diff --git a/frontend/app/(dashboard)/layout.tsx b/frontend/app/(dashboard)/layout.tsx
index 6b8f386d..1348121f 100644
--- a/frontend/app/(dashboard)/layout.tsx
+++ b/frontend/app/(dashboard)/layout.tsx
@@ -4,6 +4,13 @@ import Link from "next/link";
 import { usePathname } from "next/navigation";
 import { cn } from "@/lib/utils";
 import { ReactNode } from "react";
+import { useAuthStore } from "../../stores/auth.store";
+import { useShipmentSocket } from "../../hooks/useShipmentSocket";
+import { NotificationBell } from "../../components/notifications/notification-bell";
+
+interface DashboardLayoutProps {
+  children: ReactNode;
+}
 
 const SHIPPER_NAV = [
   { href: '/dashboard', label: 'Dashboard' },
@@ -26,18 +33,37 @@ const ADMIN_NAV = [
   { href: '/admin/shipments', label: 'Shipment Oversight' },
 ];
 
+interface DashboardLayoutProps {
+  children: ReactNode;
+}
+
 export default function DashboardLayout({ children }: DashboardLayoutProps) {
   const pathname = usePathname();
+  const user = useAuthStore((state) => state.user);
+
+  // Initialize the WebSocket connection for real-time shipment updates
+  useShipmentSocket();
+
+  // Determine nav items based on user role
+  const getNavItems = () => {
+    if (!user) return SHIPPER_NAV;
+    if (user.role === 'admin') return ADMIN_NAV;
+    if (user.role === 'carrier') return CARRIER_NAV;
+    return SHIPPER_NAV;
+  };
+
+  const navItems = getNavItems();
 
   return (
     <div className="flex h-screen">
       {/* Sidebar */}
       <aside className="w-64 border-r bg-card flex flex-col">
-        <div className="h-16 flex items-center gap-2 px-6 border-b">
-          <div className="h-7 w-7 rounded-lg bg-primary flex items-center justify-center">
+        <div className="h-16 flex items-center gap-2 px-4 border-b">
+          <div className="h-7 w-7 rounded-lg bg-primary flex items-center justify-center flex-shrink-0">
             <span className="text-primary-foreground font-bold text-xs">FF</span>
           </div>
-          <span className="font-bold text-foreground">FreightFlow</span>
+          <span className="font-bold text-foreground flex-1">FreightFlow</span>
+          <NotificationBell />
         </div>
 
         <nav className="flex-1 p-4 space-y-1">
diff --git a/frontend/components/notifications/notification-bell.tsx b/frontend/components/notifications/notification-bell.tsx
new file mode 100644
index 00000000..00eda23a
--- /dev/null
+++ b/frontend/components/notifications/notification-bell.tsx
@@ -0,0 +1,153 @@
+'use client';
+
+import { useState } from 'react';
+import { useNotificationStore, type ShipmentNotification } from '../../stores/notification.store';
+import { cn } from '@/lib/utils';
+import { ShipmentStatus } from '@/types/shipment.types';
+
+// Human-readable status labels
+const getStatusLabel = (status: ShipmentStatus): string => {
+  const labels: Record<ShipmentStatus, string> = {
+    [ShipmentStatus.PENDING]: 'Pending',
+    [ShipmentStatus.ACCEPTED]: 'Accepted',
+    [ShipmentStatus.IN_TRANSIT]: 'In Transit',
+    [ShipmentStatus.DELIVERED]: 'Delivered',
+    [ShipmentStatus.COMPLETED]: 'Completed',
+    [ShipmentStatus.CANCELLED]: 'Cancelled',
+    [ShipmentStatus.DISPUTED]: 'Disputed',
+  };
+  return labels[status] || status;
+};
+
+// Format relative time
+const formatRelativeTime = (dateString: string): string => {
+  const date = new Date(dateString);
+  const now = new Date();
+  const diffMs = now.getTime() - date.getTime();
+  const diffMins = Math.floor(diffMs / 60000);
+  const diffHours = Math.floor(diffMs / 3600000);
+  const diffDays = Math.floor(diffMs / 86400000);
+
+  if (diffMins < 1) return 'Just now';
+  if (diffMins < 60) return `${diffMins}m ago`;
+  if (diffHours < 24) return `${diffHours}h ago`;
+  if (diffDays < 7) return `${diffDays}d ago`;
+  return date.toLocaleDateString();
+};
+
+export function NotificationBell() {
+  const [isOpen, setIsOpen] = useState(false);
+  const { notifications, unreadCount, markAllAsRead } = useNotificationStore();
+
+  const handleToggle = () => {
+    if (!isOpen && unreadCount > 0) {
+      markAllAsRead();
+    }
+    setIsOpen(!isOpen);
+  };
+
+  const displayCount = unreadCount > 9 ? '9+' : unreadCount.toString();
+
+  return (
+    <div className="relative">
+      {/* Bell Icon Button */}
+      <button
+        onClick={handleToggle}
+        className="relative p-2 rounded-md hover:bg-accent transition-colors"
+        aria-label="Notifications"
+      >
+        <svg
+          xmlns="http://www.w3.org/2000/svg"
+          width="20"
+          height="20"
+          viewBox="0 0 24 24"
