diff --git a/lua/opencode/api_client.lua b/lua/opencode/api_client.lua
index f0362cc8..b2b0862e 100644
--- a/lua/opencode/api_client.lua
+++ b/lua/opencode/api_client.lua
@@ -1,4 +1,5 @@
 local server_job = require('opencode.server_job')
+local state = require('opencode.state')
 
 --- @class OpencodeApiClient
 --- @field base_url string The base URL of the opencode server
@@ -62,6 +63,10 @@ function OpencodeApiClient:_call(endpoint, method, body, query)
   local url = self.base_url .. endpoint
 
   if query then
+    if not query.directory then
+      query.directory = state.current_cwd or vim.fn.getcwd()
+    end
+
     local params = {}
 
     for k, v in pairs(query) do
diff --git a/lua/opencode/core.lua b/lua/opencode/core.lua
index aea4b478..30eac5b5 100644
--- a/lua/opencode/core.lua
+++ b/lua/opencode/core.lua
@@ -10,6 +10,7 @@ local config = require('opencode.config')
 local image_handler = require('opencode.image_handler')
 local Promise = require('opencode.promise')
 local permission_window = require('opencode.ui.permission_window')
+local log = require('opencode.log')
 
 local M = {}
 M._abort_count = 0
@@ -57,6 +58,27 @@ M.open_if_closed = Promise.async(function(opts)
   end
 end)
 
+M.is_prompting_allowed = function()
+  local mentioned_files = context.get_context().mentioned_files or {}
+  local allowed, err_msg = util.check_prompt_allowed(config.prompt_guard, mentioned_files)
+  if not allowed then
+    vim.notify(err_msg or 'Prompt denied by prompt_guard', vim.log.levels.ERROR)
+  end
+  return allowed
+end
+
+M.check_cwd = function()
+  if state.current_cwd ~= vim.fn.getcwd() then
+    log.debug(
+      'CWD changed since last check, resetting session and context',
+      { current_cwd = state.current_cwd, new_cwd = vim.fn.getcwd() }
+    )
+    state.current_cwd = vim.fn.getcwd()
+    state.active_session = nil
+    context.unload_attachments()
+  end
+end
+
 ---@param opts? OpenOpts
 M.open = Promise.async(function(opts)
   opts = opts or { focus = 'input', new_session = false }
@@ -69,13 +91,7 @@ M.open = Promise.async(function(opts)
 
   local are_windows_closed = state.windows == nil
   if are_windows_closed then
-    -- Check if whether prompting will be allowed
-    local mentioned_files = context.get_context().mentioned_files or {}
-    local allowed, err_msg = util.check_prompt_allowed(config.prompt_guard, mentioned_files)
-    if not allowed then
-      vim.notify(err_msg or 'Prompts will be denied by prompt_guard', vim.log.levels.WARN)
-    end
-
+    M.is_prompting_allowed()
     state.windows = ui.create_windows()
   end
 
@@ -85,22 +101,16 @@ M.open = Promise.async(function(opts)
     ui.focus_output({ restore_position = are_windows_closed })
   end
 
-  local server
-  local server_ok, server_err = pcall(function()
-    server = server_job.ensure_server():await()
-  end)
+  local server = server_job.ensure_server():await()
 
-  if not server_ok or not server then
+  if not server then
     state.is_opening = false
-    vim.notify('Failed to start opencode server: ' .. tostring(server_err or 'Unknown error'), vim.log.levels.ERROR)
-    return Promise.new():reject(server_err or 'Server failed to start')
+    return Promise.new():reject('Server failed to start')
   end
 
-  state.opencode_server = server
+  M.check_cwd()
 
   local ok, err = pcall(function()
-    state.opencode_server = server
-
     if opts.new_session then
       state.active_session = nil
       state.last_sent_context = nil
@@ -109,6 +119,7 @@ M.open = Promise.async(function(opts)
       M.ensure_current_mode():await()
 
       state.active_session = M.create_new_session():await()
+      log.debug('Created new session on open', { session = state.active_session.id })
     else
       M.ensure_current_mode():await()
       if not state.active_session then
@@ -543,6 +554,24 @@ function M.paste_image_from_clipboard()
   return image_handler.paste_image_from_clipboard()
 end
 
