diff --git a/client/scenes/main.tscn b/client/scenes/main.tscn
index da297226c..0a826303e 100644
--- a/client/scenes/main.tscn
+++ b/client/scenes/main.tscn
@@ -1,4 +1,4 @@
-[gd_scene load_steps=9 format=3 uid="uid://bswrmh7w8dbgm"]
+[gd_scene load_steps=10 format=3 uid="uid://bswrmh7w8dbgm"]
 
 [ext_resource type="Script" path="res://scripts/main.gd" id="1_main"]
 [ext_resource type="Script" path="res://scripts/rendering/world_renderer.gd" id="2_world"]
@@ -8,6 +8,7 @@
 [ext_resource type="PackedScene" path="res://ui/hud.tscn" id="6_hud"]
 [ext_resource type="PackedScene" path="res://ui/minimap.tscn" id="7_minimap"]
 [ext_resource type="PackedScene" path="res://ui/monologue_display.tscn" id="8_monologue"]
+[ext_resource type="PackedScene" path="res://ui/interaction_prompt.tscn" id="9_prompt"]
 
 [node name="Game" type="Node2D"]
 script = ExtResource("1_main")
@@ -36,3 +37,5 @@ zoom = Vector2(2, 2)
 [node name="Minimap" parent="UILayer" instance=ExtResource("7_minimap")]
 
 [node name="MonologueDisplay" parent="UILayer" instance=ExtResource("8_monologue")]
+
+[node name="InteractionPrompt" parent="UILayer" instance=ExtResource("9_prompt")]
diff --git a/client/scripts/autoloads/game_state.gd b/client/scripts/autoloads/game_state.gd
index c695e08e1..b8fde5743 100644
--- a/client/scripts/autoloads/game_state.gd
+++ b/client/scripts/autoloads/game_state.gd
@@ -19,6 +19,9 @@ var visibility_sectors: Dictionary = {}  # Vector2i -> "Forward"/"Peripheral"
 # refined when the server assigns explicit player entity IDs).
 var player_entity_id: int = 1
 
+# v4 fields (#404/#405)
+var nearby_interactions: Array = []  # [{entity_id, entity_type, distance, verbs: [{kind, label, priority, available}]}]
+
 func apply_snapshot(snapshot: Dictionary) -> void:
 	current_snapshot = snapshot
 
@@ -54,6 +57,12 @@ func apply_snapshot(snapshot: Dictionary) -> void:
 	if snapshot.has("player_facing") and snapshot.player_facing is String:
 		player_facing = snapshot.player_facing
 
+	# v4: nearby_interactions (#404/#405)
+	if snapshot.has("nearby_interactions") and snapshot.nearby_interactions is Array:
+		nearby_interactions = snapshot.nearby_interactions
+	else:
+		nearby_interactions = []
+
 	# v2: visible_tiles with visibility sectors
 	# Derives visible_positions when not explicitly provided (real server mode)
 	if snapshot.has("visible_tiles") and snapshot.visible_tiles is Array and snapshot.visible_tiles.size() > 0:
diff --git a/client/scripts/autoloads/sim_bridge.gd b/client/scripts/autoloads/sim_bridge.gd
index 98aad66b8..9e19a70c1 100644
--- a/client/scripts/autoloads/sim_bridge.gd
+++ b/client/scripts/autoloads/sim_bridge.gd
@@ -294,20 +294,34 @@ func _test_snapshot() -> Dictionary:
 			"visibility": sector,
 		})
 
+	# v4: nearby_interactions when NPC is nearby and visible (#404/#405)
+	var nearby: Array = []
+	if npc_dist <= 2 and _test_has_los(Vector2i(px, py), npc_pos):
+		nearby.append({
+			"entity_id": 2,
+			"entity_type": "Npc",
+			"distance": npc_dist,
+			"verbs": [
+				{"kind": "Talk", "label": "Talk", "priority": 0, "available": true},
+				{"kind": "ExamineNpc", "label": "Examine", "priority": 1, "available": true},
+			],
+		})
+
 	return {
 		"tick": _test_tick,
-		"version": 2,
+		"version": 4,
 		"game_time": {
 			"day": 0,
 			"time_of_day": _test_tick * 10,
 			"day_phase": "Morning",
-			"paused": false,
+			"tick_rate": "Full",
 		},
 		"player_facing": _test_facing,
 		"entities": entities,
 		"tiles": _test_tiles(),
 		"visible_tiles": _test_visible_tiles(),
 		"visible_positions": _test_visible_positions(),
+		"nearby_interactions": nearby,
 	}
 
