fix(policy): refactor policy dialog to remove process.exit and fix integration tests

- Refactored `PolicyUpdateDialog` to remove side effects (`process.exit`, `relaunchApp`) and delegate logic to parent.
- Updated `AppContainer` to handle relaunch logic.
- Added comprehensive unit tests for `PolicyUpdateDialog`.
- Fixed `project-policy-cli.test.ts` to correctly mock `PolicyIntegrityManager`.
- Fixed typo in `packages/core/src/policy/config.ts`.

packages/cli/src/config/project-policy-cli.test.ts

@@ -32,6 +32,14 @@ vi.mock('@google/gemini-cli-core', async () => {
       checkers: [],
     }),
     getVersion: vi.fn().mockResolvedValue('test-version'),
+    PolicyIntegrityManager: vi.fn().mockImplementation(() => ({
+      checkIntegrity: vi.fn().mockResolvedValue({
+        status: 'match', // IntegrityStatus.MATCH
+        hash: 'test-hash',
+        fileCount: 1,
+      }),
+    })),
+    IntegrityStatus: { MATCH: 'match', NEW: 'new', MISMATCH: 'mismatch' },
   };
 });
 

packages/cli/src/ui/AppContainer.tsx

@@ -122,7 +122,7 @@ import { appEvents, AppEvent, TransientMessageType } from '../utils/events.js';
 import { type UpdateObject } from './utils/updateCheck.js';
 import { setUpdateHandler } from '../utils/handleAutoUpdate.js';
 import { registerCleanup, runExitCleanup } from '../utils/cleanup.js';
-import { RELAUNCH_EXIT_CODE } from '../utils/processUtils.js';
+import { RELAUNCH_EXIT_CODE, relaunchApp } from '../utils/processUtils.js';
 import type { SessionInfo } from '../utils/sessionUtils.js';
 import { useMessageQueue } from './hooks/useMessageQueue.js';
 import { useMcpStatus } from './hooks/useMcpStatus.js';
@@ -1462,6 +1462,10 @@ Logging in with Google... Restarting Gemini CLI to continue.
           policyUpdateConfirmationRequest.newHash,
         );
         setIsRestartingPolicyUpdate(true);
+        // Give time for the UI to render the restarting message
+        setTimeout(async () => {
+          await relaunchApp();
+        }, 250);
       } else {
         setIsPolicyUpdateDialogOpen(false);
       }

packages/cli/src/ui/components/PolicyUpdateDialog.test.tsx

@@ -0,0 +1,120 @@
+/**
+ * @license
+ * Copyright 2026 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { describe, it, expect, vi, afterEach } from 'vitest';
+import { act } from 'react';
+import { renderWithProviders } from '../../test-utils/render.js';
+import { waitFor } from '../../test-utils/async.js';
+import {
+  PolicyUpdateDialog,
+  PolicyUpdateChoice,
+} from './PolicyUpdateDialog.js';
+
+describe('PolicyUpdateDialog', () => {
+  afterEach(() => {
+    vi.clearAllMocks();
+  });
+
+  it('renders correctly with default props', () => {
+    const onSelect = vi.fn();
+    const { lastFrame } = renderWithProviders(
+      <PolicyUpdateDialog
+        onSelect={onSelect}
+        scope="project"
+        identifier="/test/path"
+        isRestarting={false}
+      />,
+    );
+
+    const output = lastFrame();
+    expect(output).toContain('New or changed project policies detected');
+    expect(output).toContain('Location: /test/path');
+    expect(output).toContain('Accept and Load');
+    expect(output).toContain('Ignore');
+  });
+
+  it('calls onSelect with ACCEPT when accept option is chosen', async () => {
+    const onSelect = vi.fn();
+    const { stdin } = renderWithProviders(
+      <PolicyUpdateDialog
+        onSelect={onSelect}
+        scope="project"
+        identifier="/test/path"
+        isRestarting={false}
+      />,
+    );
+
+    // Accept is the first option, so pressing enter should select it
+    await act(async () => {
+      stdin.write('\r');
+    });
+
+    await waitFor(() => {
+      expect(onSelect).toHaveBeenCalledWith(PolicyUpdateChoice.ACCEPT);
+    });
+  });
+
+  it('calls onSelect with IGNORE when ignore option is chosen', async () => {
+    const onSelect = vi.fn();
+    const { stdin } = renderWithProviders(
+      <PolicyUpdateDialog
+        onSelect={onSelect}
+        scope="project"
+        identifier="/test/path"
+        isRestarting={false}
+      />,
+    );
+
+    // Move down to Ignore option
+    await act(async () => {
+      stdin.write('\x1B[B'); // Down arrow
+    });
+    await act(async () => {
+      stdin.write('\r'); // Enter
+    });
+
+    await waitFor(() => {
+      expect(onSelect).toHaveBeenCalledWith(PolicyUpdateChoice.IGNORE);
+    });
+  });
+
+  it('calls onSelect with IGNORE when Escape is pressed', async () => {
+    const onSelect = vi.fn();
+    const { stdin } = renderWithProviders(
+      <PolicyUpdateDialog
+        onSelect={onSelect}
+        scope="project"
+        identifier="/test/path"
+        isRestarting={false}
+      />,
+    );
+
+    await act(async () => {
+      stdin.write('\x1B'); // Escape key
+    });
+
+    await waitFor(() => {
+      expect(onSelect).toHaveBeenCalledWith(PolicyUpdateChoice.IGNORE);
+    });
+  });
+
+  it('displays restarting message when isRestarting is true', () => {
+    const onSelect = vi.fn();
+    const { lastFrame } = renderWithProviders(
+      <PolicyUpdateDialog
+        onSelect={onSelect}
+        scope="project"
+        identifier="/test/path"
+        isRestarting={true}
+      />,
+    );
+
+    const output = lastFrame();
+    expect(output).toContain(
+      'Gemini CLI is restarting to apply the policy changes...',
+    );
+  });
+});

