diff --git a/src/specify_cli/extensions/_commands.py b/src/specify_cli/extensions/_commands.py
index 3b60b6d52d..2104d9809e 100644
--- a/src/specify_cli/extensions/_commands.py
+++ b/src/specify_cli/extensions/_commands.py
@@ -207,22 +207,30 @@ def extension_list(
     available: bool = typer.Option(False, "--available", help="Show available extensions from catalog"),
     all_extensions: bool = typer.Option(False, "--all", help="Show both installed and available"),
 ):
-    """List installed extensions."""
-    from . import ExtensionManager
+    """List installed extensions, and available catalog extensions with --available/--all."""
+    from . import ExtensionManager, ExtensionCatalog, ExtensionError
 
     project_root = _require_specify_project()
     manager = ExtensionManager(project_root)
     installed = manager.list_installed()
 
-    if not installed and not (available or all_extensions):
+    # Default (no flags) lists installed; --all also lists installed.
+    # --available alone lists only catalog extensions, not installed.
+    show_installed = all_extensions or not available
+    show_available = available or all_extensions
+
+    if not installed and not show_available:
         console.print("[yellow]No extensions installed.[/yellow]")
         console.print("\nInstall an extension with:")
         console.print("  specify extension add <extension-name>")
         return
 
-    if installed:
+    if show_installed:
         console.print("\n[bold cyan]Installed Extensions:[/bold cyan]\n")
 
+        if not installed:
+            console.print("  [dim]No extensions installed.[/dim]")
+            console.print()
         for ext in installed:
             status_icon = "✓" if ext["enabled"] else "✗"
             status_color = "green" if ext["enabled"] else "red"
@@ -233,9 +241,39 @@ def extension_list(
             console.print(f"     Commands: {ext['command_count']} | Hooks: {ext['hook_count']} | Priority: {ext['priority']} | Status: {'Enabled' if ext['enabled'] else 'Disabled'}")
             console.print()
 
-    if available or all_extensions:
-        console.print("\nInstall an extension:")
-        console.print("  [cyan]specify extension add <name>[/cyan]")
+    if show_available:
+        # Query the catalog and show extensions that are not already installed.
+        catalog = ExtensionCatalog(project_root)
+        installed_ids = {ext["id"] for ext in installed}
+
+        try:
+            results = catalog.search()
+        except ExtensionError as e:
+            console.print(f"\n[red]Error:[/red] Could not query extension catalog: {_escape_markup(str(e))}")
+            console.print("[dim]The catalog may be temporarily unavailable. Try again later.[/dim]")
+            raise typer.Exit(1)
+
+        available_exts = [ext for ext in results if ext.get("id") not in installed_ids]
+
+        console.print("\n[bold cyan]Available Extensions:[/bold cyan]\n")
+        if not available_exts:
+            console.print("  [dim]No additional extensions available in the catalog.[/dim]")
+        else:
+            for ext in available_exts:
+                # Catalog fields are untrusted (remote/community catalogs); escape
+                # before embedding in Rich markup to prevent markup injection.
+                safe_id = _escape_markup(str(ext.get("id", "")))
+                verified_badge = " [green]✓ Verified[/green]" if ext.get("verified") else ""
+                console.print(f"  [bold]{_escape_markup(str(ext['name']))}[/bold] (v{_escape_markup(str(ext['version']))}){verified_badge}")
+                console.print(f"     [dim]{safe_id}[/dim]")
+                console.print(f"     {_escape_markup(str(ext.get('description', '')))}")
+                install_allowed = ext.get("_install_allowed", True)
+                if install_allowed:
+                    console.print(f"     [cyan]Install:[/cyan] specify extension add {safe_id}")
+                else:
+                    catalog_name = _escape_markup(str(ext.get("_catalog_name", "")))
+                    console.print(f"     [yellow]Discovery only — not installable from '{catalog_name}'[/yellow]")
+                console.print()
 
