diff --git a/server/src/agents/pool/auto_assign/merge_failure_block_subscriber.rs b/server/src/agents/pool/auto_assign/merge_failure_block_subscriber.rs
new file mode 100644
index 00000000..19bf4130
--- /dev/null
+++ b/server/src/agents/pool/auto_assign/merge_failure_block_subscriber.rs
@@ -0,0 +1,311 @@
+//! TransitionFired subscriber that auto-blocks stories after N consecutive MergeFailure transitions.
+//!
+//! Listens on the pipeline transition broadcast channel and, for each story,
+//! counts how many times it has entered [`Stage::MergeFailure`] consecutively.
+//! When the count reaches the configurable threshold (default 3), the story is
+//! transitioned to [`Stage::Blocked`] with a reason that names the failure kind.
+//!
+//! The counter for a story resets whenever a non-`MergeFailure` transition fires
+//! for that story (e.g. after a successful merge or a `FixupRequested` demotion
+//! back to coding).
+
+use std::collections::HashMap;
+use std::path::{Path, PathBuf};
+
+use crate::pipeline_state::{MergeFailureKind, PipelineEvent, Stage, StoryId};
+use crate::slog;
+use crate::slog_warn;
+
+/// Spawn a background task that blocks stories after N consecutive `MergeFailure` transitions.
+///
+/// Subscribes to the pipeline transition broadcast channel and tracks a per-story
+/// consecutive-failure counter.  When a story's count reaches the threshold configured
+/// in `project.toml` (`merge_failure_block_threshold`, default 3), the story is
+/// transitioned to `Stage::Blocked` with a reason that names the failure kind.
+///
+/// The counter resets when the story leaves `MergeFailure` (e.g. on `FixupRequested`,
+/// `ReQueuedForQa`, or a successful merge via `Unblock → Merge → Done`).
+pub(crate) fn spawn_merge_failure_block_subscriber(project_root: PathBuf) {
+    let mut rx = crate::pipeline_state::subscribe_transitions();
+    tokio::spawn(async move {
+        let mut counters: HashMap<StoryId, (u32, MergeFailureKind)> = HashMap::new();
+        loop {
+            match rx.recv().await {
+                Ok(fired) => {
+                    on_transition(&project_root, &fired, &mut counters);
+                }
+                Err(tokio::sync::broadcast::error::RecvError::Lagged(n)) => {
+                    slog_warn!(
+                        "[merge-block-sub] Subscriber lagged, skipped {n} event(s). \
+                         Some consecutive-failure counts may be understated."
+                    );
+                }
+                Err(tokio::sync::broadcast::error::RecvError::Closed) => break,
+            }
+        }
+    });
+}
+
+/// Handle a single transition event: update counters and emit Block if threshold is reached.
+fn on_transition(
+    project_root: &Path,
+    fired: &crate::pipeline_state::TransitionFired,
+    counters: &mut HashMap<StoryId, (u32, MergeFailureKind)>,
+) {
+    match &fired.after {
+        Stage::MergeFailure { kind, .. } => {
+            let entry = counters
+                .entry(fired.story_id.clone())
+                .or_insert_with(|| (0, kind.clone()));
+            entry.0 += 1;
+            entry.1 = kind.clone();
+
+            let count = entry.0;
+            let threshold = load_threshold(project_root);
+
+            if threshold == 0 {
+                return;
+            }
+
+            if count >= threshold {
+                let kind_str = failure_kind_label(kind);
+                let reason = format!(
+                    "Auto-blocked after {count} consecutive MergeFailure ({kind_str}) transitions."
+                );
+                let story_id = fired.story_id.0.as_str();
+                slog!(
+                    "[merge-block-sub] Story '{story_id}' reached {count} consecutive \
+                     MergeFailure ({kind_str}); blocking."
+                );
+                if let Err(e) = crate::pipeline_state::apply_transition(
+                    story_id,
+                    PipelineEvent::Block { reason },
+                    None,
+                ) {
+                    slog_warn!("[merge-block-sub] Failed to block '{story_id}': {e}");
+                } else {
+                    counters.remove(&fired.story_id);
+                }
+            }
+        }
+        _ => {
+            counters.remove(&fired.story_id);
+        }
+    }
+}
+
+/// Load the threshold from project config, falling back to the compiled default.
+fn load_threshold(project_root: &Path) -> u32 {
+    crate::config::ProjectConfig::load(project_root)
+        .map(|c| c.merge_failure_block_threshold)
+        .unwrap_or(3)
+}
+
+/// Short human-readable label for a [`MergeFailureKind`] variant.
+fn failure_kind_label(kind: &MergeFailureKind) -> &'static str {
+    match kind {
+        MergeFailureKind::ConflictDetected(_) => "ConflictDetected",
+        MergeFailureKind::GatesFailed(_) => "GatesFailed",
+        MergeFailureKind::EmptyDiff => "EmptyDiff",
+        MergeFailureKind::NoCommits => "NoCommits",
+        MergeFailureKind::Other(_) => "Other",
+    }
+}
+
+// ── Tests ──────────────────────────────────────────────────────────────────
+
+#[cfg(test)]
+mod tests {
+    use super::*;
+    use crate::pipeline_state::{BranchName, PipelineEvent, Stage, StoryId, TransitionFired};
+    use std::num::NonZeroU32;
+
+    fn setup_project(tmp: &tempfile::TempDir) {
+        let sk = tmp.path().join(".huskies");
+        std::fs::create_dir_all(&sk).unwrap();
+        std::fs::write(sk.join("project.toml"), "[[agent]]\nname = \"coder\"\n").unwrap();
+    }
+
+    fn seed_at_merge(story_id: &str) {
+        crate::crdt_state::init_for_test();
+        crate::db::ensure_content_store();
+        crate::db::write_item_with_content(
+            story_id,
+            "4_merge",
+            "---\nname: Test\n---\n",
+            crate::db::ItemMeta::named("Test"),
+        );
+    }
+
+    fn make_merge_failure_fired(story_id: &str, kind: MergeFailureKind) -> TransitionFired {
+        TransitionFired {
+            story_id: StoryId(story_id.to_string()),
+            before: Stage::Merge {
+                feature_branch: BranchName("feature/test".to_string()),
+                commits_ahead: NonZeroU32::new(1).unwrap(),
+                claim: None,
+            },
+            after: Stage::MergeFailure {
+                kind: kind.clone(),
+                feature_branch: BranchName("feature/test".to_string()),
+                commits_ahead: NonZeroU32::new(1).unwrap(),
+            },
+            event: PipelineEvent::MergeFailed { kind },
+            at: chrono::Utc::now(),
+        }
+    }
+
+    fn make_coding_fired(story_id: &str) -> TransitionFired {
+        TransitionFired {
