diff --git a/packages/core/src/zig/build.zig.zon b/packages/core/src/zig/build.zig.zon
index b3f8f4389..a498aecd7 100644
--- a/packages/core/src/zig/build.zig.zon
+++ b/packages/core/src/zig/build.zig.zon
@@ -9,8 +9,8 @@
             .hash = "uucode-0.2.0-ZZjBPuS4VABmt0lQ-jDiKB4afmuZVvZpbX09FP5JrR8N",
         },
         .ghostty = .{
-            .url = "https://github.com/ghostty-org/ghostty/archive/b988efcfe584e88a3d0330e2c17c386ffa419d72.tar.gz",
-            .hash = "ghostty-1.3.2-dev-5UdBC9WdJAU1k1nuTdAexwmdzbmW1VTy6KhL_EfHjoTt",
+            .url = "https://github.com/ghostty-org/ghostty/archive/727b8a02f8734840de664c060678dd66f01931f6.tar.gz",
+            .hash = "ghostty-1.3.2-dev-5UdBC1isOwU05h63E04-9yG3l4mK3tQ3kUxAs9P2rUPH",
             .lazy = true,
         },
         .yoga = .{
diff --git a/packages/core/src/zig/embedded-terminal/ghostty.zig b/packages/core/src/zig/embedded-terminal/ghostty.zig
new file mode 100644
index 000000000..8c2ca3ead
--- /dev/null
+++ b/packages/core/src/zig/embedded-terminal/ghostty.zig
@@ -0,0 +1,54 @@
+const vt = @import("../ghostty-vt.zig").vt;
+
+pub const Terminal = vt.Terminal;
+pub const TerminalStream = vt.TerminalStream;
+pub const Coordinate = vt.Coordinate;
+
+pub const Key = struct {
+    action: vt.input.KeyAction = .press,
+    key: vt.input.Key = .unidentified,
+    mods: vt.input.KeyMods = .{},
+    consumed_mods: vt.input.KeyMods = .{},
+    composing: bool = false,
+    utf8: []const u8 = "",
+    unshifted_codepoint: u21 = 0,
+
+    pub fn event(self: Key) vt.input.KeyEvent {
+        return .{
+            .action = self.action,
+            .key = self.key,
+            .mods = self.mods,
+            .consumed_mods = self.consumed_mods,
+            .composing = self.composing,
+            .utf8 = self.utf8,
+            .unshifted_codepoint = self.unshifted_codepoint,
+        };
+    }
+};
+
+pub const Mouse = struct {
+    action: vt.input.MouseAction,
+    button: ?vt.input.MouseButton = null,
+    mods: vt.input.KeyMods = .{},
+    x: f32,
+    y: f32,
+    any_button_pressed: bool = false,
+
+    pub fn event(self: Mouse) vt.input.MouseEncodeEvent {
+        return .{
+            .action = self.action,
+            .button = self.button,
+            .mods = self.mods,
+            .pos = .{ .x = self.x, .y = self.y },
+        };
+    }
+};
+
+pub const KeyEncodeOptions = vt.input.KeyEncodeOptions;
+pub const MouseEncodeOptions = vt.input.MouseEncodeOptions;
+pub const PasteOptions = vt.input.PasteOptions;
+pub const FocusEvent = vt.input.FocusEvent;
+pub const encodeKey = vt.input.encodeKey;
+pub const encodeMouse = vt.input.encodeMouse;
+pub const encodePaste = vt.input.encodePaste;
+pub const encodeFocus = vt.input.encodeFocus;
diff --git a/packages/core/src/zig/embedded-terminal/main.zig b/packages/core/src/zig/embedded-terminal/main.zig
new file mode 100644
index 000000000..3e17d8d3f
--- /dev/null
+++ b/packages/core/src/zig/embedded-terminal/main.zig
@@ -0,0 +1,155 @@
+const std = @import("std");
+const ghostty = @import("ghostty.zig");
+
+pub const Error = error{
+    InvalidValue,
+    ProcessingFailed,
+    ResponseOverflow,
+} || std.mem.Allocator.Error;
+
+pub const Options = struct {
+    cols: u16,
+    rows: u16,
+    max_scrollback: usize = 10_000,
