diff --git a/scripts/provision-worktree.sh b/scripts/provision-worktree.sh
index 0108419d..ea5e0e0f 100644
--- a/scripts/provision-worktree.sh
+++ b/scripts/provision-worktree.sh
@@ -31,25 +31,274 @@ source_env_path="$(dirname "$source_config_path")/.env"
 
 mkdir -p "$paperclip_dir"
 
-if [[ ! -e "$worktree_config_path" && ! -L "$worktree_config_path" && -e "$source_config_path" ]]; then
-  ln -s "$source_config_path" "$worktree_config_path"
-fi
+run_isolated_worktree_init() {
+  if command -v paperclipai >/dev/null 2>&1; then
+    paperclipai worktree init --force --name "$worktree_name" --from-config "$source_config_path"
+    return 0
+  fi
 
-if [[ ! -e "$worktree_env_path" && -e "$source_env_path" ]]; then
-  cp "$source_env_path" "$worktree_env_path"
-  chmod 600 "$worktree_env_path"
-fi
+  if command -v pnpm >/dev/null 2>&1 && pnpm paperclipai --help >/dev/null 2>&1; then
+    pnpm paperclipai worktree init --force --name "$worktree_name" --from-config "$source_config_path"
+    return 0
+  fi
 
-tmp_env="$(mktemp "${TMPDIR:-/tmp}/paperclip-worktree-env.XXXXXX")"
-if [[ -e "$worktree_env_path" ]]; then
-  grep -vE '^(PAPERCLIP_IN_WORKTREE|PAPERCLIP_WORKTREE_NAME)=' "$worktree_env_path" > "$tmp_env" || true
+  return 1
+}
+
+write_fallback_worktree_config() {
+  WORKTREE_NAME="$worktree_name" \
+  BASE_CWD="$base_cwd" \
+  WORKTREE_CWD="$worktree_cwd" \
+  PAPERCLIP_DIR="$paperclip_dir" \
+  SOURCE_CONFIG_PATH="$source_config_path" \
+  SOURCE_ENV_PATH="$source_env_path" \
+  PAPERCLIP_WORKTREES_DIR="${PAPERCLIP_WORKTREES_DIR:-}" \
+  node <<'EOF'
+const fs = require("node:fs");
+const os = require("node:os");
+const path = require("node:path");
+const net = require("node:net");
+
+function expandHomePrefix(value) {
+  if (!value) return value;
+  if (value === "~") return os.homedir();
+  if (value.startsWith("~/")) return path.resolve(os.homedir(), value.slice(2));
+  return value;
+}
+
+function nonEmpty(value) {
+  return typeof value === "string" && value.trim().length > 0 ? value.trim() : null;
+}
+
+function sanitizeInstanceId(value) {
+  const trimmed = String(value ?? "").trim().toLowerCase();
+  const normalized = trimmed
+    .replace(/[^a-z0-9_-]+/g, "-")
+    .replace(/-+/g, "-")
+    .replace(/^[-_]+|[-_]+$/g, "");
+  return normalized || "worktree";
+}
+
+function parseEnvFile(contents) {
+  const entries = {};
+  for (const rawLine of contents.split(/\r?\n/)) {
+    const line = rawLine.trim();
+    if (!line || line.startsWith("#")) continue;
+    const match = rawLine.match(/^\s*(?:export\s+)?([A-Za-z_][A-Za-z0-9_]*)\s*=\s*(.*)\s*$/);
+    if (!match) continue;
+    const [, key, rawValue] = match;
+    const value = rawValue.trim();
+    if (!value) {
+      entries[key] = "";
+      continue;
+    }
+    if (
+      (value.startsWith("\"") && value.endsWith("\"")) ||
+      (value.startsWith("'") && value.endsWith("'"))
+    ) {
+      entries[key] = value.slice(1, -1);
+      continue;
+    }
+    entries[key] = value.replace(/\s+#.*$/, "").trim();
+  }
+  return entries;
+}
+
+async function findAvailablePort(preferredPort, reserved = new Set()) {
+  const startPort = Number.isFinite(preferredPort) && preferredPort > 0 ? Math.trunc(preferredPort) : 0;
+  if (startPort > 0) {
+    for (let port = startPort; port < startPort + 100; port += 1) {
+      if (reserved.has(port)) continue;
+      const available = await new Promise((resolve) => {
+        const server = net.createServer();
+        server.unref();
+        server.once("error", () => resolve(false));
+        server.listen(port, "127.0.0.1", () => {
+          server.close(() => resolve(true));
+        });
