diff --git a/SHELL_FEATURES.md b/SHELL_FEATURES.md
index 0d341544..7c7a7aea 100644
--- a/SHELL_FEATURES.md
+++ b/SHELL_FEATURES.md
@@ -42,7 +42,7 @@ Blocked features are rejected before execution with exit code 2.
 - ✅ Expansion: `$VAR`, `${VAR}`
 - ✅ `$?` — last exit code (the only supported special variable)
 - ✅ Inline assignment: `VAR=value command` (scoped to that command)
-- ✅ Command substitution: `$(cmd)`, `` `cmd` `` — captures stdout; trailing newlines stripped; `$(<file)` shortcut reads file directly; output capped at 1 MiB
+- ✅ Command substitution: `$(cmd)`, `` `cmd` `` — captures stdout; trailing newlines stripped; `$(<file)` shortcut reads file directly (gated on `cat` being in the command allowlist); output capped at 1 MiB
 - ❌ Arithmetic expansion: `$(( expr ))`
 - ❌ Array assignment: `arr=(a b c)`, `arr[0]=x`
 - ❌ Append assignment: `VAR+=value`
diff --git a/interp/runner_expand.go b/interp/runner_expand.go
index 42252e19..ef46d64f 100644
--- a/interp/runner_expand.go
+++ b/interp/runner_expand.go
@@ -64,6 +64,13 @@ const MaxGlobReadDirCalls = 10_000
 
 // cmdSubst handles command substitution ($(...) and `...`).
 // It runs the commands in a subshell and writes their stdout to w.
+//
+// Special case: the POSIX `$(<file)` shortcut reads file contents
+// directly without spawning a subshell. Because that path performs a
+// file read without invoking any command, it would bypass the
+// AllowedCommands allowlist if left unchecked. We therefore gate the
+// shortcut on `cat` being an allowed command — `$(<file)` is treated as
+// an implicit `$(cat file)` for allowlist purposes.
 func (r *Runner) cmdSubst(w io.Writer, cs *syntax.CmdSubst) error {
 	if len(cs.Stmts) == 0 {
 		return nil
@@ -71,6 +78,12 @@ func (r *Runner) cmdSubst(w io.Writer, cs *syntax.CmdSubst) error {
 
 	// $(<file) shortcut: read file contents directly without a subshell.
 	if word := catShortcutArg(cs.Stmts[0]); word != nil && len(cs.Stmts) == 1 {
+		if !r.allowAllCommands && !r.allowedCommands["cat"] {
+			r.errf("$(<file): file read not permitted (cat not in allowed commands)\n")
+			r.lastExpandExit = exitStatus{code: 1}
+			r.lastExit = r.lastExpandExit
+			return nil
+		}
 		path := r.literal(word)
 		f, err := r.open(r.ectx, path, os.O_RDONLY, 0, true)
 		if err != nil {
diff --git a/interp/tests/cmdsubst_test.go b/interp/tests/cmdsubst_test.go
index bd40c573..bb098a0d 100644
--- a/interp/tests/cmdsubst_test.go
+++ b/interp/tests/cmdsubst_test.go
@@ -182,6 +182,41 @@ func TestCmdSubstCatShortcutMissingFile(t *testing.T) {
 	assert.Equal(t, "1\n", stdout, "$? should be 1 from the failed substitution")
 }
 
+// TestCmdSubstCatShortcutCommandAllowlistBypass is the regression test
+// for the original vulnerability: $(<file) must be gated on `cat` being
+// in AllowedCommands. With the file in AllowedPaths but cat absent from
+// the allowlist, the shortcut must refuse to read.
+func TestCmdSubstCatShortcutCommandAllowlistBypass(t *testing.T) {
+	dir := t.TempDir()
+	require.NoError(t, os.WriteFile(filepath.Join(dir, "secret.txt"), []byte("top secret"), 0644))
+	stdout, stderr, code := cmdSubstRunWithOpts(t,
+		`x=$(<secret.txt); echo "[$x]"`,
+		dir,
+		interp.AllowedPaths([]string{dir}),
+		interp.AllowedCommands([]string{"rshell:echo"}),
+	)
+	assert.Equal(t, 0, code, "script completes; only the substitution fails")
+	assert.Equal(t, "[]\n", stdout, "must not leak the file contents")
+	assert.Contains(t, stderr, "file read not permitted")
+	assert.Contains(t, stderr, "cat not in allowed commands")
+}
+
+// TestCmdSubstCatShortcutAllowedWhenCatAllowed verifies the shortcut
+// works when cat is explicitly in AllowedCommands (not just
+// AllowAllCommands).
