diff --git a/internal/config/config.go b/internal/config/config.go
index d6970aa..352482c 100644
--- a/internal/config/config.go
+++ b/internal/config/config.go
@@ -36,7 +36,7 @@ type NetworkConfig struct {
 
 // FilesystemConfig defines filesystem restrictions.
 type FilesystemConfig struct {
-	DefaultDenyRead bool     `json:"defaultDenyRead,omitempty"` // If true, deny reads by default except system paths and AllowRead
+	DefaultDenyRead *bool    `json:"defaultDenyRead,omitempty"` // If nil or true, deny reads by default except system paths, CWD, and AllowRead
 	AllowRead       []string `json:"allowRead"`                 // Paths to allow reading (used when DefaultDenyRead is true)
 	DenyRead        []string `json:"denyRead"`
 	AllowWrite      []string `json:"allowWrite"`
@@ -44,6 +44,12 @@ type FilesystemConfig struct {
 	AllowGitConfig  bool     `json:"allowGitConfig,omitempty"`
 }
 
+// IsDefaultDenyRead returns whether deny-by-default read mode is enabled.
+// Defaults to true when not explicitly set (nil).
+func (f *FilesystemConfig) IsDefaultDenyRead() bool {
+	return f.DefaultDenyRead == nil || *f.DefaultDenyRead
+}
+
 // CommandConfig defines command restrictions.
 type CommandConfig struct {
 	Deny        []string `json:"deny"`
@@ -417,8 +423,8 @@ func Merge(base, override *Config) *Config {
 		},
 
 		Filesystem: FilesystemConfig{
-			// Boolean fields: true if either enables it
-			DefaultDenyRead: base.Filesystem.DefaultDenyRead || override.Filesystem.DefaultDenyRead,
+			// Pointer field: override wins if set, otherwise base (nil = deny-by-default)
+			DefaultDenyRead: mergeOptionalBool(base.Filesystem.DefaultDenyRead, override.Filesystem.DefaultDenyRead),
 
 			// Append slices
 			AllowRead:  mergeStrings(base.Filesystem.AllowRead, override.Filesystem.AllowRead),
diff --git a/internal/config/config_test.go b/internal/config/config_test.go
index 21c0b81..58d268c 100644
--- a/internal/config/config_test.go
+++ b/internal/config/config_test.go
@@ -410,7 +410,7 @@ func TestMerge(t *testing.T) {
 	t.Run("merge defaultDenyRead and allowRead", func(t *testing.T) {
 		base := &Config{
 			Filesystem: FilesystemConfig{
-				DefaultDenyRead: true,
+				DefaultDenyRead: boolPtr(true),
 				AllowRead:       []string{"/home/user/project"},
 			},
 		}
@@ -421,13 +421,40 @@ func TestMerge(t *testing.T) {
 		}
 		result := Merge(base, override)
 
-		if !result.Filesystem.DefaultDenyRead {
-			t.Error("expected DefaultDenyRead to be true (from base)")
+		if !result.Filesystem.IsDefaultDenyRead() {
+			t.Error("expected IsDefaultDenyRead() to be true (from base)")
 		}
 		if len(result.Filesystem.AllowRead) != 2 {
 			t.Errorf("expected 2 allowRead paths, got %d: %v", len(result.Filesystem.AllowRead), result.Filesystem.AllowRead)
 		}
 	})
+
+	t.Run("defaultDenyRead nil defaults to true", func(t *testing.T) {
+		base := &Config{
+			Filesystem: FilesystemConfig{},
+		}
+		result := Merge(base, nil)
+		if !result.Filesystem.IsDefaultDenyRead() {
+			t.Error("expected IsDefaultDenyRead() to be true when nil (deny-by-default)")
+		}
+	})
+
+	t.Run("defaultDenyRead explicit false overrides", func(t *testing.T) {
+		base := &Config{
+			Filesystem: FilesystemConfig{
+				DefaultDenyRead: boolPtr(true),
+			},
+		}
+		override := &Config{
+			Filesystem: FilesystemConfig{
+				DefaultDenyRead: boolPtr(false),
+			},
+		}
+		result := Merge(base, override)
+		if result.Filesystem.IsDefaultDenyRead() {
+			t.Error("expected IsDefaultDenyRead() to be false (override explicit false)")
+		}
+	})
 }
 
 func boolPtr(b bool) *bool {
diff --git a/internal/sandbox/dangerous.go b/internal/sandbox/dangerous.go
index cf3b1b6..978da6b 100644
--- a/internal/sandbox/dangerous.go
+++ b/internal/sandbox/dangerous.go
@@ -28,6 +28,30 @@ var DangerousDirectories = []string{
 	".claude/agents",
 }
 
+// SensitiveProjectFiles lists files within the project directory that should be
+// denied for both read and write access. These commonly contain secrets.
+var SensitiveProjectFiles = []string{
+	".env",
+	".env.local",
+	".env.development",
+	".env.production",
+	".env.staging",
+	".env.test",
+}
+
+// GetSensitiveProjectPaths returns concrete paths for sensitive files within the
+// given directory. Only returns paths for files that actually exist.
+func GetSensitiveProjectPaths(cwd string) []string {
+	var paths []string
+	for _, f := range SensitiveProjectFiles {
+		p := filepath.Join(cwd, f)
+		if _, err := os.Stat(p); err == nil {
+			paths = append(paths, p)
+		}
+	}
+	return paths
+}
+
 // GetDefaultWritePaths returns system paths that should be writable for commands to work.
 func GetDefaultWritePaths() []string {
 	home, _ := os.UserHomeDir()
diff --git a/internal/sandbox/integration_test.go b/internal/sandbox/integration_test.go
index 51f4693..45b0a0c 100644
--- a/internal/sandbox/integration_test.go
+++ b/internal/sandbox/integration_test.go
@@ -123,13 +123,17 @@ func assertContains(t *testing.T, haystack, needle string) {
 // ============================================================================
 
