diff --git a/src/basic_memory/config.py b/src/basic_memory/config.py
index 006c9df7..fc4451d5 100644
--- a/src/basic_memory/config.py
+++ b/src/basic_memory/config.py
@@ -629,6 +629,12 @@ def data_dir_path(self) -> Path:
 
 # Module-level cache for configuration
 _CONFIG_CACHE: Optional[BasicMemoryConfig] = None
+# Track config file mtime+size so cross-process changes (e.g. `bm project set-cloud`
+# in a separate terminal) invalidate the cache in long-lived processes like the
+# MCP stdio server. Using both mtime and size guards against coarse-granularity
+# filesystems where two writes within the same second share the same mtime.
+_CONFIG_MTIME: Optional[float] = None
+_CONFIG_SIZE: Optional[int] = None
 
 
 class ConfigManager:
@@ -662,13 +668,38 @@ def load_config(self) -> BasicMemoryConfig:
         Environment variables take precedence over file config values,
         following Pydantic Settings best practices.
 
-        Uses module-level cache for performance across ConfigManager instances.
+        Uses module-level cache with file mtime validation so that
+        cross-process config changes (e.g. `bm project set-cloud` in a
+        separate terminal) are picked up by long-lived processes like
+        the MCP stdio server.
         """
-        global _CONFIG_CACHE
+        global _CONFIG_CACHE, _CONFIG_MTIME, _CONFIG_SIZE
 
-        # Return cached config if available
+        # Trigger: cached config exists but the on-disk file may have been
+        # modified by another process (CLI command in a different terminal).
+        # Why: the MCP server is long-lived; without this check it would
+        # serve stale project routing forever.
+        # Outcome: cheap os.stat() per access; re-read only when mtime or size differs.
         if _CONFIG_CACHE is not None:
-            return _CONFIG_CACHE
+            try:
+                st = self.config_file.stat()
+                current_mtime = st.st_mtime
+                current_size = st.st_size
+            except OSError:
+                current_mtime = None
+                current_size = None
+
+            if (
+                current_mtime is not None
+                and current_mtime == _CONFIG_MTIME
+                and current_size == _CONFIG_SIZE
+            ):
+                return _CONFIG_CACHE
+
+            # mtime/size changed or file gone — invalidate and fall through to re-read
+            _CONFIG_CACHE = None
+            _CONFIG_MTIME = None
+            _CONFIG_SIZE = None
 
         if self.config_file.exists():
             try:
@@ -723,6 +754,15 @@ def load_config(self) -> BasicMemoryConfig:
 
                 _CONFIG_CACHE = BasicMemoryConfig(**merged_data)
 
+                # Record mtime+size so subsequent calls detect cross-process changes
+                try:
+                    st = self.config_file.stat()
+                    _CONFIG_MTIME = st.st_mtime
+                    _CONFIG_SIZE = st.st_size
+                except OSError:
+                    _CONFIG_MTIME = None
+                    _CONFIG_SIZE = None
+
                 # Re-save to normalize legacy config into current format
                 if needs_resave:
                     # Create backup before overwriting so users can revert if needed
@@ -753,10 +793,12 @@ def load_config(self) -> BasicMemoryConfig:
 
     def save_config(self, config: BasicMemoryConfig) -> None:
         """Save configuration to file and invalidate cache."""
-        global _CONFIG_CACHE
+        global _CONFIG_CACHE, _CONFIG_MTIME, _CONFIG_SIZE
         save_basic_memory_config(self.config_file, config)
         # Invalidate cache so next load_config() reads fresh data
         _CONFIG_CACHE = None
+        _CONFIG_MTIME = None
+        _CONFIG_SIZE = None
 
     @property
     def projects(self) -> Dict[str, str]:
diff --git a/test-int/conftest.py b/test-int/conftest.py
index 8a98c94e..07f5af38 100644
--- a/test-int/conftest.py
+++ b/test-int/conftest.py
@@ -258,6 +258,8 @@ def config_manager(app_config: BasicMemoryConfig, config_home) -> ConfigManager:
     from basic_memory import config as config_module
 
     config_module._CONFIG_CACHE = None
+    config_module._CONFIG_MTIME = None
+    config_module._CONFIG_SIZE = None
 
     config_manager = ConfigManager()
     # Update its paths to use the test directory
diff --git a/tests/cli/conftest.py b/tests/cli/conftest.py
index 4b94e074..6d1c635c 100644
--- a/tests/cli/conftest.py
+++ b/tests/cli/conftest.py
@@ -25,6 +25,8 @@ def isolated_home(tmp_path, monkeypatch) -> Path:
     from basic_memory import config as config_module
 