+--- Handle working directory changes loading the appropriate session.
+--- @return Promise<void>
+M.handle_directory_change = Promise.async(function()
+  local log = require('opencode.log')
+
+  local cwd = vim.fn.getcwd()
+  log.debug('Working directory change %s', vim.inspect({ cwd = cwd }))
+  vim.notify('Loading last session for new working dir [' .. cwd .. ']', vim.log.levels.INFO)
+
+  state.active_session = nil
+  state.last_sent_context = nil
+  context.unload_attachments()
+
+  state.active_session = session.get_last_workspace_session():await() or M.create_new_session():await()
+
+  log.debug('Loaded session for new working dir ' .. vim.inspect({ session = state.active_session }))
+end)
+
 function M.setup()
   state.subscribe('opencode_server', on_opencode_server)
   state.subscribe('user_message_count', M._on_user_message_count_change)
diff --git a/lua/opencode/opencode_server.lua b/lua/opencode/opencode_server.lua
index e63a1b6d..5db72fcc 100644
--- a/lua/opencode/opencode_server.lua
+++ b/lua/opencode/opencode_server.lua
@@ -34,7 +34,6 @@ end
 --- Create a new ServerJob instance
 --- @return OpencodeServer
 function OpencodeServer.new()
-  local log = require('opencode.log')
   ensure_vim_leave_autocmd()
 
   return setmetatable({
diff --git a/lua/opencode/server_job.lua b/lua/opencode/server_job.lua
index 789ab19b..c571c83e 100644
--- a/lua/opencode/server_job.lua
+++ b/lua/opencode/server_job.lua
@@ -2,6 +2,7 @@ local state = require('opencode.state')
 local curl = require('opencode.curl')
 local Promise = require('opencode.promise')
 local opencode_server = require('opencode.opencode_server')
+local log = require('opencode.log')
 
 local M = {}
 M.requests = {}
@@ -146,6 +147,8 @@ function M.ensure_server()
       promise:resolve(state.opencode_server)
     end,
     on_error = function(err)
+      log.error('Error starting opencode server: ' .. vim.inspect(err))
+      vim.notify('Failed to start opencode server', vim.log.levels.ERROR)
       promise:reject(err)
     end,
     on_exit = function(exit_opts)
diff --git a/lua/opencode/state.lua b/lua/opencode/state.lua
index 0f43666f..c8644db2 100644
--- a/lua/opencode/state.lua
+++ b/lua/opencode/state.lua
@@ -43,6 +43,7 @@
 ---@field pre_zoom_width integer|nil
 ---@field required_version string
 ---@field opencode_cli_version string|nil
+---@field current_cwd string|nil
 ---@field append fun( key:string, value:any)
 ---@field remove fun( key:string, idx:number)
 ---@field subscribe fun( key:string|nil, cb:fun(key:string, new_val:any, old_val:any))
@@ -97,6 +98,7 @@ local _state = {
   -- versions
   required_version = '0.6.3',
   opencode_cli_version = nil,
+  current_cwd = vim.fn.getcwd(),
 }
 
 -- Listener registry: { [key] = {cb1, cb2, ...}, ['*'] = {cb1, ...} }
diff --git a/lua/opencode/ui/autocmds.lua b/lua/opencode/ui/autocmds.lua
index 7c780eef..9b3fef2d 100644
--- a/lua/opencode/ui/autocmds.lua
+++ b/lua/opencode/ui/autocmds.lua
@@ -48,6 +48,16 @@ function M.setup_autocmds(windows)
     end,
   })
 
+  vim.api.nvim_create_autocmd('DirChanged', {
+    group = group,
+    callback = function(event)
+      local state = require('opencode.state')
+      state.current_cwd = event.file
+      local core = require('opencode.core')
+      core.handle_directory_change()
+    end,
+  })
+
   if require('opencode.config').ui.position == 'current' then
     vim.api.nvim_create_autocmd('BufEnter', {
       group = group,
diff --git a/tests/unit/api_client_spec.lua b/tests/unit/api_client_spec.lua
index ce7445d1..130d1bc7 100644
--- a/tests/unit/api_client_spec.lua
+++ b/tests/unit/api_client_spec.lua
@@ -62,6 +62,13 @@ describe('api_client', function()
     local server_job = require('opencode.server_job')
     local original_call_api = server_job.call_api
     local captured_calls = {}
+    local original_cwd = vim.fn.getcwd
+    local state = require('opencode.state')
+    state.current_cwd = '/current/directory'
+
+    vim.fn.getcwd = function()
+      return '/current/directory'
+    end
 
     server_job.call_api = function(url, method, body)
       table.insert(captured_calls, { url = url, method = method, body = body })
@@ -74,7 +81,7 @@ describe('api_client', function()
 
