diff --git a/src/resources/extensions/gsd/auto/loop.ts b/src/resources/extensions/gsd/auto/loop.ts
index 0eb6514baf..8308178ecb 100644
--- a/src/resources/extensions/gsd/auto/loop.ts
+++ b/src/resources/extensions/gsd/auto/loop.ts
@@ -623,6 +623,17 @@ export async function autoLoop(
           finishTurn("stopped", "execution", "unit-break");
           break;
         }
+        if (unitPhaseResult.action === "retry") {
+          finishIncompleteIteration({
+            status: "retry",
+            reason: unitPhaseResult.reason,
+            retry: true,
+            unitType: iterData.unitType,
+            unitId: iterData.unitId,
+          });
+          finishTurn("retry", "execution", unitPhaseResult.reason);
+          continue;
+        }
 
         // ── Verify first, then reconcile (only mark complete on pass) ──
         debugLog("autoLoop", { phase: "custom-engine-verify", iteration, unitId: iterData.unitId });
@@ -963,6 +974,21 @@ export async function autoLoop(
         finishTurn("stopped", "execution", "unit-break");
         break;
       }
+      if (unitPhaseResult.action === "retry") {
+        dispatchSettled = settleDispatchFailed(dispatchId, unitPhaseResult.reason, {
+          markFailed: markDispatchFailed,
+          logWriteFailure: logDispatchLedgerWriteFailure,
+        }) || dispatchSettled;
+        finishIncompleteIteration({
+          status: "retry",
+          reason: unitPhaseResult.reason,
+          retry: true,
+          unitType: iterData.unitType,
+          unitId: iterData.unitId,
+        });
+        finishTurn("retry", "execution", unitPhaseResult.reason);
+        continue;
+      }
 
       // ── Phase 5: Finalize ───────────────────────────────────────────────
 
diff --git a/src/resources/extensions/gsd/auto/phases.ts b/src/resources/extensions/gsd/auto/phases.ts
index 7ac5f619a0..34782b4676 100644
--- a/src/resources/extensions/gsd/auto/phases.ts
+++ b/src/resources/extensions/gsd/auto/phases.ts
@@ -2370,9 +2370,14 @@ export async function runUnitPhase(
             `${unitType} ${unitId} completed with 0 tool calls — context exhaustion, will retry`,
             "warning",
           );
-          // Fall through to next iteration where dispatch will re-derive
-          // and re-dispatch this unit.
-          return { action: "next", data: { unitStartedAt: _resolveCurrentUnitStartedAtForTest(s.currentUnit), requestDispatchedAt: unitResult.requestDispatchedAt } };
+          return {
+            action: "retry",
+            reason: "zero-tool-calls",
+            data: {
+              unitStartedAt: _resolveCurrentUnitStartedAtForTest(s.currentUnit),
+              requestDispatchedAt: unitResult.requestDispatchedAt,
+            },
+          };
         }
       }
     }
diff --git a/src/resources/extensions/gsd/auto/types.ts b/src/resources/extensions/gsd/auto/types.ts
index 402d0f6a05..da5348e952 100644
--- a/src/resources/extensions/gsd/auto/types.ts
+++ b/src/resources/extensions/gsd/auto/types.ts
@@ -77,6 +77,7 @@ export interface UnitResult {
 export type PhaseResult<T = void> =
   | { action: "continue" }
   | { action: "break"; reason: string }
+  | { action: "retry"; reason: string; data?: T }
   | { action: "next"; data: T }
 
 export interface IterationContext {
diff --git a/src/resources/extensions/gsd/tests/auto-loop.test.ts b/src/resources/extensions/gsd/tests/auto-loop.test.ts
index a966ee2b0d..aecce03762 100644
--- a/src/resources/extensions/gsd/tests/auto-loop.test.ts
+++ b/src/resources/extensions/gsd/tests/auto-loop.test.ts
@@ -3123,7 +3123,7 @@ test("autoLoop rejects execute-task with 0 tool calls as hallucinated (#1833)",
   ctx.sessionManager = { getSessionFile: () => "/tmp/session.json" };
   const pi = makeMockPi();
 
-  let iterationCount = 0;
+  let closeoutCount = 0;
   const notifications: string[] = [];
   ctx.ui.notify = (msg: string) => { notifications.push(msg); };
 
