diff --git a/packages/api-server/src/watchPaths.ts b/packages/api-server/src/watchPaths.ts
index 7b64e0338f..83e282120e 100644
--- a/packages/api-server/src/watchPaths.ts
+++ b/packages/api-server/src/watchPaths.ts
@@ -4,6 +4,7 @@ import path from 'node:path'
 import {
   getDbDir,
   getPaths,
+  getPrismaGeneratorOutputPath,
   importStatementPath,
 } from '@cedarjs/project-config'
 
@@ -94,6 +95,16 @@ async function apiIgnorePaths() {
     dbDir,
   ]
 
+  // Always ignore the Prisma client generator output. It's usually inside
+  // `dbDir` (already ignored above), but projects that point the generator
+  // `output` outside the schema directory — e.g. into `api/src/lib/...` —
+  // otherwise trigger an infinite rebuild loop: each build regenerates the
+  // client, chokidar sees the writes, and another build is scheduled.
+  const prismaGeneratorOutputPath = await getPrismaGeneratorOutputPath()
+  if (prismaGeneratorOutputPath) {
+    ignoredApiPaths.push(prismaGeneratorOutputPath)
+  }
+
   return ignoredApiPaths
 }
 
diff --git a/packages/project-config/src/prisma.ts b/packages/project-config/src/prisma.ts
index ba8fab357b..e22f72a039 100644
--- a/packages/project-config/src/prisma.ts
+++ b/packages/project-config/src/prisma.ts
@@ -159,6 +159,36 @@ type ResolveReturnType =
   | { clientPath: string; error: undefined }
   | { clientPath: string | undefined; error: string }
 
+/**
+ * Resolves the absolute path the Prisma client generator writes to.
+ * Returns `undefined` if the schema or generator can't be read.
+ */
+export async function getPrismaGeneratorOutputPath(): Promise<
+  string | undefined
+> {
+  try {
+    const prismaInternalsMod = await import('@prisma/internals')
+    const { getConfig } = prismaInternalsMod.default || prismaInternalsMod
+
+    const { schemas, schemaRootDir } = await getPrismaSchemas()
+    const config = await getConfig({ datamodel: schemas })
+    const generator =
+      config.generators.find((entry) => entry.name === 'client') ??
+      config.generators[0]
+    const output = generator?.output?.value
+
+    if (!output) {
+      return undefined
+    }
+
+    return path.isAbsolute(output)
+      ? output
+      : path.resolve(schemaRootDir, output)
+  } catch {
+    return undefined
+  }
+}
+
 export async function resolveGeneratedPrismaClient(): Promise<ResolveReturnType> {
   let generatorOutputPath: string | undefined
   let ext = 'ts'