diff --git a/lua/code-preview/diff.lua b/lua/code-preview/diff.lua
index 59aac87..f7270c3 100644
--- a/lua/code-preview/diff.lua
+++ b/lua/code-preview/diff.lua
@@ -1,6 +1,7 @@
 local M = {}
 
 local log = require("code-preview.log")
+local resolve_hl = require("code-preview.hl").resolve
 
 -- Active diffs keyed by absolute file path.
 -- Each entry: { tab, bufs, augroup, inline_win }
@@ -20,10 +21,10 @@ local function apply_highlights(config)
   local cur = config.highlights.current
   local pro = config.highlights.proposed
   for name, hl in pairs(cur) do
-    vim.api.nvim_set_hl(current_ns, name, hl)
+    vim.api.nvim_set_hl(current_ns, name, resolve_hl(hl))
   end
   for name, hl in pairs(pro) do
-    vim.api.nvim_set_hl(proposed_ns, name, hl)
+    vim.api.nvim_set_hl(proposed_ns, name, resolve_hl(hl))
   end
 end
 
@@ -203,10 +204,10 @@ end
 
 local function apply_inline_highlights(config)
   local hl = config.highlights.inline or {}
-  vim.api.nvim_set_hl(0, "ClaudeDiffInlineAdded", hl.added or { bg = "#2e4c2e" })
-  vim.api.nvim_set_hl(0, "ClaudeDiffInlineRemoved", hl.removed or { bg = "#4c2e2e" })
-  vim.api.nvim_set_hl(0, "ClaudeDiffInlineAddedText", hl.added_text or { bg = "#3a6e3a" })
-  vim.api.nvim_set_hl(0, "ClaudeDiffInlineRemovedText", hl.removed_text or { bg = "#6e3a3a" })
+  vim.api.nvim_set_hl(0, "ClaudeDiffInlineAdded", resolve_hl(hl.added) or { bg = "#2e4c2e" })
+  vim.api.nvim_set_hl(0, "ClaudeDiffInlineRemoved", resolve_hl(hl.removed) or { bg = "#4c2e2e" })
+  vim.api.nvim_set_hl(0, "ClaudeDiffInlineAddedText", resolve_hl(hl.added_text) or { bg = "#3a6e3a" })
+  vim.api.nvim_set_hl(0, "ClaudeDiffInlineRemovedText", resolve_hl(hl.removed_text) or { bg = "#6e3a3a" })
   vim.api.nvim_set_hl(0, "ClaudeDiffInlineAddedSign", { fg = "#73e896", bold = true })
   vim.api.nvim_set_hl(0, "ClaudeDiffInlineRemovedSign", { fg = "#f47070", bold = true })
 end
diff --git a/lua/code-preview/hl.lua b/lua/code-preview/hl.lua
new file mode 100644
index 0000000..12f35ee
--- /dev/null
+++ b/lua/code-preview/hl.lua
@@ -0,0 +1,29 @@
+-- hl.lua — normalizes a highlights-config value into an nvim_set_hl-compatible
+-- table. A bare highlight-group-name string links to that group; a table
+-- passes through (optionally merged with an override table). Extracted from
+-- near-duplicate resolve_hl (diff.lua) / define_hl (neo_tree.lua) helpers.
+--
+-- IMPORTANT: never set `default = true` here. nvim_set_hl's `default` flag is
+-- sticky for the life of the process (once a group has ANY definition in a
+-- namespace, a later `default = true` call is silently ignored) — that
+-- staleness is exactly the bug this module fixes. Do not reintroduce it.
+local M = {}
+
+--- @param hl table|string|nil  a highlights-config value
+--- @param opts table|nil      optional overrides merged on top (force)
+--- @return table|nil          nvim_set_hl-compatible table, or nil if hl is
+---                            neither a string nor a table (caller decides
+---                            the fallback, e.g. `resolve(hl) or {...}`)
+function M.resolve(hl, opts)
+  if type(hl) == "string" then
+    hl = { link = hl }
+  elseif type(hl) ~= "table" then
+    return nil
+  end
+  if opts then
+    return vim.tbl_extend("force", hl, opts)
+  end
+  return hl
+end
+
+return M
diff --git a/lua/code-preview/neo_tree.lua b/lua/code-preview/neo_tree.lua
index 46be464..3180fa1 100644
--- a/lua/code-preview/neo_tree.lua
+++ b/lua/code-preview/neo_tree.lua
@@ -2,6 +2,7 @@ local M = {}
 
 local changes = require("code-preview.changes")
 local log = require("code-preview.log")
+local resolve_hl = require("code-preview.hl").resolve
 
 -- Guard: all neo-tree interaction goes through pcall
 local has_neo_tree = false
@@ -16,10 +17,9 @@ local setup_done = false
 
 -- Define a highlight group from config (supports string link or table spec)
 local function define_hl(name, hl_config, opts)
-  if type(hl_config) == "string" then
-    vim.api.nvim_set_hl(0, name, vim.tbl_extend("force", { link = hl_config, default = true }, opts or {}))
-  elseif type(hl_config) == "table" then
-    vim.api.nvim_set_hl(0, name, vim.tbl_extend("force", hl_config, opts or {}))
+  local resolved = resolve_hl(hl_config, opts)
+  if resolved then
+    vim.api.nvim_set_hl(0, name, resolved)
   end
 end
 
diff --git a/tests/plugin/diff_lifecycle_spec.lua b/tests/plugin/diff_lifecycle_spec.lua
index e1c674f..aeada5b 100644
--- a/tests/plugin/diff_lifecycle_spec.lua
+++ b/tests/plugin/diff_lifecycle_spec.lua
@@ -12,6 +12,133 @@ local function tmp_file(name, content)
   return path
 end
 
