diff --git a/Sources/TabManager.swift b/Sources/TabManager.swift
index e90fa1d4..0bcd5ea6 100644
--- a/Sources/TabManager.swift
+++ b/Sources/TabManager.swift
@@ -896,6 +896,26 @@ class TabManager: ObservableObject {
     /// This should never prompt: the process is already gone, and Ghostty emits the
     /// `SHOW_CHILD_EXITED` action specifically so the host app can decide what to do.
     func closePanelAfterChildExited(tabId: UUID, surfaceId: UUID) {
+        guard let tab = tabs.first(where: { $0.id == tabId }) else { return }
+        guard tab.panels[surfaceId] != nil else { return }
+
+        // Child-exit on the last panel should collapse the workspace, matching explicit close
+        // semantics (and close the window when it was the last workspace).
+        if tab.panels.count <= 1 {
+            if tabs.count <= 1 {
+                if let app = AppDelegate.shared {
+                    app.notificationStore?.clearNotifications(forTabId: tabId)
+                    app.closeMainWindowContainingTabId(tabId)
+                } else {
+                    // Headless/test fallback when no AppDelegate window context exists.
+                    closeRuntimeSurface(tabId: tabId, surfaceId: surfaceId)
+                }
+            } else {
+                closeWorkspace(tab)
+            }
+            return
+        }
+
         closeRuntimeSurface(tabId: tabId, surfaceId: surfaceId)
     }
 
diff --git a/cmuxTests/CmuxWebViewKeyEquivalentTests.swift b/cmuxTests/CmuxWebViewKeyEquivalentTests.swift
index 0864f9d5..27e86aec 100644
--- a/cmuxTests/CmuxWebViewKeyEquivalentTests.swift
+++ b/cmuxTests/CmuxWebViewKeyEquivalentTests.swift
@@ -877,6 +877,78 @@ final class WorkspaceReorderTests: XCTestCase {
     }
 }
 
+@MainActor
+final class TabManagerChildExitCloseTests: XCTestCase {
+    func testChildExitOnLastPanelClosesSelectedWorkspaceAndKeepsIndexStable() {
+        let manager = TabManager()
+        let first = manager.tabs[0]
+        let second = manager.addWorkspace()
+        let third = manager.addWorkspace()
+
+        manager.selectWorkspace(second)
+        XCTAssertEqual(manager.selectedTabId, second.id)
+
+        guard let secondPanelId = second.focusedPanelId else {
+            XCTFail("Expected focused panel in selected workspace")
+            return
+        }
+
+        manager.closePanelAfterChildExited(tabId: second.id, surfaceId: secondPanelId)
+
+        XCTAssertEqual(manager.tabs.map(\.id), [first.id, third.id])
+        XCTAssertEqual(
+            manager.selectedTabId,
+            third.id,
+            "Expected selection to stay at the same index after deleting the selected workspace"
+        )
+    }
+
+    func testChildExitOnLastPanelInLastWorkspaceSelectsPreviousWorkspace() {
+        let manager = TabManager()
+        let first = manager.tabs[0]
+        let second = manager.addWorkspace()
+
+        manager.selectWorkspace(second)
+        XCTAssertEqual(manager.selectedTabId, second.id)
+
+        guard let secondPanelId = second.focusedPanelId else {
+            XCTFail("Expected focused panel in selected workspace")
+            return
+        }
+
+        manager.closePanelAfterChildExited(tabId: second.id, surfaceId: secondPanelId)
+
+        XCTAssertEqual(manager.tabs.map(\.id), [first.id])
+        XCTAssertEqual(
+            manager.selectedTabId,
+            first.id,
+            "Expected previous workspace to be selected after closing the last-index workspace"
+        )
+    }
+
+    func testChildExitOnNonLastPanelClosesOnlyPanel() {
+        let manager = TabManager()
+        guard let workspace = manager.selectedWorkspace,
+              let initialPanelId = workspace.focusedPanelId else {
+            XCTFail("Expected selected workspace with focused panel")
+            return
+        }
+
+        guard let splitPanel = workspace.newTerminalSplit(from: initialPanelId, orientation: .horizontal) else {
+            XCTFail("Expected split terminal panel to be created")
+            return
+        }
+
+        let panelCountBefore = workspace.panels.count
+        manager.closePanelAfterChildExited(tabId: workspace.id, surfaceId: splitPanel.id)
+
+        XCTAssertEqual(manager.tabs.count, 1)
+        XCTAssertEqual(manager.tabs.first?.id, workspace.id)
+        XCTAssertEqual(workspace.panels.count, panelCountBefore - 1)
+        XCTAssertNotNil(workspace.panels[initialPanelId], "Expected sibling panel to remain")
+    }
+}
+
 @MainActor
 final class TabManagerPendingUnfocusPolicyTests: XCTestCase {
     func testDoesNotUnfocusWhenPendingTabIsCurrentlySelected() {