diff --git a/packages/cli/__tests__/commands/init.test.ts b/packages/cli/__tests__/commands/init.test.ts
index e6a1a8f43..7f530fd38 100644
--- a/packages/cli/__tests__/commands/init.test.ts
+++ b/packages/cli/__tests__/commands/init.test.ts
@@ -1,7 +1,8 @@
 import { describe, it, expect, vi, afterEach } from "vitest";
-import { mkdtempSync, writeFileSync, rmSync, existsSync } from "node:fs";
+import { mkdtempSync, writeFileSync, readFileSync, rmSync, existsSync } from "node:fs";
 import { join } from "node:path";
 import { tmpdir } from "node:os";
+import { createServer } from "node:net";
 
 import { Command } from "commander";
 import { registerInit } from "../../src/commands/init.js";
@@ -35,4 +36,53 @@ describe("init command", () => {
     // Original file should be untouched
     expect(existsSync(outputPath)).toBe(true);
   });
+
+  it("auto mode uses port 3000 when it is available", async () => {
+    tmpDir = mkdtempSync(join(tmpdir(), "ao-init-test-"));
+    const outputPath = join(tmpDir, "agent-orchestrator.yaml");
+
+    const program = new Command();
+    program.exitOverride();
+    registerInit(program);
+
+    vi.spyOn(console, "log").mockImplementation(() => {});
+
+    await program.parseAsync(["node", "test", "init", "--auto", "--output", outputPath]);
+
+    const content = readFileSync(outputPath, "utf-8");
+    expect(content).toContain("port: 3000");
+  });
+
+  it("auto mode picks next free port when 3000 is occupied", async () => {
+    tmpDir = mkdtempSync(join(tmpdir(), "ao-init-test-"));
+    const outputPath = join(tmpDir, "agent-orchestrator.yaml");
+
+    // Occupy port 3000
+    const blocker = createServer();
+    await new Promise<void>((resolve) => {
+      blocker.listen(3000, "127.0.0.1", () => resolve());
+    });
+
+    try {
+      const program = new Command();
+      program.exitOverride();
+      registerInit(program);
+
+      vi.spyOn(console, "log").mockImplementation(() => {});
+
+      await program.parseAsync(["node", "test", "init", "--auto", "--output", outputPath]);
+
+      const content = readFileSync(outputPath, "utf-8");
+      // Should NOT be 3000 since we're occupying it
+      expect(content).not.toContain("port: 3000");
+      // Should pick 3001 (or higher if 3001 is also taken)
+      const portMatch = content.match(/port: (\d+)/);
+      expect(portMatch).toBeTruthy();
+      const port = parseInt(portMatch![1], 10);
+      expect(port).toBeGreaterThan(3000);
+      expect(port).toBeLessThan(3100);
+    } finally {
+      await new Promise<void>((resolve) => blocker.close(() => resolve()));
+    }
+  });
 });
diff --git a/packages/cli/src/commands/init.ts b/packages/cli/src/commands/init.ts
index b009c9f5f..17c54e256 100644
--- a/packages/cli/src/commands/init.ts
+++ b/packages/cli/src/commands/init.ts
@@ -6,12 +6,24 @@ import { stringify as yamlStringify } from "yaml";
 import chalk from "chalk";
 import type { Command } from "commander";
 import { git, gh, execSilent } from "../lib/shell.js";
+import { isPortAvailable } from "../lib/web-dir.js";
 import {
   detectProjectType,
   generateRulesFromTemplates,
   formatProjectTypeForDisplay,
 } from "../lib/project-detection.js";
 
+const DEFAULT_PORT = 3000;
+const MAX_PORT_SCAN = 100;
+
+/** Find the first available port starting from `start`, scanning upward. */
+async function findFreePort(start: number): Promise<number> {
+  for (let port = start; port < start + MAX_PORT_SCAN; port++) {
+    if (await isPortAvailable(port)) return port;
+  }
+  return start; // fallback — will fail at bind time with a clear error
+}
+
 async function prompt(
   rl: ReturnType<typeof createInterface>,
   question: string,
@@ -231,7 +243,8 @@ export function registerInit(program: Command): void {
           "~/.agent-orchestrator",
         );
         const worktreeDir = await prompt(rl, "Worktree directory", "~/.worktrees");
-        const portStr = await prompt(rl, "Dashboard port", "3000");
+        const freePort = await findFreePort(DEFAULT_PORT);
+        const portStr = await prompt(rl, "Dashboard port", String(freePort));
         const port = parseInt(portStr, 10);
         if (isNaN(port) || port < 1 || port > 65535) {
           console.error(chalk.red("\nInvalid port number. Must be 1-65535."));
@@ -430,10 +443,11 @@ async function handleAutoMode(outputPath: string, smart: boolean): Promise<void>
   const path = env.isGitRepo ? workingDir : `~/${projectId}`;
   const defaultBranch = env.defaultBranch || "main";
 
+  const port = await findFreePort(DEFAULT_PORT);
   const config: Record<string, unknown> = {
     dataDir: "~/.agent-orchestrator",
     worktreeDir: "~/.worktrees",
-    port: 3000,
+    port,
     defaults: {
       runtime: "tmux",
       agent: "claude-code",
diff --git a/packages/cli/src/lib/web-dir.ts b/packages/cli/src/lib/web-dir.ts
index 7ee48c311..349f2fa90 100644
--- a/packages/cli/src/lib/web-dir.ts
+++ b/packages/cli/src/lib/web-dir.ts
@@ -20,7 +20,7 @@ const DEFAULT_TERMINAL_PORT = 14800;
  * Check if a TCP port is available by attempting to bind to it.
  * Returns true if the port is free, false if in use.
  */
-function isPortAvailable(port: number): Promise<boolean> {
+export function isPortAvailable(port: number): Promise<boolean> {
   return new Promise((resolve) => {
     const server = createServer();
     server.once("error", () => {