diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatController.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatController.ts
index 11b8f8de857..da0282f46be 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatController.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatController.ts
@@ -170,6 +170,16 @@ export class InlineChatController implements IEditorContribution {
 			await this.run({ existingSession });
 		}));
 
+		this._store.add(this._inlineChatSessionService.onDidEndSession(e => {
+			if (e.session === this._session && e.endedByExternalCause) {
+				this._log('session ENDED by external cause');
+				this._session = undefined;
+				this._strategy?.cancel();
+				this._resetWidget();
+				this.cancelSession();
+			}
+		}));
+
 		this._store.add(this._inlineChatSessionService.onDidMoveSession(async e => {
 			if (e.editor === this._editor) {
 				this._log('session RESUMING after move', e);
diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatSessionService.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatSessionService.ts
index 0f2f0fb4142..638f0858903 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatSessionService.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatSessionService.ts
@@ -31,13 +31,17 @@ export interface IInlineChatSessionEvent {
 	readonly session: Session;
 }
 
+export interface IInlineChatSessionEndEvent extends IInlineChatSessionEvent {
+	readonly endedByExternalCause: boolean;
+}
+
 export interface IInlineChatSessionService {
 	_serviceBrand: undefined;
 
 	onWillStartSession: Event<IActiveCodeEditor>;
 	onDidMoveSession: Event<IInlineChatSessionEvent>;
 	onDidStashSession: Event<IInlineChatSessionEvent>;
-	onDidEndSession: Event<IInlineChatSessionEvent>;
+	onDidEndSession: Event<IInlineChatSessionEndEvent>;
 
 	createSession(editor: IActiveCodeEditor, options: { editMode: EditMode; wholeRange?: IRange }, token: CancellationToken): Promise<Session | undefined>;
 
diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatSessionServiceImpl.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatSessionServiceImpl.ts
index 59ac9bf22ca..ad54eae0667 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatSessionServiceImpl.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatSessionServiceImpl.ts
@@ -16,7 +16,7 @@ import { ILogService } from 'vs/platform/log/common/log';
 import { CancellationToken } from 'vs/base/common/cancellation';
 import { Iterable } from 'vs/base/common/iterator';
 import { raceCancellation } from 'vs/base/common/async';
-import { Recording, IInlineChatSessionService, ISessionKeyComputer, IInlineChatSessionEvent } from './inlineChatSessionService';
+import { Recording, IInlineChatSessionService, ISessionKeyComputer, IInlineChatSessionEvent, IInlineChatSessionEndEvent } from './inlineChatSessionService';
 import { HunkData, Session, SessionWholeRange, StashedSession, TelemetryData, TelemetryDataClassification } from './inlineChatSession';
 import { IEditorWorkerService } from 'vs/editor/common/services/editorWorker';
 import { ITextModel, IValidEditOperation } from 'vs/editor/common/model';
@@ -43,8 +43,8 @@ export class InlineChatSessionServiceImpl implements IInlineChatSessionService {
 	private readonly _onDidMoveSession = new Emitter<IInlineChatSessionEvent>();
 	readonly onDidMoveSession: Event<IInlineChatSessionEvent> = this._onDidMoveSession.event;
 
-	private readonly _onDidEndSession = new Emitter<IInlineChatSessionEvent>();
-	readonly onDidEndSession: Event<IInlineChatSessionEvent> = this._onDidEndSession.event;
+	private readonly _onDidEndSession = new Emitter<IInlineChatSessionEndEvent>();
+	readonly onDidEndSession: Event<IInlineChatSessionEndEvent> = this._onDidEndSession.event;
 
 	private readonly _onDidStashSession = new Emitter<IInlineChatSessionEvent>();
 	readonly onDidStashSession: Event<IInlineChatSessionEvent> = this._onDidStashSession.event;
@@ -100,9 +100,16 @@ export class InlineChatSessionServiceImpl implements IInlineChatSessionService {
 		}
 		this._logService.trace('[IE] NEW session', provider.debugName);
 
-		this._logService.trace(`[IE] creating NEW session for ${editor.getId()},  ${provider.debugName}`);
+		this._logService.trace(`[IE] creating NEW session for ${editor.getId()}, ${provider.debugName}`);
 		const store = new DisposableStore();
 
+		store.add(this._inlineChatService.onDidChangeProviders(e => {
+			if (e.removed === provider) {
+				this._logService.trace(`[IE] provider GONE for ${editor.getId()}, ${provider.debugName}`);
+				this._releaseSession(session, true);
+			}
+		}));
+
 		const id = generateUuid();
 		const targetUri = textModel.uri;
 
@@ -131,7 +138,7 @@ export class InlineChatSessionServiceImpl implements IInlineChatSessionService {
 		if (targetUri.scheme === Schemas.untitled) {
 			store.add(this._editorService.onDidCloseEditor(() => {
 				if (!this._editorService.isOpened({ resource: targetUri, typeId: UntitledTextEditorInput.ID, editorId: DEFAULT_EDITOR_ASSOCIATION.id })) {
-					this.releaseSession(session);
+					this._releaseSession(session, true);
 				}
 			}));
 		}
@@ -141,6 +148,11 @@ export class InlineChatSessionServiceImpl implements IInlineChatSessionService {
 			wholeRange = rawSession.wholeRange ? Range.lift(rawSession.wholeRange) : editor.getSelection();
 		}
 