+func TestCmdSubstCatShortcutAllowedWhenCatAllowed(t *testing.T) {
+	dir := t.TempDir()
+	require.NoError(t, os.WriteFile(filepath.Join(dir, "data.txt"), []byte("ok"), 0644))
+	stdout, _, code := cmdSubstRunWithOpts(t,
+		`x=$(<data.txt); echo "$x"`,
+		dir,
+		interp.AllowedPaths([]string{dir}),
+		interp.AllowedCommands([]string{"rshell:cat", "rshell:echo"}),
+	)
+	assert.Equal(t, 0, code)
+	assert.Equal(t, "ok\n", stdout)
+}
+
 // --- For loop integration ---
 
 func TestCmdSubstInForLoop(t *testing.T) {
diff --git a/interp/tests/redir_input_bypass_pentest_test.go b/interp/tests/redir_input_bypass_pentest_test.go
new file mode 100644
index 00000000..85f3946b
--- /dev/null
+++ b/interp/tests/redir_input_bypass_pentest_test.go
@@ -0,0 +1,271 @@
+// Unless explicitly stated otherwise all files in this repository are licensed
+// under the Apache License Version 2.0.
+// This product includes software developed at Datadog (https://www.datadoghq.com/).
+// Copyright 2026-present Datadog, Inc.
+
+package tests_test
+
+import (
+	"bytes"
+	"context"
+	"errors"
+	"os"
+	"path/filepath"
+	"runtime"
+	"strings"
+	"testing"
+	"time"
+
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+	"mvdan.cc/sh/v3/syntax"
+
+	"github.com/DataDog/rshell/interp"
+)
+
+// Pentest suite for the `$(<file)` command-allowlist bypass.
+//
+// Historical vulnerability: the `$(<file)` POSIX shortcut in command
+// substitution was resolved by reading the file directly from the
+// interpreter, short-circuiting the normal command dispatch. That path
+// never consulted AllowedCommands, so a caller who had `rshell:echo`
+// whitelisted but not `rshell:cat` could still read any file inside
+// AllowedPaths via `x=$(<file); echo "$x"`.
+//
+// The mitigation keeps the shortcut functional but gates it on `cat`
+// being in the allowlist — $(<file) is treated as an implicit
+// $(cat file) for allowlist purposes. These tests verify both the gate
+// (reads refused when cat is missing) and the happy path (reads work
+// when cat is allowed).
+
+// runBypass runs script with AllowedPaths=[dir] and the given allowed
+// commands. It returns stdout, stderr, and exit code.
+func runBypass(t *testing.T, script, dir string, allowedCmds []string) (string, string, int) {
+	t.Helper()
+	parser := syntax.NewParser()
+	prog, err := parser.Parse(strings.NewReader(script), "")
+	if err != nil {
+		return "", err.Error(), 2
+	}
+	ctx, cancel := context.WithTimeout(context.Background(), 5*time.Second)
+	defer cancel()
+
+	var outBuf, errBuf bytes.Buffer
+	opts := []interp.RunnerOption{
+		interp.StdIO(nil, &outBuf, &errBuf),
+		interp.AllowedPaths([]string{dir}),
+		interp.AllowedCommands(allowedCmds),
+	}
+	runner, err := interp.New(opts...)
+	require.NoError(t, err)
+	defer runner.Close()
+	runner.Dir = dir
+
+	err = runner.Run(ctx, prog)
+	exitCode := 0
+	if err != nil {
+		var es interp.ExitStatus
+		if errors.As(err, &es) {
+			exitCode = int(es)
+		} else if ctx.Err() == nil {
+			t.Fatalf("unexpected error: %v", err)
+		}
+	}
+	return outBuf.String(), errBuf.String(), exitCode
+}
+
+// TestPentestCatShortcut_BlockedWhenCatNotAllowed is the exact exploit
+// reported: cat is NOT in the allowlist, but a caller tries to read a
+// file via $(<file). The gate must refuse without leaking content.