 // testConfig creates a test configuration with sensible defaults.
+// Uses legacy mode (defaultDenyRead=false) for predictable testing of
+// existing integration tests. Use testConfigDenyByDefault() for tests
+// that specifically test deny-by-default behavior.
 func testConfig() *config.Config {
 	return &config.Config{
 		Network: config.NetworkConfig{},
 		Filesystem: config.FilesystemConfig{
-			DenyRead:   []string{},
-			AllowWrite: []string{},
-			DenyWrite:  []string{},
+			DefaultDenyRead: boolPtr(false), // Legacy mode for existing tests
+			DenyRead:        []string{},
+			AllowWrite:      []string{},
+			DenyWrite:       []string{},
 		},
 		Command: config.CommandConfig{
 			Deny:        []string{},
diff --git a/internal/sandbox/learning.go b/internal/sandbox/learning.go
index 7282000..61678d7 100644
--- a/internal/sandbox/learning.go
+++ b/internal/sandbox/learning.go
@@ -87,6 +87,43 @@ func GenerateLearnedTemplate(straceLogPath, cmdName string, debug bool) (string,
 		allowWrite = append(allowWrite, toTildePath(p, home))
 	}
 
+	// Filter read paths: remove system defaults, CWD subtree, and sensitive paths
+	cwd, _ := os.Getwd()
+	var filteredReads []string
+	defaultReadable := GetDefaultReadablePaths()
+	for _, p := range result.ReadPaths {
+		// Skip system defaults
+		isDefault := false
+		for _, dp := range defaultReadable {
+			if p == dp || strings.HasPrefix(p, dp+"/") {
+				isDefault = true
+				break
+			}
+		}
+		if isDefault {
+			continue
+		}
+		// Skip CWD subtree (auto-included)
+		if cwd != "" && (p == cwd || strings.HasPrefix(p, cwd+"/")) {
+			continue
+		}
+		// Skip sensitive paths
+		if isSensitivePath(p, home) {
+			if debug {
+				fmt.Fprintf(os.Stderr, "[greywall] Skipping sensitive read path: %s\n", p)
+			}
+			continue
+		}
+		filteredReads = append(filteredReads, p)
+	}
+
+	// Collapse read paths and convert to tilde-relative
+	collapsedReads := CollapsePaths(filteredReads)
+	var allowRead []string
+	for _, p := range collapsedReads {
+		allowRead = append(allowRead, toTildePath(p, home))
+	}
+
 	// Convert read paths to tilde-relative for display
 	var readDisplay []string
 	for _, p := range result.ReadPaths {
@@ -103,6 +140,13 @@ func GenerateLearnedTemplate(straceLogPath, cmdName string, debug bool) (string,
 		}
 	}
 
+	if len(allowRead) > 0 {
+		fmt.Fprintf(os.Stderr, "[greywall] Additional read paths (beyond system + CWD):\n")
+		for _, p := range allowRead {
+			fmt.Fprintf(os.Stderr, "[greywall]   %s\n", p)
+		}
+	}
+
 	if len(allowWrite) > 1 { // >1 because "." is always included
 		fmt.Fprintf(os.Stderr, "[greywall] Discovered write paths (collapsed):\n")
 		for _, p := range allowWrite {
@@ -118,7 +162,7 @@ func GenerateLearnedTemplate(straceLogPath, cmdName string, debug bool) (string,
 	fmt.Fprintf(os.Stderr, "\n")
 
 	// Build template
-	template := buildTemplate(cmdName, allowWrite)
+	template := buildTemplate(cmdName, allowRead, allowWrite)
 
 	// Save template
 	templatePath := LearnedTemplatePath(cmdName)
@@ -345,9 +389,18 @@ func deduplicateSubPaths(paths []string) []string {
 	return result
 }
 
+// getSensitiveProjectDenyPatterns returns denyRead entries for sensitive project files.
+func getSensitiveProjectDenyPatterns() []string {
+	return []string{
+		".env",
+		".env.*",
+	}
+}
+
 // buildTemplate generates the JSONC template content for a learned config.
-func buildTemplate(cmdName string, allowWrite []string) string {
+func buildTemplate(cmdName string, allowRead, allowWrite []string) string {
 	type fsConfig struct {
+		AllowRead  []string `json:"allowRead,omitempty"`
 		AllowWrite []string `json:"allowWrite"`
 		DenyWrite  []string `json:"denyWrite"`
 		DenyRead   []string `json:"denyRead"`
@@ -356,11 +409,15 @@ func buildTemplate(cmdName string, allowWrite []string) string {
 		Filesystem fsConfig `json:"filesystem"`
 	}
 