+		if (token.isCancellationRequested) {
+			store.dispose();
+			return undefined;
+		}
+
 		const session = new Session(
 			options.editMode,
 			targetUri,
@@ -190,6 +202,10 @@ export class InlineChatSessionServiceImpl implements IInlineChatSessionService {
 	}
 
 	releaseSession(session: Session): void {
+		this._releaseSession(session, false);
+	}
+
+	private _releaseSession(session: Session, byServer: boolean): void {
 
 		let tuple: [string, SessionData] | undefined;
 
@@ -211,11 +227,11 @@ export class InlineChatSessionServiceImpl implements IInlineChatSessionService {
 		this._telemetryService.publicLog2<TelemetryData, TelemetryDataClassification>('interactiveEditor/session', session.asTelemetryData());
 
 		const [key, value] = tuple;
-		value.store.dispose();
 		this._sessions.delete(key);
 		this._logService.trace(`[IE] did RELEASED session for ${value.editor.getId()}, ${session.provider.debugName}`);
 
-		this._onDidEndSession.fire({ editor: value.editor, session });
+		this._onDidEndSession.fire({ editor: value.editor, session, endedByExternalCause: byServer });
+		value.store.dispose();
 	}
 
 	stashSession(session: Session, editor: ICodeEditor, undoCancelEdits: IValidEditOperation[]): StashedSession {
diff --git a/src/vs/workbench/contrib/inlineChat/common/inlineChat.ts b/src/vs/workbench/contrib/inlineChat/common/inlineChat.ts
index bf8c26d3a7d..0794a0f8a15 100644
--- a/src/vs/workbench/contrib/inlineChat/common/inlineChat.ts
+++ b/src/vs/workbench/contrib/inlineChat/common/inlineChat.ts
@@ -115,10 +115,15 @@ export interface IInlineChatSessionProvider {
 
 export const IInlineChatService = createDecorator<IInlineChatService>('IInlineChatService');
 
+export interface InlineChatProviderChangeEvent {
+	readonly added?: IInlineChatSessionProvider;
+	readonly removed?: IInlineChatSessionProvider;
+}
+
 export interface IInlineChatService {
 	_serviceBrand: undefined;
 
-	onDidChangeProviders: Event<void>;
+	onDidChangeProviders: Event<InlineChatProviderChangeEvent>;
 	addProvider(provider: IInlineChatSessionProvider): IDisposable;
 	getAllProvider(): Iterable<IInlineChatSessionProvider>;
 }
diff --git a/src/vs/workbench/contrib/inlineChat/common/inlineChatServiceImpl.ts b/src/vs/workbench/contrib/inlineChat/common/inlineChatServiceImpl.ts
index 63b079cb0c2..ddff44a1b7f 100644
--- a/src/vs/workbench/contrib/inlineChat/common/inlineChatServiceImpl.ts
+++ b/src/vs/workbench/contrib/inlineChat/common/inlineChatServiceImpl.ts
@@ -7,20 +7,17 @@ import { IDisposable, toDisposable } from 'vs/base/common/lifecycle';
 import { Emitter } from 'vs/base/common/event';
 import { LinkedList } from 'vs/base/common/linkedList';
 import { IContextKey, IContextKeyService } from 'vs/platform/contextkey/common/contextkey';
-import { IInlineChatService, IInlineChatSessionProvider, CTX_INLINE_CHAT_HAS_PROVIDER } from './inlineChat';
+import { IInlineChatService, IInlineChatSessionProvider, CTX_INLINE_CHAT_HAS_PROVIDER, InlineChatProviderChangeEvent } from './inlineChat';
 
 export class InlineChatServiceImpl implements IInlineChatService {
 
 	declare _serviceBrand: undefined;
 
+	private readonly _onDidChangeProviders = new Emitter<InlineChatProviderChangeEvent>();
 	private readonly _entries = new LinkedList<IInlineChatSessionProvider>();
-
 	private readonly _ctxHasProvider: IContextKey<boolean>;
 
-	private readonly _onDidChangeProviders = new Emitter<void>();
-	public get onDidChangeProviders() {
-		return this._onDidChangeProviders.event;
-	}
+	readonly onDidChangeProviders = this._onDidChangeProviders.event;
 
 	constructor(@IContextKeyService contextKeyService: IContextKeyService) {
 		this._ctxHasProvider = CTX_INLINE_CHAT_HAS_PROVIDER.bindTo(contextKeyService);
@@ -30,12 +27,12 @@ export class InlineChatServiceImpl implements IInlineChatService {
 
 		const rm = this._entries.push(provider);
 		this._ctxHasProvider.set(true);
-		this._onDidChangeProviders.fire();
+		this._onDidChangeProviders.fire({ added: provider });
 
 		return toDisposable(() => {
 			rm();
 			this._ctxHasProvider.set(this._entries.size > 0);
-			this._onDidChangeProviders.fire();
+			this._onDidChangeProviders.fire({ removed: provider });
 		});
 	}