diff --git a/src/runtime/SSHRuntime.ts b/src/runtime/SSHRuntime.ts
index d4be4d4330..da70e5604b 100644
--- a/src/runtime/SSHRuntime.ts
+++ b/src/runtime/SSHRuntime.ts
@@ -480,7 +480,21 @@ export class SSHRuntime implements Runtime {
         throw new Error(`Failed to clone repository: ${cloneStderr || cloneStdout}`);
       }
 
-      // Step 4: Update origin remote if we have an origin URL
+      // Step 4: Create local tracking branches for all remote branches
+      // This ensures that branch names like "custom-trunk" can be used directly
+      // in git checkout commands, rather than needing "origin/custom-trunk"
+      initLogger.logStep(`Creating local tracking branches...`);
+      const createTrackingBranchesStream = await this.exec(
+        `cd ${cloneDestPath} && for branch in $(git for-each-ref --format='%(refname:short)' refs/remotes/origin/ | grep -v 'origin/HEAD'); do localname=\${branch#origin/}; git show-ref --verify --quiet refs/heads/$localname || git branch $localname $branch; done`,
+        {
+          cwd: "~",
+          timeout: 30,
+        }
+      );
+      await createTrackingBranchesStream.exitCode;
+      // Don't fail if this fails - some branches may already exist
+
+      // Step 5: Update origin remote if we have an origin URL
       if (originUrl) {
         initLogger.logStep(`Setting origin remote to ${originUrl}...`);
         const setOriginStream = await this.exec(
@@ -669,13 +683,7 @@ export class SSHRuntime implements Runtime {
   }
 
   async initWorkspace(params: WorkspaceInitParams): Promise<WorkspaceInitResult> {
-    const {
-      projectPath,
-      branchName,
-      trunkBranch: _trunkBranch,
-      workspacePath,
-      initLogger,
-    } = params;
+    const { projectPath, branchName, trunkBranch, workspacePath, initLogger } = params;
 
     try {
       // 1. Sync project to remote (opportunistic rsync with scp fallback)
@@ -694,11 +702,13 @@ export class SSHRuntime implements Runtime {
       initLogger.logStep("Files synced successfully");
 
       // 2. Checkout branch remotely
-      // Note: After git clone, HEAD is already checked out to the default branch from the bundle
-      // We create new branches from HEAD instead of the trunkBranch name to avoid issues
-      // where the local repo's trunk name doesn't match the cloned repo's default branch
+      // If branch exists locally, check it out; otherwise create it from the specified trunk branch
+      // Note: We've already created local branches for all remote refs in syncProjectToRemote
       initLogger.logStep(`Checking out branch: ${branchName}`);
-      const checkoutCmd = `(git checkout ${shescape.quote(branchName)} 2>/dev/null || git checkout -b ${shescape.quote(branchName)} HEAD)`;
+
+      // Try to checkout existing branch, or create new branch from trunk
+      // Since we've created local branches for all remote refs, we can use branch names directly
+      const checkoutCmd = `git checkout ${shescape.quote(branchName)} 2>/dev/null || git checkout -b ${shescape.quote(branchName)} ${shescape.quote(trunkBranch)}`;
 