 
 @catalog_app.command("list")
diff --git a/tests/test_extension_add_path_traversal.py b/tests/test_extension_add_path_traversal.py
new file mode 100644
index 0000000000..e426e34b1e
--- /dev/null
+++ b/tests/test_extension_add_path_traversal.py
@@ -0,0 +1,69 @@
+"""Security test for `specify extension add <label> --from <url>`.
+
+The raw extension label is interpolated into the downloaded ZIP filename. A
+label containing path separators (e.g. "../../etc/evil") must not let the
+download escape the downloads cache directory. The handler sanitizes the
+label before building the filename; this test asserts the resulting path
+stays inside the downloads dir.
+"""
+
+import contextlib
+
+import pytest
+from typer.testing import CliRunner
+
+from specify_cli import app
+from specify_cli.extensions import ExtensionManager
+
+runner = CliRunner()
+
+
+@pytest.fixture
+def project_dir(tmp_path):
+    proj_dir = tmp_path / "project"
+    proj_dir.mkdir()
+    (proj_dir / ".specify").mkdir()
+    (proj_dir / ".specify" / "config.toml").write_text("ai = 'claude'")
+    return proj_dir
+
+
+def test_add_from_url_sanitizes_traversal_label(project_dir, monkeypatch):
+    monkeypatch.chdir(project_dir)
+
+    captured = {}
+
+    @contextlib.contextmanager
+    def fake_open_url(url, timeout=60):
+        class _Resp:
+            def read(self):
+                return b"not-a-real-zip"
+        yield _Resp()
+
+    monkeypatch.setattr("specify_cli.authentication.http.open_url", fake_open_url)
+
+    def fake_install_from_zip(self, zip_path, *args, **kwargs):
+        captured["zip_path"] = zip_path
+        # Stop the flow before real install/registration runs.
+        raise RuntimeError("stop after capture")
+
+    monkeypatch.setattr(ExtensionManager, "install_from_zip", fake_install_from_zip)
+
+    malicious = "../../../etc/evil"
+    runner.invoke(
+        app,
+        ["extension", "add", malicious, "--from", "https://example.com/payload.zip"],
+        obj={"project_root": project_dir},
+        input="y\n",  # confirm the "Untrusted Source" prompt for --from URLs
+    )
+
+    zip_path = captured.get("zip_path")
+    assert zip_path is not None, "install_from_zip was never reached"
+
+    download_dir = (project_dir / ".specify" / "extensions" / ".cache" / "downloads").resolve()
+    resolved = zip_path.resolve()
+
+    # The download must stay inside the downloads cache dir...
+    assert resolved.parent == download_dir
+    # ...and the filename must not carry path separators from the raw label.
+    assert "/" not in zip_path.name
+    assert ".." not in zip_path.name
diff --git a/tests/test_extension_list_available.py b/tests/test_extension_list_available.py
new file mode 100644
index 0000000000..911a6d2881
--- /dev/null
+++ b/tests/test_extension_list_available.py
@@ -0,0 +1,135 @@
+"""Behavior tests for `specify extension list --available/--all`.
+
+These flags were documented from the original extension system (#1551) as
+"Show available extensions from catalog", but the implementation was a static
+hint that never queried the catalog. This suite covers the wired-up behavior:
+the catalog is queried, already-installed IDs are filtered out, and a clear
+error is surfaced when the catalog is unavailable.
+"""
+
+import pytest
+from typer.testing import CliRunner
+
+from specify_cli import app
+from specify_cli.extensions import ExtensionManager, ExtensionCatalog, ExtensionError
+
+runner = CliRunner()
+
+
+@pytest.fixture
+def project_dir(tmp_path):
+    """Create a minimal spec-kit project directory."""
+    proj_dir = tmp_path / "project"
+    proj_dir.mkdir()
+    (proj_dir / ".specify").mkdir()
+    (proj_dir / ".specify" / "config.toml").write_text("ai = 'claude'")
+    return proj_dir
+
+
+def _catalog_entry(ext_id, name, version="1.0.0", verified=False, install_allowed=True, catalog_name="default"):
+    return {
+        "id": ext_id,
+        "name": name,
+        "version": version,
+        "description": f"{name} description",
+        "verified": verified,
