diff --git a/cmd/bd/init.go b/cmd/bd/init.go
index b89bacd7..b0238465 100644
--- a/cmd/bd/init.go
+++ b/cmd/bd/init.go
@@ -287,24 +287,6 @@ With --stealth: configures per-repository git settings for invisible beads usage
 			os.Exit(1)
 		}
 
-		// Set sync.branch only if explicitly specified via --branch flag
-		// GH#807: Do NOT auto-detect current branch - if sync.branch is set to main/master,
-		// the worktree created by bd sync will check out main, preventing the user from
-		// checking out main in their working directory (git error: "'main' is already checked out")
-		//
-		// When --branch is not specified, bd sync will commit directly to the current branch
-		// (the original behavior before sync branch feature)
-		if branch != "" {
-			if err := syncbranch.Set(ctx, store, branch); err != nil {
-				fmt.Fprintf(os.Stderr, "Error: failed to set sync branch: %v\n", err)
-				_ = store.Close()
-				os.Exit(1)
-			}
-			if !quiet {
-				fmt.Printf("  Sync branch: %s\n", branch)
-			}
-		}
-
 		// === TRACKING METADATA (Pattern B: Warn and Continue) ===
 		// Tracking metadata enhances functionality (diagnostics, version checks, collision detection)
 		// but the system works without it. Failures here degrade gracefully - we warn but continue.
@@ -386,6 +368,27 @@ With --stealth: configures per-repository git settings for invisible beads usage
 			}
 		}
 
+		// Set sync.branch only if explicitly specified via --branch flag
+		// GH#807: Do NOT auto-detect current branch - if sync.branch is set to main/master,
+		// the worktree created by bd sync will check out main, preventing the user from
+		// checking out main in their working directory (git error: "'main' is already checked out")
+		//
+		// When --branch is not specified, bd sync will commit directly to the current branch
+		// (the original behavior before sync branch feature)
+		//
+		// GH#927: This must run AFTER createConfigYaml() so that config.yaml exists
+		// and syncbranch.Set() can update it via config.SetYamlConfig() (PR#910 mechanism)
+		if branch != "" {
+			if err := syncbranch.Set(ctx, store, branch); err != nil {
+				fmt.Fprintf(os.Stderr, "Error: failed to set sync branch: %v\n", err)
+				_ = store.Close()
+				os.Exit(1)
+			}
+			if !quiet {
+				fmt.Printf("  Sync branch: %s\n", branch)
+			}
+		}
+
 		// Check if git has existing issues to import (fresh clone scenario)
 		// With --from-jsonl: import from local file instead of git history
 		if fromJSONL {
diff --git a/cmd/bd/init_test.go b/cmd/bd/init_test.go
index db0632b2..3d1a0ee9 100644
--- a/cmd/bd/init_test.go
+++ b/cmd/bd/init_test.go
@@ -1138,6 +1138,114 @@ func TestSetupClaudeSettings_NoExistingFile(t *testing.T) {
 	}
 }
 
