diff --git a/packages/opencode/test/config/paths-parsetext.test.ts b/packages/opencode/test/config/paths-parsetext.test.ts
new file mode 100644
index 0000000000..b3c8d92c87
--- /dev/null
+++ b/packages/opencode/test/config/paths-parsetext.test.ts
@@ -0,0 +1,186 @@
+import { describe, test, expect, beforeEach, afterEach } from "bun:test"
+import { ConfigPaths } from "../../src/config/paths"
+import { tmpdir } from "../fixture/fixture"
+import path from "path"
+import fs from "fs/promises"
+
+describe("ConfigPaths.parseText: JSONC parsing", () => {
+  test("parses plain JSON object", async () => {
+    const result = await ConfigPaths.parseText('{"key": "value"}', "/fake/config.json")
+    expect(result).toEqual({ key: "value" })
+  })
+
+  test("parses JSONC with comments", async () => {
+    const text = `{
+      // This is a comment
+      "key": "value"
+    }`
+    const result = await ConfigPaths.parseText(text, "/fake/config.jsonc")
+    expect(result).toEqual({ key: "value" })
+  })
+
+  test("allows trailing commas", async () => {
+    const text = '{"a": 1, "b": 2,}'
+    const result = await ConfigPaths.parseText(text, "/fake/config.json")
+    expect(result).toEqual({ a: 1, b: 2 })
+  })
+
+  test("throws JsonError on invalid JSONC", async () => {
+    const text = '{"key": value_without_quotes}'
+    try {
+      await ConfigPaths.parseText(text, "/fake/bad.json")
+      expect.unreachable("should have thrown")
+    } catch (e: any) {
+      expect(e.constructor.name).toBe("ConfigJsonError")
+      expect(e.data.path).toBe("/fake/bad.json")
+    }
+  })
+
+  test("error message includes line and column info", async () => {
+    const text = '{\n  "a": 1\n  "b": 2\n}'
+    try {
+      await ConfigPaths.parseText(text, "/fake/bad.json")
+      expect.unreachable("should have thrown")
+    } catch (e: any) {
+      expect(e.data.message).toContain("line")
+      expect(e.data.message).toContain("column")
+    }
+  })
+})
+
+describe("ConfigPaths.parseText: {env:VAR} substitution", () => {
+  const envKey = "OPENCODE_TEST_PARSE_TEXT_KEY"
+
+  beforeEach(() => {
+    process.env[envKey] = "test-api-key-12345"
+  })
+
+  afterEach(() => {
+    delete process.env[envKey]
+  })
+
+  test("substitutes {env:VAR} with environment variable value", async () => {
+    const text = `{"apiKey": "{env:${envKey}}"}`
+    const result = await ConfigPaths.parseText(text, "/fake/config.json")
+    expect(result).toEqual({ apiKey: "test-api-key-12345" })
+  })
+
+  test("substitutes to empty string when env var is not set", async () => {
+    const text = '{"apiKey": "{env:OPENCODE_TEST_NONEXISTENT_VAR_XYZ}"}'
+    const result = await ConfigPaths.parseText(text, "/fake/config.json")
+    expect(result).toEqual({ apiKey: "" })
+  })
+
+  test("substitutes multiple env vars in same text", async () => {
+    process.env.OPENCODE_TEST_HOST = "localhost"
+    process.env.OPENCODE_TEST_PORT = "5432"
+    try {
+      const text = '{"host": "{env:OPENCODE_TEST_HOST}", "port": "{env:OPENCODE_TEST_PORT}"}'
+      const result = await ConfigPaths.parseText(text, "/fake/config.json")
+      expect(result).toEqual({ host: "localhost", port: "5432" })
+    } finally {
+      delete process.env.OPENCODE_TEST_HOST
+      delete process.env.OPENCODE_TEST_PORT
+    }
+  })
+
+  test("env var substitution is raw text injection (not JSON-quoted)", async () => {
+    process.env.OPENCODE_TEST_NUM = "42"
+    try {
+      // After env substitution, this becomes {"count": 42} — a number, not a string
+      const text = '{"count": {env:OPENCODE_TEST_NUM}}'
+      const result = await ConfigPaths.parseText(text, "/fake/config.json")
+      expect(result).toEqual({ count: 42 })
