diff --git a/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessions.ts b/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessions.ts
index 16ed35cb16b..4cc9edf8ac9 100644
--- a/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessions.ts
+++ b/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessions.ts
@@ -15,7 +15,8 @@ export enum AgentSessionProviders {
 	Local = localChatSessionType,
 	Background = 'copilotcli',
 	Cloud = 'copilot-cloud-agent',
-	ClaudeCode = 'claude-code',
+	Claude = 'claude-code',
+	Codex = 'openai-codex',
 }
 
 export function getAgentSessionProvider(sessionResource: URI | string): AgentSessionProviders | undefined {
@@ -24,7 +25,8 @@ export function getAgentSessionProvider(sessionResource: URI | string): AgentSes
 		case AgentSessionProviders.Local:
 		case AgentSessionProviders.Background:
 		case AgentSessionProviders.Cloud:
-		case AgentSessionProviders.ClaudeCode:
+		case AgentSessionProviders.Claude:
+		case AgentSessionProviders.Codex:
 			return type;
 		default:
 			return undefined;
@@ -39,8 +41,10 @@ export function getAgentSessionProviderName(provider: AgentSessionProviders): st
 			return localize('chat.session.providerLabel.background', "Background");
 		case AgentSessionProviders.Cloud:
 			return localize('chat.session.providerLabel.cloud', "Cloud");
-		case AgentSessionProviders.ClaudeCode:
-			return localize('chat.session.providerLabel.claude', "Claude");
+		case AgentSessionProviders.Claude:
+			return 'Claude';
+		case AgentSessionProviders.Codex:
+			return 'Codex';
 	}
 }
 
@@ -52,7 +56,8 @@ export function getAgentSessionProviderIcon(provider: AgentSessionProviders): Th
 			return Codicon.worktree;
 		case AgentSessionProviders.Cloud:
 			return Codicon.cloud;
-		case AgentSessionProviders.ClaudeCode:
+		case AgentSessionProviders.Codex:
+		case AgentSessionProviders.Claude:
 			return Codicon.code;
 	}
 }
@@ -63,7 +68,20 @@ export function isFirstPartyAgentSessionProvider(provider: AgentSessionProviders
 		case AgentSessionProviders.Background:
 		case AgentSessionProviders.Cloud:
 			return true;
-		case AgentSessionProviders.ClaudeCode:
+		case AgentSessionProviders.Claude:
+		case AgentSessionProviders.Codex:
+			return false;
+	}
+}
+
+export function getAgentCanContinueIn(provider: AgentSessionProviders): boolean {
+	switch (provider) {
+		case AgentSessionProviders.Local:
+		case AgentSessionProviders.Background:
+		case AgentSessionProviders.Cloud:
+			return true;
+		case AgentSessionProviders.Claude:
+		case AgentSessionProviders.Codex:
 			return false;
 	}
 }
diff --git a/src/vs/workbench/contrib/chat/browser/chatSessions/chatSessions.contribution.ts b/src/vs/workbench/contrib/chat/browser/chatSessions/chatSessions.contribution.ts
index 7b973bc922d..9212545a22f 100644
--- a/src/vs/workbench/contrib/chat/browser/chatSessions/chatSessions.contribution.ts
+++ b/src/vs/workbench/contrib/chat/browser/chatSessions/chatSessions.contribution.ts
@@ -49,6 +49,7 @@ import { BugIndicatingError } from '../../../../../base/common/errors.js';
 import { IEditorGroupsService } from '../../../../services/editor/common/editorGroupsService.js';
 import { LocalChatSessionUri } from '../../common/model/chatUri.js';
 import { assertNever } from '../../../../../base/common/assert.js';
+import { ICommandService } from '../../../../../platform/commands/common/commands.js';
 
 const extensionPoint = ExtensionsRegistry.registerExtensionPoint<IChatSessionsExtensionPoint[]>({
 	extensionPoint: 'chatSessions',
@@ -516,12 +517,18 @@ export class ChatSessionsService extends Disposable implements IChatSessionsServ
 		const disposables = new DisposableStore();
 
 		// Mirror all create submenu actions into the global Chat New menu
-		for (const action of menuActions) {
+		for (let i = 0; i < menuActions.length; i++) {
+			const action = menuActions[i];
 			if (action instanceof MenuItemAction) {
-				disposables.add(MenuRegistry.appendMenuItem(MenuId.ChatNewMenu, {
-					command: action.item,
-					group: '4_externally_contributed',
-				}));
+				// TODO: This is an odd way to do this, but the best we can do currently
+				if (i === 0 && !contribution.canDelegate) {
+					disposables.add(registerNewSessionExternalAction(contribution.type, contribution.displayName, action.item.id));
+				} else {
+					disposables.add(MenuRegistry.appendMenuItem(MenuId.ChatNewMenu, {
+						command: action.item,
+						group: '4_externally_contributed',
+					}));
+				}
 			}
 		}
 		return {
@@ -1125,6 +1132,24 @@ function registerNewSessionInPlaceAction(type: string, displayName: string): IDi
 	});
 }
 
