diff --git a/packages/coding-agent/CHANGELOG.md b/packages/coding-agent/CHANGELOG.md
index 21c3ddc3..021cca96 100644
--- a/packages/coding-agent/CHANGELOG.md
+++ b/packages/coding-agent/CHANGELOG.md
@@ -10,6 +10,7 @@
 ### Fixed
 
 - Fixed extension messages rendering twice on startup when `pi.sendMessage({ display: true })` is called during `session_start` ([#765](https://github.com/badlogic/pi-mono/pull/765) by [@dannote](https://github.com/dannote))
+- Fixed `PI_CODING_AGENT_DIR` env var not expanding tilde (`~`) to home directory ([#768](https://github.com/badlogic/pi-mono/pull/778) by [@aliou](https://github.com/aliou))
 
 ## [0.47.0] - 2026-01-16
 
diff --git a/packages/coding-agent/src/config.ts b/packages/coding-agent/src/config.ts
index 9d9af583..48c3d7a4 100644
--- a/packages/coding-agent/src/config.ts
+++ b/packages/coding-agent/src/config.ts
@@ -122,7 +122,14 @@ export const ENV_AGENT_DIR = `${APP_NAME.toUpperCase()}_CODING_AGENT_DIR`;
 
 /** Get the agent config directory (e.g., ~/.pi/agent/) */
 export function getAgentDir(): string {
-	return process.env[ENV_AGENT_DIR] || join(homedir(), CONFIG_DIR_NAME, "agent");
+	const envDir = process.env[ENV_AGENT_DIR];
+	if (envDir) {
+		// Expand tilde to home directory
+		if (envDir === "~") return homedir();
+		if (envDir.startsWith("~/")) return homedir() + envDir.slice(1);
+		return envDir;
+	}
+	return join(homedir(), CONFIG_DIR_NAME, "agent");
 }
 
 /** Get path to user's custom themes directory */