diff --git a/src/vs/platform/contextkey/browser/contextKeyService.ts b/src/vs/platform/contextkey/browser/contextKeyService.ts
index df8da89a047..5896e8cc0ba 100644
--- a/src/vs/platform/contextkey/browser/contextKeyService.ts
+++ b/src/vs/platform/contextkey/browser/contextKeyService.ts
@@ -529,9 +529,9 @@ class ScopedContextKeyService extends AbstractContextKeyService {
 	}
 
 	public disposeContext(contextId: number): void {
-		if (this._isDisposed) {
-			return;
-		}
+		// Always forward to parent even after disposal — a child context may
+		// be disposed after us and must still reach the root ContextKeyService
+		// to delete its entry from _contexts.
 		this._parent.disposeContext(contextId);
 	}
 
diff --git a/src/vs/platform/contextkey/test/browser/contextkey.test.ts b/src/vs/platform/contextkey/test/browser/contextkey.test.ts
index 6b7638b6657..4d3ddd26f00 100644
--- a/src/vs/platform/contextkey/test/browser/contextkey.test.ts
+++ b/src/vs/platform/contextkey/test/browser/contextkey.test.ts
@@ -298,4 +298,27 @@ suite('ContextKeyService', () => {
 
 		assert.strictEqual(eventFired, true, 'Should fire event when setting different number');
 	});
+
+	test('disposeContext forwards through disposed scoped service', () => {
+		const root = testDisposables.add(new ContextKeyService(new TestConfigurationService()));
+		const scoped = root.createScoped(document.createElement('div'));
+		const child = scoped.createScoped(document.createElement('div'));
+
+		// Set a value on the child so we can observe it
+		child.createKey('testKey', 'value');
+		assert.strictEqual(child.getContextKeyValue('testKey'), 'value');
+
+		// Dispose the intermediate scoped service first
+		scoped.dispose();
+
+		// Now dispose the child — this should still forward to root
+		// and clean up the child's context entry. Before the fix,
+		// ScopedContextKeyService.disposeContext bailed out when
+		// _isDisposed was true, leaking Context objects.
+		child.dispose();
+
+		// The child's context should no longer be accessible through root
+		assert.strictEqual(root.getContextKeyValue('testKey'), undefined,
+			'Child context should be cleaned up even when parent scoped service was disposed first');
+	});
 });
diff --git a/src/vs/workbench/contrib/chat/common/chatService/chatServiceImpl.ts b/src/vs/workbench/contrib/chat/common/chatService/chatServiceImpl.ts
index 7a5dbc49426..5b010fe32d5 100644
--- a/src/vs/workbench/contrib/chat/common/chatService/chatServiceImpl.ts
+++ b/src/vs/workbench/contrib/chat/common/chatService/chatServiceImpl.ts
@@ -48,7 +48,7 @@ import { ChatSessionStore, IChatSessionEntryMetadata } from '../model/chatSessio
 import { IChatSlashCommandService } from '../participants/chatSlashCommands.js';
 import { IChatTransferService } from '../model/chatTransferService.js';
 import { chatSessionResourceToId, getChatSessionType, isUntitledChatSession, LocalChatSessionUri } from '../model/chatUri.js';
-import { ChatRequestVariableSet, IChatRequestVariableEntry } from '../attachments/chatVariableEntries.js';
+import { ChatRequestVariableSet, IChatRequestVariableEntry, isPromptTextVariableEntry } from '../attachments/chatVariableEntries.js';
 import { ChatAgentLocation, ChatModeKind } from '../constants.js';
 import { ChatMessageRole, IChatMessage, ILanguageModelsService } from '../languageModels.js';
 import { ILanguageModelToolsService } from '../tools/languageModelToolsService.js';
@@ -1171,8 +1171,17 @@ export class ChatService extends Disposable implements IChatService {
 					if (instructionEntries.length > 0) {
 						allContext.push(...instructionEntries);
 					}
+
+					// Store only non-instruction variables on the model.
+					// Automatically-added promptText entries (~33 KB each) are
+					// ephemeral — re-collected every turn, never rendered in
+					// the UI, and not needed in serialized session history.
+					const storedVariables = allContext.filter(v => !(isPromptTextVariableEntry(v) && v.automaticallyAdded));
+					model.updateRequest(request, { variables: storedVariables });
+
+					// The full set (including instructions) is passed to the
+					// agent request only — not stored on the request model.
 					let variableData: IChatRequestVariableData = { variables: allContext };
-					model.updateRequest(request, variableData);
 
 					// Merge resolved variables (e.g. images from directories) for the
 					// agent request only - they are not stored on the request model.