diff --git a/.gitignore b/.gitignore
index 78cd1ee..575f4b3 100644
--- a/.gitignore
+++ b/.gitignore
@@ -16,6 +16,7 @@ nexus-claude-api.local.json
 .omo
 .codegraph
 .agents
+.claude
 
 # logs
 logs
diff --git a/docs/PRD.md b/docs/PRD.md
index c9166e6..2eaec0b 100644
--- a/docs/PRD.md
+++ b/docs/PRD.md
@@ -60,6 +60,7 @@ The proxy defaults to Opus because this deployment is intended for users whose N
 - As a Claude Code user, I can use tool calls and tool results.
 - As a multimodal user, I can send images through Claude-compatible image content blocks.
 - As a developer debugging setup, I can enable verbose logs without exposing tokens.
+- As a developer debugging issues, I can trace any error in the log file using a correlation_id that appears in both the client response and the log entry.
 
 ## Acceptance Criteria
 
@@ -70,6 +71,7 @@ The proxy defaults to Opus because this deployment is intended for users whose N
 - `--dev` startup reads current-directory `nexus-claude-api.local.json` instead of user config.
 - Default logs are written to `~/.config/nexus-claude-api/logs/nexus-claude-api-YYYY-MM-DD.log`.
 - `--dev` logs are written to current-directory `logs/nexus-claude-api-YYYY-MM-DD.log`.
+- All API errors (4xx, 5xx, network failures, client disconnects) are logged with correlation_id and duration.
 - Missing Nexus credentials fail fast with a clear error.
 - `GET /health` returns healthy status.
 - `GET /v1/models` returns the supported Claude models.
diff --git a/docs/REQUIREMENTS_DESIGN.md b/docs/REQUIREMENTS_DESIGN.md
index c60987b..2b6d048 100644
--- a/docs/REQUIREMENTS_DESIGN.md
+++ b/docs/REQUIREMENTS_DESIGN.md
@@ -29,7 +29,9 @@ nexus-claude-api/
       __main__.py
       cli.py
       config.py
+      diagnostics.py
       errors.py
+      logging_config.py
       models.py
       nexus_client.py
       server.py
@@ -212,6 +214,28 @@ Status mapping:
 - Nexus throttling: `429`
 - Nexus network/timeout: `502` or `504`
 - unexpected server error: `500`
+- client disconnected: `499` (logged only, not sent)
+
+## Observability
+
+All errors are logged to the daily log file with a `correlation_id` for tracing.
+
+Request lifecycle middleware logs:
+
+- `request_complete` with method, path, status, and duration_ms for every `/v1/messages` request.
+- `client_disconnected` when the client drops connection mid-request or mid-stream.
+- `unhandled_exception` with traceback for unexpected errors (returns 500).
+
+Error logging at point of origin:
+
+- `nexus_client_error` (WARNING): Nexus API returned an error (4xx/5xx) with error code, message, HTTP status, and request ID.
+- `nexus_botocore_error` (WARNING): Network/transport failure (timeout, DNS, connection reset).
+- `stream_nexus_error` (WARNING): Error during streaming response iteration.
+- `stream_client_disconnected` (INFO): Client closed connection during streaming.
+- `validation_error` (WARNING): Malformed request that failed pydantic validation.
+- `nexus_error` (WARNING): NexusClaudeError in non-streaming response path.
+
+Diagnostics summarize each request (model, stream flag, message count, content block types, tool info) without logging secrets, prompt text, or base64 data.
 
 ## Testing
 
@@ -234,6 +258,11 @@ Route tests:
 - `POST /v1/messages` non-stream
 - `POST /v1/messages` stream
 - `POST /v1/messages/count_tokens`
+- Validation errors are logged with correlation_id.
+- Nexus errors (non-stream) are logged with status and type.
+- Nexus errors (stream) are logged as `stream_nexus_error`.
+- Request completion is logged with duration_ms.
+- Unexpected exceptions return 500 and are logged.
 
 CLI tests:
 
diff --git a/pyproject.toml b/pyproject.toml
index cb5ad8b..3689066 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -1,6 +1,6 @@
 [project]
 name = "nexus-claude-api"
-version = "0.1.2"
+version = "0.1.3"
 description = "Local Anthropic-compatible Claude Code proxy for AI Nexus Bedrock Converse."
 readme = "README.md"
 requires-python = ">=3.11"
diff --git a/src/nexus_claude_api/__init__.py b/src/nexus_claude_api/__init__.py
index 8096691..fed7a4a 100644
--- a/src/nexus_claude_api/__init__.py
+++ b/src/nexus_claude_api/__init__.py
@@ -1,3 +1,3 @@
 """Local Anthropic-compatible proxy for AI Nexus Claude models."""
 