+          fill="none"
+          stroke="currentColor"
+          strokeWidth="2"
+          strokeLinecap="round"
+          strokeLinejoin="round"
+          className="text-foreground"
+        >
+          <path d="M6 8a6 6 0 0 1 12 0c0 7 3 9 3 9H3s3-2 3-9" />
+          <path d="M10.3 21a1.94 1.94 0 0 0 3.4 0" />
+        </svg>
+        {unreadCount > 0 && (
+          <span className="absolute -top-1 -right-1 min-w-[18px] h-[18px] flex items-center justify-center bg-red-500 text-white text-xs font-bold rounded-full px-1">
+            {displayCount}
+          </span>
+        )}
+      </button>
+
+      {/* Dropdown */}
+      {isOpen && (
+        <>
+          {/* Backdrop */}
+          <div
+            className="fixed inset-0 z-40"
+            onClick={() => setIsOpen(false)}
+          />
+          
+          {/* Dropdown Panel */}
+          <div className="absolute right-0 top-full mt-2 w-80 bg-background border rounded-lg shadow-lg z-50 overflow-hidden">
+            <div className="p-3 border-b">
+              <h3 className="font-semibold text-sm">Notifications</h3>
+            </div>
+            
+            <div className="max-h-96 overflow-y-auto">
+              {notifications.length === 0 ? (
+                <div className="p-4 text-center text-muted-foreground text-sm">
+                  No notifications yet
+                </div>
+              ) : (
+                <ul className="divide-y">
+                  {notifications.slice(0, 20).map((notification) => (
+                    <NotificationItem
+                      key={notification.id}
+                      notification={notification}
+                    />
+                  ))}
+                </ul>
+              )}
+            </div>
+          </div>
+        </>
+      )}
+    </div>
+  );
+}
+
+function NotificationItem({ notification }: { notification: ShipmentNotification }) {
+  const statusColor = {
+    [ShipmentStatus.PENDING]: 'bg-yellow-500',
+    [ShipmentStatus.ACCEPTED]: 'bg-blue-500',
+    [ShipmentStatus.IN_TRANSIT]: 'bg-orange-500',
+    [ShipmentStatus.DELIVERED]: 'bg-green-500',
+    [ShipmentStatus.COMPLETED]: 'bg-green-700',
+    [ShipmentStatus.CANCELLED]: 'bg-red-500',
+    [ShipmentStatus.DISPUTED]: 'bg-red-700',
+  }[notification.status] || 'bg-gray-500';
+
+  return (
+    <li className={cn('p-3 hover:bg-accent/50 transition-colors', !notification.read && 'bg-primary/5')}>
+      <div className="flex items-start gap-3">
+        <div className={cn('w-2 h-2 rounded-full mt-2 flex-shrink-0', statusColor)} />
+        <div className="flex-1 min-w-0">
+          <p className="text-sm font-medium truncate">
+            {getStatusLabel(notification.status)}
+          </p>
+          <p className="text-xs text-muted-foreground truncate">
+            {notification.origin} → {notification.destination}
+          </p>
+          <div className="flex items-center justify-between mt-1">
+            <span className="text-xs text-muted-foreground">
+              {notification.trackingNumber}
+            </span>
+            <span className="text-xs text-muted-foreground">
+              {formatRelativeTime(notification.updatedAt)}
+            </span>
+          </div>
+        </div>
+      </div>
+    </li>
+  );
+}
diff --git a/frontend/hooks/useShipmentSocket.ts b/frontend/hooks/useShipmentSocket.ts
new file mode 100644
index 00000000..8e3b2b5f
--- /dev/null
+++ b/frontend/hooks/useShipmentSocket.ts
@@ -0,0 +1,101 @@
+'use client';
+
+import { useEffect, useRef } from 'react';
+import { useAuthStore } from '../stores/auth.store';
+import { useNotificationStore, type ShipmentNotification } from '../stores/notification.store';
+import { connectSocket, disconnectSocket } from '../lib/socket';
+import { toast } from 'sonner';
+import { ShipmentStatus } from '../types/shipment.types';
+
+// Standard status transitions that warrant a toast notification
+const STANDARD_STATUSES: ShipmentStatus[] = [
+  ShipmentStatus.PENDING,
+  ShipmentStatus.ACCEPTED,
+  ShipmentStatus.IN_TRANSIT,
+  ShipmentStatus.DELIVERED,
+];
+
+interface ShipmentUpdatedPayload {
+  event: string;
+  shipmentId: string;
+  trackingNumber: string;
+  status: ShipmentStatus;
+  origin: string;
+  destination: string;
+  updatedAt: string;
+}
+
+// Helper to get human-readable status message
+const getStatusMessage = (status: ShipmentStatus): string => {
+  const messages: Record<ShipmentStatus, string> = {
+    [ShipmentStatus.PENDING]: 'Shipment created - awaiting carrier',
+    [ShipmentStatus.ACCEPTED]: 'Shipment accepted by carrier',
