diff --git a/packages/cli/src/commands/dev.ts b/packages/cli/src/commands/dev.ts
index cee2ffe73..14bcb3bd8 100644
--- a/packages/cli/src/commands/dev.ts
+++ b/packages/cli/src/commands/dev.ts
@@ -693,6 +693,8 @@ const childEnv = { ...process.env };
 delete childEnv.HEXCLAVE_DEV_APP_COMMAND_PARENT_PID;
 delete childEnv.HEXCLAVE_DEV_APP_COMMAND;
 delete childEnv.HEXCLAVE_DEV_APP_COMMAND_ARGS_JSON;
+// Internal to the npx auto-update handshake; never meant for the user's command.
+delete childEnv.STACK_CLI_REEXEC_MARKER;
 
 const child = spawn(command, args, {
   env: childEnv,
diff --git a/packages/cli/src/lib/self-update.test.ts b/packages/cli/src/lib/self-update.test.ts
index badd5cb20..69faae175 100644
--- a/packages/cli/src/lib/self-update.test.ts
+++ b/packages/cli/src/lib/self-update.test.ts
@@ -1,7 +1,19 @@
 import { afterEach, beforeEach, describe, expect, it, vi } from "vitest";
-import { existsSync, mkdtempSync, readFileSync, rmSync } from "fs";
+import { existsSync, mkdtempSync, readFileSync, rmSync, writeFileSync } from "fs";
 import { tmpdir } from "os";
 import { join } from "path";
+import { EventEmitter } from "events";
+import * as childProcess from "child_process";
+import * as ownPackage from "./own-package.js";
+
+// `spawn` is a non-configurable built-in export, so it can't be vi.spyOn'd;
+// replace it with a vi.fn the wiring tests drive per-case. Everything else in
+// child_process stays real.
+vi.mock("child_process", async (importOriginal) => {
+  const actual = await importOriginal<typeof import("child_process")>();
+  return { ...actual, spawn: vi.fn() };
+});
+
 import {
   buildNpxInvocation,
   decidePostReexec,
@@ -188,24 +200,31 @@ describe("maybeReexecToLatest", () => {
 
 describe("decidePostReexec", () => {
   it("propagates the exit code when the CLI ran to completion (code 0)", () => {
-    expect(decidePostReexec({ result: { exited: true, code: 0 }, started: true }))
+    expect(decidePostReexec({ result: { exited: true, code: 0, signal: null }, started: true }))
       .toEqual({ kind: "exit", code: 0 });
   });
 
   it("propagates a nonzero exit code when the CLI actually started (real command failure)", () => {
     // The re-exec'd CLI ran (marker present) and the wrapped command failed — we
     // must surface that failure, not silently re-run it.
-    expect(decidePostReexec({ result: { exited: true, code: 1 }, started: true }))
+    expect(decidePostReexec({ result: { exited: true, code: 1, signal: null }, started: true }))
       .toEqual({ kind: "exit", code: 1 });
   });
 
   it("falls back when npx exits nonzero before the CLI starts (e.g. Lock compromised)", () => {
     // npm errored during install/lock; our CLI never ran. Don't take down dev —
     // run the installed CLI instead.
-    const action = decidePostReexec({ result: { exited: true, code: 1 }, started: false });
+    const action = decidePostReexec({ result: { exited: true, code: 1, signal: null }, started: false });
     expect(action.kind).toBe("fallback");
   });
 
