diff --git a/programs/gateway/src/contexts.rs b/programs/gateway/src/contexts.rs
index 4d8cb50..41f1585 100644
--- a/programs/gateway/src/contexts.rs
+++ b/programs/gateway/src/contexts.rs
@@ -313,6 +313,43 @@ pub struct Unwhitelist<'info> {
     pub whitelist_candidate: Account<'info, Mint>,
 }
 
+/// Instruction context for refunding SPL tokens from gateway custody.
+#[derive(Accounts)]
+pub struct RefundSplToken<'info> {
+    /// The authority account refunding tokens from custody.
+    #[account(mut)]
+    pub signer: Signer<'info>,
+
+    /// Gateway PDA.
+    #[account(seeds = [b"meta"], bump)]
+    pub pda: Account<'info, Pda>,
+
+    /// The associated token account for the Gateway PDA.
+    #[account(mut, associated_token::mint = mint_account, associated_token::authority = pda)]
+    pub pda_ata: Account<'info, TokenAccount>,
+
+    /// The mint account of the SPL token being refunded.
+    pub mint_account: Account<'info, Mint>,
+
+    /// The recipient wallet receiving the refunded tokens.
+    /// CHECK: Only the pubkey is used to derive the expected ATA; account data is not validated.
+    pub recipient: UncheckedAccount<'info>,
+
+    /// The recipient's associated token account.
+    /// CHECK: Validation will occur during instruction processing.
+    #[account(mut)]
+    pub recipient_ata: AccountInfo<'info>,
+
+    /// The token program.
+    pub token_program: Program<'info, Token>,
+
+    /// The associated token program.
+    pub associated_token_program: Program<'info, AssociatedToken>,
+
+    /// The system program.
+    pub system_program: Program<'info, System>,
+}
+
 /// Instruction context for checking upgrade status
 #[derive(Accounts)]
 pub struct Upgrade<'info> {
diff --git a/programs/gateway/src/errors.rs b/programs/gateway/src/errors.rs
index 3d50c49..d8a9dec 100644
--- a/programs/gateway/src/errors.rs
+++ b/programs/gateway/src/errors.rs
@@ -23,4 +23,8 @@ pub enum Errors {
     InvalidInstructionData,
     #[msg("InvalidAtaOwner")]
     InvalidAtaOwner,
+    #[msg("InsufficientBalance")]
+    InsufficientBalance,
+    #[msg("InvalidAmount")]
+    InvalidAmount,
 }
diff --git a/programs/gateway/src/instructions/mod.rs b/programs/gateway/src/instructions/mod.rs
index 0b758cf..50aeffa 100644
--- a/programs/gateway/src/instructions/mod.rs
+++ b/programs/gateway/src/instructions/mod.rs
@@ -1,4 +1,5 @@
 pub mod admin;
 pub mod deposit;
 pub mod execute;
+pub mod refund;
 pub mod withdraw;
diff --git a/programs/gateway/src/instructions/refund.rs b/programs/gateway/src/instructions/refund.rs
new file mode 100644
index 0000000..4d4e314
--- /dev/null
+++ b/programs/gateway/src/instructions/refund.rs
@@ -0,0 +1,100 @@
+use crate::{
+    contexts::RefundSplToken,
+    errors::Errors,
+    utils::{verify_ata_match, verify_authority},
+};
+use anchor_lang::prelude::*;
+use anchor_lang::solana_program::program::invoke;
+use anchor_spl::token::transfer_checked;
+use spl_associated_token_account::instruction::create_associated_token_account;
+
+// Refunds SPL tokens from gateway custody to a user. Caller is authority stored in PDA.
