diff --git a/backend/src/app.js b/backend/src/app.js
index d82349e6..4bbf5e6c 100644
--- a/backend/src/app.js
+++ b/backend/src/app.js
@@ -41,6 +41,7 @@ import prRoutes from "./routes/prRoutes.js";
 import contractRoutes from "./routes/contractRoutes.js";
 import testScreeningRoutes from "./routes/testScreeningRoutes.js";
 import recordsRoutes from "./routes/recordsRoutes.js";
+import merchandiseLinesRoutes from "./routes/merchandiseLinesRoutes.js";
 
 const app = express();
 
@@ -132,6 +133,7 @@ app.use("/api/studios", apiRateLimiter, prRoutes);
 app.use("/api/contracts", apiRateLimiter, contractRoutes);
 app.use("/api/movies", apiRateLimiter, testScreeningRoutes);
 app.use("/api/records", apiRateLimiter, recordsRoutes);
+app.use("/api/merchandise", apiRateLimiter, merchandiseLinesRoutes);
 
 app.use((req, res) => {
   res.status(404).json({
diff --git a/backend/src/controllers/merchandiseLinesController.js b/backend/src/controllers/merchandiseLinesController.js
new file mode 100644
index 00000000..9e5dfeea
--- /dev/null
+++ b/backend/src/controllers/merchandiseLinesController.js
@@ -0,0 +1,137 @@
+import Studio from "../models/Studio.js";
+import GameState from "../models/GameState.js";
+import { MERCH_LINE_TIERS } from "../services/simulation/engines/merchandiseLinesEngine.js";
+
+const CAMPAIGN_COST = 250000;
+const CAMPAIGN_DURATION_WEEKS = 4;
+const CAMPAIGN_BOOST = 0.5; // +50% revenue for the line during campaign
+
+/**
+ * GET /api/merchandise/lines
+ * Returns all merchandise lines for the player's studio.
+ */
+export const getMerchandiseLines = async (req, res) => {
+  try {
+    const studio = await Studio.findOne({ owner: req.user._id });
+    if (!studio) return res.status(404).json({ success: false, message: "Studio not found." });
+
+    res.status(200).json({
+      success: true,
+      data: {
+        merchandiseLines: studio.merchandiseLines || [],
+        availableTiers: Object.entries(MERCH_LINE_TIERS).map(([id, cfg]) => ({ id, ...cfg }))
+      }
+    });
+  } catch (error) {
+    console.error("getMerchandiseLines error:", error);
+    res.status(500).json({ success: false, message: "Server error" });
+  }
+};
+
+/**
+ * POST /api/merchandise/lines
+ * Launch a new merchandise product line.
+ * Body: { tier: "APPAREL" | "COLLECTIBLES" | "DIGITAL" | "TOYS" }
+ */
+export const launchMerchandiseLine = async (req, res) => {
+  try {
+    const { tier } = req.body;
+    if (!tier || !MERCH_LINE_TIERS[tier]) {
+      return res.status(400).json({
+        success: false,
+        message: `Invalid tier. Choose one of: ${Object.keys(MERCH_LINE_TIERS).join(", ")}`
+      });
+    }
+
+    const studio = await Studio.findOne({ owner: req.user._id });
+    if (!studio) return res.status(404).json({ success: false, message: "Studio not found." });
+
+    const gameState = await GameState.findOne({ user: req.user._id });
+    if (!gameState) return res.status(404).json({ success: false, message: "Game state not found." });
+
+    // Prevent duplicates
+    if (!studio.merchandiseLines) studio.merchandiseLines = [];
+    const existing = studio.merchandiseLines.find(l => l.tier === tier && l.active);
+    if (existing) {
+      return res.status(400).json({ success: false, message: `An active ${MERCH_LINE_TIERS[tier].label} line already exists.` });
+    }
+
+    const SETUP_COST = 500000;
+    if ((studio.money || 0) < SETUP_COST) {
+      return res.status(400).json({ success: false, message: `Insufficient funds. Setup costs ₹${SETUP_COST.toLocaleString("en-IN")}.` });
+    }
+
+    studio.money -= SETUP_COST;
+    studio.merchandiseLines.push({
+      tier,
+      active: true,
+      launchedWeek: gameState.currentWeek,
+      totalRevenue: 0,
+      campaigns: []
+    });
+
+    await studio.save();
+
+    res.status(201).json({
+      success: true,
+      message: `${MERCH_LINE_TIERS[tier].label} merchandise line launched!`,
+      data: studio.merchandiseLines.at(-1)
+    });
+  } catch (error) {
+    console.error("launchMerchandiseLine error:", error);
+    res.status(500).json({ success: false, message: "Server error" });
+  }
+};
+
+/**
+ * POST /api/merchandise/lines/:lineId/campaign
+ * Launch a seasonal campaign for a specific merchandise line.
