeFile(join(nested, "nested.txt"), "nested content\n");
+    git(nested, "add", ".");
+    git(nested, "-c", "commit.gpgsign=false", "commit", "-m", "nested base");
+    const nestedHead = git(nested, "rev-parse", "HEAD");
+    const subscription = await streams.subscribe(
+      { cwd: directory, base: { kind: "rev", rev: base }, head: { kind: "rev", rev: head } },
+      async (frame) => {
+        frames.push(frame);
+      },
+    );
+    await subscription.start();
+    frames.length = 0;
+    await streams.invalidateForCwd(directory);
+    await expect
+      .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+      .toBe(true);
+    expect(frames.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null, revision: 2 });
+    const nestedFrames: DiffFrame[] = [];
+    const sibling = await streams.subscribe(
+      { cwd: nested, base: { kind: "empty" }, head: { kind: "rev", rev: nestedHead } },
+      async (frame) => {
+        nestedFrames.push(frame);
+      },
+    );
+    await sibling.start();
+    nestedFrames.length = 0;
+    const before = streams.getMetrics().computations;
+    await streams.invalidateForCwd(nested);
+    await expect
+      .poll(() => nestedFrames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+      .toBe(true);
+    expect(streams.getMetrics().computations).toBe(before + 1);
+    await sibling.release();
+    await subscription.release();
+  } finally {
+    await streams.close();
+    await rm(root, { recursive: true, force: true });
+  }
+});
+
+test.each(["main", "linked"] as const)(
+  "%s checkout observes worktree configuration and shared attributes",
+  async (checkout) => {
+    const { resolve } = await import("node:path");
+    const { readFile } = await import("node:fs/promises");
+    const root = await mkdtemp(join(tmpdir(), "diff-interpretation-watch-"));
+    let cwd = join(root, "repo");
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+    const streams = new DiffSubscriptions({
+      async requestWorkingTreeWatch(at) {
+        return { repoRoot: at, unsubscribe: async () => {} };
+      },
+    });
+    const frames: DiffFrame[] = [];
+    try {
+      await mkdir(cwd);
+      git("init", "-b", "main");
+      git("config", "user.name", "Test");
+      git("config", "user.email", "test@example.com");
+      const lines = Array.from(
+        { length: 20 },
+        (_, index) => `export const value${index} = ${index};`,
+      );
+      await writeFile(join(cwd, "a.ts"), lines.join("\n") + "\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      const base = git("rev-parse", "HEAD");
+      lines[10] = "export const value10 = 999;";
+      await writeFile(join(cwd, "a.ts"), lines.join("\n") + "\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "edit");
+      git("config", "extensions.worktreeConfig", "true");
+      if (checkout === "linked") {
+        const linked = join(root, "linked");
+        git("worktree", "add", "-b", "side", linked);
+        cwd = linked;
+      }
+      git("config", "--worktree", "diff.context", "3");
+      const configPath = resolve(cwd, git("rev-parse", "--git-path", "config.worktree"));
+      const configText = await readFile(configPath, "utf8");
+      const subscription = await streams.subscribe(
+        { cwd, base: { kind: "rev", rev: base }, head: { kind: "rev", rev: "HEAD" } },
+        async (frame) => {
+          frames.push(frame);
+        },
+      );
+      await subscription.start();
+      const initialFiles = frames.flatMap((frame) =>
+        frame.opcode === DiffOpcode.Bodies ? frame.files : [],
+      );
+      expect(initialFiles[0].hunks[0].lines.filter((line) => line.type === "context")).toHaveLength(
+        6,
+      );
+      const attributesPath = resolve(cwd, git("rev-parse", "--git-path", "info/attributes"));
+      frames.length = 0;
+      await writeFile(attributesPath, "a.ts -diff\n");
+      await expect
+        .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+        .toBe(true);
+      expect(frames.find((frame) => frame.opcode === DiffOpcode.Begin)).toMatchObject({
+        entries: [{ path: "a.ts", content: "binary" }],
+      });
+      expect(frames.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null });
+      frames.length = 0;
+      await writeFile(attributesPath, "");
+      await expect
+        .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+        .toBe(true);
+      const restoredFiles = frames.flatMap((frame) =>
+        frame.opcode === DiffOpcode.Bodies ? frame.files : [],
+      );
+      expect(
+        restoredFiles[0].hunks[0].lines.filter((line) => line.type === "context"),
+      ).toHaveLength(6);
+      frames.length = 0;
+      const changedConfig = configText.replace("context = 3", "context = 0");
+      expect(changedConfig).not.toBe(configText);
+      await writeFile(configPath, changedConfig);
+      await expect
+        .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+        .toBe(true);
+      expect(frames.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null });
+      const updatedFiles = frames.flatMap((frame) =>
+        frame.opcode === DiffOpcode.Bodies ? frame.files : [],
+      );
+      expect(updatedFiles[0].hunks[0].lines.filter((line) => line.type === "context")).toHaveLength(
+        0,
+      );
+      await subscription.release();
+    } finally {
+      await streams.close();
+      await rm(root, { recursive: true, force: true });
+    }
+  },
+  30000,
+);
+
+test("pinned comparisons refresh Git interpretation before replaying to a joining subscriber", async () => {
+  const cwd = await mkdtemp(join(tmpdir(), "diff-pinned-interpretation-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  const streams = new DiffSubscriptions({
+    async requestWorkingTreeWatch(root) {
+      return { repoRoot: root, unsubscribe: async () => {} };
+    },
+  });
+  const frames: DiffFrame[] = [];
+  const joined: DiffFrame[] = [];
+  try {
+    git("init", "-b", "main");
+    git("config", "user.name", "Test");
+    git("config", "user.email", "test@example.com");
+    await writeFile(join(cwd, "a.ts"), "export const value = 1;\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    const base = git("rev-parse", "HEAD");
+    await writeFile(join(cwd, "a.ts"), "export const value = 2;\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "edit");
+    const compare = {
+      cwd,
+      base: { kind: "rev" as const, rev: base },
+      head: { kind: "rev" as const, rev: git("rev-parse", "HEAD") },
+    };
+    const first = await streams.subscribe(compare, async (frame) => {
+      frames.push(frame);
+    });
+    await first.start();
+    expect(frames.find((frame) => frame.opcode === DiffOpcode.Begin)).toMatchObject({
+      entries: [{ path: "a.ts", content: "text" }],
+    });
+    frames.length = 0;
+    await writeFile(join(cwd, ".git", "info", "attributes"), "a.ts -diff\n");
+    await expect
+      .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+      .toBe(true);
+    expect(frames.find((frame) => frame.opcode === DiffOpcode.Begin)).toMatchObject({
+      entries: [{ path: "a.ts", content: "binary" }],
+    });
+    expect(frames.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null });
+    const computations = streams.getMetrics().computations;
+    const second = await streams.subscribe(compare, async (frame) => {
+      joined.push(frame);
+    });
+    await second.start();
+    expect(joined.find((frame) => frame.opcode === DiffOpcode.Begin)).toMatchObject({
+      entries: [{ path: "a.ts", content: "binary" }],
+    });
+    expect(joined.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null });
+    expect(streams.getMetrics().computations).toBe(computations);
+    await second.release();
+    await first.release();
+  } finally {
+    await streams.close();
+    await rm(cwd, { recursive: true, force: true });
+  }
+}, 30000);
+
+test.each(["pinned", "HEAD"] as const)(
+  "%s revision comparisons observe worktree attributes and replay their current result",
+  async (endpoint) => {
+    const cwd = await mkdtemp(join(tmpdir(), "diff-worktree-attributes-"));
+    const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+    const observer = createFileObserver();
+    const streams = new DiffSubscriptions({
+      async requestWorkingTreeWatch(root, changed) {
+        const watch = await observer.subscribe(root, () => changed(), {
+          ignore: [join(root, ".git")],
+        });
+        return { repoRoot: root, unsubscribe: () => watch.unsubscribe() };
+      },
+    });
+    const frames: DiffFrame[] = [];
+    const joined: DiffFrame[] = [];
+    try {
+      git("init", "-b", "main");
+      git("config", "user.name", "Test");
+      git("config", "user.email", "test@example.com");
+      await writeFile(join(cwd, "a.ts"), "export const value = 1;\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+      const base = git("rev-parse", "HEAD");
+      await writeFile(join(cwd, "a.ts"), "export const value = 2;\n");
+      git("add", ".");
+      git("-c", "commit.gpgsign=false", "commit", "-m", "edit");
+      const compare = {
+        cwd,
+        base: { kind: "rev" as const, rev: base },
+        head: {
+          kind: "rev" as const,
+          rev: endpoint === "HEAD" ? "HEAD" : git("rev-parse", "HEAD"),
+        },
+      };
+      const first = await streams.subscribe(compare, async (frame) => {
+        frames.push(frame);
+      });
+      await first.start();
+      frames.length = 0;
+      await writeFile(join(cwd, ".gitattributes"), "a.ts -diff\n");
+      await expect
+        .poll(() => frames.some((frame) => frame.opcode === DiffOpcode.End), { timeout: 10000 })
+        .toBe(true);
+      expect(frames.find((frame) => frame.opcode === DiffOpcode.Begin)).toMatchObject({
+        entries: [{ path: "a.ts", content: "binary" }],
+      });
+      expect(frames.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null });
+      const computations = streams.getMetrics().computations;
+      const second = await streams.subscribe(compare, async (frame) => {
+        joined.push(frame);
+      });
+      await second.start();
+      expect(joined.find((frame) => frame.opcode === DiffOpcode.Begin)).toMatchObject({
+        entries: [{ path: "a.ts", content: "binary" }],
+      });
+      expect(joined.at(-1)).toMatchObject({ opcode: DiffOpcode.End, error: null });
+      expect(streams.getMetrics().computations).toBe(computations);
+      await second.release();
+      await first.release();
+    } finally {
+      await streams.close();
+      await observer.close();
+      await rm(cwd, { recursive: true, force: true });
+    }
+  },
+  30000,
+);
diff --git a/packages/server/src/server/git-filename-diffs.e2e.test.ts b/packages/server/src/server/git-filename-diffs.e2e.test.ts
index c32ee040b8..4b8bcb1566 100644
--- a/packages/server/src/server/git-filename-diffs.e2e.test.ts
+++ b/packages/server/src/server/git-filename-diffs.e2e.test.ts
@@ -29,6 +29,8 @@ test("a rename-only commit returns zero added or deleted lines through the clien
     expect(await client.getCommitFileDiff(cwd, sha, "new.txt")).toEqual({
       file: {
         path: "new.txt",
+        oldPath: "old.txt",
+        status: "ok",
         isNew: false,
         isDeleted: false,
         additions: 0,
@@ -98,3 +100,144 @@ test.skipIf(process.platform === "win32")(
     }
   },
 );
+
+test("streamed Changes preserves BOM-prefixed paths and highlighted content", async () => {
+  const cwd = mkdtempSync(join(tmpdir(), "stream-bom-diff-"));
+  const daemon = await createTestPaseoDaemon({ agentClients: {} });
+  const client = new DaemonClient({ url: `ws://127.0.0.1:${daemon.port}/ws` });
+  try {
+    execFileSync("git", ["init", "-b", "main"], { cwd });
+    writeFileSync(join(cwd, "\uFEFFbom.ts"), "\uFEFFexport const value = 1;\n");
+    writeFileSync(join(cwd, "other.txt"), "other edit\n");
+    await client.connect();
+    const states: import("@getpaseo/client").DiffState[] = [];
+    const observation = client.observeDiff({
+      cwd,
+      base: { kind: "empty" },
+      head: { kind: "worktree" },
+    });
+    const unsubscribe = observation.subscribe({
+      snapshot: (state) => states.push(state),
+      update: () => {},
+    });
+    try {
+      await expect.poll(() => states.at(-1)?.phase, { timeout: 15000 }).toBe("ready");
+      const readyState = states.at(-1);
+      if (readyState?.phase !== "ready") throw new Error("Expected ready diff");
+      expect(readyState.files.map((file) => file.path)).toContain("other.txt");
+      const bomFile = readyState.files.find((file) => file.path === "\uFEFFbom.ts");
+      const addedLine = bomFile?.hunks
+        .flatMap((hunk) => hunk.lines)
+        .find((line) => line.type === "add");
+      expect(addedLine?.content).toBe("\uFEFFexport const value = 1;");
+      expect(addedLine?.tokens?.map((token) => token.text).join("")).toBe(addedLine?.content);
+      expect(states.some((state) => state.phase === "error")).toBe(false);
+    } finally {
+      unsubscribe();
+      await observation.release();
+    }
+  } finally {
+    await client.close();
+    await daemon.close();
+    rmSync(cwd, { recursive: true, force: true, maxRetries: 5, retryDelay: 100 });
+  }
+});
+
+test("checkout refresh from a subdirectory updates a pinned streamed comparison", async () => {
+  const cwd = mkdtempSync(join(tmpdir(), "stream-subdirectory-refresh-"));
+  const { mkdirSync } = await import("node:fs");
+  const workspace = join(cwd, "workspace");
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  const daemon = await createTestPaseoDaemon({ agentClients: {} });
+  const client = new DaemonClient({ url: `ws://127.0.0.1:${daemon.port}/ws` });
+  try {
+    git("init", "-b", "main");
+    git("config", "user.name", "Test");
+    git("config", "user.email", "test@example.com");
+    mkdirSync(workspace);
+    writeFileSync(join(cwd, "file.txt"), "committed content\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    const head = git("rev-parse", "HEAD");
+    await client.connect();
+    const states: import("@getpaseo/client").DiffState[] = [];
+    const observation = client.observeDiff({
+      cwd: workspace,
+      base: { kind: "empty" },
+      head: { kind: "rev", rev: head },
+    });
+    const unsubscribe = observation.subscribe({
+      snapshot: (state) => states.push(state),
+      update: () => {},
+    });
+    try {
+      await expect.poll(() => states.at(-1)?.phase, { timeout: 15000 }).toBe("ready");
+      const initial = states.at(-1);
+      if (initial?.phase !== "ready") throw new Error("Expected initial diff");
+      expect(initial.files[0]).toMatchObject({ path: "file.txt", status: "ok" });
+      expect(await client.checkoutRefresh(workspace)).toMatchObject({ success: true, error: null });
+      await expect
+        .poll(() => states.at(-1)?.revision, { timeout: 15000 })
+        .toBeGreaterThan(initial.revision);
+      expect(states.at(-1)).toMatchObject({
+        phase: "ready",
+        files: [{ path: "file.txt", status: "ok" }],
+      });
+      writeFileSync(join(cwd, ".git", "info", "attributes"), "file.txt -diff\n");
+      await expect
+        .poll(() => states.at(-1), { timeout: 15000 })
+        .toMatchObject({
+          phase: "ready",
+          files: [{ path: "file.txt", status: "binary", hunks: [] }],
+        });
+    } finally {
+      unsubscribe();
+      await observation.release();
+    }
+  } finally {
+    await client.close();
+    await daemon.close();
+    rmSync(cwd, { recursive: true, force: true, maxRetries: 5, retryDelay: 100 });
+  }
+});
+
+test("refreshing a non-Git workspace succeeds while a Git comparison is open", async () => {
+  const cwd = mkdtempSync(join(tmpdir(), "stream-refresh-git-"));
+  const plain = mkdtempSync(join(tmpdir(), "stream-refresh-plain-"));
+  const git = (...args: string[]) => execFileSync("git", args, { cwd, encoding: "utf8" }).trim();
+  const daemon = await createTestPaseoDaemon({ agentClients: {} });
+  const client = new DaemonClient({ url: `ws://127.0.0.1:${daemon.port}/ws` });
+  try {
+    git("init", "-b", "main");
+    git("config", "user.name", "Test");
+    git("config", "user.email", "test@example.com");
+    writeFileSync(join(cwd, "file.txt"), "committed content\n");
+    git("add", ".");
+    git("-c", "commit.gpgsign=false", "commit", "-m", "base");
+    await client.connect();
+    const states: import("@getpaseo/client").DiffState[] = [];
+    const observation = client.observeDiff({
+      cwd,
+      base: { kind: "empty" },
+      head: { kind: "rev", rev: git("rev-parse", "HEAD") },
+    });
+    const unsubscribe = observation.subscribe({
+      snapshot: (state) => states.push(state),
+      update: () => {},
+    });
+    try {
+      await expect.poll(() => states.at(-1)?.phase, { timeout: 15000 }).toBe("ready");
+      const revision = states.at(-1)?.revision;
+      expect(await client.checkoutRefresh(plain)).toMatchObject({ success: true, error: null });
+      expect(states.at(-1)).toMatchObject({ phase: "ready", revision });
+    } finally {
+      unsubscribe();
+      await observation.release();
+    }
+  } finally {
+    await client.close();
+    await daemon.close();
+    rmSync(cwd, { recursive: true, force: true, maxRetries: 5, retryDelay: 100 });
+    rmSync(plain, { recursive: true, force: true, maxRetries: 5, retryDelay: 100 });
+  }
+});
diff --git a/packages/server/src/server/git-metadata-event-rules.test.ts b/packages/server/src/server/git-metadata-event-rules.test.ts
index 4456573624..43edc861d5 100644
--- a/packages/server/src/server/git-metadata-event-rules.test.ts
+++ b/packages/server/src/server/git-metadata-event-rules.test.ts
@@ -1,6 +1,7 @@
 import { describe, expect, test } from "vitest";
 import {
   classifyGitMetadataPath,
+  affectsGitDiffInterpretation,
   GIT_METADATA_EVENT_RULES,
   getPrunedGitMetadataPaths,
 } from "./git-metadata-event-rules.js";
@@ -35,14 +36,28 @@ describe("Git metadata event rules", () => {
     ["common", "packed-refs", { kind: "all", refreshBase: true }],
     ["common", "reftable/tables.list", { kind: "all", refreshBase: true }],
     ["common", "config", { kind: "all", refreshBase: true }],
+    ["common", "info/attributes", { kind: "all", refreshBase: false }],
     ["common", "worktrees/new/index", { kind: "ignore" }],
     ["common", "hooks/pre-commit", { kind: "ignore" }],
     ["common", "logs/refs/heads/main", { kind: "ignore" }],
     ["common", "objects/ab/cdef", { kind: "ignore" }],
-    ["common", "refs/tags/v1", { kind: "ignore" }],
+    ["common", "refs/tags/v1", { kind: "all", refreshBase: true }],
     ["common", "FETCH_HEAD", { kind: "ignore" }],
     ["common", "packed-refs.lock", { kind: "ignore" }],
   ] as const)("classifies %s metadata path %s", (scope, path, expected) => {
     expect(classifyGitMetadataPath(scope, path)).toEqual(expected);
   });
 });
+
+test.each([
+  ["worktree", "config.worktree", true],
+  ["common", "config.worktree", false],
+  ["common", "config", true],
+  ["common", "info/attributes", true],
+  ["worktree", "info/attributes", false],
+  ["common", "refs/heads/main", false],
+  ["worktree", "index", false],
+  ["common", "config.lock", false],
+] as const)("diff interpretation dependency %s/%s is %s", (scope, path, expected) => {
+  expect(affectsGitDiffInterpretation(scope, path)).toBe(expected);
+});
diff --git a/packages/server/src/server/git-metadata-event-rules.ts b/packages/server/src/server/git-metadata-event-rules.ts
index ff82747ba0..2557639f16 100644
--- a/packages/server/src/server/git-metadata-event-rules.ts
+++ b/packages/server/src/server/git-metadata-event-rules.ts
@@ -5,6 +5,7 @@ type GitMetadataEventRule = {
   scope: GitMetadataScope | "both";
   path: string;
   prune?: true;
+  diffInput?: true;
 } & (
   | { match: "exact" | "prefix" | "suffix"; route: "ignore" }
   | { match: "exact" | "prefix" | "suffix"; route: "owner" | "all"; refreshBase: boolean }
@@ -36,6 +37,7 @@ export const GIT_METADATA_EVENT_RULES = [
   },
   {
     id: "worktree-config",
+    diffInput: true,
     scope: "worktree",
     match: "exact",
     path: "config.worktree",
@@ -73,6 +75,14 @@ export const GIT_METADATA_EVENT_RULES = [
     path: "refs/heads/",
     route: "local-ref",
   },
+  {
+    id: "tag",
+    scope: "common",
+    match: "prefix",
+    path: "refs/tags/",
+    route: "all",
+    refreshBase: true,
+  },
   {
     id: "remote-branch",
     scope: "common",
@@ -98,12 +108,22 @@ export const GIT_METADATA_EVENT_RULES = [
   },
   {
     id: "shared-config",
+    diffInput: true,
     scope: "common",
     match: "exact",
     path: "config",
     route: "all",
     refreshBase: true,
   },
+  {
+    id: "shared-attributes",
+    diffInput: true,
+    scope: "common",
+    match: "exact",
+    path: "info/attributes",
+    route: "all",
+    refreshBase: false,
+  },
   {
     id: "worktree-administration",
     scope: "common",
@@ -150,11 +170,7 @@ export function classifyGitMetadataPath(
   inputPath: string,
 ): GitMetadataEffect {
   const path = inputPath.replaceAll("\\", "/");
-  const rule = GIT_METADATA_EVENT_RULES.find(
-    (candidate) =>
-      (candidate.scope === "both" || candidate.scope === scope) &&
-      matchesGitMetadataPath(candidate.match, candidate.path, path),
-  );
+  const rule = findGitMetadataRule(scope, path);
   if (!rule || rule.route === "ignore") return { kind: "ignore" };
   if (rule.route === "owner" || rule.route === "all") {
     return { kind: rule.route, refreshBase: rule.refreshBase };
@@ -166,6 +182,19 @@ export function classifyGitMetadataPath(
   };
 }
 