 # Generate a small test room: 8x6 room with walls, a door, and floor
diff --git a/client/scripts/constants.gd.uid b/client/scripts/constants.gd.uid
new file mode 100644
index 000000000..f0d00dd4a
--- /dev/null
+++ b/client/scripts/constants.gd.uid
@@ -0,0 +1 @@
+uid://wmbu7ivynu5d
diff --git a/client/scripts/main.gd b/client/scripts/main.gd
index 3d26cc0a3..f76dccd20 100644
--- a/client/scripts/main.gd
+++ b/client/scripts/main.gd
@@ -4,6 +4,7 @@ extends Node2D
 @onready var camera = $Camera2D
 @onready var hud = $UILayer/HUD
 @onready var monologue_display = $UILayer/MonologueDisplay
+@onready var interaction_prompt = $UILayer/InteractionPrompt
 
 func _ready() -> void:
 	print("The Settled Reach — client initialized")
@@ -28,4 +29,12 @@ func _process(_delta: float) -> void:
 	# Send queued input to simulation
 	var inputs = InputMapper.flush_queue()
 	for input in inputs:
+		# TODO: Once server accepts Interact(InteractData), attach target + verb:
+		#   if input.action == InputMapper.Action.INTERACT:
+		#       var target_id: int = interaction_prompt.get_interaction_target()
+		#       if target_id >= 0:
+		#           input["action_data"] = {
+		#               "target_entity_id": target_id,
+		#               "verb": interaction_prompt.get_selected_verb(),
+		#           }
 		SimBridge.send_input(input)
diff --git a/client/scripts/protocol/protocol.gd b/client/scripts/protocol/protocol.gd
index dad23ca0c..af8410f1a 100644
--- a/client/scripts/protocol/protocol.gd
+++ b/client/scripts/protocol/protocol.gd
@@ -70,6 +70,15 @@ static func decode_snapshot(bytes: PackedByteArray) -> Variant:
 					tile_entry["visibility"] = vis
 				visible_tiles.append(tile_entry)
 
+	# v4: nearby_interactions (#404/#405)
+	var nearby_interactions: Array = []
+	var raw_interactions: Variant = raw.get("nearby_interactions")
+	if raw_interactions is Array:
+		for raw_ni in raw_interactions:
+			var ni = _decode_nearby_interaction(raw_ni)
+			if ni != null:
+				nearby_interactions.append(ni)
+
 	return {
 		"tick": tick,
 		"entities": entities,
@@ -78,6 +87,7 @@ static func decode_snapshot(bytes: PackedByteArray) -> Variant:
 		"game_time": game_time,
 		"player_facing": player_facing,
 		"visible_tiles": visible_tiles,
+		"nearby_interactions": nearby_interactions,
 	}
 
 
@@ -96,6 +106,19 @@ static func _decode_entity(raw: Dictionary) -> Variant:
 	if raw_vis is String:
 		visibility = raw_vis
 
