diff --git a/src/sandbox/allowlist.c b/src/sandbox/allowlist.c
index c3033ce..9664767 100644
--- a/src/sandbox/allowlist.c
+++ b/src/sandbox/allowlist.c
@@ -70,11 +70,100 @@ static void set_reason(char *buf, size_t cap, const char *prefix, const char *de
     buf[cap - 1] = '\0';
 }
 
-/** Return 1 if @p s begins with prefix after any leading whitespace. */
+/**
+ * Strip one matching pair of surrounding quotes so `"$HOME/x"` is checked
+ * the same way as `$HOME/x`. /bin/sh still expands the inner form.
+ */
+static char *strip_surrounding_quotes(char *tok)
+{
+    size_t n;
+    if (!tok || !tok[0]) return tok;
+    n = strlen(tok);
+    if (n >= 2 && ((tok[0] == '\'' && tok[n - 1] == '\'') ||
+                   (tok[0] == '"' && tok[n - 1] == '"'))) {
+        tok[n - 1] = '\0';
+        return tok + 1;
+    }
+    return tok;
+}
+
+/**
+ * Return 1 if @p tok looks like a filesystem path (or expands to one).
+ * Includes shell parameter expansions such as `$HOME/...` and `${PWD}/...`
+ * that never start with `/` `~` `.` but become absolute after /bin/sh expands them.
+ */
 static int has_path_chars(const char *tok)
 {
-    if (!tok) return 0;
-    return tok[0] == '/' || tok[0] == '~' || tok[0] == '.';
+    if (!tok || !tok[0]) return 0;
+    if (tok[0] == '/' || tok[0] == '~' || tok[0] == '.') return 1;
+    /* `$HOME`, `${HOME}/x`, `$PWD/../out`, `$(pwd)/x`, ANSI-C `$'\x2f...'`. */
+    if (tok[0] == '$') return 1;
+    return 0;
+}
+
+/**
+ * Expand a leading `~`, `$HOME` / `${HOME}`, or `$PWD` / `${PWD}` for workspace checks.
+ * Unknown `$...` forms fail closed (return -1) so workspace_only cannot be bypassed
+ * via arbitrary parameter / command substitutions.
+ * @return 0 and writes into @p expanded on success; -1 if the token must be blocked.
+ */
+static int expand_shell_path_token(const char *tok, char *expanded, size_t expanded_cap)
+{
+    const char *home;
+    const char *cwd;
+    const char *suffix;
+    int n;
+
+    if (!tok || !expanded || expanded_cap == 0) return -1;
+
+    if (tok[0] == '~') {
+        home = getenv("HOME");
+        if (home)
+            n = snprintf(expanded, expanded_cap, "%s%s", home, tok + 1);
+        else
+            n = snprintf(expanded, expanded_cap, "%s", tok);
+        return (n < 0 || (size_t)n >= expanded_cap) ? -1 : 0;
+    }
+
+    if (tok[0] != '$') {
+        if (strlen(tok) >= expanded_cap) return -1;
+        memcpy(expanded, tok, strlen(tok) + 1);
+        return 0;
+    }
+
+    /* Fail closed on ANSI-C quoting and command substitution (encoded / dynamic paths). */
+    if (tok[1] == '\'' || tok[1] == '"' || tok[1] == '(')
+        return -1;
+
+    home = getenv("HOME");
+    cwd = getenv("PWD");
+    if (strncmp(tok, "${HOME}", 7) == 0) {
+        suffix = tok + 7;
+        if (!home) return -1;
+        n = snprintf(expanded, expanded_cap, "%s%s", home, suffix);
+        return (n < 0 || (size_t)n >= expanded_cap) ? -1 : 0;
+    }
+    if (strncmp(tok, "$HOME", 5) == 0 && (tok[5] == '\0' || tok[5] == '/')) {
+        suffix = tok + 5;
+        if (!home) return -1;
+        n = snprintf(expanded, expanded_cap, "%s%s", home, suffix);
+        return (n < 0 || (size_t)n >= expanded_cap) ? -1 : 0;
+    }
+    if (strncmp(tok, "${PWD}", 6) == 0) {
+        suffix = tok + 6;
+        if (!cwd) return -1;
+        n = snprintf(expanded, expanded_cap, "%s%s", cwd, suffix);
+        return (n < 0 || (size_t)n >= expanded_cap) ? -1 : 0;
+    }
+    if (strncmp(tok, "$PWD", 4) == 0 && (tok[4] == '\0' || tok[4] == '/')) {
+        suffix = tok + 4;
+        if (!cwd) return -1;
+        n = snprintf(expanded, expanded_cap, "%s%s", cwd, suffix);
+        return (n < 0 || (size_t)n >= expanded_cap) ? -1 : 0;
+    }
+
+    /* Other `$VAR` / `${VAR}` forms: fail closed under workspace_only. */
+    return -1;
 }
 
