diff --git a/src/cliproxy/binary-manager.ts b/src/cliproxy/binary-manager.ts
index 4e23f880..51a33d45 100644
--- a/src/cliproxy/binary-manager.ts
+++ b/src/cliproxy/binary-manager.ts
@@ -5,10 +5,12 @@
  * Pattern: Mirrors npm install behavior (fast check, download only when needed)
  */
 
-import { info } from '../utils/ui';
-import { getBinDir } from './config-generator';
+import { info, warn } from '../utils/ui';
+import { getBinDir, CLIPROXY_DEFAULT_PORT } from './config-generator';
 import { BinaryInfo, BinaryManagerConfig } from './types';
 import { CLIPROXY_FALLBACK_VERSION } from './platform-detector';
+import { isProxyRunning, stopProxy } from './services/proxy-lifecycle-service';
+import { waitForPortFree } from '../utils/port-utils';
 import {
   UpdateCheckResult,
   checkForUpdates,
@@ -108,12 +110,32 @@ export function getInstalledCliproxyVersion(): string {
 /** Install a specific version of CLIProxyAPI */
 export async function installCliproxyVersion(version: string, verbose = false): Promise<void> {
   const manager = new BinaryManager({ version, verbose, forceVersion: true });
+
+  // Check if proxy is running and stop it first
+  if (isProxyRunning()) {
+    if (verbose) console.log(info('Stopping running CLIProxy before update...'));
+    const result = await stopProxy();
+    if (result.stopped) {
+      // Wait for port to be fully released
+      const portFree = await waitForPortFree(CLIPROXY_DEFAULT_PORT, 5000);
+      if (!portFree && verbose) {
+        console.log(warn('Port did not free up in time, proceeding anyway...'));
+      }
+    } else if (verbose && result.error) {
+      console.log(warn(`Could not stop proxy: ${result.error}`));
+    }
+  }
+
   if (manager.isBinaryInstalled()) {
     if (verbose)
       console.log(info(`Removing existing CLIProxy Plus v${getInstalledCliproxyVersion()}`));
     manager.deleteBinary();
   }
   await manager.ensureBinary();
+
+  if (verbose) {
+    console.log(info('New version will be active on next CLIProxy command'));
+  }
 }
 
 /** Fetch the latest CLIProxyAPI version from GitHub API */
diff --git a/src/cliproxy/cliproxy-executor.ts b/src/cliproxy/cliproxy-executor.ts
index 17ce150f..c2813dce 100644
--- a/src/cliproxy/cliproxy-executor.ts
+++ b/src/cliproxy/cliproxy-executor.ts
@@ -17,7 +17,7 @@ import * as net from 'net';
 import { ProgressIndicator } from '../utils/progress-indicator';
 import { ok, fail, info, warn } from '../utils/ui';
 import { escapeShellArg } from '../utils/shell-executor';
-import { ensureCLIProxyBinary } from './binary-manager';
+import { ensureCLIProxyBinary, getInstalledCliproxyVersion } from './binary-manager';
 import {
   generateConfig,
   getEffectiveEnvVars,
@@ -48,7 +48,12 @@ import {
   installWebSearchHook,
   displayWebSearchStatus,
 } from '../utils/websearch-manager';
-import { registerSession, unregisterSession, cleanupOrphanedSessions } from './session-tracker';
+import {
+  registerSession,
+  unregisterSession,
+  cleanupOrphanedSessions,
+  stopProxy,
+} from './session-tracker';
 import { detectRunningProxy, waitForProxyHealthy, reclaimOrphanedProxy } from './proxy-detector';
 import { withStartupLock } from './startup-lock';
 import { loadOrCreateUnifiedConfig } from '../config/unified-config-loader';
@@ -429,9 +434,33 @@ export async function execClaudeWithCLIProxy(
     // Use startup lock to coordinate with other CCS processes
     await withStartupLock(async () => {
       // Detect running proxy using multiple methods (HTTP, session-lock, port-process)
-      const proxyStatus = await detectRunningProxy(cfg.port);
+      let proxyStatus = await detectRunningProxy(cfg.port);
       log(`Proxy detection: ${JSON.stringify(proxyStatus)}`);
 
+      // Check for version mismatch - restart proxy if installed version differs from running
+      if (proxyStatus.running && proxyStatus.verified && proxyStatus.version) {
+        const installedVersion = getInstalledCliproxyVersion();
+        if (installedVersion !== proxyStatus.version) {
+          console.log(
+            warn(
+              `Version mismatch: running v${proxyStatus.version}, installed v${installedVersion}. Restarting proxy...`
+            )
+          );
+          log(`Stopping outdated proxy (PID: ${proxyStatus.pid ?? 'unknown'})...`);
+          const stopResult = await stopProxy(cfg.port);
+          if (stopResult.stopped) {
+            log(`Stopped outdated proxy successfully`);
+          } else {
+            log(`Stop proxy result: ${stopResult.error ?? 'unknown error'}`);
+          }
+          // Wait for port to be released
+          await new Promise((r) => setTimeout(r, 500));
+          // Re-detect proxy status (should now be not running)
+          proxyStatus = await detectRunningProxy(cfg.port);
+          log(`Re-detection after version mismatch restart: ${JSON.stringify(proxyStatus)}`);
+        }
+      }
+
       if (proxyStatus.running && proxyStatus.verified) {
         // Healthy proxy found - join it
         if (proxyStatus.pid) {
@@ -542,9 +571,12 @@ export async function execClaudeWithCLIProxy(
         throw new Error(`CLIProxy startup failed: ${err.message}`);
       }
 
