diff --git a/docs/respawn-improvement-plan.md b/docs/respawn-improvement-plan.md
new file mode 100644
index 00000000..a5616612
--- /dev/null
+++ b/docs/respawn-improvement-plan.md
@@ -0,0 +1,385 @@
+# Respawn Controller Idle Detection Improvement Plan
+
+## Executive Summary
+
+The current respawn controller relies primarily on **parsing terminal output** to detect idle states. This approach is fragile and leads to false positives/negatives (e.g., the w3-reddit-analyse session).
+
+**Key insight**: Claude Code provides **direct, authoritative signals** via hooks and files that definitively indicate session state. We're receiving some of these signals but not using them for idle detection!
+
+---
+
+## Current Detection Layers (What We Have)
+
+| Layer | Signal | Source | Reliability |
+|-------|--------|--------|-------------|
+| 1 | Completion message ("Worked for Xm Xs") | Terminal parsing | Medium - can miss edge cases |
+| 2 | Output silence (configurable duration) | Terminal activity | Low - Claude can be processing silently |
+| 3 | Token stability | Terminal parsing | Low - tokens don't change during I/O waits |
+| 4 | Working pattern absence | Terminal parsing | Medium - patterns can be missed |
+| 5 | AI idle check | Spawned Claude CLI | High but slow (90s timeout) |
+
+**Problem**: All layers depend on **parsing terminal output**, which is inherently unreliable.
+
+---
+
+## Available Claude Code Signals (Not Fully Utilized)
+
+### 1. `Stop` Hook ⭐ CRITICAL - DEFINITIVE SIGNAL
+
+**What it is**: Fires when the main Claude Code agent **finishes responding**.
+
+**From docs**: "Runs when the main Claude Code agent has finished responding. Does not run if the stoppage occurred due to a user interrupt."
+
+**Current status**: We receive it via `/api/hook-event` but **don't use it for idle detection**!
+
+**Input received**:
+```json
+{
+  "session_id": "abc123",
+  "transcript_path": "~/.claude/projects/.../00893aaf.jsonl",
+  "hook_event_name": "Stop",
+  "stop_hook_active": true  // Important for preventing loops
+}
+```
+
+**Action needed**: The `Stop` hook should be the **PRIMARY** idle detection signal. When Claude fires Stop, the agent has definitively finished its response cycle.
+
+### 2. `idle_prompt` Notification ⭐ HIGH VALUE
+
+**What it is**: Fires after **60+ seconds of idle time** when Claude is waiting for user input.
+
+**From docs**: "When Claude is waiting for user input (after 60+ seconds of idle time)"
+
+**Current status**: We receive it but only forward it to the UI for notification display.
+
+**Action needed**: Use `idle_prompt` as a **definitive confirmation** that Claude is idle. If we receive this, there's no need for AI idle checks or output silence timers.
+
+### 3. Transcript JSONL File ⭐ HIGH VALUE
+
+**What it is**: Complete conversation history at `~/.claude/projects/{project-hash}/{session-id}.jsonl`
+
+**Current status**: We already watch subagent transcripts but **not the main session transcript**.
+
+**Data available**:
+- Every message (user, assistant, system)
+- Every tool call with inputs/outputs
+- Progress events
+- Structured, parseable JSON
+
+**Action needed**:
+- Monitor the main transcript file (path provided in every hook input)
+- Parse the last few entries to detect:
+  - Tool completion
+  - Assistant message completion
+  - Error states
+  - Plan mode prompts
+
+### 4. `PostToolUse` Hook - Tool Completion Tracking
+
+**What it is**: Fires immediately after any tool completes successfully.
+
+**Use case**: Track exactly when tools finish to understand execution flow.
+
+**Current status**: Not implemented.
+
+**Action needed**: Add PostToolUse hooks to track tool completion events.
+
+### 5. `SubagentStop` Hook - Background Agent Completion
+
+**What it is**: Fires when a subagent (Task tool) finishes responding.
+
+**Current status**: Not implemented in hooks config (we watch JSONL files separately).
+
+**Action needed**: Add to hooks config for redundant detection.
+
+### 6. `permission_prompt` and `elicitation_dialog` - Blocking State Detection
+
+**What it is**: Fires when Claude needs user input (permission or question).
+
+**Current status**: We receive and use for auto-accept blocking.
+
+**Enhancement**: Use as definitive "Claude is NOT idle - it's waiting for user action".
+
+---
+
+## Proposed Architecture: Multi-Signal Idle Detection
+
+### New Detection Hierarchy
+
+```
+Priority 1 (Definitive):
+  └── Stop hook received → CONFIRMED IDLE
+  └── idle_prompt received → CONFIRMED IDLE (60s+ idle)
+
+Priority 2 (Blocking):
+  └── permission_prompt received → NOT IDLE (waiting for permission)
+  └── elicitation_dialog received → NOT IDLE (waiting for answer)
+  └── Working patterns in terminal → NOT IDLE
+
+Priority 3 (Supporting):
+  └── Transcript analysis → Check last entries for completion
+  └── Output silence + token stability → Weak idle signal
+
+Priority 4 (Fallback):
+  └── AI idle check → Only if no definitive signals after timeout
+```
+
+### State Machine Changes
+
+```
+                     ┌─────────────────────────────────────┐
+                     │                                     │
+                     ▼                                     │
+    ┌─────────────────────┐                               │
+    │      WATCHING       │◄──────────────────────────────┤
+    └─────────────────────┘                               │
+           │      │                                       │
+           │      │ Stop hook or idle_prompt              │
+           │      └────────────────────────┐              │
+           │                               ▼              │
+           │ Output silence          ┌────────────┐       │
+           │ (no definitive signals) │ HOOK_IDLE  │───────┤
+           │                         └────────────┘       │
+           ▼                         (skip AI check)      │
+    ┌────────────────────┐                               │
+    │  CONFIRMING_IDLE   │                               │
+    └────────────────────┘                               │
+           │                                             │
+           │ Silence confirmed                           │
+           ▼                                             │
+    ┌────────────────────┐                               │
+    │   AI_CHECKING      │──── IDLE verdict ─────────────┤
+    └────────────────────┘                               │
+           │                                             │
+           │ WORKING verdict                             │
+           └─────────────────────────────────────────────┘
+```
+
+### New State: `hook_idle`
+
+When a definitive hook signal is received:
+1. Skip AI idle check entirely (saves time and API calls)
+2. Short confirmation period (2-3s) to handle race conditions
+3. Proceed directly to respawn sequence
+
+---
+
+## Implementation Plan
+
+### Phase 1: Use Stop Hook for Idle Detection ✅ COMPLETED
+
+**Files modified**:
+- `src/respawn-controller.ts`
+- `src/web/server.ts`
+- `test/respawn-controller.test.ts`
+
+**Changes implemented**:
+1. Added `stopHookReceived`, `stopHookTime`, `idlePromptReceived`, `idlePromptTime` fields to `DetectionStatus`
+2. Added `hookConfirmTimer` for short confirmation after hook signal (3s)
+3. Added `signalStopHook()` method:
+   - Sets `stopHookReceived = true` and timestamp
+   - Cancels any running AI check (hook is definitive)
+   - Starts 3s confirmation timer
+   - If no new output during confirmation → triggers respawn cycle
+4. Added `signalIdlePrompt()` method:
+   - Sets `idlePromptReceived = true` and timestamp
