_togglePoetryShell() {
  # Determine if currently in a Poetry-managed directory
  local in_poetry_dir=0
  local in_active_poetry_dir=0
  if [[ -f "$PWD/pyproject.toml" && -f "$PWD/poetry.lock" ]]; then
    in_poetry_dir=1
  fi

  # Deactivate when leaving the active project or entering a nested project
  if [[ $poetry_active -eq 1 ]]; then
    local project_dir="${poetry_dir%/}"
    if [[ "$PWD" == "$project_dir" || "$PWD" == "$project_dir"/* ]]; then
      in_active_poetry_dir=1
    fi

    if [[ $in_active_poetry_dir -eq 0 ]] ||
      { [[ $in_poetry_dir -eq 1 ]] && [[ "$PWD" != "$poetry_dir" ]]; }; then
      export poetry_active=0
      unset poetry_dir
      (( $+functions[deactivate] )) && deactivate
    fi
  fi

  # Activate the environment if in a Poetry directory and no environment is currently active
  if [[ $in_poetry_dir -eq 1 ]] && [[ $poetry_active -ne 1 ]]; then
    venv_dir=$(poetry env info --path 2>/dev/null)
    # Handle case where poetry returns "." for in-project virtual environments
    if [[ "$venv_dir" == "." ]]; then
      venv_dir="$PWD/.venv"
    fi
    # Only proceed if venv_dir is set and the activate script exists
    if [[ -n "$venv_dir" && -f "${venv_dir}/bin/activate" ]]; then
      export poetry_active=1
      export poetry_dir="$PWD"
      source "${venv_dir}/bin/activate"
    fi
  fi
}
autoload -U add-zsh-hook
add-zsh-hook chpwd _togglePoetryShell
_togglePoetryShell # Initial call to check the current directory at shell startup