+pub fn handle_spl(ctx: Context<RefundSplToken>, amount: u64, decimals: u8) -> Result<()> {
+    let pda = &ctx.accounts.pda;
+
+    verify_authority(&ctx.accounts.signer.key(), pda)?;
+    require!(amount > 0, Errors::InvalidAmount);
+
+    verify_ata_match(
+        &pda.key(),
+        &ctx.accounts.mint_account.key(),
+        &ctx.accounts.pda_ata.key(),
+    )?;
+
+    verify_ata_match(
+        &ctx.accounts.recipient.key(),
+        &ctx.accounts.mint_account.key(),
+        &ctx.accounts.recipient_ata.key(),
+    )?;
+
+    require!(
+        ctx.accounts.pda_ata.amount >= amount,
+        Errors::InsufficientBalance
+    );
+
+    let recipient_ata_account = ctx.accounts.recipient_ata.to_account_info();
+    require!(
+        *recipient_ata_account.owner == anchor_spl::token::ID
+            || (*recipient_ata_account.owner == anchor_lang::system_program::ID
+                && recipient_ata_account.lamports() == 0),
+        Errors::InvalidAtaOwner
+    );
+
+    if recipient_ata_account.lamports() == 0 {
+        msg!(
+            "Creating associated token account {:?} for recipient {:?}...",
+            recipient_ata_account.key(),
+            ctx.accounts.recipient.key(),
+        );
+
+        invoke(
+            &create_associated_token_account(
+                ctx.accounts.signer.to_account_info().key,
+                ctx.accounts.recipient.to_account_info().key,
+                ctx.accounts.mint_account.to_account_info().key,
+                ctx.accounts.token_program.key,
+            ),
+            &[
+                ctx.accounts.mint_account.to_account_info().clone(),
+                ctx.accounts.recipient_ata.clone(),
+                ctx.accounts.recipient.to_account_info().clone(),
+                ctx.accounts.signer.to_account_info().clone(),
+                ctx.accounts.system_program.to_account_info().clone(),
+                ctx.accounts.token_program.to_account_info().clone(),
+                ctx.accounts
+                    .associated_token_program
+                    .to_account_info()
+                    .clone(),
+            ],
+        )?;
+
+        msg!("Associated token account created!");
+    }
+
+    let token = &ctx.accounts.token_program;
+    let signer_seeds: &[&[&[u8]]] = &[&[b"meta", &[ctx.bumps.pda]]];
+
+    let xfer_ctx = CpiContext::new_with_signer(
+        token.to_account_info(),
+        anchor_spl::token::TransferChecked {
+            from: ctx.accounts.pda_ata.to_account_info(),
+            mint: ctx.accounts.mint_account.to_account_info(),
+            to: ctx.accounts.recipient_ata.to_account_info(),
+            authority: pda.to_account_info(),
+        },
+        signer_seeds,
+    );
+
+    transfer_checked(xfer_ctx, amount, decimals)?;
+
+    msg!(
+        "Refund SPL executed: amount = {}, decimals = {}, recipient = {}, mint = {}, authority = {}",
+        amount,
+        decimals,
+        ctx.accounts.recipient.key(),
+        ctx.accounts.mint_account.key(),
+        ctx.accounts.signer.key()
+    );
+
+    Ok(())
+}
diff --git a/programs/gateway/src/lib.rs b/programs/gateway/src/lib.rs
index 574ecdc..caf21fb 100644
--- a/programs/gateway/src/lib.rs
+++ b/programs/gateway/src/lib.rs
@@ -380,6 +380,15 @@ pub mod gateway {
         instructions::withdraw::handle_sol(ctx, amount, signature, recovery_id, message_hash, nonce)
     }
 
+    /// Refunds SPL tokens from gateway custody to a user. Caller is authority stored in PDA.
+    /// # Arguments
+    /// * `ctx` - The instruction context.
+    /// * `amount` - The amount of tokens to refund.
+    /// * `decimals` - Token decimals for precision.
+    pub fn refund_spl_token(ctx: Context<RefundSplToken>, amount: u64, decimals: u8) -> Result<()> {
+        instructions::refund::handle_spl(ctx, amount, decimals)
+    }
+
     /// Withdraws SPL tokens. Caller is TSS.
     /// # Arguments
     /// * `ctx` - The instruction context.
diff --git a/tests/gateway.ts b/tests/gateway.ts
index 95b284e..cfb380a 100644
--- a/tests/gateway.ts
+++ b/tests/gateway.ts
@@ -161,6 +161,40 @@ async function withdrawSplToken(
     .rpc({ commitment: "processed" });
 }
 
+async function refundSplToken(
+  gatewayProgram: Program<Gateway>,
+  mint: anchor.web3.PublicKey,
+  decimals: number,
+  amount: anchor.BN,
+  recipient: anchor.web3.PublicKey,
+  recipientAta: anchor.web3.PublicKey,
+  signer: anchor.web3.Keypair = anchor.workspace.Gateway.provider.wallet
+    .payer
+) {
+  const [pdaAccount] = anchor.web3.PublicKey.findProgramAddressSync(
+    [Buffer.from("meta", "utf-8")],
+    gatewayProgram.programId
+  );
+  const pdaAta = await spl.getAssociatedTokenAddress(
+    mint,
+    pdaAccount,
+    true
+  );
+
+  return gatewayProgram.methods
+    .refundSplToken(amount, decimals)
+    .accounts({
+      signer: signer.publicKey,
+      pda: pdaAccount,
+      pdaAta,
+      mintAccount: mint,
+      recipient,
+      recipientAta,
+    })
+    .signers(signer.publicKey.equals(anchor.workspace.Gateway.provider.wallet.publicKey) ? [] : [signer])
+    .rpc({ commitment: "processed" });
+}
+
 describe("Gateway", () => {
   // Configure the client to use the local cluster.