+	// Combine sensitive read patterns with .env project patterns
+	denyRead := append(getSensitiveReadPatterns(), getSensitiveProjectDenyPatterns()...)
+
 	cfg := templateConfig{
 		Filesystem: fsConfig{
+			AllowRead:  allowRead,
 			AllowWrite: allowWrite,
 			DenyWrite:  getDangerousFilePatterns(),
-			DenyRead:   getSensitiveReadPatterns(),
+			DenyRead:   denyRead,
 		},
 	}
 
diff --git a/internal/sandbox/learning_test.go b/internal/sandbox/learning_test.go
index 0c9c9c2..1f5d3a3 100644
--- a/internal/sandbox/learning_test.go
+++ b/internal/sandbox/learning_test.go
@@ -325,8 +325,9 @@ func TestListLearnedTemplates(t *testing.T) {
 }
 
 func TestBuildTemplate(t *testing.T) {
+	allowRead := []string{"~/external-data"}
 	allowWrite := []string{".", "~/.cache/opencode", "~/.config/opencode"}
-	result := buildTemplate("opencode", allowWrite)
+	result := buildTemplate("opencode", allowRead, allowWrite)
 
 	// Check header comments
 	if !strings.Contains(result, `Learned template for "opencode"`) {
@@ -340,6 +341,12 @@ func TestBuildTemplate(t *testing.T) {
 	}
 
 	// Check content
+	if !strings.Contains(result, `"allowRead"`) {
+		t.Error("template missing allowRead field")
+	}
+	if !strings.Contains(result, `"~/external-data"`) {
+		t.Error("template missing expected allowRead path")
+	}
 	if !strings.Contains(result, `"allowWrite"`) {
 		t.Error("template missing allowWrite field")
 	}
@@ -352,6 +359,22 @@ func TestBuildTemplate(t *testing.T) {
 	if !strings.Contains(result, `"denyRead"`) {
 		t.Error("template missing denyRead field")
 	}
+	// Check .env patterns are included in denyRead
+	if !strings.Contains(result, `".env"`) {
+		t.Error("template missing .env in denyRead")
+	}
+	if !strings.Contains(result, `".env.*"`) {
+		t.Error("template missing .env.* in denyRead")
+	}
+}
+
+func TestBuildTemplateNoAllowRead(t *testing.T) {
+	result := buildTemplate("simple-cmd", nil, []string{"."})
+
+	// When allowRead is nil, it should be omitted from JSON
+	if strings.Contains(result, `"allowRead"`) {
+		t.Error("template should omit allowRead when nil")
+	}
 }
 
 func TestGenerateLearnedTemplate(t *testing.T) {
diff --git a/internal/sandbox/linux.go b/internal/sandbox/linux.go
index 95f4def..7f04fda 100644
--- a/internal/sandbox/linux.go
+++ b/internal/sandbox/linux.go
@@ -371,6 +371,12 @@ func getMandatoryDenyPaths(cwd string) []string {
 		paths = append(paths, p)
 	}
 
+	// Sensitive project files (e.g. .env) in cwd
+	for _, f := range SensitiveProjectFiles {
+		p := filepath.Join(cwd, f)
+		paths = append(paths, p)
+	}
+
 	// Git hooks in cwd
 	paths = append(paths, filepath.Join(cwd, ".git/hooks"))
 
@@ -389,6 +395,193 @@ func getMandatoryDenyPaths(cwd string) []string {
 	return paths
 }
 
