diff --git a/src/__tests__/walletSessionApi.test.ts b/src/__tests__/walletSessionApi.test.ts
new file mode 100644
index 00000000..1c202642
--- /dev/null
+++ b/src/__tests__/walletSessionApi.test.ts
@@ -0,0 +1,136 @@
+import { beforeAll, beforeEach, describe, expect, it, jest } from "@jest/globals";
+import type { NextApiRequest, NextApiResponse } from "next";
+import { createMockResponse } from "./apiTestUtils";
+
+// The handler turned every thrown error into an opaque 500. These tests pin the
+// new contract: 400 for bad input, 401 for an invalid OR throwing signature
+// check, 200 for a valid one, and 500 reserved for genuine server faults.
+
+const addCorsHeadersMock = jest.fn<(res: NextApiResponse) => void>();
+const corsMock = jest.fn<(req: NextApiRequest, res: NextApiResponse) => Promise<void>>();
+const checkSignatureMock: jest.Mock = jest.fn();
+const nonceFindFirstMock: jest.Mock = jest.fn();
+const nonceDeleteMock: jest.Mock = jest.fn();
+const getWalletSessionFromReqMock: jest.Mock = jest.fn();
+const setWalletSessionCookieMock = jest.fn();
+
+jest.mock("@/lib/cors", () => ({
+  __esModule: true,
+  addCorsCacheBustingHeaders: addCorsHeadersMock,
+  cors: corsMock,
+}), { virtual: true });
+
+jest.mock("@/server/db", () => ({
+  __esModule: true,
+  db: {
+    nonce: {
+      findFirst: nonceFindFirstMock,
+      delete: nonceDeleteMock,
+    },
+  },
+}), { virtual: true });
+
+// DataSignature is a type-only use; stub the module so it never loads heavy WASM.
+jest.mock("@meshsdk/core", () => ({ __esModule: true }), { virtual: true });
+
+jest.mock("@meshsdk/core-cst", () => ({
+  __esModule: true,
+  checkSignature: checkSignatureMock,
+}), { virtual: true });
+
+// Identity normalize keeps these tests focused on status-code behavior; the real
+// normalize is exercised by addressCompatibility's own coverage.
+jest.mock("@/utils/addressCompatibility", () => ({
+  __esModule: true,
+  normalizeAddressToBech32: (a: string) => a,
+}), { virtual: true });
+
+jest.mock("@/lib/auth/walletSession", () => ({
+  __esModule: true,
+  getWalletSessionFromReq: getWalletSessionFromReqMock,
+  setWalletSessionCookie: setWalletSessionCookieMock,
+}), { virtual: true });
+
+let handler: (req: NextApiRequest, res: NextApiResponse) => Promise<unknown>;
+
+const ADDRESS = "addr_test1qpwalletsessionfixture0000000000000000000000000000";
+
+const postRequest = (body: unknown): NextApiRequest =>
+  ({ method: "POST", body, cookies: {} } as unknown as NextApiRequest);
+
+beforeAll(async () => {
+  process.env.JWT_SECRET = "x".repeat(32);
+  ({ default: handler } = await import("../pages/api/auth/wallet-session"));
+});
+
+beforeEach(() => {
+  jest.clearAllMocks();
+  corsMock.mockResolvedValue(undefined);
+  getWalletSessionFromReqMock.mockReturnValue(null);
+  (nonceFindFirstMock as any).mockResolvedValue({ id: "nonce-id", value: "deadbeef" });
+  (nonceDeleteMock as any).mockResolvedValue({});
+  (checkSignatureMock as any).mockResolvedValue(true);
+});
+
+describe("wallet-session API error handling", () => {
+  it("returns 400 when address/signature/key are missing", async () => {
+    const res = createMockResponse();
+    await handler(postRequest({ address: ADDRESS }), res);
+
+    expect(res.status).toHaveBeenCalledWith(400);
+    expect(checkSignatureMock).not.toHaveBeenCalled();
+  });
+
+  it("returns 400 when no nonce has been issued", async () => {
+    (nonceFindFirstMock as any).mockResolvedValue(null);
+    const res = createMockResponse();
+    await handler(postRequest({ address: ADDRESS, signature: "ab", key: "cd" }), res);
+
+    expect(res.status).toHaveBeenCalledWith(400);
+    expect(res.json).toHaveBeenCalledWith({ error: "No nonce issued for this address" });
+  });
+
+  it("returns 401 (NOT 500) when checkSignature THROWS (e.g. hex address / malformed COSE)", async () => {
+    (checkSignatureMock as any).mockRejectedValue(
+      new Error('Unknown letter "b". Allowed: qpzry9x8gf2tvdw0s3jn54khce6mua7l'),
+    );
+    const res = createMockResponse();
+    await handler(postRequest({ address: ADDRESS, signature: "00", key: "00" }), res);
+
+    expect(res.status).toHaveBeenCalledWith(401);
+    expect(res.status).not.toHaveBeenCalledWith(500);
+    expect(res.json).toHaveBeenCalledWith({ error: "Invalid signature" });
+    expect(nonceDeleteMock).not.toHaveBeenCalled();
+  });
+
+  it("returns 401 when checkSignature returns false", async () => {
+    (checkSignatureMock as any).mockResolvedValue(false);
+    const res = createMockResponse();
+    await handler(postRequest({ address: ADDRESS, signature: "ab", key: "cd" }), res);
+
+    expect(res.status).toHaveBeenCalledWith(401);
+    expect(res.json).toHaveBeenCalledWith({ error: "Invalid signature" });
+  });
+
+  it("returns 200 {ok:true} and consumes the nonce for a valid signature", async () => {
+    const res = createMockResponse();
+    await handler(postRequest({ address: ADDRESS, signature: "ab", key: "cd" }), res);
+
+    expect(res.status).toHaveBeenCalledWith(200);
+    expect(res.json).toHaveBeenCalledWith({
+      ok: true,
+      wallets: [ADDRESS],
+      primaryWallet: ADDRESS,
+    });
+    expect(nonceDeleteMock).toHaveBeenCalledWith({ where: { id: "nonce-id" } });
+    expect(setWalletSessionCookieMock).toHaveBeenCalled();
+  });
+
+  it("returns 500 only for genuine server faults (e.g. DB error)", async () => {
+    (nonceFindFirstMock as any).mockRejectedValue(new Error("db down"));
+    const res = createMockResponse();
+    await handler(postRequest({ address: ADDRESS, signature: "ab", key: "cd" }), res);
+
+    expect(res.status).toHaveBeenCalledWith(500);
+  });
+});
diff --git a/src/pages/api/auth/wallet-session.ts b/src/pages/api/auth/wallet-session.ts
index f381ebe3..1a90b863 100644
--- a/src/pages/api/auth/wallet-session.ts
+++ b/src/pages/api/auth/wallet-session.ts
@@ -3,6 +3,7 @@ import { db } from "@/server/db";
 import { cors, addCorsCacheBustingHeaders } from "@/lib/cors";
 import { DataSignature } from "@meshsdk/core";
 import { checkSignature } from "@meshsdk/core-cst";
+import { normalizeAddressToBech32 } from "@/utils/addressCompatibility";
 import {
   getWalletSessionFromReq,
   setWalletSessionCookie,
@@ -22,15 +23,22 @@ export default async function handler(req: NextApiRequest, res: NextApiResponse)
   }
 
