diff --git a/agent/agent.go b/agent/agent.go
index c7a785f8d5da1..5512f04db28ea 100644
--- a/agent/agent.go
+++ b/agent/agent.go
@@ -91,6 +91,7 @@ type Options struct {
 	ModifiedProcesses chan []*agentproc.Process
 	// ProcessManagementTick is used for testing process priority management.
 	ProcessManagementTick <-chan time.Time
+	BlockFileTransfer     bool
 }
 
 type Client interface {
@@ -184,6 +185,7 @@ func New(options Options) Agent {
 		modifiedProcs:                      options.ModifiedProcesses,
 		processManagementTick:              options.ProcessManagementTick,
 		logSender:                          agentsdk.NewLogSender(options.Logger),
+		blockFileTransfer:                  options.BlockFileTransfer,
 
 		prometheusRegistry: prometheusRegistry,
 		metrics:            newAgentMetrics(prometheusRegistry),
@@ -239,6 +241,7 @@ type agent struct {
 	sessionToken                       atomic.Pointer[string]
 	sshServer                          *agentssh.Server
 	sshMaxTimeout                      time.Duration
+	blockFileTransfer                  bool
 
 	lifecycleUpdate            chan struct{}
 	lifecycleReported          chan codersdk.WorkspaceAgentLifecycle
@@ -277,6 +280,7 @@ func (a *agent) init() {
 		AnnouncementBanners: func() *[]codersdk.BannerConfig { return a.announcementBanners.Load() },
 		UpdateEnv:           a.updateCommandEnv,
 		WorkingDirectory:    func() string { return a.manifest.Load().Directory },
+		BlockFileTransfer:   a.blockFileTransfer,
 	})
 	if err != nil {
 		panic(err)
diff --git a/agent/agent_test.go b/agent/agent_test.go
index a008a60a2362e..4b0712bcf93c6 100644
--- a/agent/agent_test.go
+++ b/agent/agent_test.go
@@ -970,6 +970,99 @@ func TestAgent_SCP(t *testing.T) {
 	require.NoError(t, err)
 }
 
