diff --git a/src/hooks/runtime-fallback/auto-retry.ts b/src/hooks/runtime-fallback/auto-retry.ts
index cbb3be2be..d4aef71a0 100644
--- a/src/hooks/runtime-fallback/auto-retry.ts
+++ b/src/hooks/runtime-fallback/auto-retry.ts
@@ -31,6 +31,16 @@ export function createAutoRetryHelpers(deps: HookDeps) {
   } = deps
 
   const abortSessionRequest = async (sessionID: string, source: string): Promise<void> => {
+    // Sources we trigger ourselves to swap in a fallback model. Marking the
+    // session lets handleSessionError tell our abort apart from a user stop
+    // so it doesn't wipe attemptCount and re-enter the retry loop.
+    if (
+      source === "session.status.retry-signal" ||
+      source === "message.updated.retry-signal" ||
+      source === "session.timeout"
+    ) {
+      deps.internallyAbortedSessions.add(sessionID)
+    }
     try {
       await ctx.client.session.abort({ path: { id: sessionID } })
       log(`[${HOOK_NAME}] Aborted in-flight session request (${source})`, { sessionID })
diff --git a/src/hooks/runtime-fallback/event-handler.test.ts b/src/hooks/runtime-fallback/event-handler.test.ts
index a2a323ee2..fe24d9dac 100644
--- a/src/hooks/runtime-fallback/event-handler.test.ts
+++ b/src/hooks/runtime-fallback/event-handler.test.ts
@@ -39,6 +39,7 @@ function createDeps(): HookDeps {
     sessionAwaitingFallbackResult: new Set(),
     sessionFallbackTimeouts: new Map(),
     sessionStatusRetryKeys: new Map(),
+    internallyAbortedSessions: new Set(),
   }
 }
 
@@ -162,4 +163,89 @@ describe("createEventHandler", () => {
     expect(clearCalls).toEqual([sessionID])
     expect(abortCalls).toEqual([])
   })
+
+  it("#given a session we aborted ourselves (internal abort flag set) #when session.error fires with isAbort #then fallback retry state is preserved (issue #4006)", async () => {
+    // given - we just called abortSessionRequest("session.status.retry-signal");
+    // opencode will emit session.error{isAbort:true} as a consequence. The
+    // handler must recognize this as our own abort and NOT wipe attemptCount,
+    // otherwise the next session.status retry signal restarts the loop at 1.
+    const sessionID = "session-internal-abort"
+    const deps = createDeps()
+    const abortCalls: string[] = []
+    const clearCalls: string[] = []
+    const state = createFallbackState("opencode-go/glm-5.1")
+    state.currentModel = "github-copilot/claude-haiku-4.5"
+    state.fallbackIndex = 0
+    state.attemptCount = 1
+    state.pendingFallbackModel = "github-copilot/claude-haiku-4.5"
+    deps.sessionStates.set(sessionID, state)
+    deps.internallyAbortedSessions.add(sessionID)
+    const handler = createEventHandler(deps, createHelpers(deps, abortCalls, clearCalls))
+
+    // when
+    await handler({ event: { type: "session.error", properties: { sessionID, error: { name: "MessageAbortedError" } } } })
+
+    // then - state intact, attemptCount preserved
+    const preserved = deps.sessionStates.get(sessionID)
+    expect(preserved?.attemptCount).toBe(1)
+    expect(preserved?.currentModel).toBe("github-copilot/claude-haiku-4.5")
+    expect(preserved?.fallbackIndex).toBe(0)
+    // flag was consumed so a subsequent user abort still gets the reset path
+    expect(deps.internallyAbortedSessions.has(sessionID)).toBe(false)
+  })
+
+  it("#given an external abort (no internal flag) #when session.error fires with isAbort #then state is still reset as a real cancellation", async () => {
+    // given - regression guard: user-initiated abort path must continue to
+    // wipe state. Only OUR internal aborts get the preservation treatment.
+    const sessionID = "session-external-abort"
+    const deps = createDeps()
+    const abortCalls: string[] = []
+    const clearCalls: string[] = []
+    const state = createFallbackState("opencode-go/glm-5.1")
+    state.currentModel = "github-copilot/claude-haiku-4.5"
+    state.attemptCount = 1
+    deps.sessionStates.set(sessionID, state)
+    // NB: internallyAbortedSessions is empty
+    const handler = createEventHandler(deps, createHelpers(deps, abortCalls, clearCalls))
+
+    // when
+    await handler({ event: { type: "session.error", properties: { sessionID, error: { name: "MessageAbortedError" } } } })
+
+    // then - state reset, behaviour matches pre-fix cancellation path
+    const reset = deps.sessionStates.get(sessionID)
+    expect(reset?.attemptCount).toBe(0)
+    expect(reset?.currentModel).toBe("opencode-go/glm-5.1")
+  })
+
+  it("#given two consecutive internal-abort cycles #when session.error fires each time #then attemptCount can progress past 1", async () => {
+    // given - the failure mode in issue #4006 manifested as attempt:1 looping
+    // forever because every cycle reset attemptCount. This test verifies the
+    // counter actually advances when the internal-abort flag is honored
+    // across multiple iterations.
+    const sessionID = "session-progressing-attempts"
+    const deps = createDeps()
+    const abortCalls: string[] = []
+    const clearCalls: string[] = []
+    const state = createFallbackState("opencode-go/glm-5.1")
+    state.attemptCount = 1
+    state.pendingFallbackModel = "github-copilot/claude-haiku-4.5"
+    deps.sessionStates.set(sessionID, state)
+    const handler = createEventHandler(deps, createHelpers(deps, abortCalls, clearCalls))
+
+    // iteration 1: internal abort -> session.error{isAbort:true}
+    deps.internallyAbortedSessions.add(sessionID)
+    await handler({ event: { type: "session.error", properties: { sessionID, error: { name: "MessageAbortedError" } } } })
+    expect(deps.sessionStates.get(sessionID)?.attemptCount).toBe(1)
+
+    // simulate the next retry signal advancing the counter
+    const advanced = deps.sessionStates.get(sessionID)!
+    advanced.attemptCount = 2
+
+    // iteration 2: another internal abort
+    deps.internallyAbortedSessions.add(sessionID)
+    await handler({ event: { type: "session.error", properties: { sessionID, error: { name: "MessageAbortedError" } } } })
+
+    // then - counter is at 2, not reset to 0
+    expect(deps.sessionStates.get(sessionID)?.attemptCount).toBe(2)
+  })
 })
diff --git a/src/hooks/runtime-fallback/event-handler.ts b/src/hooks/runtime-fallback/event-handler.ts
index 70e7af5ba..2ea6948c1 100644
--- a/src/hooks/runtime-fallback/event-handler.ts
+++ b/src/hooks/runtime-fallback/event-handler.ts
@@ -138,6 +138,14 @@ export function createEventHandler(deps: HookDeps, helpers: AutoRetryHelpers) {
     const resolvedAgent = await helpers.resolveAgentForSessionFromContext(sessionID, agent)
 
