diff --git a/enterprise/poetry.lock b/enterprise/poetry.lock
index 6a67d5c4d4..d2c45e0c0f 100644
--- a/enterprise/poetry.lock
+++ b/enterprise/poetry.lock
@@ -5536,8 +5536,8 @@ websockets = ">=12"
 [package.source]
 type = "git"
 url = "https://github.com/All-Hands-AI/agent-sdk.git"
-reference = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc"
-resolved_reference = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc"
+reference = "08cf609a996523c0199c61c768d74417b7e96109"
+resolved_reference = "08cf609a996523c0199c61c768d74417b7e96109"
 subdirectory = "openhands/agent_server"
 
 [[package]]
@@ -5582,8 +5582,8 @@ memory-profiler = "^0.61.0"
 numpy = "*"
 openai = "1.99.9"
 openhands-aci = "0.3.2"
-openhands-agent-server = {git = "https://github.com/All-Hands-AI/agent-sdk.git", rev = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc", subdirectory = "openhands/agent_server"}
-openhands-sdk = {git = "https://github.com/All-Hands-AI/agent-sdk.git", rev = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc", subdirectory = "openhands/sdk"}
+openhands-agent-server = {git = "https://github.com/All-Hands-AI/agent-sdk.git", rev = "08cf609a996523c0199c61c768d74417b7e96109", subdirectory = "openhands/agent_server"}
+openhands-sdk = {git = "https://github.com/All-Hands-AI/agent-sdk.git", rev = "08cf609a996523c0199c61c768d74417b7e96109", subdirectory = "openhands/sdk"}
 opentelemetry-api = "^1.33.1"
 opentelemetry-exporter-otlp-proto-grpc = "^1.33.1"
 pathspec = "^0.12.1"
@@ -5662,8 +5662,8 @@ boto3 = ["boto3 (>=1.35.0)"]
 [package.source]
 type = "git"
 url = "https://github.com/All-Hands-AI/agent-sdk.git"
-reference = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc"
-resolved_reference = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc"
+reference = "08cf609a996523c0199c61c768d74417b7e96109"
+resolved_reference = "08cf609a996523c0199c61c768d74417b7e96109"
 subdirectory = "openhands/sdk"
 
 [[package]]
diff --git a/openhands/app_server/config.py b/openhands/app_server/config.py
index f94a614da1..d5dd726081 100644
--- a/openhands/app_server/config.py
+++ b/openhands/app_server/config.py
@@ -130,6 +130,12 @@ def config_from_env() -> AppServerConfig:
     from openhands.app_server.sandbox.docker_sandbox_spec_service import (
         DockerSandboxSpecServiceInjector,
     )
+    from openhands.app_server.sandbox.process_sandbox_service import (
+        ProcessSandboxServiceInjector,
+    )
+    from openhands.app_server.sandbox.process_sandbox_spec_service import (
+        ProcessSandboxSpecServiceInjector,
+    )
     from openhands.app_server.sandbox.remote_sandbox_service import (
         RemoteSandboxServiceInjector,
     )
@@ -155,12 +161,16 @@ def config_from_env() -> AppServerConfig:
                 api_key=os.environ['SANDBOX_API_KEY'],
                 api_url=os.environ['SANDBOX_REMOTE_RUNTIME_API_URL'],
             )
+        elif os.getenv('RUNTIME') in ('local', 'process'):
+            config.sandbox = ProcessSandboxServiceInjector()
         else:
             config.sandbox = DockerSandboxServiceInjector()
 
     if config.sandbox_spec is None:
         if os.getenv('RUNTIME') == 'remote':
             config.sandbox_spec = RemoteSandboxSpecServiceInjector()
+        elif os.getenv('RUNTIME') in ('local', 'process'):
+            config.sandbox_spec = ProcessSandboxSpecServiceInjector()
         else:
             config.sandbox_spec = DockerSandboxSpecServiceInjector()
 
diff --git a/openhands/app_server/sandbox/process_sandbox_service.py b/openhands/app_server/sandbox/process_sandbox_service.py
new file mode 100644
index 0000000000..955f6368bc
--- /dev/null
+++ b/openhands/app_server/sandbox/process_sandbox_service.py
@@ -0,0 +1,438 @@
+"""Process-based sandbox service implementation.
+
+This service creates sandboxes by spawning separate agent server processes,
+each running within a dedicated directory.
