diff --git a/packages/coding-agent/CHANGELOG.md b/packages/coding-agent/CHANGELOG.md
index 2bc8dcd9f..c7ae064a3 100644
--- a/packages/coding-agent/CHANGELOG.md
+++ b/packages/coding-agent/CHANGELOG.md
@@ -2,6 +2,10 @@
 
 ## [Unreleased]
 
+### Fixed
+
+- Fixed managed npm extension updates to avoid package managers installing or resolving pi host packages as peer dependencies ([#4907](https://github.com/earendil-works/pi/issues/4907)).
+
 ## [0.75.5] - 2026-05-23
 
 ### New Features
diff --git a/packages/coding-agent/src/core/package-manager.ts b/packages/coding-agent/src/core/package-manager.ts
index 06933bb27..1d7dc27d3 100644
--- a/packages/coding-agent/src/core/package-manager.ts
+++ b/packages/coding-agent/src/core/package-manager.ts
@@ -1706,13 +1706,25 @@ export class DefaultPackageManager implements PackageManager {
 
 	private getNpmInstallArgs(specs: string[], installRoot: string): string[] {
 		const packageManagerName = this.getPackageManagerName();
+		// Extension packages run inside pi and resolve pi APIs through loader aliases/virtual modules.
+		// Disable peer dependency resolution for managed installs (npm's --legacy-peer-deps, and
+		// equivalent bun/pnpm settings) so package managers do not install or solve host-provided
+		// @earendil-works/pi-* peers. Stale auto-installed pi peers can otherwise block updates.
 		if (packageManagerName === "bun") {
-			return ["install", ...specs, "--cwd", installRoot];
+			return ["install", ...specs, "--cwd", installRoot, "--omit=peer"];
 		}
 		if (packageManagerName === "pnpm") {
-			return ["install", ...specs, "--prefix", installRoot, "--config.strict-dep-builds=false"];
+			return [
+				"install",
+				...specs,
+				"--prefix",
+				installRoot,
+				"--config.auto-install-peers=false",
+				"--config.strict-peer-dependencies=false",
+				"--config.strict-dep-builds=false",
+			];
 		}
-		return ["install", ...specs, "--prefix", installRoot];
+		return ["install", ...specs, "--prefix", installRoot, "--legacy-peer-deps"];
 	}
 
 	private async installNpm(source: NpmSource, scope: SourceScope, temporary: boolean): Promise<void> {
diff --git a/packages/coding-agent/test/package-manager.test.ts b/packages/coding-agent/test/package-manager.test.ts
index b464ca7d6..af3bc99d3 100644
--- a/packages/coding-agent/test/package-manager.test.ts
+++ b/packages/coding-agent/test/package-manager.test.ts
@@ -693,7 +693,17 @@ Content`,
 
 			expect(runCommandSpy).toHaveBeenCalledWith(
 				"mise",
-				["exec", "node@20", "--", "npm", "install", "@scope/pkg", "--prefix", join(agentDir, "npm")],
+				[
+					"exec",
+					"node@20",
+					"--",
+					"npm",
+					"install",
+					"@scope/pkg",
+					"--prefix",
+					join(agentDir, "npm"),
+					"--legacy-peer-deps",
+				],
 				undefined,
 			);
 		});
@@ -714,7 +724,7 @@ Content`,
 
 			expect(runCommandSpy).toHaveBeenCalledWith(
 				"mise",
-				["exec", "bun@1", "--", "bun", "install", "@scope/pkg", "--cwd", join(agentDir, "npm")],
+				["exec", "bun@1", "--", "bun", "install", "@scope/pkg", "--cwd", join(agentDir, "npm"), "--omit=peer"],
 				undefined,
 			);
 		});
@@ -953,6 +963,8 @@ Content`,
 						"pnpm-pkg",
 						"--prefix",
 						join(agentDir, "npm"),
+						"--config.auto-install-peers=false",
+						"--config.strict-peer-dependencies=false",
 						"--config.strict-dep-builds=false",
 					]);
 					mkdirSync(join(packagePath, "extensions"), { recursive: true });
@@ -2005,7 +2017,7 @@ export default function(api) { api.registerTool({ name: "test", description: "te
 			);
 			expect(runCommandSpy).toHaveBeenCalledWith(
 				"npm",
-				["install", "example@latest", "--prefix", join(tempDir, ".pi", "npm")],
+				["install", "example@latest", "--prefix", join(tempDir, ".pi", "npm"), "--legacy-peer-deps"],
 				undefined,
 			);
 		});
@@ -2044,7 +2056,13 @@ export default function(api) { api.registerTool({ name: "test", description: "te
 				.mockImplementation(async (...callArgs: unknown[]) => {
 					const [command, args] = callArgs as [string, string[]];
 					expect(command).toBe("npm");
-					expect(args).toEqual(["install", "legacy-pkg@latest", "--prefix", join(agentDir, "npm")]);
+					expect(args).toEqual([
+						"install",
+						"legacy-pkg@latest",
+						"--prefix",
+						join(agentDir, "npm"),
+						"--legacy-peer-deps",
+					]);
 					mkdirSync(managedPath, { recursive: true });
 					writeFileSync(
 						join(managedPath, "package.json"),
@@ -2154,13 +2172,27 @@ export default function(api) { api.registerTool({ name: "test", description: "te
 			expect(runCommandSpy).toHaveBeenNthCalledWith(
 				1,
 				"npm",
-				["install", "user-old@latest", "user-unknown@latest", "--prefix", join(agentDir, "npm")],
+				[
+					"install",
+					"user-old@latest",
+					"user-unknown@latest",
+					"--prefix",
+					join(agentDir, "npm"),
+					"--legacy-peer-deps",
+				],
 				undefined,
 			);
 			expect(runCommandSpy).toHaveBeenNthCalledWith(
 				2,
 				"npm",
-				["install", "project-old@latest", "project-missing@latest", "--prefix", join(tempDir, ".pi", "npm")],
+				[
+					"install",
+					"project-old@latest",
+					"project-missing@latest",
+					"--prefix",
+					join(tempDir, ".pi", "npm"),
+					"--legacy-peer-deps",
+				],
 				undefined,
 			);
 			expect(updateGitSpy).toHaveBeenCalledTimes(4);