diff --git a/.changeset/quick-rams-greet.md b/.changeset/quick-rams-greet.md
new file mode 100644
index 000000000..5bad0882c
--- /dev/null
+++ b/.changeset/quick-rams-greet.md
@@ -0,0 +1,5 @@
+---
+type: Fixed
+pr: 3460
+---
+Windows/Claude Code: /gsd-update and re-running the installer now migrate stale `.sh` managed hook commands (gsd-validate-commit, gsd-graphify-update, gsd-session-state, gsd-phase-boundary) in settings.json/settings.local.json to the current bash-runner-omission format — removing the redundant nested bash that the pre-#580/#3393 shape spawns on every hook fire. Custom user hooks are never touched.
diff --git a/bin/install.js b/bin/install.js
index bd5e98a95..3008f1ed2 100755
--- a/bin/install.js
+++ b/bin/install.js
@@ -1106,6 +1106,15 @@ function rewriteLegacyManagedNodeHookCommands(settings, absoluteRunner, opts) {
   return hooksSurface.rewriteLegacyManagedNodeHookCommands(settings, absoluteRunner, opts);
 }
 
+// #3329: rewrite already-registered managed `.sh` hook commands to the shape
+// the current installer would generate (the #580/#3393 bash-runner-omission
+// migration the register-only-if-absent path never applied to existing
+// entries). Invoked inside applySettingsJsonHooks in the compiled surface
+// module; re-bound here for tests/consumers, mirroring the #2979 rewriter.
+function reconcileManagedShellHookCommands(settings, expected, opts) {
+  return hooksSurface.reconcileManagedShellHookCommands(settings, expected, opts);
+}
+
 /**
  * Build the GSD-managed Codex SessionStart hook block for config.toml.
  *
@@ -13784,6 +13793,7 @@ module.exports = {
     referencesHook,
     applySettingsJsonHooks,
     rewriteLegacyManagedNodeHookCommands,
+    reconcileManagedShellHookCommands,
     buildCodexHookBlock,
     rewriteLegacyCodexHookBlock,
     buildCodexHookWindowsShimIR,
diff --git a/src/runtime-hooks-surface.cts b/src/runtime-hooks-surface.cts
index 3f1d9f7b5..f398893d8 100644
--- a/src/runtime-hooks-surface.cts
+++ b/src/runtime-hooks-surface.cts
@@ -568,6 +568,95 @@ function rewriteLegacyManagedNodeHookCommands(settings: Settings, absoluteRunner
   return changed;
 }
 
+// ---------------------------------------------------------------------------
+// Shared: reconcileManagedShellHookCommands (#3329)
+// ---------------------------------------------------------------------------
+
+/**
+ * Rewrite already-registered managed `.sh` hook `command` strings to the shape
+ * the current installer would generate (#3329).
+ *
+ * applySettingsJsonHooks registers the four `.sh` managed hooks only-if-absent,
+ * so an entry registered by an older installer keeps its old command forever —
+ * `/gsd-update` (which re-invokes the installer) never re-derived it. On
+ * Claude/win32 that left the pre-#580/#3393 bash-runner-prefixed commands
+ * (`bash "<script>.sh"`, `"<git>/bash.exe" "<script>.sh"`) in place, spawning a
+ * nested bash on every hook fire. The #2979 rewriter above cannot help: it is
+ * Node-only by design (its basename gate contains only `.js` filenames).
+ *
+ * Scoping / safety:
+ * - Inert unless `shellHookOmitsBashRunner({ platform, runtime, isShellHook:
+ *   true })` — the exact combination whose correct command shape changed. Where
+ *   the bash runner is still correct (non-Windows, non-claude), nothing is
+ *   rewritten, so the reconcile cannot churn unrelated installs.