+ */
+export const launchSeasonalCampaign = async (req, res) => {
+  try {
+    const { lineId } = req.params;
+
+    const studio = await Studio.findOne({ owner: req.user._id });
+    if (!studio) return res.status(404).json({ success: false, message: "Studio not found." });
+
+    const gameState = await GameState.findOne({ user: req.user._id });
+    if (!gameState) return res.status(404).json({ success: false, message: "Game state not found." });
+
+    const line = (studio.merchandiseLines || []).find(l => l._id?.toString() === lineId);
+    if (!line) return res.status(404).json({ success: false, message: "Merchandise line not found." });
+    if (!line.active) return res.status(400).json({ success: false, message: "Merchandise line is not active." });
+
+    // Check for existing active campaign
+    const hasActiveCampaign = (line.campaigns || []).some(c => c.active);
+    if (hasActiveCampaign) {
+      return res.status(400).json({ success: false, message: "A seasonal campaign is already running for this line." });
+    }
+
+    if ((studio.money || 0) < CAMPAIGN_COST) {
+      return res.status(400).json({
+        success: false,
+        message: `Insufficient funds. Campaign costs ₹${CAMPAIGN_COST.toLocaleString("en-IN")}.`
+      });
+    }
+
+    studio.money -= CAMPAIGN_COST;
+    if (!line.campaigns) line.campaigns = [];
+    line.campaigns.push({
+      startWeek: gameState.currentWeek,
+      endWeek: gameState.currentWeek + CAMPAIGN_DURATION_WEEKS,
+      boostMultiplier: CAMPAIGN_BOOST,
+      active: true
+    });
+
+    await studio.save();
+
+    res.status(201).json({
+      success: true,
+      message: `Seasonal campaign launched! +${CAMPAIGN_BOOST * 100}% revenue boost for ${CAMPAIGN_DURATION_WEEKS} weeks.`,
+      data: line.campaigns.at(-1)
+    });
+  } catch (error) {
+    console.error("launchSeasonalCampaign error:", error);
+    res.status(500).json({ success: false, message: "Server error" });
+  }
+};
diff --git a/backend/src/models/Studio.js b/backend/src/models/Studio.js
index 2c329e2a..5514d1bd 100644
--- a/backend/src/models/Studio.js
+++ b/backend/src/models/Studio.js
@@ -117,6 +117,20 @@ const studioSchema = new mongoose.Schema(
       week: { type: Number },
       reputationImpact: { type: Number },
     }],
+
+    // Merchandise Product Lines (issue #349)
+    merchandiseLines: [{
+      tier: { type: String, enum: ["APPAREL", "COLLECTIBLES", "DIGITAL", "TOYS"], required: true },
+      active: { type: Boolean, default: true },
+      launchedWeek: { type: Number },
+      totalRevenue: { type: Number, default: 0 },
+      campaigns: [{
+        startWeek: { type: Number },
+        endWeek: { type: Number },
+        boostMultiplier: { type: Number, default: 0.5 },
+        active: { type: Boolean, default: true }
+      }]
+    }],
   },
   {
     timestamps: true,
diff --git a/backend/src/routes/merchandiseLinesRoutes.js b/backend/src/routes/merchandiseLinesRoutes.js
new file mode 100644
index 00000000..f813b102
--- /dev/null
+++ b/backend/src/routes/merchandiseLinesRoutes.js
@@ -0,0 +1,15 @@
+import express from "express";
+import { protect } from "../middleware/authMiddleware.js";
+import {
+  getMerchandiseLines,
+  launchMerchandiseLine,
+  launchSeasonalCampaign
+} from "../controllers/merchandiseLinesController.js";
+
+const router = express.Router();
+
+router.get("/lines", protect, getMerchandiseLines);
+router.post("/lines", protect, launchMerchandiseLine);
+router.post("/lines/:lineId/campaign", protect, launchSeasonalCampaign);
+
+export default router;
diff --git a/backend/src/services/simulation/engines/merchandiseLinesEngine.js b/backend/src/services/simulation/engines/merchandiseLinesEngine.js
new file mode 100644
index 00000000..7b0c4646
--- /dev/null
+++ b/backend/src/services/simulation/engines/merchandiseLinesEngine.js
@@ -0,0 +1,78 @@
+/**
+ * @fileoverview Merchandise Lines Engine (issue #349)
+ *
+ * Processes studio-level merchandise product lines with seasonal campaigns.