+	# v4: relationship (D-033) and observation state
+	var relationship: String = "Unknown"
+	var raw_rel: Variant = raw.get("relationship")
+	if raw_rel is String:
+		relationship = raw_rel
+
+	var observation: Variant = "Visible"
+	var raw_obs: Variant = raw.get("observation")
+	if raw_obs is String:
+		observation = raw_obs
+	elif raw_obs is Dictionary:
+		observation = _decode_enum_variant(raw_obs)
+
 	return {
 		"entity_id": entity_id,
 		"x": float(raw["x"]),
@@ -103,6 +126,54 @@ static func _decode_entity(raw: Dictionary) -> Variant:
 		"z": int(raw["z"]),
 		"kind": _decode_enum_variant(raw["kind"]),
 		"visibility": visibility,
+		"relationship": relationship,
+		"observation": observation,
+	}
+
+
+## Decode a NearbyInteraction from a raw msgpack map.
+## Returns {entity_id, entity_type, distance, verbs: [{kind, label, priority, available}]} or null.
+static func _decode_nearby_interaction(raw) -> Variant:
+	if not raw is Dictionary:
+		return null
+	if not raw.has("entity_id") or not raw.has("verbs"):
+		push_warning("Protocol: nearby_interaction missing required fields: %s" % str(raw.keys()))
+		return null
+	var verbs: Array[Dictionary] = []
+	var raw_verbs: Variant = raw.get("verbs")
+	if raw_verbs is Array:
+		for rv in raw_verbs:
+			var verb = _decode_verb_option(rv)
+			if verb != null:
+				verbs.append(verb)
+	if verbs.is_empty():
+		return null
+	var entity_type: String = ""
+	var raw_et: Variant = raw.get("entity_type")
+	if raw_et is String:
+		entity_type = raw_et
+	return {
+		"entity_id": int(raw["entity_id"]),
+		"entity_type": entity_type,
+		"distance": int(raw.get("distance", 0)),
+		"verbs": verbs,
+	}
+
+
+## Decode a VerbOption from a raw msgpack map.
+## Returns {kind, label, priority, available} or null.
+static func _decode_verb_option(raw) -> Variant:
+	if not raw is Dictionary or not raw.has("label"):
+		return null
+	var kind: String = ""
+	var raw_kind: Variant = raw.get("kind")
+	if raw_kind is String:
+		kind = raw_kind
+	return {
+		"kind": kind,
+		"label": str(raw["label"]),
+		"priority": int(raw.get("priority", 0)),
+		"available": bool(raw.get("available", true)),
 	}
 
