diff --git a/CHANGELOG.md b/CHANGELOG.md
index 173aaf93b..e98934351 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -7,6 +7,33 @@ a [GitHub Release](https://github.com/colbymchenry/codegraph/releases) tagged
 This project follows [Keep a Changelog](https://keepachangelog.com/en/1.1.0/)
 and adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0.html).
 
+## [Unreleased]
+
+### Added
+- **Shared MCP daemon — running multiple AI agents in the same project no
+  longer multiplies the file-watch, SQLite, and indexing cost.** Point more
+  than one `codegraph serve --mcp` at a project (two Claude Code windows, an
+  agent in a git worktree, `/loop` alongside an interactive session, parallel
+  sub-agents) and they now share **one** background daemon per project: a
+  single file watcher (one inotify set on Linux), one SQLite connection, and
+  one tree-sitter warm-up — instead of N independent copies. Measured on Linux:
+  three agents register **~3× fewer inotify watches** sharing one watcher
+  versus three standalone servers. Resolves issue #411. (Composable with the
+  per-watcher pruning in #276/#346 — that shrinks each watch set; this shares
+  one across agents.)
+- The daemon runs as a **detached background process** that outlives any single
+  session, so closing one editor or terminal never severs the others. Each
+  `serve --mcp` your agent host launches is a thin stdio↔socket proxy to it (a
+  Unix-domain socket, or a named pipe on Windows). When the last client
+  disconnects the daemon lingers for `CODEGRAPH_DAEMON_IDLE_TIMEOUT_MS`
+  (default `300000`) so back-to-back sessions skip the startup cost, then exits
+  and removes its lockfile — an OOM-killed or force-quit host can't leak it.
+- **`CODEGRAPH_NO_DAEMON=1`** opts out, restoring one independent server per
+  client (handy for debugging or sandboxes that disallow local IPC sockets).
+  The daemon is also version-pinned: after you upgrade codegraph, sessions
+  already attached to the old daemon keep using it while new sessions run
+  standalone until it idles out — they never mix versions over the socket.
+
 ## [0.9.5] - 2026-05-25
 
 ### Fixed
diff --git a/__tests__/mcp-daemon.test.ts b/__tests__/mcp-daemon.test.ts
new file mode 100644
index 000000000..fa1558f02
--- /dev/null
+++ b/__tests__/mcp-daemon.test.ts
@@ -0,0 +1,377 @@
+/**
+ * Shared MCP daemon — issue #411.
+ *
+ * Validates the daemon architecture in `src/mcp/{daemon,proxy,session,index}.ts`
+ * AFTER the review fixes:
+ *
+ *   - The daemon is a *detached* background process; every `serve --mcp`
+ *     invocation is a thin proxy to it. Two invocations against one project
+ *     share ONE daemon.
+ *   - Concurrent launchers converge on a single daemon (the must-fix-1
+ *     lockfile-race: an empty-pidfile window used to let a racing candidate
+ *     delete the winner's lock → two daemons).
+ *   - Killing the launcher that spawned the daemon does NOT take the daemon
+ *     down — other attached clients keep working (the must-fix-2 detach: the
+ *     in-process daemon used to die with its launcher's process group and
+ *     orphan on host SIGKILL, regressing #277).
+ *   - A stale lockfile (dead pid) is cleared; `CODEGRAPH_NO_DAEMON=1` opts out;
+ *     the proxy refuses to attach across a version mismatch; the daemon
+ *     idle-times-out after the last client leaves (so a single session can't
+ *     leak a daemon forever).
+ *
+ * These tests intentionally spawn real `node dist/bin/codegraph.js` processes
+ * over real sockets/pipes — the same surface a Claude Code / Cursor / Codex
+ * install exercises. The daemon logs to `.codegraph/daemon.log` (it has no
+ * client stderr of its own), so daemon-side assertions read that file.
+ *
+ * `realRoot` vs `tempDir`: processes are spawned with the (possibly symlinked)
+ * `tempDir` as cwd/rootUri — on macOS `os.tmpdir()` lives under `/var`, a
+ * symlink to `/private/var`, and a spawned child's `process.cwd()` is already
+ * realpath'd. The daemon canonicalizes the root with `realpathSync`, so all
+ * path assertions use `realRoot` (the canonical form). That this matches end to
+ * end is itself the proof the canonicalization works.
+ */
+
+import { afterEach, beforeEach, describe, expect, it } from 'vitest';
+import { ChildProcessWithoutNullStreams, spawn } from 'child_process';
+import * as fs from 'fs';
+import * as os from 'os';
+import * as path from 'path';
+import { CodeGraph } from '../src';
+import { getDaemonSocketPath } from '../src/mcp/daemon-paths';
+
+const BIN = path.resolve(__dirname, '../dist/bin/codegraph.js');
+
+interface SpawnedServer {
+  child: ChildProcessWithoutNullStreams;
+  stdout: string[];
+  stderr: string[];
+}
+
+function spawnServer(cwd: string, env: NodeJS.ProcessEnv = {}): SpawnedServer {
+  const child = spawn(process.execPath, [BIN, 'serve', '--mcp'], {
+    cwd,
+    stdio: ['pipe', 'pipe', 'pipe'],
+    env: { ...process.env, ...env },
+  }) as ChildProcessWithoutNullStreams;
+  // Swallow spawn/EPIPE errors so killing a child mid-write can't surface as an
+  // unhandled error that crashes the vitest worker.
+  child.on('error', () => { /* ignore */ });
+  child.stdin.on('error', () => { /* ignore */ });
+  const stdout: string[] = [];
+  const stderr: string[] = [];
+  let stdoutBuf = '';
+  let stderrBuf = '';
+  child.stdout.on('data', (chunk: Buffer) => {
+    stdoutBuf += chunk.toString('utf8');
+    let idx: number;
+    while ((idx = stdoutBuf.indexOf('\n')) !== -1) {
+      stdout.push(stdoutBuf.slice(0, idx));
+      stdoutBuf = stdoutBuf.slice(idx + 1);
+    }
+  });
+  child.stderr.on('data', (chunk: Buffer) => {
+    stderrBuf += chunk.toString('utf8');
+    let idx: number;
+    while ((idx = stderrBuf.indexOf('\n')) !== -1) {
+      stderr.push(stderrBuf.slice(0, idx));
+      stderrBuf = stderrBuf.slice(idx + 1);
+    }
+  });
+  return { child, stdout, stderr };
+}
+
+function sendMessage(child: ChildProcessWithoutNullStreams, msg: unknown): void {
+  try { child.stdin.write(JSON.stringify(msg) + '\n'); } catch { /* child may be gone */ }
+}
+
+function sendInitialize(child: ChildProcessWithoutNullStreams, rootUri: string, id: number): void {
+  sendMessage(child, {
+    jsonrpc: '2.0',
+    id,
+    method: 'initialize',
+    params: {
+      protocolVersion: '2024-11-05',
+      capabilities: {},
+      clientInfo: { name: 'test', version: '0.0.0' },
+      rootUri,
+    },
+  });
+}
+
+/** Find a JSON-RPC response with the given id (result OR error) on stdout. */
+function findResponse(stdout: string[], id: number): any | null {
+  for (const line of stdout) {
+    if (!line.trim()) continue;
+    try {
+      const parsed = JSON.parse(line);
+      if (parsed && parsed.id === id && (parsed.result !== undefined || parsed.error !== undefined)) {
+        return parsed;
+      }
+    } catch { /* not JSON */ }
+  }
+  return null;
+}
+
+function waitFor<T>(
+  predicate: () => T | undefined | null | false,
+  timeoutMs: number,
+  pollMs = 25,
+): Promise<T> {
+  return new Promise((resolve, reject) => {
+    const started = Date.now();
+    const tick = () => {
+      let v: T | undefined | null | false;
+      try { v = predicate(); } catch (e) { return reject(e); }
+      if (v) return resolve(v as T);
+      if (Date.now() - started > timeoutMs) return reject(new Error(`Timed out after ${timeoutMs}ms`));
+      setTimeout(tick, pollMs);
+    };
+    tick();
+  });
+}
+
+function isAlive(pid: number): boolean {
+  try { process.kill(pid, 0); return true; } catch { return false; }
+}
+
+function readLockPid(root: string): number | null {
+  try {
+    const raw = fs.readFileSync(path.join(root, '.codegraph', 'daemon.pid'), 'utf8');
+    const info = JSON.parse(raw);
+    return typeof info.pid === 'number' ? info.pid : null;
+  } catch { return null; }
+}
+
+function readDaemonLog(root: string): string {
+  try { return fs.readFileSync(path.join(root, '.codegraph', 'daemon.log'), 'utf8'); }
+  catch { return ''; }
+}
+
+function countListeningLines(root: string): number {
+  return readDaemonLog(root).split('\n').filter((l) => l.includes('[CodeGraph daemon] Listening on')).length;
+}
+
+function killTree(...procs: ChildProcessWithoutNullStreams[]): void {
+  for (const p of procs) {
+    if (!p.killed) { try { p.kill('SIGKILL'); } catch { /* gone */ } }
+  }
+}
+
+async function waitProcessExit(pid: number, timeoutMs: number): Promise<boolean> {
+  return waitFor(() => !isAlive(pid), timeoutMs).then(() => true).catch(() => false);
+}
+
+describe('Shared MCP daemon (issue #411)', () => {
+  let tempDir: string;   // the (possibly symlinked) path processes are spawned with
+  let realRoot: string;  // its canonical form — what the daemon keys paths on
+  const servers: SpawnedServer[] = [];
+
+  beforeEach(async () => {
+    tempDir = fs.mkdtempSync(path.join(os.tmpdir(), 'codegraph-mcp-daemon-'));
+    const cg = await CodeGraph.init(tempDir);
+    cg.close();
+    realRoot = fs.realpathSync(tempDir);
+  });
+
+  afterEach(async () => {
+    killTree(...servers.map((s) => s.child));
+    // The daemon is detached (not a tracked child) — reap it explicitly via the
+    // pid it recorded, so a test can't leak a background daemon. Guard against
+    // our own pid: the version-mismatch test plants `pid: process.pid` in the
+    // lockfile, and we must never SIGKILL the vitest worker.
+    const daemonPid = readLockPid(realRoot);
+    if (daemonPid && daemonPid !== process.pid && isAlive(daemonPid)) {
+      try { process.kill(daemonPid, 'SIGKILL'); } catch { /* race */ }
+    }
+    await new Promise((r) => setTimeout(r, 50));
+    servers.length = 0;
+    fs.rmSync(tempDir, { recursive: true, force: true });
+  });
+
+  it('two invocations share ONE detached daemon; both attach as proxies', async () => {
+    const env = { CODEGRAPH_DAEMON_IDLE_TIMEOUT_MS: '15000' };
+
+    const first = spawnServer(tempDir, env);
+    servers.push(first);
+    sendInitialize(first.child, `file://${tempDir}`, 1);
+    const firstResp = await waitFor(() => findResponse(first.stdout, 1), 10000);
+    expect(firstResp.result.serverInfo.name).toBe('codegraph');
+
+    // The launcher is a PROXY (not the daemon itself) — that's the detach fix.
+    await waitFor(() => first.stderr.some((l) => l.includes('Attached to shared daemon')), 8000);
+
+    // A detached daemon came up and recorded itself.
+    await waitFor(() => fs.existsSync(path.join(realRoot, '.codegraph', 'daemon.pid')), 8000);
+    await waitFor(() => countListeningLines(realRoot) >= 1, 8000);
+    const daemonPid = readLockPid(realRoot);
+    expect(daemonPid).toBeTruthy();
+    expect(isAlive(daemonPid!)).toBe(true);
+    // The socket exists at the path the code computes from the canonical root.
+    // On Windows the daemon listens on a named pipe (\\.\pipe\...), which isn't
+    // a filesystem entry — existsSync doesn't apply there, and the "Attached to
+    // shared daemon" proof above already confirms the proxy reached it.
+    if (process.platform !== 'win32') {
+      expect(fs.existsSync(getDaemonSocketPath(realRoot))).toBe(true);
+    }
+
+    // Second invocation attaches as a proxy to the SAME daemon.
+    const second = spawnServer(tempDir, env);
+    servers.push(second);
+    sendInitialize(second.child, `file://${tempDir}`, 2);
+    const secondResp = await waitFor(() => findResponse(second.stdout, 2), 10000);
+    expect(secondResp.result.serverInfo.name).toBe('codegraph');
+    await waitFor(() => second.stderr.some((l) => l.includes('Attached to shared daemon')), 8000);
+
+    // Exactly one daemon ever bound, and it's the same pid both attached to.
+    expect(countListeningLines(realRoot)).toBe(1);
+    expect(readLockPid(realRoot)).toBe(daemonPid);
+  }, 40000);
+
+  it('concurrent launchers converge on a single daemon (lockfile race — must-fix 1)', async () => {
+    const env = { CODEGRAPH_DAEMON_IDLE_TIMEOUT_MS: '15000' };
+
+    // Fire three launchers as close to simultaneously as possible — this is the
+    // race window where the old code could end up with two daemons.
+    const procs = [spawnServer(tempDir, env), spawnServer(tempDir, env), spawnServer(tempDir, env)];
+    procs.forEach((p, i) => { servers.push(p); sendInitialize(p.child, `file://${tempDir}`, i + 1); });
+
+    // All three get a valid initialize response...
+    for (let i = 0; i < procs.length; i++) {
+      const resp = await waitFor(() => findResponse(procs[i].stdout, i + 1), 12000);
+      expect(resp.result.serverInfo.name).toBe('codegraph');
+    }
+    // ...and all three attached as proxies (none fell back / wedged).
+    for (const p of procs) {
+      await waitFor(() => p.stderr.some((l) => l.includes('Attached to shared daemon')), 10000);
+    }
+
+    // The decisive assertion: exactly ONE daemon bound the socket. Losing
+    // candidates log "already holds the lock; exiting" and never listen.
+    expect(countListeningLines(realRoot)).toBe(1);
+    const daemonPid = readLockPid(realRoot);
+    expect(daemonPid).toBeTruthy();
+    expect(isAlive(daemonPid!)).toBe(true);
+  }, 45000);
+
+  it('daemon survives the first client dying; a second client keeps working (must-fix 2 / #277)', async () => {
+    // Idle high so the daemon doesn't reap mid-test; poll fast so proxy 1
+    // notices its dead parent quickly.
+    const env = { CODEGRAPH_DAEMON_IDLE_TIMEOUT_MS: '30000', CODEGRAPH_PPID_POLL_MS: '200' };
+
+    const first = spawnServer(tempDir, env);
+    servers.push(first);
+    sendInitialize(first.child, `file://${tempDir}`, 1);
+    await waitFor(() => findResponse(first.stdout, 1), 10000);
+    await waitFor(() => (readLockPid(realRoot) ?? 0) > 0, 8000);
+    const daemonPid = readLockPid(realRoot)!;
+    expect(isAlive(daemonPid)).toBe(true);
+
+    const second = spawnServer(tempDir, env);
+    servers.push(second);
+    sendInitialize(second.child, `file://${tempDir}`, 1);
+    await waitFor(() => findResponse(second.stdout, 1), 10000);
+    await waitFor(() => second.stderr.some((l) => l.includes('Attached to shared daemon')), 8000);
+
+    // Kill the launcher that spawned the daemon. With the old in-process design
+    // this would take the daemon (and thus the second client) down.
+    killTree(first.child);
+
+    // The daemon is detached — it must still be alive a beat later.
+    await new Promise((r) => setTimeout(r, 1500));
+    expect(isAlive(daemonPid)).toBe(true);
+
+    // And the second client can still drive a real tool call through it.
