diff --git a/packages/opencode/src/config/config.ts b/packages/opencode/src/config/config.ts
index c51136d198..327dea464f 100644
--- a/packages/opencode/src/config/config.ts
+++ b/packages/opencode/src/config/config.ts
@@ -49,7 +49,13 @@ const log = Log.create({ service: "config" })
 // Custom merge function that concatenates array fields instead of replacing them
 // Keep remeda's deep conditional merge type out of hot config-loading paths; TS profiling showed it dominates here.
 function mergeConfig(target: Info, source: Info): Info {
-  return mergeDeep(target, source) as Info
+  const merged = mergeDeep(target, source) as Info
+  if (!target.tool_output || !source.tool_output) return merged
+  if (target.tool_output.truncate !== false && source.tool_output.truncate !== false) return merged
+
+  // Disabled truncation and custom limits are separate config modes; the later layer selects the mode.
+  merged.tool_output = source.tool_output
+  return merged
 }
 
 function mergeConfigConcatArrays(target: Info, source: Info): Info {
diff --git a/packages/opencode/test/config/config.test.ts b/packages/opencode/test/config/config.test.ts
index 913ad049e1..a2ac219c15 100644
--- a/packages/opencode/test/config/config.test.ts
+++ b/packages/opencode/test/config/config.test.ts
@@ -1307,6 +1307,42 @@ test("tool_output only accepts thresholds when truncation is enabled", () => {
   ).toThrow()
 })
 
+it.effect("project tool_output limits replace disabled global truncation", () =>
+  withConfigTree(
+    {
+      global: { tool_output: { truncate: false } },
+      project: { tool_output: { max_lines: 200 } },
+    },
+    Effect.gen(function* () {
+      expect((yield* Config.use.get()).tool_output).toEqual({ max_lines: 200 })
+    }),
+  ),
+)
+
+it.effect("project disabled tool_output replaces global limits", () =>
+  withConfigTree(
+    {
+      global: { tool_output: { max_lines: 200, max_bytes: 8192 } },
+      project: { tool_output: { truncate: false } },
+    },
+    Effect.gen(function* () {
+      expect((yield* Config.use.get()).tool_output).toEqual({ truncate: false })
+    }),
+  ),
+)
+
+it.effect("enabled tool_output limits still merge across layers", () =>
+  withConfigTree(
+    {
+      global: { tool_output: { max_bytes: 8192 } },
+      project: { tool_output: { max_lines: 200 } },
+    },
+    Effect.gen(function* () {
+      expect((yield* Config.use.get()).tool_output).toEqual({ max_bytes: 8192, max_lines: 200 })
+    }),
+  ),
+)
+
 // MCP config merging tests
 
 it.instance("project config can override MCP server enabled status", () =>