+"""
+
+import asyncio
+import logging
+import os
+import socket
+import subprocess
+import sys
+import time
+from dataclasses import dataclass
+from datetime import datetime
+from typing import AsyncGenerator
+
+import base62
+import httpx
+import psutil
+from fastapi import Request
+from pydantic import BaseModel, ConfigDict, Field
+
+from openhands.agent_server.utils import utc_now
+from openhands.app_server.errors import SandboxError
+from openhands.app_server.sandbox.sandbox_models import (
+    AGENT_SERVER,
+    ExposedUrl,
+    SandboxInfo,
+    SandboxPage,
+    SandboxStatus,
+)
+from openhands.app_server.sandbox.sandbox_service import (
+    SandboxService,
+    SandboxServiceInjector,
+)
+from openhands.app_server.sandbox.sandbox_spec_models import SandboxSpecInfo
+from openhands.app_server.sandbox.sandbox_spec_service import SandboxSpecService
+from openhands.app_server.services.injector import InjectorState
+
+_logger = logging.getLogger(__name__)
+
+
+class ProcessInfo(BaseModel):
+    """Information about a running process."""
+
+    pid: int
+    port: int
+    user_id: str | None
+    working_dir: str
+    session_api_key: str
+    created_at: datetime
+    sandbox_spec_id: str
+
+    model_config = ConfigDict(frozen=True)
+
+
+# Global store
+_processes: dict[str, ProcessInfo] = {}
+
+
+@dataclass
+class ProcessSandboxService(SandboxService):
+    """Sandbox service that spawns separate agent server processes.
+
+    Each sandbox is implemented as a separate Python process running the
+    action execution server, with each process:
+    - Operating in a dedicated directory
+    - Listening on a unique port
+    - Having its own session API key
+    """
+
+    user_id: str | None
+    sandbox_spec_service: SandboxSpecService
+    base_working_dir: str
+    base_port: int
+    python_executable: str
+    agent_server_module: str
+    health_check_path: str
+    httpx_client: httpx.AsyncClient
+
+    def __post_init__(self):
+        """Initialize the service after dataclass creation."""
+        # Ensure base working directory exists
+        os.makedirs(self.base_working_dir, exist_ok=True)
+
+    def _find_unused_port(self) -> int:
+        """Find an unused port starting from base_port."""
+        port = self.base_port
+        while port < self.base_port + 10000:  # Try up to 10000 ports
+            try:
+                with socket.socket(socket.AF_INET, socket.SOCK_STREAM) as s:
+                    s.bind(('', port))
+                    return port
+            except OSError:
+                port += 1
+        raise SandboxError('No available ports found')
+
+    def _create_sandbox_directory(self, sandbox_id: str) -> str:
+        """Create a dedicated directory for the sandbox."""
+        sandbox_dir = os.path.join(self.base_working_dir, sandbox_id)
+        os.makedirs(sandbox_dir, exist_ok=True)
+        return sandbox_dir
+
+    async def _start_agent_process(
+        self,
+        sandbox_id: str,
+        port: int,
+        working_dir: str,
+        session_api_key: str,
+        sandbox_spec: SandboxSpecInfo,
+    ) -> subprocess.Popen:
+        """Start the agent server process."""
+
+        # Prepare environment variables
+        env = os.environ.copy()
+        env.update(sandbox_spec.initial_env)
+        env['SESSION_API_KEY'] = session_api_key
+
+        # Prepare command arguments
+        cmd = [
+            self.python_executable,
+            '-m',
+            self.agent_server_module,
+            '--port',
+            str(port),
+        ]
+
+        _logger.info(
+            f'Starting agent process for sandbox {sandbox_id}: {" ".join(cmd)}'
+        )
+
+        try:
+            # Start the process
+            process = subprocess.Popen(
+                cmd,
+                env=env,
+                cwd=working_dir,
+                stdout=subprocess.PIPE,
+                stderr=subprocess.PIPE,
+            )
+
+            # Wait a moment for the process to start
+            await asyncio.sleep(1)
+
+            # Check if process is still running
+            if process.poll() is not None:
+                stdout, stderr = process.communicate()
+                raise SandboxError(f'Agent process failed to start: {stderr.decode()}')
+
+            return process
+
+        except Exception as e:
+            raise SandboxError(f'Failed to start agent process: {e}')
+
+    async def _wait_for_server_ready(self, port: int, timeout: int = 30) -> bool:
+        """Wait for the agent server to be ready."""
