diff --git a/.vscode/settings.json b/.vscode/settings.json
index bfb8f5e3e9a..d9aeed84432 100644
--- a/.vscode/settings.json
+++ b/.vscode/settings.json
@@ -210,6 +210,5 @@
 	],
 	"azureMcp.serverMode": "all",
 	"azureMcp.readOnly": true,
-	"chat.tools.terminal.outputLocation": "chat",
 	"debug.breakpointsView.presentation": "tree"
 }
diff --git a/build/azure-pipelines/common/releaseBuild.ts b/build/azure-pipelines/common/releaseBuild.ts
index 01792fd22e1..92b6d22614d 100644
--- a/build/azure-pipelines/common/releaseBuild.ts
+++ b/build/azure-pipelines/common/releaseBuild.ts
@@ -4,7 +4,12 @@
  *--------------------------------------------------------------------------------------------*/
 
 import { CosmosClient } from '@azure/cosmos';
+import path from 'path';
+import fs from 'fs';
 import { retry } from './retry.ts';
+import { type IExtensionManifest, parseApiProposalsFromSource, checkExtensionCompatibility } from './versionCompatibility.ts';
+
+const root = path.dirname(path.dirname(path.dirname(import.meta.dirname)));
 
 function getEnv(name: string): string {
 	const result = process.env[name];
@@ -16,6 +21,80 @@ function getEnv(name: string): string {
 	return result;
 }
 
+async function fetchLatestExtensionManifest(extensionId: string): Promise<IExtensionManifest> {
+	// Use the vscode-unpkg service to get the latest extension package.json
+	const [publisher, name] = extensionId.split('.');
+
+	// First, get the latest version from the gallery endpoint
+	const galleryUrl = `https://main.vscode-unpkg.net/_gallery/${publisher}/${name}/latest`;
+	const galleryResponse = await fetch(galleryUrl, {
+		headers: { 'User-Agent': 'VSCode Build' }
+	});
+
+	if (!galleryResponse.ok) {
+		throw new Error(`Failed to fetch latest version for ${extensionId}: ${galleryResponse.status} ${galleryResponse.statusText}`);
+	}
+
+	const galleryData = await galleryResponse.json() as { versions: { version: string }[] };
+	const version = galleryData.versions[0].version;
+
+	// Now fetch the package.json using the actual version
+	const url = `https://${publisher}.vscode-unpkg.net/${publisher}/${name}/${version}/extension/package.json`;
+
+	const response = await fetch(url, {
+		headers: { 'User-Agent': 'VSCode Build' }
+	});
+
+	if (!response.ok) {
+		throw new Error(`Failed to fetch extension ${extensionId} from unpkg: ${response.status} ${response.statusText}`);
+	}
+
+	return await response.json() as IExtensionManifest;
+}
+
+async function checkCopilotChatCompatibility(): Promise<void> {
+	const extensionId = 'github.copilot-chat';
+
+	console.log(`Checking compatibility of ${extensionId}...`);
+
+	// Get product version from package.json
+	const packageJson = JSON.parse(fs.readFileSync(path.join(root, 'package.json'), 'utf8'));
+	const productVersion = packageJson.version;
+
+	console.log(`Product version: ${productVersion}`);
+
+	// Get API proposals from the generated file
+	const apiProposalsPath = path.join(root, 'src/vs/platform/extensions/common/extensionsApiProposals.ts');
+	const apiProposalsContent = fs.readFileSync(apiProposalsPath, 'utf8');
+	const allApiProposals = parseApiProposalsFromSource(apiProposalsContent);
+
+	const proposalCount = Object.keys(allApiProposals).length;
+	if (proposalCount === 0) {
+		throw new Error('Failed to load API proposals from source');
+	}
+
+	console.log(`Loaded ${proposalCount} API proposals from source`);
+
+	// Fetch the latest extension manifest
+	const manifest = await retry(() => fetchLatestExtensionManifest(extensionId));
+
+	console.log(`Extension ${extensionId}@${manifest.version}:`);
+	console.log(`  engines.vscode: ${manifest.engines.vscode}`);
+	console.log(`  enabledApiProposals:\n    ${manifest.enabledApiProposals?.join('\n    ') || 'none'}`);
+
+	// Check compatibility
+	const result = checkExtensionCompatibility(productVersion, allApiProposals, manifest);
+	if (!result.compatible) {
+		throw new Error(`Compatibility check failed:\n  ${result.errors.join('\n  ')}`);
+	}
+
+	console.log(`  ✓ Engine version compatible`);
+	if (manifest.enabledApiProposals?.length) {
+		console.log(`  ✓ API proposals compatible`);
+	}
+	console.log(`✓ ${extensionId} is compatible with this build`);
+}
+
 interface Config {
 	id: string;
 	frozen: boolean;
@@ -43,6 +122,12 @@ async function getConfig(client: CosmosClient, quality: string): Promise<Config>
 async function main(force: boolean): Promise<void> {
 	const commit = getEnv('BUILD_SOURCEVERSION');
 	const quality = getEnv('VSCODE_QUALITY');
+
+	// Check Copilot Chat compatibility before releasing insider builds
+	if (quality === 'insider') {
+		await checkCopilotChatCompatibility();
+	}
+
 	const { cosmosDBAccessToken } = JSON.parse(getEnv('PUBLISH_AUTH_TOKENS'));
 	const client = new CosmosClient({ endpoint: process.env['AZURE_DOCUMENTDB_ENDPOINT']!, tokenProvider: () => Promise.resolve(`type=aad&ver=1.0&sig=${cosmosDBAccessToken.token}`) });
 
diff --git a/build/azure-pipelines/common/versionCompatibility.ts b/build/azure-pipelines/common/versionCompatibility.ts
new file mode 100644
index 00000000000..3246ef04df5
--- /dev/null
+++ b/build/azure-pipelines/common/versionCompatibility.ts
@@ -0,0 +1,347 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import assert from 'assert';
+
+export interface IExtensionManifest {
+	name: string;
+	publisher: string;
+	version: string;
+	engines: { vscode: string };
+	main?: string;
+	browser?: string;
+	enabledApiProposals?: string[];
+}
+
+export function isEngineCompatible(productVersion: string, engineVersion: string): { compatible: boolean; error?: string } {
+	if (engineVersion === '*') {
+		return { compatible: true };
+	}
+
+	const versionMatch = engineVersion.match(/^(\^|>=)?(\d+)\.(\d+)\.(\d+)/);
+	if (!versionMatch) {
+		return { compatible: false, error: `Could not parse engines.vscode value: ${engineVersion}` };
+	}
+
+	const [, prefix, major, minor, patch] = versionMatch;
+	const productMatch = productVersion.match(/^(\d+)\.(\d+)\.(\d+)/);
+	if (!productMatch) {
+		return { compatible: false, error: `Could not parse product version: ${productVersion}` };
+	}
+
+	const [, prodMajor, prodMinor, prodPatch] = productMatch;
+
+	const reqMajor = parseInt(major);
+	const reqMinor = parseInt(minor);
+	const reqPatch = parseInt(patch);
+	const pMajor = parseInt(prodMajor);
+	const pMinor = parseInt(prodMinor);
+	const pPatch = parseInt(prodPatch);
+
+	if (prefix === '>=') {
+		// Minimum version check
+		if (pMajor > reqMajor) { return { compatible: true }; }
+		if (pMajor < reqMajor) { return { compatible: false, error: `Extension requires VS Code >=${engineVersion}, but product version is ${productVersion}` }; }
+		if (pMinor > reqMinor) { return { compatible: true }; }
+		if (pMinor < reqMinor) { return { compatible: false, error: `Extension requires VS Code >=${engineVersion}, but product version is ${productVersion}` }; }
+		if (pPatch >= reqPatch) { return { compatible: true }; }
+		return { compatible: false, error: `Extension requires VS Code >=${engineVersion}, but product version is ${productVersion}` };
+	}
+
+	// Caret or exact version check
+	if (pMajor !== reqMajor) {
+		return { compatible: false, error: `Extension requires VS Code ${engineVersion}, but product version is ${productVersion} (major version mismatch)` };
+	}
+
+	if (prefix === '^') {
+		// Caret: same major, minor and patch must be >= required
+		if (pMinor > reqMinor) { return { compatible: true }; }
+		if (pMinor < reqMinor) { return { compatible: false, error: `Extension requires VS Code ${engineVersion}, but product version is ${productVersion}` }; }
+		if (pPatch >= reqPatch) { return { compatible: true }; }
+		return { compatible: false, error: `Extension requires VS Code ${engineVersion}, but product version is ${productVersion}` };
+	}
+
+	// Exact or default behavior
+	if (pMinor < reqMinor) { return { compatible: false, error: `Extension requires VS Code ${engineVersion}, but product version is ${productVersion}` }; }
+	if (pMinor > reqMinor) { return { compatible: true }; }
+	if (pPatch >= reqPatch) { return { compatible: true }; }
+	return { compatible: false, error: `Extension requires VS Code ${engineVersion}, but product version is ${productVersion}` };
+}
+
+export function parseApiProposals(enabledApiProposals: string[]): { proposalName: string; version?: number }[] {
+	return enabledApiProposals.map(proposal => {
+		const [proposalName, version] = proposal.split('@');
+		return { proposalName, version: version ? parseInt(version) : undefined };
+	});
+}
+
+export function areApiProposalsCompatible(
+	apiProposals: string[],
+	productApiProposals: Readonly<{ [proposalName: string]: Readonly<{ proposal: string; version?: number }> }>
+): { compatible: boolean; errors: string[] } {
+	if (apiProposals.length === 0) {
+		return { compatible: true, errors: [] };
+	}
+
+	const errors: string[] = [];
+	const parsedProposals = parseApiProposals(apiProposals);
+
+	for (const { proposalName, version } of parsedProposals) {
+		if (!version) {
+			continue;
+		}
+		const existingProposal = productApiProposals[proposalName];
+		if (!existingProposal) {
+			errors.push(`API proposal '${proposalName}' does not exist in this version of VS Code`);
+		} else if (existingProposal.version !== version) {
+			errors.push(`API proposal '${proposalName}' version mismatch: extension requires version ${version}, but VS Code has version ${existingProposal.version ?? 'unversioned'}`);
+		}
+	}
+
+	return { compatible: errors.length === 0, errors };
+}
+
+export function parseApiProposalsFromSource(content: string): { [proposalName: string]: { proposal: string; version?: number } } {
+	const allApiProposals: { [proposalName: string]: { proposal: string; version?: number } } = {};
+
+	// Match proposal blocks like: proposalName: {\n\t\tproposal: '...',\n\t\tversion: N\n\t}
+	// or: proposalName: {\n\t\tproposal: '...',\n\t}
+	const proposalBlockRegex = /\t(\w+):\s*\{([^}]+)\}/g;
+	const versionRegex = /version:\s*(\d+)/;
+
+	let match;
+	while ((match = proposalBlockRegex.exec(content)) !== null) {
+		const [, name, block] = match;
+		const versionMatch = versionRegex.exec(block);
+		allApiProposals[name] = {
+			proposal: '',
+			version: versionMatch ? parseInt(versionMatch[1]) : undefined
+		};
+	}
+
+	return allApiProposals;
+}
+
+export function checkExtensionCompatibility(
+	productVersion: string,
+	productApiProposals: Readonly<{ [proposalName: string]: Readonly<{ proposal: string; version?: number }> }>,
+	manifest: IExtensionManifest
+): { compatible: boolean; errors: string[] } {
+	const errors: string[] = [];
+
+	// Check engine compatibility
+	const engineResult = isEngineCompatible(productVersion, manifest.engines.vscode);
+	if (!engineResult.compatible) {
+		errors.push(engineResult.error!);
+	}
+
+	// Check API proposals compatibility
+	if (manifest.enabledApiProposals?.length) {
+		const apiResult = areApiProposalsCompatible(manifest.enabledApiProposals, productApiProposals);
+		if (!apiResult.compatible) {
+			errors.push(...apiResult.errors);
+		}
+	}
+
+	return { compatible: errors.length === 0, errors };
+}
+
+if (import.meta.main) {
+	console.log('Running version compatibility tests...\n');
+
+	// isEngineCompatible tests
+	console.log('Testing isEngineCompatible...');
+
+	// Wildcard
+	assert.strictEqual(isEngineCompatible('1.50.0', '*').compatible, true);
+
+	// Invalid engine version
+	assert.strictEqual(isEngineCompatible('1.50.0', 'invalid').compatible, false);
+
+	// Invalid product version
+	assert.strictEqual(isEngineCompatible('invalid', '1.50.0').compatible, false);
+
+	// >= prefix
+	assert.strictEqual(isEngineCompatible('1.50.0', '>=1.50.0').compatible, true);
+	assert.strictEqual(isEngineCompatible('1.50.1', '>=1.50.0').compatible, true);
+	assert.strictEqual(isEngineCompatible('1.51.0', '>=1.50.0').compatible, true);
+	assert.strictEqual(isEngineCompatible('2.0.0', '>=1.50.0').compatible, true);
+	assert.strictEqual(isEngineCompatible('1.49.0', '>=1.50.0').compatible, false);
+	assert.strictEqual(isEngineCompatible('1.50.0', '>=1.50.1').compatible, false);
+	assert.strictEqual(isEngineCompatible('0.50.0', '>=1.50.0').compatible, false);
+
+	// ^ prefix (caret)
+	assert.strictEqual(isEngineCompatible('1.50.0', '^1.50.0').compatible, true);
+	assert.strictEqual(isEngineCompatible('1.50.1', '^1.50.0').compatible, true);
+	assert.strictEqual(isEngineCompatible('1.51.0', '^1.50.0').compatible, true);
+	assert.strictEqual(isEngineCompatible('1.49.0', '^1.50.0').compatible, false);
+	assert.strictEqual(isEngineCompatible('1.50.0', '^1.50.1').compatible, false);
+	assert.strictEqual(isEngineCompatible('2.0.0', '^1.50.0').compatible, false);
+
+	// Exact/default (no prefix)
+	assert.strictEqual(isEngineCompatible('1.50.0', '1.50.0').compatible, true);
+	assert.strictEqual(isEngineCompatible('1.50.1', '1.50.0').compatible, true);
+	assert.strictEqual(isEngineCompatible('1.51.0', '1.50.0').compatible, true);
+	assert.strictEqual(isEngineCompatible('1.49.0', '1.50.0').compatible, false);
+	assert.strictEqual(isEngineCompatible('1.50.0', '1.50.1').compatible, false);
+	assert.strictEqual(isEngineCompatible('2.0.0', '1.50.0').compatible, false);
+
+	console.log('  ✓ isEngineCompatible tests passed\n');
+
+	// parseApiProposals tests
+	console.log('Testing parseApiProposals...');
+
+	assert.deepStrictEqual(parseApiProposals([]), []);
+	assert.deepStrictEqual(parseApiProposals(['proposalA']), [{ proposalName: 'proposalA', version: undefined }]);
+	assert.deepStrictEqual(parseApiProposals(['proposalA@1']), [{ proposalName: 'proposalA', version: 1 }]);
+	assert.deepStrictEqual(parseApiProposals(['proposalA@1', 'proposalB', 'proposalC@3']), [
+		{ proposalName: 'proposalA', version: 1 },
+		{ proposalName: 'proposalB', version: undefined },
+		{ proposalName: 'proposalC', version: 3 }
+	]);
+
+	console.log('  ✓ parseApiProposals tests passed\n');
+
+	// areApiProposalsCompatible tests
+	console.log('Testing areApiProposalsCompatible...');
+
+	const productProposals = {
+		proposalA: { proposal: '', version: 1 },
+		proposalB: { proposal: '', version: 2 },
+		proposalC: { proposal: '' } // unversioned
+	};
+
+	// Empty proposals
+	assert.strictEqual(areApiProposalsCompatible([], productProposals).compatible, true);
+
+	// Unversioned extension proposals (always compatible)
+	assert.strictEqual(areApiProposalsCompatible(['proposalA', 'proposalB'], productProposals).compatible, true);
+	assert.strictEqual(areApiProposalsCompatible(['unknownProposal'], productProposals).compatible, true);
+
+	// Versioned proposals - matching
+	assert.strictEqual(areApiProposalsCompatible(['proposalA@1'], productProposals).compatible, true);
+	assert.strictEqual(areApiProposalsCompatible(['proposalA@1', 'proposalB@2'], productProposals).compatible, true);
+
+	// Versioned proposals - version mismatch
+	assert.strictEqual(areApiProposalsCompatible(['proposalA@2'], productProposals).compatible, false);
+	assert.strictEqual(areApiProposalsCompatible(['proposalB@1'], productProposals).compatible, false);
+
+	// Versioned proposals - missing proposal
+	assert.strictEqual(areApiProposalsCompatible(['unknownProposal@1'], productProposals).compatible, false);
+
+	// Versioned proposals - product has unversioned
+	assert.strictEqual(areApiProposalsCompatible(['proposalC@1'], productProposals).compatible, false);
+
+	// Mixed versioned and unversioned
+	assert.strictEqual(areApiProposalsCompatible(['proposalA@1', 'proposalB'], productProposals).compatible, true);
+	assert.strictEqual(areApiProposalsCompatible(['proposalA@2', 'proposalB'], productProposals).compatible, false);
+
+	console.log('  ✓ areApiProposalsCompatible tests passed\n');
+
+	// parseApiProposalsFromSource tests
+	console.log('Testing parseApiProposalsFromSource...');
+
+	const sampleSource = `
+export const allApiProposals = {
+	authSession: {
+		proposal: 'vscode.proposed.authSession.d.ts',
+	},
+	chatParticipant: {
+		proposal: 'vscode.proposed.chatParticipant.d.ts',
+		version: 2
+	},
+	testProposal: {
+		proposal: 'vscode.proposed.testProposal.d.ts',
+		version: 15
+	}
+};
+`;
+
+	const parsedSource = parseApiProposalsFromSource(sampleSource);
+	assert.strictEqual(Object.keys(parsedSource).length, 3);
+	assert.strictEqual(parsedSource['authSession']?.version, undefined);
+	assert.strictEqual(parsedSource['chatParticipant']?.version, 2);
+	assert.strictEqual(parsedSource['testProposal']?.version, 15);
+
+	// Empty source
+	assert.strictEqual(Object.keys(parseApiProposalsFromSource('')).length, 0);
+
+	console.log('  ✓ parseApiProposalsFromSource tests passed\n');
+
+	// checkExtensionCompatibility tests
+	console.log('Testing checkExtensionCompatibility...');
+
+	const testApiProposals = {
+		authSession: { proposal: '', version: undefined },
+		chatParticipant: { proposal: '', version: 2 },
+		testProposal: { proposal: '', version: 15 }
+	};
+
+	// Compatible extension - matching engine and proposals
+	assert.strictEqual(checkExtensionCompatibility('1.90.0', testApiProposals, {
+		name: 'test-ext',
+		publisher: 'test',
+		version: '1.0.0',
+		engines: { vscode: '^1.90.0' },
+		enabledApiProposals: ['chatParticipant@2']
+	}).compatible, true);
+
+	// Compatible - no API proposals
+	assert.strictEqual(checkExtensionCompatibility('1.90.0', testApiProposals, {
+		name: 'test-ext',
+		publisher: 'test',
+		version: '1.0.0',
+		engines: { vscode: '^1.90.0' }
+	}).compatible, true);
+
+	// Compatible - unversioned API proposals
+	assert.strictEqual(checkExtensionCompatibility('1.90.0', testApiProposals, {
+		name: 'test-ext',
+		publisher: 'test',
+		version: '1.0.0',
+		engines: { vscode: '^1.90.0' },
+		enabledApiProposals: ['authSession', 'chatParticipant']
+	}).compatible, true);
+
+	// Incompatible - engine version too new
+	assert.strictEqual(checkExtensionCompatibility('1.89.0', testApiProposals, {
+		name: 'test-ext',
+		publisher: 'test',
+		version: '1.0.0',
+		engines: { vscode: '^1.90.0' },
+		enabledApiProposals: ['chatParticipant@2']
+	}).compatible, false);
+
+	// Incompatible - API proposal version mismatch
+	assert.strictEqual(checkExtensionCompatibility('1.90.0', testApiProposals, {
+		name: 'test-ext',
+		publisher: 'test',
+		version: '1.0.0',
+		engines: { vscode: '^1.90.0' },
+		enabledApiProposals: ['chatParticipant@3']
+	}).compatible, false);
+
+	// Incompatible - missing API proposal
+	assert.strictEqual(checkExtensionCompatibility('1.90.0', testApiProposals, {
+		name: 'test-ext',
+		publisher: 'test',
+		version: '1.0.0',
+		engines: { vscode: '^1.90.0' },
+		enabledApiProposals: ['unknownProposal@1']
+	}).compatible, false);
+
+	// Incompatible - both engine and API proposal issues
+	assert.strictEqual(checkExtensionCompatibility('1.89.0', testApiProposals, {
+		name: 'test-ext',
+		publisher: 'test',
+		version: '1.0.0',
+		engines: { vscode: '^1.90.0' },
+		enabledApiProposals: ['chatParticipant@3']
+	}).compatible, false);
+
+	console.log('  ✓ checkExtensionCompatibility tests passed\n');
+
+	console.log('All tests passed! ✓');
+}
diff --git a/build/gulpfile.cli.ts b/build/gulpfile.cli.ts
index e746a00e2bb..974cf892e4f 100644
--- a/build/gulpfile.cli.ts
+++ b/build/gulpfile.cli.ts
@@ -13,9 +13,8 @@ import { tmpdir } from 'os';
 import { existsSync, mkdirSync, rmSync } from 'fs';
 import * as task from './lib/task.ts';
 import watcher from './lib/watch/index.ts';
-import { debounce } from './lib/util.ts';
+import { debounce, untar } from './lib/util.ts';
 import { createReporter } from './lib/reporter.ts';
-import untar from 'gulp-untar';
 import gunzip from 'gulp-gunzip';
 