+function registerNewSessionExternalAction(type: string, displayName: string, commandId: string): IDisposable {
+	return registerAction2(class NewChatSessionExternalAction extends Action2 {
+		constructor() {
+			super({
+				id: `workbench.action.chat.openNewChatSessionExternal.${type}`,
+				title: localize2('interactiveSession.openNewChatSessionExternal', "New {0}", displayName),
+				category: CHAT_CATEGORY,
+				f1: false,
+				precondition: ChatContextKeys.enabled,
+			});
+		}
+		async run(accessor: ServicesAccessor): Promise<void> {
+			const commandService = accessor.get(ICommandService);
+			await commandService.executeCommand(commandId);
+		}
+	});
+}
+
 enum ChatSessionPosition {
 	Editor = 'editor',
 	Sidebar = 'sidebar'
diff --git a/src/vs/workbench/contrib/chat/browser/widget/input/delegationSessionPickerActionItem.ts b/src/vs/workbench/contrib/chat/browser/widget/input/delegationSessionPickerActionItem.ts
index c5c0fc6ad2e..9e562c53e3d 100644
--- a/src/vs/workbench/contrib/chat/browser/widget/input/delegationSessionPickerActionItem.ts
+++ b/src/vs/workbench/contrib/chat/browser/widget/input/delegationSessionPickerActionItem.ts
@@ -9,7 +9,7 @@ import { URI } from '../../../../../../base/common/uri.js';
 import { localize } from '../../../../../../nls.js';
 import { IActionWidgetDropdownAction } from '../../../../../../platform/actionWidget/browser/actionWidgetDropdown.js';
 import { ACTION_ID_NEW_CHAT } from '../../actions/chatActions.js';
-import { AgentSessionProviders, getAgentSessionProvider } from '../../agentSessions/agentSessions.js';
+import { AgentSessionProviders, getAgentCanContinueIn, getAgentSessionProvider, isFirstPartyAgentSessionProvider } from '../../agentSessions/agentSessions.js';
 import { ISessionTypeItem, SessionTypePickerActionItem } from './sessionTargetPickerActionItem.js';
 
 /**
@@ -49,8 +49,19 @@ export class DelegationSessionPickerActionItem extends SessionTypePickerActionIt
 		return this._getSelectedSessionType() !== type; // Always allow switching back to active session
 	}
 
+	protected override _isVisible(type: AgentSessionProviders): boolean {
+		if (this.delegate.getActiveSessionProvider() === type) {
+			return true; // Always show active session type
+		}
+
+		return getAgentCanContinueIn(type);
+	}
+
 	protected override _getSessionCategory(sessionTypeItem: ISessionTypeItem) {
-		return { label: localize('continueIn', "Continue In"), order: 1, showHeader: true };
+		if (isFirstPartyAgentSessionProvider(sessionTypeItem.type)) {
+			return { label: localize('continueIn', "Continue In"), order: 1, showHeader: true };
+		}
+		return { label: localize('continueInThirdParty', "Continue In (Third Party)"), order: 2, showHeader: false };
 	}
 
 	protected override _getSessionDescription(sessionTypeItem: ISessionTypeItem): string | undefined {
diff --git a/src/vs/workbench/contrib/chat/browser/widget/input/sessionTargetPickerActionItem.ts b/src/vs/workbench/contrib/chat/browser/widget/input/sessionTargetPickerActionItem.ts
index 5f5761e0e30..bc378fc83fe 100644
--- a/src/vs/workbench/contrib/chat/browser/widget/input/sessionTargetPickerActionItem.ts
+++ b/src/vs/workbench/contrib/chat/browser/widget/input/sessionTargetPickerActionItem.ts
@@ -58,6 +58,10 @@ export class SessionTypePickerActionItem extends ChatInputPickerActionViewItem {
 
 				const actions: IActionWidgetDropdownAction[] = [...this._getAdditionalActions()];
 				for (const sessionTypeItem of this._sessionTypeItems) {
+					if (!this._isVisible(sessionTypeItem.type)) {
+						continue;
+					}
+
 					actions.push({
 						...action,
 						id: sessionTypeItem.commandId,
@@ -134,14 +138,14 @@ export class SessionTypePickerActionItem extends ChatInputPickerActionViewItem {
 	}
 
 	private _updateAgentSessionItems(): void {
-		const localSessionItem = {
+		const localSessionItem: ISessionTypeItem = {
 			type: AgentSessionProviders.Local,
 			label: getAgentSessionProviderName(AgentSessionProviders.Local),
 			description: localize('chat.sessionTarget.local.description', "Local chat session"),
 			commandId: `workbench.action.chat.openNewChatSessionInPlace.${AgentSessionProviders.Local}`,
 		};
 
-		const agentSessionItems = [localSessionItem];
+		const agentSessionItems: ISessionTypeItem[] = [localSessionItem];
 
 		const contributions = this.chatSessionsService.getAllChatSessionContributions();
 		for (const contribution of contributions) {
@@ -154,12 +158,18 @@ export class SessionTypePickerActionItem extends ChatInputPickerActionViewItem {
 				type: agentSessionType,
 				label: getAgentSessionProviderName(agentSessionType),
 				description: contribution.description,
-				commandId: `workbench.action.chat.openNewChatSessionInPlace.${contribution.type}`,
+				commandId: contribution.canDelegate ?
+					`workbench.action.chat.openNewChatSessionInPlace.${contribution.type}` :
+					`workbench.action.chat.openNewChatSessionExternal.${contribution.type}`,
 			});
 		}
 		this._sessionTypeItems = agentSessionItems;
 	}
 
+	protected _isVisible(type: AgentSessionProviders): boolean {
+		return true;
+	}
+
 	protected _isSessionTypeEnabled(type: AgentSessionProviders): boolean {
 		return true;
 	}