diff --git a/linux/pkg/terminal/buffer_test.go b/linux/pkg/terminal/buffer_test.go
new file mode 100644
index 00000000..15bfb19e
--- /dev/null
+++ b/linux/pkg/terminal/buffer_test.go
@@ -0,0 +1,118 @@
+package terminal
+
+import (
+	"testing"
+)
+
+func TestTerminalBuffer(t *testing.T) {
+	// Create a 80x24 terminal buffer
+	buffer := NewTerminalBuffer(80, 24)
+
+	// Test writing simple text
+	text := "Hello, World!"
+	n, err := buffer.Write([]byte(text))
+	if err != nil {
+		t.Fatalf("Failed to write to buffer: %v", err)
+	}
+	if n != len(text) {
+		t.Errorf("Expected to write %d bytes, wrote %d", len(text), n)
+	}
+
+	// Get snapshot
+	snapshot := buffer.GetSnapshot()
+	if snapshot.Cols != 80 || snapshot.Rows != 24 {
+		t.Errorf("Unexpected dimensions: %dx%d", snapshot.Cols, snapshot.Rows)
+	}
+
+	// Check that text was written
+	firstLine := snapshot.Cells[0]
+	for i, ch := range text {
+		if i >= len(firstLine) {
+			break
+		}
+		if firstLine[i].Char != ch {
+			t.Errorf("Expected char %c at position %d, got %c", ch, i, firstLine[i].Char)
+		}
+	}
+
+	// Test cursor movement
+	buffer.Write([]byte("\r\n"))
+	snapshot = buffer.GetSnapshot()
+	if snapshot.CursorY != 1 || snapshot.CursorX != 0 {
+		t.Errorf("Expected cursor at (0,1), got (%d,%d)", snapshot.CursorX, snapshot.CursorY)
+	}
+
+	// Test ANSI escape sequences
+	buffer.Write([]byte("\x1b[2J")) // Clear screen
+	snapshot = buffer.GetSnapshot()
+	
+	// All cells should be spaces
+	for y := 0; y < snapshot.Rows; y++ {
+		for x := 0; x < snapshot.Cols; x++ {
+			if snapshot.Cells[y][x].Char != ' ' {
+				t.Errorf("Expected space at (%d,%d), got %c", x, y, snapshot.Cells[y][x].Char)
+			}
+		}
+	}
+
+	// Test resize
+	buffer.Resize(120, 30)
+	snapshot = buffer.GetSnapshot()
+	if snapshot.Cols != 120 || snapshot.Rows != 30 {
+		t.Errorf("Resize failed: expected 120x30, got %dx%d", snapshot.Cols, snapshot.Rows)
+	}
+}
+
+func TestAnsiParser(t *testing.T) {
+	parser := NewAnsiParser()
+	
+	var printedChars []rune
+	var executedBytes []byte
+	var csiCalls []string
+	
+	parser.OnPrint = func(r rune) {
+		printedChars = append(printedChars, r)
+	}
+	
+	parser.OnExecute = func(b byte) {
+		executedBytes = append(executedBytes, b)
+	}
+	
+	parser.OnCsi = func(params []int, intermediate []byte, final byte) {
+		csiCalls = append(csiCalls, string(final))
+	}
+	
+	// Test simple text
+	parser.Parse([]byte("Hello"))
+	if string(printedChars) != "Hello" {
+		t.Errorf("Expected 'Hello', got '%s'", string(printedChars))
+	}
+	
+	// Test control characters
+	printedChars = nil
+	parser.Parse([]byte("\r\n"))
+	if len(executedBytes) != 2 || executedBytes[0] != '\r' || executedBytes[1] != '\n' {
+		t.Errorf("Control characters not properly executed")
+	}
+	
+	// Test CSI sequence
+	parser.Parse([]byte("\x1b[2J"))
+	if len(csiCalls) != 1 || csiCalls[0] != "J" {
+		t.Errorf("CSI sequence not properly parsed")
+	}
+}
+
+func TestBufferSerialization(t *testing.T) {
+	buffer := NewTerminalBuffer(2, 2)
+	buffer.Write([]byte("AB\r\nCD"))
+	
+	snapshot := buffer.GetSnapshot()
+	data := snapshot.SerializeToBinary()
+	
+	// Binary format should contain:
+	// - 5 uint32s for dimensions (20 bytes)
+	// - 4 cells with char data and attributes
+	if len(data) < 20 {
+		t.Errorf("Serialized data too short: %d bytes", len(data))
+	}
+}
\ No newline at end of file
diff --git a/linux/pkg/termsocket/manager.go b/linux/pkg/termsocket/manager.go
index f2a1a193..6f5b513c 100644
--- a/linux/pkg/termsocket/manager.go
+++ b/linux/pkg/termsocket/manager.go
@@ -10,6 +10,7 @@ import (
 	"sync"
 	"time"
 
