diff --git a/backend/prisma/migrations/20260627190000_milestone1171_internal_session_foundation/migration.sql b/backend/prisma/migrations/20260627190000_milestone1171_internal_session_foundation/migration.sql
new file mode 100644
index 0000000..f9b6f29
--- /dev/null
+++ b/backend/prisma/migrations/20260627190000_milestone1171_internal_session_foundation/migration.sql
@@ -0,0 +1,30 @@
+CREATE TYPE "AccountSessionStatus" AS ENUM ('ACTIVE', 'REVOKED', 'EXPIRED');
+
+CREATE TABLE "account_sessions" (
+  "id" UUID NOT NULL,
+  "user_id" UUID NOT NULL,
+  "refresh_token_hash" TEXT NOT NULL,
+  "status" "AccountSessionStatus" NOT NULL DEFAULT 'ACTIVE',
+  "access_token_version" INTEGER NOT NULL DEFAULT 1,
+  "expires_at" TIMESTAMP(3) NOT NULL,
+  "last_refreshed_at" TIMESTAMP(3),
+  "revoked_at" TIMESTAMP(3),
+  "created_at" TIMESTAMP(3) NOT NULL DEFAULT CURRENT_TIMESTAMP,
+  "updated_at" TIMESTAMP(3) NOT NULL,
+  CONSTRAINT "account_sessions_pkey" PRIMARY KEY ("id")
+);
+
+CREATE UNIQUE INDEX "account_sessions_refresh_token_hash_key"
+ON "account_sessions"("refresh_token_hash");
+
+CREATE INDEX "account_sessions_user_id_idx"
+ON "account_sessions"("user_id");
+
+CREATE INDEX "account_sessions_status_expires_at_idx"
+ON "account_sessions"("status", "expires_at");
+
+ALTER TABLE "account_sessions"
+ADD CONSTRAINT "account_sessions_user_id_fkey"
+FOREIGN KEY ("user_id") REFERENCES "users"("id")
+ON DELETE CASCADE
+ON UPDATE CASCADE;
diff --git a/backend/prisma/schema.prisma b/backend/prisma/schema.prisma
index e3c4880..9e263bb 100644
--- a/backend/prisma/schema.prisma
+++ b/backend/prisma/schema.prisma
@@ -33,6 +33,7 @@ model User {
   outgoingTransfers       OwnershipTransfer[]      @relation("OwnershipTransferFromUser")
   incomingTransfers       OwnershipTransfer[]      @relation("OwnershipTransferToUser")
   initiatedTransfers      OwnershipTransfer[]      @relation("OwnershipTransferRequestedByUser")
+  accountSessions         AccountSession[]
 
   @@map("users")
 }
@@ -282,6 +283,24 @@ model OwnershipTransfer {
   @@map("ownership_transfers")
 }
 
+model AccountSession {
+  id                 String               @id @default(uuid()) @db.Uuid
+  userId             String               @map("user_id") @db.Uuid
+  refreshTokenHash   String               @unique @map("refresh_token_hash")
+  status             AccountSessionStatus @default(ACTIVE)
+  accessTokenVersion Int                  @default(1) @map("access_token_version")
+  expiresAt          DateTime             @map("expires_at")
+  lastRefreshedAt    DateTime?            @map("last_refreshed_at")
+  revokedAt          DateTime?            @map("revoked_at")
+  createdAt          DateTime             @default(now()) @map("created_at")
+  updatedAt          DateTime             @updatedAt @map("updated_at")
+  user               User                 @relation(fields: [userId], references: [id], onDelete: Cascade, onUpdate: Cascade)
+
+  @@index([userId])
+  @@index([status, expiresAt])
+  @@map("account_sessions")
+}
+
 enum UserAccountKind {
   LEGACY_DEFAULT
   GUEST
@@ -294,6 +313,12 @@ enum UserAccountStatus {
   DELETED
 }
 
+enum AccountSessionStatus {
+  ACTIVE
+  REVOKED
+  EXPIRED
+}
+
 enum DevicePlatform {
   MACOS
   IPHONE
diff --git a/backend/src/modules/auth/auth.module.ts b/backend/src/modules/auth/auth.module.ts
index 3e49c2b..3a56c26 100644
--- a/backend/src/modules/auth/auth.module.ts
+++ b/backend/src/modules/auth/auth.module.ts
@@ -6,6 +6,7 @@ import { DeviceAuthGuard } from './device-auth.guard';
 import { DeviceAuthService } from './device-auth.service';
 import { OptionalDeviceAuthGuard } from './optional-device-auth.guard';
 import { ProtectedDeviceAuthMiddleware } from './protected-device-auth.middleware';
+import { SessionService } from './session.service';
 
 @Module({
   imports: [PrismaModule, RequestContextModule],
