diff --git a/apps/server/src/lib/sdk-options.ts b/apps/server/src/lib/sdk-options.ts
index 6b907c6d..fdb8f8be 100644
--- a/apps/server/src/lib/sdk-options.ts
+++ b/apps/server/src/lib/sdk-options.ts
@@ -16,6 +16,7 @@
  */
 
 import type { Options } from '@anthropic-ai/claude-agent-sdk';
+import os from 'os';
 import path from 'path';
 import { resolveModelString } from '@automaker/model-resolver';
 import { DEFAULT_MODELS, CLAUDE_MODEL_MAP, type McpServerConfig } from '@automaker/types';
@@ -63,12 +64,24 @@ export function validateWorkingDirectory(cwd: string): void {
  *
  * @see https://github.com/anthropics/claude-code/issues/XXX (TODO: file upstream issue)
  */
-const CLOUD_STORAGE_PATH_PATTERNS = [
+
+/**
+ * macOS-specific cloud storage patterns that appear under ~/Library/
+ * These are specific enough to use with includes() safely.
+ */
+const MACOS_CLOUD_STORAGE_PATTERNS = [
   '/Library/CloudStorage/', // Dropbox, Google Drive, OneDrive, Box on macOS
   '/Library/Mobile Documents/', // iCloud Drive on macOS
-  '/Google Drive/', // Google Drive on some systems
-  '/Dropbox/', // Dropbox on Linux/alternative installs
-  '/OneDrive/', // OneDrive on Linux/alternative installs
+] as const;
+
+/**
+ * Generic cloud storage folder names that need to be anchored to the home directory
+ * to avoid false positives (e.g., /home/user/my-project-about-dropbox/).
+ */
+const HOME_ANCHORED_CLOUD_FOLDERS = [
+  'Google Drive', // Google Drive on some systems
+  'Dropbox', // Dropbox on Linux/alternative installs
+  'OneDrive', // OneDrive on Linux/alternative installs
 ] as const;
 
 /**
@@ -77,12 +90,34 @@ const CLOUD_STORAGE_PATH_PATTERNS = [
  * Cloud storage providers use virtual filesystem implementations that are
  * incompatible with the Claude CLI sandbox feature, causing process crashes.
  *
+ * Uses two detection strategies:
+ * 1. macOS-specific patterns (under ~/Library/) - checked via includes()
+ * 2. Generic folder names - anchored to home directory to avoid false positives
+ *
  * @param cwd - The working directory path to check
  * @returns true if the path is in a cloud storage location
  */
 export function isCloudStoragePath(cwd: string): boolean {
   const resolvedPath = path.resolve(cwd);
-  return CLOUD_STORAGE_PATH_PATTERNS.some((pattern) => resolvedPath.includes(pattern));
+
+  // Check macOS-specific patterns (these are specific enough to use includes)
+  if (MACOS_CLOUD_STORAGE_PATTERNS.some((pattern) => resolvedPath.includes(pattern))) {
+    return true;
+  }
+
+  // Check home-anchored patterns to avoid false positives
+  // e.g., /home/user/my-project-about-dropbox/ should NOT match
+  const home = os.homedir();
+  for (const folder of HOME_ANCHORED_CLOUD_FOLDERS) {
+    const cloudPath = path.join(home, folder);
+    // Check if resolved path starts with the cloud storage path followed by a separator
+    // This ensures we match ~/Dropbox/project but not ~/Dropbox-archive or ~/my-dropbox-tool
+    if (resolvedPath === cloudPath || resolvedPath.startsWith(cloudPath + path.sep)) {
+      return true;
+    }
+  }
+
+  return false;
 }
 
 /**
@@ -122,17 +157,10 @@ export function checkSandboxCompatibility(
 
   // Check for cloud storage incompatibility
   if (isCloudStoragePath(cwd)) {
-    const message =
-      `Sandbox mode auto-disabled: Project is in a cloud storage location (${cwd}). ` +
-      `The Claude CLI sandbox feature is incompatible with cloud storage filesystems. ` +
-      `To use sandbox mode, move your project to a local directory.`;
-
-    console.warn(`[SdkOptions] ${message}`);
-
     return {
       enabled: false,
       disabledReason: 'cloud_storage',
-      message,
+      message: `Sandbox mode auto-disabled: Project is in a cloud storage location (${cwd}). The Claude CLI sandbox feature is incompatible with cloud storage filesystems. To use sandbox mode, move your project to a local directory.`,
     };
   }
 