+   - Immediately confirms idle (skips confirmation timer - 60s+ already proven)
+5. Added `resetHookState()` to clear hook flags on:
+   - Controller start
+   - Working patterns detected
+   - Cycle completion
+6. Updated server.ts `/api/hook-event` endpoint to call:
+   - `controller.signalStopHook()` for `stop` events
+   - `controller.signalIdlePrompt()` for `idle_prompt` events
+7. Updated `getDetectionStatus()`:
+   - Returns hook signal states
+   - Sets confidence to 100% when hook received
+   - Updates statusText to show hook status
+
+**Tests added** (9 new tests in `RespawnController Hook-Based Idle Detection` describe block):
+- `should expose signalStopHook method`
+- `should expose signalIdlePrompt method`
+- `should set stopHookReceived in detection status when Stop hook signaled`
+- `should include hook status in statusText when Stop hook received`
+- `should trigger respawn cycle after Stop hook confirmation`
+- `should immediately confirm idle when idle_prompt signaled (skip confirmation)`
+- `should cancel Stop hook confirmation if working patterns detected`
+- `should ignore Stop hook when not in watching state`
+- `should have 100% confidence when hook signal is received`
+
+**Detection status update** (implemented):
+```typescript
+interface DetectionStatus {
+  /** Layer 0: Stop hook received (highest priority - definitive signal) */
+  stopHookReceived: boolean;
+  stopHookTime: number | null;
+  /** Layer 0: idle_prompt notification received (definitive signal) */
+  idlePromptReceived: boolean;
+  idlePromptTime: number | null;
+
+  // Existing fields...
+}
+```
+
+### Phase 2: Use idle_prompt for Definitive Idle ✅ COMPLETED (in Phase 1)
+
+**Already implemented in Phase 1**:
+1. `signalIdlePrompt()` method sets `idlePromptReceived = true`
+2. Immediately calls `onIdleConfirmed()` - skips all other detection
+3. Server.ts calls `controller.signalIdlePrompt()` when `idle_prompt` event received
+4. 60s+ of Claude waiting = definitive idle signal
+
+### Phase 3: Transcript File Monitoring ✅ COMPLETED
+
+**New file**: `src/transcript-watcher.ts`
+
+**Functionality implemented**:
+1. Watch the session's transcript JSONL file using `fs.watch()`
+2. Parse new entries as they're appended (incremental reading from last position)
+3. Detect:
+   - `result` entry → `transcript:complete` event (isComplete = true)
+   - `tool_use` content block → `transcript:tool_start` event
+   - `tool_result` content block → `transcript:tool_end` event
+   - `AskUserQuestion` or `ExitPlanMode` tools → `transcript:plan_mode` event
+   - Error conditions in result entries
+4. Emit structured events consumed by respawn controller
+
+**Integration implemented**:
+- `transcript_path` added to allowed hook data fields in `sanitizeHookData()`
+- `transcriptWatchers` Map added to WebServer for per-session watchers
+- `startTranscriptWatcher()` creates watcher and wires up events:
+  - `transcript:complete` → `controller.signalTranscriptComplete()`
+  - `transcript:plan_mode` → `controller.signalTranscriptPlanMode()`
+- `stopTranscriptWatcher()` cleans up on session cleanup
+- Hook events with `transcript_path` automatically start watching
+
+**RespawnController methods added**:
+- `signalTranscriptComplete()` - Supporting signal that can accelerate idle detection
+- `signalTranscriptPlanMode()` - Cancels auto-accept timer (like elicitation)
+
+**Tests added** (13 tests in `test/transcript-watcher.test.ts`):
+- Initialization tests
+- File watching tests (existing file, non-existent file, stop, updatePath)
+- Entry processing tests (user entry, result entry, tool execution, plan mode, errors)
+- State management tests
+
+### Phase 4: Enhanced Hook Configuration
+
+**Update `src/hooks-config.ts`**:
+
+```typescript
+export function generateHooksConfig(): { hooks: Record<string, unknown[]> } {
+  return {
+    hooks: {
+      Notification: [
+        { matcher: 'idle_prompt', hooks: [...] },
+        { matcher: 'permission_prompt', hooks: [...] },
+        { matcher: 'elicitation_dialog', hooks: [...] },
+      ],
+      Stop: [{ hooks: [...] }],
+      // NEW: Add these
+      PostToolUse: [
+        { matcher: '*', hooks: [...] }  // Track all tool completions
+      ],
+      SubagentStop: [{ hooks: [...] }],
+      PreCompact: [
+        { matcher: '*', hooks: [...] }  // Track compaction
+      ],
+    },
+  };
+}
+```
+
+### Phase 5: Confidence Scoring Overhaul
+
+Replace current confidence calculation with weighted signals:
+
+```typescript
+function calculateConfidence(): number {
+  let confidence = 0;
+
+  // Definitive signals (100% confidence)
+  if (this.stopHookReceived) confidence = 100;
+  if (this.idlePromptReceived) confidence = 100;
+
+  // Blocking signals (0% confidence)
+  if (this.permissionPromptReceived) return 0;
+  if (this.elicitationReceived) return 0;
+  if (this.workingPatternRecent) return 0;
+
+  // Supporting signals (build up to ~80%)
+  if (confidence < 100) {
+    if (this.outputSilent) confidence += 30;
+    if (this.tokensStable) confidence += 20;
+    if (this.transcriptShowsCompletion) confidence += 30;
+  }
+
+  return Math.min(100, confidence);
+}
+```
+
+---
+
+## Expected Benefits
+
+| Metric | Current | After Implementation |
+|--------|---------|---------------------|
+| False positive rate | ~15-20% | <5% |
+| Detection latency | 10-90s (AI check) | 3-5s (hook-based) |
+| API calls for AI check | Every idle detection | Only when hooks unavailable |
+| Reliability | Medium | High (definitive signals) |
+
+---
+
+## Testing Strategy
+
+### Unit Tests
+1. `Stop` hook triggers immediate idle confirmation
+2. `idle_prompt` skips all other detection
+3. `permission_prompt` blocks idle detection
+4. Transcript parsing correctly identifies completion
+5. Fallback to AI check when no hooks received
+
+### Integration Tests
+1. End-to-end with real Claude session
+2. Hook event delivery and handling
+3. Transcript file monitoring
+4. Race condition handling
+
+### Scenarios to Test
+1. Normal completion → Stop hook → respawn
+2. Long-running task → idle_prompt → respawn
+3. Permission needed → wait for user action
+4. AskUserQuestion → wait for user answer
+5. Plan mode → auto-accept → continue
+6. Hooks disabled/unavailable → fallback to AI check
+
+---
+
+## Migration Path
+
+1. **Implement Phase 1** - Stop hook detection (low risk, high value)
+2. **Deploy and monitor** - Verify Stop hooks are reliable
+3. **Implement Phase 2** - idle_prompt (simple addition)
+4. **Implement Phase 3** - Transcript monitoring (more complex)
+5. **Implement Phase 4** - Enhanced hooks (optional, for completeness)
+6. **Implement Phase 5** - Refactor confidence scoring
+
+---
+
+## Open Questions
+
+1. **Stop hook reliability**: Does it fire 100% of the time? Edge cases?
+2. **Transcript file location**: Always at the path in hook input?
+3. **Hook delivery latency**: How quickly do hooks fire after state change?
+4. **Race conditions**: What if Stop hook and new work happen simultaneously?
+
+---
+
+## References
+
+- [Claude Code Hooks Documentation](https://code.claude.com/docs/en/hooks)
+- [Agent SDK Documentation](https://platform.claude.com/docs/en/agent-sdk/overview)
+- Current implementation: `src/respawn-controller.ts`
+- Hooks config: `src/hooks-config.ts`
+- Subagent watcher: `src/subagent-watcher.ts`
diff --git a/src/respawn-controller.ts b/src/respawn-controller.ts
index ec2476a0..149dd2ce 100644
--- a/src/respawn-controller.ts
+++ b/src/respawn-controller.ts
@@ -94,6 +94,15 @@ export interface ActiveTimerInfo {
 }
 
