diff --git a/crates/tui/src/tui/file_mention.rs b/crates/tui/src/tui/file_mention.rs
index 3c0f1c9a..ebb9efbb 100644
--- a/crates/tui/src/tui/file_mention.rs
+++ b/crates/tui/src/tui/file_mention.rs
@@ -23,11 +23,12 @@
 
 use std::fmt::Write;
 use std::io::Read;
-use std::path::{Path, PathBuf};
+use std::path::Path;
 
 use ignore::WalkBuilder;
 
 use crate::tui::app::App;
+use crate::working_set::Workspace;
 
 /// Maximum number of `@`-mentions whose contents are inlined into one user
 /// message. Beyond this we stop appending blocks but the raw `@token` text
@@ -301,17 +302,39 @@ fn local_context_from_file_mentions(input: &str, workspace: &Path) -> Option<Str
 
     let mut blocks = Vec::new();
     let mut seen = std::collections::HashSet::new();
+    let ws = Workspace::new(workspace.to_path_buf());
+
     for mention in mentions.into_iter().take(MAX_FILE_MENTIONS_PER_MESSAGE) {
-        let path = resolve_mention_path(&mention, workspace);
-        let display_path = path
-            .canonicalize()
-            .unwrap_or_else(|_| path.clone())
-            .display()
-            .to_string();
+        // `Workspace::resolve` already returns absolute paths when the root
+        // is absolute (TUI always runs from an absolute workspace), so we
+        // skip `canonicalize()` here — it's per-mention I/O on the
+        // message-send hot path. Accept the rare symlink-aliasing dedup
+        // miss as the cost of avoiding a syscall (Gemini code-review).
+        let (path, display_path, exists) = match ws.resolve(&mention) {
+            Ok(p) => {
+                let d = p.display().to_string();
+                (p, d, true)
+            }
+            Err(p) => {
+                let d = p.display().to_string();
+                (p, d, false)
+            }
+        };
+
+        // Gate every block — including <missing-file> — through the dedup
+        // set so a user typing the same non-existent file twice doesn't
+        // waste tokens on duplicate missing-file blocks (Devin code-review).
         if !seen.insert(display_path.clone()) {
             continue;
         }
-        blocks.push(render_file_mention_context(&mention, &path, &display_path));
+
+        if exists {
+            blocks.push(render_file_mention_context(&mention, &path, &display_path));
+        } else {
+            blocks.push(format!(
+                "<missing-file mention=\"@{mention}\" path=\"{display_path}\" />"
+            ));
+        }
     }
 
     if blocks.is_empty() {
@@ -393,28 +416,6 @@ fn trim_unquoted_mention(raw: &str) -> &str {
     trimmed
 }
 
-fn resolve_mention_path(raw_path: &str, workspace: &Path) -> PathBuf {
-    let path = expand_mention_home(raw_path);
-    if path.is_absolute() {
-        path
-    } else {
-        workspace.join(path)
-    }
-}
-
-fn expand_mention_home(path: &str) -> PathBuf {
-    if path == "~" {
-        if let Some(home) = std::env::var_os("HOME") {
-            return PathBuf::from(home);
-        }
-    } else if let Some(rest) = path.strip_prefix("~/")
-        && let Some(home) = std::env::var_os("HOME")
-    {
-        return PathBuf::from(home).join(rest);
-    }
-    PathBuf::from(path)
-}
-
 fn render_file_mention_context(raw: &str, path: &Path, display_path: &str) -> String {
     if !path.exists() {
         return format!("<missing-file mention=\"@{raw}\" path=\"{display_path}\" />");
diff --git a/crates/tui/src/working_set.rs b/crates/tui/src/working_set.rs
index d0b7ad2e..9cb12ee8 100644
--- a/crates/tui/src/working_set.rs
+++ b/crates/tui/src/working_set.rs
@@ -7,6 +7,7 @@
 //! - pinned message indices that compaction should preserve
 
 use crate::models::{ContentBlock, Message};
+use ignore::WalkBuilder;
 use regex::Regex;
 use serde::{Deserialize, Serialize};
 use serde_json::Value;
@@ -16,6 +17,122 @@ use std::fs;
 use std::path::{Path, PathBuf};
 use std::sync::OnceLock;
 
