diff --git a/crates/ironclaw_engine/src/executor/loop_engine.rs b/crates/ironclaw_engine/src/executor/loop_engine.rs
index 45b6ec48..985beb8f 100644
--- a/crates/ironclaw_engine/src/executor/loop_engine.rs
+++ b/crates/ironclaw_engine/src/executor/loop_engine.rs
@@ -97,6 +97,10 @@ impl ExecutionLoop {
         let max_nudges = self.thread.config.max_tool_intent_nudges;
         let nudge_enabled = self.thread.config.enable_tool_intent_nudge;
         let start_time = std::time::Instant::now();
+
+        // Persisted state across code steps — accumulates return values
+        // and tool results so the next step can access them via `state`.
+        let mut persisted_state = serde_json::json!({});
         let mut nudge_count: u32 = 0;
         let mut consecutive_errors: u32 = 0;
         let mut compaction_count: u32 = 0;
@@ -423,7 +427,7 @@ impl ExecutionLoop {
                         step_id: step.id,
                     };
 
-                    // Execute via Monty
+                    // Execute via Monty with persisted state from prior steps
                     let code_result = crate::executor::scripting::execute_code(
                         &code,
                         &self.thread,
@@ -433,6 +437,7 @@ impl ExecutionLoop {
                         &self.policy,
                         &exec_ctx,
                         &[],
+                        &persisted_state,
                     )
                     .await?;
 
@@ -484,6 +489,17 @@ impl ExecutionLoop {
 
                     step.action_results = code_result.action_results;
 
+                    // Accumulate state for next step: return value + tool results.
+                    // This makes variables "persist" across code steps via `state`.
+                    if code_result.return_value != serde_json::Value::Null {
+                        persisted_state[format!("step_{}_return", self.thread.step_count)] =
+                            code_result.return_value.clone();
+                        persisted_state["last_return"] = code_result.return_value.clone();
+                    }
+                    for result in &step.action_results {
+                        persisted_state[&result.action_name] = result.output.clone();
+                    }
+
                     // Build comprehensive output for the LLM to see what happened.
                     // Include stdout, tool results, and return value so the model
                     // can reason about the outputs in the next iteration.
diff --git a/crates/ironclaw_engine/src/executor/prompt.rs b/crates/ironclaw_engine/src/executor/prompt.rs
index eab256e6..397a466e 100644
--- a/crates/ironclaw_engine/src/executor/prompt.rs
+++ b/crates/ironclaw_engine/src/executor/prompt.rs
@@ -61,7 +61,8 @@ You can write multiple code blocks across turns. Variables persist between block
 - `context` — List of prior conversation messages (each is a dict with 'role' and 'content')
 - `goal` — The current task description
 - `step_number` — Current execution step
-- `previous_results` — Dict of prior tool call results
+- `state` — Dict of persisted data from previous steps. Contains tool results keyed by tool name (e.g. `state['web_search']`) and return values (`state['last_return']`, `state['step_0_return']`). Use this to access data from previous steps without re-calling tools.
+- `previous_results` — Dict of prior tool call results (from ActionResult messages)
 
 ## Important rules
 
diff --git a/crates/ironclaw_engine/src/executor/scripting.rs b/crates/ironclaw_engine/src/executor/scripting.rs
index 34762a5b..32e9e5e6 100644
--- a/crates/ironclaw_engine/src/executor/scripting.rs
+++ b/crates/ironclaw_engine/src/executor/scripting.rs
@@ -151,7 +151,13 @@ pub fn build_orientation_preamble(thread: &Thread) -> String {
 // ── Context injection (RLM 3.4) ────────────────────────────
 
 /// Build Monty input variables from thread state.
-fn build_context_inputs(thread: &Thread) -> (Vec<String>, Vec<MontyObject>) {
+///
+/// `persisted_state` carries variables from previous code steps so the
+/// REPL feels persistent even though each step creates a fresh MontyRun.
+fn build_context_inputs(
+    thread: &Thread,
+    persisted_state: &serde_json::Value,
+) -> (Vec<String>, Vec<MontyObject>) {
     let mut names = Vec::new();
     let mut values = Vec::new();
 
@@ -190,6 +196,12 @@ fn build_context_inputs(thread: &Thread) -> (Vec<String>, Vec<MontyObject>) {
     names.push("step_number".into());
     values.push(MontyObject::Int(thread.step_count as i64));
 
+    // `state` — persisted variables from previous code steps.
+    // This is a dict that accumulates: return values, tool results, etc.
+    // The model can read `state["results"]`, `state["prev_return"]`, etc.
+    names.push("state".into());
+    values.push(json_to_monty(persisted_state));
+
     // `previous_results` — dict of {call_id: result_json} from prior steps
     let result_pairs: Vec<(MontyObject, MontyObject)> = thread
         .messages
@@ -226,6 +238,7 @@ pub async fn execute_code(
     policy: &PolicyEngine,
     context: &ThreadExecutionContext,
     capability_policies: &[crate::types::capability::PolicyRule],
+    persisted_state: &serde_json::Value,
 ) -> Result<CodeExecutionResult, EngineError> {
     let mut stdout = String::new();
     let mut action_results = Vec::new();
@@ -234,8 +247,8 @@ pub async fn execute_code(
     let mut final_answer: Option<String> = None;
     let mut had_error = false;
 
-    // Build context variables (RLM 3.4)
-    let (input_names, input_values) = build_context_inputs(thread);
+    // Build context variables including persisted state from prior steps
+    let (input_names, input_values) = build_context_inputs(thread, persisted_state);
 
     // Parse and compile (wrap in catch_unwind — Monty 0.0.x can panic)
     let runner = match std::panic::catch_unwind(std::panic::AssertUnwindSafe(|| {