diff --git a/desktop/src/lib/secure-storage.ts b/desktop/src/lib/secure-storage.ts
index d882ede..75c1bfa 100644
--- a/desktop/src/lib/secure-storage.ts
+++ b/desktop/src/lib/secure-storage.ts
@@ -2,20 +2,36 @@
  * ZCLAW Secure Storage
  *
  * Provides secure credential storage using the OS keyring/keychain.
- * Falls back to localStorage when not running in Tauri or if keyring is unavailable.
+ * Falls back to encrypted localStorage when not running in Tauri or if keyring is unavailable.
  *
  * Platform support:
  * - Windows: DPAPI
  * - macOS: Keychain
  * - Linux: Secret Service API (gnome-keyring, kwallet, etc.)
+ * - Fallback: AES-GCM encrypted localStorage
  */
 
 import { invoke } from '@tauri-apps/api/core';
 import { isTauriRuntime } from './tauri-gateway';
+import {
+  arrayToBase64,
+  base64ToArray,
+  deriveKey,
+  encrypt,
+  decrypt,
+  generateMasterKey,
+} from './crypto-utils';
 
 // Cache for keyring availability check
 let keyringAvailable: boolean | null = null;
 
+// Encryption constants for localStorage fallback
+const ENCRYPTED_PREFIX = 'enc_';
+const MASTER_KEY_NAME = 'zclaw-master-key';
+
+// Cache for the derived crypto key
+let cachedCryptoKey: CryptoKey | null = null;
+
 /**
  * Check if secure storage (keyring) is available
  */
@@ -41,7 +57,7 @@ export async function isSecureStorageAvailable(): Promise<boolean> {
 
 /**
  * Secure storage interface
- * Uses OS keyring when available, falls back to localStorage
+ * Uses OS keyring when available, falls back to encrypted localStorage
  */
 export const secureStorage = {
   /**
@@ -59,16 +75,16 @@ export const secureStorage = {
         } else {
           await invoke('secure_store_delete', { key });
         }
-        // Also write to localStorage as backup/migration support
-        writeLocalStorageBackup(key, trimmedValue);
+        // Also write encrypted backup to localStorage for migration support
+        await writeEncryptedLocalStorage(key, trimmedValue);
         return;
       } catch (error) {
-        console.warn('[SecureStorage] Failed to use keyring, falling back to localStorage:', error);
+        console.warn('[SecureStorage] Failed to use keyring, falling back to encrypted localStorage:', error);
       }
     }
 
-    // Fallback to localStorage
-    writeLocalStorageBackup(key, trimmedValue);
+    // Fallback to encrypted localStorage
+    await writeEncryptedLocalStorage(key, trimmedValue);
   },
 
   /**
@@ -83,15 +99,15 @@ export const secureStorage = {
         if (value !== null && value !== undefined && value !== '') {
           return value;
         }
-        // If keyring returned empty, try localStorage fallback for migration
-        return readLocalStorageBackup(key);
+        // If keyring returned empty, try encrypted localStorage fallback for migration
+        return await readEncryptedLocalStorage(key);
       } catch (error) {
-        console.warn('[SecureStorage] Failed to read from keyring, trying localStorage:', error);
+        console.warn('[SecureStorage] Failed to read from keyring, trying encrypted localStorage:', error);
       }
     }
 
-    // Fallback to localStorage
-    return readLocalStorageBackup(key);
+    // Fallback to encrypted localStorage
+    return await readEncryptedLocalStorage(key);
   },
 