+	"github.com/fsnotify/fsnotify"
 	"github.com/vibetunnel/linux/pkg/session"
 	"github.com/vibetunnel/linux/pkg/terminal"
 )
@@ -28,6 +29,8 @@ type Manager struct {
 	mu             sync.RWMutex
 	subscribers    map[string][]chan *terminal.BufferSnapshot
 	subMu          sync.RWMutex
+	shutdownCh     chan struct{}
+	wg             sync.WaitGroup
 }
 
 // NewManager creates a new terminal socket manager
@@ -36,6 +39,7 @@ func NewManager(sessionManager *session.Manager) *Manager {
 		sessionManager: sessionManager,
 		buffers:        make(map[string]*SessionBuffer),
 		subscribers:    make(map[string][]chan *terminal.BufferSnapshot),
+		shutdownCh:     make(chan struct{}),
 	}
 }
 
@@ -69,7 +73,11 @@ func (m *Manager) GetOrCreateBuffer(sessionID string) (*SessionBuffer, error) {
 	m.buffers[sessionID] = sb
 
 	// Start monitoring the session's output
-	go m.monitorSession(sessionID, sb)
+	m.wg.Add(1)
+	go func() {
+		defer m.wg.Done()
+		m.monitorSession(sessionID, sb)
+	}()
 
 	return sb, nil
 }
@@ -140,33 +148,144 @@ func (m *Manager) SubscribeToBufferChanges(sessionID string, callback func(strin
 
 // monitorSession monitors a session's output and updates the terminal buffer
 func (m *Manager) monitorSession(sessionID string, sb *SessionBuffer) {
-	// This is a simplified version - in a real implementation, we would:
-	// 1. Set up a file watcher on the session's stream-out file
-	// 2. Parse new asciinema events as they arrive
-	// 3. Feed the output data to the terminal buffer
-	// 4. Notify subscribers of buffer changes
+	streamPath := sb.Session.StreamOutPath()
+	lastPos := int64(0)
 
-	// For now, we'll implement a basic polling approach
+	// Try to use file watching
+	watcher, err := fsnotify.NewWatcher()
+	if err != nil {
+		log.Printf("Failed to create file watcher, using polling: %v", err)
+		m.monitorSessionPolling(sessionID, sb)
+		return
+	}
+	defer watcher.Close()
+
+	// Wait for stream file to exist
+	for i := 0; i < 50; i++ { // Wait up to 5 seconds
+		if _, err := os.Stat(streamPath); err == nil {
+			break
+		}
+		time.Sleep(100 * time.Millisecond)
+	}
+
+	// Add file to watcher
+	if err := watcher.Add(streamPath); err != nil {
+		log.Printf("Failed to watch file %s, using polling: %v", streamPath, err)
+		m.monitorSessionPolling(sessionID, sb)
+		return
+	}
+
+	// Read initial content
+	if update, newPos, err := readStreamContent(streamPath, lastPos); err == nil && update != nil {
+		if len(update.OutputData) > 0 || update.Resize != nil {
+			sb.mu.Lock()
+			if len(update.OutputData) > 0 {
+				sb.Buffer.Write(update.OutputData)
+			}
+			if update.Resize != nil {
+				sb.Buffer.Resize(update.Resize.Width, update.Resize.Height)
+			}
+			snapshot := sb.Buffer.GetSnapshot()
+			sb.mu.Unlock()
+			m.notifySubscribers(sessionID, snapshot)
+			lastPos = newPos
+		}
+	}
+
+	// Monitor for changes
+	sessionCheckTicker := time.NewTicker(5 * time.Second)
+	defer sessionCheckTicker.Stop()
+
+	for {
+		select {
+		case event, ok := <-watcher.Events:
+			if !ok {
+				return
+			}
+
+			if event.Op&fsnotify.Write == fsnotify.Write {
+				// Read new content
+				update, newPos, err := readStreamContent(streamPath, lastPos)
+				if err != nil {
+					log.Printf("Error reading stream content: %v", err)
+					continue
+				}
+
+				if update != nil && (len(update.OutputData) > 0 || update.Resize != nil) {
+					// Update buffer
+					sb.mu.Lock()
+					if len(update.OutputData) > 0 {
+						sb.Buffer.Write(update.OutputData)
+					}
+					if update.Resize != nil {
+						sb.Buffer.Resize(update.Resize.Width, update.Resize.Height)
+					}
+					snapshot := sb.Buffer.GetSnapshot()
+					sb.mu.Unlock()
+
+					// Notify subscribers
+					m.notifySubscribers(sessionID, snapshot)
+				}
+
+				lastPos = newPos
+			}
+
+		case err, ok := <-watcher.Errors:
+			if !ok {
+				return
+			}
+			log.Printf("File watcher error: %v", err)
+
+		case <-sessionCheckTicker.C:
+			// Check if session is still alive
+			if !sb.Session.IsAlive() {
+				// Clean up when session ends
+				m.mu.Lock()
+				delete(m.buffers, sessionID)
+				m.mu.Unlock()
+				return
+			}
+			
+		case <-m.shutdownCh:
+			// Manager is shutting down
+			return
+		}
+	}
+}
+
+// monitorSessionPolling is a fallback for when file watching isn't available
+func (m *Manager) monitorSessionPolling(sessionID string, sb *SessionBuffer) {
 	streamPath := sb.Session.StreamOutPath()
 	lastPos := int64(0)
 
 	for {
+		select {
+		case <-m.shutdownCh:
+			// Manager is shutting down
+			return
+		default:
+		}
+		
 		// Check if session is still alive
 		if !sb.Session.IsAlive() {
 			break
 		}
 