+ * - Only entries whose parsed script token's basename exactly equals one of the
+ *   expected managed `.sh` filenames are touched. A user hook would have to
+ *   live at a path ending in exactly `gsd-session-state.sh` etc. — i.e. the
+ *   GSD-installed file — to match. Extra-token commands (env prefixes, extra
+ *   args) and args-form launcher entries (#976) never match the strict
+ *   `[runner ]<script>` two-token shape and are left alone.
+ * - A null/empty expected command disables rewriting for that hook (a
+ *   bash-runner-unavailable install must not have its entry nulled).
+ *
+ * @param settings settings.json-shaped object; mutated in place
+ * @param expected map of managed `.sh` filename → the command this install
+ *   would register today (from buildHookCommand / buildLocalShellHookCommand)
+ * @param opts platform/runtime override (default: current process)
+ * @returns true when any command was rewritten
+ */
+function reconcileManagedShellHookCommands(
+  settings: Settings,
+  expected: Record<string, string | null | undefined>,
+  opts?: RewriteOpts
+): boolean {
+  if (!settings || !settings.hooks || !expected) return false;
+  if (!opts) opts = {};
+  const platform = opts.platform || process.platform;
+  const runtime = opts.runtime || 'generic';
+  if (!shellHookOmitsBashRunner({ platform, runtime, isShellHook: true })) return false;
+
+  const expectedByBasename = new Map<string, string>();
+  for (const [hookFile, command] of Object.entries(expected)) {
+    if (typeof command === 'string' && command.length > 0) {
+      expectedByBasename.set(hookFile, command);
+    }
+  }
+  if (expectedByBasename.size === 0) return false;
+
+  let changed = false;
+  for (const entries of Object.values(settings.hooks)) {
+    if (!Array.isArray(entries)) continue;
+    for (const entry of entries) {
+      if (!entry || !Array.isArray(entry.hooks)) continue;
+      for (const h of entry.hooks) {
+        if (!h || typeof h.command !== 'string') continue;
+        if (Array.isArray(h.args) && h.args.length > 0) continue;
+        let trimmed = h.command.trim();
+        const hadPowerShellCallOperator = platform === 'win32' && /^&\s+/.test(trimmed);
+        if (hadPowerShellCallOperator) {
+          trimmed = trimmed.replace(/^&\s+/, '').trim();
+        }
+        // Strict `[runner ]<script>` shape: an optional single runner token
+        // (bare, 'single-quoted', or "double-quoted") followed by the script
+        // token. Anything else (env prefixes, extra flags, pipelines) does not
+        // match and is left untouched.
+        const m = trimmed.match(/^(?:(?:"([^"]+)"|'([^']+)'|(\S+))\s+)?(?:"([^"]+)"|'([^']+)'|(\S+))\s*$/);
+        if (!m) continue;
+        const scriptToken = m[4] || m[5] || m[6] || '';
+        if (!scriptToken) continue;
+        const basename = shellCmdProjection.posixNormalize(scriptToken).split('/').pop() || '';
+        const expectedCommand = expectedByBasename.get(basename);
+        if (!expectedCommand) continue;
+        if (h.command === expectedCommand) continue;
+
+        h.command = expectedCommand;
+        changed = true;
+      }
+    }
+  }
+  return changed;
+}
+
 // ---------------------------------------------------------------------------
 // Codex TOML hook block builder
 // ---------------------------------------------------------------------------
@@ -2096,6 +2185,23 @@ function applySettingsJsonHooks(settings: any, opts: ApplySettingsJsonHooksOpts)
       console.warn(`  ${yellow}⚠${reset}  Skipped phase boundary hook — Bash executable path unavailable (#3393)`);
     }
 
+    // #3329: the four `.sh` sites above register only-if-absent, so an entry
+    // registered by an older installer keeps its old command forever —
+    // /gsd-update (which re-invokes the installer) never re-derived it. On
+    // Claude/win32 that left the pre-#580/#3393 bash-runner-prefixed commands
+    // in settings.json indefinitely. Reconcile existing managed `.sh` entries
+    // to the command this install would generate today. Inert wherever the
+    // bash runner is still the correct shape; scoped to exact managed
+    // basenames so user-authored hooks are never touched.