 
diff --git a/client/scripts/rendering/tile_renderer.gd.uid b/client/scripts/rendering/tile_renderer.gd.uid
new file mode 100644
index 000000000..63f01eb5c
--- /dev/null
+++ b/client/scripts/rendering/tile_renderer.gd.uid
@@ -0,0 +1 @@
+uid://d2evnkstnqtpb
diff --git a/client/tests/test_e2e_connection.gd.uid b/client/tests/test_e2e_connection.gd.uid
new file mode 100644
index 000000000..4ac961947
--- /dev/null
+++ b/client/tests/test_e2e_connection.gd.uid
@@ -0,0 +1 @@
+uid://bcny2nvx6b8q3
diff --git a/client/tests/test_interaction_prompt.gd b/client/tests/test_interaction_prompt.gd
new file mode 100644
index 000000000..f3edd42d5
--- /dev/null
+++ b/client/tests/test_interaction_prompt.gd
@@ -0,0 +1,219 @@
+class_name TestInteractionPrompt
+extends GdUnitTestSuite
+
+# Tests for ticket #405: Interaction prompt system.
+# Covers protocol v4 decode, GameState storage, SimBridge test mode,
+# InteractionPrompt UI, and input encoding.
+
+
+# -- Protocol: v4 nearby_interactions decoding --
+
+func test_protocol_decode_v4_with_nearby_interactions() -> void:
+	var raw := {
+		"tick": 10,
+		"version": 4,
+		"entities": [
+			{"entity_id": 1, "x": 5.0, "y": 5.0, "z": 0, "kind": "Player",
+			 "visibility": "Forward", "relationship": "Unknown", "observation": "Visible"},
+		],
+		"nearby_interactions": [{
+			"entity_id": 2,
+			"entity_type": "Npc",
+			"distance": 1,
+			"verbs": [
+				{"kind": "Talk", "label": "Talk", "priority": 0, "available": true},
+				{"kind": "ExamineNpc", "label": "Examine", "priority": 1, "available": true},
+			],
+		}],
+	}
+	var encoded = Messagepack.encode(raw)
+	assert_that(encoded.status == null).is_true()
+	var snapshot = Protocol.decode_snapshot(encoded.value)
+
+	assert_that(snapshot).is_not_null()
+	assert_that(snapshot.nearby_interactions.size()).is_equal(1)
+	var ni = snapshot.nearby_interactions[0]
+	assert_that(ni.entity_id).is_equal(2)
+	assert_that(ni.entity_type).is_equal("Npc")
+	assert_that(ni.distance).is_equal(1)
+	assert_that(ni.verbs.size()).is_equal(2)
+	assert_that(ni.verbs[0].kind).is_equal("Talk")
+	assert_that(ni.verbs[0].label).is_equal("Talk")
+	assert_that(ni.verbs[0].priority).is_equal(0)
+	assert_that(ni.verbs[0].available).is_true()
+	assert_that(ni.verbs[1].kind).is_equal("ExamineNpc")
+
+func test_protocol_decode_v2_no_nearby_interactions() -> void:
+	var raw := {
+		"tick": 5,
+		"version": 2,
+		"entities": [],
+	}
+	var encoded = Messagepack.encode(raw)
+	var snapshot = Protocol.decode_snapshot(encoded.value)
+	assert_that(snapshot).is_not_null()
+	assert_that(snapshot.nearby_interactions.size()).is_equal(0)
+
+func test_protocol_decode_empty_nearby_interactions() -> void:
+	var raw := {
+		"tick": 1,
+		"entities": [],
+		"nearby_interactions": [],
+	}
+	var encoded = Messagepack.encode(raw)
+	var snapshot = Protocol.decode_snapshot(encoded.value)
+	assert_that(snapshot.nearby_interactions.size()).is_equal(0)
+
+func test_protocol_decode_interaction_missing_verbs() -> void:
+	var raw := {
+		"tick": 1,
+		"entities": [],
+		"nearby_interactions": [{"entity_id": 2}],
+	}
+	var encoded = Messagepack.encode(raw)
+	var snapshot = Protocol.decode_snapshot(encoded.value)
+	assert_that(snapshot.nearby_interactions.size()).is_equal(0)
+
+func test_protocol_decode_interaction_empty_verbs() -> void:
+	var raw := {
+		"tick": 1,
+		"entities": [],
+		"nearby_interactions": [{"entity_id": 2, "entity_type": "Npc", "distance": 1, "verbs": []}],
+	}
+	var encoded = Messagepack.encode(raw)
+	var snapshot = Protocol.decode_snapshot(encoded.value)
+	assert_that(snapshot.nearby_interactions.size()).is_equal(0)
+
+func test_protocol_decode_v4_entity_relationship() -> void:
+	var raw := {
+		"tick": 1,
+		"version": 4,
+		"entities": [
+			{"entity_id": 1, "x": 5.0, "y": 5.0, "z": 0, "kind": "Npc",
+			 "visibility": "Forward", "relationship": "Friendly", "observation": "Visible"},
+		],
+	}
+	var encoded = Messagepack.encode(raw)
+	var snapshot = Protocol.decode_snapshot(encoded.value)
+	assert_that(snapshot.entities[0].relationship).is_equal("Friendly")
+
+
+# -- GameState: nearby_interactions storage --
+
+func test_game_state_stores_nearby_interactions() -> void:
+	var ni := [{"entity_id": 2, "entity_type": "Npc", "distance": 1,
+		"verbs": [{"kind": "Talk", "label": "Talk", "priority": 0, "available": true}]}]
+	GameState.apply_snapshot({"tick": 1, "entities": [], "nearby_interactions": ni})
+	assert_that(GameState.nearby_interactions.size()).is_equal(1)
+	assert_that(GameState.nearby_interactions[0].entity_id).is_equal(2)
+	GameState.nearby_interactions = []
+