 export interface DetectionStatus {
+  /** Layer 0: Stop hook received (highest priority - definitive signal) */
+  stopHookReceived: boolean;
+  /** Timestamp when Stop hook was received */
+  stopHookTime: number | null;
+  /** Layer 0: idle_prompt notification received (definitive signal) */
+  idlePromptReceived: boolean;
+  /** Timestamp when idle_prompt was received */
+  idlePromptTime: number | null;
+
   /** Layer 1: Completion message detected ("for Xm Xs") */
   completionMessageDetected: boolean;
   /** Timestamp when completion message was last seen */
@@ -570,6 +579,26 @@ export class RespawnController extends EventEmitter {
   /** Whether an elicitation dialog (AskUserQuestion) was detected via hook signal */
   private elicitationDetected: boolean = false;
 
+  // ========== Hook-Based Detection State (Layer 0 - Highest Priority) ==========
+
+  /** Whether a Stop hook was received (definitive idle signal from Claude Code) */
+  private stopHookReceived: boolean = false;
+
+  /** Timestamp when Stop hook was received */
+  private stopHookTime: number | null = null;
+
+  /** Whether an idle_prompt notification was received (60s+ idle signal) */
+  private idlePromptReceived: boolean = false;
+
+  /** Timestamp when idle_prompt was received */
+  private idlePromptTime: number | null = null;
+
+  /** Timer for short confirmation after hook signal (handles race conditions) */
+  private hookConfirmTimer: NodeJS.Timeout | null = null;
+
+  /** Confirmation delay after hook signal before confirming idle (ms) */
+  private static readonly HOOK_CONFIRM_DELAY_MS = 3000;
+
   /** Number of completed respawn cycles */
   private cycleCount: number = 0;
 
@@ -795,11 +824,16 @@ export class RespawnController extends EventEmitter {
     const workingPatternsAbsent = msSinceLastWorking >= 3000; // 3s without working patterns
 
     // Calculate confidence level (0-100)
+    // Hook signals are definitive (100% confidence)
     let confidence = 0;
-    if (completionMessageDetected) confidence += 40;
-    if (outputSilent) confidence += 25;
-    if (tokensStable) confidence += 20;
-    if (workingPatternsAbsent) confidence += 15;
+    if (this.stopHookReceived || this.idlePromptReceived) {
+      confidence = 100;
+    } else {
+      if (completionMessageDetected) confidence += 40;
+      if (outputSilent) confidence += 25;
+      if (tokensStable) confidence += 20;
+      if (workingPatternsAbsent) confidence += 15;
+    }
 
     // Determine status text and what we're waiting for
     let statusText: string;
@@ -808,6 +842,10 @@ export class RespawnController extends EventEmitter {
     if (this._state === 'stopped') {
       statusText = 'Controller stopped';
       waitingFor = 'Start to begin monitoring';
+    } else if (this.stopHookReceived || this.idlePromptReceived) {
+      const hookType = this.idlePromptReceived ? 'idle_prompt' : 'Stop';
+      statusText = `${hookType} hook received - confirming idle`;
+      waitingFor = 'Short confirmation (race condition check)';
     } else if (this._state === 'ai_checking') {
       statusText = 'AI Check: Analyzing terminal output...';
       waitingFor = 'AI verdict (IDLE or WORKING)';
@@ -901,6 +939,10 @@ export class RespawnController extends EventEmitter {
     }
 
     return {
+      stopHookReceived: this.stopHookReceived,
+      stopHookTime: this.stopHookTime,
+      idlePromptReceived: this.idlePromptReceived,
+      idlePromptTime: this.idlePromptTime,
       completionMessageDetected,
       completionMessageTime: this.completionMessageTime,
       outputSilent,
@@ -997,7 +1039,7 @@ export class RespawnController extends EventEmitter {
 
     this.log('Starting respawn controller (multi-layer detection)');
 
-    // Initialize all timestamps
+    // Initialize all timestamps and reset hook state
     const now = Date.now();
     this.lastActivityTime = now;
     this.lastOutputTime = now;
@@ -1005,6 +1047,7 @@ export class RespawnController extends EventEmitter {
     this.lastWorkingPatternTime = now;
     this.completionMessageTime = null;
     this.hasReceivedOutput = false;
+    this.resetHookState();
 
     // Seed the terminal buffer from the session's existing output.
     // This gives the AI checker context even if no new output arrives.
@@ -1139,9 +1182,14 @@ export class RespawnController extends EventEmitter {
       this.workingDetected = true;
       this.promptDetected = false;
       this.elicitationDetected = false; // Clear on new work cycle
+      this.resetHookState(); // Clear hook signals on new work
       this.lastWorkingPatternTime = now;
       this.clearIdleTimer();
 
+      // Cancel hook confirmation timer if running
+      this.cancelTrackedTimer('hook-confirm', this.hookConfirmTimer, 'working patterns detected');
+      this.hookConfirmTimer = null;
+
       // Cancel any pending completion confirmation
       this.cancelCompletionConfirm();
 
@@ -1396,7 +1444,7 @@ export class RespawnController extends EventEmitter {
     }
   }
 
-  /** Clear all timers (idle, step, completion confirm, no-output, pre-filter, step confirm, auto-accept, and clear fallback) */
+  /** Clear all timers (idle, step, completion confirm, no-output, pre-filter, step confirm, auto-accept, hook confirm, and clear fallback) */
   private clearTimers(): void {
     this.clearIdleTimer();
     if (this.stepTimer) {
@@ -1427,6 +1475,10 @@ export class RespawnController extends EventEmitter {
       clearTimeout(this.noOutputTimer);
       this.noOutputTimer = null;
     }
+    if (this.hookConfirmTimer) {
+      clearTimeout(this.hookConfirmTimer);
+      this.hookConfirmTimer = null;
+    }
     // Clear all tracked timers
     this.activeTimers.clear();
   }
@@ -1940,6 +1992,163 @@ export class RespawnController extends EventEmitter {
     this.log('Elicitation dialog signaled - auto-accept blocked until next work cycle');
   }
 
