diff --git a/extensions/copilot/src/platform/endpoint/node/messagesApi.ts b/extensions/copilot/src/platform/endpoint/node/messagesApi.ts
index 15ea1fefb6a..a10f4a864f4 100644
--- a/extensions/copilot/src/platform/endpoint/node/messagesApi.ts
+++ b/extensions/copilot/src/platform/endpoint/node/messagesApi.ts
@@ -413,7 +413,9 @@ export function rawMessagesToMessagesAPI(messages: readonly Raw.ChatMessage[], v
 		if (lastMessage && lastMessage.role === message.role) {
 			const prevContent = Array.isArray(lastMessage.content) ? lastMessage.content : [{ type: 'text' as const, text: lastMessage.content }];
 			const newContent = Array.isArray(message.content) ? message.content : [{ type: 'text' as const, text: message.content }];
-			lastMessage.content = [...prevContent, ...newContent];
+			lastMessage.content = lastMessage.role === 'assistant'
+				? mergeAssistantContent(prevContent, newContent)
+				: [...prevContent, ...newContent];
 		} else {
 			mergedMessages.push(message);
 		}
@@ -425,6 +427,22 @@ export function rawMessagesToMessagesAPI(messages: readonly Raw.ChatMessage[], v
 	};
 }
 
+function isThinkingBlock(block: ContentBlockParam): boolean {
+	return block.type === 'thinking' || block.type === 'redacted_thinking';
+}
+
+// Keep at most one response's thinking blocks when merging consecutive assistants (#327646).
+function mergeAssistantContent(prevContent: ContentBlockParam[], newContent: ContentBlockParam[]): ContentBlockParam[] {
+	const hasToolUse = (blocks: ContentBlockParam[]) => blocks.some(block => block.type === 'tool_use');
+	const thinkingSource = hasToolUse(newContent) ? newContent : hasToolUse(prevContent) ? prevContent : undefined;
+
+	return [
+		...(thinkingSource?.filter(isThinkingBlock) ?? []),
+		...prevContent.filter(block => !isThinkingBlock(block)),
+		...newContent.filter(block => !isThinkingBlock(block)),
+	];
+}
+
 /**
  * Parses tool result content from the custom tool search tool into
  * tool_reference content blocks that the Anthropic API understands.
diff --git a/extensions/copilot/src/platform/endpoint/test/node/messagesApi.spec.ts b/extensions/copilot/src/platform/endpoint/test/node/messagesApi.spec.ts
index 90e118fd701..bf22a589647 100644
--- a/extensions/copilot/src/platform/endpoint/test/node/messagesApi.spec.ts
+++ b/extensions/copilot/src/platform/endpoint/test/node/messagesApi.spec.ts
@@ -576,6 +576,116 @@ suite('rawMessagesToMessagesAPI', function () {
 			expect(content[0]).toEqual({ type: 'redacted_thinking', data: 'blob123' });
 		});
 	});
+
+	suite('merging consecutive assistant messages', function () {
+		// #327646: merging rounds whose tool results were dropped used to splice several
+		// responses' signed thinking blocks into one assistant message, which the API
+		// rejects with "thinking or redacted_thinking blocks in the latest assistant
+		// message cannot be modified". Only one response's blocks may survive a merge.