+            story_id: StoryId(story_id.to_string()),
+            before: Stage::MergeFailure {
+                kind: MergeFailureKind::GatesFailed("error".to_string()),
+                feature_branch: BranchName("feature/test".to_string()),
+                commits_ahead: NonZeroU32::new(1).unwrap(),
+            },
+            after: Stage::Coding {
+                claim: None,
+                plan: Default::default(),
+            },
+            event: PipelineEvent::FixupRequested,
+            at: chrono::Utc::now(),
+        }
+    }
+
+    /// AC3 (threshold-not-reached): 2 consecutive failures below threshold of 3 must NOT block.
+    #[test]
+    fn below_threshold_does_not_block() {
+        let tmp = tempfile::tempdir().unwrap();
+        setup_project(&tmp);
+        let story_id = "1018_below";
+        seed_at_merge(story_id);
+
+        // Transition to MergeFailure once to establish the stage.
+        crate::agents::lifecycle::transition_to_merge_failure(
+            story_id,
+            MergeFailureKind::GatesFailed("error".to_string()),
+        )
+        .expect("initial MergeFailure transition");
+
+        let mut counters: HashMap<StoryId, (u32, MergeFailureKind)> = HashMap::new();
+        let kind = MergeFailureKind::GatesFailed("error".to_string());
+
+        // Fire 2 MergeFailure events (default threshold is 3).
+        for _ in 0..2 {
+            let fired = make_merge_failure_fired(story_id, kind.clone());
+            on_transition(tmp.path(), &fired, &mut counters);
+        }
+
+        // Story must still be in MergeFailure (not Blocked).
+        let item = crate::pipeline_state::read_typed(story_id)
+            .expect("read")
+            .expect("item");
+        assert!(
+            matches!(item.stage, Stage::MergeFailure { .. }),
+            "story must still be in MergeFailure after 2 failures (threshold 3): {:?}",
+            item.stage
+        );
+    }
+
+    /// AC3 (threshold-reached): 3 consecutive failures at threshold of 3 must block.
+    #[test]
+    fn at_threshold_blocks_with_failure_kind_in_reason() {
+        let tmp = tempfile::tempdir().unwrap();
+        setup_project(&tmp);
+        let story_id = "1018_at_threshold";
+        seed_at_merge(story_id);
+
+        crate::agents::lifecycle::transition_to_merge_failure(
+            story_id,
+            MergeFailureKind::GatesFailed("fmt error".to_string()),
+        )
+        .expect("initial MergeFailure transition");
+
+        let mut counters: HashMap<StoryId, (u32, MergeFailureKind)> = HashMap::new();
+        let kind = MergeFailureKind::GatesFailed("fmt error".to_string());
+
+        // Fire 3 MergeFailure events — the 3rd must trigger the block.
+        for _ in 0..3 {
+            let fired = make_merge_failure_fired(story_id, kind.clone());
+            on_transition(tmp.path(), &fired, &mut counters);
+        }
+
+        let item = crate::pipeline_state::read_typed(story_id)
+            .expect("read")
+            .expect("item");
+        assert!(
+            matches!(item.stage, Stage::Blocked { .. }),
+            "story must be Blocked after 3 consecutive MergeFailures: {:?}",
+            item.stage
+        );
+
+        // The block reason must name the failure kind.
+        if let Stage::Blocked { reason } = &item.stage {
+            assert!(
+                reason.contains("GatesFailed"),
+                "block reason must name the failure kind: {reason}"
+            );
+        }
+    }
+
+    /// AC3 (reset): counter clears after a non-MergeFailure transition.
+    ///
+    /// 2 failures → FixupRequested reset → 2 more failures: still below threshold, no block.
+    #[test]
+    fn counter_resets_on_non_merge_failure_transition() {
+        let tmp = tempfile::tempdir().unwrap();
+        setup_project(&tmp);
+        let story_id = "1018_reset";
+        seed_at_merge(story_id);
+
+        crate::agents::lifecycle::transition_to_merge_failure(
+            story_id,
+            MergeFailureKind::ConflictDetected(None),
+        )
+        .expect("initial MergeFailure transition");
+
+        let mut counters: HashMap<StoryId, (u32, MergeFailureKind)> = HashMap::new();
+        let kind = MergeFailureKind::ConflictDetected(None);
+
+        // Fire 2 MergeFailure events.
+        for _ in 0..2 {
+            let fired = make_merge_failure_fired(story_id, kind.clone());
+            on_transition(tmp.path(), &fired, &mut counters);
+        }
+        assert_eq!(
+            counters.get(&StoryId(story_id.to_string())).map(|e| e.0),
+            Some(2),
+            "counter must be 2 after 2 failures"
+        );
+
+        // Simulate FixupRequested (non-MergeFailure transition).
+        let reset_fired = make_coding_fired(story_id);
+        on_transition(tmp.path(), &reset_fired, &mut counters);
+        assert!(
+            !counters.contains_key(&StoryId(story_id.to_string())),
+            "counter must be cleared after non-MergeFailure transition"
+        );
+
+        // Re-seed to MergeFailure so we can apply the block transition.
+        crate::agents::lifecycle::transition_to_merge_failure(
+            story_id,
+            MergeFailureKind::ConflictDetected(None),
+        )
+        .expect("re-enter MergeFailure after reset");
+
+        // Fire 2 more MergeFailure events — still below threshold.
+        for _ in 0..2 {
+            let fired = make_merge_failure_fired(story_id, kind.clone());
+            on_transition(tmp.path(), &fired, &mut counters);
+        }
+
+        let item = crate::pipeline_state::read_typed(story_id)
+            .expect("read")
+            .expect("item");
+        assert!(
+            matches!(item.stage, Stage::MergeFailure { .. }),
+            "story must still be in MergeFailure after reset + 2 new failures: {:?}",
+            item.stage
+        );
+    }
+}
diff --git a/server/src/agents/pool/auto_assign/mod.rs b/server/src/agents/pool/auto_assign/mod.rs
index 19215ad2..943206c6 100644
--- a/server/src/agents/pool/auto_assign/mod.rs
+++ b/server/src/agents/pool/auto_assign/mod.rs
@@ -4,6 +4,8 @@
 mod auto_assign;
 mod backlog;
 mod merge;
+/// TransitionFired subscriber that auto-blocks stories after N consecutive MergeFailure transitions.
+pub(crate) mod merge_failure_block_subscriber;
 /// TransitionFired subscriber that auto-spawns mergemaster on ConflictDetected merge failures.
 pub(crate) mod merge_failure_subscriber;
 mod pipeline;
@@ -15,5 +17,7 @@ pub(crate) mod watchdog;
 // so that pool::lifecycle and pool::pipeline continue to access them unchanged.
 pub(super) use scan::{find_free_agent_for_stage, is_agent_free};
 
