diff --git a/.changeset/fix-desktop-local-runtime-missing-engine-dist.md b/.changeset/fix-desktop-local-runtime-missing-engine-dist.md
new file mode 100644
index 0000000000..6c03775be5
--- /dev/null
+++ b/.changeset/fix-desktop-local-runtime-missing-engine-dist.md
@@ -0,0 +1,7 @@
+---
+"@runfusion/fusion": patch
+---
+
+summary: Fix desktop app crashing on "Local" mode startup with a missing-module error.
+category: fix
+dev: The desktop build now compiles @fusion/core and @fusion/engine tsc dist (both gitignored) so the packaged embedded Local runtime's `import("@fusion/engine")` resolves. Previously only release.yml's root `pnpm build` produced these; desktop-windows.yml packaged an empty engine/dist and crashed with ERR_MODULE_NOT_FOUND for app.asar/node_modules/@fusion/engine. `@fusion/desktop build` is now self-contained (build.ts → ensureEmbeddedRuntimeBuild), and desktop-windows.yml gained the `pnpm build` parity step.
diff --git a/.github/workflows/desktop-windows.yml b/.github/workflows/desktop-windows.yml
index be50354685..759497c6b3 100644
--- a/.github/workflows/desktop-windows.yml
+++ b/.github/workflows/desktop-windows.yml
@@ -22,6 +22,16 @@ jobs:
       - name: Install dependencies
         run: pnpm install --frozen-lockfile
 
+      # FNXC:WindowsDesktopPackaging 2026-07-01-19:45:
+      # Mirror release.yml: build every workspace package's tsc dist (incl.
+      # @fusion/core and @fusion/engine, which are gitignored) before packaging.
+      # Without this the embedded Local runtime's `import("@fusion/engine")`
+      # resolves to an empty dist and the app crashes with ERR_MODULE_NOT_FOUND.
+      # `@fusion/desktop build` now also self-builds these, so this is belt-and-
+      # suspenders parity that additionally covers any other workspace runtime dep.
+      - name: Build workspace
+        run: pnpm build
+
       - name: Build desktop package
         run: pnpm --filter @fusion/desktop build
 
diff --git a/packages/desktop/scripts/build.ts b/packages/desktop/scripts/build.ts
index 8dc7ca3e5c..fc68c903f0 100644
--- a/packages/desktop/scripts/build.ts
+++ b/packages/desktop/scripts/build.ts
@@ -1,7 +1,7 @@
 import { build } from "esbuild";
 import { cp, mkdir, rm, stat } from "node:fs/promises";
 import { join } from "node:path";
-import { buildDashboard, buildDashboardClient, packageRoot, workspaceRoot } from "./workspace-tools";
+import { buildCore, buildDashboard, buildDashboardClient, buildEngine, packageRoot, workspaceRoot } from "./workspace-tools";
 const dashboardRoot = join(workspaceRoot, "packages", "dashboard");
 const dashboardClientDir = join(dashboardRoot, "dist", "client");
 const dashboardRegistryManifestSource = join(dashboardRoot, "src", "registry-manifest.json");
@@ -97,10 +97,27 @@ async function copyDashboardClient(): Promise<void> {
   await cp(dashboardClientDir, desktopClientDistDir, { recursive: true });
 }
 
+// FNXC:DesktopBuild 2026-07-01-19:45:
+// Compile the workspace @fusion/* packages the embedded "Local" runtime imports
+// at runtime (@fusion/core, @fusion/engine) so `@fusion/desktop build` alone
+// produces a complete, packageable tree — no separate root `pnpm build` required.
+// engine/dist and core/dist are tsc-emitted + gitignored; without this the
+// desktop-windows.yml workflow_dispatch build shipped an empty engine/dist and
+// the packaged app crashed on Local mode with ERR_MODULE_NOT_FOUND for
+// ...app.asar/node_modules/@fusion/engine. Core must build before engine
+// (engine depends on @fusion/core). Dashboard + its runtime plugins + plugin-sdk
+// are already built by ensureDashboardBuild().
+async function ensureEmbeddedRuntimeBuild(): Promise<void> {
+  console.log("[desktop:build] Building @fusion/core and @fusion/engine runtime dist...");
+  await buildCore();
+  await buildEngine();
+}
+
 async function main(): Promise<void> {
   await rm(desktopDistDir, { recursive: true, force: true });
   await mkdir(desktopDistDir, { recursive: true });
 
+  await ensureEmbeddedRuntimeBuild();
   await ensureDashboardBuild();
   await buildElectronEntrypoints();
   await copyDashboardClient();
diff --git a/packages/desktop/scripts/workspace-tools.ts b/packages/desktop/scripts/workspace-tools.ts
index 573675f74f..1b39145c42 100644
--- a/packages/desktop/scripts/workspace-tools.ts
+++ b/packages/desktop/scripts/workspace-tools.ts
@@ -46,6 +46,18 @@ export async function buildCore(): Promise<void> {
   await runWorkspaceBin("tsc", [], resolve(workspaceRoot, "packages", "core"));
 }
 
+// FNXC:DesktopBuild 2026-07-01-19:45:
+// The packaged desktop "Local" runtime dynamically imports @fusion/engine
+// (local-runtime.ts createDashboardServerDefault). Engine's runtime code is
+// tsc-emitted into packages/engine/dist and gitignored, so a workflow that runs
+// only `@fusion/desktop build` (e.g. desktop-windows.yml, which lacked the root
+// `pnpm build`) shipped an empty engine/dist. The packaged app then crashed on
+// Local mode with `ERR_MODULE_NOT_FOUND ...app.asar/node_modules/@fusion/engine`.
+// Engine depends on @fusion/core, so callers must build core first.
+export async function buildEngine(): Promise<void> {
+  await runWorkspaceBin("tsc", [], resolve(workspaceRoot, "packages", "engine"));
+}
+
 async function buildPackage(relativePath: string): Promise<void> {
   await runWorkspaceBin("tsc", [], resolve(workspaceRoot, relativePath));
 }