diff --git a/python/packages/foundry_hosting/agent_framework_foundry_hosting/_responses.py b/python/packages/foundry_hosting/agent_framework_foundry_hosting/_responses.py
index 49882462ce..e90d8bb958 100644
--- a/python/packages/foundry_hosting/agent_framework_foundry_hosting/_responses.py
+++ b/python/packages/foundry_hosting/agent_framework_foundry_hosting/_responses.py
@@ -407,6 +407,25 @@ def _resolve_checkpoint_root(is_hosted: bool) -> str:
 
         return "/home/session/.checkpoints"
 
+    @staticmethod
+    def _resolve_approval_storage_path(is_hosted: bool) -> str:
+        """Resolve function approval storage path.
+
+        Hosted: $HOME/.function_approvals/approval_requests.json.
+        Local: {cwd}/.function_approvals/approval_requests.json.
+        """
+        if not is_hosted:
+            return os.path.join(os.getcwd(), ".function_approvals", "approval_requests.json")
+        home = os.environ.get("HOME", "").strip()
+        if home and home != "/":
+            try:
+                resolved = Path(home).resolve()
+                if str(resolved) != str(resolved.root):
+                    return str(resolved / ".function_approvals" / "approval_requests.json")
+            except (OSError, ValueError):
+                pass
+        return "/home/session/.function_approvals/approval_requests.json"
+
     def __init__(
         self,
         agent: SupportsAgentRun,
@@ -451,6 +470,7 @@ def __init__(
 
         self._is_workflow_agent = False
         self._checkpoint_storage_path = None
+        self._approval_storage_path = self._resolve_approval_storage_path(self.config.is_hosted)
         if isinstance(agent, WorkflowAgent):
             if agent.workflow._runner_context.has_checkpointing():  # pyright: ignore[reportPrivateUsage]
                 raise RuntimeError(
@@ -489,7 +509,7 @@ def __init__(
             else None
         )
         self._approval_storage: ApprovalStorage = (
-            FileBasedFunctionApprovalStorage(self.FUNCTION_APPROVAL_STORAGE_PATH)
+            FileBasedFunctionApprovalStorage(self._approval_storage_path)
             if self.config.is_hosted
             else InMemoryFunctionApprovalStorage()
         )
@@ -540,7 +560,7 @@ def _approval_storage_for_request(self) -> ApprovalStorage:
         storage = self._approval_storages_by_user.get(user_id)
         if storage is None:
             storage = FileBasedFunctionApprovalStorage(
-                _approval_storage_path_for_user(self.FUNCTION_APPROVAL_STORAGE_PATH, user_id)
+                _approval_storage_path_for_user(self._approval_storage_path, user_id)
             )
             self._approval_storages_by_user[user_id] = storage
         return storage
diff --git a/python/packages/foundry_hosting/tests/test_responses.py b/python/packages/foundry_hosting/tests/test_responses.py
index cc1d863304..546690a775 100644
--- a/python/packages/foundry_hosting/tests/test_responses.py
+++ b/python/packages/foundry_hosting/tests/test_responses.py
@@ -13,6 +13,7 @@
 import asyncio
 import json
 import os
+import pathlib
 import uuid
 from collections.abc import AsyncGenerator, AsyncIterator, Awaitable, Callable, Iterator, Mapping, Sequence
 from contextlib import contextmanager
@@ -74,6 +75,7 @@
     ConsentError,
     FileBasedFunctionApprovalStorage,  # pyright: ignore[reportPrivateUsage]
     InMemoryFunctionApprovalStorage,  # pyright: ignore[reportPrivateUsage]
+    _approval_storage_path_for_user,
     _item_to_message,  # pyright: ignore[reportPrivateUsage]
     _output_item_to_message,  # pyright: ignore[reportPrivateUsage]
     consent_url_from_error,
@@ -4222,7 +4224,6 @@ def _helper() -> Callable[..., str]:
         return _approval_storage_path_for_user
 
     def test_user_id_scopes_path_under_base_directory(self, tmp_path: Any) -> None:
-        from pathlib import Path
 
         helper = self._helper()
         base = tmp_path / "approvals" / "requests.json"
@@ -5190,3 +5191,65 @@ def test_hosted_with_unusable_home_falls_back_to_default(
 