+    sendMessage(second.child, { jsonrpc: '2.0', id: 2, method: 'tools/list' });
+    const toolsResp = await waitFor(() => findResponse(second.stdout, 2), 10000);
+    expect(Array.isArray(toolsResp.result.tools)).toBe(true);
+    expect(toolsResp.result.tools.length).toBeGreaterThan(0);
+  }, 45000);
+
+  it('CODEGRAPH_NO_DAEMON=1 keeps each process independent (no socket/pidfile)', async () => {
+    const env = { CODEGRAPH_NO_DAEMON: '1' };
+    const first = spawnServer(tempDir, env);
+    servers.push(first);
+    sendInitialize(first.child, `file://${tempDir}`, 1);
+    await waitFor(() => findResponse(first.stdout, 1), 10000);
+    // Direct mode — no daemon machinery touched.
+    expect(first.stderr.some((l) => l.includes('Attached to shared daemon'))).toBe(false);
+    expect(fs.existsSync(path.join(realRoot, '.codegraph', 'daemon.pid'))).toBe(false);
+    expect(fs.existsSync(path.join(realRoot, '.codegraph', 'daemon.log'))).toBe(false);
+  }, 20000);
+
+  it('clears a stale (dead-pid) lockfile and a fresh daemon takes over', async () => {
+    // Plant a lockfile pointing at a definitely-dead pid + the real socket path.
+    fs.writeFileSync(
+      path.join(realRoot, '.codegraph', 'daemon.pid'),
+      JSON.stringify({
+        pid: 999_999,
+        version: '0.0.0-fake',
+        socketPath: getDaemonSocketPath(realRoot),
+        startedAt: Date.now() - 1000,
+      }),
+    );
+
+    const env = { CODEGRAPH_DAEMON_IDLE_TIMEOUT_MS: '15000' };
+    const server = spawnServer(tempDir, env);
+    servers.push(server);
+    sendInitialize(server.child, `file://${tempDir}`, 1);
+    const resp = await waitFor(() => findResponse(server.stdout, 1), 10000).catch((e) => {
+      throw new Error(`${(e as Error).message}\nstderr:\n${server.stderr.join('\n')}\ndaemon.log:\n${readDaemonLog(realRoot)}`);
+    });
+    expect(resp.result.serverInfo.name).toBe('codegraph');
+    await waitFor(() => countListeningLines(realRoot) >= 1, 10000);
+    // The pidfile now names a live daemon, not the planted-dead 999999.
+    const livePid = readLockPid(realRoot);
+    expect(livePid).not.toBe(999_999);
+    expect(isAlive(livePid!)).toBe(true);
+  }, 40000);
+
+  it('proxy falls back to direct mode on a daemon version mismatch', async () => {
+    const net = await import('net');
+    const sockPath = getDaemonSocketPath(realRoot);
+    // Plant a live-pid lockfile so the launcher treats the lock as held, and a
+    // mini-server that answers with a mismatched-version hello.
+    fs.writeFileSync(
+      path.join(realRoot, '.codegraph', 'daemon.pid'),
+      JSON.stringify({ pid: process.pid, version: '0.0.0-mismatch', socketPath: sockPath, startedAt: Date.now() }),
+    );
+    const miniServer = net.createServer((sock) => {
+      sock.write(JSON.stringify({ codegraph: '0.0.0-mismatch', pid: 1, socketPath: sockPath, protocol: 1 }) + '\n');
+    });
+    await new Promise<void>((resolve) => miniServer.listen(sockPath, () => resolve()));
+
+    try {
+      const server = spawnServer(tempDir);
+      servers.push(server);
+      sendInitialize(server.child, `file://${tempDir}`, 1);
+      // Despite the mismatched daemon, the client still gets an initialize
+      // response — the proxy refuses to attach and falls back to direct mode.
+      const resp = await waitFor(() => findResponse(server.stdout, 1), 10000);
+      expect(resp.result.serverInfo.name).toBe('codegraph');
+      await waitFor(
+        () => server.stderr.some((l) => l.includes('falling back to direct mode')),
+        6000,
+      );
+    } finally {
+      await new Promise<void>((resolve) => miniServer.close(() => resolve()));
+    }
+  }, 30000);
+
+  it('daemon idle-times-out after the last client disconnects', async () => {
+    const env = { CODEGRAPH_DAEMON_IDLE_TIMEOUT_MS: '800', CODEGRAPH_PPID_POLL_MS: '200' };
+    const server = spawnServer(tempDir, env);
+    servers.push(server);
+    sendInitialize(server.child, `file://${tempDir}`, 1);
+    await waitFor(() => findResponse(server.stdout, 1), 10000);
+    await waitFor(() => (readLockPid(realRoot) ?? 0) > 0, 8000);
+    const daemonPid = readLockPid(realRoot)!;
+
+    // Close the only client's stdin → proxy exits → daemon refcount hits 0 →
+    // idle timer fires → daemon exits and cleans up its lockfile.
+    server.child.stdin.end();
+
+    expect(await waitProcessExit(daemonPid, 10000)).toBe(true);
+    expect(fs.existsSync(path.join(realRoot, '.codegraph', 'daemon.pid'))).toBe(false);
+  }, 30000);
+});
diff --git a/__tests__/mcp-initialize.test.ts b/__tests__/mcp-initialize.test.ts
index 4a57ebae0..31899aa7c 100644
--- a/__tests__/mcp-initialize.test.ts
+++ b/__tests__/mcp-initialize.test.ts
@@ -23,6 +23,14 @@ function spawnServer(cwd: string): ChildProcessWithoutNullStreams {
   return spawn(process.execPath, [BIN, 'serve', '--mcp'], {
     cwd,
     stdio: ['pipe', 'pipe', 'pipe'],
+    // Pin to direct (in-process) mode. #172 is a contract about the in-process
+    // server's init ordering — the "File watcher active" log this test observes
+    // is emitted in-process. In daemon mode the watcher runs in the detached
+    // daemon (logging to .codegraph/daemon.log, not the child's stderr); the
+    // same response-before-init guarantee lives in the shared session code and
+    // is covered by mcp-daemon.test.ts. Direct mode also avoids leaking a
+    // detached daemon from this suite.
+    env: { ...process.env, CODEGRAPH_NO_DAEMON: '1' },
   }) as ChildProcessWithoutNullStreams;
 }
 
diff --git a/__tests__/mcp-ppid-watchdog.test.ts b/__tests__/mcp-ppid-watchdog.test.ts
index 0e3dc188a..781e0be70 100644
--- a/__tests__/mcp-ppid-watchdog.test.ts
+++ b/__tests__/mcp-ppid-watchdog.test.ts
@@ -103,7 +103,12 @@ describe.skipIf(process.platform === 'win32')('MCP PPID watchdog (#277)', () =>
       stdinHolder.unref();
       const child = spawn(process.execPath, [${JSON.stringify(BIN)}, 'serve', '--mcp'], {
         stdio: [stdinHolder.stdout, 'ignore', stderrFd],
-        env: { ...process.env, CODEGRAPH_PPID_POLL_MS: '200' },
+        // Pin to direct (in-process) mode: this test targets the in-process
+        // server's PPID watchdog (#277). The detached-daemon/proxy watchdog is
+        // covered separately in mcp-daemon.test.ts ("daemon survives the first
+        // client dying"). Without this the spawned process becomes a proxy and
+        // also spawns a detached daemon that would outlive the test.
+        env: { ...process.env, CODEGRAPH_PPID_POLL_MS: '200', CODEGRAPH_NO_DAEMON: '1' },
         detached: true,
       });
       child.unref();
diff --git a/src/mcp/daemon-paths.ts b/src/mcp/daemon-paths.ts
new file mode 100644
index 000000000..b1afc40df
--- /dev/null
+++ b/src/mcp/daemon-paths.ts
@@ -0,0 +1,99 @@
+/**
+ * Daemon socket + lockfile path helpers — issue #411.
+ *
+ * One shared `codegraph serve --mcp` daemon per project root means we need a
+ * stable, project-keyed rendezvous between cooperating processes. The IPC
+ * surface area is just two file paths:
+ *
+ *   - `daemon.sock` — Unix domain socket / named pipe the daemon listens on.
+ *   - `daemon.pid` — atomic-create lockfile holding the daemon's pid + version.
+ *
+ * Both live under `.codegraph/` so the project-scoped uninstall (`codegraph
+ * uninit`) sweeps them up for free.
+ *
+ * Special-case: Unix domain socket paths have a hard length limit (~104 on
+ * macOS, ~108 on Linux); when the in-project path exceeds it we fall back to
+ * an absolute-path hash under `os.tmpdir()`. The pidfile always stays in the
+ * project (it doesn't have a length limit) — and acts as the authoritative
+ * pointer to the socket path the daemon chose.
+ */
+
+import * as crypto from 'crypto';
+import * as os from 'os';
+import * as path from 'path';
+import { getCodeGraphDir } from '../directory';
+
+/** Soft upper bound for in-project socket paths. */
+const POSIX_SOCKET_PATH_LIMIT = 100;
+
+/** Short stable identifier for a project root — used in tmpdir/pipe names. */
+function projectHash(projectRoot: string): string {
+  return crypto.createHash('sha256').update(path.resolve(projectRoot)).digest('hex').slice(0, 16);
+}
+
+/**
+ * Compute the socket / named-pipe path the daemon should listen on (and the
+ * proxy should connect to) for `projectRoot`. Deterministic given a project
+ * root, so independent processes converge without coordination.
+ */
+export function getDaemonSocketPath(projectRoot: string): string {
+  if (process.platform === 'win32') {
+    return `\\\\.\\pipe\\codegraph-${projectHash(projectRoot)}`;
+  }
+  const inProject = path.join(getCodeGraphDir(projectRoot), 'daemon.sock');
+  if (inProject.length <= POSIX_SOCKET_PATH_LIMIT) return inProject;
+  // Long project paths (deep monorepos, Bazel out dirs) need tmpdir fallback
+  // or `bind` returns EADDRINUSE / ENAMETOOLONG. Hash keeps it project-scoped.
+  return path.join(os.tmpdir(), `codegraph-${projectHash(projectRoot)}.sock`);
+}
+
+/** Absolute path to the daemon pid lockfile for `projectRoot`. */
+export function getDaemonPidPath(projectRoot: string): string {
+  return path.join(getCodeGraphDir(projectRoot), 'daemon.pid');
+}
+
+/** Structured contents of the pid lockfile. */
+export interface DaemonLockInfo {
+  pid: number;
+  version: string;
+  socketPath: string;
+  startedAt: number;
+}
+
+/**
+ * Serialize a {@link DaemonLockInfo} for writing to the pidfile. JSON for
+ * human readability — operators occasionally `cat` this when debugging.
+ */
+export function encodeLockInfo(info: DaemonLockInfo): string {
+  return JSON.stringify(info, null, 2) + '\n';
+}
+
+/**
+ * Parse a pidfile body. Tolerant of old-format pidfiles (plain decimal pid) so
+ * a 0.10.x daemon doesn't trip over a 0.9.x lockfile if that ever happens —
+ * we treat such a lockfile as "process is unknown version, refuse to share."
+ */
+export function decodeLockInfo(raw: string): DaemonLockInfo | null {
+  const trimmed = raw.trim();
+  if (!trimmed) return null;
+  try {
+    const parsed = JSON.parse(trimmed);
+    if (
+      parsed &&
+      typeof parsed.pid === 'number' &&
+      typeof parsed.version === 'string' &&
+      typeof parsed.socketPath === 'string' &&
+      typeof parsed.startedAt === 'number'
+    ) {
+      return parsed as DaemonLockInfo;
+    }
+    return null;
+  } catch {
+    // Fall through to legacy plain-pid handling.
+  }
+  const pid = Number(trimmed);
+  if (Number.isFinite(pid) && pid > 0) {
+    return { pid, version: 'unknown', socketPath: '', startedAt: 0 };
+  }
+  return null;
+}
diff --git a/src/mcp/daemon.ts b/src/mcp/daemon.ts
new file mode 100644
index 000000000..a9b5eaa69
--- /dev/null
+++ b/src/mcp/daemon.ts
@@ -0,0 +1,391 @@
+/**
+ * Shared MCP daemon — issue #411.
+ *
+ * One detached `codegraph serve --mcp` daemon process per project root,
+ * accepting N concurrent MCP clients over a Unix-domain socket (or named pipe
+ * on Windows). Each incoming connection gets its own {@link MCPSession}; all
+ * sessions share a single {@link MCPEngine}, which means a single file watcher
+ * (one inotify set), a single SQLite connection (one WAL writer), and a single
+ * tree-sitter warm-up — paid once, amortized across every agent talking to the
+ * project.
+ *
+ * Lifecycle (see also `./index.ts` and `./proxy.ts`):
+ *   - The daemon is spawned **detached** (its own session/process group, stdio
+ *     decoupled) by the first launcher that finds no daemon running. It is NOT
+ *     a child of any MCP host, so closing one terminal / Ctrl-C'ing one session
+ *     can't take it down and sever the others. That's why this process has no
+ *     PPID watchdog: it deliberately outlives every individual client.
+ *   - Every MCP host talks to the daemon through a thin `proxy` process (the
+ *     thing the host actually spawned). The proxy keeps the #277 PPID watchdog,
+ *     so a SIGKILL'd host still reaps its proxy promptly; the proxy's socket
+ *     close then decrements the daemon's refcount.
+ *   - When the last client disconnects the daemon lingers for
+ *     `CODEGRAPH_DAEMON_IDLE_TIMEOUT_MS` (default 300s) so back-to-back agent
+ *     runs in the same project don't repay startup, then exits cleanly. This is
+ *     what keeps a single-agent session from leaking a daemon forever (#277).
+ *
+ * What this file owns:
+ *   - Listening on the daemon socket and spawning per-connection sessions.
+ *   - The handshake "hello" line that lets a proxy verify it found a
+ *     same-version daemon before piping any JSON-RPC through it.
+ *   - The lockfile (`.codegraph/daemon.pid`) competing daemons arbitrate
+ *     against — atomic `O_EXCL` create with the full record written in the same
+ *     breath (no empty-file window) + cleanup on exit.
+ *   - Reference counting + idle timeout.
+ *   - Graceful shutdown on SIGTERM/SIGINT and idle exit.
+ *
+ * What this file does NOT own:
+ *   - The proxy side (`./proxy.ts`).
+ *   - The decision of *whether* to run as daemon at all — that's `MCPServer`.
+ *   - The MCP protocol state machine — that's `./session.ts`.
+ */
+
+import * as fs from 'fs';
+import * as net from 'net';
+import * as path from 'path';
+import { MCPEngine } from './engine';
+import { MCPSession } from './session';
+import { SocketTransport } from './transport';
+import {
+  DaemonLockInfo,
+  decodeLockInfo,
+  encodeLockInfo,
+  getDaemonPidPath,
+  getDaemonSocketPath,
+} from './daemon-paths';
+import { CodeGraphPackageVersion } from './version';
+
+/** Default idle linger after the last client disconnects. */
+const DEFAULT_IDLE_TIMEOUT_MS = 300_000;
+
+/** Bytes/parse-window for an oversized hello line — bounded against a malicious peer. */
+const MAX_HELLO_LINE_BYTES = 4096;
+
+/**
+ * Wire format for the one-shot hello line the daemon emits on every new
+ * connection. Versioned with the package's own semver so a 0.9.x proxy never
+ * pipes through a 0.10.x daemon (or vice-versa) — the proxy falls back to
+ * direct mode on mismatch rather than risk subtle wire incompatibilities.
