diff --git a/src/hooks/atlas/boulder-continuation-injector.ts b/src/hooks/atlas/boulder-continuation-injector.ts
index c74b2292..4f8e3580 100644
--- a/src/hooks/atlas/boulder-continuation-injector.ts
+++ b/src/hooks/atlas/boulder-continuation-injector.ts
@@ -66,6 +66,7 @@ export async function injectBoulderContinuation(input: {
     log(`[${HOOK_NAME}] Boulder continuation injected`, { sessionID })
   } catch (err) {
     sessionState.promptFailureCount += 1
+    sessionState.lastFailureAt = Date.now()
     log(`[${HOOK_NAME}] Boulder continuation failed`, {
       sessionID,
       error: String(err),
diff --git a/src/hooks/atlas/event-handler.ts b/src/hooks/atlas/event-handler.ts
index 6346dcbb..0f7187fc 100644
--- a/src/hooks/atlas/event-handler.ts
+++ b/src/hooks/atlas/event-handler.ts
@@ -10,6 +10,7 @@ import { getLastAgentFromSession } from "./session-last-agent"
 import type { AtlasHookOptions, SessionState } from "./types"
 
 const CONTINUATION_COOLDOWN_MS = 5000
+const FAILURE_BACKOFF_MS = 5 * 60 * 1000
 
 export function createAtlasEventHandler(input: {
   ctx: PluginInput
@@ -53,6 +54,7 @@ export function createAtlasEventHandler(input: {
       }
 
       const state = getState(sessionID)
+      const now = Date.now()
 
       if (state.lastEventWasAbortError) {
         state.lastEventWasAbortError = false
@@ -61,11 +63,18 @@ export function createAtlasEventHandler(input: {
       }
 
       if (state.promptFailureCount >= 2) {
-        log(`[${HOOK_NAME}] Skipped: continuation disabled after repeated prompt failures`, {
-          sessionID,
-          promptFailureCount: state.promptFailureCount,
-        })
-        return
+        const timeSinceLastFailure = state.lastFailureAt !== undefined ? now - state.lastFailureAt : Number.POSITIVE_INFINITY
+        if (timeSinceLastFailure < FAILURE_BACKOFF_MS) {
+          log(`[${HOOK_NAME}] Skipped: continuation in backoff after repeated failures`, {
+            sessionID,
+            promptFailureCount: state.promptFailureCount,
+            backoffRemaining: FAILURE_BACKOFF_MS - timeSinceLastFailure,
+          })
+          return
+        }
+
+        state.promptFailureCount = 0
+        state.lastFailureAt = undefined
       }
 
       const backgroundManager = options?.backgroundManager
@@ -111,7 +120,6 @@ export function createAtlasEventHandler(input: {
         return
       }
 
-      const now = Date.now()
       if (state.lastContinuationInjectedAt && now - state.lastContinuationInjectedAt < CONTINUATION_COOLDOWN_MS) {
         log(`[${HOOK_NAME}] Skipped: continuation cooldown active`, {
           sessionID,
diff --git a/src/hooks/atlas/index.test.ts b/src/hooks/atlas/index.test.ts
index 8c0efeba..36f30827 100644
--- a/src/hooks/atlas/index.test.ts
+++ b/src/hooks/atlas/index.test.ts
@@ -1154,6 +1154,144 @@ describe("atlas hook", () => {
       }
     })
 
