diff --git a/codex-rs/exec-server/src/client.rs b/codex-rs/exec-server/src/client.rs
index 3358f11934..0183482f6a 100644
--- a/codex-rs/exec-server/src/client.rs
+++ b/codex-rs/exec-server/src/client.rs
@@ -360,12 +360,19 @@ impl ExecServerClient {
                                 && let Err(err) =
                                     handle_server_notification(&inner, notification).await
                             {
-                                let _ = err;
+                                fail_all_sessions(
+                                    &inner,
+                                    format!("exec-server notification handling failed: {err}"),
+                                )
+                                .await;
                                 return;
                             }
                         }
                         RpcClientEvent::Disconnected { reason } => {
-                            let _ = reason;
+                            if let Some(inner) = weak.upgrade() {
+                                fail_all_sessions(&inner, disconnected_message(reason.as_deref()))
+                                    .await;
+                            }
                             return;
                         }
                     }
@@ -407,6 +414,32 @@ impl From<RpcCallError> for ExecServerError {
     }
 }
 
+fn disconnected_message(reason: Option<&str>) -> String {
+    match reason {
+        Some(reason) => format!("exec-server transport disconnected: {reason}"),
+        None => "exec-server transport disconnected".to_string(),
+    }
+}
+
+async fn fail_all_sessions(inner: &Arc<Inner>, message: String) {
+    let sessions = {
+        let _sessions_write_guard = inner.sessions_write_lock.lock().await;
+        let sessions = inner.sessions.load();
+        let drained_sessions = sessions.as_ref().clone();
+        inner.sessions.store(Arc::new(HashMap::new()));
+        drained_sessions
+    };
+
+    for (_, events_tx) in sessions {
+        // Do not block disconnect handling behind a full bounded queue. Best
+        // effort deliver a terminal failure event, then drop the sender so
+        // receivers still observe EOF if the queue was already saturated.
+        let _ = events_tx.try_send(ExecSessionEvent::Failed {
+            message: message.clone(),
+        });
+    }
+}
+
 async fn handle_server_notification(
     inner: &Arc<Inner>,
     notification: JSONRPCNotification,
diff --git a/codex-rs/exec-server/src/process.rs b/codex-rs/exec-server/src/process.rs
index a8a89cdfc9..2c89dd2838 100644
--- a/codex-rs/exec-server/src/process.rs
+++ b/codex-rs/exec-server/src/process.rs
@@ -25,6 +25,9 @@ pub enum ExecSessionEvent {
     Closed {
         seq: u64,
     },
+    Failed {
+        message: String,
+    },
 }
 
 #[derive(Debug, Clone, PartialEq, Eq, Hash)]
diff --git a/codex-rs/exec-server/tests/exec_process.rs b/codex-rs/exec-server/tests/exec_process.rs
index 7647ef63d6..f92e8edfe3 100644
--- a/codex-rs/exec-server/tests/exec_process.rs
+++ b/codex-rs/exec-server/tests/exec_process.rs
@@ -22,7 +22,7 @@ use common::exec_server::exec_server;
 
 struct ProcessContext {
     backend: Arc<dyn ExecBackend>,
-    _server: Option<ExecServerHarness>,
+    server: Option<ExecServerHarness>,
 }
 
 async fn create_process_context(use_remote: bool) -> Result<ProcessContext> {
@@ -31,13 +31,13 @@ async fn create_process_context(use_remote: bool) -> Result<ProcessContext> {
         let environment = Environment::create(Some(server.websocket_url().to_string())).await?;
         Ok(ProcessContext {
             backend: environment.get_exec_backend(),
-            _server: Some(server),
+            server: Some(server),
         })
     } else {
         let environment = Environment::create(None).await?;
         Ok(ProcessContext {
             backend: environment.get_exec_backend(),
-            _server: None,
+            server: None,
         })
     }
 }
@@ -67,6 +67,9 @@ async fn assert_exec_process_starts_and_exits(use_remote: bool) -> Result<()> {
                 } => exit_code = Some(code),
                 ExecSessionEvent::Closed { .. } => break,
                 ExecSessionEvent::Output { .. } => {}
+                ExecSessionEvent::Failed { message } => {
+                    anyhow::bail!("process failed before Closed event: {message}")
+                }
             },
             None => anyhow::bail!("event stream closed before Closed event"),
         }
@@ -94,6 +97,9 @@ async fn collect_process_output_from_events(
                 ExecSessionEvent::Closed { .. } => {
                     break;
                 }
+                ExecSessionEvent::Failed { message } => {
+                    anyhow::bail!("process failed before Closed event: {message}");
+                }
             },
             None => {
                 anyhow::bail!("event stream closed before Closed event");
@@ -196,6 +202,52 @@ async fn assert_exec_process_preserves_queued_events_before_subscribe(
     Ok(())
 }
 
+#[tokio::test(flavor = "multi_thread", worker_threads = 2)]
+async fn remote_exec_process_reports_transport_disconnect() -> Result<()> {
+    let mut context = create_process_context(/*use_remote*/ true).await?;
+    let session = context
+        .backend
+        .start(ExecParams {
+            process_id: "proc-disconnect".to_string(),
+            argv: vec![
+                "/bin/sh".to_string(),
+                "-c".to_string(),
+                "sleep 10".to_string(),
+            ],
+            cwd: std::env::current_dir()?,
+            env: Default::default(),
+            tty: false,
+            arg0: None,
+        })
+        .await?;
+
+    let server = context
+        .server
+        .as_mut()
+        .expect("remote context should include exec-server harness");
+    server.shutdown().await?;
+
+    let mut events = session.events;
+    loop {
+        match timeout(Duration::from_secs(2), events.recv()).await? {
+            Some(ExecSessionEvent::Failed { message }) => {
+                assert!(
+                    message.starts_with("exec-server transport disconnected"),
+                    "unexpected failure message: {message}"
+                );
+                break;
+            }
+            Some(ExecSessionEvent::Output { .. } | ExecSessionEvent::Exited { .. }) => {}
+            Some(ExecSessionEvent::Closed { .. }) => {
+                anyhow::bail!("received Closed instead of transport failure")
+            }
+            None => anyhow::bail!("event stream closed before Failed event"),
+        }
+    }
+
+    Ok(())
+}
+
 #[test_case(false ; "local")]
 #[test_case(true ; "remote")]
 #[tokio::test(flavor = "multi_thread", worker_threads = 2)]