+};
+
+pub const response_limit = 1024 * 1024;
+
+pub const EmbeddedTerminal = struct {
+    allocator: std.mem.Allocator,
+    terminal: ghostty.Terminal,
+    stream: ghostty.TerminalStream,
+    cols: u16,
+    rows: u16,
+    responses: std.ArrayListUnmanaged(u8) = .empty,
+    response_error: ?Error = null,
+    mouse_last_cell: ?ghostty.Coordinate = null,
+
+    pub fn init(io: std.Io, allocator: std.mem.Allocator, options: Options) Error!*EmbeddedTerminal {
+        if (options.cols == 0 or options.rows == 0) return error.InvalidValue;
+
+        const self = try allocator.create(EmbeddedTerminal);
+        errdefer allocator.destroy(self);
+
+        self.* = .{
+            .allocator = allocator,
+            .terminal = try .init(io, allocator, .{
+                .cols = options.cols,
+                .rows = options.rows,
+                .max_scrollback_bytes = options.max_scrollback,
+            }),
+            .stream = undefined,
+            .cols = options.cols,
+            .rows = options.rows,
+        };
+        errdefer self.terminal.deinit(allocator);
+
+        var handler = self.terminal.vtHandler();
+        handler.effects.write_pty = &writePty;
+        self.stream = .init(.{ .allocator = allocator, .handler = handler });
+        return self;
+    }
+
+    pub fn deinit(self: *EmbeddedTerminal) void {
+        const allocator = self.allocator;
+        self.stream.deinit();
+        self.terminal.deinit(allocator);
+        self.responses.deinit(allocator);
+        allocator.destroy(self);
+    }
+
+    pub fn write(self: *EmbeddedTerminal, bytes: []const u8) Error!void {
+        self.stream.handler.semantic_failure = false;
+        self.stream.nextSlice(bytes);
+        if (self.stream.handler.semantic_failure) return error.ProcessingFailed;
+    }
+
+    pub fn resize(self: *EmbeddedTerminal, cols: u16, rows: u16) Error!void {
+        if (cols == 0 or rows == 0) return error.InvalidValue;
+        self.stream.handler.resize(.{ .cols = cols, .rows = rows }) catch |err| switch (err) {
+            error.InvalidValue => return error.InvalidValue,
+            error.OutOfMemory => return error.OutOfMemory,
+        };
+        self.cols = cols;
+        self.rows = rows;
+        self.mouse_last_cell = null;
+    }
+
+    pub fn scroll(self: *EmbeddedTerminal, delta: i32) void {
+        self.terminal.scrollViewport(.{ .delta = delta });
+    }
+
+    pub fn encodeKey(self: *EmbeddedTerminal, key: ghostty.Key) Error![]u8 {
+        var output: std.Io.Writer.Allocating = .init(self.allocator);
+        errdefer output.deinit();
+        ghostty.encodeKey(&output.writer, key.event(), .fromTerminal(&self.terminal)) catch return error.OutOfMemory;
+        return output.toOwnedSlice();
+    }
+
+    pub fn encodeMouse(self: *EmbeddedTerminal, mouse: ghostty.Mouse) Error![]u8 {
+        const MouseSize = @FieldType(ghostty.MouseEncodeOptions, "size");
+        const size: MouseSize = .{
+            .screen = .{ .width = self.cols, .height = self.rows },
+            .cell = .{ .width = 1, .height = 1 },
+            .padding = .{},
+        };
+        var options = ghostty.MouseEncodeOptions.fromTerminal(&self.terminal, size);
+        // OpenTUI receives terminal-cell coordinates, not physical pixels.