+export function affectsGitDiffInterpretation(scope: GitMetadataScope, inputPath: string): boolean {
+  const rule = findGitMetadataRule(scope, inputPath.replaceAll("\\", "/"));
+  return rule !== undefined && "diffInput" in rule && rule.diffInput;
+}
+
+function findGitMetadataRule(scope: GitMetadataScope, path: string) {
+  return GIT_METADATA_EVENT_RULES.find(
+    (candidate) =>
+      (candidate.scope === "both" || candidate.scope === scope) &&
+      matchesGitMetadataPath(candidate.match, candidate.path, path),
+  );
+}
+
 function matchesGitMetadataPath(
   match: GitMetadataEventRule["match"],
   pattern: string,
diff --git a/packages/server/src/server/session.ts b/packages/server/src/server/session.ts
index 43710fa35d..0de1d64687 100644
--- a/packages/server/src/server/session.ts
+++ b/packages/server/src/server/session.ts
@@ -1,3 +1,4 @@
+import { DiffSession } from "./diff/index.js";
 import { type WorkspaceRuntimeStore } from "./workspace-runtime-store/index.js";
 import type { AgentMessageDelivery } from "./agent/agent-messages/index.js";
 import { AgentDirectory, type BackgroundVisibility } from "./agent/directory.js";
@@ -855,6 +856,7 @@ export class Session {
   private readonly workspaceDirectory: WorkspaceDirectory;
   private readonly voiceSessions: VoiceSessions;
   private readonly checkoutSession: CheckoutSession;
+  private readonly diffSession: DiffSession;
   private readonly scheduleSession: ScheduleSession;
   private readonly providerCatalogSession: ProviderCatalogSession;
   private readonly usageSession: UsageSession;
@@ -1019,6 +1021,7 @@ export class Session {
         await this.workspaceProvisioning.ensureWorkspaceRecordUnarchived(workspace);
       },
     });
+    this.diffSession = new DiffSession(checkoutDiffManager.streams, this.sessionLogger);
     this.checkoutSession = new CheckoutSession({
       host: {
         emit: (msg) => this.emit(msg),
@@ -3174,6 +3177,10 @@ export class Session {
   // eslint-disable-next-line complexity
   private dispatchCheckoutMessage(msg: SessionInboundMessage): Promise<void> | undefined {
     switch (msg.type) {
+      case "diff.subscribe.request":
+        return this.diffSession.subscribe(msg, this.delivery, (reply) => this.emit(reply));
+      case "diff.unsubscribe.request":
+        return this.delivery.release(msg.subscriptionId);
       case "checkout_status_request":
         return this.checkoutSession.handleStatusRequest(msg);
       case "checkout.commits.list.request":
@@ -3485,7 +3492,9 @@ export class Session {
       await this.workspaceFilesSession.handleFileTransferFrame(binaryFrame.frame, source);
       return;
     }
-    this.terminalController.handleBinaryFrame(binaryFrame.frame, source);
+    if (binaryFrame.kind === "terminal") {
+      this.terminalController.handleBinaryFrame(binaryFrame.frame, source);
+    }
   }
 
