diff --git a/crates/agent_ui/src/agent_panel.rs b/crates/agent_ui/src/agent_panel.rs
index adb255ea62454d4e3eb3dcaa3f0d6cf481f66472..6c555af7fa630f5f5cc5995f36ec8ee7007508b9 100644
--- a/crates/agent_ui/src/agent_panel.rs
+++ b/crates/agent_ui/src/agent_panel.rs
@@ -3190,28 +3190,33 @@ impl AgentPanel {
         let window_handle = window_handle
             .ok_or_else(|| anyhow!("No window handle available for workspace creation"))?;
 
-        let workspace_task = window_handle.update(cx, |multi_workspace, window, cx| {
-            let path_list = PathList::new(&all_paths);
-            let active_workspace = multi_workspace.workspace().clone();
-
-            multi_workspace.find_or_create_workspace(
-                path_list,
-                remote_connection_options,
-                None,
-                move |connection_options, window, cx| {
-                    remote_connection::connect_with_modal(
-                        &active_workspace,
-                        connection_options,
-                        window,
-                        cx,
-                    )
-                },
-                window,
-                cx,
-            )
-        })?;
+        let (workspace_task, modal_workspace) =
+            window_handle.update(cx, |multi_workspace, window, cx| {
+                let path_list = PathList::new(&all_paths);
+                let active_workspace = multi_workspace.workspace().clone();
+                let modal_workspace = active_workspace.clone();
+
+                let task = multi_workspace.find_or_create_workspace(
+                    path_list,
+                    remote_connection_options,
+                    None,
+                    move |connection_options, window, cx| {
+                        remote_connection::connect_with_modal(
+                            &active_workspace,
+                            connection_options,
+                            window,
+                            cx,
+                        )
+                    },
+                    window,
+                    cx,
+                );
+                (task, modal_workspace)
+            })?;
 
-        let new_workspace = workspace_task.await?;
+        let result = workspace_task.await;
+        remote_connection::dismiss_connection_modal(&modal_workspace, cx);
+        let new_workspace = result?;
 
         let panels_task = new_workspace.update(cx, |workspace, _cx| workspace.take_panels_task());
 
diff --git a/crates/remote_connection/src/remote_connection.rs b/crates/remote_connection/src/remote_connection.rs
index 48024af741b2b850c6cc9ff7379183cda8385efd..8aa4622929d6086b99e840e6b52bd5f46c49c898 100644
--- a/crates/remote_connection/src/remote_connection.rs
+++ b/crates/remote_connection/src/remote_connection.rs
@@ -574,6 +574,23 @@ pub fn connect_with_modal(
     })
 }
 
+/// Dismisses any active [`RemoteConnectionModal`] on the given workspace.
+///
+/// This should be called after a remote connection attempt completes
+/// (success or failure) when the modal was shown on a workspace that may
+/// outlive the connection flow — for example, when the modal is shown
+/// on a local workspace before switching to a newly-created remote
+/// workspace.
+pub fn dismiss_connection_modal(workspace: &Entity<Workspace>, cx: &mut gpui::AsyncWindowContext) {
+    workspace
+        .update_in(cx, |workspace, _window, cx| {
+            if let Some(modal) = workspace.active_modal::<RemoteConnectionModal>(cx) {
+                modal.update(cx, |modal, cx| modal.finished(cx));
+            }
+        })
+        .ok();
+}
+
 /// Creates a [`RemoteClient`] by reusing an existing connection from the
 /// global pool. No interactive UI is shown. This should only be called
 /// when [`remote::has_active_connection`] returns `true`.
diff --git a/crates/sidebar/src/sidebar.rs b/crates/sidebar/src/sidebar.rs
index 488127eb0bd04b064c2c6e3b1d8dc297ada9c477..3cd7e0059ac165bcd5e738591363cb600abcd60f 100644
--- a/crates/sidebar/src/sidebar.rs
+++ b/crates/sidebar/src/sidebar.rs
@@ -753,19 +753,26 @@ impl Sidebar {
         let host = project_group_key.host();
         let provisional_key = Some(project_group_key.clone());
         let active_workspace = multi_workspace.read(cx).workspace().clone();
+        let modal_workspace = active_workspace.clone();
 
-        multi_workspace
-            .update(cx, |this, cx| {
-                this.find_or_create_workspace(
-                    path_list,
-                    host,
-                    provisional_key,
-                    |options, window, cx| connect_remote(active_workspace, options, window, cx),
-                    window,
-                    cx,
-                )
-            })
-            .detach_and_log_err(cx);
+        let task = multi_workspace.update(cx, |this, cx| {
+            this.find_or_create_workspace(
+                path_list,
+                host,
+                provisional_key,
+                |options, window, cx| connect_remote(active_workspace, options, window, cx),
+                window,
+                cx,
+            )
+        });
+
+        cx.spawn_in(window, async move |_this, cx| {
+            let result = task.await;
+            remote_connection::dismiss_connection_modal(&modal_workspace, cx);
+            result?;
+            anyhow::Ok(())
+        })
+        .detach_and_log_err(cx);
     }
 
     /// Rebuilds the sidebar contents from current workspace and thread state.
@@ -2292,6 +2299,7 @@ impl Sidebar {
         let host = project_group_key.host();
         let provisional_key = Some(project_group_key.clone());
         let active_workspace = multi_workspace.read(cx).workspace().clone();
+        let modal_workspace = active_workspace.clone();
 
         let open_task = multi_workspace.update(cx, |this, cx| {
             this.find_or_create_workspace(
@@ -2306,6 +2314,9 @@ impl Sidebar {
 
         cx.spawn_in(window, async move |this, cx| {
             let result = open_task.await;
+            // Dismiss the modal as soon as the open attempt completes so
+            // failures or cancellations do not leave a stale connection modal behind.
+            remote_connection::dismiss_connection_modal(&modal_workspace, cx);
 
             if result.is_err() || is_remote {
                 this.update(cx, |this, _cx| {