+      });
+      if (available) return port;
+    }
+  }
+
+  return await new Promise((resolve, reject) => {
+    const server = net.createServer();
+    server.unref();
+    server.once("error", reject);
+    server.listen(0, "127.0.0.1", () => {
+      const address = server.address();
+      if (!address || typeof address === "string") {
+        server.close(() => reject(new Error("Failed to allocate a port.")));
+        return;
+      }
+      const port = address.port;
+      server.close(() => resolve(port));
+    });
+  });
+}
+
+function isLoopbackHost(hostname) {
+  const value = hostname.trim().toLowerCase();
+  return value === "127.0.0.1" || value === "localhost" || value === "::1";
+}
+
+function rewriteLocalUrlPort(rawUrl, port) {
+  if (!rawUrl) return undefined;
+  try {
+    const parsed = new URL(rawUrl);
+    if (!isLoopbackHost(parsed.hostname)) return rawUrl;
+    parsed.port = String(port);
+    return parsed.toString();
+  } catch {
+    return rawUrl;
+  }
+}
+
+function resolveRuntimeLikePath(value, configPath) {
+  const expanded = expandHomePrefix(value);
+  if (path.isAbsolute(expanded)) return expanded;
+  return path.resolve(path.dirname(configPath), expanded);
+}
+
+async function main() {
+  const worktreeName = process.env.WORKTREE_NAME;
+  const paperclipDir = process.env.PAPERCLIP_DIR;
+  const sourceConfigPath = process.env.SOURCE_CONFIG_PATH;
+  const sourceEnvPath = process.env.SOURCE_ENV_PATH;
+  const worktreeHome = path.resolve(expandHomePrefix(nonEmpty(process.env.PAPERCLIP_WORKTREES_DIR) ?? "~/.paperclip-worktrees"));
+  const instanceId = sanitizeInstanceId(worktreeName);
+  const instanceRoot = path.resolve(worktreeHome, "instances", instanceId);
+  const configPath = path.resolve(paperclipDir, "config.json");
+  const envPath = path.resolve(paperclipDir, ".env");
+
+  let sourceConfig = null;
+  if (sourceConfigPath && fs.existsSync(sourceConfigPath)) {
+    sourceConfig = JSON.parse(fs.readFileSync(sourceConfigPath, "utf8"));
+  }
+
+  const sourceEnvEntries =
+    sourceEnvPath && fs.existsSync(sourceEnvPath)
+      ? parseEnvFile(fs.readFileSync(sourceEnvPath, "utf8"))
+      : {};
+
+  const preferredServerPort = Number(sourceConfig?.server?.port ?? 3101) + 1;
+  const serverPort = await findAvailablePort(preferredServerPort);
+  const preferredDbPort = Number(sourceConfig?.database?.embeddedPostgresPort ?? 54329) + 1;
+  const databasePort = await findAvailablePort(preferredDbPort, new Set([serverPort]));
+
+  fs.rmSync(configPath, { force: true });
+  fs.mkdirSync(path.dirname(configPath), { recursive: true });
+  fs.mkdirSync(instanceRoot, { recursive: true });
+
+  const authPublicBaseUrl = rewriteLocalUrlPort(sourceConfig?.auth?.publicBaseUrl, serverPort);
+  const targetConfig = {
+    $meta: {
+      version: 1,
+      updatedAt: new Date().toISOString(),
+      source: "configure",
+    },
+    ...(sourceConfig?.llm ? { llm: sourceConfig.llm } : {}),
+    database: {
+      mode: "embedded-postgres",
+      embeddedPostgresDataDir: path.resolve(instanceRoot, "db"),
+      embeddedPostgresPort: databasePort,
+      backup: {
+        enabled: sourceConfig?.database?.backup?.enabled ?? true,
+        intervalMinutes: sourceConfig?.database?.backup?.intervalMinutes ?? 60,
+        retentionDays: sourceConfig?.database?.backup?.retentionDays ?? 30,
+        dir: path.resolve(instanceRoot, "data", "backups"),
+      },
+    },
+    logging: {
+      mode: sourceConfig?.logging?.mode ?? "file",
+      logDir: path.resolve(instanceRoot, "logs"),
+    },
+    server: {
+      deploymentMode: sourceConfig?.server?.deploymentMode ?? "local_trusted",