+// buildDenyByDefaultMounts builds bwrap arguments for deny-by-default filesystem isolation.
+// Starts with --tmpfs / (empty root), then selectively mounts system paths read-only,
+// CWD read-write, and user tooling paths read-only. Sensitive files within CWD are masked.
+func buildDenyByDefaultMounts(cfg *config.Config, cwd string, debug bool) []string {
+	var args []string
+	home, _ := os.UserHomeDir()
+
+	// Start with empty root
+	args = append(args, "--tmpfs", "/")
+
+	// System paths (read-only) - on modern distros (Arch, Fedora, etc.),
+	// /bin, /sbin, /lib, /lib64 are often symlinks to /usr/*. We must
+	// recreate these as symlinks via --symlink so the dynamic linker
+	// and shell can be found. Real directories get bind-mounted.
+	systemPaths := []string{"/usr", "/bin", "/sbin", "/lib", "/lib64", "/etc", "/opt", "/run"}
+	for _, p := range systemPaths {
+		if !fileExists(p) {
+			continue
+		}
+		if isSymlink(p) {
+			// Recreate the symlink inside the sandbox (e.g., /bin -> usr/bin)
+			target, err := os.Readlink(p)
+			if err == nil {
+				args = append(args, "--symlink", target, p)
+			}
+		} else {
+			args = append(args, "--ro-bind", p, p)
+		}
+	}
+
+	// /sys needs to be accessible for system info
+	if fileExists("/sys") && canMountOver("/sys") {
+		args = append(args, "--ro-bind", "/sys", "/sys")
+	}
+
+	// CWD: create intermediary dirs and bind read-write
+	if cwd != "" && fileExists(cwd) {
+		for _, dir := range intermediaryDirs("/", cwd) {
+			// Skip dirs that are already mounted as system paths
+			if isSystemMountPoint(dir) {
+				continue
+			}
+			args = append(args, "--dir", dir)
+		}
+		args = append(args, "--bind", cwd, cwd)
+	}
+
+	// User tooling paths from GetDefaultReadablePaths() (read-only)
+	// Filter out paths already mounted (system dirs, /dev, /proc, /tmp, macOS-specific)
+	if home != "" {
+		boundDirs := make(map[string]bool)
+		for _, p := range GetDefaultReadablePaths() {
+			// Skip system paths (already bound above), special mounts, and macOS paths
+			if isSystemMountPoint(p) || p == "/dev" || p == "/proc" || p == "/sys" ||
+				p == "/tmp" || p == "/private/tmp" ||
+				strings.HasPrefix(p, "/System") || strings.HasPrefix(p, "/Library") ||
+				strings.HasPrefix(p, "/Applications") || strings.HasPrefix(p, "/private/") ||
+				strings.HasPrefix(p, "/nix") || strings.HasPrefix(p, "/snap") ||
+				p == "/usr/local" || p == "/opt/homebrew" {
+				continue
+			}
+			if !strings.HasPrefix(p, home) {
+				continue // Only user tooling paths need intermediary dirs
+			}
+			if !fileExists(p) || !canMountOver(p) {
+				continue
+			}
+			// Create intermediary dirs between root and this path
+			for _, dir := range intermediaryDirs("/", p) {
+				if !boundDirs[dir] && !isSystemMountPoint(dir) && dir != cwd {
+					boundDirs[dir] = true
+					args = append(args, "--dir", dir)
+				}
+			}
+			args = append(args, "--ro-bind", p, p)
+		}
+
+		// Shell config files in home (read-only, literal files)
+		shellConfigs := []string{".bashrc", ".bash_profile", ".profile", ".zshrc", ".zprofile", ".zshenv", ".inputrc"}
+		homeIntermedaryAdded := boundDirs[home]
+		for _, f := range shellConfigs {
+			p := filepath.Join(home, f)
+			if fileExists(p) && canMountOver(p) {
+				if !homeIntermedaryAdded {
+					for _, dir := range intermediaryDirs("/", home) {
+						if !boundDirs[dir] && !isSystemMountPoint(dir) {
+							boundDirs[dir] = true
+							args = append(args, "--dir", dir)
+						}
+					}
+					homeIntermedaryAdded = true
+				}
+				args = append(args, "--ro-bind", p, p)
+			}
+		}
+
+		// Home tool caches (read-only, for package managers/configs)
+		homeCaches := []string{".cache", ".npm", ".cargo", ".rustup", ".local", ".config"}
+		for _, d := range homeCaches {
+			p := filepath.Join(home, d)
+			if fileExists(p) && canMountOver(p) {
+				if !homeIntermedaryAdded {
+					for _, dir := range intermediaryDirs("/", home) {
+						if !boundDirs[dir] && !isSystemMountPoint(dir) {
+							boundDirs[dir] = true
+							args = append(args, "--dir", dir)
+						}
+					}
+					homeIntermedaryAdded = true
+				}
+				args = append(args, "--ro-bind", p, p)
+			}
+		}
+	}
+
+	// User-specified allowRead paths (read-only)
+	if cfg != nil && cfg.Filesystem.AllowRead != nil {
+		boundPaths := make(map[string]bool)
+
+		expandedPaths := ExpandGlobPatterns(cfg.Filesystem.AllowRead)
+		for _, p := range expandedPaths {
+			if fileExists(p) && canMountOver(p) &&
+				!strings.HasPrefix(p, "/dev/") && !strings.HasPrefix(p, "/proc/") && !boundPaths[p] {
+				boundPaths[p] = true
+				// Create intermediary dirs if needed
+				for _, dir := range intermediaryDirs("/", p) {
+					if !isSystemMountPoint(dir) {
+						args = append(args, "--dir", dir)
+					}
+				}
+				args = append(args, "--ro-bind", p, p)
+			}
+		}
+		for _, p := range cfg.Filesystem.AllowRead {
+			normalized := NormalizePath(p)
+			if !ContainsGlobChars(normalized) && fileExists(normalized) && canMountOver(normalized) &&
+				!strings.HasPrefix(normalized, "/dev/") && !strings.HasPrefix(normalized, "/proc/") && !boundPaths[normalized] {
+				boundPaths[normalized] = true
+				for _, dir := range intermediaryDirs("/", normalized) {
+					if !isSystemMountPoint(dir) {
+						args = append(args, "--dir", dir)
+					}
+				}
+				args = append(args, "--ro-bind", normalized, normalized)
+			}
+		}
+	}
+
+	// Mask sensitive project files within CWD by overlaying an empty regular file.
+	// We use an empty file instead of /dev/null because Landlock's READ_FILE right
+	// doesn't cover character devices, causing "Permission denied" on /dev/null mounts.
+	if cwd != "" {
+		var emptyFile string
+		for _, f := range SensitiveProjectFiles {
+			p := filepath.Join(cwd, f)
+			if fileExists(p) {
+				if emptyFile == "" {
+					emptyFile = filepath.Join(os.TempDir(), "greywall", "empty")
+					_ = os.MkdirAll(filepath.Dir(emptyFile), 0o750)
+					_ = os.WriteFile(emptyFile, nil, 0o444)
+				}
+				args = append(args, "--ro-bind", emptyFile, p)
+				if debug {
+					fmt.Fprintf(os.Stderr, "[greywall:linux] Masking sensitive file: %s\n", p)
+				}
+			}
+		}
+	}
+
+	return args
+}
+
+// isSystemMountPoint returns true if the path is a top-level system directory
+// that gets mounted directly under --tmpfs / (bwrap auto-creates these).
+func isSystemMountPoint(path string) bool {
+	switch path {
+	case "/usr", "/bin", "/sbin", "/lib", "/lib64", "/etc", "/opt", "/run", "/sys",
+		"/dev", "/proc", "/tmp",
+		// macOS
+		"/System", "/Library", "/Applications", "/private",
+		// Package managers
+		"/nix", "/snap", "/usr/local", "/opt/homebrew":
+		return true
+	}
+	return false
+}
+
 // WrapCommandLinux wraps a command with Linux bubblewrap sandbox.
 // It uses available security features (Landlock, seccomp) with graceful fallback.
 func WrapCommandLinux(cfg *config.Config, command string, proxyBridge *ProxyBridge, dnsBridge *DnsBridge, reverseBridge *ReverseBridge, tun2socksPath string, debug bool) (string, error) {
@@ -480,52 +673,18 @@ func WrapCommandLinuxWithOptions(cfg *config.Config, command string, proxyBridge
 