+        start_time = time.time()
+        while time.time() - start_time < timeout:
+            try:
+                response = await self.httpx_client.get(
+                    f'http://localhost:{port}/alive', timeout=5.0
+                )
+                if response.status_code == 200:
+                    data = response.json()
+                    if data.get('status') == 'ok':
+                        return True
+            except Exception:
+                pass
+            await asyncio.sleep(1)
+        return False
+
+    def _get_process_status(self, process_info: ProcessInfo) -> SandboxStatus:
+        """Get the status of a process."""
+        try:
+            process = psutil.Process(process_info.pid)
+            if process.is_running():
+                status = process.status()
+                if status == psutil.STATUS_RUNNING:
+                    return SandboxStatus.RUNNING
+                elif status == psutil.STATUS_STOPPED:
+                    return SandboxStatus.PAUSED
+                else:
+                    return SandboxStatus.STARTING
+            else:
+                return SandboxStatus.MISSING
+        except (psutil.NoSuchProcess, psutil.AccessDenied):
+            return SandboxStatus.MISSING
+
+    async def _process_to_sandbox_info(
+        self, sandbox_id: str, process_info: ProcessInfo
+    ) -> SandboxInfo:
+        """Convert process info to sandbox info."""
+        status = self._get_process_status(process_info)
+
+        exposed_urls = None
+        session_api_key = None
+
+        if status == SandboxStatus.RUNNING:
+            # Check if server is actually responding
+            try:
+                response = await self.httpx_client.get(
+                    f'http://localhost:{process_info.port}{self.health_check_path}',
+                    timeout=5.0,
+                )
+                if response.status_code == 200:
+                    exposed_urls = [
+                        ExposedUrl(
+                            name=AGENT_SERVER,
+                            url=f'http://localhost:{process_info.port}',
+                        ),
+                    ]
+                    session_api_key = process_info.session_api_key
+                else:
+                    status = SandboxStatus.ERROR
+            except Exception:
+                status = SandboxStatus.ERROR
+
+        return SandboxInfo(
+            id=sandbox_id,
+            created_by_user_id=process_info.user_id,
+            sandbox_spec_id=process_info.sandbox_spec_id,
+            status=status,
+            session_api_key=session_api_key,
+            exposed_urls=exposed_urls,
+            created_at=process_info.created_at,
+        )
+
+    async def search_sandboxes(
+        self,
+        page_id: str | None = None,
+        limit: int = 100,
+    ) -> SandboxPage:
+        """Search for sandboxes."""
+        # Get all process infos
+        all_processes = list(_processes.items())
+
+        # Sort by creation time (newest first)
+        all_processes.sort(key=lambda x: x[1].created_at, reverse=True)
+
+        # Apply pagination
+        start_idx = 0
+        if page_id:
+            try:
+                start_idx = int(page_id)
+            except ValueError:
+                start_idx = 0
+
+        end_idx = start_idx + limit
+        paginated_processes = all_processes[start_idx:end_idx]
+
+        # Convert to sandbox infos
+        items = []
+        for sandbox_id, process_info in paginated_processes:
+            sandbox_info = await self._process_to_sandbox_info(sandbox_id, process_info)
+            items.append(sandbox_info)
+
+        # Determine next page ID
+        next_page_id = None
+        if end_idx < len(all_processes):
+            next_page_id = str(end_idx)
+
+        return SandboxPage(items=items, next_page_id=next_page_id)
+
+    async def get_sandbox(self, sandbox_id: str) -> SandboxInfo | None:
+        """Get a single sandbox."""
+        process_info = _processes.get(sandbox_id)
+        if process_info is None:
+            return None
+
+        return await self._process_to_sandbox_info(sandbox_id, process_info)
+
+    async def start_sandbox(self, sandbox_spec_id: str | None = None) -> SandboxInfo:
+        """Start a new sandbox."""