+  it("propagates (does not fall back) when npx was killed by a signal before the CLI started", () => {
+    // e.g. the user pressed Ctrl-C during the download. They want to abort, not
+    // get a fresh dev session launched on the installed CLI.
+    expect(decidePostReexec({ result: { exited: true, code: 130, signal: "SIGINT" }, started: false }))
+      .toEqual({ kind: "exit", code: 130 });
+  });
+
   it("falls back when npx cannot be spawned at all", () => {
     const action = decidePostReexec({ result: { exited: false, error: "spawn npx ENOENT" }, started: false });
     expect(action.kind).toBe("fallback");
@@ -242,3 +261,79 @@ describe("signalReexecStartedIfChild", () => {
     expect(existsSync(marker)).toBe(false);
   });
 });
+
+// End-to-end wiring of maybeReexecToLatest: createReexecMarker -> spawn -> the
+// marker existence check -> decidePostReexec. The decision functions are pure-
+// tested above; these guard against the glue regressing (e.g. inverting the
+// started default, or propagating instead of falling back).
+describe("maybeReexecToLatest fallback wiring", () => {
+  const managedKeys = [SKIP_AUTO_UPDATE_ENV, DISABLE_AUTO_UPDATE_ENV, REEXEC_MARKER_ENV];
+  const savedEnv: Record<string, string | undefined> = {};
+
+  beforeEach(() => {
+    for (const key of managedKeys) {
+      savedEnv[key] = process.env[key];
+      delete process.env[key];
+    }
+    vi.spyOn(ownPackage, "getOwnPackage").mockReturnValue({
+      name: "@hexclave/cli",
+      version: "1.0.0",
+      binName: "hexclave",
+    });
+  });
+
+  afterEach(() => {
+    for (const key of managedKeys) {
+      if (savedEnv[key] == null) delete process.env[key];
+      else process.env[key] = savedEnv[key];
+    }
+    vi.restoreAllMocks();
+  });
+
+  // Fake npx child. `writeMarker` simulates whether the re-exec'd CLI got far
+  // enough to touch the marker (as signalReexecStartedIfChild would) before the
+  // process closes.
+  function mockNpxChild(opts: { writeMarker: boolean }): EventEmitter & { pid: number, kill: () => void } {
+    const child = Object.assign(new EventEmitter(), { pid: 4242, kill: () => {} });
+    vi.mocked(childProcess.spawn).mockImplementation(((
+      _command: string,
+      _args: readonly string[],
+      spawnOpts: { env?: NodeJS.ProcessEnv },
+    ) => {
+      if (opts.writeMarker) {
+        const markerFile = spawnOpts.env?.[REEXEC_MARKER_ENV];
+        if (markerFile != null) writeFileSync(markerFile, "1");
+      }
+      return child;
+    }) as unknown as typeof childProcess.spawn);
+    return child;
+  }
+
+  it("falls back (never calls process.exit) when npx exits nonzero without the CLI starting", async () => {
+    const exitSpy = vi.spyOn(process, "exit").mockImplementation(((() => {
+      throw new Error("process.exit should not have been called");
+    }) as never));
+    const child = mockNpxChild({ writeMarker: false });
+
+    const promise = maybeReexecToLatest({ forwardArgs: ["dev"] });
+    child.emit("close", 1, null);
+
+    await expect(promise).resolves.toBeUndefined();
+    expect(exitSpy).not.toHaveBeenCalled();
+  });
+
+  it("propagates the exit code (calls process.exit) when the CLI started then failed", async () => {
+    const exitSpy = vi.spyOn(process, "exit").mockImplementation(((() => {
+      // Throw so we don't actually exit the test runner; the SUT's catch swallows
+      // it and the promise resolves, which is fine — we assert on the call.
+      throw new Error("__exit__");
+    }) as never));
+    const child = mockNpxChild({ writeMarker: true });
+
+    const promise = maybeReexecToLatest({ forwardArgs: ["dev"] });
+    child.emit("close", 1, null);
+
+    await promise;
+    expect(exitSpy).toHaveBeenCalledWith(1);
+  });
+});
diff --git a/packages/cli/src/lib/self-update.ts b/packages/cli/src/lib/self-update.ts
index 4355ae0d0..bc0033f0d 100644
--- a/packages/cli/src/lib/self-update.ts
+++ b/packages/cli/src/lib/self-update.ts
@@ -1,6 +1,6 @@
 import { spawn } from "child_process";
 import { existsSync, mkdtempSync, rmSync, writeFileSync } from "fs";
-import { tmpdir } from "os";
+import { constants as osConstants, tmpdir } from "os";
 import { join } from "path";
 import { forwardSignals } from "./child-process.js";
 import { getOwnPackage, type OwnPackage } from "./own-package.js";
@@ -106,7 +106,11 @@ export function decideReexec(opts: {
 }
 
 export type ReexecResult =
-  | { exited: true, code: number }
+  // `signal` is the terminating signal when the child was killed by one (e.g. a
+  // Ctrl-C we forwarded), else null. It disambiguates "user/system aborted us"
+  // from "npx failed", which a bare exit code can't (a signal death surfaces as
+  // code null -> would otherwise look like a generic failure).
+  | { exited: true, code: number, signal: NodeJS.Signals | null }
   | { exited: false, error: string };
 
 // Quote an argument for the single cmd.exe command line that Node builds when
@@ -131,9 +135,17 @@ function runReexec(invocation: NpxInvocation, markerFile: string | null): Promis
     });
     const cleanup = forwardSignals(child);
 
-    child.on("close", (code) => {
+    child.on("close", (code, signal) => {
       cleanup();
-      resolvePromise({ exited: true, code: code ?? 1 });
+      if (signal != null) {
+        // Killed by a signal we forwarded (e.g. Ctrl-C). Report it with the
+        // conventional 128 + signal-number exit code so the caller can both
+        // recognize the abort and propagate a sensible code.
+        const signalNumber = osConstants.signals[signal];
+        resolvePromise({ exited: true, code: 128 + signalNumber, signal });
+        return;
+      }
+      resolvePromise({ exited: true, code: code ?? 1, signal: null });
     });
     // npx missing / not spawnable: report so the caller can fall back to the
     // installed CLI instead of failing the whole `hexclave dev`.
@@ -164,6 +176,12 @@ export function decidePostReexec(opts: { result: ReexecResult, started: boolean
   if (!result.exited) {
     return { kind: "fallback", detail: `could not run npx (${result.error})` };
   }
+  // Killed by a forwarded signal (e.g. the user pressed Ctrl-C, possibly mid
+  // download before our CLI started): they want to abort, not silently relaunch
+  // dev on the installed CLI. Propagate the termination instead of falling back.
+  if (result.signal != null) {
+    return { kind: "exit", code: result.code };
+  }
   if (result.code !== 0 && !started) {
     return { kind: "fallback", detail: `npx exited with code ${result.code} before the CLI started` };
   }