   private async handleRestartServerRequest(
diff --git a/packages/server/src/server/session/checkout/checkout-session.test.ts b/packages/server/src/server/session/checkout/checkout-session.test.ts
index aaa79e3da1..61c9328e48 100644
--- a/packages/server/src/server/session/checkout/checkout-session.test.ts
+++ b/packages/server/src/server/session/checkout/checkout-session.test.ts
@@ -50,6 +50,7 @@ function createFakeDiffSubscriber(initial: CheckoutDiffSnapshotPayload) {
   const subscriptions: FakeDiffSubscription[] = [];
   const refreshedCwds: string[] = [];
   const subscriber: CheckoutDiffSubscriber = {
+    readCommitFile: async () => null,
     read: async (params) => ({ ...initial, cwd: params.cwd }),
     subscribe: async (params, listener) => {
       let isSubscribed = true;
@@ -77,7 +78,7 @@ function createFakeDiffSubscriber(initial: CheckoutDiffSnapshotPayload) {
         unsubscribe,
       };
     },
-    scheduleRefreshForCwd: (cwd) => {
+    scheduleRefreshForCwd: async (cwd) => {
       refreshedCwds.push(cwd);
     },
   };
diff --git a/packages/server/src/server/session/checkout/checkout-session.ts b/packages/server/src/server/session/checkout/checkout-session.ts
index 4deb28a56b..1611356bc8 100644
--- a/packages/server/src/server/session/checkout/checkout-session.ts
+++ b/packages/server/src/server/session/checkout/checkout-session.ts
@@ -51,7 +51,6 @@ import {
   pullCurrentBranch,
   pushCurrentBranch,
   listCheckoutCommits,
-  getCommitFileDiff,
 } from "../../../utils/checkout-git.js";
 import { runGitCommand } from "../../../utils/run-git-command.js";
 import { expandTilde } from "../../../utils/path.js";
@@ -109,6 +108,7 @@ function toLegacyGithubSearchItems(items: ForgeSearchResultItem[]): LegacyGithub
  * real CheckoutDiffManager satisfies this structurally; tests supply a fake.
  */
 export interface CheckoutDiffSubscriber {
+  readCommitFile: import("../../diff/index.js").DiffSubscriptions["readCommitFile"];
   read(
     params: Omit<CheckoutDiffSubscriptionRequest, "signal">,
   ): Promise<CheckoutDiffSnapshotPayload>;
@@ -116,7 +116,7 @@ export interface CheckoutDiffSubscriber {
     params: CheckoutDiffSubscriptionRequest,
     listener: (snapshot: CheckoutDiffSnapshotPayload) => void,
   ): Promise<CheckoutDiffSubscription>;
-  scheduleRefreshForCwd(cwd: string): void;
+  scheduleRefreshForCwd(cwd: string): Promise<void>;
 }
 
 export interface CheckoutSessionOptions {
@@ -301,7 +301,12 @@ export class CheckoutSession {
       if (path.length === 0 || isAbsolute(path) || path.split(/[\\/]/).includes("..")) {
         throw new Error(`Invalid path: ${path}`);
       }
-      const file = await getCommitFileDiff({ cwd: expandTilde(cwd), sha, path, signal });
+      const file = await this.checkoutDiffManager.readCommitFile({
+        cwd: expandTilde(cwd),
+        sha,
+        path,
+        signal,
+      });
       this.host.emit({
         type: "checkout.commits.file_diff.response",
         payload: { cwd, sha, path, file, error: null, requestId },
@@ -494,7 +499,7 @@ export class CheckoutSession {
         includeForge: true,
         reason: "manual-refresh",
       });
-      this.checkoutDiffManager.scheduleRefreshForCwd(resolvedCwd);
+      await this.checkoutDiffManager.scheduleRefreshForCwd(resolvedCwd);
       this.host.emit({
         type: "checkout.refresh.response",
         payload: {
@@ -548,8 +553,8 @@ export class CheckoutSession {
    * Notify the live diff subscriptions that the working tree at `cwd` changed.
    * Called by the command handlers below after they mutate the repository.
    */
-  private scheduleDiffRefresh(cwd: string): void {
-    this.checkoutDiffManager.scheduleRefreshForCwd(cwd);
+  private scheduleDiffRefresh(cwd: string): Promise<void> {
+    return this.checkoutDiffManager.scheduleRefreshForCwd(cwd);
   }
 