+ * Merchandise lines are independent of individual movies and represent
+ * branded product categories (apparel, collectibles, digital goods, etc.)
+ * that generate recurring revenue based on studio prestige and fan count.
+ *
+ * Each week:
+ *  1. Active lines generate revenue proportional to fans × prestige × quality.
+ *  2. Active seasonal campaigns apply a boost multiplier.
+ *  3. Campaigns expire after their duration.
+ */
+
+/**
+ * The merchandise line tiers and their base weekly revenue rates.
+ */
+export const MERCH_LINE_TIERS = {
+  APPAREL:      { label: "Apparel",      baseFanRate: 0.05, basePrestigeRate: 200 },
+  COLLECTIBLES: { label: "Collectibles", baseFanRate: 0.08, basePrestigeRate: 400 },
+  DIGITAL:      { label: "Digital Goods",baseFanRate: 0.03, basePrestigeRate: 100 },
+  TOYS:         { label: "Toys & Games", baseFanRate: 0.06, basePrestigeRate: 300 },
+};
+
+/**
+ * Processes all active merchandise lines and seasonal campaigns for the studio.
+ * Mutates `studio` in place (adds money, expires campaigns).
+ *
+ * @param {object} gameState
+ * @param {object} studio
+ * @returns {number} Total weekly revenue from merch lines
+ */
+export const processMerchandiseLines = (gameState, studio) => {
+  if (!studio.merchandiseLines || studio.merchandiseLines.length === 0) return 0;
+
+  const currentWeek = gameState.currentWeek;
+  let totalRevenue = 0;
+
+  for (const line of studio.merchandiseLines) {
+    if (!line.active) continue;
+
+    const tier = MERCH_LINE_TIERS[line.tier] || MERCH_LINE_TIERS.APPAREL;
+
+    // Base weekly revenue from fans + prestige
+    const fanRevenue = Math.floor((studio.fans || 0) * tier.baseFanRate);
+    const prestigeRevenue = Math.floor((studio.prestige || 0) * tier.basePrestigeRate);
+    let lineRevenue = fanRevenue + prestigeRevenue;
+
+    // Apply seasonal campaign boost
+    let campaignBoost = 1.0;
+    const activeCampaigns = (line.campaigns || []).filter(c => c.active);
+    for (const campaign of activeCampaigns) {
+      campaignBoost += campaign.boostMultiplier || 0;
+
+      // Expire campaign if it's past its end week
+      if (currentWeek >= campaign.endWeek) {
+        campaign.active = false;
+      }
+    }
+
+    lineRevenue = Math.floor(lineRevenue * campaignBoost);
+    line.totalRevenue = (line.totalRevenue || 0) + lineRevenue;
+    totalRevenue += lineRevenue;
+  }
+
+  if (totalRevenue > 0) {
+    studio.money = (studio.money || 0) + totalRevenue;
+
+    studio.merchandiseIncomeHistory = studio.merchandiseIncomeHistory || [];
+    studio.merchandiseIncomeHistory.push({
+      week: currentWeek,
+      amount: totalRevenue,
+      reason: "Merchandise Line Sales"
+    });
+  }
+
+  return totalRevenue;
+};
diff --git a/backend/src/services/simulation/engines/tickEngine.js b/backend/src/services/simulation/engines/tickEngine.js
index 096b1909..e2f932d9 100644
--- a/backend/src/services/simulation/engines/tickEngine.js
+++ b/backend/src/services/simulation/engines/tickEngine.js
@@ -12,6 +12,7 @@ import { generateRivalStudios, processRivalStudios } from "./rivalStudioEngine.j
 import { processProductionEvents } from "./eventEngine.js";
 import { processRandomEvents } from "./eventEngine.js";
 import { processMerchandiseSales } from "./merchandiseEngine.js";
+import { processMerchandiseLines } from "./merchandiseLinesEngine.js";
 import { processAnnualAwards } from "./awardsEngine.js";
 import { generateNewsFromTrend, generateNewsFromEvent } from "./newsEngine.js";
 import { processStreamingPlatformGrowth, processStreamingRevenue } from "./streamingEngine.js";
@@ -227,6 +228,9 @@ export const processWeeklyTick = async (gameState, studio) => {
   // after platform growth so royalties reflect this week's platform popularity.