     config_module._CONFIG_CACHE = None
+    config_module._CONFIG_MTIME = None
+    config_module._CONFIG_SIZE = None
 
     monkeypatch.setenv("HOME", str(tmp_path))
     if os.name == "nt":
diff --git a/tests/cli/test_json_output.py b/tests/cli/test_json_output.py
index 0928c27a..7a33988e 100644
--- a/tests/cli/test_json_output.py
+++ b/tests/cli/test_json_output.py
@@ -350,6 +350,8 @@ def _write(config_data: dict):
         from basic_memory import config as config_module
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         config_dir = tmp_path / ".basic-memory"
         config_dir.mkdir(parents=True, exist_ok=True)
diff --git a/tests/cli/test_project_add_with_local_path.py b/tests/cli/test_project_add_with_local_path.py
index 1f93cf61..aace06ad 100644
--- a/tests/cli/test_project_add_with_local_path.py
+++ b/tests/cli/test_project_add_with_local_path.py
@@ -27,6 +27,8 @@ def mock_config(tmp_path, monkeypatch):
     from basic_memory import config as config_module
 
     config_module._CONFIG_CACHE = None
+    config_module._CONFIG_MTIME = None
+    config_module._CONFIG_SIZE = None
 
     config_dir = tmp_path / ".basic-memory"
     config_dir.mkdir(parents=True, exist_ok=True)
diff --git a/tests/cli/test_project_list_and_ls.py b/tests/cli/test_project_list_and_ls.py
index be9f583d..02b2c557 100644
--- a/tests/cli/test_project_list_and_ls.py
+++ b/tests/cli/test_project_list_and_ls.py
@@ -29,6 +29,8 @@ def _write(config_data: dict) -> Path:
         from basic_memory import config as config_module
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         config_dir = tmp_path / ".basic-memory"
         config_dir.mkdir(parents=True, exist_ok=True)
diff --git a/tests/cli/test_project_set_cloud_local.py b/tests/cli/test_project_set_cloud_local.py
index b38c7dea..39a50784 100644
--- a/tests/cli/test_project_set_cloud_local.py
+++ b/tests/cli/test_project_set_cloud_local.py
@@ -22,6 +22,8 @@ def mock_config(tmp_path, monkeypatch):
     from basic_memory import config as config_module
 
     config_module._CONFIG_CACHE = None
+    config_module._CONFIG_MTIME = None
+    config_module._CONFIG_SIZE = None
 
     config_dir = tmp_path / ".basic-memory"
     config_dir.mkdir(parents=True, exist_ok=True)
@@ -68,6 +70,8 @@ def test_set_cloud_no_credentials(self, runner, tmp_path, monkeypatch):
         from basic_memory import config as config_module
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         config_dir = tmp_path / ".basic-memory"
         config_dir.mkdir(parents=True, exist_ok=True)
@@ -91,6 +95,8 @@ def test_set_cloud_with_oauth_session(self, runner, tmp_path, monkeypatch):
         from basic_memory import config as config_module
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         config_dir = tmp_path / ".basic-memory"
         config_dir.mkdir(parents=True, exist_ok=True)
@@ -161,11 +167,15 @@ def test_set_local_clears_workspace_id(self, runner, mock_config):
 
         # Manually set workspace_id on the project
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
         config_data = json.loads(mock_config.read_text())
         config_data["projects"]["research"]["mode"] = "cloud"
         config_data["projects"]["research"]["workspace_id"] = "11111111-1111-1111-1111-111111111111"
         mock_config.write_text(json.dumps(config_data, indent=2))
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         # Set back to local
         result = runner.invoke(app, ["project", "set-local", "research"])
@@ -173,6 +183,8 @@ def test_set_local_clears_workspace_id(self, runner, mock_config):
 
         # Verify workspace_id was cleared
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
         updated_data = json.loads(mock_config.read_text())
         assert updated_data["projects"]["research"]["workspace_id"] is None
         assert updated_data["projects"]["research"]["mode"] == "local"
@@ -187,6 +199,8 @@ def test_set_cloud_with_workspace_stores_workspace_id(self, runner, mock_config,
         from basic_memory.schemas.cloud import WorkspaceInfo
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         async def fake_get_available_workspaces():
             return [
@@ -210,6 +224,8 @@ async def fake_get_available_workspaces():
 