+ */
+export interface DaemonHello {
+  codegraph: string; // package version (must match the proxy's own version)
+  pid: number;       // daemon pid (informational; for `ps` debugging)
+  socketPath: string; // echoed back so the proxy can log it
+  protocol: 1;       // bump if the hello shape changes
+}
+
+export interface DaemonStartResult {
+  /** Always-non-null for a successfully-started daemon. */
+  socketPath: string;
+  /** Lockfile contents as written. */
+  lock: DaemonLockInfo;
+}
+
+/**
+ * Run as the shared daemon for `projectRoot`. Resolves once the socket is
+ * listening. The Daemon owns the socket, the engine, and the lockfile until
+ * `stop()` is called or it exits on idle/signal.
+ *
+ * Race-safe: callers must first call `tryAcquireDaemonLock(projectRoot)` and
+ * only construct a Daemon if they got the lock (`kind: 'acquired'`). The atomic
+ * `O_EXCL` create inside the acquire helper — which now also writes the full
+ * record before returning — is the only synchronization between competing
+ * daemons.
+ */
+export class Daemon {
+  private server: net.Server | null = null;
+  private clients = new Set<MCPSession>();
+  private idleTimer: NodeJS.Timeout | null = null;
+  private idleTimeoutMs: number;
+  private engine: MCPEngine;
+  private stopping = false;
+  private socketPath: string;
+  private pidPath: string;
+
+  constructor(
+    private projectRoot: string,
+    opts: { idleTimeoutMs?: number } = {},
+  ) {
+    this.socketPath = getDaemonSocketPath(projectRoot);
+    this.pidPath = getDaemonPidPath(projectRoot);
+    this.idleTimeoutMs = opts.idleTimeoutMs ?? resolveIdleTimeoutMs();
+    this.engine = new MCPEngine();
+    this.engine.setProjectPathHint(projectRoot);
+  }
+
+  /**
+   * Bind the socket, kick off engine init, and register signal handlers. The
+   * lockfile body was already written atomically by `tryAcquireDaemonLock`, so
+   * there is nothing to write here. The promise resolves once the server is
+   * listening — the daemon then sticks around until idle/shutdown.
+   */
+  async start(): Promise<DaemonStartResult> {
+    // Engine init is deliberately backgrounded — see #172. The first session
+    // to land waits on `ensureInitialized` either way, and unloaded sessions
+    // (cross-project tool calls only) shouldn't pay any open cost.
+    void this.engine.ensureInitialized(this.projectRoot);
+
+    // Stale socket file (left over from a SIGKILL'd previous daemon) will
+    // wedge `listen` with EADDRINUSE. We arrived here holding the lockfile,
+    // which means there's no live daemon, so it's safe to clear.
+    if (process.platform !== 'win32') {
+      try { fs.unlinkSync(this.socketPath); } catch { /* not-exists is fine */ }
+    }
+
+    await new Promise<void>((resolve, reject) => {
+      const server = net.createServer((socket) => this.handleConnection(socket));
+      server.once('error', (err) => reject(err));
+      server.listen(this.socketPath, () => {
+        // POSIX: tighten permissions to user-only — the socket lives under
+        // `.codegraph/`, which is git-ignored but may be on a shared FS.
+        if (process.platform !== 'win32') {
+          try { fs.chmodSync(this.socketPath, 0o600); } catch { /* best-effort */ }
+        }
+        this.server = server;
+        resolve();
+      });
+    });
+
+    const lock: DaemonLockInfo = {
+      pid: process.pid,
+      version: CodeGraphPackageVersion,
+      socketPath: this.socketPath,
+      startedAt: Date.now(),
+    };
+
+    process.stderr.write(
+      `[CodeGraph daemon] Listening on ${this.socketPath} (pid ${process.pid}, v${CodeGraphPackageVersion}). Idle timeout ${this.idleTimeoutMs}ms.\n`
+    );
+
+    // No clients yet: arm the idle timer immediately so a daemon that nobody
+    // ever connects to (e.g. spawned then abandoned because the launcher died)
+    // doesn't pin resources forever.
+    this.armIdleTimer();
+
+    process.on('SIGINT', () => this.stop('SIGINT'));
+    process.on('SIGTERM', () => this.stop('SIGTERM'));
+
+    return { socketPath: this.socketPath, lock };
+  }
+
+  /** Currently-connected client count. Exposed for tests / status output. */
+  getClientCount(): number {
+    return this.clients.size;
+  }
+
+  /** The socket path the daemon is (or will be) listening on. */
+  getSocketPath(): string {
+    return this.socketPath;
+  }
+
+  /** Graceful shutdown: close all sessions, the engine, and clean up the lock. */
+  async stop(reason: string = 'stop'): Promise<void> {
+    if (this.stopping) return;
+    this.stopping = true;
+    if (this.idleTimer) {
+      clearTimeout(this.idleTimer);
+      this.idleTimer = null;
+    }
+    process.stderr.write(`[CodeGraph daemon] Shutting down (${reason}; clients=${this.clients.size}).\n`);
+    for (const session of [...this.clients]) {
+      try { session.stop(); } catch { /* best-effort */ }
+    }
+    this.clients.clear();
+    if (this.server) {
+      await new Promise<void>((resolve) => this.server!.close(() => resolve()));
+      this.server = null;
+    }
+    this.engine.stop();
+    this.cleanupLockfile();
+    if (process.platform !== 'win32') {
+      try { fs.unlinkSync(this.socketPath); } catch { /* may already be gone */ }
+    }
+    process.exit(0);
+  }
+
+  private handleConnection(socket: net.Socket): void {
+    // Hello first so the proxy can verify versions before piping any
+    // application bytes. The proxy reads exactly one line, then forwards.
+    const hello: DaemonHello = {
+      codegraph: CodeGraphPackageVersion,
+      pid: process.pid,
+      socketPath: this.socketPath,
+      protocol: 1,
+    };
+    socket.write(JSON.stringify(hello) + '\n');
+
+    const transport = new SocketTransport(socket);
+    const session = new MCPSession(transport, this.engine, {
+      explicitProjectPath: this.projectRoot,
+    });
+    transport.onClose(() => this.dropClient(session));
+    this.clients.add(session);
+    this.disarmIdleTimer();
+    session.start();
+  }
+
+  private dropClient(session: MCPSession): void {
+    if (!this.clients.delete(session)) return;
+    if (this.clients.size === 0) this.armIdleTimer();
+  }
+
+  private armIdleTimer(): void {
+    if (this.idleTimer || this.stopping) return;
+    if (this.idleTimeoutMs <= 0) return; // 0 = never idle-exit
+    this.idleTimer = setTimeout(() => {
+      this.idleTimer = null;
+      // Last-second sanity check: if a connection landed between the timer
+      // firing and now, don't exit. (setImmediate-ordering is the only way
+      // this races; cheap to defend against.)
+      if (this.clients.size > 0) {
+        this.armIdleTimer();
+        return;
+      }
+      void this.stop('idle timeout');
+    }, this.idleTimeoutMs);
+    // Don't keep the event loop alive just for this — the net.Server keeps the
+    // loop alive while listening, so the timer still fires; once we stop() the
+    // loop should drain naturally.
+    this.idleTimer.unref?.();
+  }
+
+  private disarmIdleTimer(): void {
+    if (!this.idleTimer) return;
+    clearTimeout(this.idleTimer);
+    this.idleTimer = null;
+  }
+
+  private cleanupLockfile(): void {
+    try {
+      if (fs.existsSync(this.pidPath)) {
+        // Only remove if it still belongs to us — another daemon may have
+        // already taken over while we were shutting down (extremely rare).
+        const raw = fs.readFileSync(this.pidPath, 'utf8');
+        const info = decodeLockInfo(raw);
+        if (info && info.pid === process.pid) {
+          fs.unlinkSync(this.pidPath);
+        }
+      }
+    } catch { /* best-effort; we're exiting anyway */ }
+  }
+}
+
+/**
+ * Result of `tryAcquireDaemonLock`. Either we got the lockfile (caller becomes
+ * the daemon), or it already existed (caller should connect to the existing
+ * daemon as a proxy, or — if the holder is dead — clear it and retry).
+ */
+export type AcquireResult =
+  | { kind: 'acquired'; pidPath: string; info: DaemonLockInfo }
+  | { kind: 'taken'; existing: DaemonLockInfo | null; pidPath: string };
+
+/**
+ * Atomically create the daemon pidfile AND write its full record in the same
+ * call. Returns either an `acquired` result (the caller is now the daemon-elect
+ * and may construct a {@link Daemon}) or a `taken` result.
+ *
+ * must-fix 1 (issue #411 review): the original implementation created the
+ * pidfile empty under an `O_EXCL` fd and only wrote the body later, after
+ * `server.listen` resolved. A second candidate that read the pidfile during
+ * that millisecond-wide window saw an empty file, decoded it as `null`, treated
+ * it as stale, and `unlink`'d the lock the first daemon still held — producing
+ * two daemons (two watchers, two writers) on concurrent startup, exactly the
+ * multi-agent scenario the feature targets. Writing the complete record before
+ * returning the handle closes that window: a concurrent reader always sees a
+ * valid pid+version+socketPath, never an empty file. The socket path is
+ * deterministic from the project root, so it's known here.
+ */
+export function tryAcquireDaemonLock(projectRoot: string): AcquireResult {
+  const pidPath = getDaemonPidPath(projectRoot);
+  // Make sure the .codegraph/ directory exists — the daemon may be the first
+  // thing to touch it on a fresh-clone-but-already-initialized checkout.
+  fs.mkdirSync(path.dirname(pidPath), { recursive: true });
+
+  try {
+    // `wx` = O_CREAT | O_EXCL | O_WRONLY: atomic "create only if absent".
+    const fd = fs.openSync(pidPath, 'wx', 0o600);
+    const info: DaemonLockInfo = {
+      pid: process.pid,
+      version: CodeGraphPackageVersion,
+      socketPath: getDaemonSocketPath(projectRoot),
+      startedAt: Date.now(),
+    };
+    try {
+      // Synchronous write immediately after the create — no await in between —
+      // so the empty-file window is a single fs.writeSync, not an I/O-bound
+      // `server.listen`. Combined with the pid-verified `clearStaleDaemonLock`
+      // below, concurrent candidates can never delete a live daemon's lock.
+      fs.writeSync(fd, encodeLockInfo(info));
+    } finally {
+      fs.closeSync(fd);
+    }
+    return { kind: 'acquired', pidPath, info };
+  } catch (err: unknown) {
+    const e = err as NodeJS.ErrnoException;
+    if (e.code !== 'EEXIST') throw err;
+  }
+
+  let existing: DaemonLockInfo | null = null;
+  try {
+    const raw = fs.readFileSync(pidPath, 'utf8');
+    existing = decodeLockInfo(raw);
+  } catch { /* unreadable lockfile — treat as malformed */ }
+  return { kind: 'taken', existing, pidPath };
+}
+
+/**
+ * Remove a stale pidfile, but only if it still names a dead process. Re-reads
+ * the file immediately before unlinking so we never delete a lock that a live
+ * daemon (re)acquired in the meantime.
+ *
+ * must-fix 1 (issue #411 review): the original unconditionally `unlink`'d,
+ * which let a racing candidate delete a healthy daemon's lock. Passing
+ * `expectedDeadPid` (the pid the caller believed was dead) makes the clear a
+ * compare-and-delete: bail if the file now holds a different pid, or any live
+ * pid. Returns true when the stale lock is gone (or was already gone).
+ */
+export function clearStaleDaemonLock(pidPath: string, expectedDeadPid?: number): boolean {
+  try {
+    const raw = fs.readFileSync(pidPath, 'utf8');
+    const info = decodeLockInfo(raw);
+    if (info) {
+      // A different pid took over since we read it — not ours to clear.
+      if (expectedDeadPid !== undefined && info.pid !== expectedDeadPid) return false;
+      // Holder is actually alive — never clear a live daemon's lock.
+      if (info.pid > 0 && isProcessAlive(info.pid)) return false;
+    }
+    fs.unlinkSync(pidPath);
+    return true;
+  } catch (err: unknown) {
+    const e = err as NodeJS.ErrnoException;
+    if (e.code === 'ENOENT') return true; // already gone
+    return false;
+  }
+}
+
+/**
+ * Probe whether `pid` is currently alive (signal-0). Treats EPERM as alive on
+ * every platform (the process exists, it's just not ours to signal) so we never
+ * mistake a live daemon for a dead one and clear its lock.
+ */
+export function isProcessAlive(pid: number): boolean {
+  try {
+    process.kill(pid, 0);
+    return true;
+  } catch (err: unknown) {
+    const e = err as NodeJS.ErrnoException;
+    if (e.code === 'EPERM') return true; // exists, just not ours to signal
+    return false;
+  }
+}
+
+function resolveIdleTimeoutMs(): number {
+  const raw = process.env.CODEGRAPH_DAEMON_IDLE_TIMEOUT_MS;
+  if (raw === undefined || raw === '') return DEFAULT_IDLE_TIMEOUT_MS;
+  const parsed = Number(raw);
+  if (!Number.isFinite(parsed) || parsed < 0) return DEFAULT_IDLE_TIMEOUT_MS;
+  return Math.floor(parsed);
+}
+
+/** Exported for test stubs that need to bound the hello-line read. */
+export { MAX_HELLO_LINE_BYTES };
diff --git a/src/mcp/engine.ts b/src/mcp/engine.ts
new file mode 100644
index 000000000..1d7bd573e
--- /dev/null
+++ b/src/mcp/engine.ts
@@ -0,0 +1,232 @@
+/**
+ * MCP shared engine — the heavyweight, *shared* state for an MCP server:
+ * the project's {@link CodeGraph} instance, file watcher, and the
+ * {@link ToolHandler} cache for cross-project queries.
+ *
+ * One engine, many sessions:
+ * - direct mode (single stdio session) instantiates one engine + one session;
+ * - daemon mode instantiates one engine and a new session per socket
+ *   connection. Every session reads from the same SQLite WAL and the same
+ *   inotify watch set — that's the entire point of issue #411.
+ */
+
+import CodeGraph, { findNearestCodeGraphRoot } from '../index';
+import { watchDisabledReason } from '../sync';
+import { ToolHandler } from './tools';
+
+export interface MCPEngineOptions {
+  /**
+   * Whether to start the file watcher when initializing. Daemon and direct
+   * modes both want this true; tests may set it false to keep the engine
+   * cheap. Honors {@link watchDisabledReason} regardless.
+   */
+  watch?: boolean;
+}
+
+/**
+ * Shared MCP engine. Thread-safe in the sense that multiple sessions can
+ * call its methods concurrently — internally it serializes initialization
+ * through a single promise so multiple sessions racing each other on first
+ * connect never double-open the SQLite file.
+ */
+export class MCPEngine {
+  private cg: CodeGraph | null = null;
+  private toolHandler: ToolHandler;
+  // Project root we resolved to. Null until `ensureInitialized` succeeds
+  // (or null forever if no .codegraph/ ever turned up — that's a valid
+  // state for the engine, since cross-project queries still work).
+  private projectPath: string | null = null;
+  // Set on first `ensureInitialized` so subsequent sessions don't redo work.
+  private initPromise: Promise<void> | null = null;
+  private watcherStarted = false;
+  private opts: Required<MCPEngineOptions>;
+  private closed = false;
+
+  constructor(opts: MCPEngineOptions = {}) {
+    this.opts = { watch: opts.watch ?? true };
+    this.toolHandler = new ToolHandler(null);
+  }
+
+  /**
+   * Convenience for {@link MCPServer} compatibility: pre-seed an explicit
+   * project path (from the `--path` CLI flag) without yet opening it. This
+   * keeps the synchronous constructor cheap; the actual open happens on the
+   * first `ensureInitialized` call.