   await processStreamingRevenue(gameState, studio);
 
+  // Process studio merchandise product lines (issue #349)
+  processMerchandiseLines(gameState, studio);
+
   // 12. PR & Scandal events — roll for studio scandals and apply
   //     reputation decay (issue #281).
   processScandals(gameState, studio);
diff --git a/backend/tests/merchandiseLinesEngine.test.js b/backend/tests/merchandiseLinesEngine.test.js
new file mode 100644
index 00000000..b350810d
--- /dev/null
+++ b/backend/tests/merchandiseLinesEngine.test.js
@@ -0,0 +1,73 @@
+import test from "node:test";
+import assert from "node:assert";
+import { processMerchandiseLines, MERCH_LINE_TIERS } from "../src/services/simulation/engines/merchandiseLinesEngine.js";
+
+test("merchandiseLinesEngine: returns 0 if no lines", () => {
+  const gameState = { currentWeek: 10 };
+  const studio = { money: 1000000, fans: 10000, prestige: 50 };
+  const revenue = processMerchandiseLines(gameState, studio);
+  assert.strictEqual(revenue, 0);
+  assert.strictEqual(studio.money, 1000000);
+});
+
+test("merchandiseLinesEngine: generates revenue for active apparel line", () => {
+  const gameState = { currentWeek: 10 };
+  const studio = {
+    money: 1000000,
+    fans: 10000,
+    prestige: 50,
+    merchandiseLines: [{ tier: "APPAREL", active: true, totalRevenue: 0, campaigns: [] }],
+    merchandiseIncomeHistory: []
+  };
+  const revenue = processMerchandiseLines(gameState, studio);
+  assert.ok(revenue > 0);
+  assert.ok(studio.money > 1000000);
+  assert.strictEqual(studio.merchandiseIncomeHistory.length, 1);
+});
+
+test("merchandiseLinesEngine: skips inactive lines", () => {
+  const gameState = { currentWeek: 10 };
+  const studio = {
+    money: 1000000,
+    fans: 10000,
+    prestige: 50,
+    merchandiseLines: [{ tier: "APPAREL", active: false, totalRevenue: 0, campaigns: [] }]
+  };
+  const revenue = processMerchandiseLines(gameState, studio);
+  assert.strictEqual(revenue, 0);
+  assert.strictEqual(studio.money, 1000000);
+});
+
+test("merchandiseLinesEngine: applies campaign boost", () => {
+  const gameState = { currentWeek: 10 };
+  const studioWithoutCampaign = {
+    money: 1000000, fans: 10000, prestige: 50,
+    merchandiseLines: [{ tier: "APPAREL", active: true, totalRevenue: 0, campaigns: [] }],
+    merchandiseIncomeHistory: []
+  };
+  const studioWithCampaign = {
+    money: 1000000, fans: 10000, prestige: 50,
+    merchandiseLines: [{ tier: "APPAREL", active: true, totalRevenue: 0, campaigns: [
+      { startWeek: 8, endWeek: 14, boostMultiplier: 0.5, active: true }
+    ]}],
+    merchandiseIncomeHistory: []
+  };
+  const revenueWithout = processMerchandiseLines(gameState, studioWithoutCampaign);
+  const revenueWith = processMerchandiseLines(gameState, studioWithCampaign);
+  assert.ok(revenueWith > revenueWithout, "Campaign should boost revenue");
+});
+
+test("merchandiseLinesEngine: expires campaign after endWeek", () => {
+  const gameState = { currentWeek: 20 };
+  const studio = {
+    money: 1000000, fans: 10000, prestige: 50,
+    merchandiseLines: [{ tier: "APPAREL", active: true, totalRevenue: 0, campaigns: [
+      { startWeek: 8, endWeek: 14, boostMultiplier: 0.5, active: true }
+    ]}],
+    merchandiseIncomeHistory: []
+  };
+  processMerchandiseLines(gameState, studio);
+  // Campaign should have been expired (week 20 > endWeek 14)
+  const campaign = studio.merchandiseLines[0].campaigns[0];
+  assert.strictEqual(campaign.active, false);
+});