+func TestAgent_FileTransferBlocked(t *testing.T) {
+	t.Parallel()
+
+	assertFileTransferBlocked := func(t *testing.T, errorMessage string) {
+		// NOTE: Checking content of the error message is flaky. Most likely there is a race condition, which results
+		// in stopping the client in different phases, and returning different errors:
+		// - client read the full error message: File transfer has been disabled.
+		// - client's stream was terminated before reading the error message: EOF
+		// - client just read the error code (Windows): Process exited with status 65
+		isErr := strings.Contains(errorMessage, agentssh.BlockedFileTransferErrorMessage) ||
+			strings.Contains(errorMessage, "EOF") ||
+			strings.Contains(errorMessage, "Process exited with status 65")
+		require.True(t, isErr, fmt.Sprintf("Message: "+errorMessage))
+	}
+
+	t.Run("SFTP", func(t *testing.T) {
+		t.Parallel()
+
+		ctx, cancel := context.WithTimeout(context.Background(), testutil.WaitLong)
+		defer cancel()
+
+		//nolint:dogsled
+		conn, _, _, _, _ := setupAgent(t, agentsdk.Manifest{}, 0, func(_ *agenttest.Client, o *agent.Options) {
+			o.BlockFileTransfer = true
+		})
+		sshClient, err := conn.SSHClient(ctx)
+		require.NoError(t, err)
+		defer sshClient.Close()
+		_, err = sftp.NewClient(sshClient)
+		require.Error(t, err)
+		assertFileTransferBlocked(t, err.Error())
+	})
+
+	t.Run("SCP with go-scp package", func(t *testing.T) {
+		t.Parallel()
+
+		ctx, cancel := context.WithTimeout(context.Background(), testutil.WaitLong)
+		defer cancel()
+
+		//nolint:dogsled
+		conn, _, _, _, _ := setupAgent(t, agentsdk.Manifest{}, 0, func(_ *agenttest.Client, o *agent.Options) {
+			o.BlockFileTransfer = true
+		})
+		sshClient, err := conn.SSHClient(ctx)
+		require.NoError(t, err)
+		defer sshClient.Close()
+		scpClient, err := scp.NewClientBySSH(sshClient)
+		require.NoError(t, err)
+		defer scpClient.Close()
+		tempFile := filepath.Join(t.TempDir(), "scp")
+		err = scpClient.CopyFile(context.Background(), strings.NewReader("hello world"), tempFile, "0755")
+		require.Error(t, err)
+		assertFileTransferBlocked(t, err.Error())
+	})
+
+	t.Run("Forbidden commands", func(t *testing.T) {
+		t.Parallel()
+
+		for _, c := range agentssh.BlockedFileTransferCommands {
+			t.Run(c, func(t *testing.T) {
+				t.Parallel()
+
+				ctx, cancel := context.WithTimeout(context.Background(), testutil.WaitLong)
+				defer cancel()
+
+				//nolint:dogsled
+				conn, _, _, _, _ := setupAgent(t, agentsdk.Manifest{}, 0, func(_ *agenttest.Client, o *agent.Options) {
+					o.BlockFileTransfer = true
+				})
+				sshClient, err := conn.SSHClient(ctx)
+				require.NoError(t, err)
+				defer sshClient.Close()
+
+				session, err := sshClient.NewSession()
+				require.NoError(t, err)
+				defer session.Close()
+
+				stdout, err := session.StdoutPipe()
+				require.NoError(t, err)
+
+				//nolint:govet // we don't need `c := c` in Go 1.22
+				err = session.Start(c)
+				require.NoError(t, err)
+				defer session.Close()
+
+				msg, err := io.ReadAll(stdout)
+				require.NoError(t, err)
+				assertFileTransferBlocked(t, string(msg))
+			})
+		}
+	})
+}
+
 func TestAgent_EnvironmentVariables(t *testing.T) {
 	t.Parallel()
 	key := "EXAMPLE"
diff --git a/agent/agentssh/agentssh.go b/agent/agentssh/agentssh.go
index 54e5a3f41223e..5903220975b8c 100644
--- a/agent/agentssh/agentssh.go
+++ b/agent/agentssh/agentssh.go
@@ -52,8 +52,16 @@ const (
 	// MagicProcessCmdlineJetBrains is a string in a process's command line that
 	// uniquely identifies it as JetBrains software.
 	MagicProcessCmdlineJetBrains = "idea.vendor.name=JetBrains"
+
+	// BlockedFileTransferErrorCode indicates that SSH server restricted the raw command from performing
+	// the file transfer.
+	BlockedFileTransferErrorCode    = 65 // Error code: host not allowed to connect
+	BlockedFileTransferErrorMessage = "File transfer has been disabled."
 )
 
+// BlockedFileTransferCommands contains a list of restricted file transfer commands.
+var BlockedFileTransferCommands = []string{"nc", "rsync", "scp", "sftp"}
+
 // Config sets configuration parameters for the agent SSH server.
 type Config struct {
 	// MaxTimeout sets the absolute connection timeout, none if empty. If set to
@@ -74,6 +82,8 @@ type Config struct {
 	// X11SocketDir is the directory where X11 sockets are created. Default is
 	// /tmp/.X11-unix.
 	X11SocketDir string
+	// BlockFileTransfer restricts use of file transfer applications.
+	BlockFileTransfer bool
 }
 
 type Server struct {
@@ -272,6 +282,18 @@ func (s *Server) sessionHandler(session ssh.Session) {
 		extraEnv = append(extraEnv, fmt.Sprintf("DISPLAY=:%d.0", x11.ScreenNumber))
 	}
 
+	if s.fileTransferBlocked(session) {
+		s.logger.Warn(ctx, "file transfer blocked", slog.F("session_subsystem", session.Subsystem()), slog.F("raw_command", session.RawCommand()))
+
+		if session.Subsystem() == "" { // sftp does not expect error, otherwise it fails with "package too long"
+			// Response format: <status_code><message body>\n
+			errorMessage := fmt.Sprintf("\x02%s\n", BlockedFileTransferErrorMessage)
+			_, _ = session.Write([]byte(errorMessage))
+		}
+		_ = session.Exit(BlockedFileTransferErrorCode)
+		return
+	}
+
 	switch ss := session.Subsystem(); ss {
 	case "":
 	case "sftp":
@@ -322,6 +344,37 @@ func (s *Server) sessionHandler(session ssh.Session) {
 	_ = session.Exit(0)
 }
 
