diff --git a/.changeset/agent-manager-subdir-worktree.md b/.changeset/agent-manager-subdir-worktree.md
new file mode 100644
index 000000000000..36fbbd0ee547
--- /dev/null
+++ b/.changeset/agent-manager-subdir-worktree.md
@@ -0,0 +1,5 @@
+---
+"kilo-code": patch
+---
+
+Fix Agent Manager worktree creation when a VS Code window is opened on a subdirectory of a git repository.
diff --git a/packages/kilo-vscode/src/agent-manager/WorktreeManager.ts b/packages/kilo-vscode/src/agent-manager/WorktreeManager.ts
index d81905205c18..833b6a3a35db 100644
--- a/packages/kilo-vscode/src/agent-manager/WorktreeManager.ts
+++ b/packages/kilo-vscode/src/agent-manager/WorktreeManager.ts
@@ -1349,7 +1349,7 @@ export class WorktreeManager {
 
   async repoUsesLfs(): Promise<boolean> {
     // Check .git/lfs/ directory
-    const gitDir = await resolveGitDir(this.root)
+    const gitDir = await resolveGitDir(this.root, this.binary)
     if (fs.existsSync(path.join(gitDir, "lfs"))) return true
 
     // Check .gitattributes
diff --git a/packages/kilo-vscode/src/agent-manager/constants.ts b/packages/kilo-vscode/src/agent-manager/constants.ts
index 01979bf7d17b..d66b590a7def 100644
--- a/packages/kilo-vscode/src/agent-manager/constants.ts
+++ b/packages/kilo-vscode/src/agent-manager/constants.ts
@@ -1,5 +1,7 @@
 import * as fs from "node:fs"
 import * as path from "node:path"
+import { BUDGET } from "./command-budget"
+import { execWithShellEnv } from "./shell-env"
 
 // TODO: Remove the legacy .kilocode -> .kilo migration helpers below after the
 // GA release cleanup tracked in https://github.com/Kilo-Org/kilocode/issues/6986.
@@ -113,21 +115,21 @@ async function isDirectory(filepath: string): Promise<boolean> {
 }
 
 /**
- * Resolve the real git directory for a repository root.
- * When root/.git is a directory, returns it directly.
- * When root/.git is a file (worktree), follows the gitdir pointer
- * up two levels to reach the shared git directory.
+ * Resolve the shared git directory for `root`.
+ *
+ * `git rev-parse --git-common-dir` works for a repository root, a linked
+ * worktree, and a subdirectory of either. A stat of `root/.git` does not:
+ * a subdirectory workspace has no `.git` entry. The path may be relative to
+ * `root`. Unknown flags are rejected because older Git prints them and exits 0.
  */
-export async function resolveGitDir(root: string): Promise<string> {
-  const gitPath = path.join(root, ".git")
-  const stat = await fs.promises.stat(gitPath)
-  if (stat.isDirectory()) return gitPath
-
-  const content = await fs.promises.readFile(gitPath, "utf-8")
-  const match = content.match(/^gitdir:\s*(.+)$/m)
-  if (!match) throw new Error("Invalid .git file format")
-  // gitdir points to e.g. /repo/.git/worktrees/foo — go up two levels to /repo/.git
-  return path.resolve(path.dirname(gitPath), match[1].trim(), "..", "..")
+export async function resolveGitDir(root: string, binary = "git"): Promise<string> {
+  const { stdout } = await execWithShellEnv(binary, ["rev-parse", "--git-common-dir"], {
+    cwd: root,
+    timeout: BUDGET.probe,
+  })
+  const dir = stdout.trim()
+  if (!dir || dir.startsWith("--")) throw new Error("git rev-parse did not return a git directory")
+  return path.resolve(root, dir)
 }
 
 /**
diff --git a/packages/kilo-vscode/tests/unit/worktree-manager.test.ts b/packages/kilo-vscode/tests/unit/worktree-manager.test.ts
index c6bc54527b27..0f8a9d49423c 100644
--- a/packages/kilo-vscode/tests/unit/worktree-manager.test.ts
+++ b/packages/kilo-vscode/tests/unit/worktree-manager.test.ts
@@ -1510,6 +1510,25 @@ describe("WorktreeManager helpers", () => {
     await fs.mkdir(path.join(root, ".git", "lfs"), { recursive: true })
     expect(await mgr.repoUsesLfs()).toBe(true)
   })
+
+  it("creates a worktree from a subdirectory of the repository", async () => {
+    const root = await createTempRepo()
+    const sub = path.join(root, "web")
+    await fs.mkdir(sub, { recursive: true })
+    const lfs = path.join(root, ".git", "lfs")
+    await fs.mkdir(lfs, { recursive: true })
+    const mgr = createManager(sub)
+
+    expect(await mgr.repoUsesLfs()).toBe(true)
+    await fs.rm(lfs, { recursive: true, force: true })
+    expect(await mgr.repoUsesLfs()).toBe(false)
+
+    const result = await mgr.createWorktree({ prompt: "subdir" })
+    expect((await fs.stat(path.join(result.path, ".git"))).isFile()).toBe(true)
+    expect(result.path.startsWith(sub + path.sep)).toBe(true)
+    const status = await simpleGit(root).raw(["status", "--porcelain", "--untracked-files=all"])
+    expect(status.trim()).toBe("")
+  })
 })
 
 describe("WorktreeManager.resolveStartPoint", () => {