diff --git a/actions/appSettings.tsx b/actions/appSettings.tsx
index 98b46c5..9d7486e 100644
--- a/actions/appSettings.tsx
+++ b/actions/appSettings.tsx
@@ -1,8 +1,6 @@
 'use server';
 
 import fs from 'fs';
-import os from 'os';
-import path from 'path';
 
 export type AppSettings = {
   confirmToolCalls: boolean;
@@ -19,7 +17,7 @@ const defaultAppSettings: AppSettings = {
   browser: {
     headless: false,
     useDefaultSession: false,
-  },
+  } as BrowserAppSettings,
 };
 
 export async function getAppSettings() {
@@ -30,7 +28,11 @@ export async function getAppSettings() {
   const location = process.env.GPTSCRIPT_SETTINGS_FILE;
   if (fs.existsSync(location)) {
     const AppSettings = fs.readFileSync(location, 'utf-8');
-    return JSON.parse(AppSettings) as AppSettings;
+    try {
+      return JSON.parse(AppSettings) as AppSettings;
+    } catch {
+      console.error('Malformed settings file, using default settings...');
+    }
   }
   return defaultAppSettings;
 }
diff --git a/app/settings/page.tsx b/app/settings/page.tsx
index 3a84a90..8c2d786 100644
--- a/app/settings/page.tsx
+++ b/app/settings/page.tsx
@@ -69,7 +69,7 @@ export default function SettingsPage() {
                   onValueChange={(isSelected) => {
                     setPendingSettings((prevState) => ({
                       ...prevState,
-                      headless: isSelected,
+                      browser: { ...prevState.browser, headless: isSelected },
                     }));
                   }}
                 >
@@ -89,7 +89,10 @@ export default function SettingsPage() {
                   onValueChange={(isSelected) => {
                     setPendingSettings((prevState) => ({
                       ...prevState,
-                      useDefaultSession: isSelected,
+                      browser: {
+                        ...prevState.browser,
+                        useDefaultSession: isSelected,
+                      },
                     }));
                   }}
                 >
diff --git a/electron/main.mjs b/electron/main.mjs
index cbb45a7..66b2917 100644
--- a/electron/main.mjs
+++ b/electron/main.mjs
@@ -13,15 +13,21 @@ async function startServer() {
   // Fix path so that tools can find binaries installed on the system.
   fixPath();
 
-  // Ensure the app's data directory exists
+  // Ensure the app's data and workspace directories exists
   ensureDirExists(config.dataDir);
-
-  // Set up the browser tool to run in headless mode.
   ensureDirExists(config.workspaceDir);
-  writeFileSync(
-    join(`${config.workspaceDir}`, 'settings.json'),
-    JSON.stringify({ headless: true })
-  );
+
+  // If the app settings file doesn't exist, create it with default settings.
+  if (!existsSync(config.appSettingsFile)) {
+    writeFileSync(
+      config.appSettingsFile, // created in config.mjs
+      JSON.stringify({
+        browser: {
+          headless: true,
+        },
+      })
+    );
+  }
 
   // Project config onto environment variables to configure GPTScript/sdk-server and the Next.js app.
   process.env.LOGS_DIR = config.logsDir;
diff --git a/server/app.mjs b/server/app.mjs
index b069c95..3bbe0e7 100644
--- a/server/app.mjs
+++ b/server/app.mjs
@@ -4,7 +4,7 @@ import nextConfig from '../next.config.js';
 import { Server } from 'socket.io';
 import { GPTScript, RunEventType } from '@gptscript-ai/gptscript';
 import dotenv from 'dotenv';
-import fs from 'fs';
+import fs, { existsSync } from 'fs';
 import path from 'path';
 import os from 'os';
 
@@ -135,8 +135,22 @@ const mount = async (
     process.env.WORKSPACE_DIR ?? process.env.GPTSCRIPT_WORKSPACE_DIR;
   const THREADS_DIR =
     process.env.THREADS_DIR ?? path.join(WORKSPACE_DIR, 'threads');
+
+  // Get the settings file. If it doesn't exist, use default settings instead.
   const settingsLocation = process.env.GPTSCRIPT_SETTINGS_FILE;
-  const settings = JSON.parse(fs.readFileSync(settingsLocation, 'utf8'));
+  let settings = {
+    confirmToolCalls: false,
+    browser: {
+      headless: true,
+    },
+  };
+  if (existsSync(settingsLocation)) {
+    try {
+      settings = JSON.parse(fs.readFileSync(settingsLocation, 'utf8'));
+    } catch {
+      console.error('Malformed settings file, using default settings...');
+    }
+  }
 
   let script;
   if (typeof location === 'string') {