diff --git a/src/App.tsx b/src/App.tsx
index 2de46776..4fa0f71d 100644
--- a/src/App.tsx
+++ b/src/App.tsx
@@ -14,6 +14,7 @@ import { StatusBar } from './components/StatusBar'
 import { SettingsPanel } from './components/SettingsPanel'
 import { GitHubVaultModal } from './components/GitHubVaultModal'
 import { WelcomeScreen } from './components/WelcomeScreen'
+import { TelemetryConsentDialog } from './components/TelemetryConsentDialog'
 import { useMcpStatus } from './hooks/useMcpStatus'
 import { useVaultLoader } from './hooks/useVaultLoader'
 import { useSettings } from './hooks/useSettings'
@@ -93,7 +94,7 @@ function App() {
   const resolvedPath = onboarding.state.status === 'ready' ? onboarding.state.vaultPath : vaultSwitcher.vaultPath
   const vault = useVaultLoader(resolvedPath)
   useVaultConfig(resolvedPath)
-  const { settings, saveSettings } = useSettings()
+  const { settings, loaded: settingsLoaded, saveSettings } = useSettings()
   const flatVaultMigration = useFlatVaultMigration(resolvedPath, vault.entries.length > 0, vault.reloadVault)
   const { mcpStatus, installMcp } = useMcpStatus(resolvedPath, setToastMessage)
 
@@ -522,6 +523,21 @@ function App() {
     return <LoadingView />
   }
 
+  // Show telemetry consent dialog on first launch (or first upgrade with telemetry)
+  if (settingsLoaded && settings.telemetry_consent === null) {
+    return (
+      <TelemetryConsentDialog
+        onAccept={() => {
+          const id = crypto.randomUUID()
+          saveSettings({ ...settings, telemetry_consent: true, crash_reporting_enabled: true, analytics_enabled: true, anonymous_id: id })
+        }}
+        onDecline={() => {
+          saveSettings({ ...settings, telemetry_consent: false, crash_reporting_enabled: false, analytics_enabled: false, anonymous_id: null })
+        }}
+      />
+    )
+  }
+
   return (
     <div className="app-shell">
       <div className="app">
diff --git a/src/components/SettingsPanel.test.tsx b/src/components/SettingsPanel.test.tsx
index dcce7839..0e8ec6e1 100644
--- a/src/components/SettingsPanel.test.tsx
+++ b/src/components/SettingsPanel.test.tsx
@@ -403,4 +403,45 @@ describe('SettingsPanel', () => {
       })
     })
   })
+
+  describe('Privacy & Telemetry section', () => {
+    it('renders crash reporting and analytics toggles', () => {
+      render(
+        <SettingsPanel open={true} settings={emptySettings} onSave={onSave} onClose={onClose} />
+      )
+      expect(screen.getByTestId('settings-crash-reporting')).toBeInTheDocument()
+      expect(screen.getByTestId('settings-analytics')).toBeInTheDocument()
+    })
+
+    it('toggles reflect initial settings state', () => {
+      const withTelemetry: Settings = {
+        ...emptySettings,
+        telemetry_consent: true,
+        crash_reporting_enabled: true,
+        analytics_enabled: false,
+        anonymous_id: 'test-uuid',
+      }
+      render(
+        <SettingsPanel open={true} settings={withTelemetry} onSave={onSave} onClose={onClose} />
+      )
+      const crashCheckbox = screen.getByTestId('settings-crash-reporting').querySelector('input') as HTMLInputElement
+      const analyticsCheckbox = screen.getByTestId('settings-analytics').querySelector('input') as HTMLInputElement
+      expect(crashCheckbox.checked).toBe(true)
+      expect(analyticsCheckbox.checked).toBe(false)
+    })
+
+    it('saves telemetry settings when toggled and saved', () => {
+      render(
+        <SettingsPanel open={true} settings={emptySettings} onSave={onSave} onClose={onClose} />
+      )
+      const crashCheckbox = screen.getByTestId('settings-crash-reporting').querySelector('input')!
+      fireEvent.click(crashCheckbox)
+      fireEvent.click(screen.getByTestId('settings-save'))
+
+      expect(onSave).toHaveBeenCalledWith(expect.objectContaining({
+        crash_reporting_enabled: true,
+        analytics_enabled: false,
+      }))
+    })
+  })
 })
diff --git a/src/components/SettingsPanel.tsx b/src/components/SettingsPanel.tsx
index 552240e4..69a950ae 100644
--- a/src/components/SettingsPanel.tsx
+++ b/src/components/SettingsPanel.tsx
@@ -124,6 +124,8 @@ function SettingsPanelInner({ settings, onSave, onClose }: Omit<SettingsPanelPro
   const [githubToken, setGithubToken] = useState(settings.github_token)
   const [githubUsername, setGithubUsername] = useState(settings.github_username)
   const [pullInterval, setPullInterval] = useState(settings.auto_pull_interval_minutes ?? 5)
+  const [crashReporting, setCrashReporting] = useState(settings.crash_reporting_enabled ?? false)
+  const [analytics, setAnalytics] = useState(settings.analytics_enabled ?? false)
   const panelRef = useRef<HTMLDivElement>(null)
 