@@ -14,12 +15,14 @@ import { ProtectedDeviceAuthMiddleware } from './protected-device-auth.middlewar
     DeviceAuthGuard,
     OptionalDeviceAuthGuard,
     ProtectedDeviceAuthMiddleware,
+    SessionService,
   ],
   exports: [
     DeviceAuthService,
     DeviceAuthGuard,
     OptionalDeviceAuthGuard,
     ProtectedDeviceAuthMiddleware,
+    SessionService,
   ],
 })
 export class AuthModule implements NestModule {
diff --git a/backend/src/modules/auth/session.service.spec.ts b/backend/src/modules/auth/session.service.spec.ts
new file mode 100644
index 0000000..7e65bd5
--- /dev/null
+++ b/backend/src/modules/auth/session.service.spec.ts
@@ -0,0 +1,389 @@
+import { randomUUID } from 'node:crypto';
+import {
+  BadRequestException,
+  UnauthorizedException,
+} from '@nestjs/common';
+import {
+  AccountSessionStatus,
+  UserAccountStatus,
+} from '@prisma/client';
+import { SessionService } from './session.service';
+
+describe('SessionService', () => {
+  const now = new Date('2026-06-27T18:00:00.000Z');
+  const future = new Date('2026-07-27T18:00:00.000Z');
+  const activeUserId = randomUUID();
+  const lockedUserId = randomUUID();
+  const deletedUserId = randomUUID();
+
+  const buildService = () => {
+    const users = new Map<string, any>([
+      [
+        activeUserId,
+        {
+          id: activeUserId,
+          accountStatus: UserAccountStatus.ACTIVE,
+        },
+      ],
+      [
+        lockedUserId,
+        {
+          id: lockedUserId,
+          accountStatus: UserAccountStatus.LOCKED,
+        },
+      ],
+      [
+        deletedUserId,
+        {
+          id: deletedUserId,
+          accountStatus: UserAccountStatus.DELETED,
+        },
+      ],
+    ]);
+    const sessions = new Map<string, any>();
+
+    const accountSession = {
+      create: jest.fn().mockImplementation(async ({ data }) => {
+        const session = {
+          id: randomUUID(),
+          userId: data.userId,
+          refreshTokenHash: data.refreshTokenHash,
+          status: data.status ?? AccountSessionStatus.ACTIVE,
+          accessTokenVersion: data.accessTokenVersion ?? 1,
+          expiresAt: data.expiresAt,
+          lastRefreshedAt: null,
+          revokedAt: null,
+          createdAt: now,
+          updatedAt: now,
+        };
+        sessions.set(session.id, session);
+        return { ...session };
+      }),
+      findUnique: jest.fn().mockImplementation(async ({ where, include }) => {
+        const session = sessions.get(where.id) ?? null;
+        if (!session) {
+          return null;
+        }
+
+        if (include?.user) {
+          return {
+            ...session,
+            user: users.get(session.userId),
+          };
+        }
+
+        return { ...session };
+      }),
+      update: jest.fn().mockImplementation(async ({ where, data }) => {
+        const session = sessions.get(where.id);
+        if (!session) {
+          return null;
+        }
+
+        Object.assign(session, data, { updatedAt: now });
+        return { ...session };
+      }),
+      updateMany: jest.fn().mockImplementation(async ({ where, data }) => {
+        let count = 0;
+
+        for (const session of sessions.values()) {
+          const user = users.get(session.userId);
+          const matches =
+            (where.id === undefined || session.id === where.id) &&
+            (where.userId === undefined || session.userId === where.userId) &&
+            (where.refreshTokenHash === undefined ||
+              session.refreshTokenHash === where.refreshTokenHash) &&
+            (where.status === undefined || session.status === where.status) &&
+            (where.expiresAt?.gt === undefined ||
+              session.expiresAt.getTime() > where.expiresAt.gt.getTime()) &&
+            (where.user?.accountStatus === undefined ||
+              user?.accountStatus === where.user.accountStatus);
+
+          if (!matches) {