+// TestInitBranchPersistsToConfigYaml verifies that --branch flag persists to config.yaml
+// GH#927 Bug 3: The --branch flag sets sync.branch in database but NOT in config.yaml.
+// This matters because config.yaml is version-controlled and shared across clones,
+// while the database is local and gitignored.
+func TestInitBranchPersistsToConfigYaml(t *testing.T) {
+	// Reset global state
+	origDBPath := dbPath
+	defer func() { dbPath = origDBPath }()
+	dbPath = ""
+
+	// Reset Cobra flags
+	initCmd.Flags().Set("branch", "")
+
+	tmpDir := t.TempDir()
+	t.Chdir(tmpDir)
+
+	// Initialize git repo first (needed for sync branch)
+	if err := runCommandInDir(tmpDir, "git", "init", "--initial-branch=dev"); err != nil {
+		t.Fatalf("Failed to init git: %v", err)
+	}
+
+	// Run bd init with --branch flag
+	rootCmd.SetArgs([]string{"init", "--prefix", "test", "--branch", "beads-sync", "--quiet"})
+	if err := rootCmd.Execute(); err != nil {
+		t.Fatalf("Init with --branch failed: %v", err)
+	}
+
+	// Read config.yaml and verify sync-branch is uncommented
+	configPath := filepath.Join(tmpDir, ".beads", "config.yaml")
+	content, err := os.ReadFile(configPath)
+	if err != nil {
+		t.Fatalf("Failed to read config.yaml: %v", err)
+	}
+
+	configStr := string(content)
+
+	// The bug: sync-branch remains commented as "# sync-branch:" instead of "sync-branch:"
+	// This test should FAIL on the current codebase to prove the bug exists
+	if strings.Contains(configStr, "# sync-branch:") && !strings.Contains(configStr, "\nsync-branch:") {
+		t.Errorf("BUG: --branch flag did not persist to config.yaml\n"+
+			"Expected uncommented 'sync-branch: \"beads-sync\"'\n"+
+			"Got commented '# sync-branch:' (only set in database, not config.yaml)")
+	}
+
+	// Verify the uncommented line exists with correct value
+	if !strings.Contains(configStr, "sync-branch: \"beads-sync\"") {
+		t.Errorf("config.yaml should contain 'sync-branch: \"beads-sync\"', got:\n%s", configStr)
+	}
+}
+
+// TestInitReinitWithBranch verifies that --branch flag works on reinit
+// GH#927: When reinitializing with --branch, config.yaml should be updated even if it exists
+func TestInitReinitWithBranch(t *testing.T) {
+	// Reset global state
+	origDBPath := dbPath
+	defer func() { dbPath = origDBPath }()
+	dbPath = ""
+
+	// Reset Cobra flags
+	initCmd.Flags().Set("branch", "")
+	initCmd.Flags().Set("force", "false")
+
+	tmpDir := t.TempDir()
+	t.Chdir(tmpDir)
+
+	// Initialize git repo first
+	if err := runCommandInDir(tmpDir, "git", "init", "--initial-branch=dev"); err != nil {
+		t.Fatalf("Failed to init git: %v", err)
+	}
+
+	// First init WITHOUT --branch (creates config.yaml with commented sync-branch)
+	rootCmd.SetArgs([]string{"init", "--prefix", "test", "--quiet"})
+	if err := rootCmd.Execute(); err != nil {
+		t.Fatalf("First init failed: %v", err)
+	}
+
+	// Verify config.yaml has commented sync-branch initially
+	configPath := filepath.Join(tmpDir, ".beads", "config.yaml")
+	content, err := os.ReadFile(configPath)
+	if err != nil {
+		t.Fatalf("Failed to read config.yaml: %v", err)
+	}
+	if !strings.Contains(string(content), "# sync-branch:") {
+		t.Errorf("Initial config.yaml should have commented sync-branch")
+	}
+
+	// Reset Cobra flags for reinit
+	initCmd.Flags().Set("branch", "")
+	initCmd.Flags().Set("force", "false")
+
+	// Reinit WITH --branch (should update existing config.yaml)
+	rootCmd.SetArgs([]string{"init", "--prefix", "test", "--branch", "beads-sync", "--force", "--quiet"})
+	if err := rootCmd.Execute(); err != nil {
+		t.Fatalf("Reinit with --branch failed: %v", err)
+	}
+
+	// Verify config.yaml now has uncommented sync-branch
+	content, err = os.ReadFile(configPath)
+	if err != nil {
+		t.Fatalf("Failed to read config.yaml after reinit: %v", err)
+	}
+
+	configStr := string(content)
+	if !strings.Contains(configStr, "sync-branch: \"beads-sync\"") {
+		t.Errorf("After reinit with --branch, config.yaml should contain uncommented 'sync-branch: \"beads-sync\"', got:\n%s", configStr)
+	}
+}
+
 // TestSetupGlobalGitIgnore_ReadOnly verifies graceful handling when the
 // gitignore file cannot be written (prints manual instructions instead of failing).
 func TestSetupGlobalGitIgnore_ReadOnly(t *testing.T) {