 const root = 'cli';
diff --git a/build/gulpfile.reh.ts b/build/gulpfile.reh.ts
index cb1a0a5fd69..27149338d9f 100644
--- a/build/gulpfile.reh.ts
+++ b/build/gulpfile.reh.ts
@@ -21,7 +21,7 @@ import vfs from 'vinyl-fs';
 import packageJson from '../package.json' with { type: 'json' };
 import flatmap from 'gulp-flatmap';
 import gunzip from 'gulp-gunzip';
-import untar from 'gulp-untar';
+import { untar } from './lib/util.ts';
 import File from 'vinyl';
 import * as fs from 'fs';
 import glob from 'glob';
diff --git a/build/lib/typings/gulp-untar.d.ts b/build/lib/typings/gulp-untar.d.ts
deleted file mode 100644
index b4007983cac..00000000000
--- a/build/lib/typings/gulp-untar.d.ts
+++ /dev/null
@@ -1,12 +0,0 @@
-/*---------------------------------------------------------------------------------------------
- *  Copyright (c) Microsoft Corporation. All rights reserved.
- *  Licensed under the MIT License. See License.txt in the project root for license information.
- *--------------------------------------------------------------------------------------------*/
-
-declare module 'gulp-untar' {
-	import type { Transform } from 'stream';
-
-	function untar(): Transform;
-
-	export = untar;
-}
diff --git a/build/lib/util.ts b/build/lib/util.ts
index f1354b858c9..e4d01e143c9 100644
--- a/build/lib/util.ts
+++ b/build/lib/util.ts
@@ -15,6 +15,8 @@ import through from 'through';
 import sm from 'source-map';
 import { pathToFileURL } from 'url';
 import ternaryStream from 'ternary-stream';
+import type { Transform } from 'stream';
+import * as tar from 'tar';
 
 const root = path.dirname(path.dirname(import.meta.dirname));
 
@@ -429,3 +431,39 @@ export class VinylStat implements fs.Stats {
 	isFIFO(): boolean { return false; }
 	isSocket(): boolean { return false; }
 }
+
+export function untar(): Transform {
+	return es.through(function (this: through.ThroughStream, f: VinylFile) {
+		if (!f.contents || !Buffer.isBuffer(f.contents)) {
+			this.emit('error', new Error('Expected file with Buffer contents'));
+			return;
+		}
+
+		const self = this;
+		const parser = new tar.Parser();
+
+		parser.on('entry', (entry: tar.ReadEntry) => {
+			if (entry.type === 'File') {
+				const chunks: Buffer[] = [];
+				entry.on('data', (chunk: Buffer) => chunks.push(chunk));
+				entry.on('end', () => {
+					const file = new VinylFile({
+						path: entry.path,
+						contents: Buffer.concat(chunks),
+						stat: new VinylStat({
+							mode: entry.mode,
+							mtime: entry.mtime,
+							size: entry.size
+						})
+					});
+					self.emit('data', file);
+				});
+			} else {
+				entry.resume();
+			}
+		});
+
+		parser.on('error', (err: Error) => self.emit('error', err));
+		parser.end(f.contents);
+	}) as Transform;
+}
diff --git a/extensions/git/src/git.ts b/extensions/git/src/git.ts
index 5b2ca69d087..fb431257d19 100644
--- a/extensions/git/src/git.ts
+++ b/extensions/git/src/git.ts
@@ -2958,13 +2958,10 @@ export class Repository {
 	}
 
 	private async getWorktreesFS(): Promise<Worktree[]> {
-		try {
-			// List all worktree folder names
-			const mainRepositoryPath = this.dotGit.commonPath ?? this.dotGit.path;
-			const worktreesPath = path.join(mainRepositoryPath, 'worktrees');
-			const dirents = await fs.readdir(worktreesPath, { withFileTypes: true });
-			const result: Worktree[] = [];
+		const result: Worktree[] = [];
+		const mainRepositoryPath = this.dotGit.commonPath ?? this.dotGit.path;
 
+		try {
 			if (!this.dotGit.isBare) {
 				// Add main worktree for a non-bare repository
 				const headPath = path.join(mainRepositoryPath, 'HEAD');
@@ -2981,6 +2978,10 @@ export class Repository {
 				} satisfies Worktree);
 			}
 
+			// List all worktree folder names
+			const worktreesPath = path.join(mainRepositoryPath, 'worktrees');
+			const dirents = await fs.readdir(worktreesPath, { withFileTypes: true });
+
 			for (const dirent of dirents) {
 				if (!dirent.isDirectory()) {
 					continue;
@@ -3016,7 +3017,7 @@ export class Repository {
 		}
 		catch (err) {
 			if (/ENOENT/.test(err.message) || /ENOTDIR/.test(err.message)) {
-				return [];
+				return result;
 			}
 