+        if (options.format == .sgr_pixels) return self.allocator.alloc(u8, 0);
+        options.any_button_pressed = mouse.any_button_pressed;
+        options.last_cell = &self.mouse_last_cell;
+
+        var output: std.Io.Writer.Allocating = .init(self.allocator);
+        errdefer output.deinit();
+        ghostty.encodeMouse(&output.writer, mouse.event(), options) catch return error.OutOfMemory;
+        return output.toOwnedSlice();
+    }
+
+    pub fn encodePaste(self: *EmbeddedTerminal, input: []const u8) Error![]u8 {
+        const copy = try self.allocator.dupe(u8, input);
+        defer self.allocator.free(copy);
+        const parts = ghostty.encodePaste(copy, .fromTerminal(&self.terminal));
+
+        var output: std.Io.Writer.Allocating = .init(self.allocator);
+        errdefer output.deinit();
+        for (parts) |part| output.writer.writeAll(part) catch return error.OutOfMemory;
+        return output.toOwnedSlice();
+    }
+
+    pub fn encodeFocus(self: *EmbeddedTerminal, focused: bool) Error![]u8 {
+        if (!self.terminal.modes.get(.focus_event)) return self.allocator.alloc(u8, 0);
+
+        var output: std.Io.Writer.Allocating = .init(self.allocator);
+        errdefer output.deinit();
+        ghostty.encodeFocus(&output.writer, if (focused) .gained else .lost) catch return error.OutOfMemory;
+        return output.toOwnedSlice();
+    }
+
+    pub fn freeEncoded(self: *EmbeddedTerminal, bytes: []u8) void {
+        self.allocator.free(bytes);
+    }
+
+    pub fn drainResponses(self: *EmbeddedTerminal, output: []u8) Error!usize {
+        if (self.response_error) |err| {
+            self.response_error = null;
+            return err;
+        }
+        const count = @min(output.len, self.responses.items.len);
+        @memcpy(output[0..count], self.responses.items[0..count]);
+        std.mem.copyForwards(u8, self.responses.items[0 .. self.responses.items.len - count], self.responses.items[count..]);
+        self.responses.items.len -= count;
+        return count;
+    }
+
+    fn writePty(handler: *ghostty.TerminalStream.Handler, data: [:0]const u8) void {
+        const self: *EmbeddedTerminal = @fieldParentPtr("terminal", handler.terminal);
+        if (self.response_error != null) return;
+        if (data.len > response_limit - @min(self.responses.items.len, response_limit)) {
+            self.response_error = error.ResponseOverflow;
+            return;
+        }
+        self.responses.appendSlice(self.allocator, data) catch {
+            self.response_error = error.OutOfMemory;
+        };
+    }
+};
diff --git a/packages/core/src/zig/embedded-terminal/tests.zig b/packages/core/src/zig/embedded-terminal/tests.zig
new file mode 100644
index 000000000..678a99f8c
--- /dev/null
+++ b/packages/core/src/zig/embedded-terminal/tests.zig
@@ -0,0 +1,128 @@
+const std = @import("std");
+const EmbeddedTerminal = @import("main.zig").EmbeddedTerminal;
+const ghostty = @import("ghostty.zig");
+
+test "embedded terminal supports lifecycle, resize, and viewport scroll" {
+    const terminal = try EmbeddedTerminal.init(std.testing.io, std.testing.allocator, .{ .cols = 80, .rows = 24 });
+    defer terminal.deinit();
+
+    try terminal.write("hello");
+    try terminal.resize(100, 40);
+    terminal.scroll(-3);
+    terminal.scroll(3);
+
+    try std.testing.expectEqual(@as(u16, 100), terminal.cols);
+    try std.testing.expectEqual(@as(u16, 40), terminal.rows);
+    try std.testing.expectError(error.InvalidValue, terminal.resize(0, 40));
+    try std.testing.expectError(error.InvalidValue, terminal.resize(100, 0));
+    try std.testing.expectError(error.InvalidValue, EmbeddedTerminal.init(std.testing.io, std.testing.allocator, .{ .cols = 0, .rows = 24 }));
+}
+
+test "embedded terminal preserves parser state and provides mode-aware input" {
+    const terminal = try EmbeddedTerminal.init(std.testing.io, std.testing.allocator, .{ .cols = 20, .rows = 4 });
+    defer terminal.deinit();
+
+    try terminal.write("\x1b[?20");
+    try terminal.write("04h\x1b[?1004h\x1b[?1000h\x1b[?1006h");
+
+    const paste = try terminal.encodePaste("one\ntwo");
+    defer terminal.freeEncoded(paste);
+    try std.testing.expectEqualStrings("\x1b[200~one\ntwo\x1b[201~", paste);
+
+    const focus = try terminal.encodeFocus(true);
+    defer terminal.freeEncoded(focus);
+    try std.testing.expectEqualStrings("\x1b[I", focus);
+
+    const key = try terminal.encodeKey(.{ .key = .enter });
+    defer terminal.freeEncoded(key);