+  /**
+   * Signal that a Stop hook was received from Claude Code.
+   * This is a DEFINITIVE signal that Claude has finished responding.
+   * Skips AI idle check and uses a short confirmation period to handle race conditions.
+   *
+   * @fires log
+   */
+  signalStopHook(): void {
+    // Only process in states where we're watching for idle
+    if (this._state !== 'watching' && this._state !== 'confirming_idle' && this._state !== 'ai_checking') {
+      this.log(`Stop hook received but ignoring (state is ${this._state})`);
+      return;
+    }
+
+    const now = Date.now();
+    this.stopHookReceived = true;
+    this.stopHookTime = now;
+    this.logAction('hook', 'Stop hook received - definitive idle signal');
+    this.log('Stop hook received from Claude Code - definitive idle signal');
+
+    // Cancel any running AI check - we have a definitive signal
+    if (this._state === 'ai_checking') {
+      this.log('Cancelling AI check - Stop hook is definitive');
+      this.aiChecker.cancel();
+    }
+
+    // Cancel completion confirm timer - hook takes precedence
+    this.cancelTrackedTimer('completion-confirm', this.completionConfirmTimer, 'Stop hook received');
+    this.completionConfirmTimer = null;
+
+    // Cancel pre-filter timer - hook takes precedence
+    this.cancelTrackedTimer('pre-filter', this.preFilterTimer, 'Stop hook received');
+    this.preFilterTimer = null;
+
+    // Start short confirmation timer to handle race conditions
+    // (e.g., Stop hook arrives but Claude immediately starts new work)
+    this.startHookConfirmTimer('stop');
+  }
+
+  /**
+   * Signal that an idle_prompt notification was received from Claude Code.
+   * This fires after 60+ seconds of Claude waiting for user input.
+   * This is a DEFINITIVE signal that Claude is idle.
+   *
+   * @fires log
+   */
+  signalIdlePrompt(): void {
+    // Only process in states where we're watching for idle
+    if (this._state !== 'watching' && this._state !== 'confirming_idle' && this._state !== 'ai_checking') {
+      this.log(`idle_prompt received but ignoring (state is ${this._state})`);
+      return;
+    }
+
+    const now = Date.now();
+    this.idlePromptReceived = true;
+    this.idlePromptTime = now;
+    this.logAction('hook', 'idle_prompt received - 60s+ idle confirmed');
+    this.log('idle_prompt notification received - Claude has been idle for 60+ seconds');
+
+    // Cancel any running AI check - we have a definitive signal
+    if (this._state === 'ai_checking') {
+      this.log('Cancelling AI check - idle_prompt is definitive');
+      this.aiChecker.cancel();
+    }
+
+    // Cancel all other detection timers - this is definitive
+    this.cancelTrackedTimer('completion-confirm', this.completionConfirmTimer, 'idle_prompt received');
+    this.completionConfirmTimer = null;
+    this.cancelTrackedTimer('pre-filter', this.preFilterTimer, 'idle_prompt received');
+    this.preFilterTimer = null;
+    this.cancelTrackedTimer('no-output-fallback', this.noOutputTimer, 'idle_prompt received');
+    this.noOutputTimer = null;
+
+    // idle_prompt is an even stronger signal than Stop hook (60s+ idle)
+    // Skip confirmation and go directly to idle
+    this.onIdleConfirmed('idle_prompt hook (60s+ idle)');
+  }
+
+  /**
+   * Start a short confirmation timer after receiving a hook signal.
+   * This handles race conditions where a hook arrives but Claude immediately starts new work.
+   *
+   * @param hookType - Which hook triggered this ('stop' or 'idle_prompt')
+   */
+  private startHookConfirmTimer(hookType: 'stop' | 'idle_prompt'): void {
+    this.cancelTrackedTimer('hook-confirm', this.hookConfirmTimer, 'restarting');
+    this.hookConfirmTimer = null;
+
+    this.hookConfirmTimer = this.startTrackedTimer(
+      'hook-confirm',
+      RespawnController.HOOK_CONFIRM_DELAY_MS,
+      () => {
+        this.hookConfirmTimer = null;
+
+        // Verify we haven't received new output since the hook arrived
+        const hookTime = hookType === 'stop' ? this.stopHookTime : this.idlePromptTime;
+        if (hookTime && this.lastOutputTime > hookTime) {
+          // Output arrived after hook - Claude started new work
+          this.log(`Output received after ${hookType} hook, cancelling idle confirmation`);
+          this.logAction('hook', `${hookType} cancelled - new output detected`);
+          this.resetHookState();
+          this.setState('watching');
+          this.startNoOutputTimer();
+          this.startPreFilterTimer();
+          return;
+        }
+
+        // No new output - confirm idle via hook signal
+        this.logAction('hook', `${hookType} confirmed after ${RespawnController.HOOK_CONFIRM_DELAY_MS}ms`);
+        this.onIdleConfirmed(`${hookType} hook (confirmed)`);
+      },
+      `confirming ${hookType} hook`
+    );
+  }
+
+  /**
+   * Reset hook-based detection state.
+   * Called when hooks are cancelled due to new activity.
+   */
+  private resetHookState(): void {
+    this.stopHookReceived = false;
+    this.stopHookTime = null;
+    this.idlePromptReceived = false;
+    this.idlePromptTime = null;
+  }
+
+  /**
+   * Signal that the transcript indicates completion.
+   * This is a supporting signal from transcript file monitoring.
+   * Unlike hooks, this doesn't immediately trigger idle - it boosts confidence.
+   */
+  signalTranscriptComplete(): void {
+    // Transcript completion is a supporting signal, not definitive
+    // It can help reduce the confirmation time needed
+    if (this._state === 'watching') {
+      this.logAction('transcript', 'Transcript shows completion - boosting confidence');
+      this.log('Transcript completion detected - may accelerate idle detection');
+      // If we have a completion message and transcript confirms, try AI check
+      if (this.completionMessageTime !== null) {
+        this.tryStartAiCheck('transcript + completion message');
+      }
+    }
+  }
+
+  /**
+   * Signal that the transcript indicates plan mode.
+   * This helps prevent auto-accept from triggering on AskUserQuestion.
+   */
+  signalTranscriptPlanMode(): void {
+    // Plan mode from transcript = potential AskUserQuestion
+    // This is similar to elicitation detection
+    if (this._state === 'watching') {
+      this.logAction('transcript', 'Plan mode / AskUserQuestion detected');
+      this.cancelAutoAcceptTimer();
+    }
+  }
+
   /**
    * Start completion confirmation timer.
    * After completion message, waits for output silence then triggers AI check.
@@ -2183,6 +2392,14 @@ export class RespawnController extends EventEmitter {
     this.terminalBuffer.clear();
     this.promptDetected = false;
     this.workingDetected = false;
+    this.resetHookState(); // Clear hook signals for next cycle
+
+    // Restart detection timers for next cycle
+    this.startNoOutputTimer();
+    this.startPreFilterTimer();
+    if (this.config.autoAcceptPrompts) {
+      this.startAutoAcceptTimer();
+    }
   }
 
