diff --git a/internal/beads/beads.go b/internal/beads/beads.go
index 42a1ceef..6cec6b64 100644
--- a/internal/beads/beads.go
+++ b/internal/beads/beads.go
@@ -528,10 +528,11 @@ func findDatabaseInTree() string {
 	return ""
 }
 
-// FindAllDatabases scans the directory hierarchy for all .beads directories
-// Returns a slice of DatabaseInfo for each database found, starting from the
-// closest to CWD (most relevant) to the furthest (least relevant).
-// Stops at the git repository root to avoid finding unrelated databases (bd-c8x).
+// FindAllDatabases scans the directory hierarchy for the closest .beads directory.
+// Returns a slice with at most one DatabaseInfo - the closest database to CWD.
+// Stops searching upward as soon as a .beads directory is found (gt-bzd),
+// because in multi-workspace setups (like Gas Town), nested .beads directories
+// are intentional and separate - parent directories are out of scope.
 // Redirect files are supported: if a .beads/redirect file exists, its contents
 // are used as the actual .beads directory path.
 func FindAllDatabases() []DatabaseInfo {
@@ -594,6 +595,10 @@ func FindAllDatabases() []DatabaseInfo {
 					BeadsDir:   beadsDir,
 					IssueCount: issueCount,
 				})
+
+				// Stop searching upward - the closest .beads is the one to use (gt-bzd)
+				// Parent directories are out of scope in multi-workspace setups
+				break
 			}
 		}
 
diff --git a/internal/beads/beads_multidb_test.go b/internal/beads/beads_multidb_test.go
index b4233c51..7c71edde 100644
--- a/internal/beads/beads_multidb_test.go
+++ b/internal/beads/beads_multidb_test.go
@@ -63,26 +63,23 @@ func TestFindAllDatabases(t *testing.T) {
 
 	databases := FindAllDatabases()
 
-	// Should find both databases, with project1 first (closest)
-	if len(databases) != 2 {
-		t.Fatalf("expected 2 databases, got %d", len(databases))
+	// Should find only the closest database (gt-bzd: stop searching when .beads found)
+	// Parent .beads directories are out of scope in multi-workspace setups like Gas Town
+	if len(databases) != 1 {
+		t.Fatalf("expected 1 database (closest only), got %d", len(databases))
 	}
 
-	// First database should be project1 (closest to CWD)
+	// Database should be project1 (closest to CWD)
 	if databases[0].Path != project1DB {
-		t.Errorf("expected first database to be %s, got %s", project1DB, databases[0].Path)
+		t.Errorf("expected database to be %s, got %s", project1DB, databases[0].Path)
 	}
 	if databases[0].BeadsDir != project1Beads {
-		t.Errorf("expected first beads dir to be %s, got %s", project1Beads, databases[0].BeadsDir)
+		t.Errorf("expected beads dir to be %s, got %s", project1Beads, databases[0].BeadsDir)
 	}
 
-	// Second database should be root (furthest from CWD)
-	if databases[1].Path != rootDB {
-		t.Errorf("expected second database to be %s, got %s", rootDB, databases[1].Path)
-	}
-	if databases[1].BeadsDir != rootBeads {
-		t.Errorf("expected second beads dir to be %s, got %s", rootBeads, databases[1].BeadsDir)
-	}
+	// Root database should NOT be found - it's out of scope (parent of closest .beads)
+	_ = rootDB     // referenced but not expected in results
+	_ = rootBeads  // referenced but not expected in results
 }
 
 func TestFindAllDatabases_Single(t *testing.T) {