+        # Get sandbox spec
+        if sandbox_spec_id is None:
+            sandbox_spec = await self.sandbox_spec_service.get_default_sandbox_spec()
+        else:
+            sandbox_spec_maybe = await self.sandbox_spec_service.get_sandbox_spec(
+                sandbox_spec_id
+            )
+            if sandbox_spec_maybe is None:
+                raise ValueError('Sandbox Spec not found')
+            sandbox_spec = sandbox_spec_maybe
+
+        # Generate unique sandbox ID and session API key
+        sandbox_id = base62.encodebytes(os.urandom(16))
+        session_api_key = base62.encodebytes(os.urandom(32))
+
+        # Find available port
+        port = self._find_unused_port()
+
+        # Create sandbox directory
+        working_dir = self._create_sandbox_directory(sandbox_id)
+
+        # Start the agent process
+        process = await self._start_agent_process(
+            sandbox_id=sandbox_id,
+            port=port,
+            working_dir=working_dir,
+            session_api_key=session_api_key,
+            sandbox_spec=sandbox_spec,
+        )
+
+        # Store process info
+        process_info = ProcessInfo(
+            pid=process.pid,
+            port=port,
+            user_id=self.user_id,
+            working_dir=working_dir,
+            session_api_key=session_api_key,
+            created_at=utc_now(),
+            sandbox_spec_id=sandbox_spec.id,
+        )
+        _processes[sandbox_id] = process_info
+
+        # Wait for server to be ready
+        if not await self._wait_for_server_ready(port):
+            # Clean up if server didn't start properly
+            await self.delete_sandbox(sandbox_id)
+            raise SandboxError('Agent Server Failed to start properly')
+
+        return await self._process_to_sandbox_info(sandbox_id, process_info)
+
+    async def resume_sandbox(self, sandbox_id: str) -> bool:
+        """Resume a paused sandbox."""
+        process_info = _processes.get(sandbox_id)
+        if process_info is None:
+            return False
+
+        try:
+            process = psutil.Process(process_info.pid)
+            if process.status() == psutil.STATUS_STOPPED:
+                process.resume()
+            return True
+        except (psutil.NoSuchProcess, psutil.AccessDenied):
+            return False
+
+    async def pause_sandbox(self, sandbox_id: str) -> bool:
+        """Pause a running sandbox."""
+        process_info = _processes.get(sandbox_id)
+        if process_info is None:
+            return False
+
+        try:
+            process = psutil.Process(process_info.pid)
+            if process.is_running():
+                process.suspend()
+            return True
+        except (psutil.NoSuchProcess, psutil.AccessDenied):
+            return False
+
+    async def delete_sandbox(self, sandbox_id: str) -> bool:
+        """Delete a sandbox."""
+        process_info = _processes.get(sandbox_id)
+        if process_info is None:
+            return False
+
+        try:
+            # Terminate the process
+            process = psutil.Process(process_info.pid)
+            if process.is_running():
+                # Try graceful termination first
+                process.terminate()
+                try:
+                    process.wait(timeout=10)
+                except psutil.TimeoutExpired:
+                    # Force kill if graceful termination fails
+                    process.kill()
+                    process.wait(timeout=5)
+
+            # Clean up the working directory
+            import shutil
+
+            if os.path.exists(process_info.working_dir):
+                shutil.rmtree(process_info.working_dir, ignore_errors=True)
+
+            # Remove from our tracking
+            del _processes[sandbox_id]
+
+            return True
+
+        except (psutil.NoSuchProcess, psutil.AccessDenied, OSError) as e:
+            _logger.warning(f'Error deleting sandbox {sandbox_id}: {e}')
+            # Still remove from tracking even if cleanup failed
+            if sandbox_id in _processes:
+                del _processes[sandbox_id]
+            return True
+
+
+class ProcessSandboxServiceInjector(SandboxServiceInjector):
+    """Dependency injector for process sandbox services."""
+
+    base_working_dir: str = Field(
+        default='/tmp/openhands-sandboxes',
+        description='Base directory for sandbox working directories',
+    )
+    base_port: int = Field(
+        default=8000, description='Base port number for agent servers'
+    )
+    python_executable: str = Field(
+        default=sys.executable,
+        description='Python executable to use for agent processes',
+    )
+    agent_server_module: str = Field(
