diff --git a/dream-server/bin/dream-host-agent.py b/dream-server/bin/dream-host-agent.py
index 5e3f67ae3..68b381b1a 100755
--- a/dream-server/bin/dream-host-agent.py
+++ b/dream-server/bin/dream-host-agent.py
@@ -185,40 +185,6 @@ def _precreate_data_dirs(service_id: str):
                     logger.warning("Failed to pre-create %s: %s", dir_path, e)
 
 
-def _resolve_setup_hook(ext_dir: Path) -> Path | None:
-    """Read manifest to find setup_hook path. Returns None if no hook defined."""
-    manifest_path = None
-    for name in ("manifest.yaml", "manifest.yml"):
-        candidate = ext_dir / name
-        if candidate.exists():
-            manifest_path = candidate
-            break
-    if manifest_path is None:
-        return None
-    try:
-        import yaml
-        manifest = yaml.safe_load(manifest_path.read_text(encoding="utf-8"))
-    except (ImportError, OSError):
-        return None
-    if not isinstance(manifest, dict):
-        return None
-    service_def = manifest.get("service", {})
-    if not isinstance(service_def, dict):
-        return None
-    setup_hook = service_def.get("setup_hook", "")
-    if not isinstance(setup_hook, str) or not setup_hook:
-        return None
-    hook_path = (ext_dir / setup_hook).resolve()
-    try:
-        hook_path.relative_to(ext_dir.resolve())
-    except ValueError:
-        logger.warning("Path traversal attempt in setup_hook for %s: %s", ext_dir.name, setup_hook)
-        return None
-    if not hook_path.is_file():
-        return None
-    return hook_path
-
-
 def docker_compose_action(service_id: str, action: str) -> tuple:
     flags = resolve_compose_flags()
     if action == "start":
@@ -931,11 +897,27 @@ def _run_install():
                 if run_setup_hook:
                     _write_progress(service_id, "setup_hook", "Running setup...")
                     ext_dir = USER_EXTENSIONS_DIR / service_id
-                    hook_path = _resolve_setup_hook(ext_dir)
+                    hook_path = _resolve_hook(ext_dir, "post_install")
                     if hook_path:
+                        # Minimal allowlist env — mirror _execute_hook (L856-866)
+                        # to prevent leaking host-agent secrets to extension scripts.
+                        manifest = _read_manifest(ext_dir)
+                        service_def = manifest.get("service", {}) if manifest else {}
+                        if not isinstance(service_def, dict):
+                            service_def = {}
+                        hook_env = {
+                            "PATH": os.environ.get("PATH", "/usr/bin:/bin"),
+                            "HOME": os.environ.get("HOME", ""),
+                            "SERVICE_ID": service_id,
+                            "SERVICE_PORT": str(service_def.get("port", 0)),
+                            "SERVICE_DATA_DIR": str(DATA_DIR / service_id),
+                            "DREAM_VERSION": DREAM_VERSION,
+                            "GPU_BACKEND": GPU_BACKEND,
+                            "HOOK_NAME": "post_install",
+                        }
                         result = subprocess.run(
                             ["bash", str(hook_path), str(INSTALL_DIR), GPU_BACKEND],
-                            cwd=str(ext_dir),
+                            cwd=str(ext_dir), env=hook_env,
                             capture_output=True, text=True,
                             timeout=SUBPROCESS_TIMEOUT_START,
                         )
diff --git a/dream-server/extensions/services/dashboard-api/tests/test_host_agent.py b/dream-server/extensions/services/dashboard-api/tests/test_host_agent.py
index 234cd9aa8..7a6b3af19 100644
--- a/dream-server/extensions/services/dashboard-api/tests/test_host_agent.py
+++ b/dream-server/extensions/services/dashboard-api/tests/test_host_agent.py
@@ -180,3 +180,50 @@ def test_missing_cache_file_is_noop(self, tmp_path, monkeypatch):
         monkeypatch.setattr(_mod, "INSTALL_DIR", install_dir)
 
         invalidate_compose_cache()  # must not raise
+
+
+# --- Install setup-hook env allowlist (regression) ---
+#
+# Locks in the fix that strips host-agent secrets from the env passed to
+# extension setup hooks during _handle_install. A source-level check is used
+# because the subprocess.run call lives inside a nested closure started on a
+# daemon thread, which makes dynamic mocking fragile.
+
+
+class TestInstallHookEnvAllowlist:
+
+    def _install_source(self):
+        import inspect
+        return inspect.getsource(_mod.AgentHandler._handle_install)
+
+    def test_setup_hook_subprocess_run_passes_env_kwarg(self):
+        src = self._install_source()
+        assert "env=hook_env" in src, (
+            "setup_hook subprocess.run must pass env=hook_env "
+            "(regression: do not fall back to inheriting os.environ)"
+        )
+
+    def test_setup_hook_env_excludes_host_agent_secrets(self):
+        src = self._install_source()
+        for secret in ("AGENT_API_KEY", "DREAM_AGENT_KEY", "DASHBOARD_API_KEY"):
+            assert secret not in src, (
+                f"_handle_install must not reference {secret}; "
+                "extension setup hooks must not receive host-agent secrets"
+            )
+
+    def test_setup_hook_env_contains_allowlist_keys(self):
+        src = self._install_source()
+        for key in (
+            "PATH", "HOME", "SERVICE_ID", "SERVICE_PORT",
+            "SERVICE_DATA_DIR", "DREAM_VERSION", "GPU_BACKEND", "HOOK_NAME",
+        ):
+            assert f'"{key}"' in src, (
+                f"setup_hook env allowlist missing required key {key}"
+            )
+
+    def test_setup_hook_uses_resolve_hook_with_post_install(self):
+        src = self._install_source()
+        assert '_resolve_hook(ext_dir, "post_install")' in src, (
+            "setup_hook must use _resolve_hook(..., 'post_install'); "
+            "the legacy _resolve_setup_hook has been removed"
+        )