diff --git a/apps/server/src/provider/acp/CursorTransportFailure.test.ts b/apps/server/src/provider/acp/CursorTransportFailure.test.ts
index dcd4f9996bdf..fdde19b934d2 100644
--- a/apps/server/src/provider/acp/CursorTransportFailure.test.ts
+++ b/apps/server/src/provider/acp/CursorTransportFailure.test.ts
@@ -38,6 +38,8 @@ describe("CursorTransportFailure", () => {
     "Error: ConnectError: [unauthenticated] sign in",
     "Error: ConnectError: [permission_denied] subscription required",
     "Error: HTTP 500 from the application being debugged",
+    "Error: RetriableError: [internal] Failed to run step, exceeded max retries",
+    "Error: RetriableError: [internal] Failed to run step, exceeded max retries\n    at step (cli.js:1:2)",
   ])("preserves prose, code and non-transport errors: %s", (message) => {
     expect(failureFor([...message])).toBeUndefined();
   });
diff --git a/apps/server/src/provider/acp/CursorTransportFailure.ts b/apps/server/src/provider/acp/CursorTransportFailure.ts
index 99765c74eb07..e6cadb23dc0d 100644
--- a/apps/server/src/provider/acp/CursorTransportFailure.ts
+++ b/apps/server/src/provider/acp/CursorTransportFailure.ts
@@ -1,6 +1,7 @@
 const maxLineLength = 4096;
+// Cursor also uses RetriableError for agent-loop failures; preserve those diagnostics.
 const transportError =
-  /^Error: (?:RetriableError: .+|ConnectError: \[(?:unavailable|aborted|deadline_exceeded)\].*)$/;
+  /^Error: (?:RetriableError: (?!\[internal\]).+|ConnectError: \[(?:unavailable|aborted|deadline_exceeded)\].*)$/;
 const serverError = "Something went wrong communicating with the server. Please try again.";
 
 interface ReplyState {