diff --git a/apps/server/tests/unit/lib/sdk-options.test.ts b/apps/server/tests/unit/lib/sdk-options.test.ts
index 08b743ab..f1fcf710 100644
--- a/apps/server/tests/unit/lib/sdk-options.test.ts
+++ b/apps/server/tests/unit/lib/sdk-options.test.ts
@@ -1,15 +1,20 @@
 import { describe, it, expect, vi, beforeEach, afterEach } from 'vitest';
+import os from 'os';
 
 describe('sdk-options.ts', () => {
   let originalEnv: NodeJS.ProcessEnv;
+  let homedirSpy: ReturnType<typeof vi.spyOn>;
 
   beforeEach(() => {
     originalEnv = { ...process.env };
     vi.resetModules();
+    // Spy on os.homedir and set default return value
+    homedirSpy = vi.spyOn(os, 'homedir').mockReturnValue('/Users/test');
   });
 
   afterEach(() => {
     process.env = originalEnv;
+    homedirSpy.mockRestore();
   });
 
   describe('isCloudStoragePath', () => {
@@ -42,6 +47,25 @@ describe('sdk-options.ts', () => {
       ).toBe(true);
     });
 
+    it('should detect home-anchored Dropbox paths', async () => {
+      const { isCloudStoragePath } = await import('@/lib/sdk-options.js');
+      expect(isCloudStoragePath('/Users/test/Dropbox')).toBe(true);
+      expect(isCloudStoragePath('/Users/test/Dropbox/project')).toBe(true);
+      expect(isCloudStoragePath('/Users/test/Dropbox/nested/deep/project')).toBe(true);
+    });
+
+    it('should detect home-anchored Google Drive paths', async () => {
+      const { isCloudStoragePath } = await import('@/lib/sdk-options.js');
+      expect(isCloudStoragePath('/Users/test/Google Drive')).toBe(true);
+      expect(isCloudStoragePath('/Users/test/Google Drive/project')).toBe(true);
+    });
+
+    it('should detect home-anchored OneDrive paths', async () => {
+      const { isCloudStoragePath } = await import('@/lib/sdk-options.js');
+      expect(isCloudStoragePath('/Users/test/OneDrive')).toBe(true);
+      expect(isCloudStoragePath('/Users/test/OneDrive/project')).toBe(true);
+    });
+
     it('should return false for local paths', async () => {
       const { isCloudStoragePath } = await import('@/lib/sdk-options.js');
       expect(isCloudStoragePath('/Users/test/projects/myapp')).toBe(false);
@@ -54,6 +78,40 @@ describe('sdk-options.ts', () => {
       expect(isCloudStoragePath('./project')).toBe(false);
       expect(isCloudStoragePath('../other-project')).toBe(false);
     });
+
+    // Tests for false positive prevention - paths that contain cloud storage names but aren't cloud storage
+    it('should NOT flag paths that merely contain "dropbox" in the name', async () => {
+      const { isCloudStoragePath } = await import('@/lib/sdk-options.js');
+      // Projects with dropbox-like names
+      expect(isCloudStoragePath('/home/user/my-project-about-dropbox')).toBe(false);
+      expect(isCloudStoragePath('/Users/test/projects/dropbox-clone')).toBe(false);
+      expect(isCloudStoragePath('/Users/test/projects/Dropbox-backup-tool')).toBe(false);
+      // Dropbox folder that's NOT in the home directory
+      expect(isCloudStoragePath('/var/shared/Dropbox/project')).toBe(false);
+    });
+
+    it('should NOT flag paths that merely contain "Google Drive" in the name', async () => {
+      const { isCloudStoragePath } = await import('@/lib/sdk-options.js');
+      expect(isCloudStoragePath('/Users/test/projects/google-drive-api-client')).toBe(false);
+      expect(isCloudStoragePath('/home/user/Google Drive API Tests')).toBe(false);
+    });
+
+    it('should NOT flag paths that merely contain "OneDrive" in the name', async () => {
+      const { isCloudStoragePath } = await import('@/lib/sdk-options.js');
+      expect(isCloudStoragePath('/Users/test/projects/onedrive-sync-tool')).toBe(false);
+      expect(isCloudStoragePath('/home/user/OneDrive-migration-scripts')).toBe(false);
+    });
+
+    it('should handle different home directories correctly', async () => {
+      // Change the mocked home directory
+      homedirSpy.mockReturnValue('/home/linuxuser');
+      const { isCloudStoragePath } = await import('@/lib/sdk-options.js');
+
+      // Should detect Dropbox under the Linux home directory
+      expect(isCloudStoragePath('/home/linuxuser/Dropbox/project')).toBe(true);
+      // Should NOT detect Dropbox under the old home directory (since home changed)
+      expect(isCloudStoragePath('/Users/test/Dropbox/project')).toBe(false);
+    });
   });
 
   describe('checkSandboxCompatibility', () => {