+      exposure: sourceConfig?.server?.exposure ?? "private",
+      host: sourceConfig?.server?.host ?? "127.0.0.1",
+      port: serverPort,
+      allowedHostnames: sourceConfig?.server?.allowedHostnames ?? [],
+      serveUi: sourceConfig?.server?.serveUi ?? true,
+    },
+    auth: {
+      baseUrlMode: sourceConfig?.auth?.baseUrlMode ?? "auto",
+      ...(authPublicBaseUrl ? { publicBaseUrl: authPublicBaseUrl } : {}),
+      disableSignUp: sourceConfig?.auth?.disableSignUp ?? false,
+    },
+    storage: {
+      provider: sourceConfig?.storage?.provider ?? "local_disk",
+      localDisk: {
+        baseDir: path.resolve(instanceRoot, "data", "storage"),
+      },
+      s3: {
+        bucket: sourceConfig?.storage?.s3?.bucket ?? "paperclip",
+        region: sourceConfig?.storage?.s3?.region ?? "us-east-1",
+        endpoint: sourceConfig?.storage?.s3?.endpoint,
+        prefix: sourceConfig?.storage?.s3?.prefix ?? "",
+        forcePathStyle: sourceConfig?.storage?.s3?.forcePathStyle ?? false,
+      },
+    },
+    secrets: {
+      provider: sourceConfig?.secrets?.provider ?? "local_encrypted",
+      strictMode: sourceConfig?.secrets?.strictMode ?? false,
+      localEncrypted: {
+        keyFilePath: path.resolve(instanceRoot, "secrets", "master.key"),
+      },
+    },
+  };
+
+  fs.writeFileSync(configPath, `${JSON.stringify(targetConfig, null, 2)}\n`, { mode: 0o600 });
+
+  const inlineMasterKey = nonEmpty(sourceEnvEntries.PAPERCLIP_SECRETS_MASTER_KEY);
+  if (inlineMasterKey) {
+    fs.mkdirSync(path.resolve(instanceRoot, "secrets"), { recursive: true });
+    fs.writeFileSync(targetConfig.secrets.localEncrypted.keyFilePath, inlineMasterKey, {
+      encoding: "utf8",
+      mode: 0o600,
+    });
+  } else {
+    const sourceKeyFilePath = nonEmpty(sourceEnvEntries.PAPERCLIP_SECRETS_MASTER_KEY_FILE)
+      ? resolveRuntimeLikePath(sourceEnvEntries.PAPERCLIP_SECRETS_MASTER_KEY_FILE, sourceConfigPath)
+      : nonEmpty(sourceConfig?.secrets?.localEncrypted?.keyFilePath)
+        ? resolveRuntimeLikePath(sourceConfig.secrets.localEncrypted.keyFilePath, sourceConfigPath)
+        : null;
+
+    if (sourceKeyFilePath && fs.existsSync(sourceKeyFilePath)) {
+      fs.mkdirSync(path.resolve(instanceRoot, "secrets"), { recursive: true });
+      fs.copyFileSync(sourceKeyFilePath, targetConfig.secrets.localEncrypted.keyFilePath);
+      fs.chmodSync(targetConfig.secrets.localEncrypted.keyFilePath, 0o600);
+    }
+  }
+
+  const envLines = [
+    "PAPERCLIP_HOME=" + JSON.stringify(worktreeHome),
+    "PAPERCLIP_INSTANCE_ID=" + JSON.stringify(instanceId),
+    "PAPERCLIP_CONFIG=" + JSON.stringify(configPath),
+    "PAPERCLIP_CONTEXT=" + JSON.stringify(path.resolve(worktreeHome, "context.json")),
+    "PAPERCLIP_IN_WORKTREE=true",
+    "PAPERCLIP_WORKTREE_NAME=" + JSON.stringify(worktreeName),
+  ];
+
+  const agentJwtSecret = nonEmpty(sourceEnvEntries.PAPERCLIP_AGENT_JWT_SECRET);
+  if (agentJwtSecret) {
+    envLines.push("PAPERCLIP_AGENT_JWT_SECRET=" + JSON.stringify(agentJwtSecret));
+  }
+
+  fs.writeFileSync(envPath, `${envLines.join("\n")}\n`, { mode: 0o600 });
+}
+
+main().catch((error) => {
+  console.error(error instanceof Error ? error.message : String(error));
+  process.exit(1);
+});
+EOF
+}
+
+if ! run_isolated_worktree_init; then
+  echo "paperclipai CLI not available in this workspace; writing isolated fallback config without DB seeding." >&2
+  write_fallback_worktree_config
 fi
-{
-  printf 'PAPERCLIP_IN_WORKTREE=true\n'
-  printf 'PAPERCLIP_WORKTREE_NAME=%s\n' "$worktree_name"
-} >> "$tmp_env"
-mv "$tmp_env" "$worktree_env_path"
-chmod 600 "$worktree_env_path"
 