+        default='openhands.agent_server',
+        description='Python module for the agent server',
+    )
+    health_check_path: str = Field(
+        default='/alive', description='Health check endpoint path'
+    )
+
+    async def inject(
+        self, state: InjectorState, request: Request | None = None
+    ) -> AsyncGenerator[SandboxService, None]:
+        # Define inline to prevent circular lookup
+        from openhands.app_server.config import (
+            get_httpx_client,
+            get_sandbox_spec_service,
+            get_user_context,
+        )
+
+        async with (
+            get_httpx_client(state, request) as httpx_client,
+            get_sandbox_spec_service(state, request) as sandbox_spec_service,
+            get_user_context(state, request) as user_context,
+        ):
+            user_id = await user_context.get_user_id()
+            yield ProcessSandboxService(
+                user_id=user_id,
+                sandbox_spec_service=sandbox_spec_service,
+                base_working_dir=self.base_working_dir,
+                base_port=self.base_port,
+                python_executable=self.python_executable,
+                agent_server_module=self.agent_server_module,
+                health_check_path=self.health_check_path,
+                httpx_client=httpx_client,
+            )
diff --git a/openhands/app_server/sandbox/process_sandbox_spec_service.py b/openhands/app_server/sandbox/process_sandbox_spec_service.py
new file mode 100644
index 0000000000..97bb17977a
--- /dev/null
+++ b/openhands/app_server/sandbox/process_sandbox_spec_service.py
@@ -0,0 +1,43 @@
+from typing import AsyncGenerator
+
+from fastapi import Request
+from pydantic import Field
+
+from openhands.app_server.sandbox.preset_sandbox_spec_service import (
+    PresetSandboxSpecService,
+)
+from openhands.app_server.sandbox.sandbox_spec_models import (
+    SandboxSpecInfo,
+)
+from openhands.app_server.sandbox.sandbox_spec_service import (
+    AGENT_SERVER_VERSION,
+    SandboxSpecService,
+    SandboxSpecServiceInjector,
+)
+from openhands.app_server.services.injector import InjectorState
+
+
+def get_default_sandbox_specs():
+    return [
+        SandboxSpecInfo(
+            id=AGENT_SERVER_VERSION,
+            command=['python', '-m', 'openhands.agent_server'],
+            initial_env={
+                # VSCode disabled for now
+                'OH_ENABLE_VS_CODE': '0',
+            },
+            working_dir='',
+        )
+    ]
+
+
+class ProcessSandboxSpecServiceInjector(SandboxSpecServiceInjector):
+    specs: list[SandboxSpecInfo] = Field(
+        default_factory=get_default_sandbox_specs,
+        description='Preset list of sandbox specs',
+    )
+
+    async def inject(
+        self, state: InjectorState, request: Request | None = None
+    ) -> AsyncGenerator[SandboxSpecService, None]:
+        yield PresetSandboxSpecService(specs=self.specs)
diff --git a/openhands/app_server/sandbox/sandbox_spec_service.py b/openhands/app_server/sandbox/sandbox_spec_service.py
index cf6537ba2b..8a47115b8f 100644
--- a/openhands/app_server/sandbox/sandbox_spec_service.py
+++ b/openhands/app_server/sandbox/sandbox_spec_service.py
@@ -11,7 +11,7 @@ from openhands.sdk.utils.models import DiscriminatedUnionMixin
 
 # The version of the agent server to use for deployments.
 # Typically this will be the same as the values from the pyproject.toml
-AGENT_SERVER_VERSION = 'f8ca02c4a3b847bfc50b3c5e579ce126c511fefc'
+AGENT_SERVER_VERSION = '08cf609a996523c0199c61c768d74417b7e96109'
 
 
 class SandboxSpecService(ABC):
diff --git a/poetry.lock b/poetry.lock
index 2d3d71cd52..d4d11d8d28 100644
--- a/poetry.lock
+++ b/poetry.lock
@@ -7044,8 +7044,8 @@ websockets = ">=12"
 [package.source]
 type = "git"
 url = "https://github.com/All-Hands-AI/agent-sdk.git"
-reference = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc"
-resolved_reference = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc"
+reference = "08cf609a996523c0199c61c768d74417b7e96109"
+resolved_reference = "08cf609a996523c0199c61c768d74417b7e96109"
 subdirectory = "openhands/agent_server"
 
 [[package]]
@@ -7073,8 +7073,8 @@ boto3 = ["boto3 (>=1.35.0)"]
 [package.source]
 type = "git"
 url = "https://github.com/All-Hands-AI/agent-sdk.git"
-reference = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc"
-resolved_reference = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc"
+reference = "08cf609a996523c0199c61c768d74417b7e96109"
+resolved_reference = "08cf609a996523c0199c61c768d74417b7e96109"
 subdirectory = "openhands/sdk"
 
 [[package]]
@@ -12583,4 +12583,4 @@ third-party-runtimes = ["daytona", "e2b-code-interpreter", "modal", "runloop-api
