diff --git a/.changeset/fix-grok-acp-no-auto-update.md b/.changeset/fix-grok-acp-no-auto-update.md
new file mode 100644
index 0000000000..ee18bea66f
--- /dev/null
+++ b/.changeset/fix-grok-acp-no-auto-update.md
@@ -0,0 +1,7 @@
+---
+"@runfusion/fusion": patch
+---
+
+summary: Fix Grok ACP startup by making --no-auto-update opt-in.
+category: fix
+dev: Released Grok CLI v1.0.0 rejects --no-auto-update; buildGrokAcpArgs now only pushes it when noAutoUpdate === true. Updated acp-settings.test.ts.
diff --git a/plugins/fusion-plugin-grok-runtime/src/__tests__/acp-settings.test.ts b/plugins/fusion-plugin-grok-runtime/src/__tests__/acp-settings.test.ts
index 64b26b8bee..587a63ec22 100644
--- a/plugins/fusion-plugin-grok-runtime/src/__tests__/acp-settings.test.ts
+++ b/plugins/fusion-plugin-grok-runtime/src/__tests__/acp-settings.test.ts
@@ -9,23 +9,21 @@ import {
 } from "../acp-settings.js";
 
 describe("acp-settings", () => {
-  it("builds grok agent stdio args without -m when model is absent", () => {
-    // Official docs: --no-auto-update for automated ACP/headless clients.
-    expect(buildGrokAcpArgs()).toEqual(["--no-auto-update", "agent", "stdio"]);
-    expect(buildGrokAcpArgs({})).toEqual(["--no-auto-update", "agent", "stdio"]);
-    expect(buildGrokAcpArgs({ noAutoUpdate: false })).toEqual(["agent", "stdio"]);
+  it("builds grok agent stdio args without --no-auto-update by default (Grok CLI v1.0.0 rejects the flag)", () => {
+    // --no-auto-update is opt-in only; the released Grok CLI does not support it.
+    expect(buildGrokAcpArgs()).toEqual(["agent", "stdio"]);
+    expect(buildGrokAcpArgs({})).toEqual(["agent", "stdio"]);
+    expect(buildGrokAcpArgs({ noAutoUpdate: true })).toEqual(["--no-auto-update", "agent", "stdio"]);
   });
 
   it("places plugin-dir and -m before the stdio subcommand", () => {
     expect(buildGrokAcpArgs({ model: "grok-4.5" })).toEqual([
-      "--no-auto-update",
       "agent",
       "-m",
       "grok-4.5",
       "stdio",
     ]);
     expect(buildGrokAcpArgs({ model: "grok-4.5", pluginDirs: ["/tmp/skills-plugin"] })).toEqual([
-      "--no-auto-update",
       "agent",
       "--plugin-dir",
       "/tmp/skills-plugin",
@@ -59,7 +57,7 @@ describe("acp-settings", () => {
   it("builds AcpRuntimeAdapter settings for Grok ACP", () => {
     const settings = buildGrokAcpRuntimeSettings({ binary: "/usr/local/bin/grok", model: "grok-cli/grok-4.5" });
     expect(settings.acpBinaryPath).toBe("/usr/local/bin/grok");
-    expect(settings.acpArgs).toEqual(["--no-auto-update", "agent", "-m", "grok-4.5", "stdio"]);
+    expect(settings.acpArgs).toEqual(["agent", "-m", "grok-4.5", "stdio"]);
     expect(settings.acpEnvAllowList).toEqual([...GROK_ACP_ENV_ALLOWLIST]);
     expect(settings.acpFsRead).toBe(false);
     expect(settings.acpFsWrite).toBe(false);
diff --git a/plugins/fusion-plugin-grok-runtime/src/acp-settings.ts b/plugins/fusion-plugin-grok-runtime/src/acp-settings.ts
index ca3b3cd65e..3a1c5ff7d7 100644
--- a/plugins/fusion-plugin-grok-runtime/src/acp-settings.ts
+++ b/plugins/fusion-plugin-grok-runtime/src/acp-settings.ts
@@ -68,8 +68,13 @@ export function resolveGrokAcpAuthPreferMethods(
  * Official headless/ACP scripting docs recommend `--no-auto-update` for CI and
  * automated clients (https://docs.x.ai/build/cli/headless-scripting). Place it
  * before the `agent` subcommand: `grok --no-auto-update agent … stdio`.
- * Model / plugin-dir flags belong on `grok agent` before the transport:
- * `grok --no-auto-update agent [--plugin-dir <dir>…] [-m <model>] stdio`.
+ *
+ * FNXC:GrokAcp 2026-08-09-00:00:
+ * The released Grok CLI (v1.0.0, latest stable) does not recognize
+ * `--no-auto-update` and exits immediately with "unexpected argument".
+ * Default is now OFF; callers must opt in via noAutoUpdate:true. Fusion
+ * manages its own update cycle, so disabling auto-update in the subprocess
+ * is unnecessary and breaks startup for all users on current Grok CLI.
  */
 export function buildGrokAcpArgs(options?: {
   model?: string;
@@ -77,8 +82,8 @@ export function buildGrokAcpArgs(options?: {
   noAutoUpdate?: boolean;
 }): string[] {
   const args: string[] = [];
-  // Default ON for Fusion automation; callers can pass noAutoUpdate:false.
-  if (options?.noAutoUpdate !== false) {
+  // Default OFF — Grok CLI v1.0.0 rejects --no-auto-update (unknown flag).
+  if (options?.noAutoUpdate === true) {
     args.push("--no-auto-update");
   }
   args.push("agent");