 		// Read new content from stream file
-		data, newPos, err := readStreamContent(streamPath, lastPos)
-		if err != nil {
+		update, newPos, err := readStreamContent(streamPath, lastPos)
+		if err != nil && !os.IsNotExist(err) {
 			log.Printf("Error reading stream content: %v", err)
-			continue
 		}
 
-		if len(data) > 0 {
+		if update != nil && (len(update.OutputData) > 0 || update.Resize != nil) {
 			// Update buffer
 			sb.mu.Lock()
-			sb.Buffer.Write(data)
+			if len(update.OutputData) > 0 {
+				sb.Buffer.Write(update.OutputData)
+			}
+			if update.Resize != nil {
+				sb.Buffer.Resize(update.Resize.Width, update.Resize.Height)
+			}
 			snapshot := sb.Buffer.GetSnapshot()
 			sb.mu.Unlock()
 
@@ -177,8 +296,7 @@ func (m *Manager) monitorSession(sessionID string, sb *SessionBuffer) {
 		lastPos = newPos
 
 		// Small delay to prevent busy waiting
-		// In production, use file watching instead
-		<-time.After(50 * time.Millisecond)
+		time.Sleep(50 * time.Millisecond)
 	}
 
 	// Clean up when session ends
@@ -202,8 +320,20 @@ func (m *Manager) notifySubscribers(sessionID string, snapshot *terminal.BufferS
 	}
 }
 
+// StreamUpdate represents an update from the stream file
+type StreamUpdate struct {
+	OutputData []byte
+	Resize     *ResizeEvent
+}
+
+// ResizeEvent represents a terminal resize
+type ResizeEvent struct {
+	Width  int
+	Height int
+}
+
 // readStreamContent reads new content from an asciinema stream file
-func readStreamContent(path string, lastPos int64) ([]byte, int64, error) {
+func readStreamContent(path string, lastPos int64) (*StreamUpdate, int64, error) {
 	file, err := os.Open(path)
 	if err != nil {
 		return nil, lastPos, err
@@ -235,7 +365,9 @@ func readStreamContent(path string, lastPos int64) ([]byte, int64, error) {
 	}
 
 	// Parse asciinema events and extract output data
-	outputData := []byte{}
+	update := &StreamUpdate{
+		OutputData: []byte{},
+	}
 	decoder := json.NewDecoder(bytes.NewReader(newContent[:n]))
 	
 	// Skip header if at beginning of file
@@ -264,12 +396,52 @@ func readStreamContent(path string, lastPos int64) ([]byte, int64, error) {
 			if eventType == "o" { // Output event
 				data, ok := event[2].(string)
 				if ok {
-					outputData = append(outputData, []byte(data)...)
+					update.OutputData = append(update.OutputData, []byte(data)...)
+				}
+			} else if eventType == "r" { // Resize event
+				// Resize events have format: [timestamp, "r", "WIDTHxHEIGHT"]
+				data, ok := event[2].(string)
+				if ok {
+					// Parse "WIDTHxHEIGHT" format
+					var width, height int
+					if _, err := fmt.Sscanf(data, "%dx%d", &width, &height); err == nil {
+						update.Resize = &ResizeEvent{
+							Width:  width,
+							Height: height,
+						}
+					}
 				}
 			}
-			// TODO: Handle resize events ("r" type)
 		}
 	}
 
-	return outputData, lastPos + int64(n), nil
+	return update, lastPos + int64(n), nil
+}
+
+// Shutdown gracefully shuts down the manager
+func (m *Manager) Shutdown() {
+	log.Println("Shutting down terminal buffer manager...")
+	
+	// Signal shutdown
+	close(m.shutdownCh)
+	
+	// Wait for all monitors to finish
+	m.wg.Wait()
+	
+	// Close all subscriber channels
+	m.subMu.Lock()
+	for _, subs := range m.subscribers {
+		for _, ch := range subs {
+			close(ch)
+		}
+	}
+	m.subscribers = make(map[string][]chan *terminal.BufferSnapshot)
+	m.subMu.Unlock()
+	
+	// Clear buffers
+	m.mu.Lock()
+	m.buffers = make(map[string]*SessionBuffer)
+	m.mu.Unlock()
+	
+	log.Println("Terminal buffer manager shutdown complete")
 }