 	}
 
-	defaultDenyRead := cfg != nil && cfg.Filesystem.DefaultDenyRead
+	defaultDenyRead := cfg != nil && cfg.Filesystem.IsDefaultDenyRead()
 
 	if opts.Learning {
 		// Skip defaultDenyRead logic in learning mode (already set up above)
 	} else if defaultDenyRead {
-		// In defaultDenyRead mode, we only bind essential system paths read-only
-		// and user-specified allowRead paths. Everything else is inaccessible.
+		// Deny-by-default mode: start with empty root, then whitelist system paths + CWD
 		if opts.Debug {
-			fmt.Fprintf(os.Stderr, "[greywall:linux] DefaultDenyRead mode enabled - binding only essential system paths\n")
-		}
-
-		// Bind essential system paths read-only
-		// Skip /dev, /proc, /tmp as they're mounted with special options below
-		for _, systemPath := range GetDefaultReadablePaths() {
-			if systemPath == "/dev" || systemPath == "/proc" || systemPath == "/tmp" ||
-				systemPath == "/private/tmp" {
-				continue
-			}
-			if fileExists(systemPath) {
-				bwrapArgs = append(bwrapArgs, "--ro-bind", systemPath, systemPath)
-			}
-		}
-
-		// Bind user-specified allowRead paths
-		if cfg != nil && cfg.Filesystem.AllowRead != nil {
-			boundPaths := make(map[string]bool)
-
-			expandedPaths := ExpandGlobPatterns(cfg.Filesystem.AllowRead)
-			for _, p := range expandedPaths {
-				if fileExists(p) && !strings.HasPrefix(p, "/dev/") && !strings.HasPrefix(p, "/proc/") && !boundPaths[p] {
-					boundPaths[p] = true
-					bwrapArgs = append(bwrapArgs, "--ro-bind", p, p)
-				}
-			}
-			// Add non-glob paths
-			for _, p := range cfg.Filesystem.AllowRead {
-				normalized := NormalizePath(p)
-				if !ContainsGlobChars(normalized) && fileExists(normalized) &&
-					!strings.HasPrefix(normalized, "/dev/") && !strings.HasPrefix(normalized, "/proc/") && !boundPaths[normalized] {
-					boundPaths[normalized] = true
-					bwrapArgs = append(bwrapArgs, "--ro-bind", normalized, normalized)
-				}
-			}
+			fmt.Fprintf(os.Stderr, "[greywall:linux] DefaultDenyRead mode enabled - tmpfs root with selective mounts\n")
 		}
+		bwrapArgs = append(bwrapArgs, buildDenyByDefaultMounts(cfg, cwd, opts.Debug)...)
 	} else {
-		// Default mode: bind entire root filesystem read-only
+		// Legacy mode: bind entire root filesystem read-only
 		bwrapArgs = append(bwrapArgs, "--ro-bind", "/", "/")
 	}
 
@@ -679,10 +838,20 @@ func WrapCommandLinuxWithOptions(cfg *config.Config, command string, proxyBridge
 		// subdirectory dangerous files without full tree walks that hang on large dirs.
 		mandatoryDeny := getMandatoryDenyPaths(cwd)
 
+		// In deny-by-default mode, sensitive project files are already masked
+		// with --ro-bind /dev/null by buildDenyByDefaultMounts(). Skip them here
+		// to avoid overriding the /dev/null mask with a real ro-bind.
+		maskedPaths := make(map[string]bool)
+		if defaultDenyRead {
+			for _, f := range SensitiveProjectFiles {
+				maskedPaths[filepath.Join(cwd, f)] = true
+			}
+		}
+
 		// Deduplicate
 		seen := make(map[string]bool)
 		for _, p := range mandatoryDeny {
-			if !seen[p] && fileExists(p) {
+			if !seen[p] && fileExists(p) && !maskedPaths[p] {
 				seen[p] = true
 				bwrapArgs = append(bwrapArgs, "--ro-bind", p, p)
 			}
diff --git a/internal/sandbox/linux_landlock.go b/internal/sandbox/linux_landlock.go
index 7fd8394..12ddd50 100644
--- a/internal/sandbox/linux_landlock.go
+++ b/internal/sandbox/linux_landlock.go
@@ -81,17 +81,55 @@ func ApplyLandlockFromConfig(cfg *config.Config, cwd string, socketPaths []strin
 		}
 	}
 
