diff --git a/src/components/dashboard/DashboardShell.test.tsx b/src/components/dashboard/DashboardShell.test.tsx
new file mode 100644
index 0000000..fbf5fae
--- /dev/null
+++ b/src/components/dashboard/DashboardShell.test.tsx
@@ -0,0 +1,86 @@
+/**
+ * Tests for DashboardShell active-nav highlighting (#220).
+ *
+ * Before the fix, `pathname === item.href` meant a nested route such as
+ * /issues/abc123 did not highlight "Bounty pipeline", so the sidebar looked
+ * like nothing was selected whenever the user drilled into a child page.
+ *
+ * The expected behavior:
+ * - Top-level sections (/issues, /milestones, /reputation/...) stay
+ *   highlighted on their child routes.
+ * - Dashboard overview links (/dashboard/...) still use exact matching so a
+ *   nested route under an unrelated dashboard section does not keep the
+ *   overview link permanently highlighted.
+ */
+
+import { render, screen } from "@testing-library/react";
+import { usePathname } from "next/navigation";
+import { DashboardShell } from "./DashboardShell";
+
+jest.mock("next/navigation", () => ({
+  usePathname: jest.fn(),
+}));
+
+const mockedUsePathname = usePathname as jest.Mock;
+
+function renderMaintainerShell() {
+  return render(
+    <DashboardShell role="maintainer" title="Maintainer dashboard">
+      <div>content</div>
+    </DashboardShell>,
+  );
+}
+
+function activeLink(name: string | RegExp) {
+  return screen.getByRole("link", { name });
+}
+
+describe("DashboardShell — active nav highlighting (#220)", () => {
+  it("highlights a top-level section on its exact route", () => {
+    mockedUsePathname.mockReturnValue("/issues");
+    renderMaintainerShell();
+
+    expect(activeLink("Bounty pipeline")).toHaveClass("bg-indigo-50");
+  });
+
+  it("keeps a top-level section highlighted on a nested child route", () => {
+    mockedUsePathname.mockReturnValue("/issues/abc123");
+    renderMaintainerShell();
+
+    expect(activeLink("Bounty pipeline")).toHaveClass("bg-indigo-50");
+    expect(activeLink("Bounty pipeline")).toHaveAttribute("href", "/issues");
+  });
+
+  it("keeps Milestones highlighted on its nested child route", () => {
+    mockedUsePathname.mockReturnValue("/milestones/planning-2026");
+    renderMaintainerShell();
+
+    expect(activeLink("Milestones")).toHaveClass("bg-indigo-50");
+  });
+
+  it("does not highlight unrelated sections while on a nested child route", () => {
+    mockedUsePathname.mockReturnValue("/issues/abc123");
+    renderMaintainerShell();
+
+    expect(activeLink("Milestones")).not.toHaveClass("bg-indigo-50");
+  });
+
+  it("uses exact matching for dashboard overview links", () => {
+    const { unmount } = renderMaintainerShell();
+    mockedUsePathname.mockReturnValue("/dashboard/maintainer/other");
+
+    // Neither the Overview nor Team link (both point at
+    // /dashboard/maintainer) should remain active on a different nested
+    // dashboard path.
+    expect(activeLink("Overview")).not.toHaveClass("bg-indigo-50");
+    expect(activeLink("Team")).not.toHaveClass("bg-indigo-50");
+    unmount();
+  });
+
+  it("still highlights the dashboard overview link on its exact route", () => {
+    mockedUsePathname.mockReturnValue("/dashboard/maintainer");
+    renderMaintainerShell();
+
+    expect(activeLink("Overview")).toHaveClass("bg-indigo-50");
+  });
+});
diff --git a/src/components/dashboard/DashboardShell.tsx b/src/components/dashboard/DashboardShell.tsx
index d47dbf1..bafeed4 100644
--- a/src/components/dashboard/DashboardShell.tsx
+++ b/src/components/dashboard/DashboardShell.tsx
@@ -48,6 +48,18 @@ const roleSwitcher: { role: Role; label: string; href: string }[] = [
   { role: "sponsor", label: "Sponsor", href: "/dashboard/sponsor" },
 ];
 
+function isNavItemActive(pathname: string, href: string): boolean {
+  // Dashboard overview links are single-page destinations: nested routes
+  // under a different dashboard section must not keep them highlighted.
+  if (href.startsWith("/dashboard/")) {
+    return pathname === href;
+  }
+
+  // Top-level sections (e.g. /issues, /milestones) should stay highlighted
+  // while the user is drilled into a child page such as /issues/abc123.
+  return pathname === href || pathname.startsWith(`${href}/`);
+}
+
 export function DashboardShell({
   role,
   title,
@@ -75,7 +87,7 @@ export function DashboardShell({
           </p>
           <nav className="mt-3 space-y-1">
             {items.map((item) => {
-              const active = pathname === item.href;
+              const active = isNavItemActive(pathname, item.href);
               return (
                 <Link
                   key={item.label}