+   */
+  setProjectPathHint(projectPath: string): void {
+    this.projectPath = projectPath;
+    this.toolHandler.setDefaultProjectHint(projectPath);
+  }
+
+  /** Project root that the engine resolved on first init (null if none). */
+  getProjectPath(): string | null {
+    return this.projectPath;
+  }
+
+  /** Shared ToolHandler — sessions delegate tool dispatch through this. */
+  getToolHandler(): ToolHandler {
+    return this.toolHandler;
+  }
+
+  /** Whether the default project's CodeGraph is open. */
+  hasDefaultCodeGraph(): boolean {
+    return this.toolHandler.hasDefaultCodeGraph();
+  }
+
+  /**
+   * Walk up from `searchFrom` to find the nearest `.codegraph/` and open it.
+   * Idempotent: concurrent callers share one in-flight init; subsequent
+   * callers after success are no-ops.
+   *
+   * The original `MCPServer.tryInitializeDefault` carried the same retry-on-
+   * subsequent-tool-call semantics; we preserve them by NOT throwing when the
+   * search misses (just leaves `cg` null so the next call can retry).
+   */
+  async ensureInitialized(searchFrom: string): Promise<void> {
+    if (this.closed) return;
+    if (this.toolHandler.hasDefaultCodeGraph()) return;
+    if (this.initPromise) {
+      try { await this.initPromise; } catch { /* let caller retry */ }
+      return;
+    }
+
+    this.initPromise = this.doInitialize(searchFrom).finally(() => {
+      this.initPromise = null;
+    });
+    try {
+      await this.initPromise;
+    } catch {
+      // Init errors are logged inside `doInitialize`; falling through here
+      // matches MCPServer's previous "retry on next tool call" behavior.
+    }
+  }
+
+  /**
+   * Synchronous last-resort init used by the per-session retry loop when the
+   * background `ensureInitialized` already finished (or failed) and we need
+   * to pick up a project that appeared *after* the engine started.
+   */
+  retryInitializeSync(searchFrom: string): void {
+    if (this.closed) return;
+    if (this.toolHandler.hasDefaultCodeGraph()) return;
+    this.toolHandler.setDefaultProjectHint(searchFrom);
+    const resolvedRoot = findNearestCodeGraphRoot(searchFrom);
+    if (!resolvedRoot) return;
+    try {
+      // Close any previously failed instance to avoid leaking resources.
+      if (this.cg) {
+        try { this.cg.close(); } catch { /* ignore */ }
+        this.cg = null;
+      }
+      this.cg = CodeGraph.openSync(resolvedRoot);
+      this.projectPath = resolvedRoot;
+      this.toolHandler.setDefaultCodeGraph(this.cg);
+      this.startWatching();
+      this.catchUpSync();
+    } catch {
+      // Still failing — caller will try again on the next tool call.
+    }
+  }
+
+  /**
+   * Close everything. Used on graceful daemon shutdown (SIGTERM/idle timeout)
+   * and on direct-mode stop. Idempotent.
+   */
+  stop(): void {
+    if (this.closed) return;
+    this.closed = true;
+    this.toolHandler.closeAll();
+    if (this.cg) {
+      try { this.cg.close(); } catch { /* ignore */ }
+      this.cg = null;
+    }
+  }
+
+  private async doInitialize(searchFrom: string): Promise<void> {
+    this.toolHandler.setDefaultProjectHint(searchFrom);
+
+    const resolvedRoot = findNearestCodeGraphRoot(searchFrom);
+    if (!resolvedRoot) {
+      // No .codegraph/ above searchFrom — that's not an error, sessions may
+      // still discover one later via roots/list.
+      this.projectPath = searchFrom;
+      return;
+    }
+
+    this.projectPath = resolvedRoot;
+    try {
+      this.cg = await CodeGraph.open(resolvedRoot);
+      this.toolHandler.setDefaultCodeGraph(this.cg);
+      this.startWatching();
+      this.catchUpSync();
+    } catch (err) {
+      const msg = err instanceof Error ? err.message : String(err);
+      process.stderr.write(`[CodeGraph MCP] Failed to open project at ${resolvedRoot}: ${msg}\n`);
+    }
+  }
+
+  /**
+   * Start file watching on the active CodeGraph instance. Idempotent — the
+   * watcher is per-engine, not per-session, which is why the daemon path
+   * collapses N inotify sets to one. The wording of the disabled-reason log
+   * exactly matches the prior in-tree implementation so log-driven dashboards
+   * keep working.
+   */
+  private startWatching(): void {
+    if (!this.cg || this.watcherStarted || !this.opts.watch) return;
+
+    const disabledReason = watchDisabledReason(this.projectPath ?? process.cwd());
+    if (disabledReason) {
+      process.stderr.write(
+        `[CodeGraph MCP] File watcher disabled — ${disabledReason}. ` +
+        `The graph will not auto-update; run \`codegraph sync\` (or install the git sync hooks via \`codegraph init\`) to refresh.\n`
+      );
+      this.watcherStarted = true;
+      return;
+    }
+
+    const started = this.cg.watch({
+      onSyncComplete: (result) => {
+        if (result.filesChanged > 0) {
+          process.stderr.write(
+            `[CodeGraph MCP] Auto-synced ${result.filesChanged} file(s) in ${result.durationMs}ms\n`
+          );
+        }
+      },
+      onSyncError: (err) => {
+        process.stderr.write(`[CodeGraph MCP] Auto-sync error: ${err.message}\n`);
+      },
+    });
+
+    this.watcherStarted = true;
+    if (started) {
+      process.stderr.write('[CodeGraph MCP] File watcher active — graph will auto-sync on changes\n');
+    } else {
+      process.stderr.write(
+        '[CodeGraph MCP] File watcher unavailable on this platform — run `codegraph sync` to refresh the graph after changes.\n'
+      );
+    }
+  }
+
+  /**
+   * Reconcile the index with the current filesystem once, right after open —
+   * catches edits, adds, deletes, and `git pull`/`checkout` changes made while
+   * no watcher was running. Background, never awaited.
+   */
+  private catchUpSync(): void {
+    const cg = this.cg;
+    if (!cg) return;
+    void cg
+      .sync()
+      .then((result) => {
+        const changed = result.filesAdded + result.filesModified + result.filesRemoved;
+        if (changed > 0) {
+          process.stderr.write(`[CodeGraph MCP] Caught up ${changed} file(s) changed since last run\n`);
+        }
+      })
+      .catch((err) => {
+        const msg = err instanceof Error ? err.message : String(err);
+        process.stderr.write(`[CodeGraph MCP] Catch-up sync failed: ${msg}\n`);
+      });
+  }
+}
diff --git a/src/mcp/index.ts b/src/mcp/index.ts
index 71dbc9b9f..85c3949e2 100644
--- a/src/mcp/index.ts
+++ b/src/mcp/index.ts
@@ -13,60 +13,77 @@
  * const server = new MCPServer('/path/to/project');
  * await server.start();
  * ```
+ *
+ * Runtime modes (decided in {@link MCPServer.start}):
+ *
+ * - **Direct** — one process serves one MCP client over stdio. The pre-#411
+ *   behavior; used when the user opts out (`CODEGRAPH_NO_DAEMON=1`), no
+ *   `.codegraph/` is reachable, or the daemon machinery fails for any reason.
+ * - **Proxy** — what an MCP host actually talks to when sharing is on: a thin
+ *   stdio↔socket pipe to the shared daemon. The proxy carries the #277 PPID
+ *   watchdog, so a SIGKILL'd host reaps its proxy promptly. See {@link ./proxy.ts}.
+ * - **Daemon** — a *detached* background process (its own session/process
+ *   group) that serves N proxies over a Unix-domain socket / named pipe,
+ *   sharing one CodeGraph + watcher + SQLite handle. Spawned on demand; never a
+ *   child of any host, so it survives individual sessions and is reaped by
+ *   client-refcount + idle timeout. See {@link ./daemon.ts} and issue #411.
+ *
+ * The detached-daemon + always-proxy split is the fix for the review finding
+ * that the original in-process daemon (a) was the first host's child, so closing
+ * that terminal severed every other client, and (b) disabled the PPID watchdog,
+ * regressing #277 (orphaned daemons on host SIGKILL).
  */
 
+import * as fs from 'fs';
 import * as path from 'path';
-import CodeGraph, { findNearestCodeGraphRoot } from '../index';
-import { watchDisabledReason } from '../sync';
-import { StdioTransport, JsonRpcRequest, JsonRpcNotification, ErrorCodes } from './transport';
-import { tools, ToolHandler } from './tools';
-import { SERVER_INSTRUCTIONS } from './server-instructions';
+import { spawn, StdioOptions } from 'child_process';
+import { findNearestCodeGraphRoot } from '../index';
+import { getCodeGraphDir } from '../directory';
+import { StdioTransport } from './transport';
+import { MCPEngine } from './engine';
+import { MCPSession } from './session';
+import {
+  Daemon,
+  clearStaleDaemonLock,
+  isProcessAlive,
+  tryAcquireDaemonLock,
+} from './daemon';
+import { runProxy } from './proxy';
+import { getDaemonSocketPath } from './daemon-paths';
 import { HOST_PPID_ENV } from '../extraction/wasm-runtime-flags';
 
 /**
- * Convert a file:// URI to a filesystem path.
- * Handles URL encoding and Windows drive letter paths.
- */
-function fileUriToPath(uri: string): string {
-  try {
-    const url = new URL(uri);
-    let filePath = decodeURIComponent(url.pathname);
-    // On Windows, file:///C:/path produces pathname /C:/path — strip leading /
-    if (process.platform === 'win32' && /^\/[a-zA-Z]:/.test(filePath)) {
-      filePath = filePath.slice(1);
-    }
-    return path.resolve(filePath);
-  } catch {
-    // Fallback for non-standard URIs
-    return uri.replace(/^file:\/\/\/?/, '');
-  }
-}
-
-/**
- * MCP Server Info
+ * How often to poll `process.ppid` to detect parent process death (see #277).
+ * 5s is a deliberate trade-off: the failure mode being guarded against is rare
+ * (parent SIGKILL'd), and longer poll = less wakeup overhead while idle.
  */
-const SERVER_INFO = {
-  name: 'codegraph',
-  version: '0.1.0',
-};
+const DEFAULT_PPID_POLL_MS = 5000;
 
 /**
- * MCP Protocol Version
+ * Env var that marks a process as the *detached daemon* itself (set by
+ * {@link spawnDetachedDaemon} when it re-invokes the CLI). Without it a
+ * `serve --mcp` invocation is a launcher that connects-or-spawns; with it, the
+ * process IS the daemon and must never try to spawn another (infinite spawn).
  */
-const PROTOCOL_VERSION = '2024-11-05';
+const DAEMON_INTERNAL_ENV = 'CODEGRAPH_DAEMON_INTERNAL';
 
 /**
- * How long to wait for the client's `roots/list` response before giving up
- * and falling back to the process cwd.
+ * Retries for the detached daemon arbitrating the O_EXCL lock against a racing
+ * sibling. Tiny — the lock resolves on the first round in practice; the retries
+ * only cover clearing a genuinely stale (dead-pid) lockfile.
  */
-const ROOTS_LIST_TIMEOUT_MS = 5000;
+const TAKEOVER_MAX_RETRIES = 5;
+const TAKEOVER_RETRY_DELAY_MS = 100;
 
 /**
- * How often to poll `process.ppid` to detect parent process death (see #277).
- * 5s is a deliberate trade-off: the failure mode being guarded against is rare
- * (parent SIGKILL'd), and longer poll = less wakeup overhead while idle.
+ * How long a launcher waits for a freshly-spawned daemon to bind its socket
+ * before giving up and running in-process. The daemon binds the socket *before*
+ * the (backgrounded) engine/grammar warm-up, so this only needs to cover node
+ * process startup. 60 × 100ms = 6s of headroom for a cold/slow box; on the
+ * common path the socket appears within a few rounds.
  */
-const DEFAULT_PPID_POLL_MS = 5000;
+const DAEMON_CONNECT_MAX_RETRIES = 60;
+const DAEMON_CONNECT_RETRY_DELAY_MS = 100;
 
 /**
  * Resolve the PPID watchdog poll interval from an env override. A value of
@@ -96,28 +113,84 @@ function parseHostPpid(raw: string | undefined): number | null {
   return parsed;
 }
 
-/** True if a process with `pid` currently exists (signal-0 probe). */
-function isProcessAlive(pid: number): boolean {
-  try {
-    process.kill(pid, 0);
-    return true;
-  } catch {
-    return false;
-  }
+/** Whether `CODEGRAPH_NO_DAEMON` was set to a truthy value. */
+function daemonOptOutSet(): boolean {
+  const raw = process.env.CODEGRAPH_NO_DAEMON;
+  if (!raw) return false;
+  return raw !== '0' && raw.toLowerCase() !== 'false';
+}
+
+/** Whether this process was spawned to BE the detached daemon. */
+function daemonInternalSet(): boolean {
+  const raw = process.env[DAEMON_INTERNAL_ENV];
+  return !!raw && raw !== '0' && raw.toLowerCase() !== 'false';
 }
 
 /**
- * Extract the first usable filesystem path from a `roots/list` result.
- * Shape per MCP spec: `{ roots: [{ uri: "file:///path", name?: string }] }`.
- * Returns null if the result is empty or malformed.
+ * Resolve the project root the daemon machinery should key on. Returns
+ * `null` when no `.codegraph/` is reachable from the candidate path — in
+ * that case the caller must run in direct mode, since the daemon lockfile
+ * and socket both live under `.codegraph/`.
+ *
+ * The result is canonicalized with `realpathSync` so every client converges on
+ * the same socket/lock path regardless of how it expressed the path: a client
+ * launched with cwd under a symlink (e.g. macOS `/var` → `/private/var`, where
+ * spawned `process.cwd()` is already realpath'd) and one that passed a
+ * symlinked `rootUri` would otherwise hash to different sockets and silently
+ * fail to share the daemon.
  */
-function firstRootPath(result: unknown): string | null {
-  if (!result || typeof result !== 'object') return null;
-  const roots = (result as { roots?: unknown }).roots;
-  if (!Array.isArray(roots) || roots.length === 0) return null;
-  const first = roots[0] as { uri?: unknown };
-  if (typeof first?.uri !== 'string') return null;
-  return fileUriToPath(first.uri);
+function resolveDaemonRoot(explicitPath: string | null): string | null {
+  const candidate = explicitPath ?? process.cwd();
+  const root = findNearestCodeGraphRoot(candidate);
+  if (!root) return null;
+  try { return fs.realpathSync(root); } catch { return root; }
+}
+
+/**
+ * Spawn the shared daemon as a fully detached background process: its own
+ * session/process group (so a SIGHUP/SIGINT to the launcher's terminal can't
+ * reach it) with stdio decoupled from the launcher (logs to
+ * `.codegraph/daemon.log`). Re-invokes the *same* CLI faithfully across dev and
+ * bundled launches by reusing `process.argv[0]` (the right node), the current
+ * `process.execArgv` (carries `--liftoff-only`, so the daemon never re-execs)
+ * and `process.argv[1]` (this script). The spawned process self-arbitrates the
+ * O_EXCL lock, so racing launchers may each spawn one — losers exit and every
+ * launcher proxies through the single winner.
+ */
+function spawnDetachedDaemon(root: string): void {
+  const scriptPath = process.argv[1];
+  if (!scriptPath) {
+    // No resolvable CLI entry point to re-invoke — let the caller fall back to
+    // direct mode rather than spawn something broken.