+func TestPentestCatShortcut_BlockedWhenCatNotAllowed(t *testing.T) {
+	dir := t.TempDir()
+	require.NoError(t, os.WriteFile(filepath.Join(dir, "secret.txt"), []byte("TOP SECRET"), 0644))
+
+	stdout, stderr, code := runBypass(t,
+		`x=$(<secret.txt); echo "[$x]"`,
+		dir,
+		[]string{"rshell:echo"},
+	)
+	// Script completes (echo runs); only the substitution fails with
+	// $?=1 and a diagnostic message. stdout shows the empty
+	// substitution, not the file contents.
+	assert.Equal(t, 0, code)
+	assert.Equal(t, "[]\n", stdout, "must not leak file contents")
+	assert.Contains(t, stderr, "file read not permitted")
+	assert.Contains(t, stderr, "cat not in allowed commands")
+	assert.NotContains(t, stdout, "TOP SECRET")
+}
+
+// TestPentestCatShortcut_AllowedWhenCatAllowed verifies the happy path:
+// with cat in the allowlist the shortcut reads the file as expected.
+func TestPentestCatShortcut_AllowedWhenCatAllowed(t *testing.T) {
+	dir := t.TempDir()
+	require.NoError(t, os.WriteFile(filepath.Join(dir, "data.txt"), []byte("content"), 0644))
+
+	stdout, stderr, code := runBypass(t,
+		`x=$(<data.txt); echo "[$x]"`,
+		dir,
+		[]string{"rshell:cat", "rshell:echo"},
+	)
+	assert.Equal(t, 0, code, "should succeed when cat is allowed; stderr: %s", stderr)
+	assert.Equal(t, "[content]\n", stdout)
+}
+
+// TestPentestCatShortcut_ExitStatusPropagates verifies that the
+// blocked-shortcut sets $?=1 so scripts can detect the refusal with
+// standard control flow.
+func TestPentestCatShortcut_ExitStatusPropagates(t *testing.T) {
+	dir := t.TempDir()
+	require.NoError(t, os.WriteFile(filepath.Join(dir, "secret.txt"), []byte("nope"), 0644))
+
+	stdout, _, code := runBypass(t,
+		`x=$(<secret.txt); echo "$?"`,
+		dir,
+		[]string{"rshell:echo"},
+	)
+	assert.Equal(t, 0, code)
+	assert.Equal(t, "1\n", stdout, "$? must be 1 after the blocked shortcut")
+}
+
+// TestPentestCatShortcut_NoFileAccessWhenBlocked verifies that when the
+// gate refuses, no file is opened — a missing file yields the
+// allowlist-denial message, not a "no such file" error.
+func TestPentestCatShortcut_NoFileAccessWhenBlocked(t *testing.T) {
+	dir := t.TempDir()
+	_, stderr, code := runBypass(t,
+		`x=$(<nonexistent-path.txt); echo "$x"`,
+		dir,
+		[]string{"rshell:echo"},
+	)
+	assert.Equal(t, 0, code)
+	assert.Contains(t, stderr, "cat not in allowed commands")
+	assert.NotContains(t, strings.ToLower(stderr), "no such file",
+		"gate should short-circuit before any filesystem access")
+}
+
+// TestPentestCatShortcut_SandboxEnforcedWhenCatAllowed verifies that
+// permitting `cat` in AllowedCommands does not weaken AllowedPaths.
+// Even with the gate satisfied, a path outside the sandbox must be
+// refused by the path layer — the two defences are independent.
+func TestPentestCatShortcut_SandboxEnforcedWhenCatAllowed(t *testing.T) {
+	dir := t.TempDir()
+	// Put a file somewhere outside `dir` so we have a concrete target
+	// to attempt reading.