+		function assistantRound(thinking: { text: string; encrypted: string; redacted?: boolean } | undefined, text: string, toolCallId?: string): Raw.ChatMessage {
+			return {
+				role: Raw.ChatRole.Assistant,
+				content: [
+					...(thinking ? [{ type: Raw.ChatCompletionContentPartKind.Opaque as const, value: { type: 'thinking', thinking: { id: thinking.encrypted, ...thinking } } }] : []),
+					{ type: Raw.ChatCompletionContentPartKind.Text, text },
+				],
+				...(toolCallId ? { toolCalls: [{ id: toolCallId, type: 'function' as const, function: { name: 'read_file', arguments: '{}' } }] } : {}),
+			};
+		}
+
+		test('drops all thinking when no merged round still owns a tool call', function () {
+			const result = rawMessagesToMessagesAPI([
+				assistantRound({ text: 'old reasoning', encrypted: 'sigOLD' }, 'round one'),
+				assistantRound({ text: 'new reasoning', encrypted: 'sigNEW' }, 'round two'),
+			]);
+			expect(result.messages).toEqual([{
+				role: 'assistant',
+				content: [
+					{ type: 'text', text: 'round one' },
+					{ type: 'text', text: 'round two' },
+				],
+			}]);
+		});
+
+		test('drops redacted_thinking blocks along with regular ones', function () {
+			const result = rawMessagesToMessagesAPI([
+				assistantRound({ text: '', encrypted: 'blobOLD', redacted: true }, 'round one'),
+				assistantRound({ text: 'new', encrypted: 'sigNEW' }, 'round two'),
+			]);
+			expect(result.messages).toEqual([{
+				role: 'assistant',
+				content: [
+					{ type: 'text', text: 'round one' },
+					{ type: 'text', text: 'round two' },
+				],
+			}]);
+		});
+
+		test('chains through three consecutive assistant messages', function () {
+			const result = rawMessagesToMessagesAPI([
+				assistantRound({ text: 'first', encrypted: 'sig1' }, 'a'),
+				assistantRound({ text: 'second', encrypted: 'sig2' }, 'b'),
+				assistantRound({ text: 'third', encrypted: 'sig3' }, 'c', 'toolu_c'),
+			]);
+			// Only the run belonging to the round that still owns a tool call survives.
+			expect(result.messages).toEqual([{
+				role: 'assistant',
+				content: [
+					{ type: 'thinking', thinking: 'third', signature: 'sig3' },
+					{ type: 'text', text: 'a' },
+					{ type: 'text', text: 'b' },
+					{ type: 'text', text: 'c' },
+					{ type: 'tool_use', id: 'toolu_c', name: 'read_file', input: {} },
+				],
+			}]);
+		});
+
+		test('keeps the thinking of the newest round that owns a tool call', function () {
+			const result = rawMessagesToMessagesAPI([
+				assistantRound({ text: 'old', encrypted: 'sigOLD' }, 'round one'),
+				assistantRound({ text: 'new', encrypted: 'sigNEW' }, 'round two', 'toolu_1'),
+			]);
+			expect(result.messages).toEqual([{
+				role: 'assistant',
+				content: [
+					{ type: 'thinking', thinking: 'new', signature: 'sigNEW' },
+					{ type: 'text', text: 'round one' },
+					{ type: 'text', text: 'round two' },
+					{ type: 'tool_use', id: 'toolu_1', name: 'read_file', input: {} },
+				],
+			}]);
+		});
+
+		test('falls back to the earlier round when only it owns a tool call', function () {
+			const result = rawMessagesToMessagesAPI([
+				assistantRound({ text: 'old', encrypted: 'sigOLD' }, 'round one', 'toolu_1'),
+				assistantRound({ text: 'new', encrypted: 'sigNEW' }, 'round two'),
+			]);
+			expect(result.messages).toEqual([{
+				role: 'assistant',
+				content: [
+					{ type: 'thinking', thinking: 'old', signature: 'sigOLD' },
+					{ type: 'text', text: 'round one' },
+					{ type: 'tool_use', id: 'toolu_1', name: 'read_file', input: {} },
+					{ type: 'text', text: 'round two' },
+				],
+			}]);
+		});
+
+		test('leaves consecutive user messages concatenated as-is', function () {
+			const result = rawMessagesToMessagesAPI([
+				{ role: Raw.ChatRole.User, content: [{ type: Raw.ChatCompletionContentPartKind.Text, text: 'hello' }] },
+				{ role: Raw.ChatRole.User, content: [{ type: Raw.ChatCompletionContentPartKind.Text, text: 'world' }] },
+			]);
+			expect(result.messages).toEqual([{
+				role: 'user',
+				content: [
+					{ type: 'text', text: 'hello' },
+					{ type: 'text', text: 'world' },
+				],
+			}]);
+		});
+	});
 });
 
 suite('addToolsAndSystemCacheControl', function () {