diff --git a/ai/commands/index.md b/ai/commands/index.md
index f728833..96dd65a 100644
--- a/ai/commands/index.md
+++ b/ai/commands/index.md
@@ -52,6 +52,12 @@ This index provides an overview of the contents in this directory.
 
 *No description available*
 
+### 🏗️ Scaffold
+
+**File:** `scaffold.md`
+
+*No description available*
+
 ### task
 
 **File:** `task.md`
diff --git a/ai/commands/scaffold.md b/ai/commands/scaffold.md
new file mode 100644
index 0000000..8ef32fc
--- /dev/null
+++ b/ai/commands/scaffold.md
@@ -0,0 +1,98 @@
+---
+description: Scaffold design system and shadcn components after Phase 1 automation
+globs: **/app/**,**/components/**,**/stories/**
+alwaysApply: false
+---
+
+# 🏗️ Scaffold
+
+Use this command after running `npx aidd create-next-shadcn` to complete Phase 2 of the setup: adding shadcn UI and building a baseline design system.
+
+## Prerequisites
+
+You should have already run:
+```bash
+npx aidd create-next-shadcn [project-name]
+```
+
+This command completes Phase 1 (deterministic setup) and gives you a working Next.js app with:
+- TypeScript & ESM
+- Vitest + Riteway for unit tests
+- Playwright for E2E tests
+- Storybook
+- AIDD framework installed
+
+## Phase 2: Design System with shadcn
+
+Now you'll add shadcn UI and build a baseline design system.
+
+### Step 1: Install shadcn
+
+First, search for the latest official shadcn installation instructions for Next.js App Router.
+
+Then follow the current recommended setup. Document the exact commands you run.
+
+Typically this looks like:
+```bash
+npx shadcn@latest init
+```
+
+### Step 2: Build Baseline Design System
+
+Create a simple design system story that includes:
+
+**Components to build:**
+- Standard button components (variants, sizes, disabled, loading)
+- Toggle switch
+- Input elements (text, textarea, select if applicable)
+- Semantic colors: error, warning, success, primary
+- Focus and hover states for all interactive components
+
+**Location:**
+- Place design system stories under `src/stories/design-system`
+- Use Storybook CSF format
+
+### Step 3: Responsive Primary Actions
+
+Implement primary actions in two responsive styles:
+- **Mobile**: centered circular primary action
+- **Desktop**: primary action button
+
+### Step 4: TDD Process
+
+- Use TDD for any custom components you create
+- Follow `ai/rules/tdd.mdc` carefully
+- Follow JavaScript best practices in `ai/rules/javascript`
+
+### Step 5: Style Guidance
+
+Before starting implementation, prompt the user for guidance on the visual look and feel of the application.
+
+After they respond, continue with the task epic, then present it for feedback.
+
+### Step 6: Review
+
+Use your own `/review` of your changes as the approval gate before moving to the next step in the TDD process.
+
+## Exit Criteria
+
+Before considering this complete:
+
+- [ ] Storybook shows all components and states listed above
+- [ ] Visual and interaction a11y basics: keyboard nav, visible focus, acceptable contrast
+- [ ] All tests pass (`npm test`)
+- [ ] E2E tests pass (`npm run test:e2e`)
+
+## Final Review
+
+Once all work is complete, `/review` the code:
+
+- Reduce duplication
+- Ensure the TDD process was carefully adhered to, identify and fix any gaps
+- Present findings and ask for advice before any further work
+
+## References
+
+- Phase 1 setup details: `docs/new-project-setup-nextjs-shadcn.md`
+- JavaScript style guide: `ai/rules/javascript`
+- TDD guide: `ai/rules/tdd.mdc`
diff --git a/bin/aidd.js b/bin/aidd.js
index 859801d..3a6647e 100755
--- a/bin/aidd.js
+++ b/bin/aidd.js
@@ -3,6 +3,7 @@
 import { Command } from "commander";
 import { executeClone } from "../lib/cli-core.js";
 import { generateAllIndexes } from "../lib/index-generator.js";
+import { executeCreateNextShadcn } from "../lib/create-next-shadcn.js";
 import { readFileSync } from "fs";
 import { fileURLToPath } from "url";
 import path from "path";
@@ -35,7 +36,7 @@ const [, handleCliErrors] = errorCauses({
 const createCli = () => {
   const program = new Command();
 
-  return program
+  program
     .name("aidd")
     .description("AI Driven Development - Install the AIDD Framework")
     .version(packageJson.version)
@@ -104,6 +105,10 @@ To install for Cursor:
 Install without Cursor integration:
 
   npx aidd my-project
+