         # Verify workspace_id was persisted
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
         updated_data = json.loads(mock_config.read_text())
         assert (
             updated_data["projects"]["research"]["workspace_id"]
@@ -222,6 +238,8 @@ def test_set_cloud_with_workspace_not_found(self, runner, mock_config, monkeypat
         from basic_memory.schemas.cloud import WorkspaceInfo
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         async def fake_get_available_workspaces():
             return [
@@ -249,17 +267,23 @@ def test_set_cloud_uses_default_workspace_when_no_flag(self, runner, mock_config
         from basic_memory import config as config_module
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         # Set default_workspace in config
         config_data = json.loads(mock_config.read_text())
         config_data["default_workspace"] = "global-default-tenant-id"
         mock_config.write_text(json.dumps(config_data, indent=2))
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         result = runner.invoke(app, ["project", "set-cloud", "research"])
         assert result.exit_code == 0
 
         # Verify workspace_id was set from default
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
         updated_data = json.loads(mock_config.read_text())
         assert updated_data["projects"]["research"]["workspace_id"] == "global-default-tenant-id"
diff --git a/tests/cli/test_workspace_commands.py b/tests/cli/test_workspace_commands.py
index a1285a71..ef5616ac 100644
--- a/tests/cli/test_workspace_commands.py
+++ b/tests/cli/test_workspace_commands.py
@@ -76,6 +76,8 @@ def _setup_config(self, monkeypatch):
         monkeypatch.setenv("HOME", str(temp_path))
         monkeypatch.setenv("BASIC_MEMORY_CONFIG_DIR", str(config_dir))
         basic_memory.config._CONFIG_CACHE = None
+        basic_memory.config._CONFIG_MTIME = None
+        basic_memory.config._CONFIG_SIZE = None
 
         config_manager = ConfigManager()
         test_config = BasicMemoryConfig(
@@ -106,6 +108,8 @@ async def fake_get_available_workspaces(context=None):
 
         # Verify config was updated
         basic_memory.config._CONFIG_CACHE = None
+        basic_memory.config._CONFIG_MTIME = None
+        basic_memory.config._CONFIG_SIZE = None
         config = ConfigManager().config
         assert config.default_workspace == "11111111-1111-1111-1111-111111111111"
 
diff --git a/tests/conftest.py b/tests/conftest.py
index f19fb242..4c2b261b 100644
--- a/tests/conftest.py
+++ b/tests/conftest.py
@@ -138,6 +138,8 @@ def config_manager(app_config: BasicMemoryConfig, config_home: Path, monkeypatch
     from basic_memory import config as config_module
 
     config_module._CONFIG_CACHE = None
+    config_module._CONFIG_MTIME = None
+    config_module._CONFIG_SIZE = None
 
     # Create a new ConfigManager that uses the test home directory
     config_manager = ConfigManager()
diff --git a/tests/mcp/test_tool_write_note.py b/tests/mcp/test_tool_write_note.py
index ed95886c..a4d29b8d 100644
--- a/tests/mcp/test_tool_write_note.py
+++ b/tests/mcp/test_tool_write_note.py
@@ -1257,6 +1257,11 @@ async def test_write_note_config_overwrite_default_true(
         # Set config to allow overwrites by default
         app_config.write_note_overwrite_default = True
         config_module._CONFIG_CACHE = app_config
+        # Pin mtime+size to the on-disk file so the cache guard sees a match
+        # and keeps our injected config instead of re-reading from disk.
+        _st = config_manager.config_file.stat()
+        config_module._CONFIG_MTIME = _st.st_mtime
+        config_module._CONFIG_SIZE = _st.st_size
 
         try:
             await write_note(
@@ -1281,6 +1286,9 @@ async def test_write_note_config_overwrite_default_true(
             # Restore config
             app_config.write_note_overwrite_default = False
             config_module._CONFIG_CACHE = app_config
+            _st = config_manager.config_file.stat()
+            config_module._CONFIG_MTIME = _st.st_mtime
+            config_module._CONFIG_SIZE = _st.st_size
 
