diff --git a/scripts/hookd/README.md b/scripts/hookd/README.md
new file mode 100644
index 000000000..c4e902be8
--- /dev/null
+++ b/scripts/hookd/README.md
@@ -0,0 +1,105 @@
+# hookd
+
+A daemon process for PEP 517 build hook requests.
+
+
+## Example
+```
+PYTHONPATH=scripts/hookd/backends ./scripts/hookd/hookd.py < scripts/hookd/example.in
+```
+
+## Command line
+
+
+Build hooks should be run from the source tree of the project.
+
+The script can either be invoked from the project source tree, or the source
+tree path can be provided as an argument e.g. `hookd.py /path/to/source`.
+
+## Messages
+
+The daemon communicates with bidirectional messages over STDIN and STDOUT.
+Each message is terminated with a newline.
+Newlines in values will be escaped as `\\n`.
+
+``````
+READY
+    
+    Signals that the daemon is ready to do work.
+    Indicates that the daemon has finished running a hook.
+
+EXPECT <name>
+
+    Signals the input kind that the daemon expects.
+    The name MUST be one of:
+        - action
+            Either "run" or "shutdown" instruction to the daemon
+        - build_backend
+            A PEP 517 import path for the build backend
+        - hook_name
+            A PEP 517 hook function name
+        - wheel_directory
+            A path
+        - sdist_directory
+            A path
+        - config_settings
+            A JSON payload
+        - metadata_directory
+            A path
+
+DEBUG <message>
+
+    A debugging message.
+
+STDOUT <path>
+
+    Sent before a hook is imported.
+    The path to a file the hook's stdout will be directed to.
+    The caller SHOULD delete this file when done with it.
+
+STDERR <path>
+
+    Sent before a hook is imported.
+    The path to a file the hook's stderr will be directed to.
+    The caller SHOULD delete this file when done with it.
+
+OK <data>
+
+    Sent when a hook completes successfully.
+    The return value of the hook should follow.
+
+ERROR <kind> <message>
+
+    Sent when a hook fails.
+    The error kind MUST be one of:
+        - MissingBackendModule
+        - MissingBackendAttribute
+        - MalformedBackendName
+        - BackendImportError
+        - InvalidHookName
+        - InvalidAction
+        - UnsupportedHook
+        - MalformedHookArgument
+        - HookRuntimeError
+    The message is a string describing the error. 
+
+FATAL <kind> <message>
+
+    Sent when the daemon crashes due to an unhandled error.
+
+TRACEBACK <lines>
+
+    MAY be sent after a FATAL or ERROR message.
+    Contains the traceback for the error.
+
+SHUTDOWN
+    
+    Signals that the daemon is exiting cleanly.
+```
+    
+## Caveats
+
+The following caveats apply when using hookd:
+
+- Imports are cached for the duration of the daemon. Changes to the build backend packages will not be detected without restart.
+- `BaseExceptions` raised during hook execution will be swallowed, unless from a SIGINT or SIGTERM.
diff --git a/scripts/hookd/example.in b/scripts/hookd/example.in
new file mode 100644
index 000000000..d6f64da5b
--- /dev/null
+++ b/scripts/hookd/example.in
@@ -0,0 +1,7 @@
+run
+ok_backend
+build_wheel
+foo
+
+
+shutdown
diff --git a/scripts/hookd/hookd.py b/scripts/hookd/hookd.py
old mode 100644
new mode 100755
index d7bd7317a..b9fa0265c
--- a/scripts/hookd/hookd.py
+++ b/scripts/hookd/hookd.py
@@ -1,7 +1,8 @@
+#!/usr/bin/env python3
 """
 A daemon process for PEP 517 build hook requests.
 
-See https://peps.python.org/pep-0517/
+See the `README` for details.
 """
 from __future__ import annotations
 
@@ -19,7 +20,7 @@ from functools import cache
 from pathlib import Path
 from typing import Any, Literal, Self, TextIO
 
-DEBUG_ON = os.getenv("DAEMON_DEBUG") is not None
+SOURCE_TREE = os.getenv("HOOKD_SOURCE_TREE")
 
 # Arbitrary nesting is allowed, but all keys and terminal values are strings
 StringDict = dict[str, "str | StringDict"]
@@ -302,23 +303,6 @@ def parse_config_settings(buffer: TextIO) -> StringDict | None:
         raise MalformedHookArgument(data, HookArgument.config_settings) from exc
 
 
-@contextmanager
-def tmpchdir(path: str | Path) -> Path:
-    """
-    Temporarily change the working directory for this process.
-
-    WARNING: This function is not safe to concurrent usage.
-    """
-    path = Path(path).resolve()
-    cwd = os.getcwd()
-
-    try:
-        os.chdir(path)
-        yield path
-    finally:
-        os.chdir(cwd)
-
-
 @contextmanager
 def redirect_sys_stream(name: Literal["stdout", "stderr"]):
     """
@@ -386,7 +370,7 @@ def write_safe(file: TextIO, *args: str):
 
 
 def send_expect(file: TextIO, name: str):
-    write_safe(file, "EXPECT", name.replace("_", "-"))
+    write_safe(file, "EXPECT", name)
 
 
 def send_ready(file: TextIO):
@@ -526,11 +510,26 @@ def main():
             send_fatal(stdout, exc)
             raise
 
-        # Do not run multiple iterations in debug mode
-        # TODO(zanieb): Probably remove this after development is stable
-        if DEBUG_ON:
-            return
-
 
 if __name__ == "__main__":
+    if len(sys.argv) > 2:
+        print(
+            "Invalid usage. Expected one argument specifying the path to the source tree.",
+            file=sys.stderr,
+        )
+        sys.exit(1)
+
+    try:
+        source_tree = Path(sys.argv[1]).resolve()
+        os.chdir(source_tree)
+        send_debug(sys.stdout, "changed working directory to", source_tree)
+    except IndexError:
+        pass
+    except ValueError as exc:
+        print(
+            f"Invalid usage. Expected path argument but validation failed: {exc}",
+            file=sys.stderr,
+        )
+        sys.exit(1)
+
     main()