+	outside := t.TempDir()
+	outsidePath := filepath.Join(outside, "secret.txt")
+	require.NoError(t, os.WriteFile(outsidePath, []byte("CROSS-BOUNDARY"), 0644))
+
+	// `echo "$?[$x]"` is evaluated before echo runs, so $? still
+	// carries the substitution's exit code (1 on failure) and $x is
+	// empty if the read was refused. The trailing echo prevents the
+	// script's top-level exit code from being overwritten.
+	script := `x=$(<` + outsidePath + `); echo "$?[$x]"`
+	stdout, stderr, code := runBypass(t, script, dir,
+		[]string{"rshell:cat", "rshell:echo"})
+
+	assert.Equal(t, 0, code)
+	assert.Equal(t, "1[]\n", stdout,
+		"substitution should fail ($?=1) and bind empty content")
+	assert.NotContains(t, stdout, "CROSS-BOUNDARY", "file contents must not leak")
+	assert.NotContains(t, stderr, "cat not in allowed commands",
+		"failure should be path-level, not gate-level")
+	assert.NotEmpty(t, stderr, "sandbox layer should have logged an error")
+}
+
+// TestPentestCatShortcut_SymlinkEscapeBlocked verifies that a symlink
+// planted inside AllowedPaths pointing outside is refused by the
+// sandbox. The $(<file) shortcut uses the same r.open path as builtins,
+// so this is really a sanity check that symlinks do not bypass os.Root.
+func TestPentestCatShortcut_SymlinkEscapeBlocked(t *testing.T) {
+	if runtime.GOOS == "windows" {
+		t.Skip("symlink creation requires elevation on Windows")
+	}
+	dir := t.TempDir()
+	outside := t.TempDir()
+	outsidePath := filepath.Join(outside, "secret.txt")
+	require.NoError(t, os.WriteFile(outsidePath, []byte("SYMLINK TARGET"), 0644))
+
+	// Plant a symlink inside the sandbox that points outside it.
+	linkPath := filepath.Join(dir, "escape.lnk")
+	require.NoError(t, os.Symlink(outsidePath, linkPath))
+
+	stdout, stderr, code := runBypass(t,
+		`x=$(<escape.lnk); echo "$?[$x]"`,
+		dir,
+		[]string{"rshell:cat", "rshell:echo"})
+
+	assert.Equal(t, 0, code)
+	assert.Equal(t, "1[]\n", stdout,
+		"symlink escape should fail ($?=1) and bind empty content")
+	assert.NotContains(t, stdout, "SYMLINK TARGET", "contents behind symlink must not leak")
+	assert.NotContains(t, stderr, "cat not in allowed commands",
+		"refusal should be sandbox-level, not gate-level")
+	assert.NotEmpty(t, stderr, "sandbox layer should have logged an error")
+}
+
+// TestPentestCatShortcut_VariableExpandedPath verifies that the
+// shortcut path goes through normal word expansion — an attacker
+// cannot dodge the allowlist check by hiding the path behind a
+// variable, and a legitimate user can use variables to build paths.
+func TestPentestCatShortcut_VariableExpandedPath(t *testing.T) {
+	dir := t.TempDir()
+	require.NoError(t, os.WriteFile(filepath.Join(dir, "data.txt"), []byte("expanded"), 0644))
+
+	// Happy path: expanded path works when cat is allowed.
+	t.Run("allowed", func(t *testing.T) {
+		stdout, stderr, code := runBypass(t,
+			`F=data.txt; x=$(<$F); echo "[$x]"`,
+			dir,
+			[]string{"rshell:cat", "rshell:echo"})
+		assert.Equal(t, 0, code, "should succeed; stderr: %s", stderr)
+		assert.Equal(t, "[expanded]\n", stdout)
+	})
+
+	// The gate fires regardless of whether the path is literal or
+	// variable-expanded — variables cannot be used as an evasion.
+	t.Run("blocked", func(t *testing.T) {
+		stdout, stderr, code := runBypass(t,
+			`F=data.txt; x=$(<$F); echo "[$x]"`,
+			dir,
+			[]string{"rshell:echo"})
+		assert.Equal(t, 0, code)
+		assert.Equal(t, "[]\n", stdout, "must not leak content via variable-expanded path")
+		assert.Contains(t, stderr, "cat not in allowed commands")
+	})
+}
+
+// TestPentestCatShortcut_VariousContexts exercises the shortcut in
+// several expansion contexts (nested echo arg, if condition, for
+// iterator). In every context it must succeed when cat is allowed and
+// refuse when cat is not.