     @pytest.mark.asyncio
     async def test_write_note_new_note_unaffected(self, app, test_project):
diff --git a/tests/services/test_project_service.py b/tests/services/test_project_service.py
index c5a86e86..8e58f848 100644
--- a/tests/services/test_project_service.py
+++ b/tests/services/test_project_service.py
@@ -778,6 +778,8 @@ async def test_add_project_with_project_root_sanitizes_paths(
         from basic_memory import config as config_module
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         test_cases = [
             # (project_name, user_path, expected_sanitized_name)
@@ -845,6 +847,8 @@ async def test_add_project_with_project_root_rejects_escape_attempts(
         from basic_memory import config as config_module
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         # All of these should succeed by being sanitized to paths under project_root
         # The sanitization removes dangerous patterns, so they don't escape
@@ -931,6 +935,8 @@ async def test_add_project_with_project_root_normalizes_case(
         from basic_memory import config as config_module
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         test_cases = [
             # (input_path, expected_normalized_path)
@@ -985,6 +991,8 @@ async def test_add_project_with_project_root_detects_case_collisions(
         from basic_memory import config as config_module
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         # First, create a project with lowercase path
         first_project = "documents-project"
@@ -1159,6 +1167,8 @@ async def test_add_project_nested_validation_with_project_root(
         from basic_memory import config as config_module
 
         config_module._CONFIG_CACHE = None
+        config_module._CONFIG_MTIME = None
+        config_module._CONFIG_SIZE = None
 
         parent_project_name = f"cloud-parent-{os.urandom(4).hex()}"
         child_project_name = f"cloud-child-{os.urandom(4).hex()}"
diff --git a/tests/test_config.py b/tests/test_config.py
index a8d6488c..7b698c11 100644
--- a/tests/test_config.py
+++ b/tests/test_config.py
@@ -213,6 +213,8 @@ def test_stale_default_project_loaded_from_file(self, config_home, monkeypatch):
         }
         config_manager.config_file.write_text(json.dumps(config_data, indent=2))
         basic_memory.config._CONFIG_CACHE = None
+        basic_memory.config._CONFIG_MTIME = None
+        basic_memory.config._CONFIG_SIZE = None
 
         loaded = config_manager.load_config()
         assert loaded.default_project == "research"
@@ -238,6 +240,8 @@ def test_config_file_without_default_project_key(self, config_home, monkeypatch)
         }
         config_manager.config_file.write_text(json.dumps(config_data, indent=2))
         basic_memory.config._CONFIG_CACHE = None
+        basic_memory.config._CONFIG_MTIME = None
+        basic_memory.config._CONFIG_SIZE = None
 
         loaded = config_manager.load_config()
         assert loaded.default_project == "work"
@@ -545,6 +549,8 @@ def test_backward_compatibility_loading_old_format_config(self):
             import basic_memory.config
 
             basic_memory.config._CONFIG_CACHE = None
+            basic_memory.config._CONFIG_MTIME = None
+            basic_memory.config._CONFIG_SIZE = None
 
             # Should load successfully with migration to ProjectEntry
             config = config_manager.load_config()
@@ -585,6 +591,8 @@ def test_backward_compatibility_migrates_project_modes_and_cloud_projects(self):
             import basic_memory.config
 
             basic_memory.config._CONFIG_CACHE = None
+            basic_memory.config._CONFIG_MTIME = None
+            basic_memory.config._CONFIG_SIZE = None
 
             config = config_manager.load_config()
 
@@ -617,6 +625,8 @@ def test_legacy_cloud_mode_key_is_stripped_on_normalization_save(self):
             import basic_memory.config
 
             basic_memory.config._CONFIG_CACHE = None
+            basic_memory.config._CONFIG_MTIME = None
+            basic_memory.config._CONFIG_SIZE = None
 
             loaded = config_manager.load_config()
             assert isinstance(loaded, BasicMemoryConfig)
@@ -647,6 +657,8 @@ def test_migration_creates_backup_of_old_config(self):
             import basic_memory.config
 
             basic_memory.config._CONFIG_CACHE = None
+            basic_memory.config._CONFIG_MTIME = None
+            basic_memory.config._CONFIG_SIZE = None
 
             config_manager.load_config()
 
@@ -678,6 +690,8 @@ def test_no_backup_when_config_is_current_format(self):
             import basic_memory.config
 
             basic_memory.config._CONFIG_CACHE = None
+            basic_memory.config._CONFIG_MTIME = None
+            basic_memory.config._CONFIG_SIZE = None
 
             config_manager.load_config()
 
@@ -1099,6 +1113,8 @@ def test_backward_compat_loading_old_format_without_project_modes(self):
             import basic_memory.config
 
             basic_memory.config._CONFIG_CACHE = None
+            basic_memory.config._CONFIG_MTIME = None
+            basic_memory.config._CONFIG_SIZE = None
 
             # Should load successfully with migration
             config = config_manager.load_config()
@@ -1174,6 +1190,116 @@ def test_workspace_fields_round_trip(self):
             assert loaded.projects["main"].workspace_id is None
 
