diff --git a/packages/cli/src/utils/dotEnv.test.ts b/packages/cli/src/utils/dotEnv.test.ts
index 10fcb48270d..c49b19bc3bf 100644
--- a/packages/cli/src/utils/dotEnv.test.ts
+++ b/packages/cli/src/utils/dotEnv.test.ts
@@ -45,3 +45,42 @@ describe("applyDotEnv", () => {
     expect(env).toEqual({});
   });
 });
+
+describe("applyDotEnv quoted multiline values", () => {
+  it("keeps a quoted multiline value whole instead of truncating it to its first line", () => {
+    const env: NodeJS.ProcessEnv = {};
+    applyDotEnv(
+      "HYPERFRAMES_VERTEX_PROJECT_ID=synthetic-project\n" +
+        "HYPERFRAMES_VERTEX_SERVICE_ACCOUNT='{\n" +
+        '  "type": "service_account",\n' +
+        '  "project_id": "synthetic-project"\n' +
+        "}'\n" +
+        "AFTER=still-parsed",
+      env,
+    );
+    expect(env.HYPERFRAMES_VERTEX_SERVICE_ACCOUNT).toBe(
+      '{\n  "type": "service_account",\n  "project_id": "synthetic-project"\n}',
+    );
+    expect(() => JSON.parse(env.HYPERFRAMES_VERTEX_SERVICE_ACCOUNT!)).not.toThrow();
+    expect(env.AFTER).toBe("still-parsed");
+  });
+
+  it("a commented-out example with an unclosed quote does not swallow the real keys below it", () => {
+    const env: NodeJS.ProcessEnv = {};
+    applyDotEnv('# OPENROUTER_API_KEY="sk-old\nGEMINI_API_KEY=real1\nGOOGLE_API_KEY=real2', env);
+    expect(env).toEqual({ GEMINI_API_KEY: "real1", GOOGLE_API_KEY: "real2" });
+  });
+
+  it("a stray unclosed quote with no later closing line does not swallow the rest of the file", () => {
+    const env: NodeJS.ProcessEnv = {};
+    applyDotEnv("A='x\nB=2", env);
+    expect(env).toEqual({ A: "x", B: "2" });
+  });
+
+  it("strips the trailing \\r from a CRLF multiline value", () => {
+    const env: NodeJS.ProcessEnv = {};
+    applyDotEnv("KEY='line1\r\nline2'\r\nAFTER=2", env);
+    expect(env.KEY).toBe("line1\nline2");
+    expect(env.AFTER).toBe("2");
+  });
+});
diff --git a/packages/cli/src/utils/dotEnv.ts b/packages/cli/src/utils/dotEnv.ts
index 4c3c4e204ba..336063f7f56 100644
--- a/packages/cli/src/utils/dotEnv.ts
+++ b/packages/cli/src/utils/dotEnv.ts
@@ -33,6 +33,42 @@ function entryOf(rawLine: string): [string, string] | null {
   return [line.slice(0, eq).trim(), valueOf(line.slice(eq + 1).trim())];
 }
 
+function openQuoteOf(trimmedLine: string): string | null {
+  const eq = trimmedLine.indexOf("=");
+  if (eq < 1) return null;
+  const valueStart = trimmedLine.slice(eq + 1).trim();
+  const quote = valueStart.charAt(0);
+  if (quote !== '"' && quote !== "'") return null;
+  return valueStart.indexOf(quote, 1) < 0 ? quote : null;
+}
+
+function closingLineIndex(rawLines: string[], from: number, quote: string): number {
+  for (let j = from; j < rawLines.length; j++) {
+    if ((rawLines[j] ?? "").includes(quote)) return j;
+  }
+  return -1;
+}
+
+// A quoted value left open at end of line continues on later lines until one closes it;
+// blank/comment lines and an EOF with no closing quote never open or complete a continuation.
+function logicalLines(content: string): string[] {
+  const rawLines = content.split("\n").map((line) => line.replace(/\r$/, ""));
+  const lines: string[] = [];
+  for (let i = 0; i < rawLines.length; i++) {
+    const line = rawLines[i] ?? "";
+    const trimmed = line.trim();
+    const quote = trimmed && !trimmed.startsWith("#") ? openQuoteOf(trimmed) : null;
+    const end = quote === null ? -1 : closingLineIndex(rawLines, i + 1, quote);
+    if (end === -1) {
+      lines.push(line);
+      continue;
+    }
+    lines.push(rawLines.slice(i, end + 1).join("\n"));
+    i = end;
+  }
+  return lines;
+}
+
 // Never over a key already set, and never the feedback email in any letter case (Windows env names are case-blind):
 // only the launching app may attach it, and an agent can write a project `.env`.
 // An optional exact-name allowlist narrows callers that load less-trusted project settings.
@@ -42,7 +78,7 @@ export function applyDotEnv(
   allowedKeys?: readonly string[],
 ): void {
   const allowed = allowedKeys === undefined ? undefined : new Set(allowedKeys);
-  for (const entry of content.split("\n").map(entryOf)) {
+  for (const entry of logicalLines(content).map(entryOf)) {
     if (!entry) continue;
     const [key, value] = entry;
     if (