diff --git a/features/shell.feature b/features/shell.feature
index 301c61bc..de31c95b 100644
--- a/features/shell.feature
+++ b/features/shell.feature
@@ -60,3 +60,40 @@ Feature: WordPress REPL
       bool(true)
       """
     And STDERR should be empty
+
+  Scenario: Restart shell
+    Given a WP install
+    And a session file:
+      """
+      $a = 1;
+      restart
+      $b = 2;
+      """
+
+    When I run `wp shell --basic < session`
+    Then STDOUT should contain:
+      """
+      Restarting shell...
+      """
+    And STDOUT should contain:
+      """
+      => int(2)
+      """
+
+  Scenario: Exit shell
+    Given a WP install
+    And a session file:
+      """
+      $a = 1;
+      exit
+      """
+
+    When I run `wp shell --basic < session`
+    Then STDOUT should contain:
+      """
+      => int(1)
+      """
+    And STDOUT should not contain:
+      """
+      exit
+      """
diff --git a/src/Shell_Command.php b/src/Shell_Command.php
index edd2c611..38a2212e 100644
--- a/src/Shell_Command.php
+++ b/src/Shell_Command.php
@@ -19,14 +19,37 @@ class Shell_Command extends WP_CLI_Command {
 	 * : Force the use of WP-CLI's built-in PHP REPL, even if the Boris or
 	 * PsySH PHP REPLs are available.
 	 *
+	 * [--watch=<path>]
+	 * : Watch a file or directory for changes and automatically restart the shell.
+	 * Only works with the built-in REPL (--basic).
+	 *
 	 * ## EXAMPLES
 	 *
 	 *     # Call get_bloginfo() to get the name of the site.
 	 *     $ wp shell
 	 *     wp> get_bloginfo( 'name' );
 	 *     => string(6) "WP-CLI"
+	 *
+	 *     # Restart the shell to reload code changes.
+	 *     $ wp shell
+	 *     wp> restart
+	 *     Restarting shell...
+	 *     wp>
+	 *
+	 *     # Watch a directory for changes and auto-restart.
+	 *     $ wp shell --watch=wp-content/plugins/my-plugin
+	 *     wp> // Make changes to files in the plugin directory
+	 *     Detected changes in wp-content/plugins/my-plugin, restarting shell...
+	 *     wp>
 	 */
 	public function __invoke( $_, $assoc_args ) {
+		$watch_path = Utils\get_flag_value( $assoc_args, 'watch', false );
+
+		if ( $watch_path && ! Utils\get_flag_value( $assoc_args, 'basic' ) ) {
+			WP_CLI::warning( 'The --watch option only works with the built-in REPL. Enabling --basic mode.' );
+			$assoc_args['basic'] = true;
+		}
+
 		$class = WP_CLI\Shell\REPL::class;
 
 		$implementations = array(
@@ -55,8 +78,36 @@ public function __invoke( $_, $assoc_args ) {
 			/**
 			 * @var class-string<WP_CLI\Shell\REPL> $class
 			 */
-			$repl = new $class( 'wp> ' );
-			$repl->start();
+			if ( $watch_path ) {
+				$watch_path = $this->resolve_watch_path( $watch_path );
+			}
+
+			do {
+				$repl = new $class( 'wp> ' );
+				if ( $watch_path ) {
+					$repl->set_watch_path( $watch_path );
+				}
+				$exit_code = $repl->start();
+			} while ( WP_CLI\Shell\REPL::EXIT_CODE_RESTART === $exit_code );
 		}
 	}
+
+	/**
+	 * Resolve and validate the watch path.
+	 *
+	 * @param string $path Path to watch.
+	 * @return string Absolute path to watch.
+	 */
+	private function resolve_watch_path( $path ) {
+		if ( ! file_exists( $path ) ) {
+			WP_CLI::error( "Watch path does not exist: {$path}" );
+		}
+
+		$realpath = realpath( $path );
+		if ( false === $realpath ) {
+			WP_CLI::error( "Could not resolve watch path: {$path}" );
+		}
+
+		return $realpath;
+	}
 }
diff --git a/src/WP_CLI/Shell/REPL.php b/src/WP_CLI/Shell/REPL.php
index 15697bf0..418d15eb 100644
--- a/src/WP_CLI/Shell/REPL.php
+++ b/src/WP_CLI/Shell/REPL.php
@@ -10,21 +10,53 @@ class REPL {
 
 	private $history_file;
 
+	private $watch_path;
+
+	private $watch_mtime;
+
+	const EXIT_CODE_RESTART = 10;
+
 	public function __construct( $prompt ) {
 		$this->prompt = $prompt;
 
 		$this->set_history_file();
 	}
 
+	/**
+	 * Set a path to watch for changes.
+	 *
+	 * @param string $path Path to watch for changes.
+	 */
+	public function set_watch_path( $path ) {
+		$this->watch_path  = $path;
+		$this->watch_mtime = $this->get_recursive_mtime( $path );
+	}
+
 	public function start() {
-		// @phpstan-ignore while.alwaysTrue
 		while ( true ) {
+			// Check for file changes if watching
+			if ( $this->watch_path && $this->has_changes() ) {
+				WP_CLI::log( "Detected changes in {$this->watch_path}, restarting shell..." );
+				return self::EXIT_CODE_RESTART;
+			}
+
 			$line = $this->prompt();
 
 			if ( '' === $line ) {
 				continue;
 			}
 
+			// Check for special exit command
+			if ( 'exit' === trim( $line ) ) {
+				return 0;
+			}
+
+			// Check for special restart command
+			if ( 'restart' === trim( $line ) ) {
+				WP_CLI::log( 'Restarting shell...' );
+				return self::EXIT_CODE_RESTART;
+			}
+
 			$line = rtrim( $line, ';' ) . ';';
 
 			if ( self::starts_with( self::non_expressions(), $line ) ) {
@@ -153,4 +185,53 @@ private function set_history_file() {
 	private static function starts_with( $tokens, $line ) {
 		return preg_match( "/^($tokens)[\(\s]+/", $line );
 	}
+
+	/**
+	 * Check if the watched path has changes.
+	 *
+	 * @return bool True if changes detected, false otherwise.
+	 */
+	private function has_changes() {
+		if ( ! $this->watch_path ) {
+			return false;
+		}
+
+		$current_mtime = $this->get_recursive_mtime( $this->watch_path );
+		return $current_mtime !== $this->watch_mtime;
+	}
+
+	/**
+	 * Get the most recent modification time for a path recursively.
+	 *
+	 * @param string $path Path to check.
+	 * @return int Most recent modification time.
+	 */
+	private function get_recursive_mtime( $path ) {
+		$mtime = 0;
+
+		if ( is_file( $path ) ) {
+			$file_mtime = filemtime( $path );
+			return false !== $file_mtime ? $file_mtime : 0;
+		}
+
+		if ( is_dir( $path ) ) {
+			$dir_mtime = filemtime( $path );
+			$mtime     = false !== $dir_mtime ? $dir_mtime : 0;
+
+			$iterator = new \RecursiveIteratorIterator(
+				new \RecursiveDirectoryIterator( $path, \RecursiveDirectoryIterator::SKIP_DOTS ),
+				\RecursiveIteratorIterator::SELF_FIRST
+			);
+
+			foreach ( $iterator as $file ) {
+				/** @var \SplFileInfo $file */
+				$file_mtime = $file->getMTime();
+				if ( $file_mtime > $mtime ) {
+					$mtime = $file_mtime;
+				}
+			}
+		}
+
+		return $mtime;
+	}
 }