   /**
@@ -121,7 +137,116 @@ export const secureStorage = {
 
 /**
  * localStorage backup functions for migration and fallback
+ * Now with AES-GCM encryption for non-Tauri environments
  */
+
+/**
+ * Get or create the master encryption key for localStorage fallback
+ */
+async function getOrCreateMasterKey(): Promise<CryptoKey> {
+  if (cachedCryptoKey) {
+    return cachedCryptoKey;
+  }
+
+  let masterKeyRaw = localStorage.getItem(MASTER_KEY_NAME);
+
+  if (!masterKeyRaw) {
+    masterKeyRaw = generateMasterKey();
+    localStorage.setItem(MASTER_KEY_NAME, masterKeyRaw);
+  }
+
+  cachedCryptoKey = await deriveKey(masterKeyRaw);
+  return cachedCryptoKey;
+}
+
+/**
+ * Check if a stored value is encrypted (has iv and data fields)
+ */
+function isEncrypted(value: string): boolean {
+  try {
+    const parsed = JSON.parse(value);
+    return parsed && typeof parsed.iv === 'string' && typeof parsed.data === 'string';
+  } catch {
+    return false;
+  }
+}
+
+/**
+ * Write encrypted data to localStorage
+ */
+async function writeEncryptedLocalStorage(key: string, value: string): Promise<void> {
+  try {
+    const encryptedKey = ENCRYPTED_PREFIX + key;
+
+    if (!value) {
+      localStorage.removeItem(encryptedKey);
+      // Also remove legacy unencrypted key
+      localStorage.removeItem(key);
+      return;
+    }
+
+    try {
+      const cryptoKey = await getOrCreateMasterKey();
+      const encrypted = await encrypt(value, cryptoKey);
+      localStorage.setItem(encryptedKey, JSON.stringify(encrypted));
+      // Remove legacy unencrypted key if it exists
+      localStorage.removeItem(key);
+    } catch (error) {
+      console.error('[SecureStorage] Encryption failed:', error);
+      // Fallback to plaintext if encryption fails (should not happen)
+      localStorage.setItem(key, value);
+    }
+  } catch {
+    // Ignore localStorage failures
+  }
+}
+
+/**
+ * Read and decrypt data from localStorage
+ * Supports both encrypted and legacy unencrypted formats
+ */
+async function readEncryptedLocalStorage(key: string): Promise<string | null> {
+  try {
+    // Try encrypted key first
+    const encryptedKey = ENCRYPTED_PREFIX + key;
+    const encryptedRaw = localStorage.getItem(encryptedKey);
+
+    if (encryptedRaw && isEncrypted(encryptedRaw)) {
+      try {
+        const cryptoKey = await getOrCreateMasterKey();
+        const encrypted = JSON.parse(encryptedRaw);
+        return await decrypt(encrypted, cryptoKey);
+      } catch (error) {
+        console.error('[SecureStorage] Decryption failed:', error);
+        // Fall through to try legacy key
+      }
+    }
+
+    // Try legacy unencrypted key for backward compatibility
+    const legacyValue = localStorage.getItem(key);
+    if (legacyValue !== null) {
+      return legacyValue;
+    }
+
+    return null;
+  } catch {
+    return null;
+  }
+}
+
+/**
+ * Clear data from localStorage (both encrypted and legacy)
+ */
+function clearLocalStorageBackup(key: string): void {
+  try {
+    localStorage.removeItem(ENCRYPTED_PREFIX + key);
+    localStorage.removeItem(key);
+  } catch {
+    // Ignore localStorage failures
+  }
+}
+
+// Keep synchronous versions for backward compatibility (deprecated)
 function writeLocalStorageBackup(key: string, value: string): void {
   try {
     if (value) {
@@ -142,14 +267,6 @@ function readLocalStorageBackup(key: string): string | null {
   }
 }
 