+            continue;
+          }
+
+          for (const [key, value] of Object.entries(data)) {
+            if (
+              value &&
+              typeof value === 'object' &&
+              'increment' in value
+            ) {
+              session[key] += (value as { increment: number }).increment;
+            } else {
+              session[key] = value;
+            }
+          }
+          session.updatedAt = now;
+          count += 1;
+        }
+
+        return { count };
+      }),
+    };
+
+    const user = {
+      findUnique: jest.fn().mockImplementation(async ({ where }) =>
+        users.get(where.id) ?? null,
+      ),
+    };
+
+    const prismaService = {
+      user,
+      accountSession,
+    } as any;
+    const service = new SessionService(prismaService);
+
+    const addSession = (overrides: Record<string, unknown> = {}) => {
+      const session = {
+        id: randomUUID(),
+        userId: activeUserId,
+        refreshTokenHash: `refresh-${randomUUID()}`,
+        status: AccountSessionStatus.ACTIVE,
+        accessTokenVersion: 1,
+        expiresAt: future,
+        lastRefreshedAt: null,
+        revokedAt: null,
+        createdAt: now,
+        updatedAt: now,
+        ...overrides,
+      };
+      sessions.set(session.id, session);
+      return session;
+    };
+
+    return {
+      service,
+      prismaService,
+      users,
+      sessions,
+      addSession,
+    };
+  };
+
+  it('creates a session for an active user', async () => {
+    const { service, sessions } = buildService();
+
+    const result = await service.createSession(
+      {
+        userId: activeUserId,
+        refreshTokenHash: 'initial-refresh-token-hash',
+        expiresAt: future,
+      },
+      now,
+    );
+
+    expect(result).toMatchObject({
+      userId: activeUserId,
+      refreshTokenHash: 'initial-refresh-token-hash',
+      status: AccountSessionStatus.ACTIVE,
+      accessTokenVersion: 1,
+      expiresAt: future,
+    });
+    expect(sessions.get(result.id)).toBeDefined();
+  });
+
+  it('rotates the refresh token hash and access token version', async () => {
+    const { service, sessions, addSession } = buildService();
+    const session = addSession({
+      refreshTokenHash: 'old-refresh-token-hash',
+      accessTokenVersion: 4,
+    });
+
+    const result = await service.refreshSession(
+      {
+        sessionId: session.id,
+        refreshTokenHash: 'old-refresh-token-hash',
+        nextRefreshTokenHash: 'new-refresh-token-hash',
+      },
+      now,
+    );
+
+    expect(result).toMatchObject({
+      refreshTokenHash: 'new-refresh-token-hash',
+      accessTokenVersion: 5,
+      lastRefreshedAt: now,
+    });
+    expect(sessions.get(session.id)?.refreshTokenHash).toBe(
+      'new-refresh-token-hash',
+    );
+    await expect(
+      service.refreshSession(
+        {
+          sessionId: session.id,
+          refreshTokenHash: 'old-refresh-token-hash',
+          nextRefreshTokenHash: 'another-refresh-token-hash',
+        },
+        now,
+      ),
+    ).rejects.toThrow(UnauthorizedException);
+  });
+
+  it('revokes a session and prevents validation', async () => {
+    const { service, addSession } = buildService();
+    const session = addSession();
+
+    const result = await service.revokeSession(session.id, now);
+
+    expect(result.status).toBe(AccountSessionStatus.REVOKED);
+    expect(result.revokedAt).toEqual(now);
+    await expect(
+      service.validateSession(
+        {
+          sessionId: session.id,
+          accessTokenVersion: 1,
+        },
+        now,
+      ),
+    ).rejects.toThrow(UnauthorizedException);
+  });
+
+  it('revokes all active sessions for a user only', async () => {
+    const { service, addSession } = buildService();
+    const first = addSession();
+    const second = addSession();
