diff --git a/packages/cli/src/ui/AppContainer.tsx b/packages/cli/src/ui/AppContainer.tsx
index e7b6af7eb9..17e08b54ea 100644
--- a/packages/cli/src/ui/AppContainer.tsx
+++ b/packages/cli/src/ui/AppContainer.tsx
@@ -668,7 +668,7 @@ Logging in with Google... Please restart Gemini CLI to continue.
   const [showIdeRestartPrompt, setShowIdeRestartPrompt] = useState(false);
 
   const { isFolderTrustDialogOpen, handleFolderTrustSelect, isRestarting } =
-    useFolderTrust(settings, config, setIsTrustedFolder, refreshStatic);
+    useFolderTrust(settings, setIsTrustedFolder, refreshStatic);
   const { needsRestart: ideNeedsRestart } = useIdeTrustListener();
   const isInitialMount = useRef(true);
 
diff --git a/packages/cli/src/ui/hooks/useFolderTrust.test.ts b/packages/cli/src/ui/hooks/useFolderTrust.test.ts
index 180593fa9f..821e65ec2f 100644
--- a/packages/cli/src/ui/hooks/useFolderTrust.test.ts
+++ b/packages/cli/src/ui/hooks/useFolderTrust.test.ts
@@ -22,7 +22,6 @@ vi.mock('process', () => ({
 
 describe('useFolderTrust', () => {
   let mockSettings: LoadedSettings;
-  let mockConfig: unknown;
   let mockTrustedFolders: LoadedTrustedFolders;
   let loadTrustedFoldersSpy: vi.SpyInstance;
   let isWorkspaceTrustedSpy: vi.SpyInstance;
@@ -41,8 +40,6 @@ describe('useFolderTrust', () => {
       setValue: vi.fn(),
     } as unknown as LoadedSettings;
 
-    mockConfig = {} as unknown;
-
     mockTrustedFolders = {
       setValue: vi.fn(),
     } as unknown as LoadedTrustedFolders;
@@ -63,7 +60,7 @@ describe('useFolderTrust', () => {
   it('should not open dialog when folder is already trusted', () => {
     isWorkspaceTrustedSpy.mockReturnValue(true);
     const { result } = renderHook(() =>
-      useFolderTrust(mockSettings, mockConfig, onTrustChange, refreshStatic),
+      useFolderTrust(mockSettings, onTrustChange, refreshStatic),
     );
     expect(result.current.isFolderTrustDialogOpen).toBe(false);
     expect(onTrustChange).toHaveBeenCalledWith(true);
@@ -72,7 +69,7 @@ describe('useFolderTrust', () => {
   it('should not open dialog when folder is already untrusted', () => {
     isWorkspaceTrustedSpy.mockReturnValue(false);
     const { result } = renderHook(() =>
-      useFolderTrust(mockSettings, mockConfig, onTrustChange, refreshStatic),
+      useFolderTrust(mockSettings, onTrustChange, refreshStatic),
     );
     expect(result.current.isFolderTrustDialogOpen).toBe(false);
     expect(onTrustChange).toHaveBeenCalledWith(false);
@@ -81,7 +78,7 @@ describe('useFolderTrust', () => {
   it('should open dialog when folder trust is undefined', () => {
     isWorkspaceTrustedSpy.mockReturnValue(undefined);
     const { result } = renderHook(() =>
-      useFolderTrust(mockSettings, mockConfig, onTrustChange, refreshStatic),
+      useFolderTrust(mockSettings, onTrustChange, refreshStatic),
     );
     expect(result.current.isFolderTrustDialogOpen).toBe(true);
     expect(onTrustChange).toHaveBeenCalledWith(undefined);
@@ -92,7 +89,7 @@ describe('useFolderTrust', () => {
       .mockReturnValueOnce(undefined)
       .mockReturnValueOnce(true);
     const { result } = renderHook(() =>
-      useFolderTrust(mockSettings, mockConfig, onTrustChange, refreshStatic),
+      useFolderTrust(mockSettings, onTrustChange, refreshStatic),
     );
 
     isWorkspaceTrustedSpy.mockReturnValue(true);
@@ -114,7 +111,7 @@ describe('useFolderTrust', () => {
       .mockReturnValueOnce(undefined)
       .mockReturnValueOnce(true);
     const { result } = renderHook(() =>
-      useFolderTrust(mockSettings, mockConfig, onTrustChange, refreshStatic),
+      useFolderTrust(mockSettings, onTrustChange, refreshStatic),
     );
 
     act(() => {
@@ -134,7 +131,7 @@ describe('useFolderTrust', () => {
       .mockReturnValueOnce(undefined)
       .mockReturnValueOnce(false);
     const { result } = renderHook(() =>
-      useFolderTrust(mockSettings, mockConfig, onTrustChange, refreshStatic),
+      useFolderTrust(mockSettings, onTrustChange, refreshStatic),
     );
 
     act(() => {
@@ -146,14 +143,14 @@ describe('useFolderTrust', () => {
       TrustLevel.DO_NOT_TRUST,
     );
     expect(onTrustChange).toHaveBeenLastCalledWith(false);
-    expect(result.current.isRestarting).toBe(false);
-    expect(result.current.isFolderTrustDialogOpen).toBe(false);
+    expect(result.current.isRestarting).toBe(true);
+    expect(result.current.isFolderTrustDialogOpen).toBe(true);
   });
 
