diff --git a/pkg/tools/shell.go b/pkg/tools/shell.go
index b9103234f..9691008e9 100644
--- a/pkg/tools/shell.go
+++ b/pkg/tools/shell.go
@@ -149,7 +149,7 @@ func NewExecToolWithConfig(workingDir string, restrict bool, config *config.Conf
 	}
 
 	// Ensure PICOCLAW_* vars are set for child processes
-	envSet = shell.WithPicoclawEnvVars(envSet)
+	envSet = shell.WithPicoclawEnvVars(envSet, workingDir)
 
 	return &ExecTool{
 		workingDir:          workingDir,
diff --git a/pkg/tools/shell/env.go b/pkg/tools/shell/env.go
index 8b2bc89e4..975b0263a 100644
--- a/pkg/tools/shell/env.go
+++ b/pkg/tools/shell/env.go
@@ -156,7 +156,7 @@ func isAllowedPrefix(name string) bool {
 
 // WithPicoclawEnvVars ensures PICOCLAW_* vars are set in envSet.
 // These are needed for child processes to locate config, workspace, etc.
-func WithPicoclawEnvVars(envSet map[string]string) map[string]string {
+func WithPicoclawEnvVars(envSet map[string]string, workspace string) map[string]string {
 	if envSet == nil {
 		envSet = make(map[string]string)
 	}
@@ -174,6 +174,11 @@ func WithPicoclawEnvVars(envSet map[string]string) map[string]string {
 		envSet["PICOCLAW_CONFIG"] = filepath.Join(home, "config.json")
 	}
 
+	// Workspace - this is the agent's working directory
+	if workspace != "" {
+		envSet["PICOCLAW_AGENT_WORKSPACE"] = workspace
+	}
+
 	if exe, err := os.Executable(); err == nil {
 		envSet["PICOCLAW_EXE"] = exe
 	}