diff --git a/package.json b/package.json
index a73275025..22fd4a265 100644
--- a/package.json
+++ b/package.json
@@ -21,9 +21,9 @@
     "sandboxImageUri": "ghcr.io/vybestack/llxprt-code/sandbox:0.8.0"
   },
   "scripts": {
-    "start": "cross-env NODE_ENV=development node scripts/start.js",
+    "start": "./scripts/sanitize-node-options.sh cross-env NODE_ENV=development node scripts/start.js",
     "start:a2a-server": "CODER_AGENT_PORT=41242 npm run start --workspace @google/gemini-cli-a2a-server",
-    "debug": "cross-env DEBUG=1 node --inspect-brk scripts/start.js",
+    "debug": "./scripts/sanitize-node-options.sh cross-env DEBUG=1 node --inspect-brk scripts/start.js",
     "deflake": "node scripts/deflake.js",
     "deflake:test:integration:sandbox:none": "npm run deflake -- --command='npm run test:integration:sandbox:none'",
     "deflake:test:integration:sandbox:docker": "npm run deflake -- --command='npm run test:integration:sandbox:docker'",
diff --git a/packages/cli/llxprt.sh b/packages/cli/llxprt.sh
new file mode 100755
index 000000000..9167857e4
--- /dev/null
+++ b/packages/cli/llxprt.sh
@@ -0,0 +1,16 @@
+#!/usr/bin/env bash
+# Shell wrapper for llxprt CLI that sanitizes NODE_OPTIONS before invoking node.
+# This prevents warnings from --localstorage-file flags that may be set by IDEs.
+
+if [[ -n "${NODE_OPTIONS}" ]]; then
+  # Remove --localstorage-file with optional value (but don't consume following flags starting with -)
+  # Handles: --localstorage-file, --localstorage-file=value, --localstorage-file value
+  NODE_OPTIONS=$(echo "${NODE_OPTIONS}" | sed -E 's/(^|[[:space:]])--localstorage-file(=[^[:space:]]*|[[:space:]]+[^-][^[:space:]]*)?//g' | sed -E 's/[[:space:]]+/ /g' | sed -E 's/^[[:space:]]+|[[:space:]]+$//g')
+  export NODE_OPTIONS
+fi
+
+# Get the directory where this script is located
+SCRIPT_DIR=$(cd "$(dirname "$0")" && pwd)
+
+# Execute the main CLI entry point
+exec node --no-deprecation "${SCRIPT_DIR}/dist/index.js" "$@"
diff --git a/packages/cli/package.json b/packages/cli/package.json
index 1db133bc0..cbe40fa5a 100644
--- a/packages/cli/package.json
+++ b/packages/cli/package.json
@@ -10,7 +10,7 @@
   "main": "dist/index.js",
   "types": "dist/index.d.ts",
   "bin": {
-    "llxprt": "dist/index.js"
+    "llxprt": "llxprt.sh"
   },
   "scripts": {
     "build": "node ../../scripts/build_package.js",
@@ -30,7 +30,8 @@
     "prepack": "npm run build"
   },
   "files": [
-    "dist"
+    "dist",
+    "llxprt.sh"
   ],
   "config": {
     "sandboxImageUri": "ghcr.io/vybestack/llxprt-code/sandbox:0.8.0"
diff --git a/packages/cli/src/utils/relaunch.test.ts b/packages/cli/src/utils/relaunch.test.ts
index 9ae9570b6..4f3747529 100644
--- a/packages/cli/src/utils/relaunch.test.ts
+++ b/packages/cli/src/utils/relaunch.test.ts
@@ -7,7 +7,7 @@
 import { describe, it, expect, vi, beforeEach, afterEach } from 'vitest';
 import * as childProcess from 'node:child_process';
 import { EventEmitter } from 'node:events';
-import { relaunchAppInChildProcess } from './relaunch.js';
+import { relaunchAppInChildProcess, sanitizeNodeOptions } from './relaunch.js';
 import { RELAUNCH_EXIT_CODE } from './bootstrap.js';
 
 vi.mock('node:child_process');
@@ -135,4 +135,102 @@ describe('relaunchAppInChildProcess', () => {
     >;
     expect(spawnEnv.CUSTOM_VAR).toBe('test-value');
   });
+
+  it('should sanitize NODE_OPTIONS to remove --localstorage-file', async () => {
+    const nodeArgs = ['--max-old-space-size=4096'];
+    process.env = {
+      ...process.env,
+      NODE_OPTIONS:
+        '--max-old-space-size=2048 --localstorage-file --enable-source-maps',
+    };
+
+    const promise = relaunchAppInChildProcess(nodeArgs);
+
+    mockChildProcess.emit('close', 0);
+    await promise;
+
+    const spawnEnv = mockedChildProcess.spawn.mock.calls[0][2]?.env as Record<
