diff --git a/bin/install.js b/bin/install.js
index 12baca142..e04b10c46 100755
--- a/bin/install.js
+++ b/bin/install.js
@@ -225,12 +225,40 @@ function install(isGlobal) {
     console.log(`  ${green}✓${reset} Installed hooks`);
   }
 
-  // Configure statusline in settings.json
+  // Configure statusline and hooks in settings.json
   const settingsPath = path.join(claudeDir, 'settings.json');
   const settings = readSettings(settingsPath);
   const statuslineCommand = isGlobal
     ? '$HOME/.claude/hooks/statusline.sh'
     : '.claude/hooks/statusline.sh';
+  const updateCheckCommand = isGlobal
+    ? '$HOME/.claude/hooks/gsd-check-update.sh'
+    : '.claude/hooks/gsd-check-update.sh';
+
+  // Configure SessionStart hook for update checking
+  if (!settings.hooks) {
+    settings.hooks = {};
+  }
+  if (!settings.hooks.SessionStart) {
+    settings.hooks.SessionStart = [];
+  }
+
+  // Check if GSD update hook already exists
+  const hasGsdUpdateHook = settings.hooks.SessionStart.some(entry =>
+    entry.hooks && entry.hooks.some(h => h.command && h.command.includes('gsd-check-update'))
+  );
+
+  if (!hasGsdUpdateHook) {
+    settings.hooks.SessionStart.push({
+      hooks: [
+        {
+          type: 'command',
+          command: updateCheckCommand
+        }
+      ]
+    });
+    console.log(`  ${green}✓${reset} Configured update check hook`);
+  }
 
   return { settingsPath, settings, statuslineCommand };
 }
@@ -238,16 +266,18 @@ function install(isGlobal) {
 /**
  * Apply statusline config and print completion message
  */
-function finishInstall(settingsPath, settings, statuslineCommand, shouldInstall) {
-  if (shouldInstall) {
+function finishInstall(settingsPath, settings, statuslineCommand, shouldInstallStatusline) {
+  if (shouldInstallStatusline) {
     settings.statusLine = {
       type: 'command',
       command: statuslineCommand
     };
-    writeSettings(settingsPath, settings);
     console.log(`  ${green}✓${reset} Configured statusline`);
   }
 
+  // Always write settings (hooks were already configured in install())
+  writeSettings(settingsPath, settings);
+
   console.log(`
   ${green}Done!${reset} Launch Claude Code and run ${cyan}/gsd:help${reset}.
 `);
diff --git a/commands/gsd/update.md b/commands/gsd/update.md
index 0564d1f37..ad878296b 100644
--- a/commands/gsd/update.md
+++ b/commands/gsd/update.md
@@ -85,6 +85,12 @@ npx get-shit-done-cc --global
 ```
 
 Capture output. If install fails, show error and STOP.
+
+Clear the update cache so statusline indicator disappears:
+
+```bash
+rm -f ~/.claude/cache/gsd-update-check.json
+```
 </step>
 
 <step name="fetch_changelog">
diff --git a/hooks/gsd-check-update.sh b/hooks/gsd-check-update.sh
new file mode 100755
index 000000000..faf5f080b
--- /dev/null
+++ b/hooks/gsd-check-update.sh
@@ -0,0 +1,20 @@
+#!/bin/bash
+# Check for GSD updates in background, write result to cache
+# Called by SessionStart hook - runs once per session
+
+CACHE_FILE="$HOME/.claude/cache/gsd-update-check.json"
+mkdir -p "$HOME/.claude/cache"
+
+# Run check in background (non-blocking)
+(
+  installed=$(cat "$HOME/.claude/get-shit-done/VERSION" 2>/dev/null || echo "0.0.0")
+  latest=$(npm view get-shit-done-cc version 2>/dev/null)
+
+  if [[ -n "$latest" && "$installed" != "$latest" ]]; then
+    echo "{\"update_available\":true,\"installed\":\"$installed\",\"latest\":\"$latest\",\"checked\":$(date +%s)}" > "$CACHE_FILE"
+  else
+    echo "{\"update_available\":false,\"installed\":\"$installed\",\"latest\":\"${latest:-unknown}\",\"checked\":$(date +%s)}" > "$CACHE_FILE"
+  fi
+) &
+
+exit 0
diff --git a/hooks/statusline.sh b/hooks/statusline.sh
old mode 100644
new mode 100755
index fad92cac7..6f0c127e8
--- a/hooks/statusline.sh
+++ b/hooks/statusline.sh
@@ -40,10 +40,19 @@ if [[ -f "$todo" ]]; then
     task=$(jq -r '.[] | select(.status=="in_progress") | .activeForm' "$todo" 2>/dev/null | head -1)
 fi
 
+# GSD update available?
+gsd_update=""
+if [[ -f "$HOME/.claude/cache/gsd-update-check.json" ]]; then
+    update_available=$(jq -r '.update_available' "$HOME/.claude/cache/gsd-update-check.json" 2>/dev/null)
+    if [[ "$update_available" == "true" ]]; then
+        gsd_update=$'\033[33m⬆ /gsd:update\033[0m │ '
+    fi
+fi
+
 # Output
 dirname=$(basename "$dir")
 if [[ -n "$task" ]]; then
-    printf '\033[2m%s\033[0m │ \033[1m%s\033[0m │ \033[2m%s\033[0m%s' "$model" "$task" "$dirname" "$ctx"
+    printf '%s\033[2m%s\033[0m │ \033[1m%s\033[0m │ \033[2m%s\033[0m%s' "$gsd_update" "$model" "$task" "$dirname" "$ctx"
 else
-    printf '\033[2m%s\033[0m │ \033[2m%s\033[0m%s' "$model" "$dirname" "$ctx"
+    printf '%s\033[2m%s\033[0m │ \033[2m%s\033[0m%s' "$gsd_update" "$model" "$dirname" "$ctx"
 fi