+        "_install_allowed": install_allowed,
+        "_catalog_name": catalog_name,
+    }
+
+
+def test_list_available_queries_catalog_and_filters_installed(project_dir, monkeypatch):
+    """--available must query the catalog and drop already-installed IDs."""
+    monkeypatch.chdir(project_dir)
+
+    monkeypatch.setattr(ExtensionManager, "list_installed", lambda self: [{"id": "already-installed"}])
+    monkeypatch.setattr(ExtensionCatalog, "search", lambda self: [
+        _catalog_entry("already-installed", "Already Installed"),
+        _catalog_entry("fresh-ext", "Fresh Ext", verified=True),
+    ])
+
+    result = runner.invoke(app, ["extension", "list", "--available"], obj={"project_root": project_dir})
+
+    assert result.exit_code == 0
+    assert "Available Extensions:" in result.output
+    # Uninstalled catalog extension is shown...
+    assert "fresh-ext" in result.output
+    assert "✓ Verified" in result.output
+    assert "specify extension add fresh-ext" in result.output
+    # ...and the installed one is filtered out.
+    assert "already-installed" not in result.output
+
+
+def test_list_available_marks_discovery_only_entries(project_dir, monkeypatch):
+    """Entries whose catalog disallows install render a discovery-only note."""
+    monkeypatch.chdir(project_dir)
+
+    monkeypatch.setattr(ExtensionManager, "list_installed", lambda self: [])
+    monkeypatch.setattr(ExtensionCatalog, "search", lambda self: [
+        _catalog_entry("locked-ext", "Locked Ext", install_allowed=False, catalog_name="curated"),
+    ])
+
+    result = runner.invoke(app, ["extension", "list", "--available"], obj={"project_root": project_dir})
+
+    assert result.exit_code == 0
+    assert "Discovery only" in result.output
+    assert "curated" in result.output
+    assert "specify extension add locked-ext" not in result.output
+
+
+def test_list_available_empty_catalog_message(project_dir, monkeypatch):
+    """An empty (post-filter) catalog reports no additional extensions."""
+    monkeypatch.chdir(project_dir)
+
+    monkeypatch.setattr(ExtensionManager, "list_installed", lambda self: [])
+    monkeypatch.setattr(ExtensionCatalog, "search", lambda self: [])
+
+    result = runner.invoke(app, ["extension", "list", "--available"], obj={"project_root": project_dir})
+
+    assert result.exit_code == 0
+    assert "Available Extensions:" in result.output
+    assert "No additional extensions available" in result.output
+
+
+def test_list_available_catalog_error_exits(project_dir, monkeypatch):
+    """A catalog failure surfaces a clear error and exits non-zero."""
+    monkeypatch.chdir(project_dir)
+
+    def _boom(self):
+        raise ExtensionError("catalog unreachable")
+
+    monkeypatch.setattr(ExtensionManager, "list_installed", lambda self: [])
+    monkeypatch.setattr(ExtensionCatalog, "search", _boom)
+
+    result = runner.invoke(app, ["extension", "list", "--available"], obj={"project_root": project_dir})
+
+    assert result.exit_code == 1
+    assert "Could not query extension catalog" in result.output
+    assert "catalog unreachable" in result.output
+
+
+def test_list_all_shows_installed_and_available(project_dir, monkeypatch):
+    """--all lists installed extensions and available catalog extensions."""
+    monkeypatch.chdir(project_dir)
+
+    monkeypatch.setattr(ExtensionManager, "list_installed", lambda self: [{
+        "id": "my-ext",
+        "name": "My Ext",
+        "version": "2.0.0",
+        "description": "installed one",
+        "command_count": 1,
+        "hook_count": 0,
+        "priority": 10,
+        "enabled": True,
+    }])
+    monkeypatch.setattr(ExtensionCatalog, "search", lambda self: [
+        _catalog_entry("other-ext", "Other Ext"),
+    ])
+
+    result = runner.invoke(app, ["extension", "list", "--all"], obj={"project_root": project_dir})
+
+    assert result.exit_code == 0
+    assert "Installed Extensions:" in result.output
+    assert "My Ext" in result.output
+    assert "Available Extensions:" in result.output
+    assert "other-ext" in result.output