+func TestPentestCatShortcut_VariousContexts(t *testing.T) {
+	dir := t.TempDir()
+	require.NoError(t, os.WriteFile(filepath.Join(dir, "data.txt"), []byte("alpha"), 0644))
+
+	contexts := []struct {
+		name   string
+		script string
+	}{
+		{"assignment", `x=$(<data.txt); echo "$x"`},
+		{"echo arg", `echo "[$(<data.txt)]"`},
+		{"backtick", "echo \"[`<data.txt`]\""},
+		{"for iterator", `for x in $(<data.txt); do echo "$x"; done`},
+	}
+
+	for _, tc := range contexts {
+		t.Run(tc.name+"/allowed", func(t *testing.T) {
+			stdout, stderr, code := runBypass(t, tc.script, dir,
+				[]string{"rshell:cat", "rshell:echo"})
+			assert.Equal(t, 0, code, "should succeed; stderr: %s", stderr)
+			assert.Contains(t, stdout, "alpha")
+		})
+		t.Run(tc.name+"/blocked", func(t *testing.T) {
+			stdout, stderr, code := runBypass(t, tc.script, dir,
+				[]string{"rshell:echo"})
+			assert.Equal(t, 0, code)
+			assert.NotContains(t, stdout, "alpha",
+				"blocked shortcut must not leak file contents")
+			assert.Contains(t, stderr, "cat not in allowed commands")
+		})
+	}
+}
diff --git a/tests/scenarios/shell/blocked_redirects/cat_shortcut_bypass.yaml b/tests/scenarios/shell/blocked_redirects/cat_shortcut_bypass.yaml
new file mode 100644
index 00000000..ba0de062
--- /dev/null
+++ b/tests/scenarios/shell/blocked_redirects/cat_shortcut_bypass.yaml
@@ -0,0 +1,18 @@
+description: $(<file) must not bypass the command allowlist — with the file in allowed_paths but cat NOT in allowed_commands, the shortcut is blocked at runtime.
+skip_assert_against_bash: true
+setup:
+  files:
+    - path: secret.txt
+      content: "top secret"
+input:
+  allowed_paths: ["$DIR"]
+  allowed_commands: ["rshell:echo"]
+  script: |+
+    x=$(<secret.txt)
+    echo "$x"
+expect:
+  stdout: |+
+
+  stderr: |+
+    $(<file): file read not permitted (cat not in allowed commands)
+  exit_code: 0
diff --git a/tests/scenarios/shell/command_substitution/cat_shortcut.yaml b/tests/scenarios/shell/command_substitution/cat_shortcut.yaml
index 6afc9f4c..fbb98573 100644
--- a/tests/scenarios/shell/command_substitution/cat_shortcut.yaml
+++ b/tests/scenarios/shell/command_substitution/cat_shortcut.yaml
@@ -1,4 +1,4 @@
-description: $(<file) shortcut reads file contents directly.
+description: $(<file) shortcut reads file contents directly when cat is allowed.
 setup:
   files:
     - path: data.txt
diff --git a/tests/scenarios/shell/command_substitution/cat_shortcut_allowed_explicit.yaml b/tests/scenarios/shell/command_substitution/cat_shortcut_allowed_explicit.yaml
new file mode 100644
index 00000000..59fabf87
--- /dev/null
+++ b/tests/scenarios/shell/command_substitution/cat_shortcut_allowed_explicit.yaml
@@ -0,0 +1,17 @@
+description: $(<file) shortcut works when rshell:cat is explicitly in allowed_commands (inverse of blocked_redirects/cat_shortcut_bypass).
+skip_assert_against_bash: true
+setup:
+  files:
+    - path: data.txt
+      content: "hello from file"
+input:
+  allowed_paths: ["$DIR"]
+  allowed_commands: ["rshell:cat", "rshell:echo"]
+  script: |+
+    x=$(<data.txt)
+    echo "[$x]"
+expect:
+  stdout: |+
+    [hello from file]
+  stderr: |+
+  exit_code: 0