 			throw err;
diff --git a/package-lock.json b/package-lock.json
index 2b2332b3383..74e77c2e608 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -121,7 +121,6 @@
         "gulp-replace": "^0.5.4",
         "gulp-sourcemaps": "^3.0.0",
         "gulp-svgmin": "^4.1.0",
-        "gulp-untar": "^0.0.7",
         "husky": "^0.13.1",
         "innosetup": "^6.4.1",
         "istanbul-lib-coverage": "^3.2.0",
@@ -148,6 +147,7 @@
         "source-map": "0.6.1",
         "source-map-support": "^0.3.2",
         "style-loader": "^3.3.2",
+        "tar": "^7.5.2",
         "ts-loader": "^9.5.1",
         "tsec": "0.2.7",
         "tslib": "^2.6.3",
@@ -1267,6 +1267,29 @@
         "url": "https://github.com/chalk/wrap-ansi?sponsor=1"
       }
     },
+    "node_modules/@isaacs/fs-minipass": {
+      "version": "4.0.1",
+      "resolved": "https://registry.npmjs.org/@isaacs/fs-minipass/-/fs-minipass-4.0.1.tgz",
+      "integrity": "sha512-wgm9Ehl2jpeqP3zw/7mo3kRHFp5MEDhqAdwy1fTGkHAwnkGOVsgpvQhL8B5n1qlb01jV3n/bI0ZfZp5lWA1k4w==",
+      "dev": true,
+      "license": "ISC",
+      "dependencies": {
+        "minipass": "^7.0.4"
+      },
+      "engines": {
+        "node": ">=18.0.0"
+      }
+    },
+    "node_modules/@isaacs/fs-minipass/node_modules/minipass": {
+      "version": "7.1.2",
+      "resolved": "https://registry.npmjs.org/minipass/-/minipass-7.1.2.tgz",
+      "integrity": "sha512-qOOzS1cBTWYF4BH8fVePDBOO9iptMnGUEZwNc/cMWnTV2nVLZ7VoNWEPHkYczZA0pdoA7dl6e7FL659nX9S2aw==",
+      "dev": true,
+      "license": "ISC",
+      "engines": {
+        "node": ">=16 || 14 >=14.17"
+      }
+    },
     "node_modules/@istanbuljs/schema": {
       "version": "0.1.3",
       "resolved": "https://registry.npmjs.org/@istanbuljs/schema/-/schema-0.1.3.tgz",
@@ -3350,6 +3373,40 @@
         "tar": "^6.1.11"
       }
     },
+    "node_modules/@vscode/sqlite3/node_modules/chownr": {
+      "version": "2.0.0",
+      "resolved": "https://registry.npmjs.org/chownr/-/chownr-2.0.0.tgz",
+      "integrity": "sha512-bIomtDF5KGpdogkLd9VspvFzk9KfpyyGlS8YFVZl7TGPBHL5snIOnxeshwVgPteQ9b4Eydl+pVbIyE1DcvCWgQ==",
+      "license": "ISC",
+      "engines": {
+        "node": ">=10"
+      }
+    },
+    "node_modules/@vscode/sqlite3/node_modules/minizlib": {
+      "version": "2.1.2",
+      "resolved": "https://registry.npmjs.org/minizlib/-/minizlib-2.1.2.tgz",
+      "integrity": "sha512-bAxsR8BVfj60DWXHE3u30oHzfl4G7khkSuPW+qvpd7jFRHm7dLxOjUk1EHACJ/hxLY8phGJ0YhYHZo7jil7Qdg==",
+      "license": "MIT",
+      "dependencies": {
+        "minipass": "^3.0.0",
+        "yallist": "^4.0.0"
+      },
+      "engines": {
+        "node": ">= 8"
+      }
+    },
+    "node_modules/@vscode/sqlite3/node_modules/minizlib/node_modules/minipass": {
+      "version": "3.3.6",
+      "resolved": "https://registry.npmjs.org/minipass/-/minipass-3.3.6.tgz",
+      "integrity": "sha512-DxiNidxSEK+tHG6zOIklvNOwm3hvCrbUrdtzY74U6HKTJxvIDfOUL5W5P2Ghd3DTkhhKPYGqeNUIh5qcM4YBfw==",
+      "license": "ISC",
+      "dependencies": {
+        "yallist": "^4.0.0"
+      },
+      "engines": {
+        "node": ">=8"
+      }
+    },
     "node_modules/@vscode/sqlite3/node_modules/node-addon-api": {
       "version": "8.2.0",
       "resolved": "https://registry.npmjs.org/node-addon-api/-/node-addon-api-8.2.0.tgz",
@@ -3359,6 +3416,29 @@
         "node": "^18 || ^20 || >= 21"
       }
     },
+    "node_modules/@vscode/sqlite3/node_modules/tar": {
+      "version": "6.2.1",
+      "resolved": "https://registry.npmjs.org/tar/-/tar-6.2.1.tgz",
+      "integrity": "sha512-DZ4yORTwrbTj/7MZYq2w+/ZFdI6OZ/f9SFHR+71gIVUZhOQPHzVCLpvRnPgyaMpfWxxk/4ONva3GQSyNIKRv6A==",
+      "license": "ISC",
+      "dependencies": {
+        "chownr": "^2.0.0",
+        "fs-minipass": "^2.0.0",
+        "minipass": "^5.0.0",
+        "minizlib": "^2.1.1",
+        "mkdirp": "^1.0.3",
+        "yallist": "^4.0.0"
+      },
+      "engines": {
+        "node": ">=10"
+      }
+    },
+    "node_modules/@vscode/sqlite3/node_modules/yallist": {
+      "version": "4.0.0",
+      "resolved": "https://registry.npmjs.org/yallist/-/yallist-4.0.0.tgz",
+      "integrity": "sha512-3wdGidZyq5PB084XLES5TpOSRA3wjXAlIWMhum2kRcv/41Sn2emQ0dycQW4uZXLejwKvg6EsvbdlVL+FYEct7A==",
+      "license": "ISC"
+    },
     "node_modules/@vscode/sudo-prompt": {
       "version": "9.3.2",
       "resolved": "https://registry.npmjs.org/@vscode/sudo-prompt/-/sudo-prompt-9.3.2.tgz",
@@ -4730,18 +4810,6 @@
         "readable-stream": "^3.4.0"
       }
     },
-    "node_modules/block-stream": {
-      "version": "0.0.9",
-      "resolved": "https://registry.npmjs.org/block-stream/-/block-stream-0.0.9.tgz",
-      "integrity": "sha1-E+v+d4oDIFz+A3UUgeu0szAMEmo= sha512-OorbnJVPII4DuUKbjARAe8u8EfqOmkEEaSFIyoQ7OjTHn6kafxWl0wLgoZ2rXaYd7MyLcDaU4TmhfxtwgcccMQ==",
-      "dev": true,
-      "dependencies": {
-        "inherits": "~2.0.0"
-      },
-      "engines": {
-        "node": "0.4 || >=0.5.8"
-      }
-    },
     "node_modules/boolbase": {
       "version": "1.0.0",
       "resolved": "https://registry.npmjs.org/boolbase/-/boolbase-1.0.0.tgz",
@@ -5118,11 +5186,13 @@
       }
     },
     "node_modules/chownr": {
-      "version": "2.0.0",
-      "resolved": "https://registry.npmjs.org/chownr/-/chownr-2.0.0.tgz",
-      "integrity": "sha512-bIomtDF5KGpdogkLd9VspvFzk9KfpyyGlS8YFVZl7TGPBHL5snIOnxeshwVgPteQ9b4Eydl+pVbIyE1DcvCWgQ==",
+      "version": "3.0.0",
+      "resolved": "https://registry.npmjs.org/chownr/-/chownr-3.0.0.tgz",
+      "integrity": "sha512-+IxzY9BZOQd/XuYPRmrvEVjF/nqj5kgT4kEq7VofrDoM1MxoRjEWkrCC3EtLi59TVawxTAn+orJwFQcrqEN1+g==",
+      "dev": true,
+      "license": "BlueOak-1.0.0",
       "engines": {
-        "node": ">=10"
+        "node": ">=18"
       }
     },
     "node_modules/chrome-remote-interface": {
@@ -7925,6 +7995,7 @@
       "version": "2.1.0",
       "resolved": "https://registry.npmjs.org/fs-minipass/-/fs-minipass-2.1.0.tgz",
       "integrity": "sha512-V/JgOLFCS+R6Vcq0slCuaeWEdNC3ouDlJMNIsacH2VtALiu9mV4LPrHc5cDl8k5aw6J8jwgWWpiTo5RYhmIzvg==",
+      "license": "ISC",
       "dependencies": {
         "minipass": "^3.0.0"
       },
@@ -7933,9 +8004,10 @@
       }
     },
     "node_modules/fs-minipass/node_modules/minipass": {
-      "version": "3.1.3",
-      "resolved": "https://registry.npmjs.org/minipass/-/minipass-3.1.3.tgz",
-      "integrity": "sha512-Mgd2GdMVzY+x3IJ+oHnVM+KG3lA5c8tnabyJKmHSaG2kAGpudxuOf8ToDkhumF7UzME7DecbQE9uOZhNm7PuJg==",
+      "version": "3.3.6",
+      "resolved": "https://registry.npmjs.org/minipass/-/minipass-3.3.6.tgz",
+      "integrity": "sha512-DxiNidxSEK+tHG6zOIklvNOwm3hvCrbUrdtzY74U6HKTJxvIDfOUL5W5P2Ghd3DTkhhKPYGqeNUIh5qcM4YBfw==",
+      "license": "ISC",
       "dependencies": {
         "yallist": "^4.0.0"
       },
@@ -7946,7 +8018,8 @@
     "node_modules/fs-minipass/node_modules/yallist": {
       "version": "4.0.0",
       "resolved": "https://registry.npmjs.org/yallist/-/yallist-4.0.0.tgz",
-      "integrity": "sha512-3wdGidZyq5PB084XLES5TpOSRA3wjXAlIWMhum2kRcv/41Sn2emQ0dycQW4uZXLejwKvg6EsvbdlVL+FYEct7A=="
+      "integrity": "sha512-3wdGidZyq5PB084XLES5TpOSRA3wjXAlIWMhum2kRcv/41Sn2emQ0dycQW4uZXLejwKvg6EsvbdlVL+FYEct7A==",
+      "license": "ISC"
     },
     "node_modules/fs-mkdirp-stream": {
       "version": "1.0.0",
@@ -8006,34 +8079,6 @@
         "node": "^8.16.0 || ^10.6.0 || >=11.0.0"
       }
     },
-    "node_modules/fstream": {
-      "version": "1.0.12",
-      "resolved": "https://registry.npmjs.org/fstream/-/fstream-1.0.12.tgz",
-      "integrity": "sha512-WvJ193OHa0GHPEL+AycEJgxvBEwyfRkN1vhjca23OaPVMCaLCXTd5qAu82AjTcgP1UJmytkOKb63Ypde7raDIg==",
-      "deprecated": "This package is no longer supported.",
-      "dev": true,
-      "dependencies": {
-        "graceful-fs": "^4.1.2",
-        "inherits": "~2.0.0",
-        "mkdirp": ">=0.5 0",
-        "rimraf": "2"
-      },
-      "engines": {
-        "node": ">=0.6"
-      }
-    },
-    "node_modules/fstream/node_modules/mkdirp": {
-      "version": "0.5.5",
-      "resolved": "https://registry.npmjs.org/mkdirp/-/mkdirp-0.5.5.tgz",
-      "integrity": "sha512-NKmAlESf6jMGym1++R0Ra7wvhV+wFW63FaSOFPwRahvea0gMUcGUhVeAg/0BC0wiv9ih5NYPB1Wn1UEI1/L+xQ==",
-      "dev": true,
-      "dependencies": {
-        "minimist": "^1.2.5"
-      },
-      "bin": {
-        "mkdirp": "bin/cmd.js"
-      }
-    },
     "node_modules/function-bind": {
       "version": "1.1.2",
       "resolved": "https://registry.npmjs.org/function-bind/-/function-bind-1.1.2.tgz",
@@ -9832,94 +9877,6 @@
         "mkdirp": "bin/cmd.js"
       }
     },
-    "node_modules/gulp-untar": {
-      "version": "0.0.7",
-      "resolved": "https://registry.npmjs.org/gulp-untar/-/gulp-untar-0.0.7.tgz",
-      "integrity": "sha512-0QfbCH2a1k2qkTLWPqTX+QO4qNsHn3kC546YhAP3/n0h+nvtyGITDuDrYBMDZeW4WnFijmkOvBWa5HshTic1tw==",
-      "dev": true,
-      "dependencies": {
-        "event-stream": "~3.3.4",
-        "streamifier": "~0.1.1",
-        "tar": "^2.2.1",
-        "through2": "~2.0.3",
-        "vinyl": "^1.2.0"
-      }
-    },
-    "node_modules/gulp-untar/node_modules/clone": {
-      "version": "1.0.4",
-      "resolved": "https://registry.npmjs.org/clone/-/clone-1.0.4.tgz",
-      "integrity": "sha1-2jCcwmPfFZlMaIypAheco8fNfH4= sha512-JQHZ2QMW6l3aH/j6xCqQThY/9OH4D/9ls34cgkUBiEeocRTU04tHfKPBsUK1PqZCUQM7GiA0IIXJSuXHI64Kbg==",
-      "dev": true,
-      "engines": {
-        "node": ">=0.8"
-      }
-    },
-    "node_modules/gulp-untar/node_modules/clone-stats": {
-      "version": "0.0.1",
-      "resolved": "https://registry.npmjs.org/clone-stats/-/clone-stats-0.0.1.tgz",
-      "integrity": "sha1-uI+UqCzzi4eR1YBG6kAprYjKmdE= sha512-dhUqc57gSMCo6TX85FLfe51eC/s+Im2MLkAgJwfaRRexR2tA4dd3eLEW4L6efzHc2iNorrRRXITifnDLlRrhaA==",
-      "dev": true
-    },
-    "node_modules/gulp-untar/node_modules/readable-stream": {
-      "version": "2.3.7",
-      "resolved": "https://registry.npmjs.org/readable-stream/-/readable-stream-2.3.7.tgz",
-      "integrity": "sha512-Ebho8K4jIbHAxnuxi7o42OrZgF/ZTNcsZj6nRKyUmkhLFq8CHItp/fy6hQZuZmP/n3yZ9VBUbp4zz/mX8hmYPw==",
-      "dev": true,
-      "dependencies": {
-        "core-util-is": "~1.0.0",
-        "inherits": "~2.0.3",
-        "isarray": "~1.0.0",
-        "process-nextick-args": "~2.0.0",
-        "safe-buffer": "~5.1.1",
-        "string_decoder": "~1.1.1",
-        "util-deprecate": "~1.0.1"
-      }
-    },
-    "node_modules/gulp-untar/node_modules/replace-ext": {
-      "version": "0.0.1",
-      "resolved": "https://registry.npmjs.org/replace-ext/-/replace-ext-0.0.1.tgz",
-      "integrity": "sha1-KbvZIHinOfC8zitO5B6DeVNSKSQ= sha512-AFBWBy9EVRTa/LhEcG8QDP3FvpwZqmvN2QFDuJswFeaVhWnZMp8q3E6Zd90SR04PlIwfGdyVjNyLPyen/ek5CQ==",
-      "dev": true,
-      "engines": {
-        "node": ">= 0.4"
-      }
-    },
-    "node_modules/gulp-untar/node_modules/tar": {
-      "version": "2.2.2",
-      "resolved": "https://registry.npmjs.org/tar/-/tar-2.2.2.tgz",
-      "integrity": "sha512-FCEhQ/4rE1zYv9rYXJw/msRqsnmlje5jHP6huWeBZ704jUTy02c5AZyWujpMR1ax6mVw9NyJMfuK2CMDWVIfgA==",
-      "deprecated": "This version of tar is no longer supported, and will not receive security updates. Please upgrade asap.",
-      "dev": true,
-      "dependencies": {
-        "block-stream": "*",
-        "fstream": "^1.0.12",
-        "inherits": "2"
-      }
-    },
-    "node_modules/gulp-untar/node_modules/through2": {
-      "version": "2.0.3",
-      "resolved": "https://registry.npmjs.org/through2/-/through2-2.0.3.tgz",
-      "integrity": "sha1-AARWmzfHx0ujnEPzzteNGtlBQL4= sha512-tmNYYHFqXmaKSSlOU4ZbQ82cxmFQa5LRWKFtWCNkGIiZ3/VHmOffCeWfBRZZRyXAhNP9itVMR+cuvomBOPlm8g==",
-      "dev": true,
-      "dependencies": {
-        "readable-stream": "^2.1.5",
-        "xtend": "~4.0.1"
-      }
-    },
-    "node_modules/gulp-untar/node_modules/vinyl": {
-      "version": "1.2.0",
-      "resolved": "https://registry.npmjs.org/vinyl/-/vinyl-1.2.0.tgz",
-      "integrity": "sha1-XIgDbPVl5d8FVYv8kR+GVt8hiIQ= sha512-Ci3wnR2uuSAWFMSglZuB8Z2apBdtOyz8CV7dC6/U1XbltXBC+IuutUkXQISz01P+US2ouBuesSbV6zILZ6BuzQ==",
-      "dev": true,
-      "dependencies": {
-        "clone": "^1.0.0",
-        "clone-stats": "^0.0.1",
-        "replace-ext": "0.0.1"
-      },
-      "engines": {
-        "node": ">= 0.9"
-      }
-    },
     "node_modules/gulp-vinyl-zip": {
       "version": "2.1.2",
       "resolved": "https://registry.npmjs.org/gulp-vinyl-zip/-/gulp-vinyl-zip-2.1.2.tgz",
@@ -12394,33 +12351,28 @@
       }
     },
     "node_modules/minizlib": {
-      "version": "2.1.2",
-      "resolved": "https://registry.npmjs.org/minizlib/-/minizlib-2.1.2.tgz",
-      "integrity": "sha512-bAxsR8BVfj60DWXHE3u30oHzfl4G7khkSuPW+qvpd7jFRHm7dLxOjUk1EHACJ/hxLY8phGJ0YhYHZo7jil7Qdg==",
+      "version": "3.1.0",
+      "resolved": "https://registry.npmjs.org/minizlib/-/minizlib-3.1.0.tgz",
+      "integrity": "sha512-KZxYo1BUkWD2TVFLr0MQoM8vUUigWD3LlD83a/75BqC+4qE0Hb1Vo5v1FgcfaNXvfXzr+5EhQ6ing/CaBijTlw==",
+      "dev": true,
+      "license": "MIT",
       "dependencies": {
-        "minipass": "^3.0.0",
-        "yallist": "^4.0.0"
+        "minipass": "^7.1.2"
       },
       "engines": {
-        "node": ">= 8"
+        "node": ">= 18"
       }
     },
     "node_modules/minizlib/node_modules/minipass": {
-      "version": "3.1.3",
-      "resolved": "https://registry.npmjs.org/minipass/-/minipass-3.1.3.tgz",
-      "integrity": "sha512-Mgd2GdMVzY+x3IJ+oHnVM+KG3lA5c8tnabyJKmHSaG2kAGpudxuOf8ToDkhumF7UzME7DecbQE9uOZhNm7PuJg==",
-      "dependencies": {
-        "yallist": "^4.0.0"
-      },
+      "version": "7.1.2",
+      "resolved": "https://registry.npmjs.org/minipass/-/minipass-7.1.2.tgz",
+      "integrity": "sha512-qOOzS1cBTWYF4BH8fVePDBOO9iptMnGUEZwNc/cMWnTV2nVLZ7VoNWEPHkYczZA0pdoA7dl6e7FL659nX9S2aw==",
+      "dev": true,
+      "license": "ISC",
       "engines": {
-        "node": ">=8"
+        "node": ">=16 || 14 >=14.17"
       }
     },
-    "node_modules/minizlib/node_modules/yallist": {
-      "version": "4.0.0",
-      "resolved": "https://registry.npmjs.org/yallist/-/yallist-4.0.0.tgz",
-      "integrity": "sha512-3wdGidZyq5PB084XLES5TpOSRA3wjXAlIWMhum2kRcv/41Sn2emQ0dycQW4uZXLejwKvg6EsvbdlVL+FYEct7A=="
-    },
     "node_modules/mixin-deep": {
       "version": "1.3.2",
       "resolved": "https://registry.npmjs.org/mixin-deep/-/mixin-deep-1.3.2.tgz",
@@ -16446,19 +16398,20 @@
       }
     },
     "node_modules/tar": {
-      "version": "6.2.1",
-      "resolved": "https://registry.npmjs.org/tar/-/tar-6.2.1.tgz",
-      "integrity": "sha512-DZ4yORTwrbTj/7MZYq2w+/ZFdI6OZ/f9SFHR+71gIVUZhOQPHzVCLpvRnPgyaMpfWxxk/4ONva3GQSyNIKRv6A==",
+      "version": "7.5.2",
+      "resolved": "https://registry.npmjs.org/tar/-/tar-7.5.2.tgz",
+      "integrity": "sha512-7NyxrTE4Anh8km8iEy7o0QYPs+0JKBTj5ZaqHg6B39erLg0qYXN3BijtShwbsNSvQ+LN75+KV+C4QR/f6Gwnpg==",
+      "dev": true,
+      "license": "BlueOak-1.0.0",
       "dependencies": {
-        "chownr": "^2.0.0",
-        "fs-minipass": "^2.0.0",
-        "minipass": "^5.0.0",
-        "minizlib": "^2.1.1",
-        "mkdirp": "^1.0.3",
-        "yallist": "^4.0.0"
+        "@isaacs/fs-minipass": "^4.0.0",
+        "chownr": "^3.0.0",
+        "minipass": "^7.1.2",
+        "minizlib": "^3.1.0",
+        "yallist": "^5.0.0"
       },
       "engines": {
-        "node": ">=10"
+        "node": ">=18"
       }
     },
     "node_modules/tar-fs": {
@@ -16497,10 +16450,25 @@
         "streamx": "^2.15.0"
       }
     },
+    "node_modules/tar/node_modules/minipass": {
+      "version": "7.1.2",
+      "resolved": "https://registry.npmjs.org/minipass/-/minipass-7.1.2.tgz",
+      "integrity": "sha512-qOOzS1cBTWYF4BH8fVePDBOO9iptMnGUEZwNc/cMWnTV2nVLZ7VoNWEPHkYczZA0pdoA7dl6e7FL659nX9S2aw==",
+      "dev": true,
+      "license": "ISC",
+      "engines": {
+        "node": ">=16 || 14 >=14.17"
+      }
+    },
     "node_modules/tar/node_modules/yallist": {
-      "version": "4.0.0",
-      "resolved": "https://registry.npmjs.org/yallist/-/yallist-4.0.0.tgz",
-      "integrity": "sha512-3wdGidZyq5PB084XLES5TpOSRA3wjXAlIWMhum2kRcv/41Sn2emQ0dycQW4uZXLejwKvg6EsvbdlVL+FYEct7A=="
+      "version": "5.0.0",
+      "resolved": "https://registry.npmjs.org/yallist/-/yallist-5.0.0.tgz",
+      "integrity": "sha512-YgvUTfwqyc7UXVMrB+SImsVYSmTS8X/tSrtdNZMImM+n7+QTriRXyXim0mBrTXNeqzVF0KWGgHPeiyViFFrNDw==",
+      "dev": true,
+      "license": "BlueOak-1.0.0",
+      "engines": {
+        "node": ">=18"
+      }
     },
     "node_modules/tas-client": {
       "version": "0.3.1",
diff --git a/package.json b/package.json
index 44e6740de43..b76374ed584 100644
--- a/package.json
+++ b/package.json
@@ -184,7 +184,6 @@
     "gulp-replace": "^0.5.4",
     "gulp-sourcemaps": "^3.0.0",
     "gulp-svgmin": "^4.1.0",
-    "gulp-untar": "^0.0.7",
     "husky": "^0.13.1",
     "innosetup": "^6.4.1",
     "istanbul-lib-coverage": "^3.2.0",
@@ -211,6 +210,7 @@
     "source-map": "0.6.1",
     "source-map-support": "^0.3.2",
     "style-loader": "^3.3.2",
+    "tar": "^7.5.2",
     "ts-loader": "^9.5.1",
     "tsec": "0.2.7",
     "tslib": "^2.6.3",
diff --git a/src/vs/base/common/network.ts b/src/vs/base/common/network.ts
index 74cb106fd3c..00859ca7344 100644
--- a/src/vs/base/common/network.ts
+++ b/src/vs/base/common/network.ts
@@ -90,6 +90,9 @@ export namespace Schemas {
 	/** Scheme used for local chat session content */
 	export const vscodeLocalChatSession = 'vscode-chat-session';
 