   // Auto-focus first input when settings panel opens
@@ -142,11 +144,11 @@ function SettingsPanelInner({ settings, onSave, onClose }: Omit<SettingsPanelPro
     github_token: ghOverride ? ghOverride.token : (githubToken ?? null),
     github_username: ghOverride ? ghOverride.username : (githubUsername ?? null),
     auto_pull_interval_minutes: pullInterval,
-    telemetry_consent: settings.telemetry_consent,
-    crash_reporting_enabled: settings.crash_reporting_enabled,
-    analytics_enabled: settings.analytics_enabled,
-    anonymous_id: settings.anonymous_id,
-  }), [openaiKey, googleKey, githubToken, githubUsername, pullInterval, settings.telemetry_consent, settings.crash_reporting_enabled, settings.analytics_enabled, settings.anonymous_id])
+    telemetry_consent: (crashReporting || analytics) ? true : (settings.telemetry_consent === null ? null : false),
+    crash_reporting_enabled: crashReporting,
+    analytics_enabled: analytics,
+    anonymous_id: (crashReporting || analytics) ? (settings.anonymous_id ?? crypto.randomUUID()) : settings.anonymous_id,
+  }), [openaiKey, googleKey, githubToken, githubUsername, pullInterval, crashReporting, analytics, settings.telemetry_consent, settings.anonymous_id])
 
   const handleSave = () => {
     onSave(buildSettings())
@@ -196,6 +198,8 @@ function SettingsPanelInner({ settings, onSave, onClose }: Omit<SettingsPanelPro
           githubToken={githubToken ?? null} githubUsername={githubUsername ?? null}
           onGitHubConnected={handleGitHubConnected} onGitHubDisconnect={handleGitHubDisconnect}
           pullInterval={pullInterval} setPullInterval={setPullInterval}
+          crashReporting={crashReporting} setCrashReporting={setCrashReporting}
+          analytics={analytics} setAnalytics={setAnalytics}
         />
         <SettingsFooter onClose={onClose} onSave={handleSave} />
       </div>
@@ -228,6 +232,8 @@ interface SettingsBodyProps {
   onGitHubConnected: (token: string, username: string) => void
   onGitHubDisconnect: () => void
   pullInterval: number; setPullInterval: (v: number) => void
+  crashReporting: boolean; setCrashReporting: (v: boolean) => void
+  analytics: boolean; setAnalytics: (v: boolean) => void
 }
 
 function SettingsBody(props: SettingsBodyProps) {
@@ -285,10 +291,34 @@ function SettingsBody(props: SettingsBodyProps) {
           <option value={30}>30</option>
         </select>
       </div>
+
+      <div style={{ height: 1, background: 'var(--border)' }} />
+
+      <div>
+        <div style={{ fontSize: 13, fontWeight: 600, color: 'var(--foreground)', marginBottom: 4 }}>Privacy &amp; Telemetry</div>
+        <div style={{ fontSize: 12, color: 'var(--muted-foreground)', lineHeight: 1.5 }}>
+          Anonymous data helps us fix bugs and improve Laputa. No vault content, note titles, or file paths are ever sent.
+        </div>
+      </div>
+
+      <TelemetryToggle label="Crash reporting" description="Send anonymous error reports" checked={props.crashReporting} onChange={props.setCrashReporting} testId="settings-crash-reporting" />
+      <TelemetryToggle label="Usage analytics" description="Share anonymous usage patterns" checked={props.analytics} onChange={props.setAnalytics} testId="settings-analytics" />
     </div>
   )
 }
 