   /**
diff --git a/src/transcript-watcher.ts b/src/transcript-watcher.ts
new file mode 100644
index 00000000..52a358ad
--- /dev/null
+++ b/src/transcript-watcher.ts
@@ -0,0 +1,422 @@
+/**
+ * @fileoverview Transcript Watcher - Real-time monitoring of Claude Code session transcripts
+ *
+ * Watches the main session transcript JSONL file and emits structured events for:
+ * - Assistant message completion
+ * - Tool execution state
+ * - Error conditions
+ * - Plan mode prompts
+ *
+ * The transcript path is provided by Claude Code hooks in the `transcript_path` field.
+ */
+
+import { EventEmitter } from 'events';
+import { watch, statSync, existsSync, FSWatcher } from 'fs';
+import { createReadStream } from 'fs';
+import { createInterface } from 'readline';
+
+// ========== Types ==========
+
+/**
+ * Parsed transcript entry from the JSONL file
+ */
+export interface TranscriptEntry {
+  type: 'user' | 'assistant' | 'system' | 'result';
+  timestamp: string;
+  message?: {
+    role: string;
+    content: string | TranscriptContentBlock[];
+  };
+  total_cost_usd?: number;
+  duration_ms?: number;
+  error?: {
+    type: string;
+    message: string;
+  };
+}
+
+export interface TranscriptContentBlock {
+  type: 'text' | 'tool_use' | 'tool_result';
+  text?: string;
+  name?: string;
+  input?: Record<string, unknown>;
+  content?: string;
+  is_error?: boolean;
+}
+
+/**
+ * Detected state from transcript analysis
+ */
+export interface TranscriptState {
+  /** Whether the last entry indicates completion */
+  isComplete: boolean;
+  /** Whether a tool is currently executing */
+  toolExecuting: boolean;
+  /** Current tool name if executing */
+  currentTool: string | null;
+  /** Whether an error was detected */
+  hasError: boolean;
+  /** Error message if any */
+  errorMessage: string | null;
+  /** Whether a plan mode prompt was detected */
+  planModeDetected: boolean;
+  /** Last assistant message (truncated) */
+  lastAssistantMessage: string | null;
+  /** Total entries processed */
+  entryCount: number;
+  /** Last update timestamp */
+  lastUpdateAt: string | null;
+}
+
+export interface TranscriptWatcherEvents {
+  'transcript:update': (state: TranscriptState) => void;
+  'transcript:complete': (state: TranscriptState) => void;
+  'transcript:tool_start': (toolName: string) => void;
+  'transcript:tool_end': (toolName: string, isError: boolean) => void;
+  'transcript:error': (error: Error) => void;
+  'transcript:plan_mode': () => void;
+}
+
+// ========== Constants ==========
+
+/** How often to check for new content when file watching fails */
+const POLL_INTERVAL_MS = 1000;
+
+/** Max characters to keep for lastAssistantMessage */
+const MAX_MESSAGE_LENGTH = 500;
+
+/** Patterns that indicate plan mode / approval prompt */
+const PLAN_MODE_PATTERNS = [
+  /ExitPlanMode/i,
+  /AskUserQuestion/i,
+  /Ready for user approval/i,
+  /approve.*plan/i,
+];
+
+// ========== TranscriptWatcher Class ==========
+
+export class TranscriptWatcher extends EventEmitter {
+  private transcriptPath: string | null = null;
+  private fileWatcher: FSWatcher | null = null;
+  private pollInterval: NodeJS.Timeout | null = null;
+  private filePosition: number = 0;
+  private _isRunning: boolean = false;
+  private state: TranscriptState = this.getInitialState();
+
+  constructor() {
+    super();
+  }
+
+  private getInitialState(): TranscriptState {
+    return {
+      isComplete: false,
+      toolExecuting: false,
+      currentTool: null,
+      hasError: false,
+      errorMessage: null,
+      planModeDetected: false,
+      lastAssistantMessage: null,
+      entryCount: 0,
+      lastUpdateAt: null,
+    };
+  }
+
+  // ========== Public API ==========
+
+  /**
+   * Start watching a transcript file
+   * @param transcriptPath - Path to the JSONL transcript file
+   */
+  start(transcriptPath: string): void {
+    if (this._isRunning && this.transcriptPath === transcriptPath) {
+      return; // Already watching this file
+    }
+
+    // Stop any existing watcher
+    this.stop();
+
+    this.transcriptPath = transcriptPath;
+    this._isRunning = true;
+    this.state = this.getInitialState();
+    this.filePosition = 0;
+
+    // Check if file exists
+    if (!existsSync(transcriptPath)) {
+      // File doesn't exist yet, poll until it does
+      this.startPolling();
+      return;
+    }
+
+    // Get initial file size
+    try {
+      const stat = statSync(transcriptPath);
+      // Start from the end to only process new entries
+      this.filePosition = stat.size;
+    } catch {
+      this.filePosition = 0;
+    }
+
+    // Start watching
+    this.setupFileWatcher();
+  }
+
+  /**
+   * Stop watching
+   */
+  stop(): void {
+    this._isRunning = false;
+
+    if (this.fileWatcher) {
+      this.fileWatcher.close();
+      this.fileWatcher = null;
+    }
+
+    if (this.pollInterval) {
+      clearInterval(this.pollInterval);
+      this.pollInterval = null;
+    }
+
+    this.transcriptPath = null;
+    this.state = this.getInitialState();
+  }
+
+  /**
+   * Check if watcher is running
+   */
+  isRunning(): boolean {
+    return this._isRunning;
+  }
+
+  /**
+   * Get current state
+   */
+  getState(): TranscriptState {
+    return { ...this.state };
+  }
+
+  /**
+   * Update the transcript path (e.g., from a new hook event)
+   */
+  updatePath(transcriptPath: string): void {
+    if (this.transcriptPath !== transcriptPath) {
+      this.start(transcriptPath);
+    }
+  }
+
+  // ========== Private Methods ==========
+
+  private startPolling(): void {
+    if (this.pollInterval) return;
+
+    this.pollInterval = setInterval(() => {
+      if (!this.transcriptPath || !this._isRunning) return;
+
+      if (existsSync(this.transcriptPath)) {
+        // File now exists, switch to file watching
+        clearInterval(this.pollInterval!);
+        this.pollInterval = null;
+        this.setupFileWatcher();
+      }
+    }, POLL_INTERVAL_MS);
+  }
+
+  private setupFileWatcher(): void {
+    if (!this.transcriptPath || !this._isRunning) return;
+
+    try {
+      this.fileWatcher = watch(this.transcriptPath, (eventType) => {
+        if (eventType === 'change') {
+          this.processNewContent();
+        }
+      });
+
+      // Initial read
+      this.processNewContent();
+    } catch (err) {
+      // Fall back to polling if watch fails
+      this.emit('transcript:error', err as Error);
+      this.startPolling();
+    }
+  }
+
+  private async processNewContent(): Promise<void> {
+    if (!this.transcriptPath || !this._isRunning) return;
+
+    try {
+      const stat = statSync(this.transcriptPath);
+      if (stat.size <= this.filePosition) {
+        return; // No new content
+      }
+
+      // Read new content
+      const newEntries = await this.readNewEntries();
+
+      for (const entry of newEntries) {
+        this.processEntry(entry);
+      }
+
+      if (newEntries.length > 0) {
+        this.emit('transcript:update', this.getState());
+      }
+    } catch (err) {
+      this.emit('transcript:error', err as Error);
+    }
+  }
+
+  private readNewEntries(): Promise<TranscriptEntry[]> {
+    return new Promise((resolve, reject) => {
+      if (!this.transcriptPath) {
+        resolve([]);
+        return;
+      }
+
+      const entries: TranscriptEntry[] = [];
+      const stream = createReadStream(this.transcriptPath, {
+        start: this.filePosition,
+        encoding: 'utf-8',
+      });
+
+      const rl = createInterface({
+        input: stream,
+        crlfDelay: Infinity,
+      });
+
+      let bytesRead = this.filePosition;
+
+      rl.on('line', (line) => {
+        bytesRead += Buffer.byteLength(line, 'utf-8') + 1; // +1 for newline
+
+        if (!line.trim()) return;
+
+        try {
+          const entry = JSON.parse(line) as TranscriptEntry;
+          entries.push(entry);
+        } catch {
+          // Skip malformed lines
+        }
+      });
+
+      rl.on('close', () => {
+        this.filePosition = bytesRead;
+        resolve(entries);
+      });
+
+      rl.on('error', reject);
+      stream.on('error', reject);
+    });
+  }
+
+  private processEntry(entry: TranscriptEntry): void {
+    this.state.entryCount++;
+    this.state.lastUpdateAt = entry.timestamp || new Date().toISOString();
+
+    // Handle based on entry type
+    switch (entry.type) {
+      case 'assistant':
+        this.handleAssistantEntry(entry);
+        break;
+      case 'result':
+        this.handleResultEntry(entry);
+        break;
+      case 'user':
+        // User message means new turn, reset some state
+        this.state.isComplete = false;
+        this.state.hasError = false;
+        this.state.errorMessage = null;
+        break;
+      case 'system':
+        // System messages are informational
+        break;
+    }
+
+    // Check for plan mode patterns
+    this.checkPlanMode(entry);
+  }
+
+  private handleAssistantEntry(entry: TranscriptEntry): void {
+    if (!entry.message?.content) return;
+
+    const content = entry.message.content;
+
+    if (typeof content === 'string') {
+      this.state.lastAssistantMessage = content.slice(0, MAX_MESSAGE_LENGTH);
+    } else if (Array.isArray(content)) {
+      // Process content blocks
+      for (const block of content) {
+        if (block.type === 'text' && block.text) {
+          this.state.lastAssistantMessage = block.text.slice(0, MAX_MESSAGE_LENGTH);
+        } else if (block.type === 'tool_use' && block.name) {
+          // Tool started
+          this.state.toolExecuting = true;
+          this.state.currentTool = block.name;
+          this.emit('transcript:tool_start', block.name);
+        } else if (block.type === 'tool_result') {
+          // Tool completed
+          const wasError = block.is_error === true;
+          const toolName = this.state.currentTool;
+          this.state.toolExecuting = false;
+          this.state.currentTool = null;
+          if (toolName) {
+            this.emit('transcript:tool_end', toolName, wasError);
+          }
+          if (wasError && block.content) {
+            this.state.hasError = true;
+            this.state.errorMessage = String(block.content).slice(0, 200);
+          }
+        }
+      }
+    }
+  }
+
+  private handleResultEntry(entry: TranscriptEntry): void {
+    // Result entry indicates completion
+    this.state.isComplete = true;
+    this.state.toolExecuting = false;
+    this.state.currentTool = null;
+
+    if (entry.error) {
+      this.state.hasError = true;
+      this.state.errorMessage = entry.error.message?.slice(0, 200) || 'Unknown error';
+    }
+
+    this.emit('transcript:complete', this.getState());
+  }
+
+  private checkPlanMode(entry: TranscriptEntry): void {
+    // Check assistant messages for plan mode patterns
+    if (entry.type !== 'assistant' || !entry.message?.content) return;
+
+    const content = entry.message.content;
+    const textToCheck = typeof content === 'string'
+      ? content
+      : content
+          .filter((b): b is { type: 'text'; text: string } => b.type === 'text' && !!b.text)
+          .map(b => b.text)
+          .join(' ');
+
+    // Also check for tool_use with ExitPlanMode or AskUserQuestion
+    if (Array.isArray(content)) {
+      for (const block of content) {
+        if (block.type === 'tool_use' && block.name) {
+          if (block.name === 'ExitPlanMode' || block.name === 'AskUserQuestion') {
+            this.state.planModeDetected = true;
+            this.emit('transcript:plan_mode');
+            return;
+          }
+        }
+      }
+    }
+
+    for (const pattern of PLAN_MODE_PATTERNS) {
+      if (pattern.test(textToCheck)) {
+        this.state.planModeDetected = true;
+        this.emit('transcript:plan_mode');
+        return;
+      }
+    }
+  }
+}
+
+// ========== Singleton Export ==========
+
+export const transcriptWatcher = new TranscriptWatcher();
diff --git a/src/web/public/app.js b/src/web/public/app.js
index 2236a927..fa027e08 100644
--- a/src/web/public/app.js
+++ b/src/web/public/app.js
@@ -2153,6 +2153,19 @@ class ClaudemanApp {
     const waitingEl = this.$('detectionWaiting');
     const confidenceEl = this.$('detectionConfidence');
     const aiCheckEl = document.getElementById('detectionAiCheck');
+    const hookEl = document.getElementById('detectionHook');
+
+    // Hook-based detection indicator (highest priority signals)
+    if (hookEl) {
+      if (detection.stopHookReceived || detection.idlePromptReceived) {
+        const hookType = detection.idlePromptReceived ? 'idle_prompt' : 'Stop';
+        hookEl.textContent = `🎯 ${hookType} hook received`;
+        hookEl.className = 'detection-hook hook-active';
+        hookEl.style.display = '';
+      } else {
+        hookEl.style.display = 'none';
+      }
+    }
 
