[BUG] Claude Code panel in desktop app crashes immediately with "exited with code 1"

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

The Claude Code panel inside the Claude Desktop app crashes immediately when starting any new session.

Error message shown: "Claude Code process exited with code 1"

This happens in every project and also outside any project. It started 1-2 days ago. Worked fine before.

Environment:

• macOS
• Claude Code CLI version: 2.1.119 (just updated from 2.1.104)
• Desktop app: latest
• Subscription: Claude Max

Things I tried that didn't fix it:

• Updated Claude Code from 2.1.104 to 2.1.119
• Cleared old Keychain entries (Claude Safe Storage, Claude Code-credentials, etc.)
• Logged out and logged back in via terminal (/login successful, recognized as Claude Max)
• Restarted the Mac
• Tried in different folders and outside any project

What works:

• Running "claude" in Terminal works fine (login successful, Claude Max recognized)
• Regular chat with Claude in the desktop app works
• Cowork in the desktop app works

What doesn't work:

• Only the Code panel inside the desktop app fails, instantly, on every new session

What Should Happen?

The Claude Code session should open normally and respond to messages, like it did until 1-2 days ago.

Error Messages/Logs

Claude Code process exited with code 1

Steps to Reproduce

1. Open the Claude Desktop app
2. Click on a project, or open a session outside any project
3. Click on the "Code" tab to start a Claude Code session
4. Type any message (e.g. "hello") and press Enter
5. The red error appears immediately: "Claude Code process exited with code 1"

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.104

Claude Code Version

2.1.119

Platform

Other

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

<img width="1710" height="1107" alt="Image" src="https://github.com/user-attachments/assets/941afaf1-354a-458f-b4f3-bbbf23ae6248" />