+	/** Scheme used for virtual chat prompt files with embedded content */
+	export const vscodeChatPrompt = 'vscode-chat-prompt';
+
 	/**
 	 * Scheme used internally for webviews that aren't linked to a resource (i.e. not custom editors)
 	 */
diff --git a/src/vs/workbench/api/browser/mainThreadChatAgents2.ts b/src/vs/workbench/api/browser/mainThreadChatAgents2.ts
index de412e896a2..2a26c187d73 100644
--- a/src/vs/workbench/api/browser/mainThreadChatAgents2.ts
+++ b/src/vs/workbench/api/browser/mainThreadChatAgents2.ts
@@ -28,6 +28,7 @@ import { AddDynamicVariableAction, IAddDynamicVariableContext } from '../../cont
 import { IChatAgentHistoryEntry, IChatAgentImplementation, IChatAgentRequest, IChatAgentService } from '../../contrib/chat/common/participants/chatAgents.js';
 import { IPromptFileContext, IPromptsService } from '../../contrib/chat/common/promptSyntax/service/promptsService.js';
 import { isValidPromptType } from '../../contrib/chat/common/promptSyntax/promptTypes.js';
+import { IChatPromptContentStore } from '../../contrib/chat/common/promptSyntax/chatPromptContentStore.js';
 import { IChatEditingService, IChatRelatedFileProviderMetadata } from '../../contrib/chat/common/editing/chatEditingService.js';
 import { IChatModel } from '../../contrib/chat/common/model/chatModel.js';
 import { ChatRequestAgentPart } from '../../contrib/chat/common/requestParser/chatParserTypes.js';
@@ -100,6 +101,7 @@ export class MainThreadChatAgents2 extends Disposable implements MainThreadChatA
 
 	private readonly _promptFileProviders = this._register(new DisposableMap<number, IDisposable>());
 	private readonly _promptFileProviderEmitters = this._register(new DisposableMap<number, Emitter<void>>());
+	private readonly _promptFileContentRegistrations = this._register(new DisposableMap<number, DisposableMap<string, IDisposable>>());
 
 	private readonly _pendingProgress = new Map<string, { progress: (parts: IChatProgress[]) => void; chatSession: IChatModel | undefined }>();
 	private readonly _proxy: ExtHostChatAgentsShape2;
@@ -121,6 +123,7 @@ export class MainThreadChatAgents2 extends Disposable implements MainThreadChatA
 		@IExtensionService private readonly _extensionService: IExtensionService,
 		@IUriIdentityService private readonly _uriIdentityService: IUriIdentityService,
 		@IPromptsService private readonly _promptsService: IPromptsService,
+		@IChatPromptContentStore private readonly _chatPromptContentStore: IChatPromptContentStore,
 		@ILanguageModelToolsService private readonly _languageModelToolsService: ILanguageModelToolsService,
 	) {
 		super();
@@ -471,6 +474,10 @@ export class MainThreadChatAgents2 extends Disposable implements MainThreadChatA
 		const emitter = new Emitter<void>();
 		this._promptFileProviderEmitters.set(handle, emitter);
 
+		// Track content registrations for this provider so they can be disposed when provider is unregistered
+		const contentRegistrations = new DisposableMap<string, IDisposable>();
+		this._promptFileContentRegistrations.set(handle, contentRegistrations);
+
 		const disposable = this._promptsService.registerPromptFileProvider(extension, type, {
 			onDidChangePromptFiles: emitter.event,
 			providePromptFiles: async (context: IPromptFileContext, token: CancellationToken) => {
@@ -478,11 +485,21 @@ export class MainThreadChatAgents2 extends Disposable implements MainThreadChatA
 				if (!contributions) {
 					return undefined;
 				}
-				// Convert UriComponents to URI
-				return contributions.map(c => ({
-					...c,
-					uri: URI.revive(c.uri)
-				}));
+				// Convert UriComponents to URI and register any inline content
+				return contributions.map(c => {
+					const uri = URI.revive(c.uri);
+					// If this is a virtual prompt with inline content, register it with the store
+					if (c.content && uri.scheme === Schemas.vscodeChatPrompt) {
+						const uriKey = uri.toString();
+						// Dispose any previous registration for this URI before registering new content
+						contentRegistrations.deleteAndDispose(uriKey);
+						contentRegistrations.set(uriKey, this._chatPromptContentStore.registerContent(uri, c.content));
+					}
+					return {
+						uri,
+						isEditable: c.isEditable
+					};
+				});
 			}
 		});
 
@@ -492,6 +509,7 @@ export class MainThreadChatAgents2 extends Disposable implements MainThreadChatA
 	$unregisterPromptFileProvider(handle: number): void {
 		this._promptFileProviders.deleteAndDispose(handle);
 		this._promptFileProviderEmitters.deleteAndDispose(handle);
+		this._promptFileContentRegistrations.deleteAndDispose(handle);
 	}
 
 	$onDidChangePromptFiles(handle: number): void {
diff --git a/src/vs/workbench/api/browser/mainThreadChatContext.ts b/src/vs/workbench/api/browser/mainThreadChatContext.ts
index d94ff704768..917aeb8c02a 100644
--- a/src/vs/workbench/api/browser/mainThreadChatContext.ts
+++ b/src/vs/workbench/api/browser/mainThreadChatContext.ts
@@ -23,12 +23,13 @@ export class MainThreadChatContext extends Disposable implements MainThreadChatC
 	) {
 		super();
 		this._proxy = extHostContext.getProxy(ExtHostContext.ExtHostChatContext);
+		this._chatContextService.setExecuteCommandCallback((itemHandle) => this._proxy.$executeChatContextItemCommand(itemHandle));
 	}
 
 	$registerChatContextProvider(handle: number, id: string, selector: IDocumentFilterDto[] | undefined, _options: { icon: ThemeIcon }, support: IChatContextSupport): void {
 		this._providers.set(handle, { selector, support, id });
 		this._chatContextService.registerChatContextProvider(id, selector, {
-			provideChatContext: (token: CancellationToken) => {
+			provideChatContext: (_options: {}, token: CancellationToken) => {
 				return this._proxy.$provideChatContext(handle, token);
 			},
 			resolveChatContext: support.supportsResolve ? (context: IChatContextItem, token: CancellationToken) => {
@@ -36,7 +37,7 @@ export class MainThreadChatContext extends Disposable implements MainThreadChatC
 			} : undefined,
 			provideChatContextForResource: support.supportsResource ? (resource: URI, withValue: boolean, token: CancellationToken) => {
 				return this._proxy.$provideChatContextForResource(handle, { resource, withValue }, token);
-			} : undefined
+			} : undefined,
 		});
 	}
 
@@ -56,4 +57,8 @@ export class MainThreadChatContext extends Disposable implements MainThreadChatC
 		}
 		this._chatContextService.updateWorkspaceContextItems(provider.id, items);
 	}
+
+	$executeChatContextItemCommand(itemHandle: number): Promise<void> {
+		return this._proxy.$executeChatContextItemCommand(itemHandle);
+	}
 }
diff --git a/src/vs/workbench/api/common/extHost.api.impl.ts b/src/vs/workbench/api/common/extHost.api.impl.ts
index 32cbebafb60..94004152e7d 100644
--- a/src/vs/workbench/api/common/extHost.api.impl.ts
+++ b/src/vs/workbench/api/common/extHost.api.impl.ts
@@ -229,7 +229,7 @@ export function createApiFactoryAndRegisterActors(accessor: ServicesAccessor): I
 	const extHostLanguageModelTools = rpcProtocol.set(ExtHostContext.ExtHostLanguageModelTools, new ExtHostLanguageModelTools(rpcProtocol, extHostLanguageModels));
 	const extHostChatSessions = rpcProtocol.set(ExtHostContext.ExtHostChatSessions, new ExtHostChatSessions(extHostCommands, extHostLanguageModels, rpcProtocol, extHostLogService));
 	const extHostChatAgents2 = rpcProtocol.set(ExtHostContext.ExtHostChatAgents2, new ExtHostChatAgents2(rpcProtocol, extHostLogService, extHostCommands, extHostDocuments, extHostDocumentsAndEditors, extHostLanguageModels, extHostDiagnostics, extHostLanguageModelTools));
-	const extHostChatContext = rpcProtocol.set(ExtHostContext.ExtHostChatContext, new ExtHostChatContext(rpcProtocol));
+	const extHostChatContext = rpcProtocol.set(ExtHostContext.ExtHostChatContext, new ExtHostChatContext(rpcProtocol, extHostCommands));
 	const extHostAiRelatedInformation = rpcProtocol.set(ExtHostContext.ExtHostAiRelatedInformation, new ExtHostRelatedInformation(rpcProtocol));
 	const extHostAiEmbeddingVector = rpcProtocol.set(ExtHostContext.ExtHostAiEmbeddingVector, new ExtHostAiEmbeddingVector(rpcProtocol));
 	const extHostAiSettingsSearch = rpcProtocol.set(ExtHostContext.ExtHostAiSettingsSearch, new ExtHostAiSettingsSearch(rpcProtocol));
@@ -1966,6 +1966,9 @@ export function createApiFactoryAndRegisterActors(accessor: ServicesAccessor): I
 			McpStdioServerDefinition2: extHostTypes.McpStdioServerDefinition,
 			McpToolAvailability: extHostTypes.McpToolAvailability,
 			SettingsSearchResultKind: extHostTypes.SettingsSearchResultKind,
+			CustomAgentChatResource: extHostTypes.CustomAgentChatResource,
+			InstructionsChatResource: extHostTypes.InstructionsChatResource,
+			PromptFileChatResource: extHostTypes.PromptFileChatResource,
 		};
 	};
 }
diff --git a/src/vs/workbench/api/common/extHost.protocol.ts b/src/vs/workbench/api/common/extHost.protocol.ts
index b4830b6c683..9ab8b4c1e98 100644
--- a/src/vs/workbench/api/common/extHost.protocol.ts
+++ b/src/vs/workbench/api/common/extHost.protocol.ts
@@ -1358,12 +1358,14 @@ export interface ExtHostChatContextShape {
 	$provideChatContext(handle: number, token: CancellationToken): Promise<IChatContextItem[]>;
 	$provideChatContextForResource(handle: number, options: { resource: UriComponents; withValue: boolean }, token: CancellationToken): Promise<IChatContextItem | undefined>;
 	$resolveChatContext(handle: number, context: IChatContextItem, token: CancellationToken): Promise<IChatContextItem>;
+	$executeChatContextItemCommand(itemHandle: number): Promise<void>;
 }
 
 export interface MainThreadChatContextShape extends IDisposable {
 	$registerChatContextProvider(handle: number, id: string, selector: IDocumentFilterDto[] | undefined, options: {}, support: IChatContextSupport): void;
 	$unregisterChatContextProvider(handle: number): void;
 	$updateWorkspaceContextItems(handle: number, items: IChatContextItem[]): void;
+	$executeChatContextItemCommand(itemHandle: number): Promise<void>;
 }
 
 export interface MainThreadEmbeddingsShape extends IDisposable {
diff --git a/src/vs/workbench/api/common/extHostApiCommands.ts b/src/vs/workbench/api/common/extHostApiCommands.ts
index 112faf74966..12fe6f307c7 100644
--- a/src/vs/workbench/api/common/extHostApiCommands.ts
+++ b/src/vs/workbench/api/common/extHostApiCommands.ts
@@ -6,7 +6,7 @@
 import { isFalsyOrEmpty } from '../../../base/common/arrays.js';
 import { VSBuffer } from '../../../base/common/buffer.js';
 import { Schemas, matchesSomeScheme } from '../../../base/common/network.js';
-import { URI } from '../../../base/common/uri.js';
+import { URI, UriComponents } from '../../../base/common/uri.js';
 import { IPosition } from '../../../editor/common/core/position.js';
 import { IRange } from '../../../editor/common/core/range.js';
 import { ISelection } from '../../../editor/common/core/selection.js';
@@ -22,6 +22,7 @@ import * as types from './extHostTypes.js';
 import { TransientCellMetadata, TransientDocumentMetadata } from '../../contrib/notebook/common/notebookCommon.js';
 import * as search from '../../contrib/search/common/search.js';
 import type * as vscode from 'vscode';
+import { PromptsType } from '../../contrib/chat/common/promptSyntax/promptTypes.js';
 
 //#region --- NEW world
 
@@ -554,6 +555,23 @@ const newCommands: ApiCommand[] = [
 			};
 		})],
 		ApiCommandResult.Void
+	),
+	// --- extension prompt files
+	new ApiCommand(
+		'vscode.extensionPromptFileProvider', '_listExtensionPromptFiles', 'Get all extension-contributed prompt files (custom agents, instructions, and prompt files).',
+		[],
+		new ApiCommandResult<{ uri: UriComponents; type: PromptsType }[], { uri: vscode.Uri; type: PromptsType }[]>(
+			'A promise that resolves to an array of objects containing uri and type.',
+			(value) => {
+				if (!value) {
+					return [];
+				}
+				return value.map(item => ({
+					uri: URI.revive(item.uri),
+					type: item.type
+				}));
+			}
+		)
 	)
 ];
 
diff --git a/src/vs/workbench/api/common/extHostChatAgents2.ts b/src/vs/workbench/api/common/extHostChatAgents2.ts
index 64b4e08aa4d..f40f0e4477d 100644
--- a/src/vs/workbench/api/common/extHostChatAgents2.ts
+++ b/src/vs/workbench/api/common/extHostChatAgents2.ts
@@ -38,6 +38,7 @@ import * as extHostTypes from './extHostTypes.js';
 import { IPromptFileContext, IPromptFileResource } from '../../contrib/chat/common/promptSyntax/service/promptsService.js';
 import { PromptsType } from '../../contrib/chat/common/promptSyntax/promptTypes.js';
 import { ExtHostDocumentsAndEditors } from './extHostDocumentsAndEditors.js';
+import { Schemas } from '../../../base/common/network.js';
 
 export class ChatAgentResponseStream {
 
@@ -553,16 +554,54 @@ export class ExtHostChatAgents2 extends Disposable implements ExtHostChatAgentsS
 		}
 
 		const provider = providerData.provider;
+		let resources: vscode.CustomAgentChatResource[] | vscode.InstructionsChatResource[] | vscode.PromptFileChatResource[] | undefined;
 		switch (type) {
 			case PromptsType.agent:
-				return await (provider as vscode.CustomAgentProvider).provideCustomAgents(context, token) ?? undefined;
+				resources = await (provider as vscode.CustomAgentProvider).provideCustomAgents(context, token) ?? undefined;
+				break;
 			case PromptsType.instructions:
-				return await (provider as vscode.InstructionsProvider).provideInstructions(context, token) ?? undefined;
+				resources = await (provider as vscode.InstructionsProvider).provideInstructions(context, token) ?? undefined;
+				break;
 			case PromptsType.prompt:
-				return await (provider as vscode.PromptFileProvider).providePromptFiles(context, token) ?? undefined;
+				resources = await (provider as vscode.PromptFileProvider).providePromptFiles(context, token) ?? undefined;
+				break;
 			case PromptsType.skill:
 				throw new Error('Skills prompt file provider not implemented yet');
 		}
+
+		// Convert ChatResourceDescriptor to IPromptFileResource format
+		return resources?.map(r => this.convertChatResourceDescriptorToPromptFileResource(r.resource, providerData.extension.identifier.value));
+	}
+
+	/**
+	 * Creates a virtual URI for a prompt file.
+	 */
+	createVirtualPromptUri(id: string, extensionId: string): URI {
+		return URI.from({
+			scheme: Schemas.vscodeChatPrompt,
+			path: `/${extensionId}/${id}`
+		});
+	}
+
+	convertChatResourceDescriptorToPromptFileResource(resource: vscode.ChatResourceDescriptor, extensionId: string): IPromptFileResource {
+		if (URI.isUri(resource)) {
+			// Plain URI
+			return { uri: resource };
+		} else if ('id' in resource && 'content' in resource) {
+			// { id, content }
+			return {
+				content: resource.content,
+				uri: this.createVirtualPromptUri(resource.id, extensionId),
+				isEditable: undefined
+			};
+		} else if ('uri' in resource && URI.isUri(resource.uri)) {
+			// { uri, isEditable? }
+			return {
+				uri: URI.revive(resource.uri),
+				isEditable: resource.isEditable
+			};
+		}
+		throw new Error(`Invalid ChatResourceDescriptor: ${JSON.stringify(resource)}`);
 	}
 
 	async $detectChatParticipant(handle: number, requestDto: Dto<IChatAgentRequest>, context: { history: IChatAgentHistoryEntryDto[] }, options: { location: ChatAgentLocation; participants?: vscode.ChatParticipantMetadata[] }, token: CancellationToken): Promise<vscode.ChatParticipantDetectionResult | null | undefined> {
diff --git a/src/vs/workbench/api/common/extHostChatContext.ts b/src/vs/workbench/api/common/extHostChatContext.ts
index 0e3aaac540b..761fca70dbb 100644
--- a/src/vs/workbench/api/common/extHostChatContext.ts
+++ b/src/vs/workbench/api/common/extHostChatContext.ts
@@ -11,6 +11,7 @@ import { DocumentSelector } from './extHostTypeConverters.js';
 import { IExtHostRpcService } from './extHostRpcService.js';
 import { IChatContextItem } from '../../contrib/chat/common/contextContrib/chatContext.js';
 import { Disposable, DisposableStore } from '../../../base/common/lifecycle.js';
+import { IExtHostCommands } from './extHostCommands.js';
 
 export class ExtHostChatContext extends Disposable implements ExtHostChatContextShape {
 	declare _serviceBrand: undefined;
@@ -19,16 +20,21 @@ export class ExtHostChatContext extends Disposable implements ExtHostChatContext
 	private _handlePool: number = 0;
 	private _providers: Map<number, { provider: vscode.ChatContextProvider; disposables: DisposableStore }> = new Map();
 	private _itemPool: number = 0;
-	private _items: Map<number, Map<number, vscode.ChatContextItem>> = new Map(); // handle -> itemHandle -> item
+	/** Global map of itemHandle -> original item for command execution with reference equality */
+	private _globalItems: Map<number, vscode.ChatContextItem> = new Map();
+	/** Track which items belong to which provider for cleanup */
+	private _providerItems: Map<number, Set<number>> = new Map(); // providerHandle -> Set<itemHandle>
 
