diff --git a/packages/ui/src/stores/useTerminalStore.test.ts b/packages/ui/src/stores/useTerminalStore.test.ts
index 773f1152..c60f0ffd 100644
--- a/packages/ui/src/stores/useTerminalStore.test.ts
+++ b/packages/ui/src/stores/useTerminalStore.test.ts
@@ -123,3 +123,38 @@ describe('terminal state reconciliation', () => {
     expect(useTerminalStore.getState().buffers.size).toBe(0);
   });
 });
+
+describe('default terminal tab labels', () => {
+  afterEach(() => useTerminalStore.getState().clearAll());
+
+  const labels = () =>
+    useTerminalStore.getState().getDirectoryState('/repo')!.tabs.map((tab) => tab.label);
+
+  // Regression for https://github.com/openchamber/openchamber/issues/2718
+  test('does not reuse the number of a closed tab', () => {
+    const first = setup();
+    useTerminalStore.getState().createTab('/repo');
+    expect(labels()).toEqual(['Terminal', 'Terminal 2']);
+
+    useTerminalStore.getState().closeTab('/repo', first);
+    useTerminalStore.getState().createTab('/repo');
+
+    expect(labels()).toEqual(['Terminal 2', 'Terminal 3']);
+  });
+
+  test('numbers past a user-renamed "Terminal N" label instead of duplicating it', () => {
+    const first = setup();
+    useTerminalStore.getState().setTabLabel('/repo', first, 'Terminal 5');
+    useTerminalStore.getState().createTab('/repo');
+
+    expect(labels()).toEqual(['Terminal 5', 'Terminal 6']);
+  });
+
+  test('ignores custom labels and starts over at "Terminal" when no default-labeled tabs remain', () => {
+    const first = setup();
+    useTerminalStore.getState().setTabLabel('/repo', first, 'build');
+    useTerminalStore.getState().createTab('/repo');
+
+    expect(labels()).toEqual(['build', 'Terminal']);
+  });
+});
diff --git a/packages/ui/src/stores/useTerminalStore.ts b/packages/ui/src/stores/useTerminalStore.ts
index 6b68d32a..485717ff 100644
--- a/packages/ui/src/stores/useTerminalStore.ts
+++ b/packages/ui/src/stores/useTerminalStore.ts
@@ -157,6 +157,27 @@ function normalizeDirectory(dir: string): string {
   return normalized;
 }
 
+const DEFAULT_TAB_LABEL_PATTERN = /^Terminal(?: (\d+))?$/;
+
+/**
+ * Default labels must stay unique among the directory's open tabs even after
+ * closes (#2718), so number from the highest existing "Terminal N" suffix
+ * instead of the live tab count. Labels are persisted with the tabs, so the
+ * derivation also survives reloads without a dedicated counter. User-renamed
+ * labels only participate when they match the default pattern; they are never
+ * rewritten.
+ */
+const nextDefaultTabLabel = (tabs: readonly TerminalTab[]): string => {
+  let highest = 0;
+  for (const tab of tabs) {
+    const match = DEFAULT_TAB_LABEL_PATTERN.exec(tab.label);
+    if (!match) continue;
+    const value = match[1] ? Number.parseInt(match[1], 10) : 1;
+    if (Number.isSafeInteger(value)) highest = Math.max(highest, value);
+  }
+  return highest === 0 ? 'Terminal' : `Terminal ${highest + 1}`;
+};
+
 const createEmptyTab = (id: string, label: string): TerminalTab => ({
   id,
   terminalSessionId: null,
@@ -295,8 +316,7 @@ export const useTerminalStore = create<TerminalStore>()(
             const existing = newSessions.get(key);
 
             const nextTabId = state.nextTabId + 1;
-            const labelIndex = (existing?.tabs.length ?? 0) + 1;
-            const label = `Terminal ${labelIndex}`;
+            const label = nextDefaultTabLabel(existing?.tabs ?? []);
             const tab = createEmptyTab(tabId, label);
 
             if (!existing) {