+function TelemetryToggle({ label, description, checked, onChange, testId }: { label: string; description: string; checked: boolean; onChange: (v: boolean) => void; testId: string }) {
+  return (
+    <label style={{ display: 'flex', alignItems: 'center', gap: 10, cursor: 'pointer' }} data-testid={testId}>
+      <input type="checkbox" checked={checked} onChange={(e) => onChange(e.target.checked)} style={{ width: 16, height: 16, accentColor: 'var(--primary)' }} />
+      <div>
+        <div style={{ fontSize: 13, fontWeight: 500, color: 'var(--foreground)' }}>{label}</div>
+        <div style={{ fontSize: 11, color: 'var(--muted-foreground)' }}>{description}</div>
+      </div>
+    </label>
+  )
+}
+
 function SettingsFooter({ onClose, onSave }: { onClose: () => void; onSave: () => void }) {
   return (
     <div
diff --git a/src/components/TelemetryConsentDialog.test.tsx b/src/components/TelemetryConsentDialog.test.tsx
new file mode 100644
index 00000000..dc6a686c
--- /dev/null
+++ b/src/components/TelemetryConsentDialog.test.tsx
@@ -0,0 +1,30 @@
+import { describe, it, expect, vi } from 'vitest'
+import { render, screen, fireEvent } from '@testing-library/react'
+import { TelemetryConsentDialog } from './TelemetryConsentDialog'
+
+describe('TelemetryConsentDialog', () => {
+  it('renders the consent dialog', () => {
+    render(<TelemetryConsentDialog onAccept={vi.fn()} onDecline={vi.fn()} />)
+    expect(screen.getByText('Help improve Laputa')).toBeDefined()
+    expect(screen.getByText(/anonymous crash reports/i)).toBeDefined()
+  })
+
+  it('calls onAccept when Allow button is clicked', () => {
+    const onAccept = vi.fn()
+    render(<TelemetryConsentDialog onAccept={onAccept} onDecline={vi.fn()} />)
+    fireEvent.click(screen.getByTestId('telemetry-accept'))
+    expect(onAccept).toHaveBeenCalledOnce()
+  })
+
+  it('calls onDecline when No thanks button is clicked', () => {
+    const onDecline = vi.fn()
+    render(<TelemetryConsentDialog onAccept={vi.fn()} onDecline={onDecline} />)
+    fireEvent.click(screen.getByTestId('telemetry-decline'))
+    expect(onDecline).toHaveBeenCalledOnce()
+  })
+
+  it('shows a details section explaining what data is shared', () => {
+    render(<TelemetryConsentDialog onAccept={vi.fn()} onDecline={vi.fn()} />)
+    expect(screen.getByText(/no vault content, note titles/i)).toBeDefined()
+  })
+})
diff --git a/src/components/TelemetryConsentDialog.tsx b/src/components/TelemetryConsentDialog.tsx
new file mode 100644
index 00000000..0a21edbb
--- /dev/null
+++ b/src/components/TelemetryConsentDialog.tsx
@@ -0,0 +1,68 @@
+import { ShieldCheck } from '@phosphor-icons/react'
+
+interface TelemetryConsentDialogProps {
+  onAccept: () => void
+  onDecline: () => void
+}
+
+export function TelemetryConsentDialog({ onAccept, onDecline }: TelemetryConsentDialogProps) {
+  return (
+    <div
+      className="fixed inset-0 flex items-center justify-center z-50"
+      style={{ background: 'rgba(0,0,0,0.4)' }}
+    >
+      <div
+        className="bg-background border border-border rounded-lg shadow-xl"
+        style={{ width: 440, padding: 32, display: 'flex', flexDirection: 'column', gap: 20, alignItems: 'center' }}
+      >
+        <ShieldCheck size={40} weight="duotone" style={{ color: 'var(--primary)' }} />
+
+        <div style={{ textAlign: 'center' }}>
+          <h2 style={{ fontSize: 18, fontWeight: 600, color: 'var(--foreground)', margin: 0 }}>
+            Help improve Laputa
+          </h2>
+          <p style={{ fontSize: 13, color: 'var(--muted-foreground)', lineHeight: 1.6, marginTop: 8 }}>
+            Send anonymous crash reports to help us fix bugs faster.
+            No vault content, no personal data, no tracking.
+          </p>
+        </div>
+
+        <div style={{ fontSize: 12, color: 'var(--muted-foreground)', lineHeight: 1.6, width: '100%' }}>
+          <p style={{ margin: '0 0 6px', fontWeight: 500, color: 'var(--foreground)' }}>What we collect:</p>
+          <ul style={{ margin: 0, paddingLeft: 18 }}>
+            <li>Stack traces from errors (JS &amp; Rust)</li>
+            <li>App version, OS, and architecture</li>
+          </ul>
+          <p style={{ margin: '10px 0 6px', fontWeight: 500, color: 'var(--foreground)' }}>What we never collect:</p>
+          <ul style={{ margin: 0, paddingLeft: 18 }}>
+            <li>No vault content, note titles, or file paths</li>
+            <li>No personal data or IP addresses</li>
+          </ul>
+        </div>
+
+        <div style={{ display: 'flex', gap: 12, width: '100%', marginTop: 4 }}>
+          <button
+            className="border border-border bg-transparent text-foreground rounded cursor-pointer hover:bg-accent"
+            style={{ flex: 1, fontSize: 13, padding: '10px 16px' }}
+            onClick={onDecline}
+            data-testid="telemetry-decline"
+          >
+            No thanks
+          </button>
+          <button
+            className="border-none rounded cursor-pointer"
+            style={{ flex: 1, fontSize: 13, padding: '10px 16px', background: 'var(--primary)', color: 'white', fontWeight: 500 }}
+            onClick={onAccept}
+            data-testid="telemetry-accept"
+          >
+            Allow anonymous reporting
+          </button>
+        </div>
+
+        <p style={{ fontSize: 11, color: 'var(--muted-foreground)', margin: 0, textAlign: 'center' }}>
+          You can change this anytime in Settings.
+        </p>
+      </div>
+    </div>
+  )
+}