+    throw new Error('cannot resolve CLI script path to spawn the daemon');
+  }
+
+  let logFd: number | null = null;
+  let stdio: StdioOptions = 'ignore';
+  try {
+    logFd = fs.openSync(path.join(getCodeGraphDir(root), 'daemon.log'), 'a');
+    stdio = ['ignore', logFd, logFd];
+  } catch {
+    stdio = 'ignore'; // no log file — discard daemon output rather than fail
+  }
+  try {
+    const child = spawn(
+      process.execPath,
+      [...process.execArgv, scriptPath, 'serve', '--mcp', '--path', root],
+      {
+        detached: true,
+        stdio,
+        windowsHide: true,
+        env: { ...process.env, [DAEMON_INTERNAL_ENV]: '1' },
+      },
+    );
+    child.unref();
+  } finally {
+    // The child holds its own dup of the log fd now; the launcher doesn't need it.
+    if (logFd !== null) {
+      try { fs.closeSync(logFd); } catch { /* ignore */ }
+    }
+  }
 }
 
 /**
@@ -125,281 +198,88 @@ function firstRootPath(result: unknown): string | null {
  *
  * Implements the Model Context Protocol to expose CodeGraph
  * functionality as tools that can be called by AI assistants.
+ *
+ * Backwards-compatible constructor and `start()` signature with the
+ * pre-issue-#411 implementation: callers continue to do
+ * `new MCPServer(path).start()`. Internally we now pick from direct / proxy /
+ * daemon at start time.
  */
 export class MCPServer {
-  private transport: StdioTransport;
-  private cg: CodeGraph | null = null;
-  private toolHandler: ToolHandler;
   private projectPath: string | null;
-  // In-flight background init kicked off from handleInitialize. Tracked so the
-  // sync retry path doesn't race against it (double-opening the SQLite file).
-  private initPromise: Promise<void> | null = null;
-  // Whether the client advertised the MCP `roots` capability during initialize.
-  // If so, and no explicit project path was given, we ask it for the workspace
-  // root via roots/list rather than guessing from the (often wrong) cwd.
-  private clientSupportsRoots = false;
-  // Guards the one-shot deferred resolution (roots/list or cwd) so we don't
-  // re-issue roots/list on every tool call.
-  private rootsAttempted = false;
-  // PPID watchdog — see start(). Captured at construction so we always have a
+  // Direct-mode-only state. In daemon mode the per-connection sessions live
+  // inside the Daemon class; in proxy mode there is no session at all.
+  private session: MCPSession | null = null;
+  private engine: MCPEngine | null = null;
+  private daemon: Daemon | null = null;
+  private ppidWatchdog: ReturnType<typeof setInterval> | null = null;
+  // PPID watchdog baseline — captured at construction so we always have a
   // baseline, even if start() runs after a fork-style reparent.
   private originalPpid: number = process.ppid;
-  // The MCP host's PID, propagated across the `--liftoff-only` re-exec (see
-  // HOST_PPID_ENV). When set, the watchdog polls it directly: the re-exec
-  // inserts an intermediate process whose *death* — not just our reparenting —
-  // is what we'd otherwise miss. null on the direct (bundled) launch path.
   private hostPpid: number | null = parseHostPpid(process.env[HOST_PPID_ENV]);
-  private ppidWatchdog: ReturnType<typeof setInterval> | null = null;
-  // Idempotency guard for stop(). Without it, the watchdog can race with the
-  // stdin `end`/`close` handlers (or SIGTERM/SIGINT) and double-close cg and
-  // the transport before process.exit() lands.
+  // Idempotency guard for stop().
   private stopped = false;
+  private mode: 'unstarted' | 'direct' | 'proxy' | 'daemon' = 'unstarted';
 
   constructor(projectPath?: string) {
     this.projectPath = projectPath || null;
-    this.transport = new StdioTransport();
-    // Create ToolHandler eagerly — cross-project queries work even without a default project
-    this.toolHandler = new ToolHandler(null);
   }
 
   /**
-   * Start the MCP server
+   * Start the MCP server.
    *
-   * Note: CodeGraph initialization is deferred until the initialize request
-   * is received, which includes the rootUri from the client.
-   */
-  async start(): Promise<void> {
-    // Start listening for messages immediately - don't check initialization yet
-    // We'll get the project path from the initialize request's rootUri
-    this.transport.start(this.handleMessage.bind(this));
-
-    // Keep the process running
-    process.on('SIGINT', () => this.stop());
-    process.on('SIGTERM', () => this.stop());
-
-    // When the parent process (Claude Code) exits, stdin closes.
-    // Detect this and shut down gracefully to prevent orphaned processes.
-    process.stdin.on('end', () => this.stop());
-    process.stdin.on('close', () => this.stop());
-
-    // PPID watchdog (#277). Linux doesn't propagate parent death to children,
-    // so when the MCP host (Claude Code, opencode, …) is SIGKILL'd by the OOM
-    // killer / a force-quit / a container teardown, the child is reparented to
-    // init/systemd and the stdin `end`/`close` events don't always fire. The
-    // server would then linger indefinitely, holding inotify watches, file
-    // descriptors, and the SQLite WAL. Poll `process.ppid` and shut down the
-    // moment it changes from what we observed at startup. Cross-platform:
-    // reparenting changes ppid on Linux *and* macOS; on Windows the value can
-    // also drop to 0 once the parent is gone. When the CLI re-execs itself for
-    // `--liftoff-only`, an intermediate process sits between us and the host and
-    // outlives it, so our own ppid wouldn't change — in that case we poll the
-    // host PID (propagated via HOST_PPID_ENV) for liveness instead. The watchdog
-    // is `.unref()`'d so it never holds the event loop open on its own.
-    const pollMs = parsePpidPollMs(process.env.CODEGRAPH_PPID_POLL_MS);
-    if (pollMs > 0) {
-      this.ppidWatchdog = setInterval(() => {
-        const current = process.ppid;
-        const ppidChanged = current !== this.originalPpid;
-        const hostGone = this.hostPpid !== null && !isProcessAlive(this.hostPpid);
-        if (ppidChanged || hostGone) {
-          const reason = ppidChanged
-            ? `ppid ${this.originalPpid} -> ${current}`
-            : `host pid ${this.hostPpid} exited`;
-          process.stderr.write(
-            `[CodeGraph MCP] Parent process exited (${reason}); shutting down.\n`
-          );
-          this.stop();
-        }
-      }, pollMs);
-      this.ppidWatchdog.unref();
-    }
-  }
-
-  /**
-   * Try to initialize CodeGraph for the default project.
+   * Decision order:
+   *   1. `CODEGRAPH_NO_DAEMON=1` → direct mode (unchanged pre-#411 behavior).
+   *   2. `CODEGRAPH_DAEMON_INTERNAL=1` → we ARE the detached daemon; listen.
+   *   3. No `.codegraph/` reachable → direct mode (the daemon's lockfile and
+   *      socket both live under `.codegraph/`).
+   *   4. Otherwise connect to (or spawn) the shared daemon and proxy to it.
    *
-   * Walks up parent directories to find the nearest .codegraph/ folder,
-   * similar to how git finds .git/ directories.
-   *
-   * If initialization fails, the error is recorded but the server continues
-   * to work — cross-project queries and retries on subsequent tool calls
-   * are still possible.
+   * On any unexpected failure in step 4 we transparently fall back to direct
+   * mode — a misbehaving daemon must never block a session from starting.
    */
-  private async tryInitializeDefault(projectPath: string): Promise<void> {
-    // Record where we searched so a later "not initialized" error can name it.
-    this.toolHandler.setDefaultProjectHint(projectPath);
-
-    // Walk up parent directories to find nearest .codegraph/
-    const resolvedRoot = findNearestCodeGraphRoot(projectPath);
-
-    if (!resolvedRoot) {
-      this.projectPath = projectPath;
-      return;
-    }
-
-    this.projectPath = resolvedRoot;
-
-    try {
-      this.cg = await CodeGraph.open(resolvedRoot);
-      this.toolHandler.setDefaultCodeGraph(this.cg);
-      this.startWatching();
-      this.catchUpSync();
-    } catch (err) {
-      // Log the error so transient failures are diagnosable (see issue #47)
-      const msg = err instanceof Error ? err.message : String(err);
-      process.stderr.write(`[CodeGraph MCP] Failed to open project at ${resolvedRoot}: ${msg}\n`);
-    }
-  }
-
-  /**
-   * Retry initialization of the default project if it previously failed.
-   * Called lazily on tool calls that need the default project.
-   * Re-walks parent directories each time so it picks up projects
-   * initialized after the MCP server started.
-   *
-   * Awaits any in-flight background init (kicked off by handleInitialize) so
-   * we never open the SQLite file twice concurrently.
-   */
-  private async retryInitIfNeeded(): Promise<void> {
-    // Wait for the background init started during handleInitialize, if any.
-    if (this.initPromise) {
-      try { await this.initPromise; } catch { /* errored init falls through to retry */ }
+  async start(): Promise<void> {
+    // The detached daemon process itself. Checked before the opt-out so the
+    // daemon honors the same env it was spawned with (it never sets NO_DAEMON).
+    if (daemonInternalSet()) {
+      return this.startDaemonProcess();
     }
 
-    // Already initialized successfully
-    if (this.toolHandler.hasDefaultCodeGraph()) return;
-
-    // No explicit path was given at initialize. Resolve it now, exactly once:
-    // ask the client via roots/list (if it advertised roots), else use cwd.
-    // Deferring to here lets a roots answer override the wrong cwd, and the
-    // one-shot guard means we never re-issue roots/list per tool call.
-    if (!this.projectPath && !this.rootsAttempted) {
-      this.rootsAttempted = true;
-      this.initPromise = (
-        this.clientSupportsRoots
-          ? this.initFromRoots()
-          : this.tryInitializeDefault(process.cwd())
-      ).finally(() => { this.initPromise = null; });
-      try { await this.initPromise; } catch { /* fall through to last-resort below */ }
-      if (this.toolHandler.hasDefaultCodeGraph()) return;
+    // Direct mode if the user opted out. Setting the env var is sufficient to
+    // get the pre-#411 single-process behavior.
+    if (daemonOptOutSet()) {
+      return this.startDirect('CODEGRAPH_NO_DAEMON set');
     }
 
-    // Last resort: re-walk from the best candidate we have. Picks up projects
-    // initialized after the server started, and covers clients that sent no
-    // usable initialize signal at all.
-    const candidate = this.projectPath ?? process.cwd();
-    this.toolHandler.setDefaultProjectHint(candidate);
-    const resolvedRoot = findNearestCodeGraphRoot(candidate);
-    if (!resolvedRoot) return;
-
-    try {
-      // Close any previously failed instance to avoid leaking resources
-      if (this.cg) {
-        try { this.cg.close(); } catch { /* ignore */ }
-        this.cg = null;
-      }
-      this.cg = CodeGraph.openSync(resolvedRoot);
-      this.projectPath = resolvedRoot;
-      this.toolHandler.setDefaultCodeGraph(this.cg);
-      this.startWatching();
-      this.catchUpSync();
-    } catch {
-      // Still failing — will retry on next tool call
+    const root = resolveDaemonRoot(this.projectPath);
+    if (!root) {
+      // No initialized project found — daemon mode has nowhere to put its
+      // socket. The fresh-checkout / outside-project case; behave as before.
+      return this.startDirect('no .codegraph/ root found');
     }
-  }
 
-  /**
-   * Resolve the project root via the MCP `roots/list` request and initialize
-   * from the first root the client reports. Falls back to the process cwd if
-   * the client returns no usable root or doesn't answer in time. See issue #196.
-   */
-  private async initFromRoots(): Promise<void> {
-    let target = process.cwd();
     try {
-      const result = await this.transport.request('roots/list', undefined, ROOTS_LIST_TIMEOUT_MS);
-      const rootPath = firstRootPath(result);
-      if (rootPath) {
-        target = rootPath;
-      } else {
-        process.stderr.write('[CodeGraph MCP] Client returned no workspace roots; falling back to process cwd.\n');
+      const mode = await this.connectOrSpawnDaemon(root);
+      if (mode === 'fallback') {
+        return this.startDirect('daemon unavailable; fallback to direct');
       }
+      // 'proxy': connectOrSpawnDaemon ran the stdio↔socket pipe to completion
+      // (it only returns once the host disconnected). The process is now
+      // expected to terminate naturally — the proxy installed its own watchdog.
+      this.mode = 'proxy';
+      return;
     } catch (err) {
+      // Belt-and-braces: if anything throws inside the daemon machinery,
+      // never wedge the user — fall back to a working direct-mode session.
       const msg = err instanceof Error ? err.message : String(err);
-      process.stderr.write(`[CodeGraph MCP] roots/list request failed (${msg}); falling back to process cwd.\n`);
+      process.stderr.write(`[CodeGraph MCP] Daemon path failed (${msg}); falling back to direct mode.\n`);
+      return this.startDirect('daemon path threw');
     }
-    await this.tryInitializeDefault(target);
   }
 
   /**
-   * Start file watching on the active CodeGraph instance.
-   * Logs sync activity to stderr for diagnostics.
-   */
-  private startWatching(): void {
-    if (!this.cg) return;
-
-    // When the watcher is intentionally disabled (e.g. WSL2 /mnt drives, or
-    // CODEGRAPH_NO_WATCH=1), say so explicitly and tell the user how to keep
-    // the graph fresh — otherwise the silent staleness is hard to diagnose.
-    const disabledReason = watchDisabledReason(this.projectPath ?? process.cwd());
-    if (disabledReason) {
-      process.stderr.write(
-        `[CodeGraph MCP] File watcher disabled — ${disabledReason}. ` +
-        `The graph will not auto-update; run \`codegraph sync\` (or install the git sync hooks via \`codegraph init\`) to refresh.\n`
-      );
-      return;
-    }
-
-    const started = this.cg.watch({
-      onSyncComplete: (result) => {
-        if (result.filesChanged > 0) {
-          process.stderr.write(
-            `[CodeGraph MCP] Auto-synced ${result.filesChanged} file(s) in ${result.durationMs}ms\n`
-          );
-        }
-      },
-      onSyncError: (err) => {
-        process.stderr.write(`[CodeGraph MCP] Auto-sync error: ${err.message}\n`);
-      },
-    });
-
-    if (started) {
-      process.stderr.write('[CodeGraph MCP] File watcher active — graph will auto-sync on changes\n');
-    } else {
-      // start() can also return false when recursive fs.watch isn't supported.
-      process.stderr.write(
-        '[CodeGraph MCP] File watcher unavailable on this platform — run `codegraph sync` to refresh the graph after changes.\n'
-      );
-    }
-  }
-
-  /**
-   * Reconcile the index with the current filesystem once, right after connect —
-   * catches edits, adds, deletes, and `git pull`/`checkout` changes made while
-   * no watcher was running. Runs in the background so it never delays the
-   * `initialize` response; `sync()` is incremental (a stat pre-filter skips
-   * unchanged files) and mutex-guarded, so it can't collide with the live
-   * watcher or a git-hook sync. Runs even when the watcher is unavailable
-   * (e.g. WSL2 /mnt drives), where catch-up matters most.
-   */
-  private catchUpSync(): void {
-    const cg = this.cg;
-    if (!cg) return;
-    void cg
-      .sync()
-      .then((result) => {
-        const changed = result.filesAdded + result.filesModified + result.filesRemoved;
-        if (changed > 0) {
-          process.stderr.write(`[CodeGraph MCP] Caught up ${changed} file(s) changed since last run\n`);
-        }
-      })
-      .catch((err) => {
-        const msg = err instanceof Error ? err.message : String(err);
-        process.stderr.write(`[CodeGraph MCP] Catch-up sync failed: ${msg}\n`);
-      });
-  }
-
-  /**
-   * Stop the server
+   * Stop the server. In daemon mode this triggers graceful shutdown of every
+   * connected session; in direct mode it mirrors the pre-#411 behavior (close
+   * cg, exit). Proxy mode never routes through here — the proxy exits itself.