+/// Re-export for `startup::tick_loop`.
+pub(crate) use merge_failure_block_subscriber::spawn_merge_failure_block_subscriber;
 /// Re-export for `startup::tick_loop`.
 pub(crate) use merge_failure_subscriber::spawn_merge_failure_subscriber;
diff --git a/server/src/config/mod.rs b/server/src/config/mod.rs
index 397b8866..901edbeb 100644
--- a/server/src/config/mod.rs
+++ b/server/src/config/mod.rs
@@ -139,6 +139,12 @@ pub struct ProjectConfig {
     /// unaffected.  Default: `true`.
     #[serde(default = "default_status_push_enabled")]
     pub status_push_enabled: bool,
+    /// Number of consecutive `MergeFailure` transitions before a story is
+    /// automatically blocked.  The auto-block subscriber resets the counter
+    /// whenever the story leaves `MergeFailure` (e.g. after a successful
+    /// merge or `FixupRequested`).  Default: 3.  Set to 0 to disable.
+    #[serde(default = "default_merge_failure_block_threshold")]
+    pub merge_failure_block_threshold: u32,
 }
 
 /// Configuration for the filesystem watcher's sweep behaviour.
@@ -210,6 +216,10 @@ fn default_status_push_enabled() -> bool {
     true
 }
 
