diff --git a/actions/setup/js/update_project.cjs b/actions/setup/js/update_project.cjs
index 0752f951fc1..784ba9e2e28 100644
--- a/actions/setup/js/update_project.cjs
+++ b/actions/setup/js/update_project.cjs
@@ -441,6 +441,36 @@ function inferFieldDataType(fieldName, fieldValue, datePattern) {
   return "SINGLE_SELECT";
 }
 
+/**
+ * Coerce an agent-supplied `fields` value to a plain object, or return null.
+ *
+ * Agents occasionally double-encode the value as a JSON string.  If that
+ * happens we parse it transparently.  Arrays, null, and other non-object
+ * types are rejected with a warning so that callers can skip field updates
+ * without silently iterating over character indices or array elements.
+ *
+ * @param {unknown} fields - Raw value from the agent output
+ * @returns {Record<string, unknown>|null} Plain object or null when unusable
+ */
+function resolveFieldsObject(fields) {
+  if (fields == null) return null;
+  if (typeof fields === "string") {
+    try {
+      fields = JSON.parse(fields);
+    } catch {
+      core.warning("update_project: `fields` was a string and could not be parsed as JSON; skipping field updates");
+      return null;
+    }
+    // JSON.parse of "null", "1", or a quoted string yields a non-object
+    if (fields == null) return null;
+  }
+  if (Array.isArray(fields) || typeof fields !== "object") {
+    core.warning("update_project: `fields` must be a JSON object; skipping field updates");
+    return null;
+  }
+  return Object.fromEntries(Object.entries(fields));
+}
+
 /**
  * Apply field value updates to a project item, creating fields as needed.
  * @param {Object} github - GitHub client (Octokit instance)
@@ -1105,8 +1135,9 @@ async function updateProject(output, temporaryIdMap = new Map(), githubClient =
         }
       }
 
-      if (output.fields && Object.keys(output.fields).length > 0) {
-        await applyFieldUpdates(github, projectId, itemId, output.fields);
+      const resolvedFields1 = resolveFieldsObject(output.fields);
+      if (resolvedFields1 && Object.keys(resolvedFields1).length > 0) {
+        await applyFieldUpdates(github, projectId, itemId, resolvedFields1);
       }
 
       core.setOutput("item-id", itemId);
@@ -1195,8 +1226,9 @@ async function updateProject(output, temporaryIdMap = new Map(), githubClient =
         ).addProjectV2ItemById.item.id;
       }
 
-      if (output.fields && Object.keys(output.fields).length > 0) {
-        await applyFieldUpdates(github, projectId, itemId, output.fields);
+      const resolvedFields2 = resolveFieldsObject(output.fields);
+      if (resolvedFields2 && Object.keys(resolvedFields2).length > 0) {
+        await applyFieldUpdates(github, projectId, itemId, resolvedFields2);
       }
 
       core.setOutput("item-id", itemId);
diff --git a/actions/setup/js/update_project.test.cjs b/actions/setup/js/update_project.test.cjs
index 7c240a538d2..146bcb080e4 100644
--- a/actions/setup/js/update_project.test.cjs
+++ b/actions/setup/js/update_project.test.cjs
@@ -1230,6 +1230,86 @@ describe("updateProject", () => {
     expect(mockCore.warning).toHaveBeenCalledWith(expect.stringContaining('Failed to create field "NonExistentField"'));
   });
 
+  it("parses and applies field updates when fields is a JSON-encoded string (double-encoded)", async () => {
+    const projectUrl = "https://github.com/orgs/testowner/projects/60";
+    const output = {
+      type: "update_project",
+      project: projectUrl,
+      content_type: "issue",
+      content_number: 21,
+      // Agent double-encoded the fields object as a JSON string
+      fields: '{"Lifecycle":"Sandbox"}',
+    };
+
+    queueResponses([
+      repoResponse(),
+      viewerResponse(),
+      orgProjectV2Response(projectUrl, 60, "project-test"),
+      issueResponse("issue-id-21"),
+      existingItemResponse("issue-id-21", "item-test"),
+      fieldsResponse([{ id: "field-lifecycle", name: "Lifecycle", options: [{ id: "opt-sandbox", name: "Sandbox" }] }]),
+      updateFieldValueResponse(),
+    ]);
+
+    await updateProject(output);
+
+    // Should NOT create bogus numeric fields (0, 1, 2, …)
+    const createFieldCall = mockGithub.graphql.mock.calls.find(([query]) => query.includes("createProjectV2Field"));
+    expect(createFieldCall).toBeUndefined();
+
+    // Should have applied the parsed field update
+    const updateCall = mockGithub.graphql.mock.calls.find(([query]) => query.includes("updateProjectV2ItemFieldValue"));
+    expect(updateCall).toBeDefined();
+  });
+
+  it("warns and skips field updates when fields is an invalid JSON string", async () => {
+    const projectUrl = "https://github.com/orgs/testowner/projects/60";
+    const output = {
+      type: "update_project",
+      project: projectUrl,
+      content_type: "issue",
+      content_number: 22,
+      fields: "not-valid-json",
+    };
+
+    queueResponses([repoResponse(), viewerResponse(), orgProjectV2Response(projectUrl, 60, "project-test"), issueResponse("issue-id-22"), existingItemResponse("issue-id-22", "item-test")]);
+
+    await updateProject(output);
+
+    // Should warn about the bad string value
+    expect(mockCore.warning).toHaveBeenCalledWith(expect.stringContaining("`fields` was a string and could not be parsed as JSON"));
+
+    // Should NOT attempt any field GraphQL operations
+    const createFieldCall = mockGithub.graphql.mock.calls.find(([query]) => query.includes("createProjectV2Field"));
+    expect(createFieldCall).toBeUndefined();
+    const updateCall = mockGithub.graphql.mock.calls.find(([query]) => query.includes("updateProjectV2ItemFieldValue"));
+    expect(updateCall).toBeUndefined();
+  });
+
+  it("warns and skips field updates when fields is an array", async () => {
+    const projectUrl = "https://github.com/orgs/testowner/projects/60";
+    const output = {
+      type: "update_project",
+      project: projectUrl,
+      content_type: "issue",
+      content_number: 23,
+      fields: ["Status", "In Progress"],
+    };
+
+    queueResponses([repoResponse(), viewerResponse(), orgProjectV2Response(projectUrl, 60, "project-test"), issueResponse("issue-id-23"), existingItemResponse("issue-id-23", "item-test")]);
+
+    await updateProject(output);
+
+    // Should warn about the non-object value
+    expect(mockCore.warning).toHaveBeenCalledWith(expect.stringContaining("`fields` must be a JSON object"));
+
+    // Should NOT attempt any field GraphQL operations
+    const createFieldCall = mockGithub.graphql.mock.calls.find(([query]) => query.includes("createProjectV2Field"));
+    expect(createFieldCall).toBeUndefined();
+    const updateCall = mockGithub.graphql.mock.calls.find(([query]) => query.includes("updateProjectV2ItemFieldValue"));
+    expect(updateCall).toBeUndefined();
+  });
+
   it("rejects non-URL project identifier", async () => {
     const output = { type: "update_project", project: "Engineering Roadmap" };
     await expect(updateProject(output)).rejects.toThrow(/full GitHub project URL/);