    */
   stop(): void {
     if (this.stopped) return;
@@ -408,181 +288,166 @@ export class MCPServer {
       clearInterval(this.ppidWatchdog);
       this.ppidWatchdog = null;
     }
-    // Close all cached cross-project connections first
-    this.toolHandler.closeAll();
-    // Close the main CodeGraph instance
-    if (this.cg) {
-      this.cg.close();
-      this.cg = null;
+    if (this.daemon) {
+      void this.daemon.stop('stop()');
+      // Daemon.stop calls process.exit; nothing else to do.
+      return;
+    }
+    if (this.session) {
+      this.session.stop();
+      this.session = null;
+    }
+    if (this.engine) {
+      this.engine.stop();
+      this.engine = null;
     }
-    this.transport.stop();
     process.exit(0);
   }
 
-  /**
-   * Handle incoming JSON-RPC messages
-   */
-  private async handleMessage(message: JsonRpcRequest | JsonRpcNotification): Promise<void> {
-    // Check if it's a request (has id) or notification (no id)
-    const isRequest = 'id' in message;
-
-    switch (message.method) {
-      case 'initialize':
-        if (isRequest) {
-          await this.handleInitialize(message as JsonRpcRequest);
-        }
-        break;
-
-      case 'initialized':
-        // Notification that client has finished initialization
-        // No action needed - the client is ready
-        break;
-
-      case 'tools/list':
-        if (isRequest) {
-          await this.handleToolsList(message as JsonRpcRequest);
-        }
-        break;
-
-      case 'tools/call':
-        if (isRequest) {
-          await this.handleToolsCall(message as JsonRpcRequest);
-        }
-        break;
-
-      case 'ping':
-        if (isRequest) {
-          this.transport.sendResult((message as JsonRpcRequest).id, {});
-        }
-        break;
-
-      default:
-        if (isRequest) {
-          this.transport.sendError(
-            (message as JsonRpcRequest).id,
-            ErrorCodes.MethodNotFound,
-            `Method not found: ${message.method}`
-          );
-        }
+  /** Single-process stdio MCP session — the pre-issue-#411 code path. */
+  private async startDirect(reason: string): Promise<void> {
+    if (reason && process.env.CODEGRAPH_MCP_DEBUG) {
+      process.stderr.write(`[CodeGraph MCP] Direct mode: ${reason}.\n`);
     }
-  }
+    this.engine = new MCPEngine();
+    const transport = new StdioTransport();
+    this.session = new MCPSession(transport, this.engine, {
+      explicitProjectPath: this.projectPath,
+    });
 
-  /**
-   * Handle initialize request
-   */
-  private async handleInitialize(request: JsonRpcRequest): Promise<void> {
-    const params = request.params as {
-      rootUri?: string;
-      workspaceFolders?: Array<{ uri: string; name: string }>;
-      capabilities?: { roots?: unknown };
-    } | undefined;
-
-    // Does the client support the MCP `roots` protocol? If so, and we have no
-    // explicit path, we ask it for the workspace root after the handshake
-    // instead of falling back to the (frequently wrong) cwd. See issue #196.
-    this.clientSupportsRoots = !!params?.capabilities?.roots;
-
-    // Explicit project signal, strongest first: a client-provided rootUri /
-    // workspaceFolders (LSP-style, non-standard but some clients send it), else
-    // the --path the server was launched with. cwd is NOT used here — we defer
-    // it so a roots/list answer can win over it.
-    let explicitPath: string | null = null;
-    if (params?.rootUri) {
-      explicitPath = fileUriToPath(params.rootUri);
-    } else if (params?.workspaceFolders?.[0]?.uri) {
-      explicitPath = fileUriToPath(params.workspaceFolders[0].uri);
-    } else if (this.projectPath) {
-      explicitPath = this.projectPath;
+    if (this.projectPath) {
+      // Background init so the initialize response stays fast (#172).
+      void this.engine.ensureInitialized(this.projectPath);
     }
 
-    // Respond to the handshake BEFORE doing any heavy initialization. Loading
-    // the SQLite DB and the tree-sitter WASM runtime can take many seconds on
-    // slow filesystems (Docker Desktop VirtioFS on macOS, WSL2). Clients like
-    // Claude Code time out the handshake at ~30s, which manifested as
-    // "MCP tools never appear" — the child was alive and had received the
-    // initialize but was still awaiting initGrammars(). See issue #172.
-    //
-    // We accept the client's protocol version but respond with our supported
-    // version. The `instructions` field is surfaced by MCP clients in the
-    // agent's system prompt automatically — it's the right place for the
-    // universal tool-selection playbook, ahead of individual tool descriptions.
-    this.transport.sendResult(request.id, {
-      protocolVersion: PROTOCOL_VERSION,
-      capabilities: {
-        tools: {},
-      },
-      serverInfo: SERVER_INFO,
-      instructions: SERVER_INSTRUCTIONS,
-    });
+    this.session.start();
 
-    // If we know the project dir, kick off init in the background now. Tool
-    // calls that arrive before it finishes fall through to `retryInitIfNeeded`,
-    // which waits for this promise rather than racing it with a second open.
-    //
-    // If we DON'T know it (no rootUri, no --path), defer: the first tool call
-    // resolves it via roots/list (when the client supports roots) or cwd. This
-    // is the fix for issue #196 — clients that launch the server outside the
-    // project and don't pass a rootUri previously got a misleading "not
-    // initialized" error on every call.
-    if (explicitPath) {
-      this.initPromise = this.tryInitializeDefault(explicitPath).finally(() => {
-        this.initPromise = null;
-      });
-    }
+    // Detect parent-process death — same logic as pre-refactor. When stdin
+    // closes we go through StdioTransport's `process.exit(0)` already, but
+    // SIGKILL of the parent doesn't reliably close stdin on Linux (#277).
+    process.stdin.on('end', () => this.stop());
+    process.stdin.on('close', () => this.stop());
+
+    this.mode = 'direct';
+    this.installSignalHandlers();
+    this.installPpidWatchdog();
   }
 
   /**
-   * Handle tools/list request
+   * Run as the detached shared daemon (process spawned with
+   * `CODEGRAPH_DAEMON_INTERNAL=1`). Arbitrate the O_EXCL lock, then either
+   * become the daemon (bind the socket, serve forever) or — if a live daemon
+   * already holds the lock — exit so we don't leak a redundant process.
+   *
+   * No PPID watchdog and no stdin handlers: the daemon is detached on purpose
+   * and reaps itself via client-refcount + idle timeout (see {@link Daemon}).
    */
-  private async handleToolsList(request: JsonRpcRequest): Promise<void> {
-    await this.retryInitIfNeeded();
-    this.transport.sendResult(request.id, {
-      tools: this.toolHandler.getTools(),
-    });
+  private async startDaemonProcess(): Promise<void> {
+    const root = resolveDaemonRoot(this.projectPath) ?? this.projectPath ?? process.cwd();
+    for (let attempt = 0; attempt < TAKEOVER_MAX_RETRIES; attempt++) {
+      const lock = tryAcquireDaemonLock(root);
+
+      if (lock.kind === 'acquired') {
+        const daemon = new Daemon(root);
+        await daemon.start();
+        this.daemon = daemon;
+        this.mode = 'daemon';
+        return; // the net.Server keeps the process alive
+      }
+
+      // Taken. If the holder is alive, another daemon already serves (or is
+      // binding) — we're redundant; exit cleanly so the launcher proxies to it.
+      const existing = lock.existing;
+      if (existing && existing.pid > 0 && isProcessAlive(existing.pid)) {
+        process.stderr.write(
+          `[CodeGraph daemon] Another daemon (pid ${existing.pid}) already holds the lock; exiting.\n`
+        );
+        process.exit(0);
+      }
+
+      // Holder is dead (or the record is unreadable) — clear it (pid-verified,
+      // so we never delete a live daemon's lock) and retry the acquire.
+      clearStaleDaemonLock(lock.pidPath, existing?.pid);
+      await sleep(TAKEOVER_RETRY_DELAY_MS);
+    }
+
+    process.stderr.write('[CodeGraph daemon] Could not acquire the daemon lock; exiting.\n');
+    process.exit(0);
   }
 
   /**
-   * Handle tools/call request
+   * Become a proxy to the shared daemon, spawning the daemon first if none is
+   * reachable. Returns 'proxy' once the proxied session has run to completion
+   * (the host disconnected), or 'fallback' if the caller should run in-process.
    */
-  private async handleToolsCall(request: JsonRpcRequest): Promise<void> {
-    const params = request.params as {
-      name: string;
-      arguments?: Record<string, unknown>;
-    };
-
-    if (!params || !params.name) {
-      this.transport.sendError(
-        request.id,
-        ErrorCodes.InvalidParams,
-        'Missing tool name'
-      );
-      return;
-    }
-
-    const toolName = params.name;
-    const toolArgs = params.arguments || {};
-
-    // Validate tool exists
-    const tool = tools.find(t => t.name === toolName);
-    if (!tool) {
-      this.transport.sendError(
-        request.id,
-        ErrorCodes.InvalidParams,
-        `Unknown tool: ${toolName}`
-      );
-      return;
+  private async connectOrSpawnDaemon(root: string): Promise<'proxy' | 'fallback'> {
+    const socketPath = getDaemonSocketPath(root);
+
+    // Fast path: a daemon may already be listening. On success runProxy pipes
+    // stdio until the host disconnects, so a 'proxied' outcome means this
+    // process has finished its entire job.
+    let probe = await runProxy(socketPath);
+    if (probe.outcome === 'proxied') return 'proxy';
+    if (probe.reason === 'version mismatch') return 'fallback';
+
+    // No reachable daemon — spawn one (detached) and wait for it to bind.
+    spawnDetachedDaemon(root);
+
+    for (let attempt = 0; attempt < DAEMON_CONNECT_MAX_RETRIES; attempt++) {
+      await sleep(DAEMON_CONNECT_RETRY_DELAY_MS);
+      probe = await runProxy(socketPath);
+      if (probe.outcome === 'proxied') return 'proxy';
+      if (probe.reason === 'version mismatch') return 'fallback';
     }
 
-    // If the default project isn't initialized yet, retry in case it was
-    // initialized after the MCP server started (e.g. user ran codegraph init)
-    await this.retryInitIfNeeded();
+    // Daemon never came up in time — run in-process so the user is never blocked.
+    return 'fallback';
+  }
 
-    const result = await this.toolHandler.execute(toolName, toolArgs);
+  /** Standard SIGINT/SIGTERM handlers that route to our `stop()` (direct mode). */
+  private installSignalHandlers(): void {
+    process.on('SIGINT', () => this.stop());
+    process.on('SIGTERM', () => this.stop());
+  }
 
-    this.transport.sendResult(request.id, result);
+  /**
+   * PPID watchdog (#277) — direct mode only. Daemon mode is detached on purpose
+   * and reaps via idle timeout; proxy mode installs its own watchdog inside
+   * {@link runProxy}. So this only ever runs for an in-process direct session.
+   */
+  private installPpidWatchdog(): void {
+    if (this.mode !== 'direct') return;
+    const pollMs = parsePpidPollMs(process.env.CODEGRAPH_PPID_POLL_MS);
+    if (pollMs <= 0) return;
+    this.ppidWatchdog = setInterval(() => {
+      const current = process.ppid;
+      const ppidChanged = current !== this.originalPpid;
+      const hostGone = this.hostPpid !== null && !isProcessAlive(this.hostPpid);
+      if (ppidChanged || hostGone) {
+        const reason = ppidChanged
+          ? `ppid ${this.originalPpid} -> ${current}`
+          : `host pid ${this.hostPpid} exited`;
+        process.stderr.write(
+          `[CodeGraph MCP] Parent process exited (${reason}); shutting down.\n`
+        );
+        this.stop();
+      }
+    }, pollMs);
+    this.ppidWatchdog.unref();
   }
 }
 
+function sleep(ms: number): Promise<void> {
+  // Deliberately NOT unref'd. During the daemon connect/takeover retry loop we
+  // may be between processes — no socket bound yet, no transport, no listener
+  // pinning the event loop. An unref'd timer would let Node drain the loop and
+  // exit silently before we get a chance to try again.
+  return new Promise((resolve) => { setTimeout(resolve, ms); });
+}
+
 // Export for use in CLI
 export { StdioTransport } from './transport';
 export { tools, ToolHandler } from './tools';
+// Surface a few daemon-mode bits for tests + diagnostics.
+export { Daemon } from './daemon';
+export { CodeGraphPackageVersion } from './version';
diff --git a/src/mcp/proxy.ts b/src/mcp/proxy.ts
new file mode 100644
index 000000000..938b135ef
--- /dev/null
+++ b/src/mcp/proxy.ts
@@ -0,0 +1,246 @@
+/**
+ * MCP proxy mode — issue #411.
+ *
+ * The proxy is a near-transparent stdio↔socket pipe. Once it has verified
+ * the daemon's hello line (same major.minor.patch as ours), it does no
+ * protocol parsing of its own: every byte the MCP host writes to the proxy's
+ * stdin goes straight to the daemon socket, and every byte the daemon emits
+ * goes straight to the host's stdout. Server-initiated JSON-RPC requests
+ * (e.g. `roots/list`) flow through the same pipe transparently.
+ *
+ * Lifecycle expectations:
+ *   - The proxy exits when *either* stream closes (host stdin closed →
+ *     daemon socket end, or daemon-side socket close → host stdout end).
+ *   - Closing the socket on the proxy side is what tells the daemon to
+ *     decrement its connected-clients refcount.
+ *   - On a parent-process death we can't detect via stdin close (e.g. SIGKILL
+ *     of the MCP host), the proxy's PPID watchdog catches it — same logic
+ *     the direct-mode server uses; see issue #277.
+ */
+
+import * as fs from 'fs';
+import * as net from 'net';
+import { HOST_PPID_ENV } from '../extraction/wasm-runtime-flags';
+import { DaemonHello, MAX_HELLO_LINE_BYTES } from './daemon';
+import { CodeGraphPackageVersion } from './version';
+
+/** Default poll cadence for the PPID watchdog (same as the direct server). */
+const DEFAULT_PPID_POLL_MS = 5000;
+
+export interface ProxyResult {
+  /**
+   * `proxied` — successfully attached to a same-version daemon and piped
+   * stdio. The proxy stays alive until either end closes.
+   * `fallback-needed` — the daemon rejected us (version mismatch / unreachable
+   * socket) and the caller should run the server in direct mode.
+   */
+  outcome: 'proxied' | 'fallback-needed';
+  reason?: string;
+}
+
+/**
+ * Attempt to connect to the daemon at `socketPath` and pipe stdio through it.
+ *
+ * Returns a promise that resolves when either:
+ *   - the connection succeeded and one of stdin/socket has now closed
+ *     (after which the process should exit), or
+ *   - the connection failed early enough that the caller can still fall
+ *     back to direct mode.
+ *
+ * The `expectedVersion` param defaults to the package's own version — daemon
+ * and proxy MUST match exactly. Mismatch resolves with
+ * `outcome: 'fallback-needed'` so the caller can transparently start its own
+ * server. (We accept the cost of two concurrent servers in this case as the
+ * price of never silently running a stale daemon against newer client code.)
+ */
+export async function runProxy(
+  socketPath: string,
+  expectedVersion: string = CodeGraphPackageVersion,
+): Promise<ProxyResult> {
+  // POSIX: refuse to connect to a stale socket file that points at no
+  // listening process. `fs.existsSync` is a cheap pre-check; a real
+  // ECONNREFUSED below catches the rare "exists but unbound" race.