   // ---------------------------------------------------------------------------
@@ -563,7 +568,7 @@ export class CheckoutSession {
 
     try {
       const checkoutResult = await this.gitMutation.checkoutExistingBranch(cwd, branch);
-      this.scheduleDiffRefresh(cwd);
+      await this.scheduleDiffRefresh(cwd);
 
       // Push a workspace_update immediately so the sidebar/header reflect
       // the new branch name without waiting for the background git watcher.
@@ -615,7 +620,7 @@ export class CheckoutSession {
     try {
       const result = await this.host.renameCurrentBranch(cwd, branch);
       await this.gitMutation.notifyGitMutation(cwd, "rename-branch", { invalidateForge: true });
-      this.scheduleDiffRefresh(cwd);
+      await this.scheduleDiffRefresh(cwd);
       this.host.handleWorkspaceGitBranchSnapshot(cwd, result.currentBranch);
 
       // Branch is a git fact derived per-descriptor from each workspace's own
@@ -657,7 +662,7 @@ export class CheckoutSession {
     try {
       await discardChanges(cwd, paths);
       await this.gitMutation.notifyGitMutation(cwd, "discard-changes");
-      this.scheduleDiffRefresh(cwd);
+      await this.scheduleDiffRefresh(cwd);
       this.host.emit({
         type: "checkout.discard_changes.response",
         payload: { cwd, success: true, error: null, requestId },
@@ -684,7 +689,7 @@ export class CheckoutSession {
         timeout: 120_000,
       });
       await this.gitMutation.notifyGitMutation(cwd, "stash-push");
-      this.scheduleDiffRefresh(cwd);
+      await this.scheduleDiffRefresh(cwd);
       this.host.emit({
         type: "stash_save_response",
         payload: { cwd, success: true, error: null, requestId },
@@ -707,7 +712,7 @@ export class CheckoutSession {
         timeout: 120_000,
       });
       await this.gitMutation.notifyGitMutation(cwd, "stash-pop");
-      this.scheduleDiffRefresh(cwd);
+      await this.scheduleDiffRefresh(cwd);
       this.host.emit({
         type: "stash_pop_response",
         payload: { cwd, success: true, error: null, requestId },
@@ -759,7 +764,7 @@ export class CheckoutSession {
         addAll: msg.addAll ?? true,
       });
       await this.gitMutation.notifyGitMutation(cwd, "commit-changes");
-      this.scheduleDiffRefresh(cwd);
+      await this.scheduleDiffRefresh(cwd);
 
       this.host.emit({
         type: "checkout_commit_response",
@@ -820,7 +825,7 @@ export class CheckoutSession {
         this.gitMutation.notifyGitMutation(mutatedCwd, "merge-to-base", { invalidateForge: true }),
         ...(mutatedCwd !== cwd ? [this.gitMutation.notifyGitMutation(cwd, "merge-to-base")] : []),
       ]);
-      this.scheduleDiffRefresh(cwd);
+      await this.scheduleDiffRefresh(cwd);
 
       this.host.emit({
         type: "checkout_merge_response",
@@ -866,7 +871,7 @@ export class CheckoutSession {
         { paseoHome: this.paseoHome, worktreesRoot: this.worktreesRoot },
       );
       await this.gitMutation.notifyGitMutation(cwd, "merge-from-base", { invalidateForge: true });
-      this.scheduleDiffRefresh(cwd);
+      await this.scheduleDiffRefresh(cwd);
 
       this.host.emit({
         type: "checkout_merge_from_base_response",
@@ -898,7 +903,7 @@ export class CheckoutSession {
     try {
       await pullCurrentBranch(cwd);
       await this.gitMutation.notifyGitMutation(cwd, "pull", { invalidateForge: true });
-      this.scheduleDiffRefresh(cwd);
+      await this.scheduleDiffRefresh(cwd);
 
       this.host.emit({
         type: "checkout_pull_response",
diff --git a/packages/server/src/server/snapshot-mutation-ownership.test.ts b/packages/server/src/server/snapshot-mutation-ownership.test.ts
index 2917d0fec9..2c44347bef 100644
--- a/packages/server/src/server/snapshot-mutation-ownership.test.ts
+++ b/packages/server/src/server/snapshot-mutation-ownership.test.ts
@@ -1,3 +1,4 @@
+import { DiffSubscriptions } from "./diff/index.js";
 import { createWorkspaceRuntimeStore } from "./workspace-runtime-store/index.js";
 import { createAgentMessageDeliveryStub } from "./test-utils/session-stubs.js";
 import {
@@ -105,6 +106,13 @@ describe("snapshot mutation ownership boundary", () => {
 
     const session = asInternals<SessionInternals>(
       new Session({
+        checkoutDiffManager: createStub<SessionOptions["checkoutDiffManager"]>({
+          streams: new DiffSubscriptions({
+            async requestWorkingTreeWatch() {
+              throw new Error("Unexpected diff observation");
+            },
+          }),
+        }),
         workspaceRuntimeStore: createWorkspaceRuntimeStore(),
         messageReceipts: createMessageReceiptsStub(),
         agentMessages: createAgentMessageDeliveryStub(),
diff --git a/packages/server/src/server/utils/diff-highlighter.ts b/packages/server/src/server/utils/diff-highlighter.ts
index e3a0460322..6404ce2381 100644
--- a/packages/server/src/server/utils/diff-highlighter.ts
+++ b/packages/server/src/server/utils/diff-highlighter.ts
@@ -70,11 +70,6 @@ function extractPathFromMetadata(lines: string[], prefix: "--- " | "+++ "): stri
 
 function extractPathFromDiffHeader(lines: string[]): string {
   const firstLine = lines[0] ?? "";
-  const prefixedPathMatch = firstLine.match(/^a\/(.+) b\/(.+)$/);
-  if (prefixedPathMatch) {
-    return prefixedPathMatch[2];
-  }
-
   const quotedPathMatch =
     firstLine.match(/^("(?:\\.|[^"\\])*") (.+)$/) ?? firstLine.match(/^(.+) ("(?:\\.|[^"\\])*")$/);
   if (quotedPathMatch) {
@@ -86,10 +81,21 @@ function extractPathFromDiffHeader(lines: string[]): string {
     return newPath;
   }
 
-  const metadataPath =
-    extractPathFromMetadata(lines, "+++ ") ?? extractPathFromMetadata(lines, "--- ");
-  if (metadataPath) {
-    return metadataPath;
+  // The ---/+++ records are unambiguous even when a path contains " b/".
+  const oldMetadata = extractPathFromMetadata(lines, "--- ");
+  const newMetadata = extractPathFromMetadata(lines, "+++ ");
+  const metadata = newMetadata ?? oldMetadata;
+  if (metadata) {
+    const prefixed =
+      (oldMetadata !== null &&
+        newMetadata !== null &&
+        usesDiffPathPrefixes(oldMetadata, newMetadata)) ||
+      firstLine === `a/${metadata.slice(2)} b/${metadata.slice(2)}`;
+    return prefixed ? metadata.slice(2) : metadata;
+  }
+  const prefixedPathMatch = firstLine.match(/^a\/(.+) b\/(.+)$/);
+  if (prefixedPathMatch) {
+    return prefixedPathMatch[2];
   }
 
   const pathMatch = firstLine.match(/^(\S+)\s+(\S+)$/);
@@ -462,7 +468,8 @@ function applyTokensToHunks(
         newLineNum++;
       }
 
-      return tokens ? { ...line, tokens } : line;
+      const matchingTokens = tokensForPatchLine(tokens, line.content);
+      return matchingTokens ? { ...line, tokens: matchingTokens } : line;
     });
 
     return { ...hunk, lines: highlightedLines };
@@ -471,6 +478,25 @@ function applyTokensToHunks(
   return { ...file, hunks: highlightedHunks };
 }
 
