diff --git a/src/components/layout/AppShell.tsx b/src/components/layout/AppShell.tsx
index 8a6314c..7e23349 100644
--- a/src/components/layout/AppShell.tsx
+++ b/src/components/layout/AppShell.tsx
@@ -1,12 +1,28 @@
 import { type ReactNode } from 'react';
 import { useLayout } from '../../contexts/LayoutContext';
 import { useNetwork } from '../../hooks';
-import { useUpdateCheck } from '../../hooks/useUpdateCheck';
+import { useUpdateCheck, type UpdatePhase } from '../../hooks/useUpdateCheck';
 import { OfflineIndicator } from '../shared';
 import { TabSwitcher, ConversationSidebar } from '../conversations';
 import { EmployeePanel } from '../employees';
 import { TrialBanner } from '../trial/TrialBanner';
 
+function updateButtonLabel(phase: UpdatePhase): string {
+  switch (phase) {
+    case 'downloading': return 'Downloading…';
+    case 'relaunching': return 'Relaunching…';
+    default: return 'Update Available';
+  }
+}
+
+function friendlyUpdateError(raw: string): string {
+  const lower = raw.toLowerCase();
+  if (lower.includes('sandbox')) return 'Update blocked by sandbox';
+  if (lower.includes('signature') || lower.includes('sig ')) return 'Update signature invalid';
+  if (lower.includes('network') || lower.includes('fetch') || lower.includes('request')) return 'Network error during update';
+  return 'Update failed';
+}
+
 interface AppShellProps {
   children: ReactNode;
   contextPanel?: ReactNode;
@@ -79,7 +95,7 @@ function IconButton({
 export function AppShell({ children, contextPanel, onSettingsClick }: AppShellProps) {
   const { sidebarOpen, contextPanelOpen, sidebarTab, toggleSidebar, toggleContextPanel, setSidebarTab } = useLayout();
   const { isOnline, errorMessage, checkNow, isChecking } = useNetwork();
-  const { updateAvailable, installing, installUpdate } = useUpdateCheck();
+  const { updateAvailable, phase, installing, error: updateError, installUpdate, retry: retryUpdate } = useUpdateCheck();
 
   return (
     <div className="h-screen flex flex-col bg-stone-50 overflow-hidden">
@@ -115,7 +131,45 @@ export function AppShell({ children, contextPanel, onSettingsClick }: AppShellPr
         />
 
         <div className="flex items-center gap-1">
-          {updateAvailable && (
+          {updateError ? (
+            <div
+              role="alert"
+              className="
+                flex items-center gap-2
+                px-2 py-1 mr-1
+                text-xs
+                bg-red-50
+                border border-red-200/60
+                rounded-md
+              "
+              title={updateError}
+            >
+              <svg
+                className="w-3.5 h-3.5 text-red-600 flex-shrink-0"
+                fill="none"
+                viewBox="0 0 24 24"
+                stroke="currentColor"
+                strokeWidth={2}
+                aria-hidden="true"
+              >
+                <path strokeLinecap="round" strokeLinejoin="round" d="M12 9v2m0 4h.01M10.29 3.86L1.82 18a2 2 0 001.71 3h16.94a2 2 0 001.71-3L13.71 3.86a2 2 0 00-3.42 0z" />
+              </svg>
+              <span className="text-red-700 font-medium">{friendlyUpdateError(updateError)}</span>
+              <button
+                type="button"
+                onClick={() => { void retryUpdate(); }}
+                className="
+                  ml-1 px-1.5 py-0.5
+                  text-red-700 hover:text-red-900
+                  hover:bg-red-100
+                  rounded
+                  transition-colors duration-150
+                "
+              >
+                Try again
+              </button>
+            </div>
+          ) : updateAvailable && (
             <button
               type="button"
               onClick={() => { void installUpdate(); }}
@@ -130,7 +184,7 @@ export function AppShell({ children, contextPanel, onSettingsClick }: AppShellPr
                 disabled:opacity-70 disabled:cursor-wait
               "
             >
-              {installing ? 'Installing Update...' : 'Update Available'}
+              {updateButtonLabel(phase)}
             </button>
           )}
 
diff --git a/src/hooks/useUpdateCheck.ts b/src/hooks/useUpdateCheck.ts
index 1d1b4a4..52aec90 100644
--- a/src/hooks/useUpdateCheck.ts
+++ b/src/hooks/useUpdateCheck.ts
@@ -2,18 +2,20 @@ import { useEffect, useState } from 'react';
 import { check, Update } from '@tauri-apps/plugin-updater';
 import { relaunch } from '@tauri-apps/plugin-process';
 
+export type UpdatePhase = 'idle' | 'checking' | 'downloading' | 'relaunching';
+
 export function useUpdateCheck() {
   const [updateAvailable, setUpdateAvailable] = useState<Update | null>(null);
-  const [checking, setChecking] = useState(false);
-  const [installing, setInstalling] = useState(false);
+  const [phase, setPhase] = useState<UpdatePhase>('idle');
   const [error, setError] = useState<string | null>(null);
 
   useEffect(() => {
-    checkForUpdate();
+    void checkForUpdate();
+    // eslint-disable-next-line react-hooks/exhaustive-deps
   }, []);
 
   async function checkForUpdate() {
-    setChecking(true);
+    setPhase('checking');
     setError(null);
     try {
       const update = await check();
@@ -23,21 +25,47 @@ export function useUpdateCheck() {
     } catch (e) {
       setError(e instanceof Error ? e.message : 'Failed to check for updates');
     } finally {
-      setChecking(false);
+      setPhase('idle');
     }
   }
 
   async function installUpdate() {
     if (!updateAvailable) return;
-    setInstalling(true);
+    setError(null);
+    setPhase('downloading');
     try {
-      await updateAvailable.downloadAndInstall();
+      await updateAvailable.downloadAndInstall((progress) => {
+        if (progress.event === 'Finished') {
+          setPhase('relaunching');
+        }
+      });
       await relaunch();
     } catch (e) {
       setError(e instanceof Error ? e.message : 'Failed to install update');
-      setInstalling(false);
+      setPhase('idle');
     }
   }
 
-  return { updateAvailable, checking, installing, error, checkForUpdate, installUpdate };
+  async function retry() {
+    setError(null);
+    if (updateAvailable) {
+      await installUpdate();
+    } else {
+      await checkForUpdate();
+    }
+  }
+
+  const checking = phase === 'checking';
+  const installing = phase === 'downloading' || phase === 'relaunching';
+
+  return {
+    updateAvailable,
+    phase,
+    checking,
+    installing,
+    error,
+    checkForUpdate,
+    installUpdate,
+    retry,
+  };
 }