+Scaffold a new Next.js app with tests and AIDD:
+
+  npx aidd create-next-shadcn [project-name]
 `,
     )
     .addHelpText(
@@ -205,6 +210,25 @@ https://paralleldrive.com
         process.exit(result.success ? 0 : 1);
       },
     );
+
+  // Add create-next-shadcn command
+  program
+    .command("create-next-shadcn [project-name]")
+    .description(
+      "Scaffold a new Next.js app with AIDD, tests, and baseline setup",
+    )
+    .action(async (projectName = "my-app") => {
+      const result = await executeCreateNextShadcn(projectName);
+
+      if (!result.success) {
+        console.error(chalk.red(`\n❌ ${result.error}`));
+        process.exit(1);
+      }
+
+      process.exit(0);
+    });
+
+  return program;
 };
 
 // Execute CLI
diff --git a/bin/create-next-shadcn-e2e.test.js b/bin/create-next-shadcn-e2e.test.js
new file mode 100644
index 0000000..1341603
--- /dev/null
+++ b/bin/create-next-shadcn-e2e.test.js
@@ -0,0 +1,51 @@
+import { assert } from "riteway/vitest";
+import { describe, test } from "vitest";
+import { exec } from "child_process";
+import { promisify } from "util";
+import { fileURLToPath } from "url";
+import path from "path";
+
+const execAsync = promisify(exec);
+const __filename = fileURLToPath(import.meta.url);
+const __dirname = path.dirname(__filename);
+const cliPath = path.join(__dirname, "./aidd.js");
+
+describe("CLI create-next-shadcn command", () => {
+  test("help output includes create-next-shadcn command", async () => {
+    const { stdout } = await execAsync(`node ${cliPath} --help`);
+
+    assert({
+      given: "CLI help command is run",
+      should: "include create-next-shadcn in Quick Start section",
+      actual: stdout.includes("create-next-shadcn"),
+      expected: true,
+    });
+  });
+
+  test("create-next-shadcn command has help", async () => {
+    const { stdout } = await execAsync(
+      `node ${cliPath} create-next-shadcn --help`,
+    );
+
+    assert({
+      given: "create-next-shadcn help is requested",
+      should: "show command description",
+      actual:
+        stdout.includes("create-next-shadcn") && stdout.includes("Next.js"),
+      expected: true,
+    });
+  });
+
+  test("create-next-shadcn accepts project name argument", async () => {
+    const { stdout } = await execAsync(
+      `node ${cliPath} create-next-shadcn --help`,
+    );
+
+    assert({
+      given: "create-next-shadcn help is requested",
+      should: "show project-name argument",
+      actual: stdout.includes("[project-name]"),
+      expected: true,
+    });
+  });
+});
diff --git a/lib/create-next-shadcn.js b/lib/create-next-shadcn.js
new file mode 100644
index 0000000..62dfbee
--- /dev/null
+++ b/lib/create-next-shadcn.js
@@ -0,0 +1,193 @@
+import { spawn } from "child_process";
+import fs from "fs-extra";
+import path from "path";
+import process from "process";
+
+/**
+ * Run a command and stream output to user
+ */
+const runCommand = (command, args = [], cwd = process.cwd()) =>
+  new Promise((resolve, reject) => {
+    const child = spawn(command, args, {
+      cwd,
+      stdio: "inherit",
+      shell: true,
+    });
+
+    child.on("close", (code) => {
+      if (code === 0) {
+        resolve({ success: true });
+      } else {
+        reject(new Error(`Command failed with exit code ${code}`));
+      }
+    });
+
+    child.on("error", (error) => {
+      reject(error);
+    });
+  });
+
+/**
+ * Execute the create-next-shadcn command by automating Phase 1 setup
+ * @param {string} projectName - Name of the project to create
+ * @returns {Promise<{success: boolean, error?: string}>}
+ */
+export const executeCreateNextShadcn = async (projectName = "my-app") => {
+  const projectPath = path.resolve(process.cwd(), projectName);
+
+  try {
+    console.log("🚀 Creating Next.js app...\n");
+
+    // Step 1: Create Next.js app with defaults
+    await runCommand("npx", [
+      "create-next-app@latest",
+      projectName,
+      "--typescript",
+      "--eslint",
+      "--tailwind",
+      "--app",
+      "--no-src-dir",
+      "--import-alias",
+      "@/*",
+      "--use-npm",
+    ]);
+
+    console.log("\n✅ Next.js app created\n");
+
+    // Step 2: Install aidd
+    console.log("📦 Installing aidd framework...\n");
+    await runCommand("npx", ["aidd", "--cursor"], projectPath);
