diff --git a/Cargo.lock b/Cargo.lock
index 1744c462..20f6c9cf 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -890,6 +890,21 @@ dependencies = [
  "libc",
 ]
 
+[[package]]
+name = "futures"
+version = "0.3.30"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "645c6916888f6cb6350d2550b80fb63e734897a8498abe35cfb732b6487804b0"
+dependencies = [
+ "futures-channel",
+ "futures-core",
+ "futures-executor",
+ "futures-io",
+ "futures-sink",
+ "futures-task",
+ "futures-util",
+]
+
 [[package]]
 name = "futures-channel"
 version = "0.3.30"
@@ -906,12 +921,34 @@ version = "0.3.30"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "dfc6580bb841c5a68e9ef15c77ccc837b40a7504914d52e47b8b0e9bbda25a1d"
 
+[[package]]
+name = "futures-executor"
+version = "0.3.30"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "a576fc72ae164fca6b9db127eaa9a9dda0d61316034f33a0a0d4eda41f02b01d"
+dependencies = [
+ "futures-core",
+ "futures-task",
+ "futures-util",
+]
+
 [[package]]
 name = "futures-io"
 version = "0.3.30"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "a44623e20b9681a318efdd71c299b6b222ed6f231972bfe2f224ebad6311f0c1"
 
+[[package]]
+name = "futures-macro"
+version = "0.3.30"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "87750cf4b7a4c0625b1529e4c543c2182106e4dedc60a2a6455e00d212c489ac"
+dependencies = [
+ "proc-macro2",
+ "quote",
+ "syn 2.0.60",
+]
+
 [[package]]
 name = "futures-sink"
 version = "0.3.30"
@@ -924,14 +961,22 @@ version = "0.3.30"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "38d84fa142264698cdce1a9f9172cf383a0c82de1bddcf3092901442c4097004"
 
+[[package]]
+name = "futures-timer"
+version = "3.0.3"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "f288b0a4f20f9a56b5d1da57e2227c661b7b16168e2f72365f57b63326e29b24"
+
 [[package]]
 name = "futures-util"
 version = "0.3.30"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "3d6401deb83407ab3da39eba7e33987a73c3df0c82b4bb5813ee871c19c41d48"
 dependencies = [
+ "futures-channel",
  "futures-core",
  "futures-io",
+ "futures-macro",
  "futures-sink",
  "futures-task",
  "memchr",
@@ -988,7 +1033,7 @@ checksum = "8066dc2ef3bd0e2bfb84b4a2b0b04f216ffb97390e09fab0752bf0ba943dacc6"
 dependencies = [
  "doc-comment",
  "unicase",
- "winnow",
+ "winnow 0.6.7",
 ]
 
 [[package]]
@@ -1015,6 +1060,7 @@ dependencies = [
  "pretty_assertions",
  "rand",
  "ratatui",
+ "rstest",
  "secrecy",
  "sendmail",
  "serde_json",
@@ -1180,7 +1226,7 @@ dependencies = [
  "gix-utils",
  "itoa",
  "thiserror",
- "winnow",
+ "winnow 0.6.7",
 ]
 
 [[package]]
@@ -1275,7 +1321,7 @@ dependencies = [
  "smallvec",
  "thiserror",
  "unicode-bom",
- "winnow",
+ "winnow 0.6.7",
 ]
 
 [[package]]
@@ -1572,7 +1618,7 @@ dependencies = [
  "itoa",
  "smallvec",
  "thiserror",
- "winnow",
+ "winnow 0.6.7",
 ]
 
 [[package]]
@@ -1696,7 +1742,7 @@ dependencies = [
  "gix-utils",
  "maybe-async",
  "thiserror",
- "winnow",
+ "winnow 0.6.7",
 ]
 
 [[package]]
@@ -1728,7 +1774,7 @@ dependencies = [
  "gix-validate",
  "memmap2",
  "thiserror",
- "winnow",
+ "winnow 0.6.7",
 ]
 
 [[package]]
@@ -1976,6 +2022,12 @@ dependencies = [
  "thiserror",
 ]
 
+[[package]]
+name = "glob"
+version = "0.3.1"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "d2fabcfbdc87f4758337ca535fb41a6d701b65693ce38287d856d1674551ec9b"
+
 [[package]]
 name = "h2"
 version = "0.3.26"
@@ -3067,6 +3119,15 @@ dependencies = [
  "yansi",
 ]
 