+    if (reconcileManagedShellHookCommands(settings as Settings, {
+      'gsd-validate-commit.sh': validateCommitCommand,
+      'gsd-graphify-update.sh': graphifyUpdateCommand,
+      'gsd-session-state.sh': sessionStateCommand,
+      'gsd-phase-boundary.sh': phaseBoundaryCommand,
+    }, { platform: hookOpts.platform, runtime })) {
+      console.log(`  ${green}✓${reset} Reconciled managed .sh hook commands to current format (#3329)`);
+    }
+
     // ── Extended hook events: SubagentStop / Stop / PreCompact / SubagentStart
     //    (#788 + #770 + #2092) ────────────────────────────────────────────────
     // Claude Code (since #770) and Qwen Code (since #788) both support the
@@ -2559,6 +2665,7 @@ export = {
   applySettingsJsonHooks,
   referencesHook,
   rewriteLegacyManagedNodeHookCommands,
+  reconcileManagedShellHookCommands,
   normalizeNodePath,
   resolveNodeRunner,
   resolveBashRunner,
diff --git a/tests/install-regressions.test.cjs b/tests/install-regressions.test.cjs
index e4ab815be..07412e34f 100644
--- a/tests/install-regressions.test.cjs
+++ b/tests/install-regressions.test.cjs
@@ -1426,3 +1426,193 @@ describe('#3333 regression: copyWithPathReplacement tolerates a source file vani
       'vanish.md destination must not exist — the vanished source must be skipped, not partially written');
   });
 });
+
+// ─── #3329 — /gsd-update never migrates stale .sh hook commands ───────────────
+//
+// /gsd-update re-invokes the installer (workflows/update.md), but
+// applySettingsJsonHooks registers the four `.sh` managed hooks only-if-absent:
+// an already-registered entry keeps whatever command shape an older installer
+// emitted. On Windows+Claude that left the pre-#580/#3393 bash-runner-prefixed
+// commands (`bash "<script>.sh"` / `"<git>/bash.exe" "<script>.sh"`) in place
+// forever — each hook fire spawns a nested bash grandchild. The fix adds
+// reconcileManagedShellHookCommands, wired into applySettingsJsonHooks, which
+// rewrites existing managed `.sh` entries to the command this install would
+// generate today — gated on shellHookOmitsBashRunner so it never fires where
+// the bash runner is correct, and scoped to exact managed basenames so
+// user-authored hooks are untouched.
+
+describe('#3329 regression: stale managed .sh hook commands are reconciled on install/update', () => {
+  const { reconcileManagedShellHookCommands } = installExports || {};
+
+  const GLOBAL_EXPECTED = {
+    'gsd-validate-commit.sh': '"C:/Users/u/.claude/hooks/gsd-validate-commit.sh"',
+    'gsd-graphify-update.sh': '"C:/Users/u/.claude/hooks/gsd-graphify-update.sh"',
+    'gsd-session-state.sh': '"C:/Users/u/.claude/hooks/gsd-session-state.sh"',
+    'gsd-phase-boundary.sh': '"C:/Users/u/.claude/hooks/gsd-phase-boundary.sh"',
+  };
+
+  const LOCAL_EXPECTED = {
+    'gsd-validate-commit.sh': '"$CLAUDE_PROJECT_DIR"/.claude/hooks/gsd-validate-commit.sh',
+    'gsd-graphify-update.sh': '"$CLAUDE_PROJECT_DIR"/.claude/hooks/gsd-graphify-update.sh',
+    'gsd-session-state.sh': '"$CLAUDE_PROJECT_DIR"/.claude/hooks/gsd-session-state.sh',
+    'gsd-phase-boundary.sh': '"$CLAUDE_PROJECT_DIR"/.claude/hooks/gsd-phase-boundary.sh',
+  };
+
+  function settingsWith(entriesByEvent) {
+    const hooks = {};
+    for (const [event, commands] of Object.entries(entriesByEvent)) {
+      hooks[event] = commands.map(command => ({
+        hooks: [{ type: 'command', command }],
+      }));
+    }
+    return { hooks };
+  }
+
+  function allCommands(settings) {
+    const out = [];
+    for (const entries of Object.values(settings.hooks)) {
+      for (const entry of entries) {
+        for (const h of entry.hooks || []) out.push(h.command);
+      }
+    }
+    return out;
+  }
+
+  test('reconcileManagedShellHookCommands is exported from bin/install.js', () => {
+    assert.strictEqual(typeof reconcileManagedShellHookCommands, 'function',
+      'reconcileManagedShellHookCommands must be exported from bin/install.js (#3329)');
+  });
+
+  test('win32+claude: bare `bash`-prefixed global entries are rewritten to the bare script path', () => {
+    // Exact stale shapes reported in #3329 (global install, ~/.claude/settings.json).
