diff --git a/packages/playwright-core/src/tools/cli-daemon/program.ts b/packages/playwright-core/src/tools/cli-daemon/program.ts
index 07c216829a998..0bc40ed7071b8 100644
--- a/packages/playwright-core/src/tools/cli-daemon/program.ts
+++ b/packages/playwright-core/src/tools/cli-daemon/program.ts
@@ -86,6 +86,28 @@ function globalConfigFile(): string {
   return path.join(process.env['PWTEST_CLI_GLOBAL_CONFIG'] ?? os.homedir(), '.playwright', 'cli.config.json');
 }
 
+const cliOutputGitignoreEntries = ['.playwright-cli/'];
+
+async function ensureGitignore(cwd: string, entries: string[]) {
+  const gitignorePath = path.join(cwd, '.gitignore');
+  let existing = '';
+  try {
+    existing = await fs.promises.readFile(gitignorePath, 'utf8');
+  } catch (error) {
+    if ((error as NodeJS.ErrnoException).code !== 'ENOENT')
+      throw error;
+  }
+  const existingLines = new Set(existing.split(/\r?\n/).map(line => line.trim()));
+  const missing = entries.filter(entry => !existingLines.has(entry));
+  if (!missing.length)
+    return;
+  const needsNewline = existing.length > 0 && !existing.endsWith('\n');
+  const header = '# Playwright CLI traces and snapshots (may contain credentials)\n';
+  const chunk = `${needsNewline ? '\n' : ''}${header}${missing.join('\n')}\n`;
+  await fs.promises.appendFile(gitignorePath, chunk);
+  console.log(`✅ Added ${missing.map(entry => `\`${entry}\``).join(', ')} to \`.gitignore\`.`);
+}
+
 export async function initWorkspace(initSkills: string | undefined, initSkillsGlobal?: string) {
   const globalSkills = !!initSkillsGlobal;
   if (!globalSkills) {
@@ -93,6 +115,7 @@ export async function initWorkspace(initSkills: string | undefined, initSkillsGl
     const playwrightDir = path.join(cwd, '.playwright');
     await fs.promises.mkdir(playwrightDir, { recursive: true });
     console.log(`✅ Workspace initialized at \`${cwd}\`.`);
+    await ensureGitignore(cwd, cliOutputGitignoreEntries);
   }
 
   const skills = initSkillsGlobal ?? initSkills;
diff --git a/tests/mcp/cli-misc.spec.ts b/tests/mcp/cli-misc.spec.ts
index a3e8630d56634..77fd55d80889a 100644
--- a/tests/mcp/cli-misc.spec.ts
+++ b/tests/mcp/cli-misc.spec.ts
@@ -40,6 +40,26 @@ test('install workspace', async ({ cli }, testInfo) => {
   expect(fs.existsSync(playwrightDir)).toBe(true);
 });
 
+test('install workspace gitignores CLI output dir', async ({ cli }, testInfo) => {
+  const { output } = await cli('install');
+  expect(output).toContain('Added `.playwright-cli/` to `.gitignore`.');
+  const gitignore = await fs.promises.readFile(testInfo.outputPath('.gitignore'), 'utf8');
+  expect(gitignore).toContain('.playwright-cli/');
+
+  const second = await cli('install');
+  expect(second.output).not.toContain('Added `.playwright-cli/` to `.gitignore`.');
+  const gitignoreAfter = await fs.promises.readFile(testInfo.outputPath('.gitignore'), 'utf8');
+  expect(gitignoreAfter.split('.playwright-cli/').length - 1).toBe(1);
+});
+
+test('install workspace appends CLI output dir to an existing gitignore', async ({ cli }, testInfo) => {
+  await fs.promises.writeFile(testInfo.outputPath('.gitignore'), 'node_modules/\n');
+  await cli('install');
+  const gitignore = await fs.promises.readFile(testInfo.outputPath('.gitignore'), 'utf8');
+  expect(gitignore).toMatch(/^node_modules\/\n/);
+  expect(gitignore).toContain('.playwright-cli/');
+});
+
 test('install workspace w/skills', async ({ cli }, testInfo) => {
   const { output } = await cli('install', '--skills');
   expect(output).toContain(`Skill installed to \`.claude${path.sep}skills${path.sep}playwright-cli\`.`);
@@ -66,6 +86,8 @@ test('install w/--skills -g installs into the home directory', async ({ cli }, t
   const { output } = await cli('install', '--skills', '-g', { env: { HOME: fakeHome, USERPROFILE: fakeHome } });
   expect(output).toContain('Skill installed to');
   expect(output).not.toContain('Workspace initialized');
+  expect(output).not.toContain('.gitignore');
+  expect(fs.existsSync(testInfo.outputPath('.gitignore'))).toBe(false);
 
   const skillFile = path.join(fakeHome, '.claude', 'skills', 'playwright-cli', 'SKILL.md');
   expect(fs.existsSync(skillFile)).toBe(true);