+fn default_merge_failure_block_threshold() -> u32 {
+    3
+}
+
 fn default_max_mesh_peers() -> usize {
     3
 }
@@ -368,6 +378,7 @@ impl Default for ProjectConfig {
             gateway_url: None,
             gateway_project: None,
             status_push_enabled: default_status_push_enabled(),
+            merge_failure_block_threshold: default_merge_failure_block_threshold(),
         }
     }
 }
@@ -457,6 +468,7 @@ impl ProjectConfig {
                         gateway_url: None,
                         gateway_project: None,
                         status_push_enabled: default_status_push_enabled(),
+                        merge_failure_block_threshold: default_merge_failure_block_threshold(),
                     };
                     validate_agents(&config.agent)?;
                     return Ok(config);
@@ -497,6 +509,7 @@ impl ProjectConfig {
                         gateway_url: None,
                         gateway_project: None,
                         status_push_enabled: default_status_push_enabled(),
+                        merge_failure_block_threshold: default_merge_failure_block_threshold(),
                     };
                     validate_agents(&config.agent)?;
                     Ok(config)
@@ -525,6 +538,7 @@ impl ProjectConfig {
                         gateway_url: None,
                         gateway_project: None,
                         status_push_enabled: default_status_push_enabled(),
+                        merge_failure_block_threshold: default_merge_failure_block_threshold(),
                     })
                 }
             }
diff --git a/server/src/crdt_state/read.rs b/server/src/crdt_state/read.rs
index 83252563..d8848cd0 100644
--- a/server/src/crdt_state/read.rs
+++ b/server/src/crdt_state/read.rs
@@ -507,7 +507,7 @@ fn project_stage_for_view(
         }),
         "qa" => Some(Stage::Qa),
         "blocked" => Some(Stage::Blocked {
-            reason: String::new(),
+            reason: resume_to.unwrap_or("").to_string(),
         }),
         "merge" => Some(Stage::Merge {
             feature_branch: BranchName(format!("feature/story-{story_id}")),
diff --git a/server/src/crdt_state/state/tests.rs b/server/src/crdt_state/state/tests.rs
index 4ef73937..e195354a 100644
--- a/server/src/crdt_state/state/tests.rs
+++ b/server/src/crdt_state/state/tests.rs
@@ -119,8 +119,16 @@ async fn subscribe_receives_stage_transition_events() {
         None,
     );
 
-    let evt: CrdtEvent = rx.try_recv().expect("expected CrdtEvent on insert");
-    assert_eq!(evt.story_id, "906_story_subscribe");
+    // Drain any stale events from concurrent tests until we see ours.
+    // CRDT_EVENT_TX is global; parallel tests emit to the same channel.
+    let evt: CrdtEvent = loop {
+        let e = rx
+            .try_recv()
+            .expect("expected CrdtEvent for 906_story_subscribe");
+        if e.story_id == "906_story_subscribe" {
+            break e;
+        }
+    };
     assert!(evt.from_stage.is_none());
     assert!(matches!(
         evt.to_stage,
@@ -138,8 +146,14 @@ async fn subscribe_receives_stage_transition_events() {
         None,
     );
 