-	constructor(@IExtHostRpcService extHostRpc: IExtHostRpcService,
+	constructor(
+		@IExtHostRpcService extHostRpc: IExtHostRpcService,
+		@IExtHostCommands private readonly _commands: IExtHostCommands,
 	) {
 		super();
 		this._proxy = extHostRpc.getProxy(MainContext.MainThreadChatContext);
 	}
 
 	async $provideChatContext(handle: number, token: CancellationToken): Promise<IChatContextItem[]> {
-		this._items.delete(handle); // clear previous items
+		this._clearProviderItems(handle); // clear previous items for this provider
 		const provider = this._getProvider(handle);
 		if (!provider.provideChatContextExplicit) {
 			throw new Error('provideChatContext not implemented');
@@ -42,18 +48,30 @@ export class ExtHostChatContext extends Disposable implements ExtHostChatContext
 				icon: item.icon,
 				label: item.label,
 				modelDescription: item.modelDescription,
-				value: item.value
+				value: item.value,
+				command: item.command ? { id: item.command.command } : undefined
 			});
 		}
 		return items;
 	}
 
-	private _addTrackedItem(handle: number, item: vscode.ChatContextItem): number {
-		const itemHandle = this._itemPool++;
-		if (!this._items.has(handle)) {
-			this._items.set(handle, new Map());
+	private _clearProviderItems(handle: number): void {
+		const itemHandles = this._providerItems.get(handle);
+		if (itemHandles) {
+			for (const itemHandle of itemHandles) {
+				this._globalItems.delete(itemHandle);
+			}
+			itemHandles.clear();
 		}
-		this._items.get(handle)!.set(itemHandle, item);
+	}
+
+	private _addTrackedItem(providerHandle: number, item: vscode.ChatContextItem): number {
+		const itemHandle = this._itemPool++;
+		this._globalItems.set(itemHandle, item);
+		if (!this._providerItems.has(providerHandle)) {
+			this._providerItems.set(providerHandle, new Set());
+		}
+		this._providerItems.get(providerHandle)!.add(itemHandle);
 		return itemHandle;
 	}
 
@@ -75,7 +93,8 @@ export class ExtHostChatContext extends Disposable implements ExtHostChatContext
 			icon: result.icon,
 			label: result.label,
 			modelDescription: result.modelDescription,
-			value: options.withValue ? result.value : undefined
+			value: options.withValue ? result.value : undefined,
+			command: result.command ? { id: result.command.command } : undefined
 		};
 		if (options.withValue && !item.value && provider.resolveChatContext) {
 			const resolved = await provider.resolveChatContext(result, token);
@@ -87,14 +106,17 @@ export class ExtHostChatContext extends Disposable implements ExtHostChatContext
 
 	private async _doResolve(provider: vscode.ChatContextProvider, context: IChatContextItem, extItem: vscode.ChatContextItem, token: CancellationToken): Promise<IChatContextItem> {
 		const extResult = await provider.resolveChatContext(extItem, token);
-		const result = extResult ?? context;
-		return {
-			handle: context.handle,
-			icon: result.icon,
-			label: result.label,
-			modelDescription: result.modelDescription,
-			value: result.value
-		};
+		if (extResult) {
+			return {
+				handle: context.handle,
+				icon: extResult.icon,
+				label: extResult.label,
+				modelDescription: extResult.modelDescription,
+				value: extResult.value,
+				command: extResult.command ? { id: extResult.command.command } : undefined
+			};
+		}
+		return context;
 	}
 
 	async $resolveChatContext(handle: number, context: IChatContextItem, token: CancellationToken): Promise<IChatContextItem> {
@@ -103,13 +125,26 @@ export class ExtHostChatContext extends Disposable implements ExtHostChatContext
 		if (!provider.resolveChatContext) {
 			throw new Error('resolveChatContext not implemented');
 		}
-		const extItem = this._items.get(handle)?.get(context.handle);
+		const extItem = this._globalItems.get(context.handle);
 		if (!extItem) {
 			throw new Error('Chat context item not found');
 		}
 		return this._doResolve(provider, context, extItem, token);
 	}
 
+	async $executeChatContextItemCommand(itemHandle: number): Promise<void> {
+		const extItem = this._globalItems.get(itemHandle);
+		if (!extItem) {
+			throw new Error('Chat context item not found');
+		}
+		if (!extItem.command) {
+			throw new Error('Chat context item has no command');
+		}
+		// Execute the command with the original extension item as an argument (reference equality)
+		const args = extItem.command.arguments ? [extItem, ...extItem.command.arguments] : [extItem];
+		await this._commands.executeCommand(extItem.command.command, ...args);
+	}
+
 	registerChatContextProvider(selector: vscode.DocumentSelector | undefined, id: string, provider: vscode.ChatContextProvider): vscode.Disposable {
 		const handle = this._handlePool++;
 		const disposables = new DisposableStore();
@@ -120,6 +155,8 @@ export class ExtHostChatContext extends Disposable implements ExtHostChatContext
 		return {
 			dispose: () => {
 				this._providers.delete(handle);
+				this._clearProviderItems(handle); // Clean up tracked items
+				this._providerItems.delete(handle);
 				this._proxy.$unregisterChatContextProvider(handle);
 				disposables.dispose();
 			}
@@ -134,12 +171,14 @@ export class ExtHostChatContext extends Disposable implements ExtHostChatContext
 			const workspaceContexts = await provider.provideWorkspaceChatContext!(CancellationToken.None);
 			const resolvedContexts: IChatContextItem[] = [];
 			for (const item of workspaceContexts ?? []) {
+				const itemHandle = this._addTrackedItem(handle, item);
 				const contextItem: IChatContextItem = {
 					icon: item.icon,
 					label: item.label,
 					modelDescription: item.modelDescription,
 					value: item.value,
-					handle: this._itemPool++
+					handle: itemHandle,
+					command: item.command ? { id: item.command.command } : undefined
 				};
 				const resolved = await this._doResolve(provider, contextItem, item, CancellationToken.None);
 				resolvedContexts.push(resolved);
diff --git a/src/vs/workbench/api/common/extHostTypes.ts b/src/vs/workbench/api/common/extHostTypes.ts
index b8d92947c99..03dc0c22075 100644
--- a/src/vs/workbench/api/common/extHostTypes.ts
+++ b/src/vs/workbench/api/common/extHostTypes.ts
@@ -3885,3 +3885,21 @@ export class McpHttpServerDefinition implements vscode.McpHttpServerDefinition {
 	) { }
 }
 //#endregion
+
+//#region Chat Prompt Files
+
+@es5ClassCompat
+export class CustomAgentChatResource implements vscode.CustomAgentChatResource {
+	constructor(public readonly resource: vscode.ChatResourceDescriptor) { }
+}
+
+@es5ClassCompat
+export class InstructionsChatResource implements vscode.InstructionsChatResource {
+	constructor(public readonly resource: vscode.ChatResourceDescriptor) { }
+}
+
+@es5ClassCompat
+export class PromptFileChatResource implements vscode.PromptFileChatResource {
+	constructor(public readonly resource: vscode.ChatResourceDescriptor) { }
+}
+//#endregion
diff --git a/src/vs/workbench/api/test/browser/extHostTypes.test.ts b/src/vs/workbench/api/test/browser/extHostTypes.test.ts
index 105b13734bc..ef844667ecc 100644
--- a/src/vs/workbench/api/test/browser/extHostTypes.test.ts
+++ b/src/vs/workbench/api/test/browser/extHostTypes.test.ts
@@ -4,14 +4,14 @@
  *--------------------------------------------------------------------------------------------*/
 
 import assert from 'assert';
-import { URI } from '../../../../base/common/uri.js';
-import * as types from '../../common/extHostTypes.js';
+import { CancellationError } from '../../../../base/common/errors.js';
+import { MarshalledId } from '../../../../base/common/marshallingIds.js';
+import { Mimes } from '../../../../base/common/mime.js';
 import { isWindows } from '../../../../base/common/platform.js';
 import { assertType } from '../../../../base/common/types.js';
-import { Mimes } from '../../../../base/common/mime.js';
-import { MarshalledId } from '../../../../base/common/marshallingIds.js';
-import { CancellationError } from '../../../../base/common/errors.js';
+import { URI } from '../../../../base/common/uri.js';
 import { ensureNoDisposablesAreLeakedInTestSuite } from '../../../../base/test/common/utils.js';
+import * as types from '../../common/extHostTypes.js';
 
 function assertToJSON(a: any, expected: any) {
 	const raw = JSON.stringify(a);
@@ -788,4 +788,118 @@ suite('ExtHostTypes', function () {
 		m.content = 'Hello';
 		assert.deepStrictEqual(m.content, [new types.LanguageModelTextPart('Hello')]);
 	});
+
+	test('CustomAgentChatResource - URI constructor', function () {
+		const uri = URI.file('/path/to/agent.md');
+		const resource = new types.CustomAgentChatResource(uri);
+
+		assert.ok(URI.isUri(resource.resource));
+		assert.strictEqual(resource.resource.toString(), uri.toString());
+	});
+
+	test('CustomAgentChatResource - URI constructor with options', function () {
+		const uri = URI.file('/path/to/agent.md');
+		const resource = new types.CustomAgentChatResource({ uri, isEditable: true });
+
+		assert.ok(!URI.isUri(resource.resource));
+		const descriptor = resource.resource as { uri: URI; isEditable?: boolean };
+		assert.strictEqual(descriptor.uri.toString(), uri.toString());
+		assert.strictEqual(descriptor.isEditable, true);
+	});
+
+	test('CustomAgentChatResource - content constructor', function () {
+		const content = '# My Agent\nThis is agent content';
+		const resource = new types.CustomAgentChatResource({ id: 'my-agent-id', content });
+
+		assert.ok(!URI.isUri(resource.resource));
+		const descriptor = resource.resource as { id: string; content: string };
+		assert.strictEqual(descriptor.id, 'my-agent-id');
+		assert.strictEqual(descriptor.content, content);
+	});
+
+
+
+	test('InstructionsChatResource - URI constructor', function () {
+		const uri = URI.file('/path/to/instructions.md');
+		const resource = new types.InstructionsChatResource(uri);
+
+		assert.ok(URI.isUri(resource.resource));
+		assert.strictEqual(resource.resource.toString(), uri.toString());
+	});
+
+	test('InstructionsChatResource - URI constructor with options', function () {
+		const uri = URI.file('/path/to/instructions.md');
+		const resource = new types.InstructionsChatResource({ uri, isEditable: true });
+
+		assert.ok(!URI.isUri(resource.resource));
+		const descriptor = resource.resource as { uri: URI; isEditable?: boolean };
+		assert.strictEqual(descriptor.uri.toString(), uri.toString());
+		assert.strictEqual(descriptor.isEditable, true);
+	});
+
+	test('InstructionsChatResource - content constructor', function () {
+		const content = '# Instructions\nFollow these steps';
+		const resource = new types.InstructionsChatResource({ id: 'my-instructions-id', content });
+
+		assert.ok(!URI.isUri(resource.resource));
+		const descriptor = resource.resource as { id: string; content: string };
+		assert.strictEqual(descriptor.id, 'my-instructions-id');
+		assert.strictEqual(descriptor.content, content);
+	});
+
+
+
+	test('PromptFileChatResource - URI constructor', function () {
+		const uri = URI.file('/path/to/prompt.md');
+		const resource = new types.PromptFileChatResource(uri);
+
+		assert.ok(URI.isUri(resource.resource));
+		assert.strictEqual(resource.resource.toString(), uri.toString());
+	});
+
+	test('PromptFileChatResource - URI constructor with options', function () {
+		const uri = URI.file('/path/to/prompt.md');
+		const resource = new types.PromptFileChatResource({ uri, isEditable: true });
+
+		assert.ok(!URI.isUri(resource.resource));
+		const descriptor = resource.resource as { uri: URI; isEditable?: boolean };
+		assert.strictEqual(descriptor.uri.toString(), uri.toString());
+		assert.strictEqual(descriptor.isEditable, true);
+	});
+
+	test('PromptFileChatResource - content constructor', function () {
+		const content = '# Prompt\nThis is my prompt content';
+		const resource = new types.PromptFileChatResource({ id: 'my-prompt-id', content });
+
+		assert.ok(!URI.isUri(resource.resource));
+		const descriptor = resource.resource as { id: string; content: string };
+		assert.strictEqual(descriptor.id, 'my-prompt-id');
+		assert.strictEqual(descriptor.content, content);
+	});
+
+
+
+	test('Chat prompt resources store different descriptors for different IDs', function () {
+		const resource1 = new types.CustomAgentChatResource({ id: 'id-one', content: 'content1' });
+		const resource2 = new types.CustomAgentChatResource({ id: 'id-two', content: 'content2' });
+
+		const desc1 = resource1.resource as { id: string; content: string };
+		const desc2 = resource2.resource as { id: string; content: string };
+		assert.strictEqual(desc1.id, 'id-one');
+		assert.strictEqual(desc2.id, 'id-two');
+		assert.notStrictEqual(desc1.id, desc2.id);
+	});
+
+	test('Chat prompt resources store resource descriptors correctly', function () {
+		const agent = new types.CustomAgentChatResource({ id: 'test', content: 'content' });
+		const instructions = new types.InstructionsChatResource({ id: 'test', content: 'content' });
+		const prompt = new types.PromptFileChatResource({ id: 'test', content: 'content' });
+
+		assert.ok(!URI.isUri(agent.resource));
+		assert.ok(!URI.isUri(instructions.resource));
+		assert.ok(!URI.isUri(prompt.resource));
+		assert.strictEqual((agent.resource as { id: string; content: string }).id, 'test');
+		assert.strictEqual((instructions.resource as { id: string; content: string }).id, 'test');
+		assert.strictEqual((prompt.resource as { id: string; content: string }).id, 'test');
+	});
 });
diff --git a/src/vs/workbench/contrib/browserView/electron-browser/browserEditor.ts b/src/vs/workbench/contrib/browserView/electron-browser/browserEditor.ts
index 064dc540ab2..87222cab944 100644
--- a/src/vs/workbench/contrib/browserView/electron-browser/browserEditor.ts
+++ b/src/vs/workbench/contrib/browserView/electron-browser/browserEditor.ts
@@ -124,6 +124,11 @@ class BrowserNavigationBar extends Disposable {
 				}
 			}
 		}));
+
+		// Select all URL bar text when the URL bar receives focus (like in regular browsers)
+		this._register(addDisposableListener(this._urlInput, EventType.FOCUS, () => {
+			this._urlInput.select();
+		}));
 	}
 
 	/**
diff --git a/src/vs/workbench/contrib/chat/browser/attachments/chatAttachmentWidgets.ts b/src/vs/workbench/contrib/chat/browser/attachments/chatAttachmentWidgets.ts
index 8054da42f32..d5ab8f1a9aa 100644
--- a/src/vs/workbench/contrib/chat/browser/attachments/chatAttachmentWidgets.ts
+++ b/src/vs/workbench/contrib/chat/browser/attachments/chatAttachmentWidgets.ts
@@ -57,10 +57,11 @@ import { toHistoryItemHoverContent } from '../../../scm/browser/scmHistory.js';
 import { getHistoryItemEditorTitle } from '../../../scm/browser/util.js';
 import { ITerminalService } from '../../../terminal/browser/terminal.js';
 import { IChatContentReference } from '../../common/chatService/chatService.js';
-import { IChatRequestPasteVariableEntry, IChatRequestVariableEntry, IElementVariableEntry, INotebookOutputVariableEntry, IPromptFileVariableEntry, IPromptTextVariableEntry, ISCMHistoryItemVariableEntry, OmittedState, PromptFileVariableKind, ChatRequestToolReferenceEntry, ISCMHistoryItemChangeVariableEntry, ISCMHistoryItemChangeRangeVariableEntry, ITerminalVariableEntry } from '../../common/attachments/chatVariableEntries.js';
+import { IChatRequestPasteVariableEntry, IChatRequestVariableEntry, IElementVariableEntry, INotebookOutputVariableEntry, IPromptFileVariableEntry, IPromptTextVariableEntry, ISCMHistoryItemVariableEntry, OmittedState, PromptFileVariableKind, ChatRequestToolReferenceEntry, ISCMHistoryItemChangeVariableEntry, ISCMHistoryItemChangeRangeVariableEntry, ITerminalVariableEntry, isStringVariableEntry } from '../../common/attachments/chatVariableEntries.js';
 import { ILanguageModelChatMetadataAndIdentifier, ILanguageModelsService } from '../../common/languageModels.js';
 import { ILanguageModelToolsService, ToolSet } from '../../common/tools/languageModelToolsService.js';
 import { getCleanPromptName } from '../../common/promptSyntax/config/promptFileLocations.js';
+import { IChatContextService } from '../contextContrib/chatContextService.js';
 
 const commonHoverOptions: Partial<IHoverOptions> = {
 	style: HoverStyle.Pointer,
@@ -584,6 +585,16 @@ export class DefaultChatAttachmentWidget extends AbstractChatAttachmentWidget {
 			this._register(this.instantiationService.invokeFunction(hookUpSymbolAttachmentDragAndContextMenu, this.element, scopedContextKeyService, { ...attachment, kind: attachment.symbolKind }, MenuId.ChatInputSymbolAttachmentContext));
 		}
 