-      // Register this session with the new proxy
-      sessionId = registerSession(cfg.port, proxy.pid as number);
-      log(`Registered session ${sessionId} with new proxy (PID ${proxy.pid})`);
+      // Register this session with the new proxy, including the installed version
+      const installedVersion = getInstalledCliproxyVersion();
+      sessionId = registerSession(cfg.port, proxy.pid as number, installedVersion);
+      log(
+        `Registered session ${sessionId} with new proxy (PID ${proxy.pid}, version ${installedVersion})`
+      );
     });
   }
 
diff --git a/src/cliproxy/proxy-detector.ts b/src/cliproxy/proxy-detector.ts
index 1a7bc812..d1d6afe6 100644
--- a/src/cliproxy/proxy-detector.ts
+++ b/src/cliproxy/proxy-detector.ts
@@ -15,7 +15,7 @@
  * Solves race conditions between cliproxy-executor.ts and service-manager.ts
  */
 
-import { getExistingProxy, registerSession } from './session-tracker';
+import { getExistingProxy, registerSession, getRunningProxyVersion } from './session-tracker';
 import { isCliproxyRunning } from './stats-fetcher';
 import { getPortProcess, isCLIProxyProcess, PortProcess } from '../utils/port-utils';
 
@@ -38,6 +38,8 @@ export interface ProxyStatus {
   blocker?: PortProcess;
   /** Number of active sessions (if session-lock found) */
   sessionCount?: number;
+  /** Version of the running proxy (from session lock) */
+  version?: string;
 }
 
 /** Optional logger function for verbose output */
@@ -86,13 +88,19 @@ export async function detectRunningProxy(
       }
     }
 
-    log(`HTTP check passed, proxy healthy (PID: ${pid ?? 'unknown'})`);
+    // Get version from session lock
+    const runningVersion = getRunningProxyVersion(port);
+
+    log(
+      `HTTP check passed, proxy healthy (PID: ${pid ?? 'unknown'}, version: ${runningVersion ?? 'unknown'})`
+    );
     return {
       running: true,
       verified: true,
       method: 'http',
       pid,
       sessionCount: lock?.sessions?.length,
+      version: runningVersion ?? undefined,
     };
   }
   log('HTTP check failed, proxy not responding');
@@ -103,13 +111,17 @@ export async function detectRunningProxy(
   if (lock) {
     // Session lock exists - proxy might be starting up
     // The lock validates PID is running, so proxy exists but not ready
-    log(`Session lock found: PID ${lock.pid}, ${lock.sessions.length} sessions`);
+    const lockVersion = getRunningProxyVersion(port);
+    log(
+      `Session lock found: PID ${lock.pid}, ${lock.sessions.length} sessions, version: ${lockVersion ?? 'unknown'}`
+    );
     return {
       running: true,
       verified: false,
       method: 'session-lock',
       pid: lock.pid,
       sessionCount: lock.sessions.length,
+      version: lockVersion ?? undefined,
     };
   }
   log('No session lock found');
diff --git a/src/cliproxy/session-tracker.ts b/src/cliproxy/session-tracker.ts
index 05d5eee8..2279eeba 100644
--- a/src/cliproxy/session-tracker.ts
+++ b/src/cliproxy/session-tracker.ts
@@ -27,6 +27,8 @@ interface SessionLock {
   pid: number;
   sessions: string[];
   startedAt: string;
+  /** CLIProxy version running (added for version mismatch detection) */
+  version?: string;
 }
 
 /** Generate unique session ID */
@@ -125,6 +127,23 @@ function isProcessRunning(pid: number): boolean {
   }
 }
 