+    const settings = settingsWith({
+      SessionStart: ['bash "C:/Users/u/.claude/hooks/gsd-session-state.sh"'],
+      PreToolUse: ['bash "C:/Users/u/.claude/hooks/gsd-validate-commit.sh"'],
+      PostToolUse: ['"C:/Program Files/Git/bin/bash.exe" "C:/Users/u/.claude/hooks/gsd-graphify-update.sh"'],
+    });
+
+    const changed = reconcileManagedShellHookCommands(settings, GLOBAL_EXPECTED, {
+      platform: 'win32',
+      runtime: 'claude',
+    });
+
+    assert.strictEqual(changed, true, 'stale entries must be reported as changed');
+    assert.deepStrictEqual(allCommands(settings), [
+      '"C:/Users/u/.claude/hooks/gsd-session-state.sh"',
+      '"C:/Users/u/.claude/hooks/gsd-validate-commit.sh"',
+      '"C:/Users/u/.claude/hooks/gsd-graphify-update.sh"',
+    ], 'all three stale shapes must be rewritten to the shellHookOmitsBashRunner form');
+  });
+
+  test('win32+claude: local anchored-prefix entries are rewritten (buildLocalShellHookCommand shape)', () => {
+    const settings = settingsWith({
+      PreToolUse: ['bash "$CLAUDE_PROJECT_DIR"/.claude/hooks/gsd-validate-commit.sh'],
+      PostToolUse: ['"C:/Program Files/Git/bin/bash.exe" "$CLAUDE_PROJECT_DIR"/.claude/hooks/gsd-phase-boundary.sh'],
+    });
+
+    const changed = reconcileManagedShellHookCommands(settings, LOCAL_EXPECTED, {
+      platform: 'win32',
+      runtime: 'claude',
+    });
+
+    assert.strictEqual(changed, true);
+    assert.deepStrictEqual(allCommands(settings), [
+      '"$CLAUDE_PROJECT_DIR"/.claude/hooks/gsd-validate-commit.sh',
+      '"$CLAUDE_PROJECT_DIR"/.claude/hooks/gsd-phase-boundary.sh',
+    ], 'local-install .sh entries must reconcile to the anchored bare script path');
+  });
+
+  test('idempotent: already-current entries are left untouched and report no change', () => {
+    const settings = settingsWith({
+      SessionStart: ['"C:/Users/u/.claude/hooks/gsd-session-state.sh"'],
+    });
+
+    const changed = reconcileManagedShellHookCommands(settings, GLOBAL_EXPECTED, {
+      platform: 'win32',
+      runtime: 'claude',
+    });
+
+    assert.strictEqual(changed, false, 'no-op when nothing is stale');
+    assert.strictEqual(
+      settings.hooks.SessionStart[0].hooks[0].command,
+      '"C:/Users/u/.claude/hooks/gsd-session-state.sh"',
+    );
+  });
+
+  test('over-fire guard: non-Windows platforms are untouched even when commands are stale', () => {
+    const original = 'bash "/home/u/.claude/hooks/gsd-session-state.sh"';
+    const settings = settingsWith({ SessionStart: [original] });
+
+    const changed = reconcileManagedShellHookCommands(settings, {
+      'gsd-session-state.sh': 'bash "/home/u/.claude/hooks/gsd-session-state.sh"',
+    }, { platform: 'linux', runtime: 'claude' });
+
+    assert.strictEqual(changed, false, 'linux must not reconcile (bash runner is correct there)');