       const checkoutStream = await this.exec(checkoutCmd, {
         cwd: workspacePath, // Use the full workspace path for git operations
diff --git a/tests/ipcMain/createWorkspace.test.ts b/tests/ipcMain/createWorkspace.test.ts
index db6fc25a9f..44fcbb07a1 100644
--- a/tests/ipcMain/createWorkspace.test.ts
+++ b/tests/ipcMain/createWorkspace.test.ts
@@ -273,6 +273,95 @@ describeIntegration("WORKSPACE_CREATE with both runtimes", () => {
           },
           TEST_TIMEOUT_MS
         );
+
+        test.concurrent(
+          "creates new branch from specified trunk branch, not from default branch",
+          async () => {
+            const env = await createTestEnvironment();
+            const tempGitRepo = await createTempGitRepo();
+
+            try {
+              // Create a custom trunk branch with a unique commit
+              const customTrunkBranch = "custom-trunk";
+              await execAsync(
+                `git checkout -b ${customTrunkBranch} && echo "custom-trunk-content" > trunk-file.txt && git add . && git commit -m "Custom trunk commit"`,
+                { cwd: tempGitRepo }
+              );
+
+              // Create a different branch (which will become the default if we checkout to it)
+              const otherBranch = "other-branch";
+              await execAsync(
+                `git checkout -b ${otherBranch} && echo "other-content" > other-file.txt && git add . && git commit -m "Other branch commit"`,
+                { cwd: tempGitRepo }
+              );
+
+              // Switch back to the original default branch
+              const defaultBranch = await detectDefaultTrunkBranch(tempGitRepo);
+              await execAsync(`git checkout ${defaultBranch}`, { cwd: tempGitRepo });
+
+              // Now create a workspace specifying custom-trunk as the trunk branch
+              const newBranchName = generateBranchName("from-custom-trunk");
+              const runtimeConfig = getRuntimeConfig(newBranchName);
+
+              const { result, cleanup } = await createWorkspaceWithCleanup(
+                env,
+                tempGitRepo,
+                newBranchName,
+                customTrunkBranch, // Specify custom trunk branch
+                runtimeConfig
+              );
+
+              expect(result.success).toBe(true);
+              if (!result.success) {
+                throw new Error(
+                  `Failed to create workspace from custom trunk '${customTrunkBranch}': ${result.error}`
+                );
+              }
+
+              // Wait for workspace initialization to complete
+              await new Promise((resolve) => setTimeout(resolve, getInitWaitTime()));
+
+              // Verify the new branch was created from custom-trunk, not from default branch
+              // Use WORKSPACE_EXECUTE_BASH to check files (works for both local and SSH runtimes)
+
+              // Check that trunk-file.txt exists (from custom-trunk)
+              const checkTrunkFileResult = await env.mockIpcRenderer.invoke(
+                IPC_CHANNELS.WORKSPACE_EXECUTE_BASH,
+                result.metadata.id,
+                `test -f trunk-file.txt && echo "exists" || echo "missing"`
+              );
+              expect(checkTrunkFileResult.success).toBe(true);
+              expect(checkTrunkFileResult.data.success).toBe(true);
+              expect(checkTrunkFileResult.data.output.trim()).toBe("exists");
+
+              // Check that other-file.txt does NOT exist (from other-branch)
+              const checkOtherFileResult = await env.mockIpcRenderer.invoke(
+                IPC_CHANNELS.WORKSPACE_EXECUTE_BASH,
+                result.metadata.id,
+                `test -f other-file.txt && echo "exists" || echo "missing"`
+              );
+              expect(checkOtherFileResult.success).toBe(true);
+              expect(checkOtherFileResult.data.success).toBe(true);
+              expect(checkOtherFileResult.data.output.trim()).toBe("missing");
+
+              // Verify git log shows the custom trunk commit
+              const gitLogResult = await env.mockIpcRenderer.invoke(
+                IPC_CHANNELS.WORKSPACE_EXECUTE_BASH,
+                result.metadata.id,
+                `git log --oneline --all`
+              );
+              expect(gitLogResult.success).toBe(true);
+              expect(gitLogResult.data.success).toBe(true);
+              expect(gitLogResult.data.output).toContain("Custom trunk commit");
+
+              await cleanup();
+            } finally {
+              await cleanupTestEnvironment(env);
+              await cleanupTempGitRepo(tempGitRepo);
+            }
+          },
+          TEST_TIMEOUT_MS
+        );
       });
 
       describe("Init hook execution", () => {
diff --git a/tests/setup.ts b/tests/setup.ts
index daf20d3bf5..ad8144a9b2 100644
--- a/tests/setup.ts
+++ b/tests/setup.ts
@@ -9,3 +9,16 @@ require("disposablestack/auto");
 
 assert.equal(typeof Symbol.dispose, "symbol");
 assert.equal(typeof Symbol.asyncDispose, "symbol");
+
+// Polyfill File for Node 18 (undici needs it)
+if (typeof globalThis.File === "undefined") {
+  (globalThis as any).File = class File extends Blob {
+    constructor(bits: BlobPart[], name: string, options?: FilePropertyBag) {
+      super(bits, options);
+      this.name = name;
+      this.lastModified = options?.lastModified ?? Date.now();
+    }
+    name: string;
+    lastModified: number;
+  };
+}