diff --git a/pyproject.toml b/pyproject.toml
index 039dbe1..b326d71 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -21,6 +21,7 @@ importlib-metadata = ">=6.0.0"
 httpx = ">=0.27.0"
 tomli = { version = "^2.0.1", python = "<3.11" }
 pyyaml = "^6.0.0"
+pyte = "^0.8.0"
 
 [tool.poetry.group.dev.dependencies]
 pytest = "^8.0.0"
diff --git a/src/textual_webterm/local_server.py b/src/textual_webterm/local_server.py
index e996645..b6b73bf 100644
--- a/src/textual_webterm/local_server.py
+++ b/src/textual_webterm/local_server.py
@@ -14,6 +14,7 @@ from pathlib import Path
 from typing import TYPE_CHECKING
 
 import aiohttp
+import pyte
 from aiohttp import WSMsgType, web
 from rich.ansi import AnsiDecoder
 from rich.console import Console
@@ -107,26 +108,17 @@ def _rewrite_svg_fonts(svg: str) -> str:
     return svg
 
 
-def _apply_carriage_returns(text: str) -> list[str]:
-    """Interpret \r as 'return to start of line' (overwrite), not a newline.
+def _apply_carriage_returns(text: str, width: int = 80, height: int = 24) -> list[str]:
+    """Use pyte terminal emulator to properly interpret ANSI escape sequences.
 
-    This prevents terminals that redraw a single line (progress bars, prompts) from
-    expanding into many duplicate lines in screenshots.
+    This handles cursor positioning, screen clearing, and other terminal control
+    codes that cause issues like tmux status bars "creeping up" in screenshots.
     """
-
-    lines: list[str] = []
-    current: list[str] = []
-    for ch in text:
-        if ch == "\r":
-            current.clear()
-        elif ch == "\n":
-            lines.append("".join(current))
-            current.clear()
-        else:
-            current.append(ch)
-    if current:
-        lines.append("".join(current))
-    return lines
+    screen = pyte.Screen(width, height)
+    stream = pyte.Stream(screen)
+    stream.feed(text)
+    # Return lines from the display, stripping trailing whitespace
+    return [line.rstrip() for line in screen.display]
 
 
 class LocalServer:
@@ -490,9 +482,9 @@ class LocalServer:
             height = DISCONNECT_RESIZE[1]
         height = max(5, min(200, height))
 
-        lines = _apply_carriage_returns(ansi_text)
-        if len(lines) > height:
-            ansi_text = "\n".join(lines[-height:]) + "\n"
+        # Use pyte terminal emulator to get clean screen state
+        lines = _apply_carriage_returns(ansi_text, width, height)
+        ansi_text = "\n".join(lines)
 
         now = asyncio.get_event_loop().time()
         ttl = self._get_screenshot_cache_ttl(route_key, now)
diff --git a/tests/test_local_server_unit.py b/tests/test_local_server_unit.py
index 4e6636e..51aa57d 100644
--- a/tests/test_local_server_unit.py
+++ b/tests/test_local_server_unit.py
@@ -111,8 +111,24 @@ class TestLocalServerHelpers:
     """Tests for LocalServer helper methods."""
 
     def test_apply_carriage_returns_overwrites_line(self):
-        text = "hello\rworld\nnext"
-        assert _apply_carriage_returns(text) == ["world", "next"]
+        text = "hello\rworld\r\nnext"
+        # pyte terminal emulator interprets CR properly - overwrites hello with world
+        lines = _apply_carriage_returns(text, width=80, height=24)
+        # First line should have "world" (overwritten), second line "next"
+        assert lines[0] == "world"
+        assert lines[1] == "next"
+
+    def test_apply_carriage_returns_handles_cursor_positioning(self):
+        # Simulate tmux-style cursor positioning to row 5, column 1 (\x1b[5;1H)
+        # Then clear to end of line (\x1b[K) and write new content
+        # Use \r\n for proper line endings
+        text = "line1\r\nline2\r\nline3\r\nline4\r\nline5\x1b[5;1H\x1b[Kupdated"
+        lines = _apply_carriage_returns(text, width=80, height=10)
+        # Line 5 (index 4) should be overwritten with "updated"
+        assert lines[4] == "updated"
+        # Previous lines should remain
+        assert lines[0] == "line1"
+        assert lines[1] == "line2"
 
     @pytest.mark.asyncio
     async def test_keyboard_interrupt_closes_sessions_and_websockets(self, server, monkeypatch):
@@ -755,7 +771,7 @@ class TestLocalServerMoreCoverage:
 
         captured = {"len": None}
 
-        def apply_cr(text: str):
+        def apply_cr(text: str, width: int = 80, height: int = 24):
             captured["len"] = len(text)
             return ["x"]