 /* ------------------------------------------------------------------ */
@@ -166,21 +255,22 @@ int allowlist_check_shell_command(const char *cmd, const allowlist_config_t *cfg
     if (!cmd_copy) return 0; /* fail-open on OOM */
     tok = strtok_r(cmd_copy, " \t\n;|&><", &saveptr);
     while (tok) {
+        tok = strip_surrounding_quotes(tok);
         if (has_path_chars(tok)) {
-            /* Expand a leading tilde naively */
             char expanded[PATH_MAX];
-            if (tok[0] == '~') {
-                const char *home = getenv("HOME");
-                if (home)
-                    snprintf(expanded, sizeof(expanded), "%s%s", home, tok + 1);
-                else
-                    snprintf(expanded, sizeof(expanded), "%s", tok);
-                tok = expanded;
+            const char *check_path = tok;
+            if (expand_shell_path_token(tok, expanded, sizeof(expanded)) != 0) {
+                set_reason(reason_buf, reason_cap,
+                           "command blocked: unresolved shell path expansion: ", tok);
+                fprintf(stderr, "allowlist: blocked unresolved shell path: %s\n", tok);
+                free(cmd_copy);
+                return 1;
             }
-            if (!allowlist_path_is_under_workspace(tok, workspace_root)) {
+            check_path = expanded;
+            if (!allowlist_path_is_under_workspace(check_path, workspace_root)) {
                 set_reason(reason_buf, reason_cap,
-                           "command blocked: path escapes workspace: ", tok);
-                fprintf(stderr, "allowlist: blocked path outside workspace: %s\n", tok);
+                           "command blocked: path escapes workspace: ", check_path);
+                fprintf(stderr, "allowlist: blocked path outside workspace: %s\n", check_path);
                 free(cmd_copy);
                 return 1;
             }
diff --git a/src/sandbox/allowlist.h b/src/sandbox/allowlist.h
index 76a4e4f..5bc7da0 100644
--- a/src/sandbox/allowlist.h
+++ b/src/sandbox/allowlist.h
@@ -9,7 +9,9 @@
  *     "mkfs", "dd of=/dev/", fork bombs, etc.).
  *  2. An optional workspace-containment check: if enabled via allowlist_config_t,
  *     path-like tokens in the command are resolved with realpath(3) and rejected
- *     when they escape the declared workspace root.
+ *     when they escape the declared workspace root. Tokens that become absolute only
+ *     after shell expansion (`$HOME/...`, `"$HOME/..."`, `${PWD}/...`, ANSI-C
+ *     `$'\x2f...'`) are unquoted, expanded, or fail-closed before that check.
  *
  * Both checks are intentionally conservative and may produce false positives.
  * They are a best-effort defence-in-depth layer; real isolation is provided by
diff --git a/tests/test_allowlist.c b/tests/test_allowlist.c
index 5d2ac74..6ea9131 100644
--- a/tests/test_allowlist.c
+++ b/tests/test_allowlist.c
@@ -144,6 +144,54 @@ static int test_workspace_only_allows_inside_path(void)
 	return 0;
 }
 
+/**
+ * Shell expands `$HOME` / `${HOME}` / `$PWD` before open(2). Tokens never start
+ * with `/` `~` `.`, so the old has_path_chars gate skipped them and workspace_only
+ * could not stop `cat $HOME/.shellclaw/auth_tokens.json`.
+ */
+static int test_workspace_only_blocks_home_env_expansion(void)
+{
+	allowlist_config_t cfg;
+	char reason[256];
+	char ws[] = "/tmp/sc_al_home_XXXXXX";
+	char *dir;
+	const char *home = getenv("HOME");
+
+	dir = mkdtemp(ws);
+	if (!dir) {
+		fprintf(stderr, "test_workspace_only_blocks_home_env_expansion: mkdtemp failed\n");
+		return 1;
+	}
+	cfg.workspace_path = dir;
+	cfg.workspace_only = 1;
+	reason[0] = '\0';
+	ASSERT(allowlist_check_shell_command("cat $HOME/.shellclaw/auth_tokens.json",
+	                                    &cfg, reason, sizeof(reason)) == 1);
+	ASSERT(strstr(reason, "escapes workspace") != NULL ||
+	       strstr(reason, "unresolved") != NULL);
+	reason[0] = '\0';
+	ASSERT(allowlist_check_shell_command("cat ${HOME}/.shellclaw/auth_tokens.json",
+	                                    &cfg, reason, sizeof(reason)) == 1);
+	reason[0] = '\0';
+	ASSERT(allowlist_check_shell_command("cat $PWD/../outside.txt",
+	                                    &cfg, reason, sizeof(reason)) == 1);
+	reason[0] = '\0';
+	ASSERT(allowlist_check_shell_command("cat $'\\x2fetc\\x2fpasswd'",
+	                                    &cfg, reason, sizeof(reason)) == 1);
+	reason[0] = '\0';
+	ASSERT(allowlist_check_shell_command("cat \"$HOME/.shellclaw/auth_tokens.json\"",
+	                                    &cfg, reason, sizeof(reason)) == 1);
+	reason[0] = '\0';
+	ASSERT(allowlist_check_shell_command("cat notes.txt", &cfg, reason, sizeof(reason)) == 0);
+	if (home && strcmp(home, dir) == 0) {
+		/* Degenerate: HOME equals workspace — $HOME alone is in-bounds. */
+		reason[0] = '\0';
+		ASSERT(allowlist_check_shell_command("ls $HOME", &cfg, reason, sizeof(reason)) == 0);
+	}
+	rmdir(dir);
+	return 0;
+}
+
 /* ------------------------------------------------------------------ */
 /* Symlink escape test (5.4)                                            */
 /* ------------------------------------------------------------------ */
@@ -205,6 +253,7 @@ int main(void)
 	RUN(test_path_prefix_no_slash());
 	RUN(test_workspace_only_blocks_outside_path());
 	RUN(test_workspace_only_allows_inside_path());
+	RUN(test_workspace_only_blocks_home_env_expansion());
 	RUN(test_symlink_escape());
 	printf("test_allowlist: all tests passed\n");
 	return 0;