+describe("diff highlights configured as strings", function()
+  -- Temporarily override highlights config for one test, restoring it afterwards.
+  local function with_highlights(highlights, fn)
+    local cfg = require("code-preview").config
+    local saved = vim.deepcopy(cfg.highlights)
+    cfg.highlights = vim.tbl_deep_extend("force", vim.deepcopy(saved), highlights)
+    local ok, err = pcall(fn)
+    cfg.highlights = saved
+    if not ok then error(err, 2) end
+  end
+
+  before_each(function()
+    changes.clear_all()
+    diff.close_diff()
+    vim.api.nvim_set_hl(0, "TestLinkTarget", { fg = "#ff00ff" })
+    vim.api.nvim_set_hl(0, "TestLinkTargetTwo", { fg = "#00ff00" })
+  end)
+
+  it("accepts a highlight-group-name string for highlights.inline.*", function()
+    local orig = tmp_file("hl_inline_orig.txt", "line one\nline two")
+    local prop = tmp_file("hl_inline_prop.txt", "line one\nline TWO")
+
+    local ok, err = pcall(function()
+      with_highlights({ inline = { added = "TestLinkTarget" } }, function()
+        local diff_cfg = require("code-preview").config.diff
+        local saved_layout = diff_cfg.layout
+        diff_cfg.layout = "inline"
+        diff.show_diff(orig, prop, "hl_inline.txt")
+        diff_cfg.layout = saved_layout
+      end)
+    end)
+    assert.is_true(ok, tostring(err))
+    assert.is_true(diff.is_open())
+
+    local hl = vim.api.nvim_get_hl(0, { name = "ClaudeDiffInlineAdded" })
+    assert.equals("TestLinkTarget", hl.link)
+
+    diff.close_diff()
+    os.remove(orig)
+    os.remove(prop)
+  end)
+
+  it("accepts a highlight-group-name string for highlights.current/proposed", function()
+    local orig = tmp_file("hl_tab_orig.txt", "line1\nline2")
+    local prop = tmp_file("hl_tab_prop.txt", "line1\nchanged")
+
+    local ok, err = pcall(function()
+      with_highlights({ current = { DiffAdd = "TestLinkTarget" } }, function()
+        local diff_cfg = require("code-preview").config.diff
+        local saved_layout = diff_cfg.layout
+        diff_cfg.layout = "tab"
+        diff.show_diff(orig, prop, "hl_tab.txt")
+        diff_cfg.layout = saved_layout
+      end)
+    end)
+    assert.is_true(ok, tostring(err))
+    assert.is_true(diff.is_open())
+
+    local current_ns = vim.api.nvim_get_namespaces()["claude_diff_current_hl"]
+    local hl = vim.api.nvim_get_hl(current_ns, { name = "DiffAdd" })
+    assert.equals("TestLinkTarget", hl.link)
+
+    diff.close_diff()
+    os.remove(orig)
+    os.remove(prop)
+  end)
+
+  -- Regression test: a re-applied string-linked highlight must pick up a
+  -- changed target (e.g. after the user edits their config and re-sources
+  -- it). Previously nvim_set_hl's `default = true` made the first link
+  -- sticky for the rest of the process, so the second show_diff below would
+  -- have kept pointing at TestLinkTarget instead of TestLinkTargetTwo.
+  it("updates the link when a highlights.inline.* string value changes", function()
+    local orig = tmp_file("hl_inline_relink_orig.txt", "line one\nline two")
+    local prop = tmp_file("hl_inline_relink_prop.txt", "line one\nline TWO")
+
+    local function show_with(target)
+      with_highlights({ inline = { added = target } }, function()
+        local diff_cfg = require("code-preview").config.diff
+        local saved_layout = diff_cfg.layout
+        diff_cfg.layout = "inline"
+        diff.show_diff(orig, prop, "hl_inline_relink.txt")
+        diff_cfg.layout = saved_layout
+      end)
+    end
+
+    show_with("TestLinkTarget")
+    assert.equals("TestLinkTarget", vim.api.nvim_get_hl(0, { name = "ClaudeDiffInlineAdded" }).link)
+    diff.close_diff()
+
+    show_with("TestLinkTargetTwo")
+    assert.equals("TestLinkTargetTwo", vim.api.nvim_get_hl(0, { name = "ClaudeDiffInlineAdded" }).link)
+
+    diff.close_diff()
+    os.remove(orig)
+    os.remove(prop)
+  end)
+
+  it("updates the link when a highlights.current/proposed string value changes", function()
+    local orig = tmp_file("hl_tab_relink_orig.txt", "line1\nline2")
+    local prop = tmp_file("hl_tab_relink_prop.txt", "line1\nchanged")
+
+    local function show_with(target)
+      with_highlights({ current = { DiffAdd = target } }, function()
+        local diff_cfg = require("code-preview").config.diff
+        local saved_layout = diff_cfg.layout
+        diff_cfg.layout = "tab"
+        diff.show_diff(orig, prop, "hl_tab_relink.txt")
+        diff_cfg.layout = saved_layout
+      end)
+    end
+
+    local current_ns = vim.api.nvim_get_namespaces()["claude_diff_current_hl"]
+
+    show_with("TestLinkTarget")
+    assert.equals("TestLinkTarget", vim.api.nvim_get_hl(current_ns, { name = "DiffAdd" }).link)
+    diff.close_diff()
+
+    show_with("TestLinkTargetTwo")
+    assert.equals("TestLinkTargetTwo", vim.api.nvim_get_hl(current_ns, { name = "DiffAdd" }).link)
+
+    diff.close_diff()
+    os.remove(orig)
+    os.remove(prop)
+  end)
+end)
+
 describe("diff lifecycle", function()
   before_each(function()
     changes.clear_all()