+// fileTransferBlocked method checks if the file transfer commands should be blocked.
+//
+// Warning: consider this mechanism as "Do not trespass" sign, as a violator can still ssh to the host,
+// smuggle the `scp` binary, or just manually send files outside with `curl` or `ftp`.
+// If a user needs a more sophisticated and battle-proof solution, consider full endpoint security.
+func (s *Server) fileTransferBlocked(session ssh.Session) bool {
+	if !s.config.BlockFileTransfer {
+		return false // file transfers are permitted
+	}
+	// File transfers are restricted.
+
+	if session.Subsystem() == "sftp" {
+		return true
+	}
+
+	cmd := session.Command()
+	if len(cmd) == 0 {
+		return false // no command?
+	}
+
+	c := cmd[0]
+	c = filepath.Base(c) // in case the binary is absolute path, /usr/sbin/scp
+
+	for _, cmd := range BlockedFileTransferCommands {
+		if cmd == c {
+			return true
+		}
+	}
+	return false
+}
+
 func (s *Server) sessionStart(logger slog.Logger, session ssh.Session, extraEnv []string) (retErr error) {
 	ctx := session.Context()
 	env := append(session.Environ(), extraEnv...)
diff --git a/cli/agent.go b/cli/agent.go
index 1f91f1c98bb8d..5465aeedd9302 100644
--- a/cli/agent.go
+++ b/cli/agent.go
@@ -27,6 +27,7 @@ import (
 	"cdr.dev/slog/sloggers/slogstackdriver"
 	"github.com/coder/coder/v2/agent"
 	"github.com/coder/coder/v2/agent/agentproc"
+	"github.com/coder/coder/v2/agent/agentssh"
 	"github.com/coder/coder/v2/agent/reaper"
 	"github.com/coder/coder/v2/buildinfo"
 	"github.com/coder/coder/v2/codersdk"
@@ -48,6 +49,7 @@ func (r *RootCmd) workspaceAgent() *serpent.Command {
 		slogHumanPath       string
 		slogJSONPath        string
 		slogStackdriverPath string
+		blockFileTransfer   bool
 	)
 	cmd := &serpent.Command{
 		Use:   "agent",
@@ -314,6 +316,8 @@ func (r *RootCmd) workspaceAgent() *serpent.Command {
 				// Intentionally set this to nil. It's mainly used
 				// for testing.
 				ModifiedProcesses: nil,
+
+				BlockFileTransfer: blockFileTransfer,
 			})
 
 			promHandler := agent.PrometheusMetricsHandler(prometheusRegistry, logger)
@@ -417,6 +421,13 @@ func (r *RootCmd) workspaceAgent() *serpent.Command {
 			Default:     "",
 			Value:       serpent.StringOf(&slogStackdriverPath),
 		},
+		{
+			Flag:        "block-file-transfer",
+			Default:     "false",
+			Env:         "CODER_AGENT_BLOCK_FILE_TRANSFER",
+			Description: fmt.Sprintf("Block file transfer using known applications: %s.", strings.Join(agentssh.BlockedFileTransferCommands, ",")),
+			Value:       serpent.BoolOf(&blockFileTransfer),
+		},
 	}
 
 	return cmd
diff --git a/cli/testdata/coder_agent_--help.golden b/cli/testdata/coder_agent_--help.golden
index 372395c4ba5fe..d6982fda18e7c 100644
--- a/cli/testdata/coder_agent_--help.golden
+++ b/cli/testdata/coder_agent_--help.golden
@@ -18,6 +18,9 @@ OPTIONS:
       --auth string, $CODER_AGENT_AUTH (default: token)
           Specify the authentication type to use for the agent.
 
+      --block-file-transfer bool, $CODER_AGENT_BLOCK_FILE_TRANSFER (default: false)
+          Block file transfer using known applications: nc,rsync,scp,sftp.
+
       --debug-address string, $CODER_AGENT_DEBUG_ADDRESS (default: 127.0.0.1:2113)
           The bind address to serve a debug HTTP server.