+    const other = addSession({ userId: randomUUID() });
+
+    await expect(
+      service.revokeAllSessionsForUser(activeUserId, now),
+    ).resolves.toBe(2);
+    expect(first.status).toBe(AccountSessionStatus.REVOKED);
+    expect(second.status).toBe(AccountSessionStatus.REVOKED);
+    expect(other.status).toBe(AccountSessionStatus.ACTIVE);
+  });
+
+  it('rejects validation and refresh for an expired session', async () => {
+    const { service, addSession } = buildService();
+    const session = addSession({
+      expiresAt: new Date('2026-06-27T17:59:59.000Z'),
+    });
+
+    await expect(
+      service.validateSession(
+        {
+          sessionId: session.id,
+          accessTokenVersion: 1,
+        },
+        now,
+      ),
+    ).rejects.toThrow(UnauthorizedException);
+    await expect(
+      service.refreshSession(
+        {
+          sessionId: session.id,
+          refreshTokenHash: session.refreshTokenHash,
+          nextRefreshTokenHash: 'rotated-expired-hash',
+        },
+        now,
+      ),
+    ).rejects.toThrow(UnauthorizedException);
+  });
+
+  it('rejects refresh for a revoked session', async () => {
+    const { service, addSession } = buildService();
+    const session = addSession({
+      status: AccountSessionStatus.REVOKED,
+      revokedAt: now,
+    });
+
+    await expect(
+      service.refreshSession(
+        {
+          sessionId: session.id,
+          refreshTokenHash: session.refreshTokenHash,
+          nextRefreshTokenHash: 'rotated-revoked-hash',
+        },
+        now,
+      ),
+    ).rejects.toThrow(UnauthorizedException);
+  });
+
+  it('rejects session creation and validation for a locked user', async () => {
+    const { service, addSession } = buildService();
+
+    await expect(
+      service.createSession(
+        {
+          userId: lockedUserId,
+          refreshTokenHash: 'locked-user-refresh-hash',
+          expiresAt: future,
+        },
+        now,
+      ),
+    ).rejects.toThrow(new BadRequestException('Account is not active'));
+
+    const existingSession = addSession({ userId: lockedUserId });
+    await expect(
+      service.validateSession(
+        {
+          sessionId: existingSession.id,
+          accessTokenVersion: 1,
+        },
+        now,
+      ),
+    ).rejects.toThrow(UnauthorizedException);
+  });
+
+  it('rejects session creation and validation for a deleted user', async () => {
+    const { service, addSession } = buildService();
+
+    await expect(
+      service.createSession(
+        {
+          userId: deletedUserId,
+          refreshTokenHash: 'deleted-user-refresh-hash',
+          expiresAt: future,
+        },
+        now,
+      ),
+    ).rejects.toThrow(new BadRequestException('Account is not active'));
+
+    const existingSession = addSession({ userId: deletedUserId });
+    await expect(
+      service.validateSession(
+        {
+          sessionId: existingSession.id,
+          accessTokenVersion: 1,
+        },
+        now,
+      ),
+    ).rejects.toThrow(UnauthorizedException);
+  });
+
+  it('expires a session explicitly', async () => {
+    const { service, addSession } = buildService();
+    const session = addSession();
+
+    const result = await service.expireSession(session.id, now);
+
+    expect(result.status).toBe(AccountSessionStatus.EXPIRED);
+  });
+
+  it('validates by session identity and version without selecting email', async () => {
+    const { service, prismaService, addSession } = buildService();
+    const session = addSession({ accessTokenVersion: 7 });
+
+    await expect(
+      service.validateSession(
+        {
+          sessionId: session.id,
+          accessTokenVersion: 7,
+        },
+        now,
+      ),
+    ).resolves.toMatchObject({ id: session.id, userId: activeUserId });
+
+    expect(prismaService.accountSession.findUnique).toHaveBeenCalledWith({