 
 # endregion
+
+
+@pytest.mark.filterwarnings("ignore::DeprecationWarning")
+class TestApprovalStoragePath:
+    """
+    In hosted mode, function approval storage must be stored under
+    $HOME/.function_approvals (durable across compute recreation), not
+    /.function_approvals (ephemeral root path that is wiped on idle).
+    """
+
+    def test_local_approval_path_uses_cwd(self) -> None:
+        """In local mode, approval storage should be under cwd, NOT root `/`."""
+        server = _make_server(MagicMock())
+        expected = os.path.join(os.getcwd(), ".function_approvals", "approval_requests.json")
+        assert server._approval_storage_path == expected
+
+    def test_hosted_approval_path_uses_home(self, monkeypatch: pytest.MonkeyPatch, tmp_path: pathlib.Path) -> None:
+        """In hosted mode with valid HOME, approvals must be under $HOME/.function_approvals/."""
+        monkeypatch.setenv("FOUNDRY_HOSTING_ENVIRONMENT", "true")
+        monkeypatch.setenv("HOME", "/home/testuser")
+
+        monkeypatch.setattr(pathlib.Path, "home", lambda *args, **kwargs: tmp_path)
+
+        server = ResponsesHostServer(MagicMock(context_providers=[]), store=InMemoryResponseProvider())
+        actual_normalized = server._approval_storage_path.replace("\\", "/")
+        assert actual_normalized.endswith("/home/testuser/.function_approvals/approval_requests.json")
+        assert not actual_normalized.startswith("/.function_approvals")
+        assert isinstance(server._approval_storage, FileBasedFunctionApprovalStorage)
+        storage_normalized = server._approval_storage._storage_path.replace("\\", "/")
+        assert storage_normalized.endswith("/home/testuser/.function_approvals/approval_requests.json")
+        user_path = _approval_storage_path_for_user(server._approval_storage_path, "test-user")
+        user_normalized = str(user_path).replace("\\", "/")
+        assert user_normalized.endswith("/home/testuser/.function_approvals/test-user/approval_requests.json")
+
+    def test_hosted_without_home_env_uses_default_session_dir(
+        self, monkeypatch: pytest.MonkeyPatch, tmp_path: pathlib.Path
+    ) -> None:
+        """When HOME is unset in hosted mode, fall back to /home/session/.function_approvals/."""
+        monkeypatch.setenv("FOUNDRY_HOSTING_ENVIRONMENT", "true")
+        monkeypatch.delenv("HOME", raising=False)
+
+        monkeypatch.setattr(pathlib.Path, "home", lambda *args, **kwargs: tmp_path)
+
+        server = ResponsesHostServer(MagicMock(), store=InMemoryResponseProvider())
+        expected = "/home/session/.function_approvals/approval_requests.json"
+        assert server._approval_storage_path == expected
+
+    @pytest.mark.parametrize("bad_home", ["/", "", "   "])
+    def test_hosted_with_unusable_home_falls_back_to_default(
+        self, monkeypatch: pytest.MonkeyPatch, tmp_path: pathlib.Path, bad_home: str
+    ) -> None:
+        """Filesystem-root or empty HOME must NOT produce /.function_approvals/."""
+        monkeypatch.setenv("FOUNDRY_HOSTING_ENVIRONMENT", "true")
+        monkeypatch.setenv("HOME", bad_home)
+
+        # Patch Path.home to use a writable temp directory for SessionStore initialization
+        monkeypatch.setattr(pathlib.Path, "home", lambda *args, **kwargs: tmp_path)
+
+        server = ResponsesHostServer(MagicMock(), store=InMemoryResponseProvider())
+        expected = "/home/session/.function_approvals/approval_requests.json"
+        assert server._approval_storage_path == expected
+        assert not server._approval_storage_path.startswith("/.function_approvals")