+      string,
+      string | undefined
+    >;
+    expect(spawnEnv.NODE_OPTIONS).toBe(
+      '--max-old-space-size=2048 --enable-source-maps',
+    );
+  });
+
+  it('should remove NODE_OPTIONS entirely if only --localstorage-file present', async () => {
+    const nodeArgs = ['--max-old-space-size=4096'];
+    process.env = { ...process.env, NODE_OPTIONS: '--localstorage-file' };
+
+    const promise = relaunchAppInChildProcess(nodeArgs);
+
+    mockChildProcess.emit('close', 0);
+    await promise;
+
+    const spawnEnv = mockedChildProcess.spawn.mock.calls[0][2]?.env as Record<
+      string,
+      string | undefined
+    >;
+    expect(spawnEnv.NODE_OPTIONS).toBeUndefined();
+  });
+});
+
+describe('sanitizeNodeOptions', () => {
+  it('should return undefined for undefined input', () => {
+    expect(sanitizeNodeOptions(undefined)).toBeUndefined();
+  });
+
+  it('should return undefined for empty string', () => {
+    expect(sanitizeNodeOptions('')).toBeUndefined();
+  });
+
+  it('should remove --localstorage-file without value', () => {
+    expect(sanitizeNodeOptions('--localstorage-file')).toBeUndefined();
+  });
+
+  it('should remove --localstorage-file with equals value', () => {
+    expect(
+      sanitizeNodeOptions('--localstorage-file=/some/path'),
+    ).toBeUndefined();
+  });
+
+  it('should remove --localstorage-file with space-separated value', () => {
+    expect(
+      sanitizeNodeOptions('--localstorage-file /some/path'),
+    ).toBeUndefined();
+  });
+
+  it('should preserve other options before --localstorage-file', () => {
+    expect(
+      sanitizeNodeOptions('--max-old-space-size=4096 --localstorage-file'),
+    ).toBe('--max-old-space-size=4096');
+  });
+
+  it('should preserve other options after --localstorage-file', () => {
+    expect(
+      sanitizeNodeOptions('--localstorage-file --enable-source-maps'),
+    ).toBe('--enable-source-maps');
+  });
+
+  it('should preserve options on both sides of --localstorage-file', () => {
+    expect(
+      sanitizeNodeOptions(
+        '--max-old-space-size=4096 --localstorage-file --enable-source-maps',
+      ),
+    ).toBe('--max-old-space-size=4096 --enable-source-maps');
+  });
+
+  it('should not consume following flags as values', () => {
+    expect(sanitizeNodeOptions('--localstorage-file --other-flag value')).toBe(
+      '--other-flag value',
+    );
+  });
+
+  it('should handle multiple spaces', () => {
+    expect(
+      sanitizeNodeOptions(
+        '  --max-old-space-size=4096   --localstorage-file   ',
+      ),
+    ).toBe('--max-old-space-size=4096');
+  });
 });
diff --git a/packages/cli/src/utils/relaunch.ts b/packages/cli/src/utils/relaunch.ts
index 503833f7a..47d3adee0 100644
--- a/packages/cli/src/utils/relaunch.ts
+++ b/packages/cli/src/utils/relaunch.ts
@@ -11,6 +11,25 @@
 
 import { spawn } from 'node:child_process';
 
+/**
+ * Sanitize NODE_OPTIONS to remove --localstorage-file flags that may cause warnings.
+ * Node emits a warning when --localstorage-file is present without a valid path.
+ * This can happen when IDEs like VSCode set NODE_OPTIONS in the environment.
+ *
+ * @param nodeOptions - The NODE_OPTIONS environment variable value
+ * @returns Sanitized NODE_OPTIONS string, or undefined if empty
+ */
+export function sanitizeNodeOptions(
+  nodeOptions: string | undefined,
+): string | undefined {
+  if (!nodeOptions) return undefined;
+  const sanitized = nodeOptions
+    .replace(/\s*--localstorage-file(?:(?:\s*=\s*|\s+)(?!-)\S+)?/g, '')
+    .replace(/\s+/g, ' ')
+    .trim();
+  return sanitized || undefined;
+}
+
 /**
  * Relaunch the current application in a child process with additional Node.js arguments.
  * This is used to restart with higher memory limits or enter sandboxed environments.
