diff --git a/gitnexus/src/cli/setup.ts b/gitnexus/src/cli/setup.ts
index 79cd6eba5..e8df28737 100644
--- a/gitnexus/src/cli/setup.ts
+++ b/gitnexus/src/cli/setup.ts
@@ -10,6 +10,7 @@ import fs from 'fs/promises';
 import path from 'path';
 import os from 'os';
 import { fileURLToPath } from 'url';
+import { glob } from 'glob';
 import { getGlobalDir } from '../storage/repo-manager.js';
 
 const __filename = fileURLToPath(import.meta.url);
@@ -240,8 +241,6 @@ async function setupOpenCode(result: SetupResult): Promise<void> {
 
 // ─── Skill Installation ───────────────────────────────────────────
 
-const SKILL_NAMES = ['gitnexus-exploring', 'gitnexus-debugging', 'gitnexus-impact-analysis', 'gitnexus-refactoring', 'gitnexus-guide', 'gitnexus-cli'];
-
 /**
  * Install GitNexus skills to a target directory.
  * Each skill is installed as {targetDir}/gitnexus-{skillName}/SKILL.md
@@ -255,25 +254,38 @@ async function installSkillsTo(targetDir: string): Promise<string[]> {
   const installed: string[] = [];
   const skillsRoot = path.join(__dirname, '..', '..', 'skills');
 
-  for (const skillName of SKILL_NAMES) {
+  let flatFiles: string[] = [];
+  let dirSkillFiles: string[] = [];
+  try {
+    [flatFiles, dirSkillFiles] = await Promise.all([
+      glob('*.md', { cwd: skillsRoot }),
+      glob('*/SKILL.md', { cwd: skillsRoot }),
+    ]);
+  } catch {
+    return [];
+  }
+
+  const skillSources = new Map<string, { isDirectory: boolean }>();
+
+  for (const relPath of dirSkillFiles) {
+    skillSources.set(path.dirname(relPath), { isDirectory: true });
+  }
+  for (const relPath of flatFiles) {
+    const skillName = path.basename(relPath, '.md');
+    if (!skillSources.has(skillName)) {
+      skillSources.set(skillName, { isDirectory: false });
+    }
+  }
+
+  for (const [skillName, source] of skillSources) {
     const skillDir = path.join(targetDir, skillName);
 
     try {
-      // Try directory-based skill first (skills/{name}/SKILL.md)
-      const dirSource = path.join(skillsRoot, skillName);
-      const dirSkillFile = path.join(dirSource, 'SKILL.md');
-
-      let isDirectory = false;
-      try {
-        const stat = await fs.stat(dirSource);
-        isDirectory = stat.isDirectory();
-      } catch { /* not a directory */ }
-
-      if (isDirectory) {
+      if (source.isDirectory) {
+        const dirSource = path.join(skillsRoot, skillName);
         await copyDirRecursive(dirSource, skillDir);
         installed.push(skillName);
       } else {
-        // Fall back to flat file (skills/{name}.md)
         const flatSource = path.join(skillsRoot, `${skillName}.md`);
         const content = await fs.readFile(flatSource, 'utf-8');
         await fs.mkdir(skillDir, { recursive: true });
diff --git a/gitnexus/test/integration/setup-skills.test.ts b/gitnexus/test/integration/setup-skills.test.ts
new file mode 100644
index 000000000..9f60909e9
--- /dev/null
+++ b/gitnexus/test/integration/setup-skills.test.ts
@@ -0,0 +1,85 @@
+import { describe, it, expect, beforeAll, afterAll } from 'vitest';
+import fs from 'fs/promises';
+import path from 'path';
+import os from 'os';
+import { fileURLToPath } from 'url';
+import { setupCommand } from '../../src/cli/setup.js';
+
+describe('setupCommand skills integration', () => {
+  let tempHome: string;
+  const originalHome = process.env.HOME;
+  const testId = `${Date.now()}-${process.pid}`;
+  const flatSkillName = `test-flat-skill-${testId}`;
+  const dirSkillName = `test-dir-skill-${testId}`;
+  const testDir = path.dirname(fileURLToPath(import.meta.url));
+  const packageSkillsRoot = path.resolve(testDir, '..', '..', 'skills');
+
+  beforeAll(async () => {
+    tempHome = await fs.mkdtemp(path.join(os.tmpdir(), 'gn-setup-home-'));
+    process.env.HOME = tempHome;
+    await fs.mkdir(path.join(tempHome, '.cursor'), { recursive: true });
+
+    // Create temporary source skills to verify both supported source layouts:
+    // - flat file: skills/{name}.md
+    // - directory: skills/{name}/SKILL.md (+ nested files copied recursively)
+    await fs.writeFile(
+      path.join(packageSkillsRoot, `${flatSkillName}.md`),
+      `---\nname: ${flatSkillName}\ndescription: temp flat skill\n---\n\n# Flat Test Skill`,
+      'utf-8',
+    );
+    await fs.mkdir(path.join(packageSkillsRoot, dirSkillName, 'references'), { recursive: true });
+    await fs.writeFile(
+      path.join(packageSkillsRoot, dirSkillName, 'SKILL.md'),
+      `---\nname: ${dirSkillName}\ndescription: temp directory skill\n---\n\n# Directory Test Skill`,
+      'utf-8',
+    );
+    await fs.writeFile(
+      path.join(packageSkillsRoot, dirSkillName, 'references', 'note.md'),
+      '# Directory Nested File',
+      'utf-8',
+    );
+  });
+
+  afterAll(async () => {
+    await fs.rm(path.join(packageSkillsRoot, `${flatSkillName}.md`), { force: true });
+    await fs.rm(path.join(packageSkillsRoot, dirSkillName), { recursive: true, force: true });
+    process.env.HOME = originalHome;
+    await fs.rm(tempHome, { recursive: true, force: true });
+  });
+
+  it('installs packaged, flat-file, and directory skills into cursor skills directory', async () => {
+    await setupCommand();
+
+    const cursorSkillsRoot = path.join(tempHome, '.cursor', 'skills');
+    const entries = await fs.readdir(cursorSkillsRoot, { withFileTypes: true });
+    const skillDirs = entries.filter(e => e.isDirectory()).map(e => e.name);
+
+    expect(skillDirs.length).toBeGreaterThan(0);
+    expect(skillDirs).toContain('gitnexus-cli');
+
+    const skillContent = await fs.readFile(
+      path.join(cursorSkillsRoot, 'gitnexus-cli', 'SKILL.md'),
+      'utf-8',
+    );
+    expect(skillContent).toContain('GitNexus CLI Commands');
+
+    // Flat file source should be installed as {name}/SKILL.md.
+    const flatInstalled = await fs.readFile(
+      path.join(cursorSkillsRoot, flatSkillName, 'SKILL.md'),
+      'utf-8',
+    );
+    expect(flatInstalled).toContain('# Flat Test Skill');
+
+    // Directory source should be copied recursively with nested files preserved.
+    const dirInstalled = await fs.readFile(
+      path.join(cursorSkillsRoot, dirSkillName, 'SKILL.md'),
+      'utf-8',
+    );
+    expect(dirInstalled).toContain('# Directory Test Skill');
+    const nestedInstalled = await fs.readFile(
+      path.join(cursorSkillsRoot, dirSkillName, 'references', 'note.md'),
+      'utf-8',
+    );
+    expect(nestedInstalled).toContain('Directory Nested File');
+  });
+});