+    await runCommand("npm", ["install", "aidd"], projectPath);
+
+    console.log("\n✅ AIDD framework installed\n");
+
+    // Step 3: Install test dependencies
+    console.log("🧪 Installing test dependencies...\n");
+    await runCommand(
+      "npm",
+      ["install", "-D", "vitest", "riteway", "@playwright/test", "@vitest/ui"],
+      projectPath,
+    );
+
+    console.log("\n✅ Test dependencies installed\n");
+
+    // Step 4: Install Storybook
+    console.log("📚 Installing Storybook...\n");
+    await runCommand("npx", ["storybook@latest", "init", "--yes"], projectPath);
+
+    console.log("\n✅ Storybook installed\n");
+
+    // Step 5: Update package.json scripts
+    console.log("⚙️  Configuring npm scripts...\n");
+    const packageJsonPath = path.join(projectPath, "package.json");
+    const packageJson = await fs.readJson(packageJsonPath);
+
+    packageJson.scripts = {
+      ...packageJson.scripts,
+      test: "vitest run && npm run -s lint && npm run -s typecheck",
+      "test:watch": "vitest",
+      "test:e2e": "playwright test",
+      "test:ui": "vitest --ui",
+      typecheck: "tsc --noEmit",
+    };
+
+    packageJson.type = "module";
+
+    await fs.writeJson(packageJsonPath, packageJson, { spaces: 2 });
+
+    console.log("✅ Package.json configured\n");
+
+    // Step 6: Create baseline test file
+    console.log("📝 Creating baseline tests...\n");
+    const testDir = path.join(projectPath, "app");
+    const testFile = path.join(testDir, "page.test.js");
+
+    const testContent = `import { assert } from "riteway";
+import { describe, test } from "vitest";
+
+describe("Home page", () => {
+  test("baseline test", () => {
+    assert({
+      given: "a baseline test",
+      should: "pass",
+      actual: true,
+      expected: true,
+    });
+  });
+});
+`;
+
+    await fs.writeFile(testFile, testContent);
+
+    console.log("✅ Baseline test created\n");
+
+    // Step 7: Create playwright config
+    console.log("🎭 Configuring Playwright...\n");
+    const playwrightConfig = `import { defineConfig, devices } from '@playwright/test';
+
+export default defineConfig({
+  testDir: './e2e',
+  fullyParallel: true,
+  forbidOnly: !!process.env.CI,
+  retries: process.env.CI ? 2 : 0,
+  workers: process.env.CI ? 1 : undefined,
+  reporter: 'html',
+  use: {
+    baseURL: 'http://localhost:3000',
+    trace: 'on-first-retry',
+  },
+  projects: [
+    {
+      name: 'chromium',
+      use: { ...devices['Desktop Chrome'] },
+    },
+  ],
+  webServer: {
+    command: 'npm run build && npm start',
+    url: 'http://localhost:3000',
+    reuseExistingServer: !process.env.CI,
+  },
+});
+`;
+
+    await fs.writeFile(
+      path.join(projectPath, "playwright.config.js"),
+      playwrightConfig,
+    );
+
+    // Create e2e test directory and sample test
+    const e2eDir = path.join(projectPath, "e2e");
+    await fs.ensureDir(e2eDir);
+
+    const e2eTest = `import { test, expect } from '@playwright/test';
+
+test('home page loads', async ({ page }) => {
+  await page.goto('/');
+  await expect(page).toHaveTitle(/Next/);
+});
+`;
+
+    await fs.writeFile(path.join(e2eDir, "home.spec.js"), e2eTest);
+
+    console.log("✅ Playwright configured\n");
+
+    console.log("🎉 Phase 1 setup complete!\n");
+    console.log(`📁 Project created at: ${projectPath}\n`);
+    console.log("Next steps:");
+    console.log(`  cd ${projectName}`);
+    console.log("  npm test          # Run unit tests");
+    console.log("  npm run test:e2e  # Run E2E tests");
+    console.log("  npm run storybook # Start Storybook");
+    console.log("  npm run dev       # Start dev server\n");
+    console.log(
+      "💡 For Phase 2 (design system), use the /scaffold command with your preferred LLM",
+    );
+
+    return { success: true };
+  } catch (error) {
+    return {
+      success: false,
+      error: `Setup failed: ${error.message}`,
+    };
+  }
+};
diff --git a/lib/create-next-shadcn.test.js b/lib/create-next-shadcn.test.js
new file mode 100644
index 0000000..c3eb8eb
--- /dev/null
+++ b/lib/create-next-shadcn.test.js
@@ -0,0 +1,171 @@
+import { assert } from "riteway/vitest";
+import { describe, test, vi, beforeEach, afterEach } from "vitest";
+
+// Mock modules before importing
+vi.mock("child_process", () => ({
+  spawn: vi.fn(),
+  exec: vi.fn(),
+}));
+