     -- Test without query params
     client:list_projects()
-    assert.are.equal('http://localhost:8080/project', captured_calls[1].url)
+    assert.are.equal('http://localhost:8080/project?directory=/current/directory', captured_calls[1].url)
     assert.are.equal('GET', captured_calls[1].method)
 
     -- Test with query params
@@ -95,5 +102,6 @@ describe('api_client', function()
 
     -- Restore original function
     server_job.call_api = original_call_api
+    vim.fn.getcwd = original_cwd
   end)
 end)
diff --git a/tests/unit/core_spec.lua b/tests/unit/core_spec.lua
index 94e5f843..623d48fb 100644
--- a/tests/unit/core_spec.lua
+++ b/tests/unit/core_spec.lua
@@ -152,6 +152,37 @@ describe('opencode.core', function()
       }, state.windows)
     end)
 
+    it('ensure the current cwd is correct when opening', function()
+      local cwd = vim.fn.getcwd()
+      state.current_cwd = nil
+      core.open({ new_session = false, focus = 'input' }):wait()
+      assert.equal(cwd, state.current_cwd)
+    end)
+
+    it('reload the active_session if cwd has changed since last session', function()
+      local original_getcwd = vim.fn.getcwd
+
+      state.windows = nil
+      state.active_session = { id = 'old-session' }
+      state.current_cwd = '/some/old/path'
+      vim.fn.getcwd = function()
+        return '/some/new/path'
+      end
+      session.get_last_workspace_session:revert()
+      stub(session, 'get_last_workspace_session').invokes(function()
+        local p = Promise.new()
+        p:resolve({ id = 'new_cwd-test-session' })
+        return p
+      end)
+
+      core.open({ new_session = false, focus = 'input' }):wait()
+
+      assert.truthy(state.active_session)
+      assert.equal('new_cwd-test-session', state.active_session.id)
+      -- Restore original cwd function
+      vim.fn.getcwd = original_getcwd
+    end)
+
     it('handles new session properly', function()
       state.windows = nil
       state.active_session = { id = 'old-session' }
@@ -469,6 +500,58 @@ describe('opencode.core', function()
     end)
   end)
 
+  describe('handle_directory_change', function()
+    local server_job
+    local context
+
+    before_each(function()
+      server_job = require('opencode.server_job')
+      context = require('opencode.context')
+
+      stub(context, 'unload_attachments')
+    end)
+
+    after_each(function()
+      context.unload_attachments:revert()
+    end)
+
+    it('clears active session and context', function()
+      state.active_session = { id = 'old-session' }
+      state.last_sent_context = { some = 'context' }
+
+      core.handle_directory_change():wait()
+
+      -- Should be set to the new session from get_last_workspace_session stub
+      assert.truthy(state.active_session)
+      assert.equal('test-session', state.active_session.id)
+      assert.is_nil(state.last_sent_context)
+      assert.stub(context.unload_attachments).was_called()
+    end)
+
+    it('loads last workspace session for new directory', function()
+      core.handle_directory_change():wait()
+
+      assert.truthy(state.active_session)
+      assert.equal('test-session', state.active_session.id)
+      assert.stub(session.get_last_workspace_session).was_called()
+    end)
+
+    it('creates new session when no last session exists', function()
+      -- Override stub to return nil (no last session)
+      session.get_last_workspace_session:revert()
+      stub(session, 'get_last_workspace_session').invokes(function()
+        local p = Promise.new()
+        p:resolve(nil)
+        return p
+      end)
+
+      core.handle_directory_change():wait()
+
+      assert.truthy(state.active_session)
+      assert.truthy(state.active_session.id)
+    end)
+  end)
+
   describe('switch_to_mode', function()
     it('sets current model from config file when mode has a model configured', function()
       local Promise = require('opencode.promise')