 while IFS= read -r relative_path; do
   [[ -n "$relative_path" ]] || continue
diff --git a/server/src/__tests__/workspace-runtime.test.ts b/server/src/__tests__/workspace-runtime.test.ts
index 6e07f6c6..6a55a72b 100644
--- a/server/src/__tests__/workspace-runtime.test.ts
+++ b/server/src/__tests__/workspace-runtime.test.ts
@@ -126,6 +126,7 @@ afterEach(async () => {
   delete process.env.PAPERCLIP_CONFIG;
   delete process.env.PAPERCLIP_HOME;
   delete process.env.PAPERCLIP_INSTANCE_ID;
+  delete process.env.PAPERCLIP_WORKTREES_DIR;
   delete process.env.DATABASE_URL;
 });
 
@@ -284,10 +285,11 @@ describe("realizeExecutionWorkspace", () => {
     await expect(fs.readFile(path.join(reused.cwd, ".paperclip-provision-created"), "utf8")).resolves.toBe("false\n");
   });
 
-  it("seeds repo-local Paperclip config and worktree branding when provisioning", async () => {
+  it("writes an isolated repo-local Paperclip config and worktree branding when provisioning", async () => {
     const repoRoot = await createTempRepo();
     const previousCwd = process.cwd();
     const paperclipHome = await fs.mkdtemp(path.join(os.tmpdir(), "paperclip-worktree-home-"));
+    const isolatedWorktreeHome = await fs.mkdtemp(path.join(os.tmpdir(), "paperclip-worktrees-"));
     const instanceId = "worktree-base";
     const sharedConfigDir = path.join(paperclipHome, "instances", instanceId);
     const sharedConfigPath = path.join(sharedConfigDir, "config.json");
@@ -295,6 +297,7 @@ describe("realizeExecutionWorkspace", () => {
 
     process.env.PAPERCLIP_HOME = paperclipHome;
     process.env.PAPERCLIP_INSTANCE_ID = instanceId;
+    process.env.PAPERCLIP_WORKTREES_DIR = isolatedWorktreeHome;
 
     await fs.mkdir(sharedConfigDir, { recursive: true });
     await fs.writeFile(
@@ -397,17 +400,36 @@ describe("realizeExecutionWorkspace", () => {
         },
       });
 
-      const configLinkPath = path.join(workspace.cwd, ".paperclip", "config.json");
+      const configPath = path.join(workspace.cwd, ".paperclip", "config.json");
       const envPath = path.join(workspace.cwd, ".paperclip", ".env");
       const envContents = await fs.readFile(envPath, "utf8");
+      const configContents = JSON.parse(await fs.readFile(configPath, "utf8"));
+      const configStats = await fs.lstat(configPath);
+      const expectedInstanceId = "pap-885-show-worktree-banner";
+      const expectedInstanceRoot = path.join(
+        isolatedWorktreeHome,
+        "instances",
+        expectedInstanceId,
+      );
 
-      expect(await fs.readlink(configLinkPath)).toBe(sharedConfigPath);
-      expect(envContents).toContain('DATABASE_URL="postgres://worktree:test@db.example.com:6543/paperclip"');
+      expect(configStats.isSymbolicLink()).toBe(false);
+      expect(configContents.database.embeddedPostgresDataDir).toBe(path.join(expectedInstanceRoot, "db"));
+      expect(configContents.database.embeddedPostgresDataDir).not.toBe(path.join(sharedConfigDir, "db"));
+      expect(configContents.server.port).not.toBe(3100);
+      expect(configContents.secrets.localEncrypted.keyFilePath).toBe(
+        path.join(expectedInstanceRoot, "secrets", "master.key"),
+      );
+      expect(envContents).not.toContain("DATABASE_URL=");
+      expect(envContents).toContain(`PAPERCLIP_HOME=${JSON.stringify(isolatedWorktreeHome)}`);
+      expect(envContents).toContain(`PAPERCLIP_INSTANCE_ID=${JSON.stringify(expectedInstanceId)}`);
+      expect(envContents).toContain(`PAPERCLIP_CONFIG=${JSON.stringify(configPath)}`);
       expect(envContents).toContain("PAPERCLIP_IN_WORKTREE=true");
-      expect(envContents).toContain("PAPERCLIP_WORKTREE_NAME=PAP-885-show-worktree-banner");
+      expect(envContents).toContain(
+        `PAPERCLIP_WORKTREE_NAME=${JSON.stringify("PAP-885-show-worktree-banner")}`,
+      );
 
       process.chdir(workspace.cwd);
-      expect(resolvePaperclipConfigPath()).toBe(configLinkPath);
+      expect(resolvePaperclipConfigPath()).toBe(configPath);
     } finally {
       process.chdir(previousCwd);
     }