+      where: {
+        id: session.id,
+      },
+      include: {
+        user: {
+          select: {
+            accountStatus: true,
+          },
+        },
+      },
+    });
+  });
+});
diff --git a/backend/src/modules/auth/session.service.ts b/backend/src/modules/auth/session.service.ts
new file mode 100644
index 0000000..a610556
--- /dev/null
+++ b/backend/src/modules/auth/session.service.ts
@@ -0,0 +1,296 @@
+import {
+  BadRequestException,
+  Injectable,
+  NotFoundException,
+  UnauthorizedException,
+} from '@nestjs/common';
+import {
+  AccountSession,
+  AccountSessionStatus,
+  UserAccountStatus,
+} from '@prisma/client';
+import { PrismaService } from '../../infrastructure/database/prisma.service';
+
+export interface CreateSessionInput {
+  userId: string;
+  refreshTokenHash: string;
+  expiresAt: Date;
+}
+
+export interface RefreshSessionInput {
+  sessionId: string;
+  refreshTokenHash: string;
+  nextRefreshTokenHash: string;
+  expiresAt?: Date;
+}
+
+export interface ValidateSessionInput {
+  sessionId: string;
+  accessTokenVersion: number;
+}
+
+@Injectable()
+export class SessionService {
+  constructor(private readonly prismaService: PrismaService) {}
+
+  async createSession(
+    input: CreateSessionInput,
+    now = new Date(),
+  ): Promise<AccountSession> {
+    const user = await this.prismaService.user.findUnique({
+      where: {
+        id: input.userId,
+      },
+      select: {
+        id: true,
+        accountStatus: true,
+      },
+    });
+
+    if (!user) {
+      throw new NotFoundException('Account not found');
+    }
+
+    if (user.accountStatus !== UserAccountStatus.ACTIVE) {
+      throw new BadRequestException('Account is not active');
+    }
+
+    this.assertUsableRefreshTokenHash(input.refreshTokenHash);
+    this.assertFutureExpiration(input.expiresAt, now);
+
+    return this.prismaService.accountSession.create({
+      data: {
+        userId: user.id,
+        refreshTokenHash: input.refreshTokenHash,
+        status: AccountSessionStatus.ACTIVE,
+        accessTokenVersion: 1,
+        expiresAt: input.expiresAt,
+      },
+    });
+  }
+
+  async refreshSession(
+    input: RefreshSessionInput,
+    now = new Date(),
+  ): Promise<AccountSession> {
+    this.assertUsableRefreshTokenHash(input.refreshTokenHash);
+    this.assertUsableRefreshTokenHash(input.nextRefreshTokenHash);
+
+    if (input.refreshTokenHash === input.nextRefreshTokenHash) {
+      throw new BadRequestException('Refresh token hash must be rotated');
+    }
+
+    if (input.expiresAt) {
+      this.assertFutureExpiration(input.expiresAt, now);
+    }
+
+    const session = await this.prismaService.accountSession.findUnique({
+      where: {
+        id: input.sessionId,
+      },
+      include: {
+        user: {
+          select: {
+            accountStatus: true,
+          },
+        },
+      },
+    });
+
+    this.assertSessionCanBeUsed(
+      session,
+      input.refreshTokenHash,
+      now,
+      'refresh',
+    );
+
+    const rotation = await this.prismaService.accountSession.updateMany({
+      where: {
+        id: input.sessionId,
+        refreshTokenHash: input.refreshTokenHash,
+        status: AccountSessionStatus.ACTIVE,
+        expiresAt: {
+          gt: now,
+        },
+        user: {
+          accountStatus: UserAccountStatus.ACTIVE,
+        },
+      },
+      data: {
+        refreshTokenHash: input.nextRefreshTokenHash,
+        accessTokenVersion: {
+          increment: 1,
+        },
+        lastRefreshedAt: now,
+        ...(input.expiresAt ? { expiresAt: input.expiresAt } : {}),
+      },
+    });
+
+    if (rotation.count !== 1) {
+      throw new UnauthorizedException('Session cannot be refreshed');
+    }
+
+    const refreshedSession =
+      await this.prismaService.accountSession.findUnique({
+        where: {
+          id: input.sessionId,
