diff --git a/packages/core/src/config/storage.path.test.ts b/packages/core/src/config/storage.path.test.ts
new file mode 100644
index 0000000000..f97bf2a868
--- /dev/null
+++ b/packages/core/src/config/storage.path.test.ts
@@ -0,0 +1,92 @@
+/**
+ * @license
+ * Copyright 2026 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { describe, it, expect, vi, beforeEach } from 'vitest';
+import * as os from 'node:os';
+import { Storage } from './storage.js';
+import * as paths from '../utils/paths.js';
+
+vi.mock('../utils/paths.js', async (importOriginal) => {
+  const actual = await importOriginal<typeof import('../utils/paths.js')>();
+  return {
+    ...actual,
+    homedir: vi.fn(actual.homedir),
+    resolveToRealPath: vi.fn(actual.resolveToRealPath),
+  };
+});
+
+describe('Storage.isWorkspaceHomeDir', () => {
+  beforeEach(() => {
+    vi.clearAllMocks();
+    vi.mocked(paths.homedir).mockImplementation(os.homedir);
+    vi.mocked(paths.resolveToRealPath).mockImplementation((p) => p);
+  });
+
+  it('returns true when targetDir is the same as homedir', () => {
+    const home = '/Users/test';
+    vi.mocked(paths.homedir).mockReturnValue(home);
+    const storage = new Storage(home);
+
+    expect(storage.isWorkspaceHomeDir()).toBe(true);
+  });
+
+  it('returns true when paths differ only by casing on case-insensitive platforms', () => {
+    vi.spyOn(process, 'platform', 'get').mockReturnValue('win32');
+    const home = '/Users/Test';
+    const target = '/users/test';
+    vi.mocked(paths.homedir).mockReturnValue(home);
+    const storage = new Storage(target);
+
+    expect(storage.isWorkspaceHomeDir()).toBe(true);
+  });
+
+  it('returns true when paths differ by slashes (simulating win32)', () => {
+    vi.spyOn(process, 'platform', 'get').mockReturnValue('win32');
+    const home = 'C:\\\\Users\\\\Test';
+    const target = 'C:/Users/Test';
+    vi.mocked(paths.homedir).mockReturnValue(home);
+    const storage = new Storage(target);
+
+    expect(storage.isWorkspaceHomeDir()).toBe(true);
+  });
+
+  it('returns true when one path has the \\\\?\\ prefix on Windows', () => {
+    vi.spyOn(process, 'platform', 'get').mockReturnValue('win32');
+    const home = '\\\\?\\C:\\\\Users\\\\Test';
+    const target = 'C:\\\\Users\\\\Test';
+
+    vi.mocked(paths.homedir).mockReturnValue(home);
+    const storage = new Storage(target);
+    expect(storage.isWorkspaceHomeDir()).toBe(true);
+  });
+
+  it('returns false when targetDir is a subdirectory of homedir', () => {
+    const home = '/Users/test';
+    const target = '/Users/test/projects/my-project';
+    vi.mocked(paths.homedir).mockReturnValue(home);
+    const storage = new Storage(target);
+
+    expect(storage.isWorkspaceHomeDir()).toBe(false);
+  });
+
+  it('returns true if paths are technically the same but formatted differently (repro attempt)', () => {
+    // Simulate Windows short names if we can
+    const home = 'C:\\Users\\HENRIQ~1';
+    const target = 'C:\\Users\\Henrique';
+
+    vi.mocked(paths.homedir).mockReturnValue(home);
+
+    // In reality, resolveToRealPath(home) and resolveToRealPath(target)
+    // should both return C:\Users\Henrique
+    vi.mocked(paths.resolveToRealPath).mockImplementation((p) => {
+      if (p === home || p === target) return 'C:\\Users\\Henrique';
+      return p;
+    });
+
+    const storage = new Storage(target);
+    expect(storage.isWorkspaceHomeDir()).toBe(true);
+  });
+});
diff --git a/packages/core/src/config/storage.ts b/packages/core/src/config/storage.ts
index fcc3cddc84..66e312d71a 100644
--- a/packages/core/src/config/storage.ts
+++ b/packages/core/src/config/storage.ts
@@ -14,7 +14,6 @@ import {
   GOOGLE_ACCOUNTS_FILENAME,
   isSubpath,
   resolveToRealPath,
-  normalizePath,
 } from '../utils/paths.js';
 import { ProjectRegistry } from './projectRegistry.js';
 import { StorageMigration } from './storageMigration.js';
@@ -168,10 +167,32 @@ export class Storage {
    * This handles symlinks and platform-specific path normalization.
    */
   isWorkspaceHomeDir(): boolean {
-    return (
-      normalizePath(resolveToRealPath(this.targetDir)) ===
-      normalizePath(resolveToRealPath(homedir()))
-    );
+    const target = resolveToRealPath(this.targetDir);
+    const home = resolveToRealPath(homedir());
+
+    const platform = process.platform;
+    const isWindows = platform === 'win32';
+    const isDarwin = platform === 'darwin';
+    const pathModule = isWindows ? path.win32 : path;
+
+    // Strip Windows long path prefix (\\?\) if present, as it can cause
+    // discrepancies in string comparisons and path.relative.
+    const stripPrefix = (p: string) =>
+      isWindows && p.startsWith('\\\\?\\') ? p.substring(4) : p;
+
+    let t = stripPrefix(target);
+    let h = stripPrefix(home);
+
+    // Use path.relative to robustly check for path equality.
+    // On Windows, path.win32.relative is case-insensitive.
+    // On macOS (Darwin), we manually lowercase to ensure case-insensitive comparison
+    // to match user expectation and sandbox policy.
+    if (isDarwin) {
+      t = t.toLowerCase();
+      h = h.toLowerCase();
+    }
+
+    return pathModule.relative(t, h) === '';
   }
 
   getAgentsDir(): string {