+function tokensForPatchLine(
+  tokens: HighlightToken[] | undefined,
+  content: string,
+): HighlightToken[] | undefined {
+  if (!tokens) return undefined;
+  const source = tokens.map((token) => token.text).join("");
+  if (source === content) return tokens;
+  // Git can normalize a CRLF worktree while source highlighting retains its CR.
+  if (source !== `${content}\r`) return undefined;
+  const aligned: HighlightToken[] = [];
+  let remaining = content.length;
+  for (const token of tokens) {
+    const text = token.text.slice(0, remaining);
+    if (text) aligned.push({ text, style: token.style });
+    remaining -= text.length;
+  }
+  return aligned;
+}
+
 /**
  * Parse and highlight a complete diff, using actual file content when available.
  */
diff --git a/packages/server/src/server/websocket-server.ts b/packages/server/src/server/websocket-server.ts
index c5f1303f77..17d0b6d109 100644
--- a/packages/server/src/server/websocket-server.ts
+++ b/packages/server/src/server/websocket-server.ts
@@ -1227,7 +1227,7 @@ export class VoiceAssistantWebSocketServer {
 
     await Promise.all(cleanupPromises);
     this.providerSnapshotManager.destroy();
-    this.checkoutDiffManager.dispose();
+    await this.checkoutDiffManager.dispose();
     await this.workspaceGitService.dispose();
     this.pendingConnections.clear();
     this.sessions.clear();
@@ -2025,6 +2025,7 @@ export class VoiceAssistantWebSocketServer {
         usageSetting: true,
         usageSources: true,
         ownedSubscriptions: true,
+        diffSubscription: true,
         binaryChunkingV1: true,
         agentRequestReceipts: true,
         workspaceRequestReceipts: true,
diff --git a/packages/server/src/server/wire-compat.test.ts b/packages/server/src/server/wire-compat.test.ts
index a0de895810..a4f6fbe9dd 100644
--- a/packages/server/src/server/wire-compat.test.ts
+++ b/packages/server/src/server/wire-compat.test.ts
@@ -258,7 +258,7 @@ function createSessionForWireCompatTest(options?: {
     directorySync: options?.directorySync,
     scheduleService: {} as SessionOptions["scheduleService"],
     checkoutDiffManager: {
-      scheduleRefreshForCwd() {},
+      async scheduleRefreshForCwd() {},
       onWorkspaceStateMayHaveChanged() {},
     } as unknown as SessionOptions["checkoutDiffManager"],
     github: {
diff --git a/packages/server/src/server/workspace-git-service.observation.integration.test.ts b/packages/server/src/server/workspace-git-service.observation.integration.test.ts
index 17e3a4a2af..0a5152e5d4 100644
--- a/packages/server/src/server/workspace-git-service.observation.integration.test.ts
+++ b/packages/server/src/server/workspace-git-service.observation.integration.test.ts
@@ -11,7 +11,6 @@ import {
   type CheckoutSnapshotFacts,
   type CheckoutStatusGit,
 } from "../utils/checkout-git.js";
-import { CheckoutDiffManager } from "./checkout-diff-manager.js";
 import { createFileObserver } from "./file-observer/index.js";
 import { WorkspaceGitServiceImpl } from "./workspace-git-service.js";
 import type { FileChange, FileObserver, SubscribeToFileChanges } from "./file-observer/index.js";
@@ -250,24 +249,15 @@ test("recursive observation updates tracked state and prunes ignored storms", as
   });
   const workspaceRuntimeStore = createWorkspaceRuntimeStore();
   service.onSnapshotUpdated((snapshot) => workspaceRuntimeStore.set(snapshot));
-  const diffManager = new CheckoutDiffManager({
-    workspaceRuntimeStore: workspaceRuntimeStore,
-    logger: createLogger(),
-    paseoHome: path.join(tempDir, "paseo-home"),
-    workspaceGitService: service,
-  });
+
   const summaryListener = vi.fn();
   const diffListener = vi.fn();
   const summarySubscription = service.registerWorkspace({ cwd: repoDir }, summaryListener);
-  const diffSubscription = await diffManager.subscribe(
-    { cwd: repoDir, compare: { mode: "uncommitted" } },
-    diffListener,
-  );
+  const diffSubscription = await service.requestWorkingTreeWatch(repoDir, diffListener);
 
   cleanup.push(async () => {
     diffSubscription.unsubscribe();
     summarySubscription.unsubscribe();
-    diffManager.dispose();
     await service.dispose();
     expect(activeWatcherCount).toBe(0);
     rmSync(tempDir, { recursive: true, force: true });
@@ -312,6 +302,7 @@ test("recursive observation updates tracked state and prunes ignored storms", as
   getCheckoutShortstat.mockClear();
   getCheckoutWorktreeState.mockClear();
   getCheckoutDiff.mockClear();
+  diffListener.mockClear();
   runGitCommand.mockClear();
   deliveredEvents.length = 0;
 
@@ -344,18 +335,7 @@ test("recursive observation updates tracked state and prunes ignored storms", as
           }),
         }),
       );
-      expect(diffListener).toHaveBeenLastCalledWith({
-        cwd: repoDir,
-        files: [
-          {
-            path: "src/tracked.txt",
-            additions: 2,
-            deletions: 0,
-            status: "modified",
-          },
-        ],
-        error: null,
-      });
+      expect(diffListener).toHaveBeenCalled();
       expect(service.getMetrics().workspaceRefreshQueuedCount).toBe(0);
     },
     { timeout: 5_000 },
@@ -371,11 +351,7 @@ test("recursive observation updates tracked state and prunes ignored storms", as
           }),
         }),
       );
-      expect(diffListener).toHaveBeenLastCalledWith(
-        expect.objectContaining({
-          files: [expect.objectContaining({ additions: 3 })],
-        }),
-      );
+      expect(diffListener).toHaveBeenCalled();
       expect(service.getMetrics()).toMatchObject({
         workspaceRefreshInFlightCount: 0,
         workspaceRefreshQueuedCount: 0,
@@ -409,18 +385,7 @@ test("recursive observation updates tracked state and prunes ignored storms", as
           }),
         }),
       );
-      expect(diffListener).toHaveBeenLastCalledWith({
-        cwd: repoDir,
-        files: [
-          {
-            path: "build/tracked.txt",
-            additions: 2,
-            deletions: 0,
-            status: "modified",
-          },
-        ],
-        error: null,
-      });
+      expect(diffListener).toHaveBeenCalled();
       expect(service.getMetrics()).toMatchObject({
         workspaceRefreshInFlightCount: 0,
         workspaceRefreshQueuedCount: 0,
@@ -434,6 +399,7 @@ test("recursive observation updates tracked state and prunes ignored storms", as
   getCheckoutShortstat.mockClear();
   getCheckoutWorktreeState.mockClear();
   getCheckoutDiff.mockClear();
+  diffListener.mockClear();
   runGitCommand.mockClear();
   summaryListener.mockClear();
   diffListener.mockClear();
@@ -449,18 +415,7 @@ test("recursive observation updates tracked state and prunes ignored storms", as
           }),
         }),
       );
-      expect(diffListener).toHaveBeenLastCalledWith({
-        cwd: repoDir,
-        files: [
-          {
-            path: "build/tracked.txt",
-            additions: 4,
-            deletions: 0,
-            status: "modified",
-          },
-        ],
-        error: null,
-      });
+      expect(diffListener).toHaveBeenCalled();
       expect(service.getMetrics()).toMatchObject({
         workspaceRefreshInFlightCount: 0,
         workspaceRefreshQueuedCount: 0,
@@ -474,6 +429,7 @@ test("recursive observation updates tracked state and prunes ignored storms", as
   getCheckoutShortstat.mockClear();
   getCheckoutWorktreeState.mockClear();
   getCheckoutDiff.mockClear();
+  diffListener.mockClear();
   runGitCommand.mockClear();
 
   for (let index = 0; index < 100; index += 1) {
diff --git a/packages/server/src/server/workspace-git-service.observation.test.ts b/packages/server/src/server/workspace-git-service.observation.test.ts
index 86a49b55ac..f866aa8dc6 100644
--- a/packages/server/src/server/workspace-git-service.observation.test.ts
+++ b/packages/server/src/server/workspace-git-service.observation.test.ts
@@ -4,7 +4,6 @@ import { pathToFileURL } from "node:url";
 import type pino from "pino";
 import { afterEach, beforeEach, describe, expect, test, vi } from "vitest";
 import type { CheckoutSnapshotFacts, CheckoutStatusGit } from "../utils/checkout-git.js";
-import { CheckoutDiffManager } from "./checkout-diff-manager.js";
 import type { FileObserver } from "./file-observer/index.js";
 import { WorkspaceGitServiceImpl } from "./workspace-git-service.js";
 
@@ -428,41 +427,30 @@ describe("WorkspaceGitService checkout observation", () => {
     service.dispose();
   });
 
-  test("a tracked edit refreshes summary and active uncommitted diff without structural or forge work", async () => {
+  test("a tracked edit refreshes summary and notifies worktree consumers without structural or forge work", async () => {
     const watcher = createWatcherHarness();
     const getCheckoutSnapshotFacts = vi.fn(async (cwd: string) => createCheckoutFacts(cwd));
     let diffStat = { additions: 1, deletions: 0 };
-    let diffFile = { path: "tracked.txt", additions: 1, deletions: 0, status: "modified" };
     const getCheckoutStatus = vi.fn(async (cwd: string) =>
       createCheckoutStatus(cwd, { isDirty: true }),
     );
     const getCheckoutShortstat = vi.fn(async () => diffStat);
     const getPullRequestStatus = vi.fn();
-    const getCheckoutDiff = vi.fn(async () => ({ diff: "", structured: [diffFile] }));
     const service = createService(watcher, {
       getCheckoutSnapshotFacts,
       getCheckoutStatus,
       getCheckoutShortstat,
       getPullRequestStatus,
-      getCheckoutDiff,
     });
     const workspaceRuntimeStore = createWorkspaceRuntimeStore();
     service.onSnapshotUpdated((snapshot) => workspaceRuntimeStore.set(snapshot));
-    const diffManager = new CheckoutDiffManager({
-      workspaceRuntimeStore: workspaceRuntimeStore,
-      logger: createLogger(),
-      paseoHome: "/tmp/paseo-home",
-      workspaceGitService: service,
-    });
+
     const summaryListener = vi.fn();
     const diffListener = vi.fn();
 
     await service.getSnapshot(REPO_CWD);
     const summarySubscription = service.registerWorkspace({ cwd: REPO_CWD }, summaryListener);
-    const diffSubscription = await diffManager.subscribe(
-      { cwd: REPO_CWD, compare: { mode: "uncommitted" } },
-      diffListener,
-    );
+    const diffSubscription = await service.requestWorkingTreeWatch(REPO_CWD, diffListener);
     await vi.waitFor(() => {
       expect(watcher.subscribe).toHaveBeenCalledWith(
         REPO_CWD,
@@ -475,7 +463,6 @@ describe("WorkspaceGitService checkout observation", () => {
     });
 
     diffStat = { additions: 4, deletions: 2 };
-    diffFile = { path: "tracked.txt", additions: 4, deletions: 2, status: "modified" };
     watcher.records[0]?.callback(null, [
       { path: path.join(REPO_CWD, "tracked.txt"), type: "update" },
     ]);
@@ -489,11 +476,7 @@ describe("WorkspaceGitService checkout observation", () => {
           }),
         }),
       );
-      expect(diffListener).toHaveBeenLastCalledWith({
-        cwd: REPO_CWD,
-        files: [{ path: "tracked.txt", additions: 4, deletions: 2, status: "modified" }],
-        error: null,
-      });
+      expect(diffListener).toHaveBeenCalledTimes(1);
     });
     await flushPromises();
 