     // Simplified status - only show when meaningful
     if (detection.statusText && detection.statusText !== 'Watching...') {
@@ -2171,8 +2184,14 @@ class ClaudemanApp {
       confidenceEl.textContent = `${confidence}%`;
       confidenceEl.style.display = '';
       confidenceEl.className = 'detection-confidence';
-      if (confidence >= 60) confidenceEl.classList.add('high');
-      else if (confidence >= 30) confidenceEl.classList.add('medium');
+      // Hook signals give 100% confidence
+      if (detection.stopHookReceived || detection.idlePromptReceived) {
+        confidenceEl.classList.add('hook-confirmed');
+      } else if (confidence >= 60) {
+        confidenceEl.classList.add('high');
+      } else if (confidence >= 30) {
+        confidenceEl.classList.add('medium');
+      }
     } else {
       confidenceEl.style.display = 'none';
     }
diff --git a/src/web/public/index.html b/src/web/public/index.html
index d5592940..f67cb717 100644
--- a/src/web/public/index.html
+++ b/src/web/public/index.html
@@ -73,6 +73,7 @@
         <span class="detection-status" id="detectionStatus"></span>
         <span class="detection-waiting" id="detectionWaiting" style="display: none;"></span>
         <span class="detection-confidence" id="detectionConfidence"></span>
+        <span class="detection-hook" id="detectionHook" style="display: none;"></span>
         <span class="detection-ai-check" id="detectionAiCheck" style="display: none;"></span>
         <span class="respawn-spacer"></span>
         <span class="respawn-cycles">#<span id="respawnCycleCount">0</span></span>
diff --git a/src/web/public/styles.css b/src/web/public/styles.css
index ebe125df..6ea6e8a8 100644
--- a/src/web/public/styles.css
+++ b/src/web/public/styles.css
@@ -671,6 +671,31 @@ body {
   color: var(--yellow);
 }
 
+.detection-confidence.hook-confirmed {
+  background: rgba(139, 92, 246, 0.3);
+  color: var(--purple, #a78bfa);
+}
+
+.detection-hook {
+  font-size: 0.7rem;
+  padding: 0.1rem 0.4rem;
+  border-radius: 3px;
+  background: rgba(139, 92, 246, 0.15);
+  color: var(--purple, #a78bfa);
+}
+
+.detection-hook.hook-active {
+  background: rgba(139, 92, 246, 0.25);
+  color: var(--purple, #a78bfa);
+  font-weight: 500;
+  animation: pulse-hook 1.5s ease-in-out infinite;
+}
+
+@keyframes pulse-hook {
+  0%, 100% { opacity: 1; }
+  50% { opacity: 0.7; }
+}
+
 @keyframes spin {
   to { transform: rotate(360deg); }
 }
diff --git a/src/web/server.ts b/src/web/server.ts
index d74068f3..34c04eb6 100644
--- a/src/web/server.ts
+++ b/src/web/server.ts
@@ -28,6 +28,7 @@ import { generateClaudeMd } from '../templates/claude-md.js';
 import { parseRalphLoopConfig, extractCompletionPhrase } from '../ralph-config.js';
 import { writeHooksConfig } from '../hooks-config.js';
 import { subagentWatcher, type SubagentInfo, type SubagentToolCall, type SubagentProgress, type SubagentMessage } from '../subagent-watcher.js';
+import { TranscriptWatcher } from '../transcript-watcher.js';
 import { v4 as uuidv4 } from 'uuid';
 import { createRequire } from 'node:module';
 
@@ -112,7 +113,7 @@ function sanitizeHookData(data: Record<string, unknown> | undefined): Record<str
   const safeFields: Record<string, unknown> = {};
   const allowedKeys = [
     'hook_event_name', 'tool_name', 'tool_input', 'session_id',
-    'cwd', 'permission_mode', 'stop_hook_active',
+    'cwd', 'permission_mode', 'stop_hook_active', 'transcript_path',
   ];
 
   for (const key of allowedKeys) {
@@ -233,6 +234,7 @@ export class WebServer extends EventEmitter {
   private sessions: Map<string, Session> = new Map();
   private respawnControllers: Map<string, RespawnController> = new Map();
   private respawnTimers: Map<string, { timer: NodeJS.Timeout; endAt: number; startedAt: number }> = new Map();
+  private transcriptWatchers: Map<string, TranscriptWatcher> = new Map();
   private scheduledRuns: Map<string, ScheduledRun> = new Map();
   private sseClients: Set<FastifyReply> = new Set();
   private store = getStore();
@@ -1698,11 +1700,26 @@ export class WebServer extends EventEmitter {
         return createErrorResponse(ApiErrorCode.NOT_FOUND, 'Session not found');
       }
 
-      // Signal the respawn controller to block auto-accept for question prompts
-      if (event === 'elicitation_dialog') {
-        const controller = this.respawnControllers.get(sessionId);
-        if (controller) {
+      // Signal the respawn controller based on hook event type
+      const controller = this.respawnControllers.get(sessionId);
+      if (controller) {
+        if (event === 'elicitation_dialog') {
+          // Block auto-accept for question prompts
           controller.signalElicitation();
+        } else if (event === 'stop') {
+          // DEFINITIVE idle signal - Claude finished responding
+          controller.signalStopHook();
+        } else if (event === 'idle_prompt') {
+          // DEFINITIVE idle signal - Claude has been idle for 60+ seconds
+          controller.signalIdlePrompt();
+        }
+      }
+
+      // Start transcript watching if transcript_path is provided
+      if (data && typeof data === 'object' && 'transcript_path' in data) {
+        const transcriptPath = String(data.transcript_path);
+        if (transcriptPath) {
+          this.startTranscriptWatcher(sessionId, transcriptPath);
         }
       }
 