-	// Current working directory - read access (may be upgraded to write below)
+	// Current working directory - read+write access (project directory)
 	if cwd != "" {
-		if err := ruleset.AllowRead(cwd); err != nil && debug {
-			fmt.Fprintf(os.Stderr, "[greywall:landlock] Warning: failed to add cwd read path: %v\n", err)
+		if err := ruleset.AllowReadWrite(cwd); err != nil && debug {
+			fmt.Fprintf(os.Stderr, "[greywall:landlock] Warning: failed to add cwd read/write path: %v\n", err)
 		}
 	}
 
-	// Home directory - read access
-	if home, err := os.UserHomeDir(); err == nil {
-		if err := ruleset.AllowRead(home); err != nil && debug {
-			fmt.Fprintf(os.Stderr, "[greywall:landlock] Warning: failed to add home read path: %v\n", err)
+	// Home directory - read access only when not in deny-by-default mode.
+	// In deny-by-default mode, only specific user tooling paths are allowed,
+	// not the entire home directory. Landlock can't selectively deny files
+	// within an allowed directory, so we rely on bwrap mount overlays for
+	// .env file masking.
+	defaultDenyRead := cfg != nil && cfg.Filesystem.IsDefaultDenyRead()
+	if !defaultDenyRead {
+		if home, err := os.UserHomeDir(); err == nil {
+			if err := ruleset.AllowRead(home); err != nil && debug {
+				fmt.Fprintf(os.Stderr, "[greywall:landlock] Warning: failed to add home read path: %v\n", err)
+			}
+		}
+	} else {
+		// In deny-by-default mode, allow specific user tooling paths
+		if home, err := os.UserHomeDir(); err == nil {
+			for _, p := range GetDefaultReadablePaths() {
+				if strings.HasPrefix(p, home) {
+					if err := ruleset.AllowRead(p); err != nil && debug {
+						fmt.Fprintf(os.Stderr, "[greywall:landlock] Warning: failed to add user tooling path %s: %v\n", p, err)
+					}
+				}
+			}
+			// Shell configs
+			shellConfigs := []string{".bashrc", ".bash_profile", ".profile", ".zshrc", ".zprofile", ".zshenv", ".inputrc"}
+			for _, f := range shellConfigs {
+				p := filepath.Join(home, f)
+				if err := ruleset.AllowRead(p); err != nil && debug {
+					if !os.IsNotExist(err) {
+						fmt.Fprintf(os.Stderr, "[greywall:landlock] Warning: failed to add shell config %s: %v\n", p, err)
+					}
+				}
+			}
+			// Home caches
+			homeCaches := []string{".cache", ".npm", ".cargo", ".rustup", ".local", ".config"}
+			for _, d := range homeCaches {
+				p := filepath.Join(home, d)
+				if err := ruleset.AllowRead(p); err != nil && debug {
+					if !os.IsNotExist(err) {
+						fmt.Fprintf(os.Stderr, "[greywall:landlock] Warning: failed to add home cache %s: %v\n", p, err)
+					}
+				}
+			}
 		}
 	}
 
diff --git a/internal/sandbox/macos.go b/internal/sandbox/macos.go
index f7b475d..c13910a 100644
--- a/internal/sandbox/macos.go
+++ b/internal/sandbox/macos.go
@@ -37,6 +37,7 @@ type MacOSSandboxParams struct {
 	AllowLocalBinding       bool
 	AllowLocalOutbound      bool
 	DefaultDenyRead         bool
+	Cwd                     string // Current working directory (for deny-by-default CWD allowlisting)
 	ReadAllowPaths          []string
 	ReadDenyPaths           []string
 	WriteAllowPaths         []string
@@ -146,13 +147,13 @@ func getTmpdirParent() []string {
 }
 
 // generateReadRules generates filesystem read rules for the sandbox profile.
-func generateReadRules(defaultDenyRead bool, allowPaths, denyPaths []string, logTag string) []string {
+func generateReadRules(defaultDenyRead bool, cwd string, allowPaths, denyPaths []string, logTag string) []string {
 	var rules []string
 
 	if defaultDenyRead {
 		// When defaultDenyRead is enabled:
 		// 1. Allow file-read-metadata globally (needed for directory traversal, stat, etc.)
-		// 2. Allow file-read-data only for system paths + user-specified allowRead paths
+		// 2. Allow file-read-data only for system paths + CWD + user-specified allowRead paths
 		// This lets programs see what files exist but not read their contents.
 