@@ -502,7 +485,6 @@ describe("WorkspaceGitService checkout observation", () => {
 
     diffSubscription.unsubscribe();
     summarySubscription.unsubscribe();
-    diffManager.dispose();
     service.dispose();
   });
 
@@ -1245,7 +1227,7 @@ describe("WorkspaceGitService checkout observation", () => {
     service.dispose();
   });
 
-  test("metadata-only changes refresh worktree summary and active uncommitted diff", async () => {
+  test("metadata-only changes refresh worktree summary and invalidate the uncommitted projection", async () => {
     const watcher = createWatcherHarness();
     let isDirty = true;
     let diffStat = { additions: 3, deletions: 1 };
@@ -1260,19 +1242,10 @@ describe("WorkspaceGitService checkout observation", () => {
     });
     const workspaceRuntimeStore = createWorkspaceRuntimeStore();
     service.onSnapshotUpdated((snapshot) => workspaceRuntimeStore.set(snapshot));
-    const diffManager = new CheckoutDiffManager({
-      workspaceRuntimeStore: workspaceRuntimeStore,
-      logger: createLogger(),
-      paseoHome: "/tmp/paseo-home",
-      workspaceGitService: service,
-    });
+
     const summaryListener = vi.fn();
-    const diffListener = vi.fn();
     const summarySubscription = service.registerWorkspace({ cwd: REPO_CWD }, summaryListener);
-    const diffSubscription = await diffManager.subscribe(
-      { cwd: REPO_CWD, compare: { mode: "uncommitted" } },
-      diffListener,
-    );
+    await service.getCheckoutDiff(REPO_CWD, { mode: "uncommitted" });
 
     await vi.waitFor(() => {
       expect(service.getMetrics().workspaceObservationSetupInFlightCount).toBe(0);
@@ -1295,16 +1268,13 @@ describe("WorkspaceGitService checkout observation", () => {
           }),
         }),
       );
-      expect(diffListener).toHaveBeenLastCalledWith({
-        cwd: REPO_CWD,
-        files: [],
-        error: null,
-      });
     });
 
-    diffSubscription.unsubscribe();
+    expect(await service.getCheckoutDiff(REPO_CWD, { mode: "uncommitted" })).toMatchObject({
+      structured: [],
+    });
+    expect(getCheckoutDiff).toHaveBeenCalledTimes(2);
     summarySubscription.unsubscribe();
-    diffManager.dispose();
     service.dispose();
   });
 
@@ -1318,20 +1288,14 @@ describe("WorkspaceGitService checkout observation", () => {
     const service = createService(watcher, { getCheckoutDiff, getCheckoutWorktreeState });
     const workspaceRuntimeStore = createWorkspaceRuntimeStore();
     service.onSnapshotUpdated((snapshot) => workspaceRuntimeStore.set(snapshot));
-    const diffManager = new CheckoutDiffManager({
-      workspaceRuntimeStore: workspaceRuntimeStore,
-      logger: createLogger(),
-      paseoHome: "/tmp/paseo-home",
-      workspaceGitService: service,
-    });
-    const diffSubscription = await diffManager.subscribe(
-      { cwd: REPO_CWD, compare: { mode: "base", baseRef: "main" } },
-      vi.fn(),
-    );
+
+    const subscription = service.registerWorkspace({ cwd: REPO_CWD }, () => {});
+    await service.getCheckoutDiff(REPO_CWD, { mode: "base", baseRef: "main" });
 
     await vi.waitFor(() => {
       expect(service.getMetrics().workspaceObservationSetupInFlightCount).toBe(0);
     });
+    await service.getCheckoutDiff(REPO_CWD, { mode: "base", baseRef: "main" });
     expect(getCheckoutDiff).toHaveBeenCalledTimes(1);
 
     watcher.records
@@ -1339,6 +1303,7 @@ describe("WorkspaceGitService checkout observation", () => {
       ?.callback(null, [{ path: path.join(REPO_CWD, "tracked.txt"), type: "update" }]);
     await vi.advanceTimersByTimeAsync(1_000);
     await flushPromises();
+    await service.getCheckoutDiff(REPO_CWD, { mode: "base", baseRef: "main" });
     expect(getCheckoutDiff).toHaveBeenCalledTimes(1);
 
     watcher.records
@@ -1346,12 +1311,10 @@ describe("WorkspaceGitService checkout observation", () => {
       ?.callback(null, [{ path: path.join(GIT_DIR, "packed-refs"), type: "update" }]);
     await vi.advanceTimersByTimeAsync(1_000);
     await vi.advanceTimersByTimeAsync(150);
-    await vi.waitFor(() => {
-      expect(getCheckoutDiff).toHaveBeenCalledTimes(2);
-    });
+    await service.getCheckoutDiff(REPO_CWD, { mode: "base", baseRef: "main" });
+    expect(getCheckoutDiff).toHaveBeenCalledTimes(2);
 
-    diffSubscription.unsubscribe();
-    diffManager.dispose();
+    subscription.unsubscribe();
     service.dispose();
   });
 
@@ -2773,39 +2736,23 @@ describe("WorkspaceGitService checkout observation", () => {
     service.dispose();
   });
 
-  test("a working-tree watcher event refreshes summary and diff subscribers", async () => {
+  test("a working-tree watcher event refreshes summary and notifies worktree consumers", async () => {
     const watcher = createWatcherHarness();
     let isDirty = false;
     let diffStat = { additions: 0, deletions: 0 };
-    let diffFiles: Array<{
-      path: string;
-      additions: number;
-      deletions: number;
-      status: string;
-    }> = [];
     const getCheckoutStatus = vi.fn(async (cwd: string) => createCheckoutStatus(cwd, { isDirty }));
     const getCheckoutShortstat = vi.fn(async () => diffStat);
-    const getCheckoutDiff = vi.fn(async () => ({ diff: "", structured: diffFiles }));
     const service = createService(watcher, {
       getCheckoutStatus,
       getCheckoutShortstat,
-      getCheckoutDiff,
     });
     const workspaceRuntimeStore = createWorkspaceRuntimeStore();
     service.onSnapshotUpdated((snapshot) => workspaceRuntimeStore.set(snapshot));
-    const diffManager = new CheckoutDiffManager({
-      workspaceRuntimeStore: workspaceRuntimeStore,
-      logger: createLogger(),
-      paseoHome: "/tmp/paseo-home",
-      workspaceGitService: service,
-    });
+
     const listener = vi.fn();
     const diffListener = vi.fn();
     const subscription = service.registerWorkspace({ cwd: REPO_CWD }, listener);
-    const diffSubscription = await diffManager.subscribe(
-      { cwd: REPO_CWD, compare: { mode: "uncommitted" } },
-      diffListener,
-    );
+    const diffSubscription = await service.requestWorkingTreeWatch(REPO_CWD, diffListener);
 
     await vi.waitFor(() => {
       expect(workspaceRuntimeStore.get(REPO_CWD)).not.toBeNull();
@@ -2813,7 +2760,6 @@ describe("WorkspaceGitService checkout observation", () => {
     });
     isDirty = true;
     diffStat = { additions: 7, deletions: 3 };
-    diffFiles = [{ path: "tracked.txt", additions: 7, deletions: 3, status: "modified" }];
 
     getWatcherRecordsForDirectory(watcher, REPO_CWD)[0]?.callback(null, [
       { path: path.join(REPO_CWD, "tracked.txt"), type: "update" },
@@ -2828,17 +2774,12 @@ describe("WorkspaceGitService checkout observation", () => {
           }),
         }),
       );
-      expect(diffListener).toHaveBeenLastCalledWith({
-        cwd: REPO_CWD,
-        files: [{ path: "tracked.txt", additions: 7, deletions: 3, status: "modified" }],
-        error: null,
-      });
+      expect(diffListener).toHaveBeenCalledTimes(1);
     });
     expect(getCheckoutStatus).toHaveBeenCalledTimes(2);
 
