diff --git a/Cargo.lock b/Cargo.lock
index 025aafb2..f4ccd4dc 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -1572,6 +1572,7 @@ dependencies = [
  "tokio",
  "toml 0.8.2",
  "tracing",
+ "tracing-appender",
  "tracing-subscriber",
  "uuid",
  "which",
@@ -10263,6 +10264,18 @@ dependencies = [
  "tracing-core",
 ]
 
+[[package]]
+name = "tracing-appender"
+version = "0.2.4"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "786d480bce6247ab75f005b14ae1624ad978d3029d9113f0a22fa1ac773faeaf"
+dependencies = [
+ "crossbeam-channel",
+ "thiserror 2.0.18",
+ "time",
+ "tracing-subscriber",
+]
+
 [[package]]
 name = "tracing-attributes"
 version = "0.1.31"
diff --git a/cortex-cli/Cargo.toml b/cortex-cli/Cargo.toml
index 72444c7d..678cd329 100644
--- a/cortex-cli/Cargo.toml
+++ b/cortex-cli/Cargo.toml
@@ -46,6 +46,7 @@ tokio = { workspace = true, features = ["full"] }
 anyhow = { workspace = true }
 tracing = { workspace = true }
 tracing-subscriber = { workspace = true, features = ["env-filter"] }
+tracing-appender = { workspace = true }
 dirs = { workspace = true }
 serde_json = { workspace = true }
 chrono = { workspace = true }
diff --git a/cortex-cli/src/main.rs b/cortex-cli/src/main.rs
index fffbe8f7..e18dfdda 100644
--- a/cortex-cli/src/main.rs
+++ b/cortex-cli/src/main.rs
@@ -286,8 +286,10 @@ struct InteractiveArgs {
     )]
     log_level: LogLevel,
 
-    /// Enable debug logging (deprecated: use --log-level debug instead)
-    #[arg(long, hide = true)]
+    /// Enable debug mode: writes ALL trace-level logs to ./debug.txt
+    /// This captures all Rust logs, tracing events, and internal diagnostics
+    /// to help troubleshoot issues when the agent doesn't return expected output.
+    #[arg(long = "debug", help_heading = "Debugging")]
     debug: bool,
 
     /// Initial prompt (if no subcommand)
@@ -672,6 +674,62 @@ fn pre_main_hardening() {
     cortex_process_hardening::pre_main_hardening();
 }
 
+/// Guard that ensures debug log file is properly flushed when dropped.
+struct DebugLogGuard {
+    _guard: tracing_appender::non_blocking::WorkerGuard,
+}
+
+/// Set up debug file logging that writes ALL trace-level logs to ./debug.txt.
+///
+/// This function configures tracing to write comprehensive debug information
+/// to a file in the current working directory. It captures:
+/// - All Rust log levels (trace, debug, info, warn, error)
+/// - Tracing spans and events from all crates
+/// - Internal diagnostics for troubleshooting
+///
+/// Returns a guard that must be kept alive for the duration of logging.
+fn setup_debug_file_logging() -> Result<DebugLogGuard> {
+    use std::fs::File;
+    use tracing_subscriber::layer::SubscriberExt;
+    use tracing_subscriber::util::SubscriberInitExt;
+
+    let debug_file_path = std::env::current_dir()?.join("debug.txt");
+
+    // Create/truncate the debug file
+    let file = File::create(&debug_file_path).map_err(|e| {
+        anyhow::anyhow!(
+            "Failed to create debug.txt: {}. Check write permissions.",
+            e
+        )
+    })?;
+
+    // Use non-blocking writer for performance
+    let (non_blocking, guard) = tracing_appender::non_blocking(file);
+
+    // Create a formatting layer that writes to the file
+    let file_layer = tracing_subscriber::fmt::layer()
+        .with_writer(non_blocking)
+        .with_ansi(false) // No ANSI colors in file
+        .with_target(true) // Include module path
+        .with_thread_ids(true) // Include thread IDs
+        .with_thread_names(true) // Include thread names
+        .with_file(true) // Include source file
+        .with_line_number(true); // Include line numbers
+
+    // Initialize the subscriber with trace level (captures everything)
+    tracing_subscriber::registry()
+        .with(tracing_subscriber::EnvFilter::new("trace"))
+        .with(file_layer)
+        .init();
+
+    eprintln!(
+        "Debug mode enabled: logging to {}",
+        debug_file_path.display()
+    );
+
+    Ok(DebugLogGuard { _guard: guard })
+}
+
 #[tokio::main]
 async fn main() -> Result<()> {
     // Install Ctrl+C handler to restore terminal state before exiting
@@ -679,14 +737,20 @@ async fn main() -> Result<()> {
 
     let cli = Cli::parse();
 
-    // Initialize logging only for non-TUI commands
+    // Initialize debug file logging if --debug flag is passed
+    // This writes ALL trace-level logs to ./debug.txt for troubleshooting
+    let _debug_guard = if cli.interactive.debug {
+        Some(setup_debug_file_logging()?)
+    } else {
+        None
+    };
+
+    // Initialize logging only for non-TUI commands (when not in debug mode)
     // TUI mode has its own file-based logging to avoid stdout pollution
-    if cli.command.is_some() {
-        // Determine log level with precedence: --debug flag > --log-level > CORTEX_LOG_LEVEL env > default (info)
-        let log_level = if cli.interactive.debug {
-            // Deprecated --debug flag takes precedence for backward compatibility
-            LogLevel::Debug
-        } else if let Ok(env_level) = std::env::var("CORTEX_LOG_LEVEL") {
+    // Debug mode uses file logging configured above
+    if cli.command.is_some() && !cli.interactive.debug {
+        // Determine log level with precedence: --log-level > CORTEX_LOG_LEVEL env > default (info)
+        let log_level = if let Ok(env_level) = std::env::var("CORTEX_LOG_LEVEL") {
             // Check environment variable
             LogLevel::from_str_loose(&env_level).unwrap_or(cli.interactive.log_level)
         } else {