diff --git a/src/plugin/event.test.ts b/src/plugin/event.test.ts
index 8db998c43..67089e2a5 100644
--- a/src/plugin/event.test.ts
+++ b/src/plugin/event.test.ts
@@ -1,8 +1,15 @@
-import { describe, it, expect } from "bun:test"
+import { describe, it, expect, afterEach } from "bun:test"
 
 import { createEventHandler } from "./event"
+import { createChatMessageHandler } from "./chat-message"
+import { _resetForTesting, setMainSession } from "../features/claude-code-session-state"
+import { clearPendingModelFallback, createModelFallbackHook } from "../hooks/model-fallback/hook"
 
-type EventInput = { event: { type: string; properties?: Record<string, unknown> } }
+type EventInput = { event: { type: string; properties?: unknown } }
+
+afterEach(() => {
+	_resetForTesting()
+})
 
 	describe("createEventHandler - idle deduplication", () => {
 	it("Order A (status→idle): synthetic idle deduped - real idle not dispatched again", async () => {
@@ -66,7 +73,7 @@ type EventInput = { event: { type: string; properties?: Record<string, unknown>
 		//#then - synthetic idle dispatched once
 		expect(dispatchCalls.length).toBe(1)
 		expect(dispatchCalls[0].event.type).toBe("session.idle")
-		expect(dispatchCalls[0].event.properties?.sessionID).toBe(sessionId)
+		expect((dispatchCalls[0].event.properties as { sessionID?: string } | undefined)?.sessionID).toBe(sessionId)
 
 		//#when - real session.idle arrives
 		await eventHandler({
@@ -142,7 +149,7 @@ type EventInput = { event: { type: string; properties?: Record<string, unknown>
 		//#then - real idle dispatched once
 		expect(dispatchCalls.length).toBe(1)
 		expect(dispatchCalls[0].event.type).toBe("session.idle")
-		expect(dispatchCalls[0].event.properties?.sessionID).toBe(sessionId)
+		expect((dispatchCalls[0].event.properties as { sessionID?: string } | undefined)?.sessionID).toBe(sessionId)
 
 		//#when - session.status with idle (generates synthetic idle)
 		await eventHandler({
@@ -245,7 +252,7 @@ type EventInput = { event: { type: string; properties?: Record<string, unknown>
 			event: {
 				type: "message.updated",
 			},
-		})
+		} as any)
 
 		//#then - both maps should be pruned (no dedup should occur for new events)
 		// We verify by checking that a new idle event for same session is dispatched
@@ -287,7 +294,7 @@ type EventInput = { event: { type: string; properties?: Record<string, unknown>
 				stopContinuationGuard: { event: async () => {} },
 				compactionTodoPreserver: { event: async () => {} },
 				atlasHook: { handler: async () => {} },
-			},
+			} as any,
 		})
 
 		await eventHandlerWithMock({
@@ -426,7 +433,7 @@ describe("createEventHandler - event forwarding", () => {
 				type: "session.deleted",
 				properties: { info: { id: sessionID } },
 			},
-		})
+		} as any)
 
