diff --git a/headroom/cli/wrap.py b/headroom/cli/wrap.py
index 966d150ac..c3d42af40 100644
--- a/headroom/cli/wrap.py
+++ b/headroom/cli/wrap.py
@@ -3598,9 +3598,16 @@ def _proxy_version(payload: dict[str, Any] | None) -> str | None:
 def _proxy_needs_version_restart(payload: dict[str, Any] | None) -> bool:
     """Return True when a running Headroom proxy uses a different package version."""
     running_version = _proxy_version(payload)
-    running_release = _normalize_release_version(running_version)
     # -dev is a display marker for source builds; compare the base release so a
-    # dev CLI still restarts a stale proxy on a real version difference.
+    # dev CLI still restarts a stale proxy on a real version difference. The
+    # suffix must be stripped from the running version too: with it intact,
+    # "0.34.0-dev" fails the release regex, normalizes to None, and the check
+    # below silently never fires for source-built proxies. The scheme is always
+    # "<base>-dev" (get_version in headroom/_version.py); any future "-rcN" or
+    # "-dev.N" style would need stripping here as well.
+    running_release = _normalize_release_version(
+        running_version.removesuffix("-dev") if running_version is not None else None
+    )
     current_release = _normalize_release_version(_HEADROOM_VERSION.removesuffix("-dev"))
     return (
         running_release is not None
diff --git a/tests/test_cli/test_wrap_persistent.py b/tests/test_cli/test_wrap_persistent.py
index 740b81afc..a3649b9ed 100644
--- a/tests/test_cli/test_wrap_persistent.py
+++ b/tests/test_cli/test_wrap_persistent.py
@@ -332,6 +332,28 @@ def test_proxy_version_restart_ignores_non_release_source_labels(monkeypatch) ->
     assert wrap_cli._proxy_needs_version_restart({"version": "0.29.0"}) is True
 
 
+def test_proxy_version_restart_strips_dev_suffix_on_both_sides(monkeypatch) -> None:
+    """A dev-built proxy must be compared by its base release, like the CLI is.
+
+    Regression: "0.34.0-dev" failed the release regex, normalized to None, and
+    the check never fired, so a stale source-built proxy was silently reused
+    forever (observed: a 21-day-old 0.34.0-dev proxy reused by a 0.37.0-dev
+    wrap).
+    """
+    monkeypatch.setattr(wrap_cli, "_HEADROOM_VERSION", "0.37.0-dev")
+    assert wrap_cli._proxy_needs_version_restart({"version": "0.34.0-dev"}) is True
+    assert wrap_cli._proxy_needs_version_restart({"version": "0.37.0-dev"}) is False
+    assert wrap_cli._proxy_needs_version_restart({"version": "0.36.4"}) is True
+
+    monkeypatch.setattr(wrap_cli, "_HEADROOM_VERSION", "0.37.0")
+    assert wrap_cli._proxy_needs_version_restart({"version": "0.36.4-dev"}) is True
+
+    # Unparseable running versions still never trigger a restart.
+    assert wrap_cli._proxy_needs_version_restart({"version": "unknown"}) is False
+    assert wrap_cli._proxy_needs_version_restart(None) is False
+    assert wrap_cli._proxy_needs_version_restart({}) is False
+
+
 def test_ensure_proxy_restarts_ephemeral_proxy_for_openai_api_url_mismatch(monkeypatch) -> None:
     calls: list[object] = []
     health = {