     diffSubscription.unsubscribe();
     subscription.unsubscribe();
-    diffManager.dispose();
     service.dispose();
   });
 });
diff --git a/packages/server/src/server/workspace-git-service.ts b/packages/server/src/server/workspace-git-service.ts
index ea91186e9b..00c7084c7b 100644
--- a/packages/server/src/server/workspace-git-service.ts
+++ b/packages/server/src/server/workspace-git-service.ts
@@ -161,6 +161,7 @@ export interface WorkspaceGitRuntimeSnapshot {
     isDirty: boolean | null;
     baseRef: string | null;
     baseRefExact?: string | null;
+    comparisonBaseRef?: string | null;
     aheadBehind: { ahead: number; behind: number } | null;
     upstreamRef: string | null;
     aheadOfOrigin: number | null;
@@ -3626,6 +3627,7 @@ export class WorkspaceGitServiceImpl implements WorkspaceGitService {
         : (target.latestGit?.isDirty ?? checkoutStatus.isDirty),
       baseRef: checkoutStatus.baseRef,
       baseRefExact: checkoutStatus.baseRefExact,
+      comparisonBaseRef: checkoutStatus.comparisonBaseRef,
       aheadBehind: checkoutStatus.aheadBehind,
       upstreamRef: checkoutStatus.upstreamRef,
       aheadOfOrigin: checkoutStatus.aheadOfOrigin,
diff --git a/packages/server/src/utils/checkout-git.commits.test.ts b/packages/server/src/utils/checkout-git.commits.test.ts
index 7baac91c23..a19b81ded8 100644
--- a/packages/server/src/utils/checkout-git.commits.test.ts
+++ b/packages/server/src/utils/checkout-git.commits.test.ts
@@ -3,7 +3,12 @@ import { mkdirSync, mkdtempSync, realpathSync, rmSync, writeFileSync } from "fs"
 import { tmpdir } from "os";
 import { join } from "path";
 import { afterEach, describe, expect, it } from "vitest";
-import { getCommitFileDiff, listCheckoutCommits } from "./checkout-git.js";
+import {
+  getCommitFileDiff,
+  listCheckoutCommits,
+  getCheckoutStatus,
+  getCheckoutDiff,
+} from "./checkout-git.js";
 import { writePaseoWorktreeMetadata } from "./worktree-metadata.js";
 
 const tempDirs: string[] = [];
@@ -393,3 +398,45 @@ describe("listCheckoutCommits", () => {
     ]);
   });
 });
+
+it("compares tag-based worktrees in status, history and legacy diff modes", async () => {
+  const { repoDir: mainRepoDir, tempDir } = initRepoOnMain();
+  const worktreesRoot = join(tempDir, "worktrees");
+  const repoDir = join(worktreesRoot, "repo-hash", "tag-feature");
+  mkdirSync(join(worktreesRoot, "repo-hash"), { recursive: true });
+  const context = { worktreesRoot };
+  git(["tag", "v1"], mainRepoDir);
+  git(["worktree", "add", "-b", "tag-feature", repoDir, "v1"], mainRepoDir);
+  await writePaseoWorktreeMetadata(repoDir, { baseRefName: "refs/tags/v1" });
+  commitFile(repoDir, "tag.txt", "committed\n", "tag feature");
+  writeFileSync(join(repoDir, "tag.txt"), "edited\n");
+  const status = await getCheckoutStatus(repoDir, context);
+  expect(status).toMatchObject({
+    isGit: true,
+    comparisonBaseRef: "refs/tags/v1",
+    aheadBehind: { ahead: 1, behind: 0 },
+  });
+  const history = await listCheckoutCommits({ cwd: repoDir, context });
+  expect(history.baseRef).toBe("refs/tags/v1");
+  expect(history.commits[0].subject).toBe("tag feature");
+  const committed = await getCheckoutDiff(repoDir, { mode: "base", baseRef: "refs/tags/v1" });
+  expect(committed.diff).toContain("+committed");
+  const all = await getCheckoutDiff(repoDir, { mode: "all", baseRef: "refs/tags/v1" });
+  expect(all.diff).toContain("+edited");
+});
+
+it("announces a usable comparison base while checked out on the base branch", async () => {
+  const cwd = makeTempDir();
+  git(["init", "-b", "main"], cwd);
+  git(["config", "user.name", "Test"], cwd);
+  git(["config", "user.email", "test@example.com"], cwd);
+  writeFileSync(join(cwd, "a.txt"), "before\n");
+  git(["add", "."], cwd);
+  commit(cwd, "base");
+  writeFileSync(join(cwd, "a.txt"), "after\n");
+  const status = await getCheckoutStatus(cwd);
+  expect(status).toMatchObject({ isGit: true, comparisonBaseRef: "refs/heads/main" });
+  if (!status.isGit || !status.comparisonBaseRef) throw new Error("Missing comparison base");
+  const all = await getCheckoutDiff(cwd, { mode: "all", baseRef: status.comparisonBaseRef });
+  expect(all.diff).toContain("+after");
+});
diff --git a/packages/server/src/utils/checkout-git.ts b/packages/server/src/utils/checkout-git.ts
index d793e2c683..2bb295b371 100644
--- a/packages/server/src/utils/checkout-git.ts
+++ b/packages/server/src/utils/checkout-git.ts
@@ -40,7 +40,7 @@ import {
 } from "../services/forge-cli-command.js";
 import { parseGitRevParsePath, resolveGitRevParsePath } from "./git-rev-parse-path.js";
 import { runGitCommand, type RunGitCommand } from "./run-git-command.js";
-import { readGitFileContents } from "./git-file-contents.js";
+import { readGitFileContents, readGitFileContentAtRef } from "./git-file-contents.js";
 import { unquoteGitPath } from "./git-quoted-path.js";
 import { isPaseoOwnedWorktreeCwd, resolvePaseoWorktreesBaseRoot } from "./worktree.js";
 import {
@@ -613,22 +613,6 @@ async function listCheckoutFileChanges(
   return Array.from(byPath.values());
 }
 
-async function readGitFileContentAtRef(
-  cwd: string,
-  ref: string,
-  path: string,
-): Promise<string | null> {
-  try {
-    const { stdout } = await runGitCommand(["show", `${ref}:${path}`], {
-      cwd,
-      envOverlay: READ_ONLY_GIT_ENV,
-    });
-    return stdout;
-  } catch {
-    return null;
-  }
-}
-
 async function tryResolveMergeBase(cwd: string, baseRef: string): Promise<string | null> {
   try {
     const { stdout } = await runGitCommand(["merge-base", baseRef, "HEAD"], {
@@ -669,7 +653,12 @@ function normalizeNumstatPath(pathField: string): string {
 }
 
 // Parsed patches need a stable wire format regardless of terminal presentation settings.
-const GIT_PATCH_FORMAT_ARGS = ["--no-ext-diff", "--no-color", "--src-prefix=a/", "--dst-prefix=b/"];
+export const GIT_PATCH_FORMAT_ARGS = [
+  "--no-ext-diff",
+  "--no-color",
+  "--src-prefix=a/",
+  "--dst-prefix=b/",
+] as const;
 
 function buildGitDiffArgs(args: { ignoreWhitespace?: boolean; extra: string[] }): string[] {
   return [
@@ -906,6 +895,7 @@ export interface CheckoutStatusGitNonPaseo {
   isDirty: boolean;
   baseRef: string | null;
   baseRefExact?: string | null;
+  comparisonBaseRef?: string | null;
   aheadBehind: AheadBehind | null;
   // Remote-tracking ref for currentBranch, e.g. "refs/remotes/origin/main". Null when the
   // branch has no upstream or git could not resolve it. aheadOfOrigin/behindOfOrigin are
@@ -926,6 +916,7 @@ export interface CheckoutStatusGitPaseo {
   isDirty: boolean;
   baseRef: string;
   baseRefExact?: string | null;
+  comparisonBaseRef?: string | null;
   aheadBehind: AheadBehind | null;
   upstreamRef: string | null;
   aheadOfOrigin: number | null;
@@ -1748,6 +1739,24 @@ function isQualifiedBranchRef(ref: string): boolean {
   return ref.startsWith("refs/heads/") || ref.startsWith("refs/remotes/");
 }
 
+async function resolveCommitComparisonRef(
+  cwd: string,
+  name: string,
+  context?: CheckoutContext,
+): Promise<string> {
+  await getRunGitCommand(context)(["rev-parse", "--verify", `${name}^{commit}`], {
+    cwd,
+    envOverlay: READ_ONLY_GIT_ENV,
+    logger: context?.logger,
+  });
+  const result = await getRunGitCommand(context)(["rev-parse", "--symbolic-full-name", name], {
+    cwd,
+    envOverlay: READ_ONLY_GIT_ENV,
+    logger: context?.logger,
+  });
+  return result.stdout.trim() || name;
+}
+
 async function resolveBestComparisonBaseRef(
   cwd: string,
   baseRef: string,
@@ -1774,11 +1783,17 @@ async function resolveBestComparisonBaseRef(
     return normalized.localName;
   }
 
-  const refName =
-    baseRef.startsWith("origin/") || baseRef.startsWith("refs/remotes/origin/")
-      ? normalized.originRef
-      : normalized.localName;
-  throw new Error(`Base branch not found locally or on origin: ${refName}`);
+  return resolveCommitComparisonRef(cwd, baseRef, context);
+}
+
+async function resolveQualifiedComparisonBaseRef(
+  cwd: string,
+  baseRef: string,
+  context: CheckoutContext,
+): Promise<string> {
+  const comparison = context.facts?.isGit ? context.facts.comparisonBaseRef : null;
+  const ref = comparison ?? (await resolveBestComparisonBaseRef(cwd, baseRef, context));
+  return resolveCommitComparisonRef(cwd, ref, context);
 }
 
 async function resolveMostAheadBaseRef(cwd: string, baseRef: string): Promise<string> {
@@ -1801,7 +1816,7 @@ async function resolveMostAheadBaseRef(cwd: string, baseRef: string): Promise<st
     return `origin/${normalizedBaseRef}`;
   }
   if (!hasLocal && !hasOrigin) {
-    throw new Error(`Base branch not found locally or on origin: ${normalizedBaseRef}`);
+    return resolveCommitComparisonRef(cwd, baseRef);
   }
 
   const { stdout } = await runGitCommand(
@@ -2239,8 +2254,8 @@ export async function getCheckoutSnapshotFacts(
   };
 }
 