+[[package]]
+name = "proc-macro-crate"
+version = "3.1.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "6d37c51ca738a55da99dc0c4a34860fd675453b8b36209178c2249bb13651284"
+dependencies = [
+ "toml_edit 0.21.1",
+]
+
 [[package]]
 name = "proc-macro2"
 version = "1.0.81"
@@ -3260,6 +3321,12 @@ version = "0.8.3"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "adad44e29e4c806119491a7f06f03de4d1af22c3a680dd47f1e6e179439d1f56"
 
+[[package]]
+name = "relative-path"
+version = "1.9.3"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "ba39f3699c378cd8970968dcbff9c43159ea4cfbd88d43c00b22f2ef10a435d2"
+
 [[package]]
 name = "reqwest"
 version = "0.12.4"
@@ -3323,6 +3390,36 @@ dependencies = [
  "windows-sys 0.52.0",
 ]
 
+[[package]]
+name = "rstest"
+version = "0.22.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "7b423f0e62bdd61734b67cd21ff50871dfaeb9cc74f869dcd6af974fbcb19936"
+dependencies = [
+ "futures",
+ "futures-timer",
+ "rstest_macros",
+ "rustc_version",
+]
+
+[[package]]
+name = "rstest_macros"
+version = "0.22.0"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "c5e1711e7d14f74b12a58411c542185ef7fb7f2e7f8ee6e2940a883628522b42"
+dependencies = [
+ "cfg-if",
+ "glob",
+ "proc-macro-crate",
+ "proc-macro2",
+ "quote",
+ "regex",
+ "relative-path",
+ "rustc_version",
+ "syn 2.0.60",
+ "unicode-ident",
+]
+
 [[package]]
 name = "rust-argon2"
 version = "0.8.3"
@@ -4002,7 +4099,7 @@ dependencies = [
  "serde",
  "serde_spanned",
  "toml_datetime",
- "toml_edit",
+ "toml_edit 0.22.12",
 ]
 
 [[package]]
@@ -4014,6 +4111,17 @@ dependencies = [
  "serde",
 ]
 
+[[package]]
+name = "toml_edit"
+version = "0.21.1"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "6a8534fd7f78b5405e860340ad6575217ce99f38d4d5c8f2442cb5ecb50090e1"
+dependencies = [
+ "indexmap",
+ "toml_datetime",
+ "winnow 0.5.40",
+]
+
 [[package]]
 name = "toml_edit"
 version = "0.22.12"
@@ -4024,7 +4132,7 @@ dependencies = [
  "serde",
  "serde_spanned",
  "toml_datetime",
- "winnow",
+ "winnow 0.6.7",
 ]
 
 [[package]]
@@ -4634,6 +4742,15 @@ version = "0.52.5"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "bec47e5bfd1bff0eeaf6d8b485cc1074891a197ab4225d504cb7a1ab88b02bf0"
 
+[[package]]
+name = "winnow"
+version = "0.5.40"
+source = "registry+https://github.com/rust-lang/crates.io-index"
+checksum = "f593a95398737aeed53e489c785df13f3618e41dbcd6718c6addbf1395aa6876"
+dependencies = [
+ "memchr",
+]
+
 [[package]]
 name = "winnow"
 version = "0.6.7"
diff --git a/Cargo.toml b/Cargo.toml
index 164c1d73..99d465e2 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -111,3 +111,4 @@ pretty_assertions = "1.4"
 rand = "0.8"
 mockall = "0.13"
 test-log = "0.2"
+rstest = { version = "0.22", features = ["async-timeout"] }
diff --git a/crates/cli/Cargo.toml b/crates/cli/Cargo.toml
index affe9c03..e1ff60d0 100644
--- a/crates/cli/Cargo.toml
+++ b/crates/cli/Cargo.toml
@@ -77,6 +77,7 @@ test-log = { workspace = true }
 rand = { workspace = true }
 pretty_assertions = { workspace = true }
 mockall = { workspace = true }
+rstest = { workspace = true }
 
 [lints.clippy]
 nursery = { level = "warn", priority = -1 }
diff --git a/crates/cli/src/file_watcher.rs b/crates/cli/src/file_watcher.rs
index c6bfc3da..eac23b7c 100644
--- a/crates/cli/src/file_watcher.rs
+++ b/crates/cli/src/file_watcher.rs
@@ -9,6 +9,9 @@ use tracing::error;
 use tracing::info;
 
 use std::path::PathBuf;
+use std::sync::atomic::AtomicBool;
+use std::sync::atomic::Ordering;
+use std::sync::Arc;
 use std::time::Duration;
 