packages/cli/src/ui/components/PolicyUpdateDialog.tsx

@@ -1,20 +1,15 @@
 /**
  * @license
- * Copyright 2025 Google LLC
+ * Copyright 2026 Google LLC
  * SPDX-License-Identifier: Apache-2.0
  */
 
 import { Box, Text } from 'ink';
 import type React from 'react';
-import { useEffect, useState, useCallback } from 'react';
 import { theme } from '../semantic-colors.js';
 import type { RadioSelectItem } from './shared/RadioButtonSelect.js';
 import { RadioButtonSelect } from './shared/RadioButtonSelect.js';
 import { useKeypress } from '../hooks/useKeypress.js';
-import * as process from 'node:process';
-import { relaunchApp } from '../../utils/processUtils.js';
-import { runExitCleanup } from '../../utils/cleanup.js';
-import { ExitCodes } from '@google/gemini-cli-core';
 
 export enum PolicyUpdateChoice {
   ACCEPT = 'accept',
@@ -34,33 +29,10 @@ export const PolicyUpdateDialog: React.FC<PolicyUpdateDialogProps> = ({
   identifier,
   isRestarting,
 }) => {
-  const [exiting, setExiting] = useState(false);
-
-  useEffect(() => {
-    let timer: ReturnType<typeof setTimeout>;
-    if (isRestarting) {
-      timer = setTimeout(async () => {
-        await relaunchApp();
-      }, 250);
-    }
-    return () => {
-      if (timer) clearTimeout(timer);
-    };
-  }, [isRestarting]);
-
-  const handleExit = useCallback(() => {
-    setExiting(true);
-    // Give time for the UI to render the exiting message
-    setTimeout(async () => {
-      await runExitCleanup();
-      process.exit(ExitCodes.FATAL_CANCELLATION_ERROR);
-    }, 100);
-  }, []);
-
   useKeypress(
     (key) => {
       if (key.name === 'escape') {
-        handleExit();
+        onSelect(PolicyUpdateChoice.IGNORE);
         return true;
       }
       return false;
@@ -114,14 +86,6 @@ export const PolicyUpdateDialog: React.FC<PolicyUpdateDialogProps> = ({
           </Text>
         </Box>
       )}
-      {exiting && (
-        <Box marginLeft={1} marginTop={1}>
-          <Text color={theme.status.warning}>
-            A selection must be made to continue. Exiting since escape was
-            pressed.
-          </Text>
-        </Box>
-      )}
     </Box>
   );
 };

packages/core/src/policy/config.ts

@@ -61,7 +61,7 @@ export function getPolicyDirectories(
   // Admin tier (highest priority)
   dirs.push(Storage.getSystemPoliciesDir());
 
-  // User tier (second higheset priority)
+  // User tier (second highest priority)
   if (policyPaths && policyPaths.length > 0) {
     dirs.push(...policyPaths);
   } else {