-__version__ = "0.1.2"
+__version__ = "0.1.3"
diff --git a/src/nexus_claude_api/nexus_client.py b/src/nexus_claude_api/nexus_client.py
index 5e1cde2..13c4c15 100644
--- a/src/nexus_claude_api/nexus_client.py
+++ b/src/nexus_claude_api/nexus_client.py
@@ -40,6 +40,11 @@ class NexusClient:
                 correlation_id=correlation_id,
             ) from exc
         except BotoCoreError as exc:
+            logger.warning(
+                "nexus_botocore_error operation=converse correlation_id=%s error=%s",
+                correlation_id,
+                str(exc),
+            )
             raise NexusClaudeError(
                 "Failed to call Nexus Converse API",
                 status_code=502,
@@ -62,6 +67,11 @@ class NexusClient:
                 correlation_id=correlation_id,
             ) from exc
         except BotoCoreError as exc:
+            logger.warning(
+                "nexus_botocore_error operation=converse_stream correlation_id=%s error=%s",
+                correlation_id,
+                str(exc),
+            )
             raise NexusClaudeError(
                 "Failed to call Nexus Converse Stream API",
                 status_code=502,
diff --git a/src/nexus_claude_api/routes/messages.py b/src/nexus_claude_api/routes/messages.py
index 6e9ecc7..50c4cf9 100644
--- a/src/nexus_claude_api/routes/messages.py
+++ b/src/nexus_claude_api/routes/messages.py
@@ -71,6 +71,13 @@ def anthropic_sse_stream(
         for event in bedrock_stream_to_anthropic_events(stream, model=model):
             yield sse_frame(event)
     except NexusClaudeError as exc:
+        logger.warning(
+            "stream_nexus_error correlation_id=%s status=%d type=%s message=%s",
+            correlation_id,
+            exc.status_code,
+            exc.error_type,
+            exc.message,
+        )
         yield sse_frame(
             {
                 "type": "error",
@@ -81,6 +88,9 @@ def anthropic_sse_stream(
                 },
             }
         )
+    except GeneratorExit:
+        logger.info("stream_client_disconnected correlation_id=%s", correlation_id)
+        return
     except Exception:
         logger.exception(
             "anthropic_messages_stream_error correlation_id=%s",
@@ -144,12 +154,24 @@ async def create_message(
         )
         return JSONResponse(content=anthropic_response.model_dump(exclude_none=True))
     except ValidationError as exc:
+        logger.warning(
+            "validation_error correlation_id=%s error=%s",
+            correlation_id,
+            str(exc)[:500],
+        )
         return anthropic_error_response(
             str(exc),
             status_code=400,
             correlation_id=correlation_id,
         )
     except NexusClaudeError as exc:
+        logger.warning(
+            "nexus_error correlation_id=%s status=%d type=%s message=%s",
+            correlation_id,
+            exc.status_code,
+            exc.error_type,
+            exc.message,
+        )
         return anthropic_error_response(
             exc.message,
             status_code=exc.status_code,
diff --git a/src/nexus_claude_api/server.py b/src/nexus_claude_api/server.py
index 819e4e9..471ba92 100644
--- a/src/nexus_claude_api/server.py
+++ b/src/nexus_claude_api/server.py
@@ -1,9 +1,14 @@
 from __future__ import annotations
 
+import logging
+import time
+
 from fastapi import FastAPI
 from fastapi.middleware.cors import CORSMiddleware
 from fastapi.requests import Request
-from fastapi.responses import JSONResponse
+from fastapi.responses import JSONResponse, Response
+from starlette.middleware.base import BaseHTTPMiddleware
+from starlette.requests import ClientDisconnect
 
 from nexus_claude_api import __version__
 from nexus_claude_api.config import Settings
@@ -13,6 +18,54 @@ from nexus_claude_api.routes.health import router as health_router
 from nexus_claude_api.routes.messages import router as messages_router
 from nexus_claude_api.routes.models import router as models_router
 
+logger = logging.getLogger(__name__)
+
+
+class RequestLifecycleMiddleware(BaseHTTPMiddleware):
+    async def dispatch(self, request: Request, call_next):
+        if not request.url.path.startswith("/v1/messages"):
+            return await call_next(request)
+
+        start = time.perf_counter()
+        try:
+            response = await call_next(request)
+            duration_ms = (time.perf_counter() - start) * 1000
+            logger.info(
+                "request_complete method=%s path=%s status=%d duration_ms=%.1f",
+                request.method,
+                request.url.path,
+                response.status_code,
+                duration_ms,
+            )
+            return response
+        except ClientDisconnect:
+            duration_ms = (time.perf_counter() - start) * 1000
+            logger.info(
+                "client_disconnected method=%s path=%s duration_ms=%.1f",
+                request.method,
+                request.url.path,
+                duration_ms,
+            )
+            return Response(status_code=499)
+        except Exception:
+            duration_ms = (time.perf_counter() - start) * 1000
+            logger.exception(
+                "unhandled_exception method=%s path=%s duration_ms=%.1f",
+                request.method,
+                request.url.path,
+                duration_ms,
+            )
+            return JSONResponse(
+                status_code=500,
+                content={
+                    "type": "error",
+                    "error": {
+                        "type": "api_error",
+                        "message": "Internal server error",
+                    },
+                },
+            )
+
 
 def create_app(
     settings: Settings | None = None,
@@ -23,6 +76,7 @@ def create_app(
     app.state.settings = resolved_settings
     app.state.nexus_client = nexus_client or NexusClient(resolved_settings)
 