+		// Handle click for string context attachments with context commands
+		if (isStringVariableEntry(attachment) && attachment.commandId) {
+			this.element.style.cursor = 'pointer';
+			const contextItemHandle = attachment.handle;
+			this._register(dom.addDisposableListener(this.element, dom.EventType.CLICK, async () => {
+				const chatContextService = this.instantiationService.invokeFunction(accessor => accessor.get(IChatContextService));
+				await chatContextService.executeChatContextItemCommand(contextItemHandle);
+			}));
+		}
+
 		if (resource) {
 			this.addResourceOpenHandlers(resource, range);
 		}
diff --git a/src/vs/workbench/contrib/chat/browser/attachments/chatImplicitContext.ts b/src/vs/workbench/contrib/chat/browser/attachments/chatImplicitContext.ts
index eac7f983360..48aee8ff887 100644
--- a/src/vs/workbench/contrib/chat/browser/attachments/chatImplicitContext.ts
+++ b/src/vs/workbench/contrib/chat/browser/attachments/chatImplicitContext.ts
@@ -388,7 +388,9 @@ export class ChatImplicitContext extends Disposable implements IChatRequestImpli
 					value: this.value.value ?? this.name,
 					modelDescription: this.modelDescription,
 					icon: this.value.icon,
-					uri: this.value.uri
+					uri: this.value.uri,
+					handle: this.value.handle,
+					commandId: this.value.commandId
 				}
 			];
 		}
diff --git a/src/vs/workbench/contrib/chat/browser/attachments/implicitContextAttachment.ts b/src/vs/workbench/contrib/chat/browser/attachments/implicitContextAttachment.ts
index 5a4815ff15d..cc939a7ff93 100644
--- a/src/vs/workbench/contrib/chat/browser/attachments/implicitContextAttachment.ts
+++ b/src/vs/workbench/contrib/chat/browser/attachments/implicitContextAttachment.ts
@@ -209,7 +209,9 @@ export class ImplicitContextAttachmentWidget extends Disposable {
 				name: this.attachment.name,
 				icon: this.attachment.value.icon,
 				modelDescription: this.attachment.value.modelDescription,
-				uri: this.attachment.value.uri
+				uri: this.attachment.value.uri,
+				commandId: this.attachment.value.commandId,
+				handle: this.attachment.value.handle
 			};
 			this.attachmentModel.addContext(context);
 		} else {
diff --git a/src/vs/workbench/contrib/chat/browser/chat.contribution.ts b/src/vs/workbench/contrib/chat/browser/chat.contribution.ts
index bc89fbfdf76..ad76b78f988 100644
--- a/src/vs/workbench/contrib/chat/browser/chat.contribution.ts
+++ b/src/vs/workbench/contrib/chat/browser/chat.contribution.ts
@@ -53,6 +53,7 @@ import { ILanguageModelStatsService, LanguageModelStatsService } from '../common
 import { ILanguageModelToolsConfirmationService } from '../common/tools/languageModelToolsConfirmationService.js';
 import { ILanguageModelToolsService } from '../common/tools/languageModelToolsService.js';
 import { ChatPromptFilesExtensionPointHandler } from '../common/promptSyntax/chatPromptFilesContribution.js';
+import { ChatPromptContentStore, IChatPromptContentStore } from '../common/promptSyntax/chatPromptContentStore.js';
 import { PromptsConfig } from '../common/promptSyntax/config/config.js';
 import { INSTRUCTIONS_DEFAULT_SOURCE_FOLDER, INSTRUCTION_FILE_EXTENSION, LEGACY_MODE_DEFAULT_SOURCE_FOLDER, LEGACY_MODE_FILE_EXTENSION, PROMPT_DEFAULT_SOURCE_FOLDER, PROMPT_FILE_EXTENSION, DEFAULT_SKILL_SOURCE_FOLDERS } from '../common/promptSyntax/config/promptFileLocations.js';
 import { PromptLanguageFeaturesProvider } from '../common/promptSyntax/promptFileContributions.js';
@@ -94,6 +95,7 @@ import { ChatAttachmentResolveService, IChatAttachmentResolveService } from './a
 import { ChatMarkdownAnchorService, IChatMarkdownAnchorService } from './widget/chatContentParts/chatMarkdownAnchorService.js';
 import { ChatContextPickService, IChatContextPickService } from './attachments/chatContextPickService.js';
 import { ChatInputBoxContentProvider } from './widget/input/editor/chatEditorInputContentProvider.js';
+import { ChatPromptContentProvider } from './promptSyntax/chatPromptContentProvider.js';
 import { ChatEditingEditorAccessibility } from './chatEditing/chatEditingEditorAccessibility.js';
 import { registerChatEditorActions } from './chatEditing/chatEditingEditorActions.js';
 import { ChatEditingEditorContextKeys } from './chatEditing/chatEditingEditorContextKeys.js';
@@ -1120,6 +1122,7 @@ AccessibleViewRegistry.register(new EditsChatAccessibilityHelp());
 AccessibleViewRegistry.register(new AgentChatAccessibilityHelp());
 
 registerEditorFeature(ChatInputBoxContentProvider);
+registerEditorFeature(ChatPromptContentProvider);
 
 class ChatSlashStaticSlashCommandsContribution extends Disposable {
 
@@ -1280,6 +1283,7 @@ registerSingleton(IChatEditingService, ChatEditingService, InstantiationType.Del
 registerSingleton(IChatMarkdownAnchorService, ChatMarkdownAnchorService, InstantiationType.Delayed);
 registerSingleton(ILanguageModelIgnoredFilesService, LanguageModelIgnoredFilesService, InstantiationType.Delayed);
 registerSingleton(IPromptsService, PromptsService, InstantiationType.Delayed);
+registerSingleton(IChatPromptContentStore, ChatPromptContentStore, InstantiationType.Delayed);
 registerSingleton(IChatContextPickService, ChatContextPickService, InstantiationType.Delayed);
 registerSingleton(IChatModeService, ChatModeService, InstantiationType.Delayed);
 registerSingleton(IChatAttachmentResolveService, ChatAttachmentResolveService, InstantiationType.Delayed);
diff --git a/src/vs/workbench/contrib/chat/browser/contextContrib/chatContextService.ts b/src/vs/workbench/contrib/chat/browser/contextContrib/chatContextService.ts
index 5538c84c4b1..57850cea5ca 100644
--- a/src/vs/workbench/contrib/chat/browser/contextContrib/chatContextService.ts
+++ b/src/vs/workbench/contrib/chat/browser/contextContrib/chatContextService.ts
@@ -34,6 +34,7 @@ export class ChatContextService extends Disposable {
 	private readonly _workspaceContext = new Map<string, IChatContextItem[]>();
 	private readonly _registeredPickers = this._register(new DisposableMap<string, IDisposable>());
 	private _lastResourceContext: Map<StringChatContextValue, { originalItem: IChatContextItem; provider: IChatContextProvider }> = new Map();
+	private _executeCommandCallback: ((itemHandle: number) => Promise<void>) | undefined;
 
 	constructor(
 		@IChatContextPickService private readonly _contextPickService: IChatContextPickService,
@@ -42,6 +43,17 @@ export class ChatContextService extends Disposable {
 		super();
 	}
 
+	setExecuteCommandCallback(callback: (itemHandle: number) => Promise<void>): void {
+		this._executeCommandCallback = callback;
+	}
+
+	async executeChatContextItemCommand(handle: number): Promise<void> {
+		if (!this._executeCommandCallback) {
+			return;
+		}
+		await this._executeCommandCallback(handle);
+	}
+
 	setChatContextProvider(id: string, picker: { title: string; icon: ThemeIcon }): void {
 		const providerEntry = this._providers.get(id) ?? { picker: undefined };
 		providerEntry.picker = picker;
@@ -110,7 +122,8 @@ export class ChatContextService extends Disposable {
 		if (scoredProviders.length === 0 || scoredProviders[0].score <= 0) {
 			return;
 		}
-		const context = (await scoredProviders[0].provider.provideChatContextForResource!(uri, withValue, CancellationToken.None));
+		const provider = scoredProviders[0].provider;
+		const context = (await provider.provideChatContextForResource!(uri, withValue, CancellationToken.None));
 		if (!context) {
 			return;
 		}
@@ -119,10 +132,12 @@ export class ChatContextService extends Disposable {
 			name: context.label,
 			icon: context.icon,
 			uri: uri,
-			modelDescription: context.modelDescription
+			modelDescription: context.modelDescription,
+			commandId: context.command?.id,
+			handle: context.handle
 		};
 		this._lastResourceContext.clear();
-		this._lastResourceContext.set(contextValue, { originalItem: context, provider: scoredProviders[0].provider });
+		this._lastResourceContext.set(contextValue, { originalItem: context, provider });
 		return contextValue;
 	}
 
@@ -183,7 +198,7 @@ export class ChatContextService extends Disposable {
 								id: contextValue.label,
 								name: contextValue.label,
 								icon: contextValue.icon,
-								value: contextValue.value
+								value: contextValue.value,
 							};
 						}
 					}));
diff --git a/src/vs/workbench/contrib/chat/browser/promptSyntax/chatPromptContentProvider.ts b/src/vs/workbench/contrib/chat/browser/promptSyntax/chatPromptContentProvider.ts
new file mode 100644
index 00000000000..b193910212f
--- /dev/null
+++ b/src/vs/workbench/contrib/chat/browser/promptSyntax/chatPromptContentProvider.ts
@@ -0,0 +1,49 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import { Disposable } from '../../../../../base/common/lifecycle.js';
+import { Schemas } from '../../../../../base/common/network.js';
+import { URI } from '../../../../../base/common/uri.js';
+import { ILanguageService } from '../../../../../editor/common/languages/language.js';
+import { ITextModel } from '../../../../../editor/common/model.js';
+import { IModelService } from '../../../../../editor/common/services/model.js';
+import { ITextModelContentProvider, ITextModelService } from '../../../../../editor/common/services/resolverService.js';
+import { IChatPromptContentStore } from '../../common/promptSyntax/chatPromptContentStore.js';
+import { PROMPT_LANGUAGE_ID } from '../../common/promptSyntax/promptTypes.js';
+
+/**
+ * Content provider for virtual chat prompt files created with inline content.
+ * These URIs have the scheme 'vscode-chat-prompt' and retrieve their content
+ * from the {@link IChatPromptContentStore} which maintains an in-memory map
+ * of content indexed by URI. This approach avoids putting content in the URI
+ * query string which is a misuse of URIs.
+ */
+export class ChatPromptContentProvider extends Disposable implements ITextModelContentProvider {
+	constructor(
+		@ITextModelService textModelService: ITextModelService,
+		@IModelService private readonly modelService: IModelService,
+		@ILanguageService private readonly languageService: ILanguageService,
+		@IChatPromptContentStore private readonly chatPromptContentStore: IChatPromptContentStore
+	) {
+		super();
+		this._register(textModelService.registerTextModelContentProvider(Schemas.vscodeChatPrompt, this));
+	}
+
+	async provideTextContent(resource: URI): Promise<ITextModel | null> {
+		const existing = this.modelService.getModel(resource);
+		if (existing) {
+			return existing;
+		}
+
+		// Get the content from the content store
+		const content = this.chatPromptContentStore.getContent(resource) ?? '';
+
+		return this.modelService.createModel(
+			content,
+			this.languageService.createById(PROMPT_LANGUAGE_ID),
+			resource
+		);
+	}
+}
diff --git a/src/vs/workbench/contrib/chat/browser/widget/input/chatInputPart.ts b/src/vs/workbench/contrib/chat/browser/widget/input/chatInputPart.ts
index f36daedcf89..5cbb6604e91 100644
--- a/src/vs/workbench/contrib/chat/browser/widget/input/chatInputPart.ts
+++ b/src/vs/workbench/contrib/chat/browser/widget/input/chatInputPart.ts
@@ -80,7 +80,7 @@ import { getSimpleCodeEditorWidgetOptions, getSimpleEditorOptions, setupSimpleEd
 import { InlineChatConfigKeys } from '../../../../inlineChat/common/inlineChat.js';
 import { IChatViewTitleActionContext } from '../../../common/actions/chatActions.js';
 import { ChatContextKeys } from '../../../common/actions/chatContextKeys.js';
-import { ChatRequestVariableSet, IChatRequestVariableEntry, isElementVariableEntry, isImageVariableEntry, isNotebookOutputVariableEntry, isPasteVariableEntry, isPromptFileVariableEntry, isPromptTextVariableEntry, isSCMHistoryItemChangeRangeVariableEntry, isSCMHistoryItemChangeVariableEntry, isSCMHistoryItemVariableEntry, isStringVariableEntry } from '../../../common/attachments/chatVariableEntries.js';
+import { ChatRequestVariableSet, IChatRequestVariableEntry, isElementVariableEntry, isImageVariableEntry, isNotebookOutputVariableEntry, isPasteVariableEntry, isPromptFileVariableEntry, isPromptTextVariableEntry, isSCMHistoryItemChangeRangeVariableEntry, isSCMHistoryItemChangeVariableEntry, isSCMHistoryItemVariableEntry, isStringImplicitContextValue, isStringVariableEntry } from '../../../common/attachments/chatVariableEntries.js';
 import { ChatMode, IChatMode, IChatModeService } from '../../../common/chatModes.js';
 import { IChatFollowup, IChatService } from '../../../common/chatService/chatService.js';
 import { IChatSessionFileChange, IChatSessionProviderOptionItem, IChatSessionsService, localChatSessionType } from '../../../common/chatSessionsService.js';
@@ -217,7 +217,7 @@ export class ChatInputPart extends Disposable implements IHistoryNavigationWidge
 
 		const contextArr = this.getAttachedContext(sessionResource);
 
-		if ((this.implicitContext?.enabled && this.implicitContext?.value) || (this.implicitContext && !URI.isUri(this.implicitContext.value) && this.configurationService.getValue<boolean>('chat.implicitContext.suggestedContext'))) {
+		if ((this.implicitContext?.enabled && this.implicitContext?.value) || (this.implicitContext && !URI.isUri(this.implicitContext.value) && !isStringImplicitContextValue(this.implicitContext.value) && this.configurationService.getValue<boolean>('chat.implicitContext.suggestedContext'))) {
 			const implicitChatVariables = this.implicitContext.toBaseEntries();
 			contextArr.add(...implicitChatVariables);
 		}
@@ -2289,6 +2289,8 @@ export class ChatInputPart extends Disposable implements IHistoryNavigationWidge
 				dom.clearNode(this.chatEditingSessionWidgetContainer);
 				this._chatEditsDisposables.clear();
 				this._chatEditList = undefined;
+
+				this._onDidChangeHeight.fire();
 			}
 		});
 	}
diff --git a/src/vs/workbench/contrib/chat/common/attachments/chatVariableEntries.ts b/src/vs/workbench/contrib/chat/common/attachments/chatVariableEntries.ts
index 54452201d19..c45c4899abc 100644
--- a/src/vs/workbench/contrib/chat/common/attachments/chatVariableEntries.ts
+++ b/src/vs/workbench/contrib/chat/common/attachments/chatVariableEntries.ts
@@ -73,6 +73,11 @@ export interface StringChatContextValue {
 	modelDescription?: string;
 	icon: ThemeIcon;
 	uri: URI;
+	/**
+	 * Command ID to execute when this context item is clicked.
+	 */
+	readonly commandId?: string;
+	readonly handle: number;
 }
 
 export interface IChatRequestImplicitVariableEntry extends IBaseChatRequestVariableEntry {
@@ -90,6 +95,11 @@ export interface IChatRequestStringVariableEntry extends IBaseChatRequestVariabl
 	readonly modelDescription?: string;
 	readonly icon: ThemeIcon;
 	readonly uri: URI;
+	/**
+	 * Command ID to execute when this context item is clicked.
+	 */
+	readonly commandId?: string;
+	readonly handle: number;
 }
 
 export interface IChatRequestWorkspaceVariableEntry extends IBaseChatRequestVariableEntry {
@@ -329,7 +339,6 @@ export namespace IChatRequestVariableEntry {
 	}
 }
 