+func test_game_state_clears_nearby_interactions_when_absent() -> void:
+	var ni := [{"entity_id": 2, "entity_type": "Npc", "distance": 1,
+		"verbs": [{"kind": "Talk", "label": "Talk", "priority": 0, "available": true}]}]
+	GameState.apply_snapshot({"tick": 1, "entities": [], "nearby_interactions": ni})
+	assert_that(GameState.nearby_interactions.size()).is_equal(1)
+	GameState.apply_snapshot({"tick": 2, "entities": []})
+	assert_that(GameState.nearby_interactions.size()).is_equal(0)
+
+
+# -- SimBridge test mode: nearby_interactions generation --
+
+func test_sim_bridge_test_snapshot_interaction_when_near_npc() -> void:
+	SimBridge.reset_test_state()
+	SimBridge._test_player_pos = Vector2i(11, 9)
+	var snap = SimBridge._test_snapshot()
+	assert_that(snap.has("nearby_interactions")).is_true()
+	assert_that(snap.nearby_interactions.size()).is_equal(1)
+	assert_that(snap.nearby_interactions[0].entity_id).is_equal(2)
+	assert_that(snap.nearby_interactions[0].verbs.size()).is_greater(0)
+
+func test_sim_bridge_test_snapshot_no_interaction_when_far() -> void:
+	SimBridge.reset_test_state()
+	SimBridge._test_player_pos = Vector2i(10, 10)
+	var snap = SimBridge._test_snapshot()
+	assert_that(snap.nearby_interactions.size()).is_equal(0)
+
+func test_sim_bridge_test_snapshot_interaction_at_range_2() -> void:
+	SimBridge.reset_test_state()
+	SimBridge._test_player_pos = Vector2i(10, 9)
+	var snap = SimBridge._test_snapshot()
+	assert_that(snap.nearby_interactions.size()).is_equal(1)
+
+func test_sim_bridge_test_snapshot_v4_version() -> void:
+	SimBridge.reset_test_state()
+	var snap = SimBridge._test_snapshot()
+	assert_that(snap.version).is_equal(4)
+
+
+# -- InteractionPrompt UI --
+
+func test_prompt_get_selected_verb_returns_first_kind() -> void:
+	GameState.nearby_interactions = [{
+		"entity_id": 2, "entity_type": "Npc", "distance": 1,
+		"verbs": [
+			{"kind": "Talk", "label": "Talk", "priority": 0, "available": true},
+			{"kind": "ExamineNpc", "label": "Examine", "priority": 1, "available": true},
+		],
+	}]
+	var prompt = _make_prompt()
+	assert_that(prompt.get_selected_verb()).is_equal("Talk")
+	prompt.queue_free()
+	GameState.nearby_interactions = []
+
+func test_prompt_get_selected_verb_empty_when_no_interactions() -> void:
+	GameState.nearby_interactions = []
+	var prompt = _make_prompt()
+	assert_that(prompt.get_selected_verb()).is_equal("")
+	prompt.queue_free()
+
+func test_prompt_get_target_negative_when_no_interactions() -> void:
+	GameState.nearby_interactions = []
+	var prompt = _make_prompt()
+	assert_that(prompt.get_interaction_target()).is_equal(-1)
+	prompt.queue_free()
+
+func test_prompt_hidden_initially() -> void:
+	GameState.nearby_interactions = []
+	var prompt = _make_prompt()
+	assert_that(prompt._is_showing).is_false()
+	prompt.queue_free()
+
+
+# -- Input encoding: Interact --
+
+func test_interact_encodes_as_unit_variant() -> void:
+	var inputs: Array = [{"tick": 100, "action_name": "Interact"}]
+	var bytes := Protocol.encode_player_inputs(inputs)
+	var raw = Messagepack.decode(bytes)
+	assert_that(raw.status == null).is_true()
+	assert_that(raw.value[0]["action"]).is_equal("Interact")
+
+func test_interact_with_data_encodes_as_data_variant() -> void:
+	# Future: once server accepts Interact(InteractData)
+	var inputs: Array = [{
+		"tick": 100,
+		"action_name": "Interact",
+		"action_data": {"target_entity_id": 2, "verb": "Talk"},
+	}]
+	var bytes := Protocol.encode_player_inputs(inputs)
+	var raw = Messagepack.decode(bytes)
+	assert_that(raw.status == null).is_true()
+	assert_that(raw.value[0]["action"] is Dictionary).is_true()
+	assert_that(raw.value[0]["action"].has("Interact")).is_true()
+
+
+# -- Helpers --
+
+func _make_prompt() -> PanelContainer:
+	var PromptScript = load("res://ui/interaction_prompt.gd")
+	var panel = PanelContainer.new()
+	panel.set_script(PromptScript)
+	var margin = MarginContainer.new()
+	margin.name = "MarginContainer"
+	panel.add_child(margin)
+	var label = Label.new()
+	label.name = "PromptLabel"
+	margin.add_child(label)
+	add_child(panel)
+	return panel
diff --git a/client/tests/test_interaction_prompt.gd.uid b/client/tests/test_interaction_prompt.gd.uid
new file mode 100644
index 000000000..7b6fc5f1b
--- /dev/null
+++ b/client/tests/test_interaction_prompt.gd.uid
@@ -0,0 +1 @@
+uid://bu0ib6ucyleoc
diff --git a/client/tests/test_protocol.gd b/client/tests/test_protocol.gd
index 818f7659c..172e1be10 100644
--- a/client/tests/test_protocol.gd
+++ b/client/tests/test_protocol.gd
@@ -279,13 +279,12 @@ func test_decode_snapshot_v2_full() -> void:
 