   try {
-    const { address, signature, key } = req.body ?? {};
+    const { address: rawAddress, signature, key } = req.body ?? {};
     if (
-      typeof address !== "string" ||
+      typeof rawAddress !== "string" ||
       typeof signature !== "string" ||
       typeof key !== "string"
     ) {
       return res.status(400).json({ error: "Missing address, signature or key." });
     }
 
+    // Normalize to bech32 up front (defense in depth). Some CIP-30 wallets hand
+    // back hex-encoded address bytes; checkSignature() calls Address.fromBech32()
+    // internally and THROWS on hex ("Unknown letter ..."), not returns false.
+    // The WalletAuthModal client already normalizes, but other callers may not —
+    // and an unhandled throw here used to surface as an opaque 500.
+    const address = normalizeAddressToBech32(rawAddress);
+
     // Fetch the nonce from the database (same table used by /api/v1/getNonce)
     const nonceEntry = await db.nonce.findFirst({ where: { address } });
     if (!nonceEntry) {
@@ -40,7 +48,20 @@ export default async function handler(req: NextApiRequest, res: NextApiResponse)
     const nonce = nonceEntry.value;
     const sig: DataSignature = { signature, key };
 
-    const isValid = await checkSignature(nonce, sig, address);
+    // Verify the signature in isolation. checkSignature can THROW (malformed
+    // COSE_Sign1 / COSE_Key, non-bech32 address, etc.) as well as return false —
+    // treat both as an invalid signature (401), never a 500, and log the
+    // underlying reason so genuine failures stay diagnosable.
+    let isValid = false;
+    try {
+      isValid = await checkSignature(nonce, sig, address);
+    } catch (verifyError) {
+      console.warn(
+        "[api/auth/wallet-session] checkSignature threw; treating as invalid signature:",
+        verifyError instanceof Error ? verifyError.message : verifyError,
+      );
+      isValid = false;
+    }
 
     if (!isValid) {
       return res.status(401).json({ error: "Invalid signature" });
@@ -69,8 +90,10 @@ export default async function handler(req: NextApiRequest, res: NextApiResponse)
       primaryWallet: payload.primaryWallet,
     });
   } catch (error) {
-    console.error("[api/auth/wallet-session] Error:", error);
+    // Reserved for genuinely unexpected failures (e.g. DB errors). Bad input is
+    // 400 and a failed/throwing signature check is 401, both handled above — so
+    // a 500 here now means something actually went wrong server-side.
+    console.error("[api/auth/wallet-session] Unexpected error:", error);
     return res.status(500).json({ error: "Internal Server Error" });
   }
 }
-