diff --git a/CHANGELOG.md b/CHANGELOG.md
index 1a3d872..83db76e 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -13,6 +13,9 @@
 ### Fixed
 - EscrowForm now rejects self-escrow (beneficiary === depositor) and
   arbiter addresses that match the depositor or beneficiary (#23)
+- `useTheme` now subscribes to live OS theme changes when set to
+  `'system'`, instead of reading `matchMedia(...).matches` once and
+  going stale until `theme` itself changes (#31)
 
 ### Removed
 - Removed the orphaned `useStellarAccount` hook: it had no call sites,
diff --git a/src/hooks/useMediaQuery.test.ts b/src/hooks/useMediaQuery.test.ts
new file mode 100644
index 0000000..dc11ce6
--- /dev/null
+++ b/src/hooks/useMediaQuery.test.ts
@@ -0,0 +1,86 @@
+import { renderHook, act } from '@testing-library/react'
+import { describe, it, expect, afterEach } from 'vitest'
+import { useMediaQuery, useIsDarkMode } from './useMediaQuery'
+
+function createMockMatchMedia(initialMatches: boolean) {
+  let matches = initialMatches
+  const listeners = new Set<(e: MediaQueryListEvent) => void>()
+
+  const mql = {
+    get matches() {
+      return matches
+    },
+    media: '',
+    onchange: null,
+    addEventListener: (_: 'change', handler: (e: MediaQueryListEvent) => void) => {
+      listeners.add(handler)
+    },
+    removeEventListener: (_: 'change', handler: (e: MediaQueryListEvent) => void) => {
+      listeners.delete(handler)
+    },
+    addListener: () => {},
+    removeListener: () => {},
+    dispatchEvent: () => false,
+  }
+
+  return {
+    matchMedia: () => mql as unknown as MediaQueryList,
+    fireChange: (nextMatches: boolean) => {
+      matches = nextMatches
+      const event = { matches: nextMatches } as MediaQueryListEvent
+      listeners.forEach((handler) => handler(event))
+    },
+  }
+}
+
+describe('useMediaQuery / useIsDarkMode', () => {
+  const originalMatchMedia = window.matchMedia
+
+  afterEach(() => {
+    window.matchMedia = originalMatchMedia
+  })
+
+  it('returns the initial matches value synchronously', () => {
+    const mock = createMockMatchMedia(true)
+    window.matchMedia = mock.matchMedia
+
+    const { result } = renderHook(() => useMediaQuery('(prefers-color-scheme: dark)'))
+
+    expect(result.current).toBe(true)
+  })
+
+  it('updates when the underlying media query fires a change event', () => {
+    const mock = createMockMatchMedia(false)
+    window.matchMedia = mock.matchMedia
+
+    const { result } = renderHook(() => useMediaQuery('(prefers-color-scheme: dark)'))
+    expect(result.current).toBe(false)
+
+    act(() => {
+      mock.fireChange(true)
+    })
+
+    expect(result.current).toBe(true)
+  })
+
+  it('removes its change listener on unmount', () => {
+    const mock = createMockMatchMedia(false)
+    window.matchMedia = mock.matchMedia
+
+    const { unmount } = renderHook(() => useMediaQuery('(prefers-color-scheme: dark)'))
+    unmount()
+
+    // Firing a change after unmount should not throw (no dangling listener
+    // calling setState on an unmounted component).
