diff --git a/src/components/PromptInput/PromptInput.tsx b/src/components/PromptInput/PromptInput.tsx
index 66f934d6..b65440e4 100644
--- a/src/components/PromptInput/PromptInput.tsx
+++ b/src/components/PromptInput/PromptInput.tsx
@@ -111,7 +111,7 @@ import { BackgroundTasksDialog } from '../tasks/BackgroundTasksDialog.js';
 import { shouldHideTasksFooter } from '../tasks/taskStatusUtils.js';
 import { TeamsDialog } from '../teams/TeamsDialog.js';
 import VimTextInput from '../VimTextInput.js';
-import { getModeFromInput, getValueFromInput } from './inputModes.js';
+import { detectModeEntry, getModeFromInput, getValueFromInput } from './inputModes.js';
 import { FOOTER_TEMPORARY_STATUS_TIMEOUT, Notifications } from './Notifications.js';
 import PromptInputFooter from './PromptInputFooter.js';
 import type { SuggestionItem } from './PromptInputFooterSuggestions.js';
@@ -878,24 +878,22 @@ function PromptInput({
     abortPromptSuggestion();
     abortSpeculation(setAppState);
 
-    // Check if this is a single character insertion at the start
-    const isSingleCharInsertion = value.length === input.length + 1;
-    const insertedAtStart = cursorOffset === 0;
-    const mode = getModeFromInput(value);
-    if (insertedAtStart && mode !== 'prompt') {
-      if (isSingleCharInsertion) {
-        onModeChange(mode);
-        return;
-      }
-      // Multi-char insertion into empty input (e.g. tab-accepting "! gcloud auth login")
-      if (input.length === 0) {
-        onModeChange(mode);
-        const valueWithoutMode = getValueFromInput(value).replaceAll('\t', '    ');
-        pushToBuffer(input, cursorOffset, pastedContents);
-        trackAndSetInput(valueWithoutMode);
-        setCursorOffset(valueWithoutMode.length);
-        return;
-      }
+    // Strip the mode character from the buffer when entering bash mode — the
+    // mode itself is shown via the prompt prefix in the UI. Without this,
+    // typing `!` into empty input would enter bash mode but leave the literal
+    // `!` in the buffer (issue #662).
+    const modeEntry = detectModeEntry({
+      value,
+      prevInputLength: input.length,
+      cursorOffset,
+    });
+    if (modeEntry) {
+      onModeChange(modeEntry.mode);
+      const cleaned = modeEntry.strippedValue.replaceAll('\t', '    ');
+      pushToBuffer(input, cursorOffset, pastedContents);
+      trackAndSetInput(cleaned);
+      setCursorOffset(cleaned.length);
+      return;
     }
     const processedValue = value.replaceAll('\t', '    ');
 
diff --git a/src/components/PromptInput/inputModes.test.ts b/src/components/PromptInput/inputModes.test.ts
new file mode 100644
index 00000000..69c97998
--- /dev/null
+++ b/src/components/PromptInput/inputModes.test.ts
@@ -0,0 +1,104 @@
+import { describe, expect, it } from 'bun:test'
+import {
+  detectModeEntry,
+  getModeFromInput,
+  getValueFromInput,
+  isInputModeCharacter,
+  prependModeCharacterToInput,
+} from './inputModes.js'
+
+describe('inputModes', () => {
+  describe('getModeFromInput', () => {
+    it('returns bash mode for input starting with !', () => {
+      expect(getModeFromInput('!')).toBe('bash')
+      expect(getModeFromInput('!ls')).toBe('bash')
+    })
+
+    it('returns prompt mode for non-bash input', () => {
+      expect(getModeFromInput('')).toBe('prompt')
+      expect(getModeFromInput('hello')).toBe('prompt')
+      expect(getModeFromInput(' !')).toBe('prompt')
+    })
+  })
+
+  describe('getValueFromInput', () => {
+    it('strips the leading ! when entering bash mode', () => {
+      expect(getValueFromInput('!')).toBe('')
+      expect(getValueFromInput('!ls -la')).toBe('ls -la')
+    })
+
+    it('returns input unchanged in prompt mode', () => {
+      expect(getValueFromInput('')).toBe('')
+      expect(getValueFromInput('hello')).toBe('hello')
+    })
+  })
+
+  describe('isInputModeCharacter', () => {
+    it('returns true only for the bare ! character', () => {
+      expect(isInputModeCharacter('!')).toBe(true)
+      expect(isInputModeCharacter('!ls')).toBe(false)
+      expect(isInputModeCharacter('')).toBe(false)
+    })
+  })
+
+  describe('prependModeCharacterToInput', () => {
+    it('prepends ! when mode is bash', () => {
+      expect(prependModeCharacterToInput('ls', 'bash')).toBe('!ls')
+      expect(prependModeCharacterToInput('', 'bash')).toBe('!')