 #[derive(Debug, Message)]
@@ -20,16 +23,22 @@ pub enum Error {
     #[error("io")]
     Io(#[from] std::io::Error),
 }
-pub async fn watch_file(path: PathBuf, recipient: Recipient<FileUpdated>) -> Result<()> {
+pub fn watch_file(path: PathBuf, recipient: Recipient<FileUpdated>) -> Result<Arc<AtomicBool>> {
     let (tx, rx) = std::sync::mpsc::channel();
+    let shutdown = Arc::new(AtomicBool::default());
 
     let mut handler = notify::recommended_watcher(tx).context("file watcher")?;
     handler
         .watch(&path, notify::RecursiveMode::NonRecursive)
         .with_context(|| format!("Watch file: {path:?}"))?;
     info!("Watching: {:?}", path);
-    async move {
+    let thread_shutdown = shutdown.clone();
+    actix_rt::task::spawn_blocking(move || {
         loop {
+            if thread_shutdown.load(Ordering::Relaxed) {
+                drop(handler);
+                break;
+            }
             for result in rx.try_iter() {
                 match result {
                     Ok(event) => match event.kind {
@@ -50,9 +59,8 @@ pub async fn watch_file(path: PathBuf, recipient: Recipient<FileUpdated>) -> Res
                     }
                 }
             }
-            actix_rt::time::sleep(Duration::from_millis(1000)).await;
+            std::thread::sleep(Duration::from_millis(1000));
         }
-    }
-    .await;
-    Ok(())
+    });
+    Ok(shutdown)
 }
diff --git a/crates/cli/src/server/mod.rs b/crates/cli/src/server/mod.rs
index 1d517ead..8acabe4a 100644
--- a/crates/cli/src/server/mod.rs
+++ b/crates/cli/src/server/mod.rs
@@ -17,7 +17,7 @@ use anyhow::{Context, Result};
 use kxio::{fs::FileSystem, network::Network};
 use tracing::info;
 
-use std::{path::PathBuf, time::Duration};
+use std::{path::PathBuf, sync::atomic::Ordering, time::Duration};
 
 const A_DAY: Duration = Duration::from_secs(24 * 60 * 60);
 
@@ -62,8 +62,7 @@ pub fn start(
 
         info!("Starting File Watcher...");
         #[allow(clippy::expect_used)]
-        watch_file("git-next-server.toml".into(), server.clone().recipient())
-            .await
+        let fw_shutdown = watch_file("git-next-server.toml".into(), server.clone().recipient())
             .expect("file watcher");
 
         info!("Server running - Press Ctrl-C to stop...");
@@ -72,6 +71,7 @@ pub fn start(
         server.do_send(crate::server::actor::messages::Shutdown);
         actix_rt::time::sleep(std::time::Duration::from_millis(200)).await;
         System::current().stop();
+        fw_shutdown.store(true, Ordering::Relaxed);
     };
     let system = System::new();
     Arbiter::current().spawn(execution);
diff --git a/crates/cli/src/tests.rs b/crates/cli/src/tests.rs
index 627c3784..6248879d 100644
--- a/crates/cli/src/tests.rs
+++ b/crates/cli/src/tests.rs
@@ -38,3 +38,44 @@ mod init {
         Ok(())
     }
 }
+mod file_watcher {
+    use std::{sync::atomic::Ordering, time::Duration};
+
+    use actix::{Actor, Context, Handler};
+    use rstest::*;
+
+    use crate::file_watcher::{self, FileUpdated};
+
+    use super::TestResult;
+
+    #[rstest]
+    #[actix::test]
+    #[timeout(Duration::from_millis(80))]
+    async fn should_not_block_calling_thread() -> TestResult {
+        let fs = kxio::fs::temp()?;
+        let path = fs.base().join("file");
+        fs.file_write(&path, "foo")?;
+
+        let listener = Listener;
+        let l_addr = listener.start();
+        let recipient = l_addr.recipient();
+
+        let fw_shutdown = file_watcher::watch_file(path, recipient)?;
+        std::thread::sleep(Duration::from_millis(10));
+        fw_shutdown.store(true, Ordering::Relaxed);
+
+        Ok(()) // was not blocked
+    }
+
+    struct Listener;
+    impl Actor for Listener {
+        type Context = Context<Self>;
+    }
+    impl Handler<FileUpdated> for Listener {
+        type Result = ();
+
+        fn handle(&mut self, _msg: FileUpdated, _ctx: &mut Self::Context) -> Self::Result {
+            // todo!()
+        }
+    }
+}