diff --git a/apps/desktop/AGENTS.md b/apps/desktop/AGENTS.md
index 3e897a4f5ea..aa7a8c5bbcd 100644
--- a/apps/desktop/AGENTS.md
+++ b/apps/desktop/AGENTS.md
@@ -1,4 +1,43 @@
 # Implementation details
-For Electron interprocess communnication, ALWAYS use trpc as defined in `src/lib/trpc`
+For Electron interprocess communication, ALWAYS use trpc as defined in `src/lib/trpc`
 Please use alias as defined in `tsconfig.json` when possible
-Prefer zustand for state management if it makes sense. Do not use effect unless absolutely necessary.
\ No newline at end of file
+Prefer zustand for state management if it makes sense. Do not use effect unless absolutely necessary.
+
+## tRPC Subscriptions (trpc-electron)
+
+**Important:** While standard tRPC recommends async generators for subscriptions, `trpc-electron` (used for Electron IPC) **only supports observables**. The library explicitly checks `isObservable(result)` and throws an error otherwise. Use the `observable` pattern:
+
+```typescript
+// CORRECT for trpc-electron - use observable pattern
+import { observable } from "@trpc/server/observable";
+
+export const createMyRouter = () => {
+  return router({
+    subscribe: publicProcedure.subscription(() => {
+      return observable<MyEvent>((emit) => {
+        const handler = (data: MyData) => {
+          emit.next({ type: "my-event", data });
+        };
+
+        myEmitter.on("my-event", handler);
+
+        return () => {
+          myEmitter.off("my-event", handler);
+        };
+      });
+    }),
+  });
+};
+
+// WRONG for trpc-electron - async generators don't work with IPC transport
+export const createMyRouter = () => {
+  return router({
+    subscribe: publicProcedure.subscription(async function* () {
+      // This will NOT work - the generator never gets invoked
+      while (true) {
+        yield await getNextEvent();
+      }
+    }),
+  });
+};
+```
\ No newline at end of file
diff --git a/apps/desktop/src/lib/trpc/routers/notifications.ts b/apps/desktop/src/lib/trpc/routers/notifications.ts
index e658226e639..eb539b8122a 100644
--- a/apps/desktop/src/lib/trpc/routers/notifications.ts
+++ b/apps/desktop/src/lib/trpc/routers/notifications.ts
@@ -1,3 +1,4 @@
+import { observable } from "@trpc/server/observable";
 import {
 	type AgentCompleteEvent,
 	type NotificationIds,
@@ -15,36 +16,27 @@ type NotificationEvent =
 
 export const createNotificationsRouter = () => {
 	return router({
-		subscribe: publicProcedure.subscription(async function* () {
-			const queue: NotificationEvent[] = [];
+		subscribe: publicProcedure.subscription(() => {
+			return observable<NotificationEvent>((emit) => {
+				const onComplete = (data: AgentCompleteEvent) => {
+					emit.next({ type: NOTIFICATION_EVENTS.AGENT_COMPLETE, data });
+				};
 
-			const onComplete = (data: AgentCompleteEvent) => {
-				queue.push({ type: NOTIFICATION_EVENTS.AGENT_COMPLETE, data });
-			};
+				const onFocusTab = (data: NotificationIds) => {
+					emit.next({ type: NOTIFICATION_EVENTS.FOCUS_TAB, data });
+				};
 
-			const onFocusTab = (data: NotificationIds) => {
-				queue.push({ type: NOTIFICATION_EVENTS.FOCUS_TAB, data });
-			};
+				notificationsEmitter.on(NOTIFICATION_EVENTS.AGENT_COMPLETE, onComplete);
+				notificationsEmitter.on(NOTIFICATION_EVENTS.FOCUS_TAB, onFocusTab);
 
-			notificationsEmitter.on(NOTIFICATION_EVENTS.AGENT_COMPLETE, onComplete);
-			notificationsEmitter.on(NOTIFICATION_EVENTS.FOCUS_TAB, onFocusTab);
-
-			try {
-				while (true) {
-					const event = queue.shift();
-					if (event) {
-						yield event;
-					} else {
-						await new Promise((resolve) => setTimeout(resolve, 100));
-					}
-				}
-			} finally {
-				notificationsEmitter.off(
-					NOTIFICATION_EVENTS.AGENT_COMPLETE,
-					onComplete,
-				);
-				notificationsEmitter.off(NOTIFICATION_EVENTS.FOCUS_TAB, onFocusTab);
-			}
+				return () => {
+					notificationsEmitter.off(
+						NOTIFICATION_EVENTS.AGENT_COMPLETE,
+						onComplete,
+					);
+					notificationsEmitter.off(NOTIFICATION_EVENTS.FOCUS_TAB, onFocusTab);
+				};
+			});
 		}),
 	});
 };
diff --git a/apps/desktop/src/renderer/stores/tabs/useAgentHookListener.ts b/apps/desktop/src/renderer/stores/tabs/useAgentHookListener.ts
index 3863f189815..0b158830c49 100644
--- a/apps/desktop/src/renderer/stores/tabs/useAgentHookListener.ts
+++ b/apps/desktop/src/renderer/stores/tabs/useAgentHookListener.ts
@@ -1,3 +1,4 @@
+import { useRef } from "react";
 import { trpc } from "renderer/lib/trpc";
 import { useSetActiveWorkspace } from "renderer/react-query/workspaces/useSetActiveWorkspace";
 import { NOTIFICATION_EVENTS } from "shared/constants";
@@ -13,6 +14,10 @@ export function useAgentHookListener() {
 	const setActiveWorkspace = useSetActiveWorkspace();
 	const { data: activeWorkspace } = trpc.workspaces.getActive.useQuery();
 
+	// Use ref to avoid stale closure in subscription callback
+	const activeWorkspaceRef = useRef(activeWorkspace);
+	activeWorkspaceRef.current = activeWorkspace;
+
 	trpc.notifications.subscribe.useSubscription(undefined, {
 		onData: (event) => {
 			if (!event.data) return;
@@ -26,17 +31,16 @@ export function useAgentHookListener() {
 			if (event.type === NOTIFICATION_EVENTS.AGENT_COMPLETE) {
 				if (!paneId) return;
 
-				// Only show red dot if not already viewing this pane
 				const activeTabId = state.activeTabIds[workspaceId];
 				const focusedPaneId = activeTabId && state.focusedPaneIds[activeTabId];
 				const isAlreadyActive =
-					activeWorkspace?.id === workspaceId && focusedPaneId === paneId;
+					activeWorkspaceRef.current?.id === workspaceId &&
+					focusedPaneId === paneId;
 
 				if (!isAlreadyActive) {
 					state.setNeedsAttention(paneId, true);
 				}
 			} else if (event.type === NOTIFICATION_EVENTS.FOCUS_TAB) {
-				// Switch to workspace view if not already there
 				const appState = useAppStore.getState();
 				if (appState.currentView !== "workspace") {
 					appState.setView("workspace");