diff --git a/sdk/docs/caching.md b/sdk/docs/caching.md
new file mode 100644
index 000000000..f34c88fe5
--- /dev/null
+++ b/sdk/docs/caching.md
@@ -0,0 +1,68 @@
+# Prompt Caching Best Practices
+
+When building applications on the GSD SDK, system prompts that include workflow instructions (executor prompts, planner context, verification rules) are large and stable across requests. Prompt caching avoids re-processing these on every API call.
+
+## Recommended: 1-Hour Cache TTL
+
+Use `cache_control` with a 1-hour TTL on system prompts that include GSD workflow content:
+
+```typescript
+const response = await client.messages.create({
+  model: 'claude-sonnet-4-20250514',
+  system: [
+    {
+      type: 'text',
+      text: executorPrompt, // GSD workflow instructions — large, stable across requests
+      cache_control: { type: 'ephemeral', ttl: '1h' },
+    },
+  ],
+  messages,
+});
+```
+
+### Why 1 hour instead of the default 5 minutes
+
+GSD workflows involve human review pauses between phases — discussing results, checking verification output, deciding next steps. The default 5-minute TTL expires during these pauses, forcing full re-processing of the system prompt on the next request.
+
+With a 1-hour TTL:
+
+- **Cost:** 2x write cost on cache miss (vs. 1.25x for 5-minute TTL)
+- **Break-even:** Pays for itself after 3 cache hits per hour
+- **GSD usage pattern:** Phase execution involves dozens of requests per hour, well above break-even
+- **Cache refresh:** Every cache hit resets the TTL at no cost, so active sessions maintain warm cache throughout
+
+### Which prompts to cache
+
+| Prompt | Cache? | Reason |
+|--------|--------|--------|
+| Executor system prompt | Yes | Large (~10K tokens), identical across tasks in a phase |
+| Planner system prompt | Yes | Large, stable within a planning session |
+| Verifier system prompt | Yes | Large, stable within a verification session |
+| User/task-specific content | No | Changes per request |
+
+### SDK integration point
+
+In `session-runner.ts`, the `systemPrompt.append` field carries the executor/planner prompt. When using the Claude API directly (outside the Agent SDK's `query()` helper), wrap this content with `cache_control`:
+
+```typescript
+// In runPlanSession / runPhaseStepSession, the systemPrompt is:
+systemPrompt: {
+  type: 'preset',
+  preset: 'claude_code',
+  append: executorPrompt, // <-- this is the content to cache
+}
+
+// When calling the API directly, convert to:
+system: [
+  {
+    type: 'text',
+    text: executorPrompt,
+    cache_control: { type: 'ephemeral', ttl: '1h' },
+  },
+]
+```
+
+## References
+
+- [Anthropic Prompt Caching documentation](https://docs.anthropic.com/en/docs/build-with-claude/prompt-caching)
+- [Extended caching (1-hour TTL)](https://docs.anthropic.com/en/docs/build-with-claude/prompt-caching#extended-caching)