+/**
+ * Wait for a process to exit within a timeout.
+ * @param pid Process ID to wait for
+ * @param timeoutMs Maximum time to wait in milliseconds
+ * @returns true if process exited, false if timeout
+ */
+async function waitForProcessExit(pid: number, timeoutMs: number): Promise<boolean> {
+  const start = Date.now();
+  while (Date.now() - start < timeoutMs) {
+    if (!isProcessRunning(pid)) {
+      return true; // Process exited
+    }
+    await new Promise((resolve) => setTimeout(resolve, 100));
+  }
+  return false; // Timeout
+}
+
 /**
  * Check if there's an existing proxy running that we can reuse.
  * Returns the existing lock if proxy is healthy, null otherwise.
@@ -153,9 +172,12 @@ export function getExistingProxy(port: number): SessionLock | null {
 /**
  * Register a new session with the proxy.
  * Call this when starting a new CCS session that will use an existing proxy.
+ * @param port Port the proxy is running on
+ * @param proxyPid PID of the proxy process
+ * @param version Optional CLIProxy version (stored when spawning new proxy)
  * @returns Session ID for this session
  */
-export function registerSession(port: number, proxyPid: number): string {
+export function registerSession(port: number, proxyPid: number, version?: string): string {
   const sessionId = generateSessionId();
   const existingLock = readSessionLockForPort(port);
 
@@ -170,6 +192,7 @@ export function registerSession(port: number, proxyPid: number): string {
       pid: proxyPid,
       sessions: [sessionId],
       startedAt: new Date().toISOString(),
+      version,
     };
     writeSessionLockForPort(newLock);
   }
@@ -315,6 +338,19 @@ export async function stopProxy(port: number = CLIPROXY_DEFAULT_PORT): Promise<{
     // Found CLIProxy running without session lock - kill it
     try {
       process.kill(portProcess.pid, 'SIGTERM');
+
+      // Wait for graceful shutdown
+      const exited = await waitForProcessExit(portProcess.pid, 3000);
+      if (!exited) {
+        // Escalate to SIGKILL
+        try {
+          process.kill(portProcess.pid, 'SIGKILL');
+          await waitForProcessExit(portProcess.pid, 1000);
+        } catch {
+          // Process may have exited between check and kill
+        }
+      }
+
       return { stopped: true, pid: portProcess.pid, sessionCount: 0 };
     } catch (err) {
       const error = err as NodeJS.ErrnoException;
@@ -338,6 +374,18 @@ export async function stopProxy(port: number = CLIPROXY_DEFAULT_PORT): Promise<{
     // Kill the proxy process
     process.kill(pid, 'SIGTERM');
 
+    // Wait for graceful shutdown
+    const exited = await waitForProcessExit(pid, 3000);
+    if (!exited) {
+      // Escalate to SIGKILL
+      try {
+        process.kill(pid, 'SIGKILL');
+        await waitForProcessExit(pid, 1000);
+      } catch {
+        // Process may have exited between check and kill
+      }
+    }
+
     // Clean up session lock
     deleteSessionLockForPort(port);
 
@@ -362,6 +410,7 @@ export function getProxyStatus(port: number = CLIPROXY_DEFAULT_PORT): {
   pid?: number;
   sessionCount?: number;
   startedAt?: string;
+  version?: string;
 } {
   const lock = readSessionLockForPort(port);
 
@@ -381,5 +430,26 @@ export function getProxyStatus(port: number = CLIPROXY_DEFAULT_PORT): {
     pid: lock.pid,
     sessionCount: lock.sessions.length,
     startedAt: lock.startedAt,
+    version: lock.version,
   };
 }
+
+/**
+ * Get the version of the running proxy from session lock.
+ * @param port Port to check (defaults to CLIPROXY_DEFAULT_PORT)
+ * @returns Version string if available, null otherwise
+ */
+export function getRunningProxyVersion(port: number = CLIPROXY_DEFAULT_PORT): string | null {
+  const lock = readSessionLockForPort(port);
+  if (!lock) {
+    return null;
+  }
+
+  // Verify proxy is still running
+  if (!isProcessRunning(lock.pid)) {
+    deleteSessionLockForPort(port);
+    return null;
+  }
+
+  return lock.version ?? null;
+}
diff --git a/src/utils/port-utils.ts b/src/utils/port-utils.ts
index 2359f1ab..31f87208 100644
--- a/src/utils/port-utils.ts
+++ b/src/utils/port-utils.ts
@@ -181,6 +181,32 @@ export interface BindingTestResult {
   message: string;
 }
 
+/**
+ * Wait for a port to become free (no process listening)
+ * @param port Port number to wait for
+ * @param timeoutMs Maximum time to wait in milliseconds (default: 5000)
+ * @param pollIntervalMs Interval between checks in milliseconds (default: 200)
+ * @returns True if port became free, false if timeout
+ */
+export async function waitForPortFree(
+  port: number,
+  timeoutMs = 5000,
+  pollIntervalMs = 200
+): Promise<boolean> {
+  const startTime = Date.now();
+
+  while (Date.now() - startTime < timeoutMs) {
+    const process = await getPortProcess(port);
+    if (!process) {
+      return true; // Port is free
+    }
+    // Wait before next check
+    await new Promise((resolve) => setTimeout(resolve, pollIntervalMs));
+  }
+
+  return false; // Timeout reached
+}
+
 /**
  * Test if we can bind to localhost on a specific port
  * This verifies network stack is working and port is actually available