 		// Allow metadata operations globally (stat, readdir, etc.) and root dir (for path resolution)
@@ -167,6 +168,44 @@ func generateReadRules(defaultDenyRead bool, allowPaths, denyPaths []string, log
 			)
 		}
 
+		// Allow reading CWD (full recursive read access)
+		if cwd != "" {
+			rules = append(rules,
+				"(allow file-read-data",
+				fmt.Sprintf("  (subpath %s))", escapePath(cwd)),
+			)
+
+			// Allow ancestor directory traversal (literal only, so programs can resolve CWD path)
+			for _, ancestor := range getAncestorDirectories(cwd) {
+				rules = append(rules,
+					fmt.Sprintf("(allow file-read-data (literal %s))", escapePath(ancestor)),
+				)
+			}
+		}
+
+		// Allow home shell configs and tool caches (read-only)
+		home, _ := os.UserHomeDir()
+		if home != "" {
+			// Shell config files (literal access)
+			shellConfigs := []string{".bashrc", ".bash_profile", ".profile", ".zshrc", ".zprofile", ".zshenv", ".inputrc"}
+			for _, f := range shellConfigs {
+				p := filepath.Join(home, f)
+				rules = append(rules,
+					fmt.Sprintf("(allow file-read-data (literal %s))", escapePath(p)),
+				)
+			}
+
+			// Home tool caches (subpath access for package managers/configs)
+			homeCaches := []string{".cache", ".npm", ".cargo", ".rustup", ".local", ".config", ".nvm", ".pyenv", ".rbenv", ".asdf"}
+			for _, d := range homeCaches {
+				p := filepath.Join(home, d)
+				rules = append(rules,
+					"(allow file-read-data",
+					fmt.Sprintf("  (subpath %s))", escapePath(p)),
+				)
+			}
+		}
+
 		// Allow reading data from user-specified paths
 		for _, pathPattern := range allowPaths {
 			normalized := NormalizePath(pathPattern)
@@ -184,6 +223,24 @@ func generateReadRules(defaultDenyRead bool, allowPaths, denyPaths []string, log
 				)
 			}
 		}
+
+		// Deny sensitive files within CWD (Seatbelt evaluates deny before allow)
+		if cwd != "" {
+			for _, f := range SensitiveProjectFiles {
+				p := filepath.Join(cwd, f)
+				rules = append(rules,
+					"(deny file-read*",
+					fmt.Sprintf("  (literal %s)", escapePath(p)),
+					fmt.Sprintf("  (with message %q))", logTag),
+				)
+			}
+			// Also deny .env.* pattern via regex
+			rules = append(rules,
+				"(deny file-read*",
+				fmt.Sprintf("  (regex %s)", escapePath("^"+regexp.QuoteMeta(cwd)+"/\\.env\\..*$")),
+				fmt.Sprintf("  (with message %q))", logTag),
+			)
+		}
 	} else {
 		// Allow all reads by default
 		rules = append(rules, "(allow file-read*)")
@@ -220,9 +277,19 @@ func generateReadRules(defaultDenyRead bool, allowPaths, denyPaths []string, log
 }
 
 // generateWriteRules generates filesystem write rules for the sandbox profile.
-func generateWriteRules(allowPaths, denyPaths []string, allowGitConfig bool, logTag string) []string {
+// When cwd is non-empty, it is automatically included in the write allow paths.
+func generateWriteRules(cwd string, allowPaths, denyPaths []string, allowGitConfig bool, logTag string) []string {
 	var rules []string
 
+	// Auto-allow CWD for writes (project directory should be writable)
+	if cwd != "" {
+		rules = append(rules,
+			"(allow file-write*",
+			fmt.Sprintf("  (subpath %s)", escapePath(cwd)),
+			fmt.Sprintf("  (with message %q))", logTag),
+		)
+	}
+
 	// Allow TMPDIR parent on macOS
 	for _, tmpdirParent := range getTmpdirParent() {
 		normalized := NormalizePath(tmpdirParent)
@@ -254,8 +321,11 @@ func generateWriteRules(allowPaths, denyPaths []string, allowGitConfig bool, log
 	}
 
 	// Combine user-specified and mandatory deny patterns
-	cwd, _ := os.Getwd()
-	mandatoryDeny := GetMandatoryDenyPatterns(cwd, allowGitConfig)
+	mandatoryCwd := cwd
+	if mandatoryCwd == "" {
+		mandatoryCwd, _ = os.Getwd()
+	}
+	mandatoryDeny := GetMandatoryDenyPatterns(mandatoryCwd, allowGitConfig)
 	allDenyPaths := make([]string, 0, len(denyPaths)+len(mandatoryDeny))
 	allDenyPaths = append(allDenyPaths, denyPaths...)
 	allDenyPaths = append(allDenyPaths, mandatoryDeny...)
@@ -530,14 +600,14 @@ func GenerateSandboxProfile(params MacOSSandboxParams) string {
 
 	// Read rules
 	profile.WriteString("; File read\n")
-	for _, rule := range generateReadRules(params.DefaultDenyRead, params.ReadAllowPaths, params.ReadDenyPaths, logTag) {
+	for _, rule := range generateReadRules(params.DefaultDenyRead, params.Cwd, params.ReadAllowPaths, params.ReadDenyPaths, logTag) {
 		profile.WriteString(rule + "\n")
 	}
 	profile.WriteString("\n")
 
 	// Write rules
 	profile.WriteString("; File write\n")
-	for _, rule := range generateWriteRules(params.WriteAllowPaths, params.WriteDenyPaths, params.AllowGitConfig, logTag) {
+	for _, rule := range generateWriteRules(params.Cwd, params.WriteAllowPaths, params.WriteDenyPaths, params.AllowGitConfig, logTag) {
 		profile.WriteString(rule + "\n")
 	}
 
@@ -562,6 +632,8 @@ func GenerateSandboxProfile(params MacOSSandboxParams) string {
 
 // WrapCommandMacOS wraps a command with macOS sandbox restrictions.
 func WrapCommandMacOS(cfg *config.Config, command string, exposedPorts []int, debug bool) (string, error) {
+	cwd, _ := os.Getwd()
+
 	// Build allow paths: default + configured
 	allowPaths := append(GetDefaultWritePaths(), cfg.Filesystem.AllowWrite...)
 
