diff --git a/tests/test_path_traversal_security.py b/tests/test_path_traversal_security.py
new file mode 100644
index 0000000..1345398
--- /dev/null
+++ b/tests/test_path_traversal_security.py
@@ -0,0 +1,65 @@
+"""
+Test path traversal security fix.
+
+Fixes vulnerability reported in:
+- https://github.com/BeehiveInnovations/zen-mcp-server/issues/293
+- https://github.com/BeehiveInnovations/zen-mcp-server/issues/312
+
+The vulnerability: is_dangerous_path() only did exact string matching,
+so /etc was blocked but /etc/passwd was allowed.
+"""
+
+from pathlib import Path
+
+from utils.security_config import is_dangerous_path
+
+
+class TestPathTraversalFix:
+    """Test that subdirectories of dangerous paths are now blocked."""
+
+    def test_exact_match_still_works(self):
+        """Test that exact dangerous paths are still blocked."""
+        assert is_dangerous_path(Path("/etc")) is True
+        assert is_dangerous_path(Path("/usr")) is True
+        assert is_dangerous_path(Path("/var")) is True
+
+    def test_subdirectory_now_blocked(self):
+        """Test that subdirectories are now blocked (the fix)."""
+        # These were allowed before the fix
+        assert is_dangerous_path(Path("/etc/passwd")) is True
+        assert is_dangerous_path(Path("/etc/shadow")) is True
+        assert is_dangerous_path(Path("/etc/hosts")) is True
+        assert is_dangerous_path(Path("/var/log/auth.log")) is True
+
+    def test_deeply_nested_blocked(self):
+        """Test that deeply nested paths are blocked."""
+        assert is_dangerous_path(Path("/etc/ssh/sshd_config")) is True
+        assert is_dangerous_path(Path("/usr/local/bin/python")) is True
+
+    def test_root_blocked(self):
+        """Test that root directory is blocked."""
+        assert is_dangerous_path(Path("/")) is True
+
+    def test_safe_paths_allowed(self):
+        """Test that safe paths are still allowed."""
+        # User project directories should be allowed
+        assert is_dangerous_path(Path("/tmp/test")) is False
+        assert is_dangerous_path(Path("/tmp/myproject/src")) is False
+
+    def test_similar_names_not_blocked(self):
+        """Test that paths with similar names are not blocked."""
+        # /etcbackup should NOT be blocked (it's not under /etc)
+        assert is_dangerous_path(Path("/tmp/etcbackup")) is False
+        assert is_dangerous_path(Path("/tmp/my_etc_files")) is False
+
+
+class TestRegressionPrevention:
+    """Regression tests for the specific vulnerability."""
+
+    def test_etc_passwd_blocked(self):
+        """Test /etc/passwd is blocked (common attack target)."""
+        assert is_dangerous_path(Path("/etc/passwd")) is True
+
+    def test_etc_shadow_blocked(self):
+        """Test /etc/shadow is blocked (password hashes)."""
+        assert is_dangerous_path(Path("/etc/shadow")) is True
diff --git a/utils/security_config.py b/utils/security_config.py
index ce8fb29..9623113 100644
--- a/utils/security_config.py
+++ b/utils/security_config.py
@@ -89,16 +89,47 @@ EXCLUDED_DIRS = {
 
 def is_dangerous_path(path: Path) -> bool:
     """
-    Check if a path is in the dangerous paths list.
+    Check if a path is in or under a dangerous directory.
+
+    Uses PREFIX MATCHING to block dangerous directories AND their subdirectories.
+    For example, if "/etc" is in DANGEROUS_PATHS, both "/etc" and "/etc/passwd"
+    will be blocked.
 
     Args:
         path: Path to check
 
     Returns:
         True if the path is dangerous and should not be accessed
+
+    Security:
+        Fixes path traversal vulnerability (CWE-22) reported in:
+        - https://github.com/BeehiveInnovations/zen-mcp-server/issues/293
+        - https://github.com/BeehiveInnovations/zen-mcp-server/issues/312
     """
     try:
         resolved = path.resolve()
-        return str(resolved) in DANGEROUS_PATHS or resolved.parent == resolved
+        resolved_str = str(resolved)
+
+        # Check 1: Root directory (filesystem root)
+        if resolved.parent == resolved:
+            return True
+
+        # Check 2: Exact match or subdirectory of dangerous paths
+        for dangerous in DANGEROUS_PATHS:
+            # Skip root "/" - already handled above
+            if dangerous == "/":
+                continue
+
+            # Exact match
+            if resolved_str == dangerous:
+                return True
+
+            # Subdirectory check: path starts with dangerous + separator
+            # Use os.sep for platform-appropriate separator
+            if resolved_str.startswith(dangerous + "/") or resolved_str.startswith(dangerous + "\\"):
+                return True
+
+        return False
+
     except Exception:
         return True  # If we can't resolve, consider it dangerous