+vi.mock("fs-extra", () => ({
+  default: {
+    readJson: vi.fn(),
+    writeJson: vi.fn(),
+    writeFile: vi.fn(),
+    ensureDir: vi.fn(),
+  },
+  readJson: vi.fn(),
+  writeJson: vi.fn(),
+  writeFile: vi.fn(),
+  ensureDir: vi.fn(),
+}));
+
+vi.mock("util", () => ({
+  promisify: vi.fn(),
+}));
+
+describe("executeCreateNextShadcn", () => {
+  let childProcess;
+  let fs;
+  let spawnMock;
+  let readJsonMock;
+  let writeJsonMock;
+  let writeFileMock;
+  let ensureDirMock;
+
+  beforeEach(async () => {
+    childProcess = await import("child_process");
+    fs = await import("fs-extra");
+
+    spawnMock = vi.fn();
+    readJsonMock = vi.fn();
+    writeJsonMock = vi.fn();
+    writeFileMock = vi.fn();
+    ensureDirMock = vi.fn();
+
+    childProcess.spawn.mockImplementation(spawnMock);
+    fs.readJson.mockImplementation(readJsonMock);
+    fs.writeJson.mockImplementation(writeJsonMock);
+    fs.writeFile.mockImplementation(writeFileMock);
+    fs.ensureDir.mockImplementation(ensureDirMock);
+
+    // Default successful spawn implementation
+    spawnMock.mockReturnValue({
+      on: (event, callback) => {
+        if (event === "close") {
+          setTimeout(() => callback(0), 0);
+        }
+      },
+    });
+
+    // Default package.json
+    readJsonMock.mockResolvedValue({
+      name: "test-app",
+      scripts: {},
+    });
+
+    writeJsonMock.mockResolvedValue(undefined);
+    writeFileMock.mockResolvedValue(undefined);
+    ensureDirMock.mockResolvedValue(undefined);
+  });
+
+  afterEach(() => {
+    vi.clearAllMocks();
+    vi.resetModules();
+  });
+
+  test("should run create-next-app with correct flags", async () => {
+    const spawnCalls = [];
+    spawnMock.mockImplementation((cmd, args) => {
+      spawnCalls.push({ cmd, args });
+      return {
+        on: (event, callback) => {
+          if (event === "close") {
+            setTimeout(() => callback(0), 0);
+          }
+        },
+      };
+    });
+
+    const { executeCreateNextShadcn } = await import("./create-next-shadcn.js");
+    await executeCreateNextShadcn("test-project");
+
+    const createNextCall = spawnCalls.find(
+      (call) =>
+        call.cmd === "npx" &&
+        call.args?.some((arg) => arg === "create-next-app@latest"),
+    );
+
+    assert({
+      given: "executeCreateNextShadcn is called",
+      should: "run create-next-app",
+      actual: createNextCall !== undefined,
+      expected: true,
+    });
+
+    assert({
+      given: "create-next-app command",
+      should: "include TypeScript flag",
+      actual: createNextCall?.args?.includes("--typescript"),
+      expected: true,
+    });
+  });
+
+  test("should install aidd framework", async () => {
+    const spawnCalls = [];
+    spawnMock.mockImplementation((cmd, args) => {
+      spawnCalls.push({ cmd, args });
+      return {
+        on: (event, callback) => {
+          if (event === "close") {
+            setTimeout(() => callback(0), 0);
+          }
+        },
+      };
+    });
+
+    const { executeCreateNextShadcn } = await import("./create-next-shadcn.js");
+    await executeCreateNextShadcn("test-project");
+
+    const aiddInstall = spawnCalls.find(
+      (call) => call.cmd === "npx" && call.args?.includes("aidd"),
+    );
+
+    assert({
+      given: "executeCreateNextShadcn is called",
+      should: "install aidd framework",
+      actual: aiddInstall !== undefined,
+      expected: true,
+    });
+  });
+
+  test("should install test dependencies", async () => {
+    const spawnCalls = [];
+    spawnMock.mockImplementation((cmd, args) => {
+      spawnCalls.push({ cmd, args });
+      return {
+        on: (event, callback) => {
+          if (event === "close") {
+            setTimeout(() => callback(0), 0);
+          }
+        },
+      };
+    });
+
+    const { executeCreateNextShadcn } = await import("./create-next-shadcn.js");
+    await executeCreateNextShadcn("test-project");
+
+    const testDepsInstall = spawnCalls.find(
+      (call) =>
+        call.cmd === "npm" &&
+        call.args?.some((arg) => arg === "vitest" || arg === "riteway"),
+    );
+
+    assert({
+      given: "executeCreateNextShadcn is called",
+      should: "install vitest and riteway",
+      actual: testDepsInstall !== undefined,
+      expected: true,
+    });
+  });
+});