diff --git a/store/session.go b/store/session.go
index 211194c..67a5f49 100644
--- a/store/session.go
+++ b/store/session.go
@@ -336,6 +336,7 @@ func (s *SessionStore) createSession(args []string) error {
 		}
 	}
 
+	cwd = paths.ExpandHome(os.ExpandEnv(cwd))
 	if cwd == "" {
 		return fmt.Errorf("cwd is required (e.g. new cwd=/path/to/project)")
 	}
diff --git a/store/store_test.go b/store/store_test.go
index 71fedb3..f1aefc0 100644
--- a/store/store_test.go
+++ b/store/store_test.go
@@ -1402,6 +1402,61 @@ func TestSessionStoreCreateSessionUnknownKey(t *testing.T) {
 	}
 }
 
+func TestSessionStoreCreateSessionEnvExpansion(t *testing.T) {
+	home, err := os.UserHomeDir()
+	if err != nil {
+		t.Skip("no home dir")
+	}
+	t.Setenv("HOME", home)
+	var gotCwd string
+	sink := testSink()
+	s := store.NewSessionStore(store.SessionStoreConfig{
+		Log:      sink.NewLogger("test"),
+		Sink:     sink,
+		ReadFile: func(string) ([]byte, error) { return []byte("#!/bin/sh\n"), nil },
+		MkdirAll: func(string, os.FileMode) error { return nil },
+		NewCore: func(sessionID, agentName, cwd string) (agent.Core, error) {
+			gotCwd = cwd
+			return &stubCore{state: "idle", backend: "stub", model: "m", agentName: agentName, cwd: cwd}, nil
+		},
+	})
+	e, _ := s.Open("new")
+	if err := e.Write([]byte("name=envtest cwd=$HOME/")); err != nil {
+		t.Fatalf("Write(new): %v", err)
+	}
+	if gotCwd != home+"/" {
+		t.Errorf("cwd env not expanded: got %q, want %q", gotCwd, home+"/")
+	}
+	s.KillSession("envtest")
+}
+
+func TestSessionStoreCreateSessionTildeExpansion(t *testing.T) {
+	home, err := os.UserHomeDir()
+	if err != nil {
+		t.Skip("no home dir")
+	}
+	var gotCwd string
+	sink := testSink()
+	s := store.NewSessionStore(store.SessionStoreConfig{
+		Log:      sink.NewLogger("test"),
+		Sink:     sink,
+		ReadFile: func(string) ([]byte, error) { return []byte("#!/bin/sh\n"), nil },
+		MkdirAll: func(string, os.FileMode) error { return nil },
+		NewCore: func(sessionID, agentName, cwd string) (agent.Core, error) {
+			gotCwd = cwd
+			return &stubCore{state: "idle", backend: "stub", model: "m", agentName: agentName, cwd: cwd}, nil
+		},
+	})
+	e, _ := s.Open("new")
+	if err := e.Write([]byte("name=tildetest cwd=~/")); err != nil {
+		t.Fatalf("Write(new): %v", err)
+	}
+	if gotCwd != home+"/" {
+		t.Errorf("cwd not expanded: got %q, want %q", gotCwd, home+"/")
+	}
+	s.KillSession("tildetest")
+}
+
 // ===== openEntry not-found =====
 
 func TestSessionStoreOpenEntryNotFound(t *testing.T) {