+        },
+      });
+
+    if (!refreshedSession) {
+      throw new UnauthorizedException('Session cannot be refreshed');
+    }
+
+    return refreshedSession;
+  }
+
+  async validateSession(
+    input: ValidateSessionInput,
+    now = new Date(),
+  ): Promise<AccountSession> {
+    const session = await this.prismaService.accountSession.findUnique({
+      where: {
+        id: input.sessionId,
+      },
+      include: {
+        user: {
+          select: {
+            accountStatus: true,
+          },
+        },
+      },
+    });
+
+    this.assertSessionCanBeUsed(session, undefined, now, 'validate');
+
+    if (session.accessTokenVersion !== input.accessTokenVersion) {
+      throw new UnauthorizedException('Session is invalid');
+    }
+
+    const { user: _user, ...validatedSession } = session;
+    return validatedSession;
+  }
+
+  async revokeSession(
+    sessionId: string,
+    now = new Date(),
+  ): Promise<AccountSession> {
+    const session = await this.prismaService.accountSession.findUnique({
+      where: {
+        id: sessionId,
+      },
+    });
+
+    if (!session) {
+      throw new NotFoundException('Session not found');
+    }
+
+    if (session.status === AccountSessionStatus.REVOKED) {
+      return session;
+    }
+
+    return this.prismaService.accountSession.update({
+      where: {
+        id: sessionId,
+      },
+      data: {
+        status: AccountSessionStatus.REVOKED,
+        revokedAt: now,
+      },
+    });
+  }
+
+  async revokeAllSessionsForUser(
+    userId: string,
+    now = new Date(),
+  ): Promise<number> {
+    const result = await this.prismaService.accountSession.updateMany({
+      where: {
+        userId,
+        status: AccountSessionStatus.ACTIVE,
+      },
+      data: {
+        status: AccountSessionStatus.REVOKED,
+        revokedAt: now,
+      },
+    });
+
+    return result.count;
+  }
+
+  async expireSession(
+    sessionId: string,
+    now = new Date(),
+  ): Promise<AccountSession> {
+    const session = await this.prismaService.accountSession.findUnique({
+      where: {
+        id: sessionId,
+      },
+    });
+
+    if (!session) {
+      throw new NotFoundException('Session not found');
+    }
+
+    if (session.status === AccountSessionStatus.EXPIRED) {
+      return session;
+    }
+
+    return this.prismaService.accountSession.update({
+      where: {
+        id: sessionId,
+      },
+      data: {
+        status: AccountSessionStatus.EXPIRED,
+      },
+    });
+  }
+
+  private assertSessionCanBeUsed(
+    session:
+      | (AccountSession & {
+          user: {
+            accountStatus: UserAccountStatus;
+          };
+        })
+      | null,
+    refreshTokenHash: string | undefined,
+    now: Date,
+    operation: 'refresh' | 'validate',
+  ): asserts session is AccountSession & {
+    user: {
+      accountStatus: UserAccountStatus;
+    };
+  } {
+    const message =
+      operation === 'refresh'
+        ? 'Session cannot be refreshed'
+        : 'Session is invalid';
+
+    if (
+      !session ||
+      session.status !== AccountSessionStatus.ACTIVE ||
+      session.expiresAt.getTime() <= now.getTime() ||
+      session.user.accountStatus !== UserAccountStatus.ACTIVE ||
+      (refreshTokenHash !== undefined &&
+        session.refreshTokenHash !== refreshTokenHash)
+    ) {
+      throw new UnauthorizedException(message);
+    }
+  }
+
+  private assertUsableRefreshTokenHash(refreshTokenHash: string): void {
+    if (!refreshTokenHash.trim()) {
+      throw new BadRequestException('Refresh token hash is required');
+    }
+  }
+
+  private assertFutureExpiration(expiresAt: Date, now: Date): void {
+    if (
+      Number.isNaN(expiresAt.getTime()) ||
+      expiresAt.getTime() <= now.getTime()
+    ) {
+      throw new BadRequestException('Session expiration must be in the future');
+    }
+  }
+}