diff --git a/crates/tui/src/core/engine.rs b/crates/tui/src/core/engine.rs
index 8efb9570..40a951bc 100644
--- a/crates/tui/src/core/engine.rs
+++ b/crates/tui/src/core/engine.rs
@@ -1679,16 +1679,35 @@ impl Engine {
             .as_ref()
             .map(|client| client.base_url().to_string());
 
-        // Main turn loop
-        let (status, error) = self
-            .handle_deepseek_turn(
-                &mut turn,
-                tool_registry.as_ref(),
-                tools,
-                mode,
-                force_update_plan_first,
-            )
-            .await;
+        // Main turn loop. Catch panics here so an internal error surfaces as a
+        // failed TurnComplete instead of unwinding through `engine.run()` and
+        // killing the whole engine-event-loop task — which left the UI stuck
+        // on "working" forever with the engine silently dead (#2583, #1269).
+        use futures_util::FutureExt as _;
+        let turn_result = std::panic::AssertUnwindSafe(self.handle_deepseek_turn(
+            &mut turn,
+            tool_registry.as_ref(),
+            tools,
+            mode,
+            force_update_plan_first,
+        ))
+        .catch_unwind()
+        .await;
+        let (status, error) = match turn_result {
+            Ok(outcome) => outcome,
+            Err(panic) => {
+                let detail = crate::utils::panic_message(&*panic);
+                crate::utils::record_caught_panic("engine-event-loop", &detail);
+                (
+                    TurnOutcomeStatus::Failed,
+                    Some(format!(
+                        "The engine hit an internal error and stopped this turn: {detail}. \
+                         Your session is intact — send your message again to retry. \
+                         A crash report was saved to ~/.codewhale/crashes/."
+                    )),
+                )
+            }
+        };
 
         // Update session usage
         self.session.total_usage.add(&turn.usage);
diff --git a/crates/tui/src/utils.rs b/crates/tui/src/utils.rs
index 3cb7972a..7d7c0c6a 100644
--- a/crates/tui/src/utils.rs
+++ b/crates/tui/src/utils.rs
@@ -282,13 +282,7 @@ where
         use futures_util::FutureExt;
         let result = std::panic::AssertUnwindSafe(future).catch_unwind().await;
         if let Err(panic_info) = result {
-            let msg = if let Some(s) = panic_info.downcast_ref::<&str>() {
-                s.to_string()
-            } else if let Some(s) = panic_info.downcast_ref::<String>() {
-                s.clone()
-            } else {
-                "unknown panic".to_string()
-            };
+            let msg = panic_message(&*panic_info);
             tracing::error!(
                 target: "panic",
                 "Task '{name}' panicked at {}: {msg}",
@@ -300,6 +294,32 @@ where
     })
 }
 
+/// Extract a human-readable message from a caught panic payload (the `Err`
+/// value of `catch_unwind`). Mirrors how the panic hook formats `&str` and
+/// `String` payloads so crash dumps stay consistent across call sites.
+#[must_use]
+pub fn panic_message(panic: &(dyn std::any::Any + Send)) -> String {
+    if let Some(s) = panic.downcast_ref::<&str>() {
+        (*s).to_string()
+    } else if let Some(s) = panic.downcast_ref::<String>() {
+        s.clone()
+    } else {
+        "unknown panic".to_string()
+    }
+}
+
+/// Record a panic that was caught at a call site (via `catch_unwind`) rather
+/// than by a task supervisor. Logs it on the `panic` target and writes a
+/// best-effort crash dump to `~/.codewhale/crashes/`, so diagnostics land in
+/// the same place `spawn_supervised` writes them even when the caller recovers
+/// and keeps running.
+#[track_caller]
+pub fn record_caught_panic(name: &'static str, message: &str) {
+    let location = std::panic::Location::caller();
+    tracing::error!(target: "panic", "Task '{name}' panicked at {location}: {message}");
+    let _ = write_panic_dump(name, location, message);
+}
+
 /// Write a panic dump file to `~/.codewhale/crashes/`.
 ///
 /// Creates the directory if needed and writes a timestamped log
@@ -362,13 +382,7 @@ where
     tokio::task::spawn_blocking(move || {
         let result = std::panic::catch_unwind(std::panic::AssertUnwindSafe(f));
         if let Err(panic_info) = result {
-            let msg = if let Some(s) = panic_info.downcast_ref::<&str>() {
-                s.to_string()
-            } else if let Some(s) = panic_info.downcast_ref::<String>() {
-                s.clone()
-            } else {
-                "unknown panic".to_string()
-            };
+            let msg = panic_message(&*panic_info);
             tracing::error!(
                 target: "panic",
                 "Blocking task '{name}' panicked at {location}: {msg}",