+    } finally {
+      delete process.env.OPENCODE_TEST_NUM
+    }
+  })
+})
+
+describe("ConfigPaths.parseText: {file:path} substitution", () => {
+  test("substitutes {file:path} with file contents (trimmed)", async () => {
+    await using tmp = await tmpdir()
+    const secretPath = path.join(tmp.path, "secret.txt")
+    await fs.writeFile(secretPath, "my-secret-value\n")
+
+    const text = `{"secret": "{file:${secretPath}}"}`
+    const result = await ConfigPaths.parseText(text, "/fake/config.json")
+    expect(result).toEqual({ secret: "my-secret-value" })
+  })
+
+  test("resolves relative file path from config directory", async () => {
+    await using tmp = await tmpdir()
+    const secretPath = path.join(tmp.path, "creds.txt")
+    await fs.writeFile(secretPath, "relative-secret")
+
+    // source is the config file path — {file:creds.txt} resolves relative to its directory
+    const configPath = path.join(tmp.path, "config.json")
+    const text = '{"secret": "{file:creds.txt}"}'
+    const result = await ConfigPaths.parseText(text, configPath)
+    expect(result).toEqual({ secret: "relative-secret" })
+  })
+
+  test("throws InvalidError when referenced file does not exist", async () => {
+    const text = '{"secret": "{file:/nonexistent/path/secret.txt}"}'
+    try {
+      await ConfigPaths.parseText(text, "/fake/config.json")
+      expect.unreachable("should have thrown")
+    } catch (e: any) {
+      expect(e.constructor.name).toBe("ConfigInvalidError")
+      expect(e.data.path).toBe("/fake/config.json")
+      expect(e.data.message).toContain("does not exist")
+    }
+  })
+
+  test("missing='empty' returns empty string for missing files", async () => {
+    const text = '{"secret": "{file:/nonexistent/path/secret.txt}"}'
+    const result = await ConfigPaths.parseText(text, "/fake/config.json", "empty")
+    expect(result).toEqual({ secret: "" })
+  })
+
+  test("skips {file:...} inside // comments", async () => {
+    await using tmp = await tmpdir()
+    // The file doesn't exist, but it's in a comment so should not trigger an error
+    const text = `{
+      // Reference: {file:nonexistent.txt}
+      "key": "value"
+    }`
+    const result = await ConfigPaths.parseText(text, path.join(tmp.path, "config.json"))
+    expect(result).toEqual({ key: "value" })
+  })
+
+  test("escapes file content for JSON safety (quotes and newlines)", async () => {
+    await using tmp = await tmpdir()
+    const secretPath = path.join(tmp.path, "multiline.txt")
+    // Content with characters that need JSON escaping
+    await fs.writeFile(secretPath, 'value with "quotes" and\nnewlines')
+
+    const text = `{"secret": "{file:${secretPath}}"}`
+    const result = await ConfigPaths.parseText(text, "/fake/config.json")
+    // After file read → trim → JSON.stringify escape → parseJsonc, we get original content back
+    expect(result.secret).toBe('value with "quotes" and\nnewlines')
+  })
+})
+
+describe("ConfigPaths.parseText: combined substitutions", () => {
+  test("handles both {env:} and {file:} in same config", async () => {
+    await using tmp = await tmpdir()
+    const secretPath = path.join(tmp.path, "db-pass.txt")
+    await fs.writeFile(secretPath, "file-password")
+
+    process.env.OPENCODE_TEST_DB_HOST = "db.example.com"
+    try {
+      const text = `{
+        "host": "{env:OPENCODE_TEST_DB_HOST}",
+        "password": "{file:${secretPath}}"
+      }`
+      const result = await ConfigPaths.parseText(text, "/fake/config.json")
+      expect(result).toEqual({
+        host: "db.example.com",
+        password: "file-password",
+      })
+    } finally {
+      delete process.env.OPENCODE_TEST_DB_HOST
+    }
+  })
+})