diff --git a/tests/test_litellm/proxy/agent_session_endpoints/test_session_busy_ready_oscillation.py b/tests/test_litellm/proxy/agent_session_endpoints/test_session_busy_ready_oscillation.py
new file mode 100644
index 00000000000..f274212de74
--- /dev/null
+++ b/tests/test_litellm/proxy/agent_session_endpoints/test_session_busy_ready_oscillation.py
@@ -0,0 +1,159 @@
+"""
+Validation #17 — session toggles ``ready`` <-> ``busy`` based on runs.
+
+A prior version of the endpoint layer defined
+``derive_session_status_from_runs`` in ``state_machine.py`` and
+unit-tested it, but never called it from any endpoint. After the first
+run completed, every session stayed permanently ``busy`` regardless of
+whether any active run existed — clients polling
+``GET /v2/sessions/{id}`` would always see ``busy``.
+
+The fix wires ``refresh_session_status_from_runs`` (in
+``session_status.py``) into every endpoint that flips a run's status:
+  * ``POST /v2/sessions/{sid}/runs``                 — queued -> session busy
+  * ``POST /v2/sessions/{sid}/followup`` (new run)   — same
+  * ``POST /v2/sessions/{sid}/runs/{rid}/cancel``    — terminal -> ready
+  * ``GET  /v2/sessions/{sid}/runs/next/internal/poll`` — claim
+  * ``POST /v2/sessions/{sid}/runs/{rid}/events:append`` — terminal -> ready
+
+This file walks the SDK-visible state across the lifecycle and asserts
+the session status flips correctly at each step.
+"""
+
+
+def _bootstrap(client):
+    agent = client.post(
+        "/v2/agents",
+        headers={"Authorization": "Bearer k"},
+        json={"name": "osc", "model": "gpt-4"},
+    ).json()
+    sess = client.post(
+        "/v2/sessions",
+        headers={"Authorization": "Bearer k"},
+        json={"agent_id": agent["id"], "repos": []},
+    ).json()
+    return sess["id"]
+
+
+def _force_session_ready(fake_prisma_client, session_id):
+    """Skip the daemon-register step. ``derive_session_status_from_runs``
+    intentionally returns None for ``provisioning`` (see state_machine
+    docstring), so we manually flip to ``ready`` to test the
+    ``ready`` <-> ``busy`` oscillation directly."""
+    for row in fake_prisma_client.db.litellm_agentsession.rows:
+        if row.id == session_id:
+            row.status = "ready"
+            return
+    raise AssertionError(f"session {session_id} not found in fake prisma")
+
+
+def _get_status(client, session_id):
+    return client.get(
+        f"/v2/sessions/{session_id}",
+        headers={"Authorization": "Bearer k"},
+    ).json()["status"]
+
+
+def test_session_flips_busy_when_run_created(client, fake_prisma_client, noop_provider):
+    sid = _bootstrap(client)
+    _force_session_ready(fake_prisma_client, sid)
+
+    assert _get_status(client, sid) == "ready"
+
+    client.post(
+        f"/v2/sessions/{sid}/runs",
+        headers={"Authorization": "Bearer k"},
+        json={"prompt": {"text": "hello"}},
+    )
+    assert _get_status(client, sid) == "busy"
+
+
+def test_session_flips_ready_after_run_cancelled(
+    client, fake_prisma_client, noop_provider
+):
+    sid = _bootstrap(client)
+    _force_session_ready(fake_prisma_client, sid)
+
+    run = client.post(
+        f"/v2/sessions/{sid}/runs",
+        headers={"Authorization": "Bearer k"},
+        json={"prompt": {"text": "hi"}},
+    ).json()
+    assert _get_status(client, sid) == "busy"
+
+    client.post(
+        f"/v2/sessions/{sid}/runs/{run['id']}/cancel",
+        headers={"Authorization": "Bearer k"},
+    )
+    assert _get_status(client, sid) == "ready"
+
+
+def test_session_flips_ready_after_followup_run_cancelled(
+    client, fake_prisma_client, noop_provider
+):
+    """Followup creating a new run should also drive the session to busy,
+    and cancelling that run should drive it back to ready."""
+    sid = _bootstrap(client)
+    _force_session_ready(fake_prisma_client, sid)
+
+    fr = client.post(
+        f"/v2/sessions/{sid}/followup",
+        headers={"Authorization": "Bearer k"},
+        json={"prompt": {"text": "from followup"}},
+    ).json()
+    assert _get_status(client, sid) == "busy"
+
+    client.post(
+        f"/v2/sessions/{sid}/runs/{fr['run_id']}/cancel",
+        headers={"Authorization": "Bearer k"},
+    )
+    assert _get_status(client, sid) == "ready"
+
+
+def test_refresh_helper_is_idempotent(fake_prisma_client):
+    """Calling ``refresh_session_status_from_runs`` twice in a row with
+    the same DB state must not produce conflicting writes — the helper
+    is a no-op when no transition is needed."""
+    import asyncio
+    from datetime import datetime, timezone
+
+    from litellm.proxy.agent_session_endpoints.session_status import (
+        refresh_session_status_from_runs,
+    )
+    from tests.test_litellm.proxy.agent_session_endpoints.conftest import _Row
+
+    fake_prisma_client.db.litellm_agentsession.rows.append(
+        _Row(
+            id="sess_idem",
+            status="ready",
+            created_at=datetime.now(timezone.utc),
+            updated_at=datetime.now(timezone.utc),
+        )
+    )
+
+    async def _go():
+        # No active runs -> derived status = "ready" -> no transition.
+        await refresh_session_status_from_runs(fake_prisma_client, "sess_idem")
+        await refresh_session_status_from_runs(fake_prisma_client, "sess_idem")
+
+    asyncio.get_event_loop().run_until_complete(_go())
+    row = next(
+        r
+        for r in fake_prisma_client.db.litellm_agentsession.rows
+        if r.id == "sess_idem"
+    )
+    assert row.status == "ready"
+
+
+def test_refresh_helper_returns_quietly_for_missing_session(fake_prisma_client):
+    """If the session row was deleted between event handling and the
+    refresh call, the helper must not raise."""
+    import asyncio
+
+    from litellm.proxy.agent_session_endpoints.session_status import (
+        refresh_session_status_from_runs,
+    )
+
+    asyncio.get_event_loop().run_until_complete(
+        refresh_session_status_from_runs(fake_prisma_client, "sess_does_not_exist")
+    )