   it('should do nothing for default choice', () => {
     isWorkspaceTrustedSpy.mockReturnValue(undefined);
     const { result } = renderHook(() =>
-      useFolderTrust(mockSettings, mockConfig, onTrustChange, refreshStatic),
+      useFolderTrust(mockSettings, onTrustChange, refreshStatic),
     );
 
     act(() => {
@@ -171,15 +168,15 @@ describe('useFolderTrust', () => {
   it('should set isRestarting to true when trust status changes from false to true', () => {
     isWorkspaceTrustedSpy.mockReturnValueOnce(false).mockReturnValueOnce(true); // Initially untrusted, then trusted
     const { result } = renderHook(() =>
-      useFolderTrust(mockSettings, mockConfig, onTrustChange, refreshStatic),
+      useFolderTrust(mockSettings, onTrustChange, refreshStatic),
     );
 
     act(() => {
       result.current.handleFolderTrustSelect(FolderTrustChoice.TRUST_FOLDER);
     });
 
-    expect(result.current.isRestarting).toBe(false);
-    expect(result.current.isFolderTrustDialogOpen).toBe(false); // Dialog should close after selection
+    expect(result.current.isRestarting).toBe(true);
+    expect(result.current.isFolderTrustDialogOpen).toBe(true); // Dialog should stay open
   });
 
   it('should not set isRestarting to true when trust status does not change', () => {
@@ -187,7 +184,7 @@ describe('useFolderTrust', () => {
       .mockReturnValueOnce(undefined)
       .mockReturnValueOnce(true); // Initially undefined, then trust
     const { result } = renderHook(() =>
-      useFolderTrust(mockSettings, mockConfig, onTrustChange, refreshStatic),
+      useFolderTrust(mockSettings, onTrustChange, refreshStatic),
     );
 
     act(() => {
@@ -201,7 +198,7 @@ describe('useFolderTrust', () => {
   it('should call refreshStatic when dialog opens and closes', () => {
     isWorkspaceTrustedSpy.mockReturnValue(undefined);
     const { result } = renderHook(() =>
-      useFolderTrust(mockSettings, mockConfig, onTrustChange, refreshStatic),
+      useFolderTrust(mockSettings, onTrustChange, refreshStatic),
     );
 
     // The hook runs, isFolderTrustDialogOpen becomes true, useEffect triggers.
diff --git a/packages/cli/src/ui/hooks/useFolderTrust.ts b/packages/cli/src/ui/hooks/useFolderTrust.ts
index 93e019ae20..ddefc8827f 100644
--- a/packages/cli/src/ui/hooks/useFolderTrust.ts
+++ b/packages/cli/src/ui/hooks/useFolderTrust.ts
@@ -5,7 +5,6 @@
  */
 
 import { useState, useCallback, useEffect } from 'react';
-import { type Config } from '@google/gemini-cli-core';
 import type { LoadedSettings } from '../../config/settings.js';
 import { FolderTrustChoice } from '../components/FolderTrustDialog.js';
 import {
@@ -17,13 +16,12 @@ import * as process from 'node:process';
 
 export const useFolderTrust = (
   settings: LoadedSettings,
-  config: Config,
   onTrustChange: (isTrusted: boolean | undefined) => void,
   refreshStatic: () => void,
 ) => {
   const [isTrusted, setIsTrusted] = useState<boolean | undefined>(undefined);
   const [isFolderTrustDialogOpen, setIsFolderTrustDialogOpen] = useState(false);
-  const [isRestarting] = useState(false);
+  const [isRestarting, setIsRestarting] = useState(false);
 
   const folderTrust = settings.merged.security?.folderTrust?.enabled;
 
@@ -46,6 +44,8 @@ export const useFolderTrust = (
       const cwd = process.cwd();
       let trustLevel: TrustLevel;
 
+      const wasTrusted = isTrusted ?? true;
+
       switch (choice) {
         case FolderTrustChoice.TRUST_FOLDER:
           trustLevel = TrustLevel.TRUST_FOLDER;
@@ -61,12 +61,21 @@ export const useFolderTrust = (
       }
 
       trustedFolders.setValue(cwd, trustLevel);
-      const trusted = isWorkspaceTrusted(settings.merged);
-      setIsTrusted(trusted);
-      setIsFolderTrustDialogOpen(false);
-      onTrustChange(trusted);
+      const currentIsTrusted =
+        trustLevel === TrustLevel.TRUST_FOLDER ||
+        trustLevel === TrustLevel.TRUST_PARENT;
+      setIsTrusted(currentIsTrusted);
+      onTrustChange(currentIsTrusted);
+
+      const needsRestart = wasTrusted !== currentIsTrusted;
+      if (needsRestart) {
+        setIsRestarting(true);
+        setIsFolderTrustDialogOpen(true);
+      } else {
+        setIsFolderTrustDialogOpen(false);
+      }
     },
-    [settings.merged, onTrustChange],
+    [onTrustChange, isTrusted],
   );
 
   return {