+    try std.testing.expectEqualStrings("\r", key);
+
+    const mouse = try terminal.encodeMouse(.{
+        .action = .press,
+        .button = .left,
+        .x = 0,
+        .y = 0,
+        .any_button_pressed = true,
+    });
+    defer terminal.freeEncoded(mouse);
+    try std.testing.expectEqualStrings("\x1b[<0;1;1M", mouse);
+}
+
+test "embedded terminal encodes long Kitty associated text" {
+    const terminal = try EmbeddedTerminal.init(std.testing.io, std.testing.allocator, .{ .cols = 20, .rows = 4 });
+    defer terminal.deinit();
+    try terminal.write("\x1b[>19u");
+
+    const text = "x" ** 2048;
+    const encoded = try terminal.encodeKey(.{ .key = .unidentified, .utf8 = text });
+    defer terminal.freeEncoded(encoded);
+    try std.testing.expectEqualStrings(text, encoded);
+}
+
+test "embedded terminal drains generated PTY responses incrementally" {
+    const terminal = try EmbeddedTerminal.init(std.testing.io, std.testing.allocator, .{ .cols = 20, .rows = 4 });
+    defer terminal.deinit();
+
+    try terminal.write("\x1b[5n");
+    var first: [2]u8 = undefined;
+    var rest: [16]u8 = undefined;
+    const first_len = try terminal.drainResponses(&first);
+    const rest_len = try terminal.drainResponses(&rest);
+
+    var combined: [18]u8 = undefined;
+    @memcpy(combined[0..first_len], first[0..first_len]);
+    @memcpy(combined[first_len .. first_len + rest_len], rest[0..rest_len]);
+    try std.testing.expectEqualStrings("\x1b[0n", combined[0 .. first_len + rest_len]);
+}
+
+test "embedded terminal preserves queued responses when the bound is reached" {
+    const terminal = try EmbeddedTerminal.init(std.testing.io, std.testing.allocator, .{ .cols = 20, .rows = 4 });
+    defer terminal.deinit();
+
+    const query = "\x1b[5n";
+    const count = @import("main.zig").response_limit / query.len + 1;
+    const input = try std.testing.allocator.alloc(u8, count * query.len);
+    defer std.testing.allocator.free(input);
+    for (0..count) |index| @memcpy(input[index * query.len ..][0..query.len], query);
+
+    try terminal.write(input);
+    var byte: [1]u8 = undefined;
+    try std.testing.expectError(error.ResponseOverflow, terminal.drainResponses(&byte));
+
+    var preserved: [16]u8 = undefined;
+    const preserved_len = try terminal.drainResponses(&preserved);
+    try std.testing.expect(preserved_len > 0);
+}
+
+test "embedded terminal reports semantic failures per write" {
+    const terminal = try EmbeddedTerminal.init(std.testing.io, std.testing.allocator, .{ .cols = 20, .rows = 4 });
+    defer terminal.deinit();
+
+    terminal.stream.handler.semantic_failure = true;
+    try terminal.write("ok");
+    try std.testing.expect(!terminal.stream.handler.semantic_failure);
+}
+
+test "embedded terminal resets mouse motion deduplication after resize" {
+    const terminal = try EmbeddedTerminal.init(std.testing.io, std.testing.allocator, .{ .cols = 20, .rows = 4 });
+    defer terminal.deinit();
+    try terminal.write("\x1b[?1003h\x1b[?1006h");
+
+    const mouse: ghostty.Mouse = .{ .action = .motion, .x = 0, .y = 0 };
+    const first = try terminal.encodeMouse(mouse);
+    defer terminal.freeEncoded(first);
+    try std.testing.expect(first.len > 0);
+
+    const duplicate = try terminal.encodeMouse(mouse);
+    defer terminal.freeEncoded(duplicate);
+    try std.testing.expectEqual(@as(usize, 0), duplicate.len);
+
+    try terminal.resize(10, 4);
+    const after_resize = try terminal.encodeMouse(mouse);
+    defer terminal.freeEncoded(after_resize);
+    try std.testing.expect(after_resize.len > 0);
+}
+
+comptime {
+    _ = ghostty;
+}
diff --git a/packages/core/src/zig/test.zig b/packages/core/src/zig/test.zig
index 964482bb6..9f5061de3 100644
--- a/packages/core/src/zig/test.zig
+++ b/packages/core/src/zig/test.zig
@@ -37,6 +37,7 @@ const handles_tests = @import("tests/handles_test.zig");
 const yoga_tests = @import("tests/yoga_test.zig");
 const ansi_tests = @import("tests/ansi_test.zig");
 const ghostty_vt_tests = @import("tests/ghostty_vt_test.zig");
+const embedded_terminal_tests = @import("embedded-terminal/tests.zig");
 const image_tests = @import("tests/image_test.zig");
 const terminal_image_tests = @import("tests/terminal-image_test.zig");
 const lib_tests = @import("lib.zig");
@@ -83,6 +84,7 @@ comptime {
     _ = yoga_tests;
     _ = ansi_tests;
     _ = ghostty_vt_tests;
+    _ = embedded_terminal_tests;
     _ = image_tests;
     _ = terminal_image_tests;
     _ = lib_tests;