@@ -25,7 +44,12 @@ export async function relaunchAppInChildProcess(
   additionalArgs: string[],
 ): Promise<number> {
   const nodeArgs = [...additionalArgs, ...process.argv.slice(1)];
-  const newEnv = { ...process.env, LLXPRT_CODE_NO_RELAUNCH: 'true' };
+  const sanitizedNodeOptions = sanitizeNodeOptions(process.env.NODE_OPTIONS);
+  const newEnv: Record<string, string | undefined> = {
+    ...process.env,
+    LLXPRT_CODE_NO_RELAUNCH: 'true',
+    NODE_OPTIONS: sanitizedNodeOptions,
+  };
 
   const child = spawn(process.execPath, nodeArgs, {
     stdio: 'inherit',
diff --git a/scripts/sanitize-node-options.sh b/scripts/sanitize-node-options.sh
new file mode 100755
index 000000000..55992c55d
--- /dev/null
+++ b/scripts/sanitize-node-options.sh
@@ -0,0 +1,13 @@
+#!/usr/bin/env bash
+# Sanitize NODE_OPTIONS to remove --localstorage-file flags that may cause warnings.
+# This must happen BEFORE node is invoked, since Node parses NODE_OPTIONS at startup.
+
+if [[ -n "${NODE_OPTIONS}" ]]; then
+  # Remove --localstorage-file with optional value (but don't consume following flags starting with -)
+  # Handles: --localstorage-file, --localstorage-file=value, --localstorage-file value
+  SANITIZED=$(echo "${NODE_OPTIONS}" | sed -E 's/(^|[[:space:]])--localstorage-file(=[^[:space:]]*|[[:space:]]+[^-][^[:space:]]*)?//g' | sed -E 's/[[:space:]]+/ /g' | sed -E 's/^[[:space:]]+|[[:space:]]+$//g')
+  export NODE_OPTIONS="${SANITIZED}"
+fi
+
+# Execute the remaining arguments
+exec "$@"
diff --git a/scripts/tests/sanitize-node-options.test.js b/scripts/tests/sanitize-node-options.test.js
new file mode 100644
index 000000000..a8db36e6e
--- /dev/null
+++ b/scripts/tests/sanitize-node-options.test.js
@@ -0,0 +1,96 @@
+/**
+ * @license
+ * Copyright 2025 Vybestack LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { describe, it, expect } from 'vitest';
+import { execSync } from 'child_process';
+import { join, dirname } from 'path';
+import { fileURLToPath } from 'url';
+
+const __dirname = dirname(fileURLToPath(import.meta.url));
+const scriptPath = join(__dirname, '..', 'sanitize-node-options.sh');
+
+function runWithNodeOptions(nodeOptions, command = 'echo "$NODE_OPTIONS"') {
+  const env = { ...process.env };
+  if (nodeOptions !== undefined) {
+    env.NODE_OPTIONS = nodeOptions;
+  } else {
+    delete env.NODE_OPTIONS;
+  }
+
+  try {
+    return execSync(`${scriptPath} bash -c '${command}'`, {
+      env,
+      encoding: 'utf-8',
+    }).trim();
+  } catch (error) {
+    throw new Error(`Script failed: ${error.message}`);
+  }
+}
+
+describe('sanitize-node-options.sh', () => {
+  it('should remove --localstorage-file without value', () => {
+    const result = runWithNodeOptions('--localstorage-file');
+    expect(result).toBe('');
+  });
+
+  it('should remove --localstorage-file with equals value', () => {
+    const result = runWithNodeOptions('--localstorage-file=/some/path');
+    expect(result).toBe('');
+  });
+
+  it('should remove --localstorage-file with space-separated value', () => {
+    const result = runWithNodeOptions('--localstorage-file /some/path');
+    expect(result).toBe('');
+  });
+
+  it('should preserve other options before --localstorage-file', () => {
+    const result = runWithNodeOptions(
+      '--max-old-space-size=4096 --localstorage-file',
+    );
+    expect(result).toBe('--max-old-space-size=4096');
+  });
+
+  it('should preserve other options after --localstorage-file', () => {
+    const result = runWithNodeOptions(
+      '--localstorage-file --enable-source-maps',
+    );
+    expect(result).toBe('--enable-source-maps');
+  });
+
+  it('should preserve options on both sides', () => {
+    const result = runWithNodeOptions(
+      '--max-old-space-size=4096 --localstorage-file --enable-source-maps',
+    );
+    expect(result).toBe('--max-old-space-size=4096 --enable-source-maps');
+  });
+
+  it('should not modify NODE_OPTIONS when not set', () => {
+    const result = runWithNodeOptions(undefined);
+    expect(result).toBe('');
+  });
+
+  it('should handle empty NODE_OPTIONS', () => {
+    const result = runWithNodeOptions('');
+    expect(result).toBe('');
+  });
+
+  it('should pass through to child command', () => {
+    const result = runWithNodeOptions(
+      '--localstorage-file',
+      'echo "hello world"',
+    );
+    expect(result).toBe('hello world');
+  });
+
+  it('should allow node to run without warning when NODE_OPTIONS has --localstorage-file', () => {
+    // This test verifies that node runs successfully without the warning
+    const result = runWithNodeOptions(
+      '--localstorage-file',
+      'node -e "console.log(\\"success\\")"',
+    );
+    expect(result).toBe('success');
+  });
+});