-
 export function isImplicitVariableEntry(obj: IChatRequestVariableEntry): obj is IChatRequestImplicitVariableEntry {
 	return obj.kind === 'implicit';
 }
diff --git a/src/vs/workbench/contrib/chat/common/contextContrib/chatContext.ts b/src/vs/workbench/contrib/chat/common/contextContrib/chatContext.ts
index 854d415e208..6973240728d 100644
--- a/src/vs/workbench/contrib/chat/common/contextContrib/chatContext.ts
+++ b/src/vs/workbench/contrib/chat/common/contextContrib/chatContext.ts
@@ -13,6 +13,9 @@ export interface IChatContextItem {
 	modelDescription?: string;
 	handle: number;
 	value?: string;
+	command?: {
+		id: string;
+	};
 }
 
 export interface IChatContextSupport {
diff --git a/src/vs/workbench/contrib/chat/common/promptSyntax/chatPromptContentStore.ts b/src/vs/workbench/contrib/chat/common/promptSyntax/chatPromptContentStore.ts
new file mode 100644
index 00000000000..30de1ac7e0c
--- /dev/null
+++ b/src/vs/workbench/contrib/chat/common/promptSyntax/chatPromptContentStore.ts
@@ -0,0 +1,66 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import { Disposable } from '../../../../../base/common/lifecycle.js';
+import { URI } from '../../../../../base/common/uri.js';
+import { createDecorator } from '../../../../../platform/instantiation/common/instantiation.js';
+
+export const IChatPromptContentStore = createDecorator<IChatPromptContentStore>('chatPromptContentStore');
+
+/**
+ * Service for managing virtual chat prompt content.
+ *
+ * This store maintains an in-memory map of content indexed by URI.
+ * URIs use the vscode-chat-prompt scheme with just the ID in the path,
+ * avoiding the need to encode large content in the URI query string.
+ */
+export interface IChatPromptContentStore {
+	readonly _serviceBrand: undefined;
+
+	/**
+	 * Registers content for a given URI.
+	 * @param uri The URI to associate with the content.
+	 * @param content The content to store.
+	 * @returns A disposable that removes the content when disposed.
+	 */
+	registerContent(uri: URI, content: string): { dispose: () => void };
+
+	/**
+	 * Retrieves content by URI.
+	 * @param uri The URI to look up.
+	 * @returns The content if found, or undefined.
+	 */
+	getContent(uri: URI): string | undefined;
+}
+
+export class ChatPromptContentStore extends Disposable implements IChatPromptContentStore {
+	readonly _serviceBrand: undefined;
+
+	private readonly _contentMap = new Map<string, string>();
+
+	constructor() {
+		super();
+	}
+
+	registerContent(uri: URI, content: string): { dispose: () => void } {
+		const key = uri.toString();
+		this._contentMap.set(key, content);
+
+		const dispose = () => {
+			this._contentMap.delete(key);
+		};
+
+		return { dispose };
+	}
+
+	getContent(uri: URI): string | undefined {
+		return this._contentMap.get(uri.toString());
+	}
+
+	override dispose(): void {
+		this._contentMap.clear();
+		super.dispose();
+	}
+}
diff --git a/src/vs/workbench/contrib/chat/common/promptSyntax/chatPromptFilesContribution.ts b/src/vs/workbench/contrib/chat/common/promptSyntax/chatPromptFilesContribution.ts
index a5352e3e7b0..6952e85834f 100644
--- a/src/vs/workbench/contrib/chat/common/promptSyntax/chatPromptFilesContribution.ts
+++ b/src/vs/workbench/contrib/chat/common/promptSyntax/chatPromptFilesContribution.ts
@@ -3,14 +3,17 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
+import { CancellationToken } from '../../../../../base/common/cancellation.js';
+import { DisposableMap } from '../../../../../base/common/lifecycle.js';
+import { joinPath, isEqualOrParent } from '../../../../../base/common/resources.js';
+import { UriComponents } from '../../../../../base/common/uri.js';
 import { localize } from '../../../../../nls.js';
+import { CommandsRegistry } from '../../../../../platform/commands/common/commands.js';
+import { ExtensionIdentifier } from '../../../../../platform/extensions/common/extensions.js';
 import { IWorkbenchContribution } from '../../../../common/contributions.js';
 import * as extensionsRegistry from '../../../../services/extensions/common/extensionsRegistry.js';
-import { ExtensionIdentifier } from '../../../../../platform/extensions/common/extensions.js';
-import { joinPath, isEqualOrParent } from '../../../../../base/common/resources.js';
-import { IPromptsService } from './service/promptsService.js';
+import { IPromptsService, PromptsStorage } from './service/promptsService.js';
 import { PromptsType } from './promptTypes.js';
-import { DisposableMap } from '../../../../../base/common/lifecycle.js';
 
 interface IRawChatFileContribution {
 	readonly path: string;
@@ -117,3 +120,35 @@ export class ChatPromptFilesExtensionPointHandler implements IWorkbenchContribut
 		});
 	}
 }
+
+/**
+ * Result type for the extension prompt file provider command.
+ */
+export interface IExtensionPromptFileResult {
+	readonly uri: UriComponents;
+	readonly type: PromptsType;
+}
+
+/**
+ * Register the command to list all extension-contributed prompt files.
+ */
+CommandsRegistry.registerCommand('_listExtensionPromptFiles', async (accessor): Promise<IExtensionPromptFileResult[]> => {
+	const promptsService = accessor.get(IPromptsService);
+
+	// Get extension prompt files for all prompt types in parallel
+	const [agents, instructions, prompts] = await Promise.all([
+		promptsService.listPromptFiles(PromptsType.agent, CancellationToken.None),
+		promptsService.listPromptFiles(PromptsType.instructions, CancellationToken.None),
+		promptsService.listPromptFiles(PromptsType.prompt, CancellationToken.None),
+	]);
+
+	// Combine all files and collect extension-contributed ones
+	const result: IExtensionPromptFileResult[] = [];
+	for (const file of [...agents, ...instructions, ...prompts]) {
+		if (file.storage === PromptsStorage.extension) {
+			result.push({ uri: file.uri.toJSON(), type: file.type });
+		}
+	}
+
+	return result;
+});
diff --git a/src/vs/workbench/contrib/chat/common/promptSyntax/service/promptsService.ts b/src/vs/workbench/contrib/chat/common/promptSyntax/service/promptsService.ts
index ccf1a4c42f4..f84cc15db38 100644
--- a/src/vs/workbench/contrib/chat/common/promptSyntax/service/promptsService.ts
+++ b/src/vs/workbench/contrib/chat/common/promptSyntax/service/promptsService.ts
@@ -41,6 +41,13 @@ export interface IPromptFileResource {
 	 * Indicates whether the custom agent resource is editable. Defaults to false.
 	 */
 	readonly isEditable?: boolean;
+
+	/**
+	 * The inline content for virtual prompt files. This property is only used
+	 * during IPC transfer from extension host to main thread - the content is
+	 * immediately registered with the ChatPromptContentStore and not passed further.
+	 */
+	readonly content?: string;
 }
 
 /**
diff --git a/src/vs/workbench/contrib/chat/common/promptSyntax/service/promptsServiceImpl.ts b/src/vs/workbench/contrib/chat/common/promptSyntax/service/promptsServiceImpl.ts
index eac1705a2d0..47b297427bb 100644
--- a/src/vs/workbench/contrib/chat/common/promptSyntax/service/promptsServiceImpl.ts
+++ b/src/vs/workbench/contrib/chat/common/promptSyntax/service/promptsServiceImpl.ts
@@ -35,6 +35,7 @@ import { PromptFileParser, ParsedPromptFile, PromptHeaderAttributes } from '../p
 import { IAgentInstructions, IAgentSource, IChatPromptSlashCommand, ICustomAgent, IExtensionPromptPath, ILocalPromptPath, IPromptPath, IPromptsService, IAgentSkill, IUserPromptPath, PromptsStorage, ExtensionAgentSourceType, CUSTOM_AGENT_PROVIDER_ACTIVATION_EVENT, INSTRUCTIONS_PROVIDER_ACTIVATION_EVENT, IPromptFileContext, IPromptFileResource, PROMPT_FILE_PROVIDER_ACTIVATION_EVENT, SKILL_PROVIDER_ACTIVATION_EVENT } from './promptsService.js';
 import { Delayer } from '../../../../../../base/common/async.js';
 import { Schemas } from '../../../../../../base/common/network.js';
+import { IChatPromptContentStore } from '../chatPromptContentStore.js';
 
 /**
  * Provides prompt services.
@@ -98,7 +99,8 @@ export class PromptsService extends Disposable implements IPromptsService {
 		@IStorageService private readonly storageService: IStorageService,
 		@IExtensionService private readonly extensionService: IExtensionService,
 		@IDefaultAccountService private readonly defaultAccountService: IDefaultAccountService,
-		@ITelemetryService private readonly telemetryService: ITelemetryService
+		@ITelemetryService private readonly telemetryService: ITelemetryService,
+		@IChatPromptContentStore private readonly chatPromptContentStore: IChatPromptContentStore
 	) {
 		super();
 
@@ -502,6 +504,16 @@ export class PromptsService extends Disposable implements IPromptsService {
 		if (model) {
 			return this.getParsedPromptFile(model);
 		}
+
+		// Handle virtual prompt URIs - get content from the content store
+		if (uri.scheme === Schemas.vscodeChatPrompt) {
+			const content = this.chatPromptContentStore.getContent(uri);
+			if (content !== undefined) {
+				return new PromptFileParser().parse(uri, content);
+			}
+			throw new Error(`Content not found in store for virtual prompt URI: ${uri.toString()}`);
+		}
+
 		const fileContent = await this.fileService.readFile(uri);
 		if (token.isCancellationRequested) {
 			throw new CancellationError();
diff --git a/src/vs/workbench/contrib/chat/test/browser/promptSyntax/chatPromptContentProvider.test.ts b/src/vs/workbench/contrib/chat/test/browser/promptSyntax/chatPromptContentProvider.test.ts
new file mode 100644
index 00000000000..6323d234eba
--- /dev/null
+++ b/src/vs/workbench/contrib/chat/test/browser/promptSyntax/chatPromptContentProvider.test.ts
@@ -0,0 +1,215 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import assert from 'assert';
+import { URI } from '../../../../../../base/common/uri.js';
+import { ensureNoDisposablesAreLeakedInTestSuite } from '../../../../../../base/test/common/utils.js';
+import { ILanguageService, ILanguageSelection } from '../../../../../../editor/common/languages/language.js';
+import { ITextModel } from '../../../../../../editor/common/model.js';
+import { IModelService } from '../../../../../../editor/common/services/model.js';
+import { ITextModelService } from '../../../../../../editor/common/services/resolverService.js';
+import { TestInstantiationService } from '../../../../../../platform/instantiation/test/common/instantiationServiceMock.js';
+import { ChatPromptContentProvider } from '../../../browser/promptSyntax/chatPromptContentProvider.js';
+import { ChatPromptContentStore, IChatPromptContentStore } from '../../../common/promptSyntax/chatPromptContentStore.js';
+import { PROMPT_LANGUAGE_ID } from '../../../common/promptSyntax/promptTypes.js';
+import { Disposable, IDisposable } from '../../../../../../base/common/lifecycle.js';
+import { Schemas } from '../../../../../../base/common/network.js';
+
+suite('ChatPromptContentProvider', () => {
+	const testDisposables = ensureNoDisposablesAreLeakedInTestSuite();
+
+	let instantiationService: TestInstantiationService;
+	let contentStore: ChatPromptContentStore;
+	let mockModelService: MockModelService;
+	let mockLanguageService: MockLanguageService;
+	let mockTextModelService: MockTextModelService;
+	let contentProvider: ChatPromptContentProvider;
+
+	class MockLanguageSelection implements ILanguageSelection {
+		readonly languageId = PROMPT_LANGUAGE_ID;
+		readonly onDidChange = testDisposables.add(new (class extends Disposable { readonly event = () => ({ dispose: () => { } }); })()).event;
+	}
+
+	class MockLanguageService {
+		createById(languageId: string): ILanguageSelection {
+			return new MockLanguageSelection();
+		}
+	}
+
+	class MockTextModel implements Partial<ITextModel> {
+		constructor(
+			readonly uri: URI,
+			readonly content: string,
+			readonly languageId: string
+		) { }
+
+		getValue(): string {
+			return this.content;
+		}
+
+		getLanguageId(): string {
+			return this.languageId;
+		}
+	}
+
+	class MockModelService {
+		private models = new Map<string, ITextModel>();
+
+		getModel(resource: URI): ITextModel | null {
+			return this.models.get(resource.toString()) ?? null;
+		}
+
+		createModel(content: string, languageSelection: ILanguageSelection, resource: URI): ITextModel {
+			const model = new MockTextModel(resource, content, languageSelection.languageId) as unknown as ITextModel;
+			this.models.set(resource.toString(), model);
+			return model;
+		}
+
+		setExistingModel(uri: URI, model: ITextModel): void {
+			this.models.set(uri.toString(), model);
+		}
+
+		clear(): void {
+			this.models.clear();
+		}
+	}
+
+	class MockTextModelService {
+		private providers = new Map<string, { provideTextContent: (resource: URI) => Promise<ITextModel | null> }>();
+
+		registerTextModelContentProvider(scheme: string, provider: { provideTextContent: (resource: URI) => Promise<ITextModel | null> }): IDisposable {
+			this.providers.set(scheme, provider);
+			return { dispose: () => this.providers.delete(scheme) };
+		}
+
+		getProvider(scheme: string) {
+			return this.providers.get(scheme);
+		}
+	}
+
+	setup(() => {
+		instantiationService = testDisposables.add(new TestInstantiationService());
+
+		contentStore = testDisposables.add(new ChatPromptContentStore());
+		mockModelService = new MockModelService();
+		mockLanguageService = new MockLanguageService();
+		mockTextModelService = new MockTextModelService();
+
+		instantiationService.stub(IChatPromptContentStore, contentStore);
+		instantiationService.stub(IModelService, mockModelService);
+		instantiationService.stub(ILanguageService, mockLanguageService as unknown as ILanguageService);
+		instantiationService.stub(ITextModelService, mockTextModelService as unknown as ITextModelService);
+
+		contentProvider = testDisposables.add(instantiationService.createInstance(ChatPromptContentProvider));
+	});
+
+	teardown(() => {
+		mockModelService.clear();
+	});
+
+	test('registers as content provider for vscode-chat-prompt scheme', () => {
+		const provider = mockTextModelService.getProvider(Schemas.vscodeChatPrompt);
+		assert.ok(provider, 'Provider should be registered for vscode-chat-prompt scheme');
+	});
+
+	test('provideTextContent creates model from stored content', async () => {
+		const uri = URI.parse('vscode-chat-prompt:/.agent.md/test-agent');
+		const content = '# Test Agent\nThis is the agent content.';
+
+		testDisposables.add(contentStore.registerContent(uri, content));
+
+		const model = await contentProvider.provideTextContent(uri);
+
+		assert.ok(model, 'Model should be created');
+		assert.strictEqual((model as unknown as MockTextModel).getValue(), content);
+		assert.strictEqual((model as unknown as MockTextModel).getLanguageId(), PROMPT_LANGUAGE_ID);
+	});
+
+	test('provideTextContent returns existing model if available', async () => {
+		const uri = URI.parse('vscode-chat-prompt:/.prompt.md/existing');
+		const existingContent = 'Existing model content';
+
+		const existingModel = new MockTextModel(uri, existingContent, PROMPT_LANGUAGE_ID) as unknown as ITextModel;
+		mockModelService.setExistingModel(uri, existingModel);
+
+		const model = await contentProvider.provideTextContent(uri);
+
+		assert.strictEqual(model, existingModel, 'Should return existing model');
+	});
+
+	test('provideTextContent creates model with empty content when URI has no stored content', async () => {
+		const uri = URI.parse('vscode-chat-prompt:/.instructions.md/missing');
+
+		const model = await contentProvider.provideTextContent(uri);
+
+		assert.ok(model, 'Model should be created even without stored content');
+		assert.strictEqual((model as unknown as MockTextModel).getValue(), '');
+	});
+
+	test('provideTextContent uses prompt language ID', async () => {
+		const uri = URI.parse('vscode-chat-prompt:/.agent.md/language-test');
+		const content = 'Test content';
+
+		testDisposables.add(contentStore.registerContent(uri, content));
+
+		const model = await contentProvider.provideTextContent(uri);
+
+		assert.ok(model);
+		assert.strictEqual((model as unknown as MockTextModel).getLanguageId(), PROMPT_LANGUAGE_ID);
+	});
+
+	test('handles multiple sequential requests for different URIs', async () => {
+		const uri1 = URI.parse('vscode-chat-prompt:/.agent.md/agent-1');
+		const uri2 = URI.parse('vscode-chat-prompt:/.instructions.md/instructions-1');
+		const uri3 = URI.parse('vscode-chat-prompt:/.prompt.md/prompt-1');
+
+		const content1 = 'Agent content';
+		const content2 = 'Instructions content';
+		const content3 = 'Prompt content';
+
+		testDisposables.add(contentStore.registerContent(uri1, content1));
+		testDisposables.add(contentStore.registerContent(uri2, content2));
+		testDisposables.add(contentStore.registerContent(uri3, content3));
+
+		const model1 = await contentProvider.provideTextContent(uri1);
+		const model2 = await contentProvider.provideTextContent(uri2);
+		const model3 = await contentProvider.provideTextContent(uri3);
+
+		assert.strictEqual((model1 as unknown as MockTextModel).getValue(), content1);
+		assert.strictEqual((model2 as unknown as MockTextModel).getValue(), content2);
+		assert.strictEqual((model3 as unknown as MockTextModel).getValue(), content3);
+	});
+
+	test('content with special characters is handled correctly', async () => {
+		const uri = URI.parse('vscode-chat-prompt:/.prompt.md/special');
+		const content = '# Unicode Test\n\n日本語テスト 🎉\n\n```typescript\nconst x = "hello";\n```';
+
+		testDisposables.add(contentStore.registerContent(uri, content));
+
+		const model = await contentProvider.provideTextContent(uri);
+
+		assert.ok(model);
+		assert.strictEqual((model as unknown as MockTextModel).getValue(), content);
+	});
+
+	test('disposed content results in empty model', async () => {
+		const uri = URI.parse('vscode-chat-prompt:/.agent.md/disposed-test');
+		const content = 'Content that will be disposed';
+
+		const registration = contentStore.registerContent(uri, content);
+
+		// Verify content exists
+		const model1 = await contentProvider.provideTextContent(uri);
+		assert.strictEqual((model1 as unknown as MockTextModel).getValue(), content);
+
+		// Clear the model cache and dispose the content
+		mockModelService.clear();
+		registration.dispose();
+
+		// Now requesting should return model with empty content
+		const model2 = await contentProvider.provideTextContent(uri);
+		assert.strictEqual((model2 as unknown as MockTextModel).getValue(), '');
+	});
+});
diff --git a/src/vs/workbench/contrib/chat/test/common/promptSyntax/chatPromptContentStore.test.ts b/src/vs/workbench/contrib/chat/test/common/promptSyntax/chatPromptContentStore.test.ts
new file mode 100644
index 00000000000..3d3236124b9
--- /dev/null
+++ b/src/vs/workbench/contrib/chat/test/common/promptSyntax/chatPromptContentStore.test.ts
@@ -0,0 +1,145 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import assert from 'assert';
+import { URI } from '../../../../../../base/common/uri.js';
+import { ensureNoDisposablesAreLeakedInTestSuite } from '../../../../../../base/test/common/utils.js';
+import { ChatPromptContentStore } from '../../../common/promptSyntax/chatPromptContentStore.js';
+
+suite('ChatPromptContentStore', () => {
+	const testDisposables = ensureNoDisposablesAreLeakedInTestSuite();
+
+	let store: ChatPromptContentStore;
+
+	setup(() => {
+		store = testDisposables.add(new ChatPromptContentStore());
+	});
+
+	test('registerContent stores content retrievable by URI', () => {
+		const uri = URI.parse('vscode-chat-prompt:/.agent.md/test-id');
+		const content = '# Test Agent\nThis is test content';
+
+		const disposable = store.registerContent(uri, content);
+		testDisposables.add(disposable);
+
+		const retrieved = store.getContent(uri);
+		assert.strictEqual(retrieved, content);
+	});
+
+	test('getContent returns undefined for unregistered URI', () => {
+		const uri = URI.parse('vscode-chat-prompt:/.agent.md/unknown-id');
+
+		const retrieved = store.getContent(uri);
+		assert.strictEqual(retrieved, undefined);
+	});
+
+	test('registerContent returns disposable that removes content', () => {
+		const uri = URI.parse('vscode-chat-prompt:/.prompt.md/disposable-test');
+		const content = 'Content to be disposed';
+
+		const disposable = store.registerContent(uri, content);
+
+		// Content should exist before disposal
+		assert.strictEqual(store.getContent(uri), content);
+
+		// Dispose and verify content is removed
+		disposable.dispose();
+		assert.strictEqual(store.getContent(uri), undefined);
+	});
+
+	test('multiple registrations for different URIs are independent', () => {
+		const uri1 = URI.parse('vscode-chat-prompt:/.agent.md/id-1');
+		const uri2 = URI.parse('vscode-chat-prompt:/.instructions.md/id-2');
+		const content1 = 'Content 1';
+		const content2 = 'Content 2';
+
+		const disposable1 = store.registerContent(uri1, content1);
+		const disposable2 = store.registerContent(uri2, content2);
+		testDisposables.add(disposable1);
+		testDisposables.add(disposable2);
+
+		assert.strictEqual(store.getContent(uri1), content1);
+		assert.strictEqual(store.getContent(uri2), content2);
+
+		// Disposing one should not affect the other
+		disposable1.dispose();
+		assert.strictEqual(store.getContent(uri1), undefined);
+		assert.strictEqual(store.getContent(uri2), content2);
+	});
+
+	test('re-registering same URI overwrites content', () => {
+		const uri = URI.parse('vscode-chat-prompt:/.prompt.md/overwrite-test');
+		const content1 = 'Original content';
+		const content2 = 'Updated content';
+
+		const disposable1 = store.registerContent(uri, content1);
+		testDisposables.add(disposable1);
+
+		assert.strictEqual(store.getContent(uri), content1);
+
+		const disposable2 = store.registerContent(uri, content2);
+		testDisposables.add(disposable2);
+
+		assert.strictEqual(store.getContent(uri), content2);
+	});
+
+	test('store disposal clears all content', () => {
+		const uri1 = URI.parse('vscode-chat-prompt:/.agent.md/clear-1');
+		const uri2 = URI.parse('vscode-chat-prompt:/.agent.md/clear-2');
+
+		store.registerContent(uri1, 'Content 1');
+		store.registerContent(uri2, 'Content 2');
+
+		assert.strictEqual(store.getContent(uri1), 'Content 1');
+		assert.strictEqual(store.getContent(uri2), 'Content 2');
+
+		// Create a new store for this test that we can dispose independently
+		const localStore = new ChatPromptContentStore();
+		const localUri = URI.parse('vscode-chat-prompt:/.agent.md/local');
+		localStore.registerContent(localUri, 'Local content');
+
+		assert.strictEqual(localStore.getContent(localUri), 'Local content');
+
+		localStore.dispose();
+		assert.strictEqual(localStore.getContent(localUri), undefined);
+	});
+
+	test('empty string content is stored correctly', () => {
+		const uri = URI.parse('vscode-chat-prompt:/.prompt.md/empty-content');
+
+		const disposable = store.registerContent(uri, '');
+		testDisposables.add(disposable);
+
+		const retrieved = store.getContent(uri);
+		assert.strictEqual(retrieved, '');
+	});
+
+	test('content with special characters is stored correctly', () => {
+		const uri = URI.parse('vscode-chat-prompt:/.instructions.md/special-chars');
+		const content = '# Test\n\nUnicode: 你好世界 🎉\nSpecial: ${{variable}} @mention #tag';
+
+		const disposable = store.registerContent(uri, content);
+		testDisposables.add(disposable);
+
+		const retrieved = store.getContent(uri);
+		assert.strictEqual(retrieved, content);
+	});
+
+	test('URI comparison is string-based', () => {
+		// Same logical URI created two different ways
+		const uri1 = URI.parse('vscode-chat-prompt:/.agent.md/test');
+		const uri2 = URI.from({
+			scheme: 'vscode-chat-prompt',
+			path: '/.agent.md/test'
+		});
+
+		const content = 'Test content';
+		const disposable = store.registerContent(uri1, content);
+		testDisposables.add(disposable);
+
+		// Should be retrievable with equivalent URI
+		assert.strictEqual(store.getContent(uri2), content);
+	});
+});
diff --git a/src/vs/workbench/contrib/terminalContrib/chatAgentTools/browser/tools/monitoring/outputMonitor.ts b/src/vs/workbench/contrib/terminalContrib/chatAgentTools/browser/tools/monitoring/outputMonitor.ts
index 6de2cb80cc3..9c146f6a13a 100644
--- a/src/vs/workbench/contrib/terminalContrib/chatAgentTools/browser/tools/monitoring/outputMonitor.ts
+++ b/src/vs/workbench/contrib/terminalContrib/chatAgentTools/browser/tools/monitoring/outputMonitor.ts
@@ -9,7 +9,7 @@ import { timeout, type MaybePromise } from '../../../../../../../base/common/asy
 import { CancellationToken } from '../../../../../../../base/common/cancellation.js';
 import { Emitter, Event } from '../../../../../../../base/common/event.js';
 import { MarkdownString } from '../../../../../../../base/common/htmlContent.js';
-import { Disposable, type IDisposable } from '../../../../../../../base/common/lifecycle.js';
+import { Disposable, MutableDisposable, type IDisposable } from '../../../../../../../base/common/lifecycle.js';
 import { isObject, isString } from '../../../../../../../base/common/types.js';
 import { localize } from '../../../../../../../nls.js';
 import { ExtensionIdentifier } from '../../../../../../../platform/extensions/common/extensions.js';
@@ -66,7 +66,7 @@ export class OutputMonitor extends Disposable implements IOutputMonitor {
 	 * This is used to skip showing prompts if the user already provided input.
 	 */
 	private _userInputtedSinceIdleDetected = false;
-	private _userInputListener: IDisposable | undefined;
+	private readonly _userInputListener = this._register(new MutableDisposable<IDisposable>());
 