 [metadata]
 lock-version = "2.1"
 python-versions = "^3.12,<3.14"
-content-hash = "90ae740f15865e77791e259038940ba45652f2639159cad26f2b3292948b32e8"
+content-hash = "056952164091353e4fd14ac7710b1c74bc2e59511578afecf279fc170be1c68e"
diff --git a/pyproject.toml b/pyproject.toml
index 48266783d7..1b04f29594 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -113,10 +113,10 @@ e2b-code-interpreter = { version = "^2.0.0", optional = true }
 pybase62 = "^1.0.0"
 
 # V1 dependencies
-openhands-agent-server = { git = "https://github.com/All-Hands-AI/agent-sdk.git", subdirectory = "openhands/agent_server", rev = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc" }
-openhands-sdk = { git = "https://github.com/All-Hands-AI/agent-sdk.git", subdirectory = "openhands/sdk", rev = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc" }
+openhands-agent-server = { git = "https://github.com/All-Hands-AI/agent-sdk.git", subdirectory = "openhands/agent_server", rev = "08cf609a996523c0199c61c768d74417b7e96109" }
+openhands-sdk = { git = "https://github.com/All-Hands-AI/agent-sdk.git", subdirectory = "openhands/sdk", rev = "08cf609a996523c0199c61c768d74417b7e96109" }
 # This refuses to install
-# openhands-tools = { git = "https://github.com/All-Hands-AI/agent-sdk.git", subdirectory = "openhands/tools", rev = "f8ca02c4a3b847bfc50b3c5e579ce126c511fefc" }
+# openhands-tools = { git = "https://github.com/All-Hands-AI/agent-sdk.git", subdirectory = "openhands/tools", rev = "08cf609a996523c0199c61c768d74417b7e96109" }
 python-jose = { version = ">=3.3", extras = [ "cryptography" ] }
 sqlalchemy = { extras = [ "asyncio" ], version = "^2.0.40" }
 pg8000 = "^1.31.5"
diff --git a/tests/unit/app_server/test_process_sandbox_service.py b/tests/unit/app_server/test_process_sandbox_service.py
new file mode 100644
index 0000000000..f39384241d
--- /dev/null
+++ b/tests/unit/app_server/test_process_sandbox_service.py
@@ -0,0 +1,343 @@
+"""Tests for ProcessSandboxService."""
+
+import os
+import tempfile
+from datetime import datetime
+from unittest.mock import AsyncMock, MagicMock, patch
+
+import httpx
+import psutil
+import pytest
+
+from openhands.app_server.sandbox.process_sandbox_service import (
+    ProcessInfo,
+    ProcessSandboxService,
+    ProcessSandboxServiceInjector,
+)
+from openhands.app_server.sandbox.sandbox_models import SandboxStatus
+
+
+class MockSandboxSpec:
+    """Mock sandbox specification."""
+
+    def __init__(self):
+        self.id = 'test-spec'
+        self.initial_env = {'TEST_VAR': 'test_value'}
+        self.plugins = []
+
+
+class MockSandboxSpecService:
+    """Mock sandbox spec service."""
+
+    async def get_default_sandbox_spec(self):
+        return MockSandboxSpec()
+
+    async def get_sandbox_spec(self, spec_id: str):
+        if spec_id == 'test-spec':
+            return MockSandboxSpec()
+        return None
+
+
+@pytest.fixture
+def mock_httpx_client():
+    """Mock httpx client."""
+    client = AsyncMock(spec=httpx.AsyncClient)
+    return client
+
+
+@pytest.fixture
+def temp_dir():
+    """Create a temporary directory for testing."""
+    with tempfile.TemporaryDirectory() as tmpdir:
+        yield tmpdir
+
+
+@pytest.fixture
+def process_sandbox_service(mock_httpx_client, temp_dir):
+    """Create a ProcessSandboxService instance for testing."""
+    return ProcessSandboxService(
+        user_id='test-user-id',
+        sandbox_spec_service=MockSandboxSpecService(),
+        base_working_dir=temp_dir,
+        base_port=9000,
+        python_executable='python',
+        agent_server_module='openhands.agent_server',
+        health_check_path='/alive',
+        httpx_client=mock_httpx_client,
+    )
+
+
+class TestProcessSandboxService:
+    """Test cases for ProcessSandboxService."""
+
+    def test_find_unused_port(self, process_sandbox_service):
+        """Test finding an unused port."""
+        port = process_sandbox_service._find_unused_port()
+        assert port >= process_sandbox_service.base_port
+        assert port < process_sandbox_service.base_port + 10000
+
+    @patch('os.makedirs')
+    def test_create_sandbox_directory(self, mock_makedirs, process_sandbox_service):
+        """Test creating a sandbox directory."""
+        sandbox_dir = process_sandbox_service._create_sandbox_directory('test-id')
+
+        expected_dir = os.path.join(process_sandbox_service.base_working_dir, 'test-id')
+        assert sandbox_dir == expected_dir
+        mock_makedirs.assert_called_once_with(expected_dir, exist_ok=True)
+
+    @pytest.mark.asyncio
+    async def test_wait_for_server_ready_success(self, process_sandbox_service):
+        """Test waiting for server to be ready - success case."""