@@ -3158,6 +3158,7 @@ test("autoLoop rejects execute-task with 0 tool calls as hallucinated (#1833)",
       };
     },
     closeoutUnit: async () => {
+      closeoutCount++;
       // Simulate snapshotUnitMetrics adding a 0-toolCalls entry to ledger
       mockLedger.units.push({
         type: "execute-task",
@@ -3168,15 +3169,9 @@ test("autoLoop rejects execute-task with 0 tool calls as hallucinated (#1833)",
         tokens: { input: 100, output: 200, total: 300, cacheRead: 0, cacheWrite: 0 },
         cost: 0.50,
       });
+      if (closeoutCount >= 2) s.active = false;
     },
     getLedger: () => mockLedger,
-    postUnitPostVerification: async () => {
-      deps.callLog.push("postUnitPostVerification");
-      iterationCount++;
-      // Deactivate after 2nd iteration
-      s.active = iterationCount < 2;
-      return "continue" as const;
-    },
   });
 
   const loopPromise = autoLoop(ctx, pi, s, deps);
@@ -3189,6 +3184,7 @@ test("autoLoop rejects execute-task with 0 tool calls as hallucinated (#1833)",
   await new Promise((r) => setTimeout(r, 50));
   mockLedger.units.length = 0; // clear previous entry
   (deps as any).closeoutUnit = async () => {
+    closeoutCount++;
     mockLedger.units.push({
       type: "execute-task",
       id: "M001/S01/T01",
@@ -3198,6 +3194,7 @@ test("autoLoop rejects execute-task with 0 tool calls as hallucinated (#1833)",
       tokens: { input: 500, output: 800, total: 1300, cacheRead: 0, cacheWrite: 0 },
       cost: 1.00,
     });
+    if (closeoutCount >= 2) s.active = false;
   };
   resolveAgentEnd(makeEvent());
 
@@ -3219,6 +3216,11 @@ test("autoLoop rejects execute-task with 0 tool calls as hallucinated (#1833)",
     deriveCount >= 2,
     `deriveState should be called at least 2 times for retry (got ${deriveCount})`,
   );
+  assert.equal(
+    deps.callLog.filter((c) => c === "postUnitPreVerification").length,
+    1,
+    "zero-tool retry should bypass finalize on the failed iteration",
+  );
 });
 
 test("autoLoop pauses user-driven deep question instead of flagging 0 tool calls", async () => {
@@ -3310,7 +3312,7 @@ test("autoLoop rejects complete-slice with 0 tool calls as context-exhausted (#2
   ctx.sessionManager = { getSessionFile: () => "/tmp/session.json" };
   const pi = makeMockPi();
 
-  let iterationCount = 0;
+  let closeoutCount = 0;
   const notifications: string[] = [];
   ctx.ui.notify = (msg: string) => { notifications.push(msg); };
 
@@ -3344,6 +3346,7 @@ test("autoLoop rejects complete-slice with 0 tool calls as context-exhausted (#2
       };
     },
     closeoutUnit: async () => {
+      closeoutCount++;
       // complete-slice with 0 tool calls — context exhausted, no progress
       mockLedger.units.push({
         type: "complete-slice",
@@ -3354,15 +3357,9 @@ test("autoLoop rejects complete-slice with 0 tool calls as context-exhausted (#2
         tokens: { input: 50, output: 100, total: 150, cacheRead: 0, cacheWrite: 0 },
         cost: 0.10,
       });
+      if (closeoutCount >= 2) s.active = false;
     },
     getLedger: () => mockLedger,
-    postUnitPostVerification: async () => {
-      deps.callLog.push("postUnitPostVerification");
-      iterationCount++;
-      // Deactivate after 2nd iteration
-      s.active = iterationCount < 2;
-      return "continue" as const;
-    },
   });
 
   const loopPromise = autoLoop(ctx, pi, s, deps);
@@ -3375,6 +3372,7 @@ test("autoLoop rejects complete-slice with 0 tool calls as context-exhausted (#2
   await new Promise((r) => setTimeout(r, 50));
   mockLedger.units.length = 0;
   (deps as any).closeoutUnit = async () => {
+    closeoutCount++;
     mockLedger.units.push({
       type: "complete-slice",
       id: "M001/S01",
@@ -3384,6 +3382,7 @@ test("autoLoop rejects complete-slice with 0 tool calls as context-exhausted (#2
       tokens: { input: 200, output: 400, total: 600, cacheRead: 0, cacheWrite: 0 },
       cost: 0.30,
     });
+    if (closeoutCount >= 2) s.active = false;
   };
   resolveAgentEnd(makeEvent());
 
@@ -3404,6 +3403,11 @@ test("autoLoop rejects complete-slice with 0 tool calls as context-exhausted (#2
     deriveCount >= 2,
     `deriveState should be called at least 2 times for retry (got ${deriveCount})`,
   );
+  assert.equal(
+    deps.callLog.filter((c) => c === "postUnitPreVerification").length,
+    1,
+    "zero-tool retry should bypass finalize on the failed iteration",
+  );
 });
 
 // ─── Worktree health check (#1833) ────────────────────────────────────────