diff --git a/CHANGELOG.md b/CHANGELOG.md
index dda4472..6f244bc 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -4,6 +4,17 @@ All notable changes to this project will be documented in this file.
 
 The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.1.0/).
 
+## [0.7.2] - 2026-03-02
+
+### Fixed
+
+- 🐳 **PTY device exhaustion** — fixed `OSError: out of pty devices` by closing leaked file descriptors when subprocess creation fails after `pty.openpty()`. Both `PtyRunner` (command execution) and `create_terminal` (interactive sessions) now properly clean up on error paths.
+- 🛡️ **Graceful PTY error handling** — `create_terminal` now returns a clear `503` with a descriptive message when the system runs out of PTY devices, instead of an unhandled server error.
+
+### Added
+
+- 🔒 **Terminal session limit** — new `OPEN_TERMINAL_MAX_SESSIONS` environment variable (default `16`) caps the number of concurrent interactive terminal sessions. Dead sessions are automatically pruned before the limit is checked. Returns `429` when the limit is reached.
+
 ## [0.7.1] - 2026-03-02
 
 ### Fixed
diff --git a/open_terminal/env.py b/open_terminal/env.py
index 03e57e1..5bfadcb 100644
--- a/open_terminal/env.py
+++ b/open_terminal/env.py
@@ -58,3 +58,10 @@ BINARY_FILE_MIME_PREFIXES = [
     ).split(",")
     if p.strip()
 ]
+
+MAX_TERMINAL_SESSIONS = int(
+    os.environ.get(
+        "OPEN_TERMINAL_MAX_SESSIONS",
+        config.get("max_terminal_sessions", "16"),
+    )
+)
diff --git a/open_terminal/main.py b/open_terminal/main.py
index 905aa11..3592ab1 100644
--- a/open_terminal/main.py
+++ b/open_terminal/main.py
@@ -24,7 +24,7 @@ from fastapi.security import HTTPAuthorizationCredentials, HTTPBearer
 from pydantic import BaseModel, Field
 from pypdf import PdfReader
 
-from open_terminal.env import API_KEY, BINARY_FILE_MIME_PREFIXES, CORS_ALLOWED_ORIGINS, LOG_DIR
+from open_terminal.env import API_KEY, BINARY_FILE_MIME_PREFIXES, CORS_ALLOWED_ORIGINS, LOG_DIR, MAX_TERMINAL_SESSIONS
 from open_terminal.runner import PipeRunner, ProcessRunner, create_runner
 
 try:
@@ -69,7 +69,7 @@ async def verify_api_key(
 app = FastAPI(
     title="Open Terminal",
     description="A remote terminal API.",
-    version="0.7.1",
+    version="0.7.2",
 )
 app.add_middleware(
     CORSMiddleware,
@@ -1140,6 +1140,7 @@ def _cleanup_session(session_id: str):
             process.kill()
 
 
+
 @app.post("/api/terminals", dependencies=[Depends(verify_api_key)], include_in_schema=False)
 async def create_terminal(request: Request):
     """Create a new terminal session and return its ID."""
@@ -1148,20 +1149,44 @@ async def create_terminal(request: Request):
             {"error": "PTY not available on this platform"}, status_code=503
         )
 
-    session_id = str(_uuid.uuid4())[:8]
-    master_fd, slave_fd = pty.openpty()
-    fcntl.ioctl(slave_fd, termios.TIOCSWINSZ, struct.pack("HHHH", 24, 80, 0, 0))
+    # Prune dead sessions before checking limit
+    dead = [sid for sid, s in _terminal_sessions.items() if s["process"].poll() is not None]
+    for sid in dead:
+        _cleanup_session(sid)
 
-    shell = os.environ.get("SHELL", "/bin/sh")
-    process = subprocess.Popen(
-        [shell],
-        stdin=slave_fd,
-        stdout=slave_fd,
-        stderr=slave_fd,
-        cwd=os.getcwd(),
-        env=os.environ.copy(),
-        start_new_session=True,
-    )
+    if len(_terminal_sessions) >= MAX_TERMINAL_SESSIONS:
+        return JSONResponse(
+            {"error": f"Maximum number of terminal sessions ({MAX_TERMINAL_SESSIONS}) reached"},
+            status_code=429,
+        )
+
+    session_id = str(_uuid.uuid4())[:8]
+
+    try:
+        master_fd, slave_fd = pty.openpty()
+    except OSError:
+        return JSONResponse(
+            {"error": "Out of PTY devices — too many active terminals or processes"},
+            status_code=503,
+        )
+
+    try:
+        fcntl.ioctl(slave_fd, termios.TIOCSWINSZ, struct.pack("HHHH", 24, 80, 0, 0))
+
+        shell = os.environ.get("SHELL", "/bin/sh")
+        process = subprocess.Popen(
+            [shell],
+            stdin=slave_fd,
+            stdout=slave_fd,
+            stderr=slave_fd,
+            cwd=os.getcwd(),
+            env=os.environ.copy(),
+            start_new_session=True,
+        )
+    except Exception:
+        os.close(slave_fd)
+        os.close(master_fd)
+        raise
     os.close(slave_fd)
 
     # Set non-blocking
diff --git a/open_terminal/runner.py b/open_terminal/runner.py
index e1b9386..ab07836 100644
--- a/open_terminal/runner.py
+++ b/open_terminal/runner.py
@@ -51,18 +51,23 @@ class PtyRunner(ProcessRunner):
 
     def __init__(self, command: str, cwd: str | None, env: dict | None):
         master_fd, slave_fd = pty.openpty()
-        # Set a reasonable default window size (80x24).
-        fcntl.ioctl(slave_fd, termios.TIOCSWINSZ, struct.pack("HHHH", 24, 80, 0, 0))
-        self._process = subprocess.Popen(
-            command,
-            shell=True,
-            stdin=slave_fd,
-            stdout=slave_fd,
-            stderr=slave_fd,
-            cwd=cwd,
-            env=env,
-            start_new_session=True,
-        )
+        try:
+            # Set a reasonable default window size (80x24).
+            fcntl.ioctl(slave_fd, termios.TIOCSWINSZ, struct.pack("HHHH", 24, 80, 0, 0))
+            self._process = subprocess.Popen(
+                command,
+                shell=True,
+                stdin=slave_fd,
+                stdout=slave_fd,
+                stderr=slave_fd,
+                cwd=cwd,
+                env=env,
+                start_new_session=True,
+            )
+        except Exception:
+            os.close(slave_fd)
+            os.close(master_fd)
+            raise
         os.close(slave_fd)
         self._master_fd = master_fd
 
diff --git a/pyproject.toml b/pyproject.toml
index eb7d4e2..eb602d8 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -1,6 +1,6 @@
 [project]
 name = "open-terminal"
-version = "0.7.1"
+version = "0.7.2"
 description = "A remote terminal API."
 readme = "README.md"
 authors = [