@@ -599,7 +671,8 @@ func WrapCommandMacOS(cfg *config.Config, command string, exposedPorts []int, de
 		AllowAllUnixSockets:     cfg.Network.AllowAllUnixSockets,
 		AllowLocalBinding:       allowLocalBinding,
 		AllowLocalOutbound:      allowLocalOutbound,
-		DefaultDenyRead:         cfg.Filesystem.DefaultDenyRead,
+		DefaultDenyRead:         cfg.Filesystem.IsDefaultDenyRead(),
+		Cwd:                     cwd,
 		ReadAllowPaths:          cfg.Filesystem.AllowRead,
 		ReadDenyPaths:           cfg.Filesystem.DenyRead,
 		WriteAllowPaths:         allowPaths,
diff --git a/internal/sandbox/macos_test.go b/internal/sandbox/macos_test.go
index 6e466e5..bae76fd 100644
--- a/internal/sandbox/macos_test.go
+++ b/internal/sandbox/macos_test.go
@@ -1,6 +1,7 @@
 package sandbox
 
 import (
+	"fmt"
 	"strings"
 	"testing"
 
@@ -108,7 +109,8 @@ func buildMacOSParamsForTest(cfg *config.Config) MacOSSandboxParams {
 		AllowAllUnixSockets:     cfg.Network.AllowAllUnixSockets,
 		AllowLocalBinding:       allowLocalBinding,
 		AllowLocalOutbound:      allowLocalOutbound,
-		DefaultDenyRead:         cfg.Filesystem.DefaultDenyRead,
+		DefaultDenyRead:         cfg.Filesystem.IsDefaultDenyRead(),
+		Cwd:                     "/tmp/test-project",
 		ReadAllowPaths:          cfg.Filesystem.AllowRead,
 		ReadDenyPaths:           cfg.Filesystem.DenyRead,
 		WriteAllowPaths:         allowPaths,
@@ -175,38 +177,46 @@ func TestMacOS_DefaultDenyRead(t *testing.T) {
 	tests := []struct {
 		name                      string
 		defaultDenyRead           bool
+		cwd                       string
 		allowRead                 []string
 		wantContainsBlanketAllow  bool
 		wantContainsMetadataAllow bool
 		wantContainsSystemAllows  bool
 		wantContainsUserAllowRead bool
+		wantContainsCwdAllow      bool
 	}{
 		{
-			name:                      "default mode - blanket allow read",
+			name:                      "legacy mode - blanket allow read",
 			defaultDenyRead:           false,
+			cwd:                       "/home/user/project",
 			allowRead:                 nil,
 			wantContainsBlanketAllow:  true,
 			wantContainsMetadataAllow: false,
 			wantContainsSystemAllows:  false,
 			wantContainsUserAllowRead: false,
+			wantContainsCwdAllow:      false,
 		},
 		{
-			name:                      "defaultDenyRead enabled - metadata allow, system data allows",
+			name:                      "defaultDenyRead enabled - metadata allow, system data allows, CWD allow",
 			defaultDenyRead:           true,
+			cwd:                       "/home/user/project",
 			allowRead:                 nil,
 			wantContainsBlanketAllow:  false,
 			wantContainsMetadataAllow: true,
 			wantContainsSystemAllows:  true,
 			wantContainsUserAllowRead: false,
+			wantContainsCwdAllow:      true,
 		},
 		{
 			name:                      "defaultDenyRead with allowRead paths",
 			defaultDenyRead:           true,
-			allowRead:                 []string{"/home/user/project"},
+			cwd:                       "/home/user/project",
+			allowRead:                 []string{"/home/user/other"},
 			wantContainsBlanketAllow:  false,
 			wantContainsMetadataAllow: true,
 			wantContainsSystemAllows:  true,
 			wantContainsUserAllowRead: true,
+			wantContainsCwdAllow:      true,
 		},
 	}
 
@@ -215,6 +225,7 @@ func TestMacOS_DefaultDenyRead(t *testing.T) {
 			params := MacOSSandboxParams{
 				Command:         "echo test",
 				DefaultDenyRead: tt.defaultDenyRead,
+				Cwd:             tt.cwd,
 				ReadAllowPaths:  tt.allowRead,
 			}
 
@@ -236,6 +247,13 @@ func TestMacOS_DefaultDenyRead(t *testing.T) {
 				t.Errorf("system path allows = %v, want %v\nProfile:\n%s", hasSystemAllows, tt.wantContainsSystemAllows, profile)
 			}
 
+			if tt.wantContainsCwdAllow && tt.cwd != "" {
+				hasCwdAllow := strings.Contains(profile, fmt.Sprintf(`(subpath %q)`, tt.cwd))
+				if !hasCwdAllow {
+					t.Errorf("CWD path %q not found in profile", tt.cwd)
+				}
+			}
+
 			if tt.wantContainsUserAllowRead && len(tt.allowRead) > 0 {
 				hasUserAllow := strings.Contains(profile, tt.allowRead[0])
 				if !hasUserAllow {