+    [ShipmentStatus.IN_TRANSIT]: 'Shipment is in transit',
+    [ShipmentStatus.DELIVERED]: 'Shipment delivered',
+    [ShipmentStatus.COMPLETED]: 'Shipment completed',
+    [ShipmentStatus.CANCELLED]: 'Shipment cancelled',
+    [ShipmentStatus.DISPUTED]: 'Shipment has a dispute',
+  };
+  return messages[status] || `Status updated to ${status}`;
+};
+
+export function useShipmentSocket() {
+  const user = useAuthStore((state) => state.user);
+  const addNotification = useNotificationStore((state) => state.addNotification);
+  const socketRef = useRef<ReturnType<typeof connectSocket> | null>(null);
+  const isConnectedRef = useRef(false);
+
+  useEffect(() => {
+    // When user is set, connect the socket
+    if (user && user.accessToken) {
+      if (!isConnectedRef.current) {
+        const socket = connectSocket(user.accessToken);
+        socketRef.current = socket;
+        isConnectedRef.current = true;
+
+        // Attach the shipment:updated listener
+        socket.on('shipment:updated', (payload: ShipmentUpdatedPayload) => {
+          // Add to notification store
+          const notification: Omit<ShipmentNotification, 'id' | 'read'> = {
+            event: payload.event,
+            shipmentId: payload.shipmentId,
+            trackingNumber: payload.trackingNumber,
+            status: payload.status,
+            origin: payload.origin,
+            destination: payload.destination,
+            updatedAt: payload.updatedAt,
+          };
+          addNotification(notification);
+
+          // Show toast for standard transitions
+          if (STANDARD_STATUSES.includes(payload.status)) {
+            toast.info(getStatusMessage(payload.status), {
+              description: `Tracking: ${payload.trackingNumber}`,
+              duration: 5000,
+            });
+          }
+        });
+      }
+    } else if (!user && isConnectedRef.current) {
+      // When user becomes null (logout), disconnect
+      if (socketRef.current) {
+        socketRef.current.off('shipment:updated');
+        socketRef.current = null;
+      }
+      disconnectSocket();
+      isConnectedRef.current = false;
+    }
+  }, [user, addNotification]);
+
+  // Cleanup on unmount
+  useEffect(() => {
+    return () => {
+      if (socketRef.current) {
+        socketRef.current.off('shipment:updated');
+        socketRef.current = null;
+      }
+      disconnectSocket();
+      isConnectedRef.current = false;
+    };
+  }, []);
+}
diff --git a/frontend/stores/notification.store.ts b/frontend/stores/notification.store.ts
new file mode 100644
index 00000000..79cdde76
--- /dev/null
+++ b/frontend/stores/notification.store.ts
@@ -0,0 +1,69 @@
+'use client';
+
+import { create } from 'zustand';
+import type { ShipmentStatus } from '../types/shipment.types';
+
+export interface ShipmentNotification {
+  id: string;
+  event: string;
+  shipmentId: string;
+  trackingNumber: string;
+  status: ShipmentStatus;
+  origin: string;
+  destination: string;
+  updatedAt: string;
+  read: boolean;
+}
+
+interface NotificationState {
+  notifications: ShipmentNotification[];
+  unreadCount: number;
+  addNotification: (notification: Omit<ShipmentNotification, 'id' | 'read'>) => void;
+  markAllAsRead: () => void;
+  markAsRead: (id: string) => void;
+  clearNotifications: () => void;
+}
+
+const generateId = (): string => {
+  return `notif-${Date.now()}-${Math.random().toString(36).substring(2, 9)}`;
+};
+
+export const useNotificationStore = create<NotificationState>((set) => ({
+  notifications: [],
+  unreadCount: 0,
+
+  addNotification: (notification) =>
+    set((state) => {
+      const newNotification: ShipmentNotification = {
+        ...notification,
+        id: generateId(),
+        read: false,
+      };
+      // Keep only the last 20 notifications
+      const updatedNotifications = [newNotification, ...state.notifications].slice(0, 20);
+      return {
+        notifications: updatedNotifications,
+        unreadCount: state.unreadCount + 1,
+      };
+    }),
+
+  markAllAsRead: () =>
+    set((state) => ({
+      notifications: state.notifications.map((n) => ({ ...n, read: true })),
+      unreadCount: 0,
+    })),
+
+  markAsRead: (id) =>
+    set((state) => {
+      const notification = state.notifications.find((n) => n.id === id);
+      if (!notification || notification.read) return state;
+      return {
+        notifications: state.notifications.map((n) =>
+          n.id === id ? { ...n, read: true } : n
+        ),
+        unreadCount: Math.max(0, state.unreadCount - 1),
+      };
+    }),
+
+  clearNotifications: () => set({ notifications: [], unreadCount: 0 }),
+}));