 
+class TestConfigCacheMtimeInvalidation:
+    """Test that config cache is invalidated when file is modified externally."""
+
+    def test_cache_returns_same_config_when_file_unchanged(self, config_home):
+        """Verify cache hit when config file mtime has not changed."""
+        import basic_memory.config
+
+        basic_memory.config._CONFIG_CACHE = None
+        basic_memory.config._CONFIG_MTIME = None
+        basic_memory.config._CONFIG_SIZE = None
+
+        with tempfile.TemporaryDirectory() as temp_dir:
+            temp_path = Path(temp_dir)
+            config_manager = ConfigManager()
+            config_manager.config_dir = temp_path / "basic-memory"
+            config_manager.config_file = config_manager.config_dir / "config.json"
+            config_manager.config_dir.mkdir(parents=True, exist_ok=True)
+
+            test_config = BasicMemoryConfig(
+                projects={"main": {"path": str(temp_path / "main")}},
+                default_project="main",
+            )
+            config_manager.save_config(test_config)
+
+            # First load populates cache
+            config1 = config_manager.load_config()
+            assert config1.default_project == "main"
+
+            # Second load should return cached config (same object)
+            config2 = config_manager.load_config()
+            assert config1 is config2
+
+    def test_cache_invalidated_when_file_modified(self, config_home):
+        """Verify cache miss when config file is modified by another process."""
+        import json
+        import os
+        import time
+
+        import basic_memory.config
+
+        basic_memory.config._CONFIG_CACHE = None
+        basic_memory.config._CONFIG_MTIME = None
+        basic_memory.config._CONFIG_SIZE = None
+
+        with tempfile.TemporaryDirectory() as temp_dir:
+            temp_path = Path(temp_dir)
+            config_manager = ConfigManager()
+            config_manager.config_dir = temp_path / "basic-memory"
+            config_manager.config_file = config_manager.config_dir / "config.json"
+            config_manager.config_dir.mkdir(parents=True, exist_ok=True)
+
+            test_config = BasicMemoryConfig(
+                projects={"main": {"path": str(temp_path / "main")}},
+                default_project="main",
+            )
+            config_manager.save_config(test_config)
+
+            # First load populates cache
+            config1 = config_manager.load_config()
+            assert config1.get_project_mode("main") == ProjectMode.LOCAL
+
+            # Simulate external process modifying the config file
+            config_data = json.loads(config_manager.config_file.read_text())
+            config_data["projects"]["main"]["mode"] = "cloud"
+
+            # Ensure mtime actually changes (some filesystems have 1s granularity)
+            time.sleep(0.05)
+            config_manager.config_file.write_text(json.dumps(config_data, indent=2))
+            # Force mtime change on filesystems with coarse granularity
+            new_mtime = os.path.getmtime(config_manager.config_file) + 1
+            os.utime(config_manager.config_file, (new_mtime, new_mtime))
+
+            # Next load should detect mtime change and re-read
+            config2 = config_manager.load_config()
+            assert config2.get_project_mode("main") == ProjectMode.CLOUD
+            assert config1 is not config2
+
+    def test_save_config_resets_mtime(self, config_home):
+        """Verify save_config clears both cache and mtime."""
+        import basic_memory.config
+
+        basic_memory.config._CONFIG_CACHE = None
+        basic_memory.config._CONFIG_MTIME = None
+        basic_memory.config._CONFIG_SIZE = None
+
+        with tempfile.TemporaryDirectory() as temp_dir:
+            temp_path = Path(temp_dir)
+            config_manager = ConfigManager()
+            config_manager.config_dir = temp_path / "basic-memory"
+            config_manager.config_file = config_manager.config_dir / "config.json"
+            config_manager.config_dir.mkdir(parents=True, exist_ok=True)
+
+            test_config = BasicMemoryConfig(
+                projects={"main": {"path": str(temp_path / "main")}},
+            )
+            config_manager.save_config(test_config)
+
+            # Load to populate cache
+            config_manager.load_config()
+            assert basic_memory.config._CONFIG_CACHE is not None
+            assert basic_memory.config._CONFIG_MTIME is not None
+            assert basic_memory.config._CONFIG_SIZE is not None
+
+            # Save should clear all cache state
+            config_manager.save_config(test_config)
+            assert basic_memory.config._CONFIG_CACHE is None
+            assert basic_memory.config._CONFIG_MTIME is None
+            assert basic_memory.config._CONFIG_SIZE is None
+
+
 class TestLocalSyncPathMigration:
     """Test migration that promotes local_sync_path into path for cloud projects."""