+    app.add_middleware(RequestLifecycleMiddleware)
     app.add_middleware(
         CORSMiddleware,
         allow_origins=["*"],
@@ -43,4 +97,18 @@ def create_app(
             error_type=exc.error_type,
         )
 
+    @app.exception_handler(ClientDisconnect)
+    async def handle_client_disconnect(_: Request, exc: ClientDisconnect) -> Response:
+        logger.debug("client_disconnect_handler_invoked")
+        return Response(status_code=499)
+
+    @app.exception_handler(Exception)
+    async def handle_unexpected_error(_: Request, exc: Exception) -> JSONResponse:
+        logger.exception("unhandled_exception")
+        return anthropic_error_response(
+            "Internal server error",
+            status_code=500,
+            error_type="api_error",
+        )
+
     return app
diff --git a/tests/test_routes.py b/tests/test_routes.py
index 0312921..de5a010 100644
--- a/tests/test_routes.py
+++ b/tests/test_routes.py
@@ -230,3 +230,87 @@ def test_count_tokens() -> None:
 
     assert response.status_code == 200
     assert response.json()["input_tokens"] > 0
+
+
+def test_validation_error_is_logged(caplog) -> None:
+    caplog.set_level(logging.WARNING, logger="nexus_claude_api.routes.messages")
+
+    response = client().post(
+        "/v1/messages",
+        json={"model": "claude-opus-4.6", "max_tokens": -1},
+    )
+
+    assert response.status_code == 400
+    assert any("validation_error" in r.message for r in caplog.records)
+
+
+def test_nexus_error_non_stream_is_logged(caplog) -> None:
+    caplog.set_level(logging.WARNING, logger="nexus_claude_api.routes.messages")
+
+    response = client(AccessDeniedNexusClient()).post(
+        "/v1/messages",
+        json={
+            "model": "claude-opus-4.6",
+            "messages": [{"role": "user", "content": "Hello"}],
+            "max_tokens": 32,
+        },
+    )
+
+    assert response.status_code == 403
+    assert any("nexus_error" in r.message for r in caplog.records)
+
+
+def test_stream_nexus_error_is_logged(caplog) -> None:
+    caplog.set_level(logging.WARNING, logger="nexus_claude_api.routes.messages")
+
+    with client(StreamErrorNexusClient()).stream(
+        "POST",
+        "/v1/messages",
+        json={
+            "model": "claude-opus-4.6",
+            "messages": [{"role": "user", "content": "Hello"}],
+            "max_tokens": 32,
+            "stream": True,
+        },
+    ) as response:
+        response.read()
+
+    assert any("stream_nexus_error" in r.message for r in caplog.records)
+
+
+def test_request_complete_is_logged(caplog) -> None:
+    caplog.set_level(logging.INFO, logger="nexus_claude_api.server")
+
+    client().post(
+        "/v1/messages",
+        json={
+            "model": "claude-opus-4.6",
+            "messages": [{"role": "user", "content": "Hello"}],
+            "max_tokens": 32,
+        },
+    )
+
+    assert any("request_complete" in r.message and "duration_ms" in r.message for r in caplog.records)
+
+
+class ExplodingNexusClient:
+    def converse(self, request: dict, *, correlation_id: str | None = None) -> dict:
+        raise RuntimeError("unexpected kaboom")
+
+
+def test_unexpected_exception_returns_500_and_is_logged(caplog) -> None:
+    caplog.set_level(logging.ERROR, logger="nexus_claude_api.server")
+
+    response = client(ExplodingNexusClient()).post(
+        "/v1/messages",
+        json={
+            "model": "claude-opus-4.6",
+            "messages": [{"role": "user", "content": "Hello"}],
+            "max_tokens": 32,
+        },
+    )
+
+    assert response.status_code == 500
+    body = response.json()
+    assert body["error"]["type"] == "api_error"
+    assert any("unhandled_exception" in r.message for r in caplog.records)
diff --git a/uv.lock b/uv.lock
index 9ebe087..dcfa9dc 100644
--- a/uv.lock
+++ b/uv.lock
@@ -173,7 +173,7 @@ wheels = [
 
 [[package]]
 name = "nexus-claude-api"
-version = "0.1.2"
+version = "0.1.3"
 source = { editable = "." }
 dependencies = [
     { name = "boto3" },