-function clearLocalStorageBackup(key: string): void {
-  try {
-    localStorage.removeItem(key);
-  } catch {
-    // Ignore localStorage failures
-  }
-}
-
 /**
  * Synchronous versions for compatibility with existing code
  * These use localStorage only and are provided for gradual migration
diff --git a/desktop/tests/lib/secure-storage.test.ts b/desktop/tests/lib/secure-storage.test.ts
new file mode 100644
index 0000000..34ca9e3
--- /dev/null
+++ b/desktop/tests/lib/secure-storage.test.ts
@@ -0,0 +1,187 @@
+/**
+ * Tests for secure-storage.ts
+ *
+ * These tests verify that credentials are encrypted when stored in localStorage
+ * (fallback mode when OS keyring is unavailable).
+ */
+import { describe, it, expect, beforeEach, vi } from 'vitest';
+
+// Mock Tauri runtime to return false (non-Tauri environment)
+vi.mock('../../src/lib/tauri-gateway', () => ({
+  isTauriRuntime: () => false,
+}));
+
+// Import after mocking
+import { secureStorage } from '../../src/lib/secure-storage';
+
+describe('secureStorage', () => {
+  beforeEach(() => {
+    localStorage.clear();
+    vi.clearAllMocks();
+  });
+
+  describe('encryption fallback', () => {
+    it('should encrypt data when storing to localStorage', async () => {
+      const key = 'test-key';
+      const value = 'secret-value';
+
+      await secureStorage.set(key, value);
+
+      // Check that localStorage doesn't contain plaintext
+      const encryptedKey = 'enc_' + key;
+      const stored = localStorage.getItem(encryptedKey);
+      expect(stored).not.toBeNull();
+      expect(stored).not.toBe(value);
+      expect(stored).not.toContain('secret-value');
+
+      // Should be JSON with iv and data fields
+      const parsed = JSON.parse(stored!);
+      expect(parsed).toHaveProperty('iv');
+      expect(parsed).toHaveProperty('data');
+    });
+
+    it('should decrypt data when retrieving from localStorage', async () => {
+      const key = 'test-key';
+      const value = 'secret-value';
+
+      await secureStorage.set(key, value);
+      const retrieved = await secureStorage.get(key);
+
+      expect(retrieved).toBe(value);
+    });
+
+    it('should handle special characters in values', async () => {
+      const key = 'test-key';
+      const value = 'p@ssw0rd!#$%^&*(){}[]|\\:";\'<>?,./~`';
+
+      await secureStorage.set(key, value);
+      const retrieved = await secureStorage.get(key);
+
+      expect(retrieved).toBe(value);
+    });
+
+    it('should handle Unicode characters in values', async () => {
+      const key = 'test-key';
+      const value = '密码测试123テスト🔑🔐';
+
+      await secureStorage.set(key, value);
+      const retrieved = await secureStorage.get(key);
+
+      expect(retrieved).toBe(value);
+    });
+
+    it('should handle empty string by removing the key', async () => {
+      const key = 'test-key';
+      const value = 'initial-value';
+
+      await secureStorage.set(key, value);
+      expect(await secureStorage.get(key)).toBe(value);
+
+      // Setting empty string should remove the key
+      await secureStorage.set(key, '');
+      const encryptedKey = 'enc_' + key;
+      expect(localStorage.getItem(encryptedKey)).toBeNull();
+      expect(await secureStorage.get(key)).toBeNull();
+    });
+
+    it('should handle null by removing the key', async () => {
+      const key = 'test-key';
+      const value = 'initial-value';
+
+      await secureStorage.set(key, value);
+      expect(await secureStorage.get(key)).toBe(value);
+
+      // Delete should remove the key
+      await secureStorage.delete(key);
+      const encryptedKey = 'enc_' + key;
+      expect(localStorage.getItem(encryptedKey)).toBeNull();
+    });
+  });
+
+  describe('backward compatibility', () => {
+    it('should read unencrypted legacy data', async () => {
+      const key = 'legacy-key';
+      const value = 'legacy-value';
+
+      // Simulate legacy unencrypted storage
+      localStorage.setItem(key, value);
+
+      const retrieved = await secureStorage.get(key);
+      expect(retrieved).toBe(value);
+    });
+
+    it('should migrate unencrypted data to encrypted on next set', async () => {
+      const key = 'legacy-key';
+      const value = 'legacy-value';
+      const newValue = 'new-encrypted-value';
+
+      // Simulate legacy unencrypted storage
+      localStorage.setItem(key, value);
+
+      // Read should return legacy value
+      const retrieved = await secureStorage.get(key);
+      expect(retrieved).toBe(value);
+
+      // Write should encrypt the new value
+      await secureStorage.set(key, newValue);
+
+      // Legacy key should be removed, encrypted key should exist
+      expect(localStorage.getItem(key)).toBeNull();
+      const encryptedKey = 'enc_' + key;
+      const stored = localStorage.getItem(encryptedKey);
+      expect(stored).not.toBeNull();
+      expect(stored).not.toContain(newValue);
+
+      // Should retrieve the new encrypted value
+      expect(await secureStorage.get(key)).toBe(newValue);
+    });
+  });
+
+  describe('encryption strength', () => {
+    it('should use different IV for each encryption', async () => {
+      const key = 'test-key';
+      const value = 'same-value';
+
+      await secureStorage.set(key, value);
+      const encrypted1 = localStorage.getItem('enc_' + key);
+
+      await secureStorage.set(key, value);
+      const encrypted2 = localStorage.getItem('enc_' + key);
+
+      // Both should be encrypted versions of the same value
+      expect(encrypted1).not.toBe(encrypted2);
+
+      // But both should decrypt to the same value
+      const parsed1 = JSON.parse(encrypted1!);
+      const parsed2 = JSON.parse(encrypted2!);
+      expect(parsed1.iv).not.toBe(parsed2.iv); // Different IVs
+      expect(parsed1.data).not.toBe(parsed2.data); // Different ciphertext
+    });
+  });
+
+  describe('error handling', () => {
+    it('should return null for non-existent keys', async () => {
+      const retrieved = await secureStorage.get('non-existent-key');
+      expect(retrieved).toBeNull();
+    });
+
+    it('should handle corrupted encrypted data gracefully', async () => {
+      const key = 'corrupted-key';
+      const value = 'valid-value';
+
+      // Store valid encrypted data
+      await secureStorage.set(key, value);
+
+      // Corrupt the encrypted data
+      const encryptedKey = 'enc_' + key;
+      const encrypted = localStorage.getItem(encryptedKey);
+      const parsed = JSON.parse(encrypted!);
+      parsed.data = 'corrupted-data';
+      localStorage.setItem(encryptedKey, JSON.stringify(parsed));
+
+      // Should return null for corrupted data
+      const retrieved = await secureStorage.get(key);
+      expect(retrieved).toBeNull();
+    });
+  });
+});