diff --git a/packages/cli/src/ui/commands/approvalModeCommand.test.ts b/packages/cli/src/ui/commands/approvalModeCommand.test.ts
index 2cbae6319..c036bceda 100644
--- a/packages/cli/src/ui/commands/approvalModeCommand.test.ts
+++ b/packages/cli/src/ui/commands/approvalModeCommand.test.ts
@@ -146,6 +146,25 @@ describe('approvalModeCommand', () => {
     });
   });
 
+  describe('untrusted folder handling', () => {
+    it('should return error when setApprovalMode throws (e.g., untrusted folder)', async () => {
+      const errorMessage =
+        'Cannot enable privileged approval modes in an untrusted folder.';
+      mockSetApprovalMode.mockImplementation(() => {
+        throw new Error(errorMessage);
+      });
+
+      const result = (await approvalModeCommand.action?.(
+        mockContext,
+        'yolo',
+      )) as MessageActionReturn;
+
+      expect(result.type).toBe('message');
+      expect(result.messageType).toBe('error');
+      expect(result.content).toBe(errorMessage);
+    });
+  });
+
   it('should not have subcommands', () => {
     expect(approvalModeCommand.subCommands).toBeUndefined();
   });
diff --git a/packages/cli/src/ui/commands/approvalModeCommand.ts b/packages/cli/src/ui/commands/approvalModeCommand.ts
index c53a4184d..f41e4b1cf 100644
--- a/packages/cli/src/ui/commands/approvalModeCommand.ts
+++ b/packages/cli/src/ui/commands/approvalModeCommand.ts
@@ -63,7 +63,15 @@ export const approvalModeCommand: SlashCommand = {
     // Set the mode for current session only (not persisted)
     const { config } = context.services;
     if (config) {
-      config.setApprovalMode(mode);
+      try {
+        config.setApprovalMode(mode);
+      } catch (e) {
+        return {
+          type: 'message',
+          messageType: 'error',
+          content: (e as Error).message,
+        };
+      }
     }
 
     return {