   anchor.setProvider(anchor.AnchorProvider.env());
@@ -3911,6 +3945,164 @@ describe("Gateway", () => {
     }
   });
 
+  it("Refund SPL token to user", async () => {
+    const refundAmount = new anchor.BN(100_000);
+    const pdaAta = await spl.getAssociatedTokenAddress(
+      mint.publicKey,
+      pdaAccount,
+      true
+    );
+    const custodyBefore = await spl.getAccount(conn, pdaAta);
+    const recipientBefore = await spl.getAccount(conn, wallet_ata);
+
+    await refundSplToken(
+      gatewayProgram,
+      mint.publicKey,
+      usdcDecimals,
+      refundAmount,
+      wallet.publicKey,
+      wallet_ata
+    );
+
+    const custodyAfter = await spl.getAccount(conn, pdaAta);
+    const recipientAfter = await spl.getAccount(conn, wallet_ata);
+    expect(custodyBefore.amount - custodyAfter.amount).to.equal(
+      BigInt(refundAmount.toNumber())
+    );
+    expect(recipientAfter.amount - recipientBefore.amount).to.equal(
+      BigInt(refundAmount.toNumber())
+    );
+  });
+
+  it("Refund SPL token fails for non-authority", async () => {
+    try {
+      await refundSplToken(
+        gatewayProgram,
+        mint.publicKey,
+        usdcDecimals,
+        new anchor.BN(1),
+        wallet.publicKey,
+        wallet_ata,
+        random_account
+      );
+      throw new Error("Expected error not thrown");
+    } catch (err) {
+      expect(err).to.be.instanceof(anchor.AnchorError);
+      expect(err.message).to.include("SignerIsNotAuthority");
+    }
+  });
+
+  it("Refund SPL token fails for insufficient balance", async () => {
+    const pdaAta = await spl.getAssociatedTokenAddress(
+      mint.publicKey,
+      pdaAccount,
+      true
+    );
+    const custody = await spl.getAccount(conn, pdaAta);
+
+    try {
+      await refundSplToken(
+        gatewayProgram,
+        mint.publicKey,
+        usdcDecimals,
+        new anchor.BN(custody.amount.toString()).addn(1),
+        wallet.publicKey,
+        wallet_ata
+      );
+      throw new Error("Expected error not thrown");
+    } catch (err) {
+      expect(err).to.be.instanceof(anchor.AnchorError);
+      expect(err.message).to.include("InsufficientBalance");
+    }
+  });
+
+  it("Refund SPL token fails for zero amount", async () => {
+    try {
+      await refundSplToken(
+        gatewayProgram,
+        mint.publicKey,
+        usdcDecimals,
+        new anchor.BN(0),
+        wallet.publicKey,
+        wallet_ata
+      );
+      throw new Error("Expected error not thrown");
+    } catch (err) {
+      expect(err).to.be.instanceof(anchor.AnchorError);
+      expect(err.message).to.include("InvalidAmount");
+    }
+  });
+
+  it("Refund SPL token creates recipient ATA if needed", async () => {
+    const refundRecipient = anchor.web3.Keypair.generate();
+    const refundAmount = new anchor.BN(50_000);
+    const recipientAta = await spl.getAssociatedTokenAddress(
+      mint.publicKey,
+      refundRecipient.publicKey
+    );
+
+    await refundSplToken(
+      gatewayProgram,
+      mint.publicKey,
+      usdcDecimals,
+      refundAmount,
+      refundRecipient.publicKey,
+      recipientAta
+    );
+
+    const recipientAccount = await spl.getAccount(conn, recipientAta);
+    expect(recipientAccount.amount).to.equal(BigInt(refundAmount.toNumber()));
+  });
+
+  it("Refund SPL token fails for mismatched recipient ATA", async () => {
+    const wrongRecipientAta = await spl.getAssociatedTokenAddress(
+      mint.publicKey,
+      random_account.publicKey
+    );
+
+    try {
+      await refundSplToken(
+        gatewayProgram,
+        mint.publicKey,
+        usdcDecimals,
+        new anchor.BN(1),
+        wallet.publicKey,
+        wrongRecipientAta
+      );
+      throw new Error("Expected error not thrown");
+    } catch (err) {
+      expect(err).to.be.instanceof(anchor.AnchorError);
+      expect(err.message).to.include("SPLAtaAndMintAddressMismatch");
+    }
+  });
+
+  it("Refund SPL token works while deposits are paused", async () => {
+    await gatewayProgram.methods.setDepositPaused(true).rpc();
+
+    try {
+      const refundRecipient = anchor.web3.Keypair.generate();
+      const refundAmount = new anchor.BN(25_000);
+      const recipientAta = await spl.getAssociatedTokenAddress(
+        mint.publicKey,
+        refundRecipient.publicKey
+      );
+
+      await refundSplToken(
+        gatewayProgram,
+        mint.publicKey,
+        usdcDecimals,
+        refundAmount,
+        refundRecipient.publicKey,
+        recipientAta
+      );
+
+      const recipientAccount = await spl.getAccount(conn, recipientAta);
+      expect(recipientAccount.amount).to.equal(BigInt(refundAmount.toNumber()));
+    } finally {
+      await gatewayProgram.methods.setDepositPaused(false).rpc();
+    }
+  });
+
   it("Update TSS address", async () => {
     const newTss = new Uint8Array(20);
     randomFillSync(newTss);