@@ -1713,6 +1730,63 @@ export class WebServer extends EventEmitter {
     });
   }
 
+  /**
+   * Start a transcript watcher for a session.
+   * Creates a new watcher or updates an existing one with the new transcript path.
+   */
+  private startTranscriptWatcher(sessionId: string, transcriptPath: string): void {
+    let watcher = this.transcriptWatchers.get(sessionId);
+
+    if (!watcher) {
+      watcher = new TranscriptWatcher();
+
+      // Wire up transcript events to the respawn controller
+      watcher.on('transcript:complete', () => {
+        const controller = this.respawnControllers.get(sessionId);
+        if (controller) {
+          controller.signalTranscriptComplete();
+        }
+        this.broadcast('transcript:complete', { sessionId, timestamp: Date.now() });
+      });
+
+      watcher.on('transcript:plan_mode', () => {
+        const controller = this.respawnControllers.get(sessionId);
+        if (controller) {
+          controller.signalTranscriptPlanMode();
+        }
+        this.broadcast('transcript:plan_mode', { sessionId, timestamp: Date.now() });
+      });
+
+      watcher.on('transcript:tool_start', (toolName: string) => {
+        this.broadcast('transcript:tool_start', { sessionId, toolName, timestamp: Date.now() });
+      });
+
+      watcher.on('transcript:tool_end', (toolName: string, isError: boolean) => {
+        this.broadcast('transcript:tool_end', { sessionId, toolName, isError, timestamp: Date.now() });
+      });
+
+      watcher.on('transcript:error', (error: Error) => {
+        console.error(`[Transcript] Error for session ${sessionId}:`, error.message);
+      });
+
+      this.transcriptWatchers.set(sessionId, watcher);
+    }
+
+    // Start or update the watcher with the transcript path
+    watcher.updatePath(transcriptPath);
+  }
+
+  /**
+   * Stop the transcript watcher for a session.
+   */
+  private stopTranscriptWatcher(sessionId: string): void {
+    const watcher = this.transcriptWatchers.get(sessionId);
+    if (watcher) {
+      watcher.stop();
+      this.transcriptWatchers.delete(sessionId);
+    }
+  }
+
   /** Persists full session state including respawn config to state.json */
   private persistSessionState(session: Session): void {
     const state = session.toState();
@@ -1852,6 +1926,9 @@ export class WebServer extends EventEmitter {
       this.respawnTimers.delete(sessionId);
     }
 