-const PER_FILE_DIFF_MAX_BYTES = 1024 * 1024; // 1MB
-const TOTAL_DIFF_MAX_BYTES = 2 * 1024 * 1024; // 2MB
+export const PER_FILE_DIFF_MAX_BYTES = 1024 * 1024; // 1MB
+export const TOTAL_DIFF_MAX_BYTES = 2 * 1024 * 1024; // 2MB
 const CHECKOUT_DIFF_FRAME_HEADROOM_BYTES = 1024 * 1024;
 // Temporary until diffs load lazily per file. The Paseo relay's 32 MiB frame limit is
 // binding: string frames are encrypted and base64-encoded. Reserve 1 MiB plaintext for
@@ -2301,7 +2316,7 @@ async function isLikelyBinaryFile(absolutePath: string): Promise<boolean> {
   }
 }
 
-async function inspectUntrackedFile(
+export async function inspectUntrackedFile(
   cwd: string,
   relativePath: string,
 ): Promise<{ stat: FileStat; truncated: boolean }> {
@@ -2399,6 +2414,10 @@ export async function getCheckoutStatus(
   const baseRef = facts.resolvedBaseRef;
   const mainRepoRoot = facts.mainRepoRoot;
   const factsContext = { ...context, facts };
+  // Ref-derived counts skip the current base branch; the diff consumer still needs its ref.
+  const comparisonBaseRef = baseRef
+    ? await resolveQualifiedComparisonBaseRef(cwd, baseRef, factsContext).catch(() => null)
+    : null;
   const aheadBehind =
     baseRef && currentBranch
       ? await getAheadBehind(cwd, baseRef, currentBranch, factsContext)
@@ -2421,6 +2440,7 @@ export async function getCheckoutStatus(
       isDirty,
       baseRef: displayBaseRef ?? baseRef,
       baseRefExact: baseRef,
+      comparisonBaseRef,
       aheadBehind,
       upstreamRef,
       aheadOfOrigin,
@@ -2440,6 +2460,7 @@ export async function getCheckoutStatus(
     isDirty,
     baseRef: displayBaseRef,
     baseRefExact: baseRef,
+    comparisonBaseRef,
     aheadBehind,
     upstreamRef,
     aheadOfOrigin,
@@ -2804,6 +2825,7 @@ async function readCommitRenames(cwd: string, sha: string): Promise<ReadonlyMap<
  * binary-only (no textual hunks). Throws on git failure (e.g. an unknown sha),
  * which the caller maps to a typed checkout error.
  */
+// COMPAT(diffSubscription): added in v0.15.0, remove after 2027-05-06.
 export async function getCommitFileDiff({
   cwd,
   sha,
@@ -3570,6 +3592,21 @@ async function resolveCheckoutDiffRefs(
   if (compare.mode === "uncommitted") {
     return { baseRef: "HEAD", includeUntracked: true };
   }
+  const bestBaseRef = await resolveCheckoutDiffBase(cwd, compare, context);
+  if (!bestBaseRef) return null;
+  return {
+    baseRef: (await tryResolveMergeBase(cwd, bestBaseRef)) ?? bestBaseRef,
+    targetRef: compare.mode === "base" ? "HEAD" : undefined,
+    includeUntracked: compare.mode === "all",
+  };
+}
+
+export async function resolveCheckoutDiffBase(
+  cwd: string,
+  compare: CheckoutDiffCompare,
+  context?: CheckoutContext,
+): Promise<string | null> {
+  if (compare.mode === "uncommitted") return "HEAD";
   const { storedBaseRef, resolvedBaseRef } = await resolveBaseRefForCwd(cwd, context);
   const baseRef = resolveOperationBaseRef({
     storedBaseRef,
@@ -3579,17 +3616,12 @@ async function resolveCheckoutDiffRefs(
   if (!baseRef) {
     return null;
   }
-  const bestBaseRef = await resolveBestComparisonBaseRef(cwd, baseRef);
-  return {
-    baseRef: (await tryResolveMergeBase(cwd, bestBaseRef)) ?? bestBaseRef,
-    targetRef: compare.mode === "base" ? "HEAD" : undefined,
-    includeUntracked: compare.mode === "all",
-  };
+  return resolveBestComparisonBaseRef(cwd, baseRef);
 }
 
 // Git's working-tree diff ignores files absent from the index, even when they
 // exist in the comparison tree. Restore those entries only in a private index.
-async function prepareAllChangesIndex(cwd: string, baseRef: string) {
+export async function prepareAllChangesIndex(cwd: string, baseRef: string) {
   const untracked = await runGitCommand(["ls-files", "-z", "--others", "--exclude-standard"], {
     cwd,
     envOverlay: READ_ONLY_GIT_ENV,
@@ -3612,21 +3644,41 @@ async function prepareAllChangesIndex(cwd: string, baseRef: string) {
     entries += result.stdout;
   }
   if (!entries) return null;
-  const directory = await mkdtemp(resolve(tmpdir(), "paseo-all-changes-"));
+  const snapshot = await snapshotComparisonIndex(cwd);
+  try {
+    await runGitCommand(["update-index", "-z", "--index-info"], {
+      cwd,
+      input: entries,
+      envOverlay: { ...READ_ONLY_GIT_ENV, GIT_INDEX_FILE: snapshot.indexFile },
+    });
+    return snapshot;
+  } catch (error) {
+    await snapshot.cleanup();
+    throw error;
+  }
+}
+
+// write-tree rewrites its index. A private snapshot prevents an index read from
+// invalidating the observation that requested it.
+export async function snapshotComparisonIndex(cwd: string) {
+  const directory = await mkdtemp(resolve(tmpdir(), "paseo-comparison-index-"));
   const indexFile = resolve(directory, "index");
   try {
     const index = await runGitCommand(["rev-parse", "--git-path", "index"], {
       cwd,
       envOverlay: READ_ONLY_GIT_ENV,
     });
-    const indexPath = resolveGitRevParsePath(cwd, index.stdout);
-    if (!indexPath) throw new Error("Git did not return an index path");
-    await copyFile(indexPath, indexFile);
-    await runGitCommand(["update-index", "-z", "--index-info"], {
-      cwd,
-      input: entries,
-      envOverlay: { ...READ_ONLY_GIT_ENV, GIT_INDEX_FILE: indexFile },
-    });
+    const source = resolveGitRevParsePath(cwd, index.stdout);
+    if (!source) throw new Error("Git did not return an index path");
+    try {
+      await copyFile(source, indexFile);
+    } catch (error) {
+      if (!(error instanceof Error) || !("code" in error) || error.code !== "ENOENT") throw error;
+      await runGitCommand(["read-tree", "--empty"], {
+        cwd,
+        envOverlay: { ...READ_ONLY_GIT_ENV, GIT_INDEX_FILE: indexFile },
+      });
+    }
     return { indexFile, cleanup: () => rm(directory, { recursive: true, force: true }) };
   } catch (error) {
     await rm(directory, { recursive: true, force: true });
diff --git a/packages/server/src/utils/git-file-contents.ts b/packages/server/src/utils/git-file-contents.ts
index e42d3c6c83..04a314f17c 100644
--- a/packages/server/src/utils/git-file-contents.ts
+++ b/packages/server/src/utils/git-file-contents.ts
@@ -1,4 +1,4 @@
-import { runGitCommandBytes } from "./run-git-command.js";
+import { runGitCommandBytes, runGitCommand } from "./run-git-command.js";
 
 // Match the existing git-show ceiling. Oversized batches use bounded per-file reads.
 const MAX_CONTENT_BYTES = 20 * 1024 * 1024;
@@ -46,3 +46,17 @@ export async function readGitFileContents(
   if (offset !== result.stdout.length) throw new Error("Unexpected git object output");
   return contents;
 }
+
+export async function readGitFileContentAtRef(
+  cwd: string,
+  ref: string,
+  path: string,
+): Promise<string | null> {
+  const result = await runGitCommand(["show", `${ref}:${path}`], {
+    cwd,
+    envOverlay: { GIT_OPTIONAL_LOCKS: "0", LC_ALL: "C" },
+    acceptExitCodes: [0, 128],
+  });
+  if (result.exitCode !== 0 || result.truncated) return null;
+  return result.stdout;
+}
diff --git a/packages/server/src/utils/run-git-command.ts b/packages/server/src/utils/run-git-command.ts
index 3a3cbf5b4c..e65416878f 100644
--- a/packages/server/src/utils/run-git-command.ts
+++ b/packages/server/src/utils/run-git-command.ts
@@ -20,7 +20,7 @@ import {
 } from "./git-process-scheduler.js";
 
 const DEFAULT_TIMEOUT_MS = 30_000;
-const DEFAULT_MAX_OUTPUT_BYTES = 20 * 1024 * 1024; // 20MB
+export const DEFAULT_MAX_OUTPUT_BYTES = 20 * 1024 * 1024; // 20MB
 const DEFAULT_STDERR_LIMIT = 2048;
 
 let gitProcessScheduler = new GitProcessScheduler(resolveGitProcessPolicy({ env: process.env }));