+        # Mock successful response
+        mock_response = MagicMock()
+        mock_response.status_code = 200
+        mock_response.json.return_value = {'status': 'ok'}
+        process_sandbox_service.httpx_client.get.return_value = mock_response
+
+        result = await process_sandbox_service._wait_for_server_ready(9000, timeout=1)
+        assert result is True
+
+    @pytest.mark.asyncio
+    async def test_wait_for_server_ready_timeout(self, process_sandbox_service):
+        """Test waiting for server to be ready - timeout case."""
+        # Mock failed response
+        process_sandbox_service.httpx_client.get.side_effect = Exception(
+            'Connection failed'
+        )
+
+        result = await process_sandbox_service._wait_for_server_ready(9000, timeout=1)
+        assert result is False
+
+    @patch('psutil.Process')
+    def test_get_process_status_running(
+        self, mock_process_class, process_sandbox_service
+    ):
+        """Test getting process status for running process."""
+        mock_process = MagicMock()
+        mock_process.is_running.return_value = True
+        mock_process.status.return_value = psutil.STATUS_RUNNING
+        mock_process_class.return_value = mock_process
+
+        process_info = ProcessInfo(
+            pid=1234,
+            port=9000,
+            user_id='test-user-id',
+            working_dir='/tmp/test',
+            session_api_key='test-key',
+            created_at=datetime.now(),
+            sandbox_spec_id='test-spec',
+        )
+
+        status = process_sandbox_service._get_process_status(process_info)
+        assert status == SandboxStatus.RUNNING
+
+    @patch('psutil.Process')
+    def test_get_process_status_missing(
+        self, mock_process_class, process_sandbox_service
+    ):
+        """Test getting process status for missing process."""
+        import psutil
+
+        mock_process_class.side_effect = psutil.NoSuchProcess(1234)
+
+        process_info = ProcessInfo(
+            pid=1234,
+            port=9000,
+            user_id='test-user-id',
+            working_dir='/tmp/test',
+            session_api_key='test-key',
+            created_at=datetime.now(),
+            sandbox_spec_id='test-spec',
+        )
+
+        status = process_sandbox_service._get_process_status(process_info)
+        assert status == SandboxStatus.MISSING
+
+    @pytest.mark.asyncio
+    async def test_search_sandboxes_empty(self, process_sandbox_service):
+        """Test searching sandboxes when none exist."""
+        result = await process_sandbox_service.search_sandboxes()
+
+        assert len(result.items) == 0
+        assert result.next_page_id is None
+
+    @pytest.mark.asyncio
+    async def test_get_sandbox_not_found(self, process_sandbox_service):
+        """Test getting a sandbox that doesn't exist."""
+        result = await process_sandbox_service.get_sandbox('nonexistent')
+        assert result is None
+
+    @pytest.mark.asyncio
+    async def test_resume_sandbox_not_found(self, process_sandbox_service):
+        """Test resuming a sandbox that doesn't exist."""
+        result = await process_sandbox_service.resume_sandbox('nonexistent')
+        assert result is False
+
+    @pytest.mark.asyncio
+    async def test_pause_sandbox_not_found(self, process_sandbox_service):
+        """Test pausing a sandbox that doesn't exist."""
+        result = await process_sandbox_service.pause_sandbox('nonexistent')
+        assert result is False
+
+    @pytest.mark.asyncio
+    async def test_delete_sandbox_not_found(self, process_sandbox_service):
+        """Test deleting a sandbox that doesn't exist."""
+        result = await process_sandbox_service.delete_sandbox('nonexistent')
+        assert result is False
+
+    @patch('psutil.Process')
+    def test_get_process_status_paused(
+        self, mock_process_class, process_sandbox_service
+    ):
+        """Test getting process status for paused process."""
+        mock_process = MagicMock()
+        mock_process.is_running.return_value = True
+        mock_process.status.return_value = psutil.STATUS_STOPPED
+        mock_process_class.return_value = mock_process
+
+        process_info = ProcessInfo(
+            pid=1234,
+            port=9000,
+            user_id='test-user-id',
+            working_dir='/tmp/test',
+            session_api_key='test-key',
+            created_at=datetime.now(),
+            sandbox_spec_id='test-spec',
+        )
+
+        status = process_sandbox_service._get_process_status(process_info)
+        assert status == SandboxStatus.PAUSED
+
+    @patch('psutil.Process')
+    def test_get_process_status_starting(
+        self, mock_process_class, process_sandbox_service
+    ):
+        """Test getting process status for starting process."""