+    expect(() => mock.fireChange(true)).not.toThrow()
+  })
+
+  it('useIsDarkMode reflects the prefers-color-scheme: dark query', () => {
+    const mock = createMockMatchMedia(true)
+    window.matchMedia = mock.matchMedia
+
+    const { result } = renderHook(() => useIsDarkMode())
+
+    expect(result.current).toBe(true)
+  })
+})
diff --git a/src/hooks/useTheme.test.ts b/src/hooks/useTheme.test.ts
new file mode 100644
index 0000000..0590090
--- /dev/null
+++ b/src/hooks/useTheme.test.ts
@@ -0,0 +1,109 @@
+import { renderHook, act } from '@testing-library/react'
+import { describe, it, expect, beforeEach, afterEach } from 'vitest'
+import { useTheme } from './useTheme'
+
+function createMockMatchMedia(initialMatches: boolean) {
+  let matches = initialMatches
+  const listeners = new Set<(e: MediaQueryListEvent) => void>()
+
+  const mql = {
+    get matches() {
+      return matches
+    },
+    media: '(prefers-color-scheme: dark)',
+    onchange: null,
+    addEventListener: (_: 'change', handler: (e: MediaQueryListEvent) => void) => {
+      listeners.add(handler)
+    },
+    removeEventListener: (_: 'change', handler: (e: MediaQueryListEvent) => void) => {
+      listeners.delete(handler)
+    },
+    addListener: () => {},
+    removeListener: () => {},
+    dispatchEvent: () => false,
+  }
+
+  return {
+    matchMedia: () => mql as unknown as MediaQueryList,
+    fireChange: (nextMatches: boolean) => {
+      matches = nextMatches
+      const event = { matches: nextMatches } as MediaQueryListEvent
+      listeners.forEach((handler) => handler(event))
+    },
+  }
+}
+
+describe('useTheme', () => {
+  const originalMatchMedia = window.matchMedia
+
+  beforeEach(() => {
+    localStorage.clear()
+    document.documentElement.classList.remove('dark')
+  })
+
+  afterEach(() => {
+    window.matchMedia = originalMatchMedia
+    localStorage.clear()
+    document.documentElement.classList.remove('dark')
+  })
+
+  it('reacts live to an OS theme change while theme is "system", with no change to theme itself', () => {
+    const mock = createMockMatchMedia(false)
+    window.matchMedia = mock.matchMedia
+
+    const { result } = renderHook(() => useTheme())
+    expect(result.current.theme).toBe('system')
+    expect(document.documentElement.classList.contains('dark')).toBe(false)
+
+    act(() => {
+      mock.fireChange(true)
+    })
+
+    expect(document.documentElement.classList.contains('dark')).toBe(true)
+    expect(result.current.theme).toBe('system')
+  })
+
+  it('toggles the dark class back off when the OS switches back to light', () => {
+    const mock = createMockMatchMedia(true)
+    window.matchMedia = mock.matchMedia
+
+    renderHook(() => useTheme())
+    expect(document.documentElement.classList.contains('dark')).toBe(true)
+
+    act(() => {
+      mock.fireChange(false)
+    })
+
+    expect(document.documentElement.classList.contains('dark')).toBe(false)
+  })
+
+  it('does not react to OS theme changes when explicitly set to "light"', () => {
+    localStorage.setItem('ss-theme', JSON.stringify('light'))
+    const mock = createMockMatchMedia(false)
+    window.matchMedia = mock.matchMedia
+
+    renderHook(() => useTheme())
+    expect(document.documentElement.classList.contains('dark')).toBe(false)
+
+    act(() => {
+      mock.fireChange(true)
+    })
+
+    expect(document.documentElement.classList.contains('dark')).toBe(false)
+  })
+
+  it('does not react to OS theme changes when explicitly set to "dark"', () => {
+    localStorage.setItem('ss-theme', JSON.stringify('dark'))
+    const mock = createMockMatchMedia(true)
+    window.matchMedia = mock.matchMedia
+
+    renderHook(() => useTheme())
+    expect(document.documentElement.classList.contains('dark')).toBe(true)
+
+    act(() => {
+      mock.fireChange(false)
+    })
+
+    expect(document.documentElement.classList.contains('dark')).toBe(true)
+  })
+})
diff --git a/src/hooks/useTheme.ts b/src/hooks/useTheme.ts
index b3c84a4..ce01093 100644
--- a/src/hooks/useTheme.ts
+++ b/src/hooks/useTheme.ts
@@ -1,13 +1,15 @@
 import { useLocalStorage } from './useLocalStorage'
+import { useIsDarkMode } from './useMediaQuery'
 import { useEffect } from 'react'
 type Theme = 'light' | 'dark' | 'system'
 export function useTheme() {
   const [theme, setTheme] = useLocalStorage<Theme>('ss-theme', 'system')
+  const systemIsDark = useIsDarkMode()
   useEffect(() => {
     const root = document.documentElement
     if (theme === 'dark') root.classList.add('dark')
     else if (theme === 'light') root.classList.remove('dark')
-    else root.classList.toggle('dark', matchMedia('(prefers-color-scheme: dark)').matches)
-  }, [theme])
+    else root.classList.toggle('dark', systemIsDark)
+  }, [theme, systemIsDark])
   return { theme, setTheme }
 }