     if (isAbortError(error)) {
+      // If we triggered this abort to swap in a fallback model, consume the
+      // flag and preserve state — wiping attemptCount here is what causes
+      // the infinite retry loop (issue #4006).
+      if (deps.internallyAbortedSessions.has(sessionID)) {
+        deps.internallyAbortedSessions.delete(sessionID)
+        log(`[${HOOK_NAME}] session.error matched internal abort; preserving retry state`, { sessionID, resolvedAgent })
+        return
+      }
       cancelledSessions.add(sessionID)
       resetRetryState(sessionID)
       log(`[${HOOK_NAME}] session.error matched cancellation; cleared retry state`, { sessionID, resolvedAgent })
diff --git a/src/hooks/runtime-fallback/hook.ts b/src/hooks/runtime-fallback/hook.ts
index f3509ab0a..4ecd95d99 100644
--- a/src/hooks/runtime-fallback/hook.ts
+++ b/src/hooks/runtime-fallback/hook.ts
@@ -33,6 +33,7 @@ export function createRuntimeFallbackHook(
     sessionAwaitingFallbackResult: new Set(),
     sessionFallbackTimeouts: new Map(),
     sessionStatusRetryKeys: new Map(),
+    internallyAbortedSessions: new Set(),
   }
 
   const helpers = createAutoRetryHelpers(deps)
@@ -81,6 +82,7 @@ export function createRuntimeFallbackHook(
     deps.sessionAwaitingFallbackResult.clear()
     deps.sessionFallbackTimeouts.clear()
     deps.sessionStatusRetryKeys.clear()
+    deps.internallyAbortedSessions.clear()
   }
 
   return {
diff --git a/src/hooks/runtime-fallback/types.ts b/src/hooks/runtime-fallback/types.ts
index ecf18a4f5..c05bfe952 100644
--- a/src/hooks/runtime-fallback/types.ts
+++ b/src/hooks/runtime-fallback/types.ts
@@ -74,4 +74,12 @@ export interface HookDeps {
   sessionAwaitingFallbackResult: Set<string>
   sessionFallbackTimeouts: Map<string, RuntimeFallbackTimeout>
   sessionStatusRetryKeys: Map<string, string>
+  /**
+   * Sessions whose in-flight request was aborted by us (to swap in a fallback
+   * model), as opposed to a user-initiated stop. Consumed by
+   * handleSessionError so the resulting session.error{isAbort:true} does NOT
+   * reset attemptCount — that reset is what was driving the infinite retry
+   * loop (every cycle started over at attempt:1). See issue #4006.
+   */
+  internallyAbortedSessions: Set<string>
 }