 	assert_that(snapshot).is_not_null()
 	assert_that(snapshot.tick).is_equal(500)
-	assert_that(snapshot.version).is_equal(2)
+	assert_that(snapshot.version).is_equal(4)
 
 	# game_time
 	assert_that(snapshot.game_time).is_not_null()
 	assert_that(snapshot.game_time.day).is_equal(1)
 	assert_that(snapshot.game_time.time_of_day).is_equal(720)
-	assert_that(snapshot.game_time.paused).is_false()
 
 	# player_facing (unit enum → bare string)
 	assert_that(snapshot.player_facing).is_equal("Southeast")
@@ -302,12 +301,12 @@ func test_decode_snapshot_v2_full() -> void:
 
 
 func test_existing_fixtures_have_v2_fields() -> void:
-	# All fixtures are generated by v2 fixture_snapshot() — verify decoder extracts v2 fields
+	# All fixtures are generated by fixture_snapshot() — verify decoder extracts v2+ fields
 	for fixture_name in ["snapshot_one_npc", "snapshot_empty", "snapshot_player", "snapshot_multi_entity"]:
 		var bytes = _load_fixture(fixture_name)
 		var snapshot = Protocol.decode_snapshot(bytes)
 		assert_that(snapshot).is_not_null()
-		assert_that(snapshot.version).is_equal(2)
+		assert_that(snapshot.version).is_equal(4)
 		assert_that(snapshot.player_facing).is_equal("North")
 		assert_that(snapshot.game_time).is_not_null()
 