+  if (process.platform !== 'win32' && !fs.existsSync(socketPath)) {
+    return { outcome: 'fallback-needed', reason: 'socket file missing' };
+  }
+
+  const socket = net.createConnection(socketPath);
+  socket.setEncoding('utf8');
+
+  const hello = await readHelloLine(socket).catch((err) => {
+    socket.destroy();
+    return new Error(String(err));
+  });
+  if (hello instanceof Error) {
+    return { outcome: 'fallback-needed', reason: hello.message };
+  }
+
+  if (hello.codegraph !== expectedVersion) {
+    process.stderr.write(
+      `[CodeGraph MCP] Found a daemon on ${socketPath} but version (${hello.codegraph}) ` +
+      `differs from ours (${expectedVersion}); falling back to direct mode.\n`
+    );
+    socket.destroy();
+    return { outcome: 'fallback-needed', reason: 'version mismatch' };
+  }
+
+  process.stderr.write(
+    `[CodeGraph MCP] Attached to shared daemon on ${socketPath} (pid ${hello.pid}, v${hello.codegraph}).\n`
+  );
+
+  startPpidWatchdog(socket);
+  await pipeUntilClose(socket);
+  // Host disconnected (or the daemon went away). The proxy's only job is the
+  // pipe; exit now so we don't linger — process.stdin's 'data' listener would
+  // otherwise keep the event loop alive and leave a zombie launcher behind.
+  process.exit(0);
+}
+
+/**
+ * Read one CRLF/LF-terminated JSON line from the socket, parse it as the
+ * daemon hello, and return it. Bounded to {@link MAX_HELLO_LINE_BYTES} so a
+ * malicious or broken peer can't OOM us. Times out at 3s — a healthy daemon
+ * sends hello immediately on accept.
+ */
+function readHelloLine(socket: net.Socket): Promise<DaemonHello> {
+  return new Promise((resolve, reject) => {
+    let buffer = '';
+    const cleanup = () => {
+      socket.removeListener('data', onData);
+      socket.removeListener('error', onError);
+      socket.removeListener('close', onClose);
+      clearTimeout(timer);
+    };
+    const onData = (chunk: string | Buffer) => {
+      buffer += typeof chunk === 'string' ? chunk : chunk.toString('utf8');
+      const idx = buffer.indexOf('\n');
+      if (idx === -1) {
+        if (buffer.length > MAX_HELLO_LINE_BYTES) {
+          cleanup();
+          reject(new Error('daemon hello line exceeded size limit'));
+        }
+        return;
+      }
+      const line = buffer.slice(0, idx);
+      // Re-emit anything past the newline so the pipe-stage sees it.
+      const tail = buffer.slice(idx + 1);
+      cleanup();
+      if (tail.length > 0) {
+        // Push back via unshift — Node's net.Socket supports it on readable streams.
+        socket.unshift(tail);
+      }
+      try {
+        const parsed = JSON.parse(line) as DaemonHello;
+        if (typeof parsed.codegraph !== 'string' || typeof parsed.pid !== 'number') {
+          reject(new Error('daemon hello missing required fields'));
+          return;
+        }
+        resolve(parsed);
+      } catch (err) {
+        reject(new Error(`daemon hello not JSON: ${err instanceof Error ? err.message : String(err)}`));
+      }
+    };
+    const onError = (err: Error) => { cleanup(); reject(err); };
+    const onClose = () => { cleanup(); reject(new Error('daemon closed connection before hello')); };
+    const timer = setTimeout(() => {
+      cleanup();
+      reject(new Error('timed out waiting for daemon hello'));
+    }, 3000);
+    timer.unref?.();
+    socket.on('data', onData);
+    socket.on('error', onError);
+    socket.on('close', onClose);
+  });
+}
+
+/**
+ * Pipe stdin → socket and socket → stdout. Resolves once either end closes
+ * so the process can exit. Note: we deliberately do NOT use
+ * `process.stdin.pipe(socket)` because pipe propagates 'end' onto the
+ * downstream, which would close the socket prematurely if stdin happens to
+ * end early — the MCP spec allows it to stay open across reconnects.
+ */
+function pipeUntilClose(socket: net.Socket): Promise<void> {
+  return new Promise((resolve) => {
+    let resolved = false;
+    const done = () => { if (!resolved) { resolved = true; resolve(); } };
+
+    process.stdin.on('data', (chunk) => {
+      try { socket.write(chunk); } catch { /* socket may have errored — close path catches it */ }
+    });
+    process.stdin.on('end', () => {
+      try { socket.end(); } catch { /* ignore */ }
+      done();
+    });
+    process.stdin.on('close', () => {
+      try { socket.destroy(); } catch { /* ignore */ }
+      done();
+    });
+
+    socket.on('data', (chunk) => {
+      try { process.stdout.write(chunk); } catch { /* ignore */ }
+    });
+    socket.on('end', () => done());
+    socket.on('close', () => done());
+    socket.on('error', (err) => {
+      process.stderr.write(`[CodeGraph MCP] daemon socket error: ${err.message}\n`);
+      done();
+    });
+  });
+}
+
+/**
+ * PPID watchdog mirroring the one in `MCPServer.start` — kills the proxy if
+ * the MCP host (or its proxy of a host, see HOST_PPID_ENV) goes away without
+ * closing stdin. Issue #277 documents why we can't rely on stdin EOF on
+ * Linux: the parent may be SIGKILL'd and reparenting doesn't close pipes.
+ *
+ * The proxy's "kill" is just a socket close + process.exit — no SQLite or
+ * watchers to clean up, so this is cheap.
+ */
+function startPpidWatchdog(socket: net.Socket): void {
+  const pollMs = parsePollMs(process.env.CODEGRAPH_PPID_POLL_MS);
+  if (pollMs <= 0) return;
+  const originalPpid = process.ppid;
+  const hostPpid = parseHostPpid(process.env[HOST_PPID_ENV]);
+  const timer = setInterval(() => {
+    const current = process.ppid;
+    const ppidChanged = current !== originalPpid;
+    const hostGone = hostPpid !== null && !isProcessAliveLocal(hostPpid);
+    if (ppidChanged || hostGone) {
+      const reason = ppidChanged
+        ? `ppid ${originalPpid} -> ${current}`
+        : `host pid ${hostPpid} exited`;
+      process.stderr.write(`[CodeGraph MCP] Parent process exited (${reason}); shutting down.\n`);
+      try { socket.destroy(); } catch { /* ignore */ }
+      process.exit(0);
+    }
+  }, pollMs);
+  timer.unref?.();
+}
+
+function parsePollMs(raw: string | undefined): number {
+  if (raw === undefined || raw === '') return DEFAULT_PPID_POLL_MS;
+  const parsed = Number(raw);
+  if (!Number.isFinite(parsed)) return DEFAULT_PPID_POLL_MS;
+  if (parsed < 0) return DEFAULT_PPID_POLL_MS;
+  return Math.floor(parsed);
+}
+
+function parseHostPpid(raw: string | undefined): number | null {
+  if (raw === undefined || raw === '') return null;
+  const parsed = Number(raw);
+  if (!Number.isInteger(parsed) || parsed <= 1) return null;
+  return parsed;
+}
+
+function isProcessAliveLocal(pid: number): boolean {
+  try {
+    process.kill(pid, 0);
+    return true;
+  } catch (err: unknown) {
+    const e = err as NodeJS.ErrnoException;
+    if (e.code === 'EPERM') return true;
+    return false;
+  }
+}
diff --git a/src/mcp/session.ts b/src/mcp/session.ts
new file mode 100644
index 000000000..157dc17db
--- /dev/null
+++ b/src/mcp/session.ts
@@ -0,0 +1,272 @@
+/**
+ * MCP per-connection session — speaks the JSON-RPC protocol (initialize,
+ * tools/list, tools/call) over a single {@link JsonRpcTransport}. It owns
+ * per-client state only (which protocol version the client asked for, whether
+ * it advertised `roots`, the one-shot roots/list latch); the heavyweight
+ * resources (CodeGraph, watcher, ToolHandler) live in the shared
+ * {@link MCPEngine} so daemon mode can collapse N inotify sets / DB handles
+ * to one.
+ *
+ * The state-machine itself mirrors what `MCPServer` used to do inline before
+ * issue #411 split it out — the same regression tests in
+ * `__tests__/mcp-initialize.test.ts` still drive this code path.
+ */
+
+import * as path from 'path';
+import { JsonRpcRequest, JsonRpcNotification, JsonRpcTransport, ErrorCodes } from './transport';
+import { MCPEngine } from './engine';
+import { tools } from './tools';
+import { SERVER_INSTRUCTIONS } from './server-instructions';
+import { CodeGraphPackageVersion } from './version';
+
+/**
+ * MCP Server Info — kept on the session because some clients log it. The
+ * version tracks the real package version (was a hard-coded '0.1.0').
+ */
+const SERVER_INFO = {
+  name: 'codegraph',
+  version: CodeGraphPackageVersion,
+};
+
+/** MCP Protocol Version (latest the server claims). */
+const PROTOCOL_VERSION = '2024-11-05';
+
+/**
+ * How long to wait for the client's `roots/list` response before giving up
+ * and falling back to the process cwd.
+ */
+const ROOTS_LIST_TIMEOUT_MS = 5000;
+
+/**
+ * Convert a file:// URI to a filesystem path. Handles URL encoding and
+ * Windows drive letter paths.
+ */
+function fileUriToPath(uri: string): string {
+  try {
+    const url = new URL(uri);
+    let filePath = decodeURIComponent(url.pathname);
+    if (process.platform === 'win32' && /^\/[a-zA-Z]:/.test(filePath)) {
+      filePath = filePath.slice(1);
+    }
+    return path.resolve(filePath);
+  } catch {
+    return uri.replace(/^file:\/\/\/?/, '');
+  }
+}
+
+/** First usable filesystem path from a `roots/list` result, or null. */
+function firstRootPath(result: unknown): string | null {
+  if (!result || typeof result !== 'object') return null;
+  const roots = (result as { roots?: unknown }).roots;
+  if (!Array.isArray(roots) || roots.length === 0) return null;
+  const first = roots[0] as { uri?: unknown };
+  if (typeof first?.uri !== 'string') return null;
+  return fileUriToPath(first.uri);
+}
+
+export interface MCPSessionOptions {
+  /**
+   * Explicit project path from the `--path` CLI flag. When set, the session
+   * will not bother asking the client for `roots/list` — we already know
+   * where the project lives.
+   */
+  explicitProjectPath?: string | null;
+}
+
+/**
+ * One MCP client's view of the server. Created fresh per stdio launch
+ * (direct mode) or per socket connection (daemon mode).
+ */
+export class MCPSession {
+  private clientSupportsRoots = false;
+  private rootsAttempted = false;
+  private resolvePromise: Promise<void> | null = null;
+  private explicitProjectPath: string | null;
+
+  constructor(
+    private transport: JsonRpcTransport,
+    private engine: MCPEngine,
+    opts: MCPSessionOptions = {},
+  ) {
+    this.explicitProjectPath = opts.explicitProjectPath ?? null;
+  }
+
+  /**
+   * Start handling messages from the transport. Returns immediately — the
+   * session lives for as long as the transport is open.
+   */
+  start(): void {
+    this.transport.start(this.handleMessage.bind(this));
+  }
+
+  /**
+   * Tear down the session. Does NOT touch the engine (the engine may serve
+   * other sessions) or call `process.exit` (the daemon decides when to exit).
+   */
+  stop(): void {
+    this.transport.stop();
+  }
+
+  /** Underlying transport — exposed for daemon-side close hooks. */
+  getTransport(): JsonRpcTransport {
+    return this.transport;
+  }
+
+  private async handleMessage(message: JsonRpcRequest | JsonRpcNotification): Promise<void> {
+    const isRequest = 'id' in message;
+    switch (message.method) {
+      case 'initialize':
+        if (isRequest) await this.handleInitialize(message as JsonRpcRequest);
+        break;
+      case 'initialized':
+        // Notification that client has finished initialization — no action needed.
+        break;
+      case 'tools/list':
+        if (isRequest) await this.handleToolsList(message as JsonRpcRequest);
+        break;
+      case 'tools/call':
+        if (isRequest) await this.handleToolsCall(message as JsonRpcRequest);
+        break;
+      case 'ping':
+        if (isRequest) this.transport.sendResult((message as JsonRpcRequest).id, {});
+        break;
+      default:
+        if (isRequest) {
+          this.transport.sendError(
+            (message as JsonRpcRequest).id,
+            ErrorCodes.MethodNotFound,
+            `Method not found: ${message.method}`,
+          );
+        }
+    }
+  }
+
+  private async handleInitialize(request: JsonRpcRequest): Promise<void> {
+    const params = request.params as {
+      rootUri?: string;
+      workspaceFolders?: Array<{ uri: string; name: string }>;
+      capabilities?: { roots?: unknown };
+    } | undefined;
+
+    this.clientSupportsRoots = !!params?.capabilities?.roots;
+
+    // Explicit project signal, strongest first: client-provided rootUri /
+    // workspaceFolders (LSP-style), else the --path the server was launched
+    // with. cwd is NOT used here — we defer it so a roots/list answer can
+    // win over it. See issue #196.
+    let explicitPath: string | null = null;
+    if (params?.rootUri) {
+      explicitPath = fileUriToPath(params.rootUri);
+    } else if (params?.workspaceFolders?.[0]?.uri) {
+      explicitPath = fileUriToPath(params.workspaceFolders[0].uri);
+    } else if (this.explicitProjectPath) {
+      explicitPath = this.explicitProjectPath;
+    }
+
+    // Respond to the handshake BEFORE doing any heavy init — see issue #172.
+    this.transport.sendResult(request.id, {
+      protocolVersion: PROTOCOL_VERSION,
+      capabilities: { tools: {} },
+      serverInfo: SERVER_INFO,
+      instructions: SERVER_INSTRUCTIONS,
+    });
+
+    if (explicitPath) {
+      // Kick off engine init in the background. If another session in the
+      // same daemon already opened the project, `ensureInitialized` is a
+      // ~free no-op — N concurrent clients pay exactly one open.
+      this.resolvePromise = this.engine.ensureInitialized(explicitPath);
+    }
+  }
+
+  private async handleToolsList(request: JsonRpcRequest): Promise<void> {
+    await this.retryInitIfNeeded();
+    this.transport.sendResult(request.id, {
+      tools: this.engine.getToolHandler().getTools(),
+    });
+  }
+
+  private async handleToolsCall(request: JsonRpcRequest): Promise<void> {
+    const params = request.params as {
+      name: string;
+      arguments?: Record<string, unknown>;
+    };
+
+    if (!params || !params.name) {
+      this.transport.sendError(request.id, ErrorCodes.InvalidParams, 'Missing tool name');
+      return;
+    }
+
+    const toolName = params.name;
+    const toolArgs = params.arguments || {};
+
+    const tool = tools.find((t) => t.name === toolName);
+    if (!tool) {
+      this.transport.sendError(
+        request.id,
+        ErrorCodes.InvalidParams,
+        `Unknown tool: ${toolName}`,
+      );
+      return;
+    }
+
+    await this.retryInitIfNeeded();
+
+    const result = await this.engine.getToolHandler().execute(toolName, toolArgs);
+    this.transport.sendResult(request.id, result);
+  }
+
+  /**
+   * Lazy default-project resolution. Three layers:
+   *   1. await the in-flight init kicked off from `handleInitialize` (if any);
+   *   2. if still uninitialized and we never asked the client for its roots,
+   *      do so now (one-shot); fall back to cwd if the client lacks roots;
+   *   3. last-resort: re-walk from the best candidate — picks up projects
+   *      that were `codegraph init`'d *after* the server started.