+    assert.strictEqual(settings.hooks.SessionStart[0].hooks[0].command, original);
+  });
+
+  test('over-fire guard: win32 non-claude runtimes are untouched', () => {
+    const original = 'bash "C:/Users/u/.claude/hooks/gsd-session-state.sh"';
+    const settings = settingsWith({ SessionStart: [original] });
+
+    const changed = reconcileManagedShellHookCommands(settings, GLOBAL_EXPECTED, {
+      platform: 'win32',
+      runtime: 'qwen',
+    });
+
+    assert.strictEqual(changed, false, 'win32+qwen keeps the bash runner by design');
+    assert.strictEqual(settings.hooks.SessionStart[0].hooks[0].command, original);
+  });
+
+  test('scope guard: non-managed and user-authored hooks are never rewritten', () => {
+    const entries = [
+      'bash "/home/u/hooks/my-own-hook.sh"',                       // user hook, foreign basename
+      'node "C:/Users/u/.claude/hooks/gsd-check-update.js"',       // .js hook — owned by the #2979 rewriter
+      'FOO=1 bash "C:/Users/u/.claude/hooks/gsd-session-state.sh"', // 3-token wrapper, not the managed shape
+      'bash "C:/Users/u/.claude/hooks/gsd-session-state.sh" --flag', // extra args after the script
+    ];
+    const settings = settingsWith({ SessionStart: entries.slice() });
+
+    const changed = reconcileManagedShellHookCommands(settings, GLOBAL_EXPECTED, {
+      platform: 'win32',
+      runtime: 'claude',
+    });
+
+    assert.strictEqual(changed, false, 'no managed 2-token entry present — nothing to rewrite');
+    assert.deepStrictEqual(allCommands(settings), entries, 'every entry must be byte-identical');
+  });
+
+  test('scope guard: args-form launcher entries are skipped (#976 parity)', () => {
+    const settings = {
+      hooks: {
+        SessionStart: [{
+          hooks: [{
+            type: 'command',
+            command: '/usr/local/bin/node-launcher',
+            args: ['C:/Users/u/.claude/hooks/gsd-session-state.sh'],
+          }],
+        }],
+      },
+    };
+
+    const changed = reconcileManagedShellHookCommands(settings, GLOBAL_EXPECTED, {
+      platform: 'win32',
+      runtime: 'claude',
+    });
+
+    assert.strictEqual(changed, false, 'args-form entries are intentional wrappers');
+    assert.strictEqual(settings.hooks.SessionStart[0].hooks[0].command, '/usr/local/bin/node-launcher');
+  });
+
+  test('null expected commands are never written (bash-runner-unavailable installs stay intact)', () => {
+    const original = 'bash "C:/Users/u/.claude/hooks/gsd-session-state.sh"';
+    const settings = settingsWith({ SessionStart: [original] });
+
+    const changed = reconcileManagedShellHookCommands(settings, {
+      'gsd-session-state.sh': null,
+    }, { platform: 'win32', runtime: 'claude' });
+
+    assert.strictEqual(changed, false, 'a null expected command must disable rewriting for that hook');
+    assert.strictEqual(settings.hooks.SessionStart[0].hooks[0].command, original);
+  });
+});