diff --git a/src/claude_agent_sdk/_internal/transport/subprocess_cli.py b/src/claude_agent_sdk/_internal/transport/subprocess_cli.py
index 4b47f115..3d7dd3d1 100644
--- a/src/claude_agent_sdk/_internal/transport/subprocess_cli.py
+++ b/src/claude_agent_sdk/_internal/transport/subprocess_cli.py
@@ -20,6 +20,7 @@
 from ..._errors import CLIConnectionError, CLINotFoundError, ProcessError
 from ..._errors import CLIJSONDecodeError as SDKJSONDecodeError
 from ..._version import __version__
+from ..sessions import list_sessions
 from ...types import ClaudeAgentOptions, SystemPromptFile, SystemPromptPreset
 from . import Transport
 
@@ -108,6 +109,33 @@ def _find_bundled_cli(self) -> str | None:
 
         return None
 
+    def _get_resume_session_id(self) -> str | None:
+        """Resolve the session to resume when continuation is requested.
+
+        Explicit ``resume`` and ``session_id`` options take precedence. When
+        ``continue_conversation`` is enabled on a fresh process, fall back to
+        the most recent session for the current cwd so the CLI can resume the
+        prior conversation instead of starting a new one.
+        """
+        if self._options.resume:
+            return self._options.resume
+
+        if self._options.session_id or not self._options.continue_conversation:
+            return None
+
+        if not self._cwd:
+            return None
+
+        try:
+            sessions = list_sessions(directory=self._cwd, limit=1)
+        except OSError:
+            return None
+
+        if not sessions:
+            return None
+
+        return sessions[0].session_id
+
     def _build_settings_value(self) -> str | None:
         """Build settings value, merging sandbox settings if provided.
 
@@ -225,11 +253,13 @@ def _build_command(self) -> list[str]:
         if self._options.permission_mode:
             cmd.extend(["--permission-mode", self._options.permission_mode])
 
+        resume_session_id = self._get_resume_session_id()
+
         if self._options.continue_conversation:
             cmd.append("--continue")
 
-        if self._options.resume:
-            cmd.extend(["--resume", self._options.resume])
+        if resume_session_id:
+            cmd.extend(["--resume", resume_session_id])
 
         if self._options.session_id:
             cmd.extend(["--session-id", self._options.session_id])
diff --git a/tests/test_transport.py b/tests/test_transport.py
index b2c40923..5fe50f51 100644
--- a/tests/test_transport.py
+++ b/tests/test_transport.py
@@ -306,6 +306,50 @@ def test_session_continuation(self):
         assert "--resume" in cmd
         assert "session-123" in cmd
 
+    def test_session_continuation_uses_latest_project_session(self):
+        """Test continuation resolves the latest session for the current cwd."""
+        transport = SubprocessCLITransport(
+            prompt="Continue from before",
+            options=make_options(
+                continue_conversation=True,
+                cwd="/tmp/project",
+            ),
+        )
+
+        with patch(
+            "claude_agent_sdk._internal.transport.subprocess_cli.list_sessions"
+        ) as mock_list_sessions:
+            mock_session = Mock(session_id="550e8400-e29b-41d4-a716-446655440000")
+            mock_list_sessions.return_value = [mock_session]
+
+            cmd = transport._build_command()
+
+        mock_list_sessions.assert_called_once_with(directory="/tmp/project", limit=1)
+        assert "--continue" in cmd
+        assert "--resume" in cmd
+        idx = cmd.index("--resume")
+        assert cmd[idx + 1] == "550e8400-e29b-41d4-a716-446655440000"
+
+    def test_session_continuation_skips_resume_when_no_prior_session(self):
+        """Test continuation without prior sessions does not add --resume."""
+        transport = SubprocessCLITransport(
+            prompt="Continue from before",
+            options=make_options(
+                continue_conversation=True,
+                cwd="/tmp/project",
+            ),
+        )
+
+        with patch(
+            "claude_agent_sdk._internal.transport.subprocess_cli.list_sessions",
+            return_value=[],
+        ) as mock_list_sessions:
+            cmd = transport._build_command()
+
+        mock_list_sessions.assert_called_once_with(directory="/tmp/project", limit=1)
+        assert "--continue" in cmd
+        assert "--resume" not in cmd
+
     def test_session_id(self):
         """Test custom session ID option."""
         transport = SubprocessCLITransport(