diff --git a/server/src/http/mcp.rs b/server/src/http/mcp.rs
index adb6b6e..731c7fc 100644
--- a/server/src/http/mcp.rs
+++ b/server/src/http/mcp.rs
@@ -1788,6 +1788,13 @@ fn tool_report_merge_failure(args: &Value, ctx: &AppContext) -> Result<String, S
     slog!("[mergemaster] Merge failure reported for '{story_id}': {reason}");
     ctx.agents.set_merge_failure_reported(story_id);
 
+    // Broadcast the failure so the Matrix notification listener can post an
+    // error message to configured rooms without coupling this tool to the bot.
+    let _ = ctx.watcher_tx.send(crate::io::watcher::WatcherEvent::MergeFailure {
+        story_id: story_id.to_string(),
+        reason: reason.to_string(),
+    });
+
     // Persist the failure reason to the story file's front matter so it
     // survives server restarts and is visible in the web UI.
     if let Ok(project_root) = ctx.state.get_project_root() {
diff --git a/server/src/http/ws.rs b/server/src/http/ws.rs
index d5eae43..7e56380 100644
--- a/server/src/http/ws.rs
+++ b/server/src/http/ws.rs
@@ -150,6 +150,9 @@ impl From<WatcherEvent> for Option<WsResponse> {
             }),
             WatcherEvent::ConfigChanged => Some(WsResponse::AgentConfigChanged),
             WatcherEvent::AgentStateChanged => Some(WsResponse::AgentStateChanged),
+            // MergeFailure is handled by the Matrix notification listener only;
+            // no WebSocket message is needed for the frontend.
+            WatcherEvent::MergeFailure { .. } => None,
         }
     }
 }
diff --git a/server/src/io/watcher.rs b/server/src/io/watcher.rs
index 649463e..231a0b3 100644
--- a/server/src/io/watcher.rs
+++ b/server/src/io/watcher.rs
@@ -50,6 +50,14 @@ pub enum WatcherEvent {
     /// Triggers a pipeline state refresh so the frontend can update agent
     /// assignments without waiting for a filesystem event.
     AgentStateChanged,
+    /// A story encountered a failure (e.g. merge failure).
+    /// Triggers an error notification to configured Matrix rooms.
+    MergeFailure {
+        /// Work item ID (e.g. `"42_story_my_feature"`).
+        story_id: String,
+        /// Human-readable description of the failure.
+        reason: String,
+    },
 }
 
 /// Return `true` if `path` is the root-level `.story_kit/project.toml`, i.e.
diff --git a/server/src/matrix/notifications.rs b/server/src/matrix/notifications.rs
index 90820f9..4ec2170 100644
--- a/server/src/matrix/notifications.rs
+++ b/server/src/matrix/notifications.rs
@@ -81,6 +81,24 @@ pub fn format_stage_notification(
     (plain, html)
 }
 
+/// Format an error notification message for a story failure.
+///
+/// Returns `(plain_text, html)` suitable for `RoomMessageEventContent::text_html`.
+pub fn format_error_notification(
+    item_id: &str,
+    story_name: Option<&str>,
+    reason: &str,
+) -> (String, String) {
+    let number = extract_story_number(item_id).unwrap_or(item_id);
+    let name = story_name.unwrap_or(item_id);
+
+    let plain = format!("\u{274c} #{number} {name} \u{2014} {reason}");
+    let html = format!(
+        "\u{274c} <strong>#{number}</strong> <em>{name}</em> \u{2014} {reason}"
+    );
+    (plain, html)
+}
+
 /// Spawn a background task that listens for watcher events and posts
 /// stage-transition notifications to all configured Matrix rooms.
 pub fn spawn_notification_listener(
@@ -126,6 +144,32 @@ pub fn spawn_notification_listener(
                         }
                     }
                 }
+                Ok(WatcherEvent::MergeFailure {
+                    ref story_id,
+                    ref reason,
+                }) => {
+                    let story_name =
+                        read_story_name(&project_root, "4_merge", story_id);
+                    let (plain, html) = format_error_notification(
+                        story_id,
+                        story_name.as_deref(),
+                        reason,
+                    );
+
+                    slog!("[matrix-bot] Sending error notification: {plain}");
+
+                    for room_id in &room_ids {
+                        if let Some(room) = client.get_room(room_id) {
+                            let content =
+                                RoomMessageEventContent::text_html(plain.clone(), html.clone());
+                            if let Err(e) = room.send(content).await {
+                                slog!(
+                                    "[matrix-bot] Failed to send error notification to {room_id}: {e}"
+                                );
+                            }
+                        }
+                    }
+                }
                 Ok(_) => {} // Ignore non-work-item events
                 Err(broadcast::error::RecvError::Lagged(n)) => {
                     slog!(
@@ -246,6 +290,42 @@ mod tests {
         assert_eq!(name, None);
     }
 
+    // ── format_error_notification ────────────────────────────────────────────
+
+    #[test]
+    fn format_error_notification_with_story_name() {
+        let (plain, html) =
+            format_error_notification("262_story_bot_errors", Some("Bot error notifications"), "merge conflict in src/main.rs");
+        assert_eq!(
+            plain,
+            "\u{274c} #262 Bot error notifications \u{2014} merge conflict in src/main.rs"
+        );
+        assert_eq!(
+            html,
+            "\u{274c} <strong>#262</strong> <em>Bot error notifications</em> \u{2014} merge conflict in src/main.rs"
+        );
+    }
+
+    #[test]
+    fn format_error_notification_without_story_name_falls_back_to_item_id() {
+        let (plain, _html) =
+            format_error_notification("42_bug_fix_thing", None, "tests failed");
+        assert_eq!(
+            plain,
+            "\u{274c} #42 42_bug_fix_thing \u{2014} tests failed"
+        );
+    }
+
+    #[test]
+    fn format_error_notification_non_numeric_id_uses_full_id() {
+        let (plain, _html) =
+            format_error_notification("abc_story_thing", Some("Some Story"), "clippy errors");
+        assert_eq!(
+            plain,
+            "\u{274c} #abc_story_thing Some Story \u{2014} clippy errors"
+        );
+    }
+
     // ── format_stage_notification ───────────────────────────────────────────
 
     #[test]