 		//#then
 		expect(forwardedEvents.length).toBe(1)
@@ -435,3 +442,146 @@ describe("createEventHandler - event forwarding", () => {
 		expect(deletedSessions).toEqual([sessionID])
 	})
 })
+
+describe("createEventHandler - retry dedupe lifecycle", () => {
+	it("re-handles same retry key after session recovers to idle status", async () => {
+		//#given
+		const sessionID = "ses_retry_recovery_rearm"
+		setMainSession(sessionID)
+		clearPendingModelFallback(sessionID)
+
+		const abortCalls: string[] = []
+		const promptCalls: string[] = []
+		const modelFallback = createModelFallbackHook()
+
+		const eventHandler = createEventHandler({
+			ctx: {
+				directory: "/tmp",
+				client: {
+					session: {
+						abort: async ({ path }: { path: { id: string } }) => {
+							abortCalls.push(path.id)
+							return {}
+						},
+						prompt: async ({ path }: { path: { id: string } }) => {
+							promptCalls.push(path.id)
+							return {}
+						},
+					},
+				},
+			} as any,
+			pluginConfig: {} as any,
+			firstMessageVariantGate: {
+				markSessionCreated: () => {},
+				clear: () => {},
+			},
+			managers: {
+				tmuxSessionManager: {
+					onSessionCreated: async () => {},
+					onSessionDeleted: async () => {},
+				},
+				skillMcpManager: {
+					disconnectSession: async () => {},
+				},
+			} as any,
+			hooks: {
+				modelFallback,
+				stopContinuationGuard: { isStopped: () => false },
+			} as any,
+		})
+
+		const chatMessageHandler = createChatMessageHandler({
+			ctx: {
+				client: {
+					tui: {
+						showToast: async () => ({}),
+					},
+				},
+			} as any,
+			pluginConfig: {} as any,
+			firstMessageVariantGate: {
+				shouldOverride: () => false,
+				markApplied: () => {},
+			},
+			hooks: {
+				modelFallback,
+				stopContinuationGuard: null,
+				keywordDetector: null,
+				claudeCodeHooks: null,
+				autoSlashCommand: null,
+				startWork: null,
+				ralphLoop: null,
+			} as any,
+		})
+
+		const retryStatus = {
+			type: "retry",
+			attempt: 1,
+			message: "All credentials for model claude-opus-4-6-thinking are cooling down [retrying in 7m 56s attempt #1]",
+			next: 476,
+		} as const
+
+		await eventHandler({
+			event: {
+				type: "message.updated",
+				properties: {
+					info: {
+						id: "msg_user_retry_rearm",
+						sessionID,
+						role: "user",
+						modelID: "claude-opus-4-6-thinking",
+						providerID: "anthropic",
+						agent: "Sisyphus (Ultraworker)",
+					},
+				},
+			},
+		} as any)
+
+		//#when - first retry key is handled
+		await eventHandler({
+			event: {
+				type: "session.status",
+				properties: {
+					sessionID,
+					status: retryStatus,
+				},
+			},
+		} as any)
+
+		const firstOutput = { message: {}, parts: [] as Array<{ type: string; text?: string }> }
+		await chatMessageHandler(
+			{
+				sessionID,
+				agent: "sisyphus",
+				model: { providerID: "anthropic", modelID: "claude-opus-4-6-thinking" },
+			},
+			firstOutput,
+		)
+
+		//#when - session recovers to non-retry idle state
+		await eventHandler({
+			event: {
+				type: "session.status",
+				properties: {
+					sessionID,
+					status: { type: "idle" },
+				},
+			},
+		} as any)
+
+		//#when - same retry key appears again after recovery
+		await eventHandler({
+			event: {
+				type: "session.status",
+				properties: {
+					sessionID,
+					status: retryStatus,
+				},
+			},
+		} as any)
+
+		//#then
+		expect(abortCalls).toEqual([sessionID, sessionID])
+		expect(promptCalls).toEqual([sessionID, sessionID])
+	})
+})
diff --git a/src/plugin/event.ts b/src/plugin/event.ts
index d18ec3691..45765c025 100644
--- a/src/plugin/event.ts
+++ b/src/plugin/event.ts
@@ -421,6 +421,12 @@ export function createEventHandler(args: {
       const sessionID = props?.sessionID as string | undefined;
       const status = props?.status as { type?: string; attempt?: number; message?: string; next?: number } | undefined;
 
+      // Retry dedupe lifecycle: set key when a retry status is handled, clear it after recovery
+      // (non-retry idle) so future failures with the same key can trigger fallback again.
+      if (sessionID && status?.type === "idle") {
+        lastHandledRetryStatusKey.delete(sessionID);
+      }
+
       if (sessionID && status?.type === "retry" && isModelFallbackEnabled && !isRuntimeFallbackEnabled) {
         try {
           const retryMessage = typeof status.message === "string" ? status.message : "";