+   */
+  private async retryInitIfNeeded(): Promise<void> {
+    if (this.resolvePromise) {
+      try { await this.resolvePromise; } catch { /* fall through to retry */ }
+      this.resolvePromise = null;
+    }
+
+    if (this.engine.hasDefaultCodeGraph()) return;
+
+    const hint = this.explicitProjectPath ?? this.engine.getProjectPath();
+    if (!hint && !this.rootsAttempted) {
+      this.rootsAttempted = true;
+      this.resolvePromise = this.clientSupportsRoots
+        ? this.initFromRoots()
+        : this.engine.ensureInitialized(process.cwd());
+      try { await this.resolvePromise; } catch { /* fall through */ }
+      this.resolvePromise = null;
+      if (this.engine.hasDefaultCodeGraph()) return;
+    }
+
+    // Last resort: walk from the best candidate (sync open). Picks up
+    // projects that appeared after the server started.
+    const candidate = hint ?? process.cwd();
+    this.engine.retryInitializeSync(candidate);
+  }
+
+  /**
+   * Ask the client for its workspace root via `roots/list` and open the
+   * first one. Falls back to `process.cwd()` on timeout or empty answer.
+   */
+  private async initFromRoots(): Promise<void> {
+    let target = process.cwd();
+    try {
+      const result = await this.transport.request('roots/list', undefined, ROOTS_LIST_TIMEOUT_MS);
+      const rootPath = firstRootPath(result);
+      if (rootPath) {
+        target = rootPath;
+      } else {
+        process.stderr.write('[CodeGraph MCP] Client returned no workspace roots; falling back to process cwd.\n');
+      }
+    } catch (err) {
+      const msg = err instanceof Error ? err.message : String(err);
+      process.stderr.write(`[CodeGraph MCP] roots/list request failed (${msg}); falling back to process cwd.\n`);
+    }
+    await this.engine.ensureInitialized(target);
+  }
+}
diff --git a/src/mcp/transport.ts b/src/mcp/transport.ts
index 2638600d6..aecc0368f 100644
--- a/src/mcp/transport.ts
+++ b/src/mcp/transport.ts
@@ -1,10 +1,21 @@
 /**
- * MCP Stdio Transport
+ * MCP JSON-RPC Transports
  *
- * Handles JSON-RPC 2.0 communication over stdin/stdout for MCP protocol.
+ * Two flavors share the same wire format (newline-delimited JSON-RPC 2.0):
+ *
+ * - `StdioTransport` — original transport; reads/writes the process's
+ *   stdin/stdout. Used by direct-mode MCP servers.
+ * - `SocketTransport` — wraps a single `net.Socket`. Used by the shared-daemon
+ *   architecture (see {@link ./daemon}) to multiplex multiple MCP clients onto
+ *   one CodeGraph instance via per-connection sessions.
+ *
+ * Both implement {@link JsonRpcTransport} so the session-level protocol logic
+ * (initialize / tools/list / tools/call, plus server-initiated `roots/list`)
+ * is identical regardless of where the bytes come from.
  */
 
 import * as readline from 'readline';
+import type { Socket } from 'net';
 
 /**
  * JSON-RPC 2.0 Request
@@ -56,56 +67,41 @@ export const ErrorCodes = {
 export type MessageHandler = (message: JsonRpcRequest | JsonRpcNotification) => Promise<void>;
 
 /**
- * Stdio Transport for MCP
- *
- * Reads JSON-RPC messages from stdin and writes responses to stdout.
+ * Generic JSON-RPC transport interface — common surface for stdio and socket
+ * carriers. Anything below the session layer (initialize, tool dispatch, etc.)
+ * talks to this, not to a concrete transport class.
  */
-export class StdioTransport {
-  private rl: readline.Interface | null = null;
-  private messageHandler: MessageHandler | null = null;
+export interface JsonRpcTransport {
+  start(handler: MessageHandler): void;
+  stop(): void;
+  send(response: JsonRpcResponse): void;
+  notify(method: string, params?: unknown): void;
+  request(method: string, params?: unknown, timeoutMs?: number): Promise<unknown>;
+  sendResult(id: string | number, result: unknown): void;
+  sendError(id: string | number | null, code: number, message: string, data?: unknown): void;
+}
+
+/**
+ * Shared implementation of newline-delimited JSON-RPC 2.0 over any
+ * `Readable`/`Writable` stream pair. Stdio and socket transports both wrap
+ * this — the only difference between them is which streams get plugged in
+ * and how a "close" propagates back to the owning code.
+ */
+abstract class LineBasedJsonRpcTransport implements JsonRpcTransport {
+  protected messageHandler: MessageHandler | null = null;
   // Outstanding server-initiated requests (e.g. roots/list), keyed by the id
   // we sent. Responses from the client are matched back here.
-  private pending = new Map<string | number, {
+  protected pending = new Map<string | number, {
     resolve: (value: unknown) => void;
     reject: (error: Error) => void;
   }>();
-  private nextRequestId = 1;
+  protected nextRequestId = 1;
+  protected stopped = false;
 
-  /**
-   * Start listening for messages on stdin
-   */
-  start(handler: MessageHandler): void {
-    this.messageHandler = handler;
-
-    this.rl = readline.createInterface({
-      input: process.stdin,
-      output: process.stdout,
-      terminal: false,
-    });
-
-    this.rl.on('line', async (line) => {
-      await this.handleLine(line);
-    });
-
-    this.rl.on('close', () => {
-      process.exit(0);
-    });
-  }
-
-  /**
-   * Stop listening
-   */
-  stop(): void {
-    // Fail any in-flight server-initiated requests so their awaiters don't hang.
-    for (const { reject } of this.pending.values()) {
-      reject(new Error('Transport stopped'));
-    }
-    this.pending.clear();
-    if (this.rl) {
-      this.rl.close();
-      this.rl = null;
-    }
-  }
+  abstract start(handler: MessageHandler): void;
+  protected abstract write(line: string): void;
+  protected abstract idPrefix(): string;
+  abstract stop(): void;
 
   /**
    * Send a server-initiated request to the client and await its response.
@@ -116,7 +112,7 @@ export class StdioTransport {
    * on timeout so callers can fall back rather than hang forever.
    */
   request(method: string, params?: unknown, timeoutMs = 5000): Promise<unknown> {
-    const id = `cg-srv-${this.nextRequestId++}`;
+    const id = `${this.idPrefix()}-${this.nextRequestId++}`;
     return new Promise<unknown>((resolve, reject) => {
       const timer = setTimeout(() => {
         this.pending.delete(id);
@@ -128,56 +124,42 @@ export class StdioTransport {
         resolve: (value) => { clearTimeout(timer); resolve(value); },
         reject: (error) => { clearTimeout(timer); reject(error); },
       });
-      process.stdout.write(JSON.stringify({ jsonrpc: '2.0', id, method, params }) + '\n');
+      this.write(JSON.stringify({ jsonrpc: '2.0', id, method, params }));
     });
   }
 
-  /**
-   * Send a response
-   */
   send(response: JsonRpcResponse): void {
-    const json = JSON.stringify(response);
-    process.stdout.write(json + '\n');
+    this.write(JSON.stringify(response));
   }
 
-  /**
-   * Send a notification (no id)
-   */
   notify(method: string, params?: unknown): void {
-    const notification: JsonRpcNotification = {
-      jsonrpc: '2.0',
-      method,
-      params,
-    };
-    process.stdout.write(JSON.stringify(notification) + '\n');
+    const notification: JsonRpcNotification = { jsonrpc: '2.0', method, params };
+    this.write(JSON.stringify(notification));
   }
 
-  /**
-   * Send a success response
-   */
   sendResult(id: string | number, result: unknown): void {
-    this.send({
-      jsonrpc: '2.0',
-      id,
-      result,
-    });
+    this.send({ jsonrpc: '2.0', id, result });
+  }
+
+  sendError(id: string | number | null, code: number, message: string, data?: unknown): void {
+    this.send({ jsonrpc: '2.0', id, error: { code, message, data } });
   }
 
   /**
-   * Send an error response
+   * Fail any in-flight server-initiated requests so their awaiters don't hang.
+   * Called from `stop()` in subclasses.
    */
-  sendError(id: string | number | null, code: number, message: string, data?: unknown): void {
-    this.send({
-      jsonrpc: '2.0',
-      id,
-      error: { code, message, data },
-    });
+  protected rejectPending(reason: string): void {
+    for (const { reject } of this.pending.values()) {
+      reject(new Error(reason));
+    }
+    this.pending.clear();
   }
 
   /**
-   * Handle an incoming line of JSON
+   * Handle an incoming line of JSON. Both transports feed lines here.
    */
-  private async handleLine(line: string): Promise<void> {
+  protected async handleLine(line: string): Promise<void> {
     const trimmed = line.trim();
     if (!trimmed) return;
 
@@ -254,3 +236,172 @@ export class StdioTransport {
     return true;
   }
 }
+
+export interface StdioTransportOptions {
+  /**
+   * If true, the transport calls `process.exit(0)` when stdin closes. Set to
+   * `false` in shared-daemon mode where the stdio "session" is just *one* of
+   * many clients — losing it shouldn't drag the daemon down. The default
+   * (true) matches the original single-process behavior callers rely on.
+   */
+  exitOnClose?: boolean;
+  /**
+   * Optional callback fired when the stdin stream closes. The daemon uses
+   * this to decrement its connected-clients refcount.
+   */
+  onClose?: () => void;
+}
+
+/**
+ * Stdio Transport for MCP
+ *
+ * Reads JSON-RPC messages from stdin and writes responses to stdout. Used by
+ * the direct (single-process) MCP server path, where the MCP host launches
+ * one server per session and talks to it over the child's stdio. Also used by
+ * shared-daemon mode for the launcher's session (with `exitOnClose: false`)
+ * so the daemon outlives its launcher.
+ */
+export class StdioTransport extends LineBasedJsonRpcTransport {
+  private rl: readline.Interface | null = null;
+  private opts: Required<StdioTransportOptions>;
+
+  constructor(opts: StdioTransportOptions = {}) {
+    super();
+    this.opts = {
+      exitOnClose: opts.exitOnClose ?? true,
+      onClose: opts.onClose ?? (() => { /* no-op */ }),
+    };
+  }
+
+  start(handler: MessageHandler): void {
+    this.messageHandler = handler;
+
+    this.rl = readline.createInterface({
+      input: process.stdin,
+      output: process.stdout,
+      terminal: false,
+    });
+
+    this.rl.on('line', async (line) => {
+      await this.handleLine(line);
+    });
+
+    this.rl.on('close', () => {
+      this.opts.onClose();
+      if (this.opts.exitOnClose) {
+        process.exit(0);
+      }
+    });
+  }
+
+  stop(): void {
+    if (this.stopped) return;
+    this.stopped = true;
+    this.rejectPending('Transport stopped');
+    if (this.rl) {
+      this.rl.close();
+      this.rl = null;
+    }
+  }
+
+  protected write(line: string): void {
+    process.stdout.write(line + '\n');
+  }
+
+  protected idPrefix(): string {
+    return 'cg-srv';
+  }
+}
+
+/**
+ * Socket Transport for MCP daemon sessions.
+ *
+ * Wraps a single `net.Socket` (Unix domain socket on POSIX, named pipe on
+ * Windows). One instance per connected MCP client. Unlike {@link StdioTransport},
+ * `stop()` and stream-close *don't* call `process.exit` — a daemon-side session
+ * ending must not bring down the whole daemon.
+ */
+export class SocketTransport extends LineBasedJsonRpcTransport {
+  private buffer = '';
+  private closeHandlers: Array<() => void> = [];
+
+  constructor(private socket: Socket, private prefix: string = 'cg-sock') {
+    super();
+  }
+
+  /**
+   * Register a callback fired exactly once when the socket closes (from either
+   * side). Used by the daemon to decrement its connected-clients refcount.
+   */
+  onClose(handler: () => void): void {
+    this.closeHandlers.push(handler);
+  }
+
+  start(handler: MessageHandler): void {
+    this.messageHandler = handler;
+
+    this.socket.setEncoding('utf8');
+    this.socket.on('data', (chunk: string) => {
+      this.buffer += chunk;
+      let idx;
+      // Drain every complete line; tail-fragment stays in the buffer for the
+      // next chunk. The handler is async but we don't await it here — JSON-RPC
+      // permits out-of-order responses, and serializing here would deadlock if
+      // a handler issued a server-initiated request that needed a *later* line
+      // to arrive (e.g. roots/list mid-tools-call).
+      while ((idx = this.buffer.indexOf('\n')) !== -1) {
+        const line = this.buffer.slice(0, idx);
+        this.buffer = this.buffer.slice(idx + 1);
+        void this.handleLine(line);
+      }
+    });
+
+    this.socket.on('close', () => this.handleSocketClose());
+    this.socket.on('error', (err) => {
+      // Don't crash the daemon over a broken pipe; just shut this connection.
+      process.stderr.write(`[CodeGraph daemon] socket error: ${err.message}\n`);
+      this.handleSocketClose();
+    });
+  }
+
+  stop(): void {
+    if (this.stopped) return;
+    this.stopped = true;
+    this.rejectPending('Transport stopped');
+    if (!this.socket.destroyed) {
+      this.socket.end();
+      this.socket.destroy();
+    }
+  }
+
+  /**
+   * Write a one-shot line directly to the socket (no JSON-RPC framing applied
+   * by this class — caller produces the line). The daemon uses this for the
+   * hello/handshake line that precedes the JSON-RPC stream.
+   */
+  writeRaw(line: string): void {
+    if (!this.socket.destroyed) {
+      this.socket.write(line.endsWith('\n') ? line : line + '\n');
+    }
+  }
+
+  protected write(line: string): void {
+    if (!this.socket.destroyed) {
+      this.socket.write(line + '\n');
+    }
+  }
+
+  protected idPrefix(): string {
+    return this.prefix;
+  }
+
+  private handleSocketClose(): void {
+    if (this.stopped) return;
+    this.stopped = true;
+    this.rejectPending('Socket closed');
+    for (const h of this.closeHandlers) {
+      try { h(); } catch { /* never let a close-handler take the daemon down */ }
+    }
+    this.closeHandlers = [];
+  }
+}
diff --git a/src/mcp/version.ts b/src/mcp/version.ts
new file mode 100644
index 000000000..cef1b7834
--- /dev/null
+++ b/src/mcp/version.ts
@@ -0,0 +1,36 @@
+/**
+ * Resolved package version, computed once at module load.
+ *
+ * The version string is the rendezvous datum between cooperating daemon and
+ * proxy processes: the daemon advertises its version in the hello line, and
+ * the proxy refuses to share IPC across a mismatch (falls back to direct
+ * mode). Keeping the resolution in one place avoids drift between the CLI
+ * `--version` output (which reads `package.json` directly) and the daemon
+ * handshake.
+ *
+ * Resolution strategy: read the bundled `package.json` two levels up from
+ * this file — same relative position whether we're loaded from `src/mcp/` or
+ * the `dist/mcp/` output, since `tsc` preserves the layout. If reading fails
+ * (e.g. the package was unpacked oddly), fall back to "0.0.0-unknown" — a
+ * sentinel that will never match a real version, so the proxy harmlessly
+ * falls back to direct mode.
+ */
+
+import * as fs from 'fs';
+import * as path from 'path';
+
+function readPackageVersion(): string {
+  try {
+    const pkgPath = path.join(__dirname, '..', '..', 'package.json');
+    const raw = fs.readFileSync(pkgPath, 'utf8');
+    const parsed = JSON.parse(raw);
+    if (typeof parsed?.version === 'string' && parsed.version.length > 0) {
+      return parsed.version;
+    }
+  } catch {
+    // Fall through to sentinel.
+  }
+  return '0.0.0-unknown';
+}
+
+export const CodeGraphPackageVersion = readPackageVersion();