 	private readonly _outputMonitorTelemetryCounters: IOutputMonitorTelemetryCounters = {
 		inputToolManualAcceptCount: 0,
@@ -168,8 +168,7 @@ export class OutputMonitor extends Disposable implements IOutputMonitor {
 				resources
 			};
 			// Clean up idle input listener if still active
-			this._userInputListener?.dispose();
-			this._userInputListener = undefined;
+			this._userInputListener.clear();
 			const promptPart = this._promptPart;
 			this._promptPart = undefined;
 			if (promptPart) {
@@ -346,15 +345,11 @@ export class OutputMonitor extends Disposable implements IOutputMonitor {
 	 * This ensures we catch any input that happens between idle detection and prompt creation.
 	 */
 	private _setupIdleInputListener(): void {
-		// Clean up any existing listener
-		this._userInputListener?.dispose();
 		this._userInputtedSinceIdleDetected = false;
 
-		// Set up new listener
-		this._userInputListener = this._execution.instance.onDidInputData((data) => {
-			if (data === '\r' || data === '\n' || data === '\r\n') {
-				this._userInputtedSinceIdleDetected = true;
-			}
+		// Set up new listener (MutableDisposable auto-disposes previous)
+		this._userInputListener.value = this._execution.instance.onDidInputData(() => {
+			this._userInputtedSinceIdleDetected = true;
 		});
 	}
 
@@ -363,8 +358,7 @@ export class OutputMonitor extends Disposable implements IOutputMonitor {
 	 */
 	private _cleanupIdleInputListener(): void {
 		this._userInputtedSinceIdleDetected = false;
-		this._userInputListener?.dispose();
-		this._userInputListener = undefined;
+		this._userInputListener.clear();
 	}
 
 	private async _assessOutputForErrors(buffer: string, token: CancellationToken): Promise<string | undefined> {
diff --git a/src/vscode-dts/vscode.proposed.chatContextProvider.d.ts b/src/vscode-dts/vscode.proposed.chatContextProvider.d.ts
index e2309591824..94681edf174 100644
--- a/src/vscode-dts/vscode.proposed.chatContextProvider.d.ts
+++ b/src/vscode-dts/vscode.proposed.chatContextProvider.d.ts
@@ -43,6 +43,11 @@ declare module 'vscode' {
 		 * The value of the context item. Can be omitted when returned from one of the `provide` methods if the provider supports `resolveChatContext`.
 		 */
 		value?: string;
+		/**
+		 * An optional command that is executed when the context item is clicked.
+		 * The original context item will be passed as the first argument to the command.
+		 */
+		command?: Command;
 	}
 
 	export interface ChatContextProvider<T extends ChatContextItem = ChatContextItem> {
@@ -53,7 +58,11 @@ declare module 'vscode' {
 		onDidChangeWorkspaceChatContext?: Event<void>;
 
 		/**
-		 * Provide a list of chat context items to be included as workspace context for all chat sessions.
+		 * TODO @API: should this be a separate provider interface?
+		 *
+		 * Provide a list of chat context items to be included as workspace context for all chat requests.
+		 * This should be used very sparingly to avoid providing useless context and to avoid using up the context window.
+		 * A good example use case is to provide information about which branch the user is working on in a source control context.
 		 *
 		 * @param token A cancellation token.
 		 */
diff --git a/src/vscode-dts/vscode.proposed.chatPromptFiles.d.ts b/src/vscode-dts/vscode.proposed.chatPromptFiles.d.ts
index 8a901755807..b0da5fe1321 100644
--- a/src/vscode-dts/vscode.proposed.chatPromptFiles.d.ts
+++ b/src/vscode-dts/vscode.proposed.chatPromptFiles.d.ts
@@ -7,25 +7,76 @@
 
 declare module 'vscode' {
 
-	// #region CustomAgentProvider
+	// #region Resource Classes
 
 	/**
-	 * Represents a custom agent resource file (e.g., .agent.md) available for a repository.
+	 * Describes a chat resource file.
 	 */
-	export interface CustomAgentResource {
+	export type ChatResourceDescriptor =
+		| Uri
+		| {
+			uri: Uri;
+			isEditable?: boolean;
+		}
+		| {
+			id: string;
+			content: string;
+		};
+
+	/**
+	 * Represents a custom agent resource file (e.g., .agent.md).
+	 */
+	export class CustomAgentChatResource {
 		/**
-		 * The URI to the custom agent resource file.
+		 * The custom agent resource descriptor.
 		 */
-		readonly uri: Uri;
+		readonly resource: ChatResourceDescriptor;
 
 		/**
-		 * Indicates whether the custom agent is editable. Defaults to false.
+		 * Creates a new custom agent resource from the specified resource.
+		 * @param resource The chat resource descriptor.
 		 */
-		readonly isEditable?: boolean;
+		constructor(resource: ChatResourceDescriptor);
 	}
 
 	/**
-	 * Context for querying custom agents.
+	 * Represents an instructions resource file.
+	 */
+	export class InstructionsChatResource {
+		/**
+		 * The instructions resource descriptor.
+		 */
+		readonly resource: ChatResourceDescriptor;
+
+		/**
+		 * Creates a new instructions resource from the specified resource.
+		 * @param resource The chat resource descriptor.
+		 */
+		constructor(resource: ChatResourceDescriptor);
+	}
+
+	/**
+	 * Represents a prompt file resource (e.g., .prompt.md).
+	 */
+	export class PromptFileChatResource {
+		/**
+		 * The prompt file resource descriptor.
+		 */
+		readonly resource: ChatResourceDescriptor;
+
+		/**
+		 * Creates a new prompt file resource from the specified resource.
+		 * @param resource The chat resource descriptor.
+		 */
+		constructor(resource: ChatResourceDescriptor);
+	}
+
+	// #endregion
+
+	// #region Providers
+
+	/**
+	 * Options for querying custom agents.
 	 */
 	export type CustomAgentContext = object;
 
@@ -47,28 +98,12 @@ declare module 'vscode' {
 		 * Provide the list of custom agents available.
 		 * @param context Context for the query.
 		 * @param token A cancellation token.
-		 * @returns An array of custom agent resources or a promise that resolves to such.
+		 * @returns An array of custom agents or a promise that resolves to such.
 		 */
-		provideCustomAgents(context: CustomAgentContext, token: CancellationToken): ProviderResult<CustomAgentResource[]>;
-	}
-
-	// #endregion
-
-	// #region InstructionsProvider
-
-	/**
-	 * Represents an instructions resource file available for a repository.
-	 */
-	export interface InstructionsResource {
-		/**
-		 * The URI to the instructions resource file.
-		 */
-		readonly uri: Uri;
-
-		/**
-		 * Indicates whether the instructions are editable. Defaults to false.
-		 */
-		readonly isEditable?: boolean;
+		provideCustomAgents(
+			context: CustomAgentContext,
+			token: CancellationToken
+		): ProviderResult<CustomAgentChatResource[]>;
 	}
 
 	/**
@@ -94,28 +129,12 @@ declare module 'vscode' {
 		 * Provide the list of instructions available.
 		 * @param context Context for the query.
 		 * @param token A cancellation token.
-		 * @returns An array of instructions resources or a promise that resolves to such.
+		 * @returns An array of instructions or a promise that resolves to such.
 		 */
-		provideInstructions(context: InstructionsContext, token: CancellationToken): ProviderResult<InstructionsResource[]>;
-	}
-
-	// #endregion
-
-	// #region PromptFileProvider
-
-	/**
-	 * Represents a prompt file resource (e.g., .prompt.md) available for a repository.
-	 */
-	export interface PromptFileResource {
-		/**
-		 * The URI to the prompt file resource.
-		 */
-		readonly uri: Uri;
-
-		/**
-		 * Indicates whether the prompt file is editable. Defaults to false.
-		 */
-		readonly isEditable?: boolean;
+		provideInstructions(
+			context: InstructionsContext,
+			token: CancellationToken
+		): ProviderResult<InstructionsChatResource[]>;
 	}
 
 	/**
@@ -141,9 +160,12 @@ declare module 'vscode' {
 		 * Provide the list of prompt files available.
 		 * @param context Context for the query.
 		 * @param token A cancellation token.
-		 * @returns An array of prompt file resources or a promise that resolves to such.
+		 * @returns An array of prompt files or a promise that resolves to such.
 		 */
-		providePromptFiles(context: PromptFileContext, token: CancellationToken): ProviderResult<PromptFileResource[]>;
+		providePromptFiles(
+			context: PromptFileContext,
+			token: CancellationToken
+		): ProviderResult<PromptFileChatResource[]>;
 	}
 
 	// #endregion
@@ -156,21 +178,27 @@ declare module 'vscode' {
 		 * @param provider The custom agent provider.
 		 * @returns A disposable that unregisters the provider when disposed.
 		 */
-		export function registerCustomAgentProvider(provider: CustomAgentProvider): Disposable;
+		export function registerCustomAgentProvider(
+			provider: CustomAgentProvider
+		): Disposable;
 
 		/**
 		 * Register a provider for instructions.
 		 * @param provider The instructions provider.
 		 * @returns A disposable that unregisters the provider when disposed.
 		 */
-		export function registerInstructionsProvider(provider: InstructionsProvider): Disposable;
+		export function registerInstructionsProvider(
+			provider: InstructionsProvider
+		): Disposable;
 
 		/**
 		 * Register a provider for prompt files.
 		 * @param provider The prompt file provider.
 		 * @returns A disposable that unregisters the provider when disposed.
 		 */
-		export function registerPromptFileProvider(provider: PromptFileProvider): Disposable;
+		export function registerPromptFileProvider(
+			provider: PromptFileProvider
+		): Disposable;
 	}
 
 	// #endregion