+    })
+
+    it('returns input unchanged in prompt mode', () => {
+      expect(prependModeCharacterToInput('hello', 'prompt')).toBe('hello')
+    })
+  })
+
+  describe('detectModeEntry', () => {
+    // Regression for #662 — typing `!` into empty input must switch to bash
+    // mode AND yield an empty stripped buffer. Before the fix the single-char
+    // path returned without stripping, leaving `!` visible in the buffer.
+    it('strips the mode character when typing ! into empty input', () => {
+      expect(
+        detectModeEntry({ value: '!', prevInputLength: 0, cursorOffset: 0 }),
+      ).toEqual({ mode: 'bash', strippedValue: '' })
+    })
+
+    it('strips the mode character when pasting !cmd into empty input', () => {
+      expect(
+        detectModeEntry({ value: '!ls -la', prevInputLength: 0, cursorOffset: 0 }),
+      ).toEqual({ mode: 'bash', strippedValue: 'ls -la' })
+    })
+
+    it('returns null when the cursor is not at the start', () => {
+      expect(
+        detectModeEntry({ value: '!', prevInputLength: 0, cursorOffset: 1 }),
+      ).toBeNull()
+    })
+
+    it('returns null when the value does not start with !', () => {
+      expect(
+        detectModeEntry({ value: 'hello', prevInputLength: 0, cursorOffset: 0 }),
+      ).toBeNull()
+    })
+
+    it('returns null when typing ! after existing text', () => {
+      // value="ab!" with prevInputLength=2 is a single-char insertion but does
+      // not start with ! — getModeFromInput returns 'prompt'.
+      expect(
+        detectModeEntry({ value: 'ab!', prevInputLength: 2, cursorOffset: 0 }),
+      ).toBeNull()
+    })
+
+    it('returns null when prepending ! to non-empty existing text', () => {
+      // Single-char insertion at start that produces "!ab" from "ab" — value
+      // length is 3, prevInputLength is 2, so isSingleCharInsertion is true
+      // and isMultiCharIntoEmpty is false. We accept the mode change here so
+      // that typing ! at the start of existing text still toggles mode.
+      const result = detectModeEntry({
+        value: '!ab',
+        prevInputLength: 2,
+        cursorOffset: 0,
+      })
+      expect(result).toEqual({ mode: 'bash', strippedValue: 'ab' })
+    })
+  })
+})
diff --git a/src/components/PromptInput/inputModes.ts b/src/components/PromptInput/inputModes.ts
index f464a206..2db312da 100644
--- a/src/components/PromptInput/inputModes.ts
+++ b/src/components/PromptInput/inputModes.ts
@@ -31,3 +31,30 @@ export function getValueFromInput(input: string): string {
 export function isInputModeCharacter(input: string): boolean {
   return input === '!'
 }
+
+export type ModeEntryDecision = {
+  mode: HistoryMode
+  strippedValue: string
+}
+
+/**
+ * Decide whether an onChange `value` should switch the input mode (e.g.
+ * `prompt` → `bash`) and what the stripped buffer value should be.
+ *
+ * Returns null when no mode change applies. Returns a decision otherwise so
+ * callers run a single update path — no separate single-char vs multi-char
+ * branches that can drift apart.
+ */
+export function detectModeEntry(args: {
+  value: string
+  prevInputLength: number
+  cursorOffset: number
+}): ModeEntryDecision | null {
+  if (args.cursorOffset !== 0) return null
+  const mode = getModeFromInput(args.value)
+  if (mode === 'prompt') return null
+  const isSingleCharInsertion = args.value.length === args.prevInputLength + 1
+  const isMultiCharIntoEmpty = args.prevInputLength === 0
+  if (!isSingleCharInsertion && !isMultiCharIntoEmpty) return null
+  return { mode, strippedValue: getValueFromInput(args.value) }
+}