diff --git a/extensions/workspaces/scripts/setup.ts b/extensions/workspaces/scripts/setup.ts
index 8f9fa53406..b10cad32bd 100644
--- a/extensions/workspaces/scripts/setup.ts
+++ b/extensions/workspaces/scripts/setup.ts
@@ -302,7 +302,7 @@ and full builds) to a dedicated, high-performance GCP worker.
   
   // 1. Sync Scripts & Policies
   await provider.sync('extensions/workspaces/scripts/', `${persistentScripts}/`, { delete: true, sudo: true });
-  await provider.sync('extensions/workspaces/policies/workspace-policy.toml', `${workspaceRoot}/policies/workspace-policy.toml`, { sudo: true });
+  await provider.sync('policies/workspaces/workspace-policy.toml', `${workspaceRoot}/policies/workspace-policy.toml`, { sudo: true });
 
   // 2. Initialize Remote Gemini Config with Auth
   console.log('⚙️  Initializing remote Gemini configuration...');