+    test("should keep skipping continuation during 5-minute backoff after 2 consecutive failures", async () => {
+      //#given - boulder state with incomplete plan and prompt always fails
+      const planPath = join(TEST_DIR, "test-plan.md")
+      writeFileSync(planPath, "# Plan\n- [ ] Task 1\n- [ ] Task 2")
+
+      const state: BoulderState = {
+        active_plan: planPath,
+        started_at: "2026-01-02T10:00:00Z",
+        session_ids: [MAIN_SESSION_ID],
+        plan_name: "test-plan",
+      }
+      writeBoulderState(TEST_DIR, state)
+
+      const promptMock = mock(() => Promise.reject(new Error("Bad Request")))
+      const mockInput = createMockPluginInput({ promptMock })
+      const hook = createAtlasHook(mockInput)
+
+      const originalDateNow = Date.now
+      let now = 0
+      Date.now = () => now
+
+      try {
+        //#when - third idle occurs inside 5-minute backoff window
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+        now += 6000
+
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+        now += 60000
+
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+
+        //#then - third attempt should still be skipped
+        expect(promptMock).toHaveBeenCalledTimes(2)
+      } finally {
+        Date.now = originalDateNow
+      }
+    })
+
+    test("should retry continuation after 5-minute backoff expires following 2 consecutive failures", async () => {
+      //#given - boulder state with incomplete plan and prompt always fails
+      const planPath = join(TEST_DIR, "test-plan.md")
+      writeFileSync(planPath, "# Plan\n- [ ] Task 1\n- [ ] Task 2")
+
+      const state: BoulderState = {
+        active_plan: planPath,
+        started_at: "2026-01-02T10:00:00Z",
+        session_ids: [MAIN_SESSION_ID],
+        plan_name: "test-plan",
+      }
+      writeBoulderState(TEST_DIR, state)
+
+      const promptMock = mock(() => Promise.reject(new Error("Bad Request")))
+      const mockInput = createMockPluginInput({ promptMock })
+      const hook = createAtlasHook(mockInput)
+
+      const originalDateNow = Date.now
+      let now = 0
+      Date.now = () => now
+
+      try {
+        //#when - third idle occurs after 5+ minutes
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+        now += 6000
+
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+        now += 300000
+
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+
+        //#then - third attempt should run after backoff expiration
+        expect(promptMock).toHaveBeenCalledTimes(3)
+      } finally {
+        Date.now = originalDateNow
+      }
+    })
+
+    test("should reset prompt failure counter after successful retry beyond backoff window", async () => {
+      //#given - boulder state with incomplete plan and success on first retry after backoff
+      const planPath = join(TEST_DIR, "test-plan.md")
+      writeFileSync(planPath, "# Plan\n- [ ] Task 1\n- [ ] Task 2")
+
+      const state: BoulderState = {
+        active_plan: planPath,
+        started_at: "2026-01-02T10:00:00Z",
+        session_ids: [MAIN_SESSION_ID],
+        plan_name: "test-plan",
+      }
+      writeBoulderState(TEST_DIR, state)
+
+      const promptMock = mock((): Promise<void> => Promise.reject(new Error("Bad Request")))
+      promptMock.mockImplementationOnce(() => Promise.reject(new Error("Bad Request")))
+      promptMock.mockImplementationOnce(() => Promise.reject(new Error("Bad Request")))
+      promptMock.mockImplementationOnce(() => Promise.resolve(undefined))
+      const mockInput = createMockPluginInput({ promptMock })
+      const hook = createAtlasHook(mockInput)
+
+      const originalDateNow = Date.now
+      let now = 0
+      Date.now = () => now
+
+      try {
+        //#when - fail twice, recover after backoff with success, then fail twice again
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+        now += 6000
+
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+        now += 300000
+
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+        now += 6000
+
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+        now += 6000
+
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+        now += 6000
+
+        await hook.handler({ event: { type: "session.idle", properties: { sessionID: MAIN_SESSION_ID } } })
+        await flushMicrotasks()
+
+        //#then - success retry resets counter, so two additional failures are allowed before skip
+        expect(promptMock).toHaveBeenCalledTimes(5)
+      } finally {
+        Date.now = originalDateNow
+      }
+    })
+
     test("should reset continuation failure state on session.compacted event", async () => {
       //#given - boulder state with incomplete plan and prompt always fails
       const planPath = join(TEST_DIR, "test-plan.md")
diff --git a/src/hooks/atlas/types.ts b/src/hooks/atlas/types.ts
index e1919cd2..7302f830 100644
--- a/src/hooks/atlas/types.ts
+++ b/src/hooks/atlas/types.ts
@@ -26,4 +26,5 @@ export interface SessionState {
   lastEventWasAbortError?: boolean
   lastContinuationInjectedAt?: number
   promptFailureCount: number
+  lastFailureAt?: number
 }