-    let evt: CrdtEvent = rx.try_recv().expect("expected CrdtEvent on stage change");
-    assert_eq!(evt.story_id, "906_story_subscribe");
+    let evt: CrdtEvent = loop {
+        let e = rx
+            .try_recv()
+            .expect("expected CrdtEvent for 906_story_subscribe stage change");
+        if e.story_id == "906_story_subscribe" {
+            break e;
+        }
+    };
     assert!(matches!(
         evt.from_stage,
         Some(crate::pipeline_state::Stage::Backlog)
diff --git a/server/src/pipeline_state/apply.rs b/server/src/pipeline_state/apply.rs
index 0d31a7ff..e278bc16 100644
--- a/server/src/pipeline_state/apply.rs
+++ b/server/src/pipeline_state/apply.rs
@@ -75,7 +75,7 @@ pub fn apply_transition(
         super::Stage::Superseded { superseded_by, .. } => {
             crate::crdt_state::set_resume_to_raw(story_id, &superseded_by.0);
         }
-        super::Stage::Rejected { reason, .. } => {
+        super::Stage::Rejected { reason, .. } | super::Stage::Blocked { reason } => {
             crate::crdt_state::set_resume_to_raw(story_id, reason);
         }
         _ => {}
diff --git a/server/src/pipeline_state/transition.rs b/server/src/pipeline_state/transition.rs
index 9f4b299b..12035258 100644
--- a/server/src/pipeline_state/transition.rs
+++ b/server/src/pipeline_state/transition.rs
@@ -203,7 +203,9 @@ pub fn transition(state: Stage, event: PipelineEvent) -> Result<Stage, Transitio
         (Backlog, Block { reason })
         | (Coding { .. }, Block { reason })
         | (Qa, Block { reason })
-        | (Merge { .. }, Block { reason }) => Ok(Blocked { reason }),
+        | (Merge { .. }, Block { reason })
+        | (MergeFailure { .. }, Block { reason })
+        | (MergeFailureFinal { .. }, Block { reason }) => Ok(Blocked { reason }),
 
         // Story 945: ReviewHold no longer auto-archives.  It transitions the
         // story to `Stage::ReviewHold { resume_to, reason }`, preserving the
diff --git a/server/src/startup/tick_loop.rs b/server/src/startup/tick_loop.rs
index c128d36d..1b78e59e 100644
--- a/server/src/startup/tick_loop.rs
+++ b/server/src/startup/tick_loop.rs
@@ -68,6 +68,10 @@ pub(crate) fn spawn_event_bridges(
             root.clone(),
         );
 
+        // Consecutive-failure auto-block subscriber: blocks stories after N
+        // consecutive MergeFailure transitions (story 1018).
+        crate::agents::pool::auto_assign::spawn_merge_failure_block_subscriber(root.clone());
+
         // Content-store GC subscriber: purges all ContentKey::* entries for a
         // story when it reaches a terminal stage, preventing zombie entries from
         // accumulating in the process heap (story 996).
diff --git a/server/src/worktree/cleanup.rs b/server/src/worktree/cleanup.rs
index 4c22c7b0..e34612eb 100644
--- a/server/src/worktree/cleanup.rs
+++ b/server/src/worktree/cleanup.rs
@@ -214,6 +214,7 @@ mod tests {
             gateway_url: None,
             gateway_project: None,
             status_push_enabled: true,
+            merge_failure_block_threshold: 3,
         }
     }
 
diff --git a/server/src/worktree/create.rs b/server/src/worktree/create.rs
index 7047b7cb..0fcc61c1 100644
--- a/server/src/worktree/create.rs
+++ b/server/src/worktree/create.rs
@@ -220,6 +220,7 @@ mod tests {
             gateway_url: None,
             gateway_project: None,
             status_push_enabled: true,
+            merge_failure_block_threshold: 3,
         }
     }
 
diff --git a/server/src/worktree/remove.rs b/server/src/worktree/remove.rs
index cec5a723..894368b2 100644
--- a/server/src/worktree/remove.rs
+++ b/server/src/worktree/remove.rs
@@ -92,6 +92,7 @@ mod tests {
             gateway_url: None,
             gateway_project: None,
             status_push_enabled: true,
+            merge_failure_block_threshold: 3,
         }
     }
 
diff --git a/server/src/worktree/sweep.rs b/server/src/worktree/sweep.rs
index 58dd71c1..7ea2d9ba 100644
--- a/server/src/worktree/sweep.rs
+++ b/server/src/worktree/sweep.rs
@@ -135,6 +135,7 @@ mod tests {
             gateway_url: None,
             gateway_project: None,
             status_push_enabled: true,
+            merge_failure_block_threshold: 3,
         }
     }