diff --git a/scripts/prompt-guard.js b/scripts/prompt-guard.js
index 1e71346..a91c369 100755
--- a/scripts/prompt-guard.js
+++ b/scripts/prompt-guard.js
@@ -56,6 +56,22 @@ function finish(exitPath, code) {
   process.exit(code);
 }
 
+// Pull the user's prompt out of the UserPromptSubmit stdin payload. Falls back
+// to the raw text when stdin isn't the expected JSON envelope (e.g. the script
+// invoked manually with a piped prompt, or a future protocol change) so the
+// guard still scans something rather than silently allowing everything.
+function extractPrompt(raw) {
+  const trimmed = raw.trim();
+  if (!trimmed.startsWith('{')) return raw;
+  try {
+    const payload = JSON.parse(trimmed);
+    if (payload && typeof payload.prompt === 'string') return payload.prompt;
+  } catch {
+    // Not JSON after all - fall through and scan the raw text.
+  }
+  return raw;
+}
+
 debugLog([
   `=== Hook Execution ${new Date().toISOString()} ===`,
   `CLAUDE_PLUGIN_ROOT: ${process.env.CLAUDE_PLUGIN_ROOT ?? ''}`,
@@ -64,10 +80,15 @@ debugLog([
 ]);
 
 try {
-  // Read the user's prompt from stdin (passed by Claude Code).
+  // Read the hook payload from stdin (passed by Claude Code). Claude Code sends
+  // a JSON envelope - {"session_id":...,"prompt":"..."} - not the bare prompt,
+  // so only the "prompt" field may be scanned or echoed back. Scanning the raw
+  // envelope would both produce false positives on paths/ids and leak the JSON
+  // into redact mode's copy-pasteable output.
   let promptText = '';
   try {
-    promptText = readFileSync(0, 'utf-8');
+    const raw = readFileSync(0, 'utf-8');
+    promptText = extractPrompt(raw);
   } catch (error) {
     // The shell wrapper discarded stderr when debug was off; keep stderr quiet
     // and route the error to the debug log instead. Exit non-zero as before -
diff --git a/tests/prompt-payload.test.ts b/tests/prompt-payload.test.ts
new file mode 100644
index 0000000..3fceb8b
--- /dev/null
+++ b/tests/prompt-payload.test.ts
@@ -0,0 +1,68 @@
+/**
+ * End-to-end tests for the UserPromptSubmit hook script's stdin handling.
+ *
+ * Claude Code pipes a JSON envelope (session_id, transcript_path, cwd, prompt,
+ * ...) into the hook - not the bare prompt. The hook must scan and echo back
+ * only the "prompt" field; scanning the envelope produced false positives on
+ * paths/ids and leaked the whole JSON into redact mode's cleaned copy.
+ */
+
+import { describe, expect, test } from '@jest/globals';
+import { execFileSync } from 'child_process';
+import { mkdtempSync, writeFileSync } from 'fs';
+import * as os from 'os';
+import * as path from 'path';
+
+const HOOK = path.resolve(__dirname, '../scripts/prompt-guard.js');
+
+function runHook(stdin: string, config: Record<string, unknown>): { decision?: string; reason?: string; systemMessage?: string } | null {
+  const dir = mkdtempSync(path.join(os.tmpdir(), 'privacy-guard-hook-'));
+  writeFileSync(path.join(dir, '.privacy-guard.json'), JSON.stringify(config));
+  const stdout = execFileSync('node', [HOOK], {
+    input: stdin,
+    cwd: dir,
+    encoding: 'utf-8',
+    stdio: ['pipe', 'pipe', 'ignore'],
+  });
+  return stdout.trim() ? JSON.parse(stdout) : null;
+}
+
+const ENVELOPE = {
+  session_id: 'a24ce33f-3780-491d-8d22-aa4d88f34bd1',
+  transcript_path: '/Users/someone/.claude/projects/-Users-someone-proj/a24ce33f.jsonl',
+  cwd: '/Users/someone/Projects/proj',
+  prompt_id: 'c8320832-4a29-41d5-aa58-359903658ce6',
+  permission_mode: 'default',
+  hook_event_name: 'UserPromptSubmit',
+  prompt: 'my email is john.doe@example.com',
+};
+
+describe('hook stdin payload handling', () => {
+  test('redact mode returns the cleaned prompt, not the JSON envelope', () => {
+    const response = runHook(JSON.stringify(ENVELOPE), { mode: 'redact' });
+
+    expect(response?.decision).toBe('block');
+    expect(response?.reason).toContain('---\nmy email is <PII_1>\n---');
+    expect(response?.reason).not.toContain('session_id');
+    expect(response?.reason).not.toContain('hook_event_name');
+  });
+
+  test('scans only the prompt field, not envelope metadata', () => {
+    const clean = { ...ENVELOPE, prompt: 'refactor the parser' };
+    expect(runHook(JSON.stringify(clean), { mode: 'block' })).toBeNull();
+  });
+
+  test('still blocks on sensitive data inside the prompt field', () => {
+    const response = runHook(JSON.stringify(ENVELOPE), { mode: 'block' });
+
+    expect(response?.decision).toBe('block');
+    expect(response?.reason).toContain('Email Address');
+  });
+
+  test('falls back to scanning raw stdin when it is not a JSON envelope', () => {
+    const response = runHook('my email is john.doe@example.com', { mode: 'block' });
+
+    expect(response?.decision).toBe('block');
+    expect(response?.reason).toContain('Email Address');
+  });
+});