diff --git a/cli/planoai/trace_cmd.py b/cli/planoai/trace_cmd.py
index dd8194ef..5012f419 100644
--- a/cli/planoai/trace_cmd.py
+++ b/cli/planoai/trace_cmd.py
@@ -28,6 +28,17 @@ MAX_TRACES = 50
 MAX_SPANS_PER_TRACE = 500
 
 
+class TraceListenerBindError(RuntimeError):
+    """Raised when the OTLP/gRPC listener cannot bind to the requested address."""
+
+
+def _trace_listener_bind_error_message(address: str) -> str:
+    return (
+        f"Failed to start OTLP listener on {address}: address is already in use.\n"
+        "Stop the process using that port or run `planoai trace listen --port <PORT>`."
+    )
+
+
 @dataclass
 class TraceSummary:
     trace_id: str
@@ -501,7 +512,15 @@ def _create_trace_server(host: str, grpc_port: int) -> grpc.Server:
     trace_service_pb2_grpc.add_TraceServiceServicer_to_server(
         _OTLPTraceServicer(), grpc_server
     )
-    grpc_server.add_insecure_port(f"{host}:{grpc_port}")
+    address = f"{host}:{grpc_port}"
+    try:
+        bound_port = grpc_server.add_insecure_port(address)
+    except RuntimeError as exc:
+        raise TraceListenerBindError(
+            _trace_listener_bind_error_message(address)
+        ) from exc
+    if bound_port == 0:
+        raise TraceListenerBindError(_trace_listener_bind_error_message(address))
     grpc_server.start()
     return grpc_server
 
@@ -509,7 +528,10 @@ def _create_trace_server(host: str, grpc_port: int) -> grpc.Server:
 def _start_trace_listener(host: str, grpc_port: int) -> None:
     """Start the OTLP/gRPC listener and block until interrupted."""
     console = Console()
-    grpc_server = _create_trace_server(host, grpc_port)
+    try:
+        grpc_server = _create_trace_server(host, grpc_port)
+    except TraceListenerBindError as exc:
+        raise click.ClickException(str(exc)) from exc
 
     console.print()
     console.print(f"[bold {PLANO_COLOR}]Listening for traces...[/bold {PLANO_COLOR}]")
diff --git a/cli/test/test_trace_cmd.py b/cli/test/test_trace_cmd.py
new file mode 100644
index 00000000..23373277
--- /dev/null
+++ b/cli/test/test_trace_cmd.py
@@ -0,0 +1,44 @@
+import pytest
+import rich_click as click
+
+from planoai import trace_cmd
+
+
+class _FakeGrpcServer:
+    def add_insecure_port(self, _address: str) -> int:
+        raise RuntimeError("bind failed")
+
+    def start(self) -> None:
+        return None
+
+
+def test_create_trace_server_raises_bind_error(monkeypatch):
+    monkeypatch.setattr(
+        trace_cmd.grpc, "server", lambda *_args, **_kwargs: _FakeGrpcServer()
+    )
+    monkeypatch.setattr(
+        trace_cmd.trace_service_pb2_grpc,
+        "add_TraceServiceServicer_to_server",
+        lambda *_args, **_kwargs: None,
+    )
+
+    with pytest.raises(trace_cmd.TraceListenerBindError) as excinfo:
+        trace_cmd._create_trace_server("0.0.0.0", 4317)
+
+    assert "already in use" in str(excinfo.value)
+    assert "planoai trace listen --port" in str(excinfo.value)
+
+
+def test_start_trace_listener_converts_bind_error_to_click_exception(monkeypatch):
+    monkeypatch.setattr(
+        trace_cmd,
+        "_create_trace_server",
+        lambda *_args, **_kwargs: (_ for _ in ()).throw(
+            trace_cmd.TraceListenerBindError("port in use")
+        ),
+    )
+
+    with pytest.raises(click.ClickException) as excinfo:
+        trace_cmd._start_trace_listener("0.0.0.0", 4317)
+
+    assert "port in use" in str(excinfo.value)