diff --git a/client/tests/test_rendering.gd b/client/tests/test_rendering.gd
index f2d354ae4..125a4ab7c 100644
--- a/client/tests/test_rendering.gd
+++ b/client/tests/test_rendering.gd
@@ -175,7 +175,7 @@ func test_sim_bridge_test_snapshot_has_v2_fields() -> void:
 	SimBridge.reset_test_state()
 	var snap = SimBridge._test_snapshot()
 	assert_that(snap.has("version")).is_true()
-	assert_that(snap.version).is_equal(2)
+	assert_that(snap.version).is_equal(4)
 	assert_that(snap.has("game_time")).is_true()
 	assert_that(snap.has("player_facing")).is_true()
 	assert_that(snap.has("visible_tiles")).is_true()
diff --git a/client/tests/test_rendering.gd.uid b/client/tests/test_rendering.gd.uid
new file mode 100644
index 000000000..4a8ac0423
--- /dev/null
+++ b/client/tests/test_rendering.gd.uid
@@ -0,0 +1 @@
+uid://cwyma3isr20u0
diff --git a/client/tests/test_sprint2_proof.gd.uid b/client/tests/test_sprint2_proof.gd.uid
new file mode 100644
index 000000000..84fd263dd
--- /dev/null
+++ b/client/tests/test_sprint2_proof.gd.uid
@@ -0,0 +1 @@
+uid://dn7p6lsej3702
diff --git a/client/ui/interaction_prompt.gd b/client/ui/interaction_prompt.gd
new file mode 100644
index 000000000..dfa569d0c
--- /dev/null
+++ b/client/ui/interaction_prompt.gd
@@ -0,0 +1,80 @@
+extends PanelContainer
+
+# Interaction prompt — displays available interaction verb for nearby entity.
+# Server-driven: shows when GameState.nearby_interactions is non-empty,
+# hides when empty. No game logic — pure display layer.
+#
+# v0.1: Single-line "E - Talk" (first verb on nearest entity)
+# v0.2: Will be replaced/extended with radial verb menu.
+# Public interface: get_interaction_target(), get_selected_verb()
+
+@onready var prompt_label: Label = $MarginContainer/PromptLabel
+
+var _is_showing: bool = false
+var _active_tween: Tween = null
+var _current_target_id: int = -1
+
+const FADE_IN: float = 0.15
+const FADE_OUT: float = 0.15
+
+func _ready() -> void:
+	modulate.a = 0.0
+	visible = false
+	_is_showing = false
+
+func _process(_delta: float) -> void:
+	var interactions: Array = GameState.nearby_interactions
+	if interactions.size() > 0:
+		_show_prompt(interactions[0])
+	elif _is_showing:
+		_hide_prompt()
+
+func _show_prompt(interaction: Dictionary) -> void:
+	var target_id: int = interaction.get("entity_id", -1)
+	var verbs: Array = interaction.get("verbs", [])
+
+	if verbs.is_empty():
+		if _is_showing:
+			_hide_prompt()
+		return
+
+	# v0.1: pick first verb (sorted by priority from server)
+	var verb_label: String = verbs[0].get("label", "")
+	var display_text: String = "E - %s" % verb_label
+
+	if _current_target_id != target_id or prompt_label.text != display_text:
+		prompt_label.text = display_text
+		_current_target_id = target_id
+
+	if not _is_showing:
+		visible = true
+		_is_showing = true
+		if _active_tween and _active_tween.is_valid():
+			_active_tween.kill()
+		_active_tween = create_tween()
+		_active_tween.tween_property(self, "modulate:a", 1.0, FADE_IN)
+
+func _hide_prompt() -> void:
+	if not _is_showing:
+		return
+	_is_showing = false
+	_current_target_id = -1
+	if _active_tween and _active_tween.is_valid():
+		_active_tween.kill()
+	_active_tween = create_tween()
+	_active_tween.tween_property(self, "modulate:a", 0.0, FADE_OUT)
+	_active_tween.tween_callback(func(): visible = false)
+
+## Returns the current interaction target entity ID, or -1 if no interaction.
+func get_interaction_target() -> int:
+	return _current_target_id
+
+## Returns the selected verb kind (v0.1: first verb on nearest, v0.2: radial selection).
+func get_selected_verb() -> String:
+	var interactions: Array = GameState.nearby_interactions
+	if interactions.is_empty():
+		return ""
+	var verbs: Array = interactions[0].get("verbs", [])
+	if verbs.is_empty():
+		return ""
+	return verbs[0].get("kind", "")
diff --git a/client/ui/interaction_prompt.gd.uid b/client/ui/interaction_prompt.gd.uid
new file mode 100644
index 000000000..ebd01b47c
--- /dev/null
+++ b/client/ui/interaction_prompt.gd.uid
@@ -0,0 +1 @@
+uid://b43jk3eu2uig
diff --git a/client/ui/interaction_prompt.tscn b/client/ui/interaction_prompt.tscn
new file mode 100644
index 000000000..3ed02c5a0
--- /dev/null
+++ b/client/ui/interaction_prompt.tscn
@@ -0,0 +1,28 @@
+[gd_scene load_steps=2 format=3]
+
+[ext_resource type="Script" path="res://ui/interaction_prompt.gd" id="1_prompt"]
+
+[node name="InteractionPrompt" type="PanelContainer"]
+anchors_preset = 7
+anchor_top = 1.0
+anchor_right = 1.0
+anchor_bottom = 1.0
+offset_left = 200.0
+offset_top = -60.0
+offset_right = -200.0
+grow_horizontal = 2
+grow_vertical = 0
+mouse_filter = 2
+script = ExtResource("1_prompt")
+
+[node name="MarginContainer" type="MarginContainer" parent="."]
+layout_mode = 2
+theme_override_constants/margin_left = 16
+theme_override_constants/margin_top = 8
+theme_override_constants/margin_right = 16
+theme_override_constants/margin_bottom = 8
+
+[node name="PromptLabel" type="Label" parent="MarginContainer"]
+layout_mode = 2
+horizontal_alignment = 1
+text = ""