+    // Stop transcript watcher
+    this.stopTranscriptWatcher(sessionId);
+
     // Clear batches and pending state updates
     this.terminalBatches.delete(sessionId);
     this.outputBatches.delete(sessionId);
diff --git a/test/respawn-controller.test.ts b/test/respawn-controller.test.ts
index dda7f661..5dfa62d0 100644
--- a/test/respawn-controller.test.ts
+++ b/test/respawn-controller.test.ts
@@ -2531,4 +2531,158 @@ describe('RespawnController Timer Cleanup', () => {
     // Should end in stopped state without errors
     expect(controller.state).toBe('stopped');
   });
+
+});
+
+// ========== Hook-Based Detection Tests (Phase 1) ==========
+
+describe('RespawnController Hook-Based Idle Detection', () => {
+  let session: MockSession;
+  let controller: RespawnController;
+
+  beforeEach(() => {
+    session = new MockSession();
+    controller = new RespawnController(session as unknown as Session, {
+      idleTimeoutMs: 100,
+      interStepDelayMs: 50,
+      completionConfirmMs: 50,
+      noOutputTimeoutMs: 500,
+      aiIdleCheckEnabled: false,
+    });
+  });
+
+  afterEach(() => {
+    controller.stop();
+  });
+
+  it('should expose signalStopHook method', () => {
+    expect(typeof controller.signalStopHook).toBe('function');
+  });
+
+  it('should expose signalIdlePrompt method', () => {
+    expect(typeof controller.signalIdlePrompt).toBe('function');
+  });
+
+  it('should set stopHookReceived in detection status when Stop hook signaled', () => {
+    controller.start();
+    expect(controller.state).toBe('watching');
+
+    controller.signalStopHook();
+
+    const status = controller.getDetectionStatus();
+    expect(status.stopHookReceived).toBe(true);
+    expect(status.stopHookTime).not.toBeNull();
+    expect(status.confidenceLevel).toBe(100); // Hook signals are definitive
+  });
+
+  it('should include hook status in statusText when Stop hook received', () => {
+    controller.start();
+    controller.signalStopHook();
+
+    const status = controller.getDetectionStatus();
+    expect(status.statusText).toContain('Stop hook received');
+  });
+
+  it('should trigger respawn cycle after Stop hook confirmation', async () => {
+    const testController = new RespawnController(session as unknown as Session, {
+      completionConfirmMs: 50,
+      noOutputTimeoutMs: 500,
+      aiIdleCheckEnabled: false,
+    });
+
+    const cycleStarted = vi.fn();
+    testController.on('respawnCycleStarted', cycleStarted);
+
+    testController.start();
+    testController.signalStopHook();
+
+    // Wait for hook confirmation timer (3s default)
+    await new Promise(resolve => setTimeout(resolve, 3100));
+
+    expect(cycleStarted).toHaveBeenCalled();
+    testController.stop();
+  });
+
+  it('should immediately confirm idle when idle_prompt signaled (skip confirmation)', async () => {
+    const testController = new RespawnController(session as unknown as Session, {
+      completionConfirmMs: 50,
+      noOutputTimeoutMs: 500,
+      aiIdleCheckEnabled: false,
+    });
+
+    const cycleStarted = vi.fn();
+    testController.on('respawnCycleStarted', cycleStarted);
+
+    testController.start();
+    testController.signalIdlePrompt();
+
+    // idle_prompt skips confirmation and goes directly to idle
+    await new Promise(resolve => setTimeout(resolve, 100));
+
+    expect(cycleStarted).toHaveBeenCalled();
+    testController.stop();
+  });
+
+  it('should cancel Stop hook confirmation if working patterns detected', async () => {
+    const testController = new RespawnController(session as unknown as Session, {
+      completionConfirmMs: 5000, // Long enough to not interfere with test timing
+      noOutputTimeoutMs: 10000,
+      aiIdleCheckEnabled: false,
+    });
+
+    const cycleStarted = vi.fn();
+    testController.on('respawnCycleStarted', cycleStarted);
+
+    testController.start();
+    testController.signalStopHook();
+
+    // Simulate working patterns IMMEDIATELY after hook (before confirmation)
+    await new Promise(resolve => setTimeout(resolve, 100));
+    session.simulateWorking();
+
+    // Wait longer than hook confirmation delay (3s)
+    await new Promise(resolve => setTimeout(resolve, 3500));
+
+    // Cycle should NOT have started because working was detected
+    expect(cycleStarted).not.toHaveBeenCalled();
+
+    const status = testController.getDetectionStatus();
+    expect(status.stopHookReceived).toBe(false); // Reset by working detection
+    testController.stop();
+  });
+
+  it('should ignore Stop hook when not in watching state', async () => {
+    const testController = new RespawnController(session as unknown as Session, {
+      completionConfirmMs: 50,
+      noOutputTimeoutMs: 500,
+      aiIdleCheckEnabled: false,
+      sendClear: false,
+      sendInit: false,
+    });
+
+    testController.start();
+    testController.signalIdlePrompt(); // Start a cycle
+
+    await new Promise(resolve => setTimeout(resolve, 100));
+
+    // Now in sending_update state - Stop hook should be ignored
+    testController.signalStopHook();
+
+    const status = testController.getDetectionStatus();
+    expect(status.stopHookReceived).toBe(false);
+    testController.stop();
+  });
+
+  it('should have 100% confidence when hook signal is received', () => {
+    controller.start();
+
+    // Before hook - confidence should be low
+    let status = controller.getDetectionStatus();
+    expect(status.confidenceLevel).toBeLessThan(100);
+
+    // After Stop hook - confidence should be 100%
+    controller.signalStopHook();
+    status = controller.getDetectionStatus();
+    expect(status.confidenceLevel).toBe(100);
+  });
 });
diff --git a/test/transcript-watcher.test.ts b/test/transcript-watcher.test.ts
new file mode 100644
index 00000000..c286dd0f
--- /dev/null
+++ b/test/transcript-watcher.test.ts
@@ -0,0 +1,214 @@
+import { describe, it, expect, beforeEach, afterEach, vi } from 'vitest';
+import { TranscriptWatcher, TranscriptState } from '../src/transcript-watcher.js';
+import { writeFileSync, unlinkSync, mkdirSync, existsSync, appendFileSync } from 'fs';
+import { join } from 'path';
+import { tmpdir } from 'os';
+
+describe('TranscriptWatcher', () => {
+  let watcher: TranscriptWatcher;
+  let testDir: string;
+  let testFile: string;
+
+  beforeEach(() => {
+    watcher = new TranscriptWatcher();
+    testDir = join(tmpdir(), `transcript-test-${Date.now()}`);
+    if (!existsSync(testDir)) {
+      mkdirSync(testDir, { recursive: true });
+    }
+    testFile = join(testDir, 'test-transcript.jsonl');
+  });
+
+  afterEach(() => {
+    watcher.stop();
+    // Clean up test file
+    try {
+      if (existsSync(testFile)) {
+        unlinkSync(testFile);
+      }
+    } catch {
+      // Ignore cleanup errors
+    }
+  });
+
+  describe('Initialization', () => {
+    it('should start in stopped state', () => {
+      expect(watcher.isRunning()).toBe(false);
+    });
+
+    it('should have initial state with defaults', () => {
+      const state = watcher.getState();
+      expect(state.isComplete).toBe(false);
+      expect(state.toolExecuting).toBe(false);
+      expect(state.currentTool).toBeNull();
+      expect(state.hasError).toBe(false);
+      expect(state.planModeDetected).toBe(false);
+      expect(state.entryCount).toBe(0);
+    });
+  });
+
+  describe('File Watching', () => {
+    it('should start watching an existing file', () => {
+      writeFileSync(testFile, '');
+      watcher.start(testFile);
+      expect(watcher.isRunning()).toBe(true);
+    });
+
+    it('should handle non-existent file by polling', () => {
+      const nonExistent = join(testDir, 'nonexistent.jsonl');
+      watcher.start(nonExistent);
+      expect(watcher.isRunning()).toBe(true);
+    });
+
+    it('should stop watching on stop()', () => {
+      writeFileSync(testFile, '');
+      watcher.start(testFile);
+      expect(watcher.isRunning()).toBe(true);
+      watcher.stop();
+      expect(watcher.isRunning()).toBe(false);
+    });
+
+    it('should update path with updatePath()', () => {
+      const file1 = join(testDir, 'file1.jsonl');
+      const file2 = join(testDir, 'file2.jsonl');
+      writeFileSync(file1, '');
+      writeFileSync(file2, '');
+
+      watcher.start(file1);
+      expect(watcher.isRunning()).toBe(true);
+
+      watcher.updatePath(file2);
+      expect(watcher.isRunning()).toBe(true);
+    });
+  });
+
+  describe('Entry Processing', () => {
+    it('should process user entry and reset state', async () => {
+      // Start with some state
+      writeFileSync(testFile, '');
+      watcher.start(testFile);
+
+      // Add user entry
+      const userEntry = { type: 'user', timestamp: new Date().toISOString(), message: { role: 'user', content: 'test' } };
+      appendFileSync(testFile, JSON.stringify(userEntry) + '\n');
+
+      // Wait for processing
+      await new Promise(resolve => setTimeout(resolve, 100));
+
+      const state = watcher.getState();
+      expect(state.entryCount).toBeGreaterThanOrEqual(1);
+    });
+
+    it('should emit transcript:complete on result entry', async () => {
+      writeFileSync(testFile, '');
+      watcher.start(testFile);
+
+      const completeHandler = vi.fn();
+      watcher.on('transcript:complete', completeHandler);
+
+      // Add result entry
+      const resultEntry = { type: 'result', timestamp: new Date().toISOString() };
+      appendFileSync(testFile, JSON.stringify(resultEntry) + '\n');
+
+      // Wait for processing
+      await new Promise(resolve => setTimeout(resolve, 200));
+
+      expect(completeHandler).toHaveBeenCalled();
+      const state = watcher.getState();
+      expect(state.isComplete).toBe(true);
+    });
+
+    it('should track tool execution', async () => {
+      writeFileSync(testFile, '');
+      watcher.start(testFile);
+
+      const toolStartHandler = vi.fn();
+      watcher.on('transcript:tool_start', toolStartHandler);
+
+      // Add assistant entry with tool_use
+      const assistantEntry = {
+        type: 'assistant',
+        timestamp: new Date().toISOString(),
+        message: {
+          role: 'assistant',
+          content: [
+            { type: 'tool_use', name: 'Read', input: { file_path: '/test.txt' } }
+          ]
+        }
+      };
+      appendFileSync(testFile, JSON.stringify(assistantEntry) + '\n');
+
+      // Wait for processing
+      await new Promise(resolve => setTimeout(resolve, 200));
+
+      expect(toolStartHandler).toHaveBeenCalledWith('Read');
+      const state = watcher.getState();
+      expect(state.toolExecuting).toBe(true);
+      expect(state.currentTool).toBe('Read');
+    });
+
+    it('should detect plan mode from AskUserQuestion tool', async () => {
+      writeFileSync(testFile, '');
+      watcher.start(testFile);
+
+      const planModeHandler = vi.fn();
+      watcher.on('transcript:plan_mode', planModeHandler);
+
+      // Add assistant entry with AskUserQuestion
+      const assistantEntry = {
+        type: 'assistant',
+        timestamp: new Date().toISOString(),
+        message: {
+          role: 'assistant',
+          content: [
+            { type: 'tool_use', name: 'AskUserQuestion', input: { question: 'test?' } }
+          ]
+        }
+      };
+      appendFileSync(testFile, JSON.stringify(assistantEntry) + '\n');
+
+      // Wait for processing
+      await new Promise(resolve => setTimeout(resolve, 200));
+
+      expect(planModeHandler).toHaveBeenCalled();
+      const state = watcher.getState();
+      expect(state.planModeDetected).toBe(true);
+    });
+
+    it('should detect errors in result entry', async () => {
+      writeFileSync(testFile, '');
+      watcher.start(testFile);
+
+      // Add result entry with error
+      const resultEntry = {
+        type: 'result',
+        timestamp: new Date().toISOString(),
+        error: { type: 'api_error', message: 'Rate limited' }
+      };
+      appendFileSync(testFile, JSON.stringify(resultEntry) + '\n');
+
+      // Wait for processing
+      await new Promise(resolve => setTimeout(resolve, 200));
+
+      const state = watcher.getState();
+      expect(state.hasError).toBe(true);
+      expect(state.errorMessage).toContain('Rate limited');
+    });
+  });
+
+  describe('State Management', () => {
+    it('should return a copy of state', () => {
+      const state1 = watcher.getState();
+      const state2 = watcher.getState();
+      expect(state1).not.toBe(state2); // Different objects
+      expect(state1).toEqual(state2); // Same content
+    });
+
+    it('should reset state on stop()', () => {
+      writeFileSync(testFile, '');
+      watcher.start(testFile);
+      watcher.stop();
+      const state = watcher.getState();
+      expect(state.entryCount).toBe(0);
+    });
+  });
+});