+        mock_process = MagicMock()
+        mock_process.is_running.return_value = True
+        mock_process.status.return_value = psutil.STATUS_SLEEPING
+        mock_process_class.return_value = mock_process
+
+        process_info = ProcessInfo(
+            pid=1234,
+            port=9000,
+            user_id='test-user-id',
+            working_dir='/tmp/test',
+            session_api_key='test-key',
+            created_at=datetime.now(),
+            sandbox_spec_id='test-spec',
+        )
+
+        status = process_sandbox_service._get_process_status(process_info)
+        assert status == SandboxStatus.STARTING
+
+    @patch('psutil.Process')
+    def test_get_process_status_access_denied(
+        self, mock_process_class, process_sandbox_service
+    ):
+        """Test getting process status when access is denied."""
+        mock_process_class.side_effect = psutil.AccessDenied(1234)
+
+        process_info = ProcessInfo(
+            pid=1234,
+            port=9000,
+            user_id='test-user-id',
+            working_dir='/tmp/test',
+            session_api_key='test-key',
+            created_at=datetime.now(),
+            sandbox_spec_id='test-spec',
+        )
+
+        status = process_sandbox_service._get_process_status(process_info)
+        assert status == SandboxStatus.MISSING
+
+    @pytest.mark.asyncio
+    async def test_process_to_sandbox_info_error_status(self, process_sandbox_service):
+        """Test converting process info to sandbox info when server is not responding."""
+        # Mock a process that's running but server is not responding
+        with patch.object(
+            process_sandbox_service,
+            '_get_process_status',
+            return_value=SandboxStatus.RUNNING,
+        ):
+            # Mock httpx client to return error response
+            mock_response = MagicMock()
+            mock_response.status_code = 500
+            process_sandbox_service.httpx_client.get.return_value = mock_response
+
+            process_info = ProcessInfo(
+                pid=1234,
+                port=9000,
+                user_id='test-user-id',
+                working_dir='/tmp/test',
+                session_api_key='test-key',
+                created_at=datetime.now(),
+                sandbox_spec_id='test-spec',
+            )
+
+            sandbox_info = await process_sandbox_service._process_to_sandbox_info(
+                'test-sandbox', process_info
+            )
+
+            assert sandbox_info.status == SandboxStatus.ERROR
+            assert sandbox_info.session_api_key is None
+            assert sandbox_info.exposed_urls is None
+
+    @pytest.mark.asyncio
+    async def test_process_to_sandbox_info_exception(self, process_sandbox_service):
+        """Test converting process info to sandbox info when httpx raises exception."""
+        # Mock a process that's running but httpx raises exception
+        with patch.object(
+            process_sandbox_service,
+            '_get_process_status',
+            return_value=SandboxStatus.RUNNING,
+        ):
+            # Mock httpx client to raise exception
+            process_sandbox_service.httpx_client.get.side_effect = Exception(
+                'Connection failed'
+            )
+
+            process_info = ProcessInfo(
+                pid=1234,
+                port=9000,
+                user_id='test-user-id',
+                working_dir='/tmp/test',
+                session_api_key='test-key',
+                created_at=datetime.now(),
+                sandbox_spec_id='test-spec',
+            )
+
+            sandbox_info = await process_sandbox_service._process_to_sandbox_info(
+                'test-sandbox', process_info
+            )
+
+            assert sandbox_info.status == SandboxStatus.ERROR
+            assert sandbox_info.session_api_key is None
+            assert sandbox_info.exposed_urls is None
+
+
+class TestProcessSandboxServiceInjector:
+    """Test cases for ProcessSandboxServiceInjector."""
+
+    def test_default_values(self):
+        """Test default configuration values."""
+        injector = ProcessSandboxServiceInjector()
+
+        assert injector.base_working_dir == '/tmp/openhands-sandboxes'
+        assert injector.base_port == 8000
+        assert injector.health_check_path == '/alive'
+        assert injector.agent_server_module == 'openhands.agent_server'
+
+    def test_custom_values(self):
+        """Test custom configuration values."""
+        injector = ProcessSandboxServiceInjector(
+            base_working_dir='/custom/path',
+            base_port=9000,
+            health_check_path='/health',
+            agent_server_module='custom.agent.module',
+        )
+
+        assert injector.base_working_dir == '/custom/path'
+        assert injector.base_port == 9000
+        assert injector.health_check_path == '/health'
+        assert injector.agent_server_module == 'custom.agent.module'