+/// Repo-aware resolver for `@`-mentions and file pickers.
+///
+/// `cwd` is captured at construction; if the host's current directory changes
+/// during a session, build a fresh `Workspace`. Fuzzy lookups are backed by a
+/// lazy basename → paths index built once on first miss and reused for the
+/// rest of the session — without it, every mis-typed mention triggered a full
+/// `WalkBuilder` traversal up to depth 6 (Gemini code-review feedback).
+#[derive(Debug)]
+pub struct Workspace {
+    pub root: PathBuf,
+    cwd: Option<PathBuf>,
+    file_index: OnceLock<HashMap<String, Vec<PathBuf>>>,
+}
+
+impl Workspace {
+    pub fn new(root: PathBuf) -> Self {
+        Self::with_cwd(root, std::env::current_dir().ok())
+    }
+
+    /// Construct with an explicit cwd. Used by tests that need deterministic
+    /// resolution against a known directory without depending on (and
+    /// mutating) the process's real working directory.
+    pub fn with_cwd(root: PathBuf, cwd: Option<PathBuf>) -> Self {
+        Self {
+            root,
+            cwd,
+            file_index: OnceLock::new(),
+        }
+    }
+
+    /// Two-pass resolution: workspace, then cwd, then fuzzy fallback.
+    pub fn resolve(&self, raw_path: &str) -> Result<PathBuf, PathBuf> {
+        let path = expand_mention_home(raw_path);
+        if path.is_absolute() {
+            if path.exists() {
+                return Ok(path);
+            }
+            return Err(path);
+        }
+
+        let ws_path = self.root.join(&path);
+        if ws_path.exists() {
+            return Ok(ws_path);
+        }
+
+        if let Some(cwd) = self.cwd.as_ref() {
+            let cwd_path = cwd.join(&path);
+            if cwd_path.exists() {
+                return Ok(cwd_path);
+            }
+        }
+
+        if let Some(fuzzy) = self.fuzzy_resolve(&path) {
+            return Ok(fuzzy);
+        }
+
+        Err(ws_path)
+    }
+
+    fn fuzzy_resolve(&self, path: &Path) -> Option<PathBuf> {
+        let needle = path.file_name()?.to_string_lossy().to_lowercase();
+        if needle.is_empty() {
+            return None;
+        }
+
+        let index = self.file_index.get_or_init(|| self.build_file_index());
+        index.get(&needle).and_then(|paths| paths.first()).cloned()
+    }
+
+    fn build_file_index(&self) -> HashMap<String, Vec<PathBuf>> {
+        let mut index: HashMap<String, Vec<PathBuf>> = HashMap::new();
+        let mut builder = WalkBuilder::new(&self.root);
+        builder.hidden(true).follow_links(false).max_depth(Some(6));
+
+        for entry in builder.build().flatten() {
+            if entry
+                .file_type()
+                .is_some_and(|ft| ft.is_file() || ft.is_dir())
+            {
+                let name = entry.file_name().to_string_lossy().to_lowercase();
+                index
+                    .entry(name)
+                    .or_default()
+                    .push(entry.path().to_path_buf());
+            }
+        }
+        index
+    }
+}
+
+impl Clone for Workspace {
+    fn clone(&self) -> Self {
+        // Don't carry the cached file_index — clones get a fresh OnceLock so
+        // they don't pin a stale snapshot of the previous owner's tree.
+        Self {
+            root: self.root.clone(),
+            cwd: self.cwd.clone(),
+            file_index: OnceLock::new(),
+        }
+    }
+}
+
+fn expand_mention_home(path: &str) -> PathBuf {
+    if path == "~"
+        && let Some(home) = std::env::var_os("HOME")
+    {
+        return PathBuf::from(home);
+    }
+    if let Some(rest) = path.strip_prefix("~/")
+        && let Some(home) = std::env::var_os("HOME")
+    {
+        return PathBuf::from(home).join(rest);
+    }
+    PathBuf::from(path)
+}
+
 /// Configuration for working-set tracking.
 #[derive(Debug, Clone, Serialize, Deserialize)]
 pub struct WorkingSetConfig {
@@ -790,4 +907,55 @@ mod tests {
         let messages = vec![make_message("user", "src/main.rs")];
         assert!(estimate_tokens(&messages) > 0);
     }
+
+    #[test]
+    fn workspace_resolve_respects_cwd_and_workspace() {
+        let tmp = TempDir::new().unwrap();
+
+        let sub = tmp.path().join("sub");
+        std::fs::create_dir_all(&sub).unwrap();
+        let bar = sub.join("bar.txt");
+        std::fs::write(&bar, "bar").unwrap();
+
+        let nested = tmp.path().join("nested/deep");
+        std::fs::create_dir_all(&nested).unwrap();
+        let file_md = nested.join("file.md");
+        std::fs::write(&file_md, "md").unwrap();
+
+        // Construct with an explicit cwd so the test doesn't race with other
+        // tests that mutate the real process cwd.
+        let ws = Workspace::with_cwd(tmp.path().to_path_buf(), Some(sub.clone()));
+
+        // Test 1: @bar.txt with cwd=sub → resolves via the cwd pass.
+        let res1 = ws.resolve("bar.txt").unwrap();
+        assert_eq!(
+            res1.canonicalize().unwrap_or(res1),
+            bar.canonicalize().unwrap_or(bar)
+        );
+
+        // Test 2: @nested/deep/file.md → falls through to workspace root.
+        let res2 = ws.resolve("nested/deep/file.md").unwrap();
+        assert_eq!(
+            res2.canonicalize().unwrap_or(res2),
+            file_md.canonicalize().unwrap_or(file_md)
+        );
+    }
+
+    #[test]
+    fn fuzzy_index_finds_files_and_directories() {
+        let tmp = TempDir::new().unwrap();
+        std::fs::create_dir_all(tmp.path().join("a/b/target_dir")).unwrap();
+        std::fs::write(tmp.path().join("a/b/needle.rs"), "fn main(){}").unwrap();
+
+        let ws = Workspace::with_cwd(tmp.path().to_path_buf(), None);
+
+        // Basename-only mention triggers fuzzy fallback for both files and dirs.
+        let f = ws.resolve("needle.rs").unwrap();
+        assert!(f.ends_with("a/b/needle.rs"));
+        let d = ws.resolve("target_dir").unwrap();
+        assert!(d.ends_with("a/b/target_dir"));
+
+        // Index was populated exactly once (subsequent lookups reuse it).
+        assert!(ws.file_index.get().is_some());
+    }
 }