diff --git a/src/vs/workbench/contrib/chat/common/widget/annotations.ts b/src/vs/workbench/contrib/chat/common/widget/annotations.ts
index b43079b5add..e1b417e5f9b 100644
--- a/src/vs/workbench/contrib/chat/common/widget/annotations.ts
+++ b/src/vs/workbench/contrib/chat/common/widget/annotations.ts
@@ -57,9 +57,25 @@ export function annotateSpecialMarkdownContent(response: Iterable<IChatProgressR
 					result.push({ content: new MarkdownString(markdownText), inlineReferences: annotationMetadata, kind: 'markdownContent' });
 				}
 			}
-		} else if (item.kind === 'markdownContent' && previousItem?.kind === 'markdownContent' && canMergeMarkdownStrings(previousItem.content, item.content)) {
-			const merged = appendMarkdownString(previousItem.content, item.content);
-			result[previousItemIndex] = { ...previousItem, content: merged };
+		} else if (item.kind === 'markdownContent' && previousItem?.kind === 'markdownContent') {
+			if (canMergeMarkdownStrings(previousItem.content, item.content)) {
+				const merged = appendMarkdownString(previousItem.content, item.content);
+				result[previousItemIndex] = { ...previousItem, content: merged };
+			} else if (previousItem.inlineReferences && isContentRefOnly(previousItem.content.value)) {
+				// The previous item is a standalone inline reference whose MarkdownString
+				// was synthesized with default properties that don't match the incoming
+				// markdown (e.g., different isTrusted). Prepend the reference text and
+				// adopt the incoming item's properties so they render together in one block.
+				result[previousItemIndex] = {
+					...previousItem,
+					content: {
+						...item.content,
+						value: previousItem.content.value + item.content.value,
+					},
+				};
+			} else {
+				result.push(item);
+			}
 		} else if (item.kind === 'markdownVuln') {
 			const vulnText = encodeURIComponent(JSON.stringify(item.vulnerabilities));
 			const markdownText = `<vscode_annotation details='${vulnText}'>${item.content.value}</vscode_annotation>`;
@@ -88,6 +104,18 @@ export function annotateSpecialMarkdownContent(response: Iterable<IChatProgressR
 	return result;
 }
 
+const contentRefPattern = new RegExp(`^(\\[.*?\\]\\(${contentRefUrl}/\\d+\\))+$`);
+
+/**
+ * Returns true when the text consists entirely of synthesized content-ref
+ * links (e.g. `[file.ts](http://_vscodecontentref_/0)`), with no other
+ * markdown text mixed in. Used to decide whether the MarkdownString
+ * properties are "synthetic defaults" that can safely be replaced.
+ */
+function isContentRefOnly(text: string): boolean {
+	return contentRefPattern.test(text);
+}
+
 /**
  * Checks whether the end of a markdown string is inside a code context
  * (fenced code block or inline code span) where markdown link syntax
diff --git a/src/vs/workbench/contrib/chat/test/common/widget/annotations.test.ts b/src/vs/workbench/contrib/chat/test/common/widget/annotations.test.ts
index f41859e6977..f1863786eb5 100644
--- a/src/vs/workbench/contrib/chat/test/common/widget/annotations.test.ts
+++ b/src/vs/workbench/contrib/chat/test/common/widget/annotations.test.ts
@@ -239,5 +239,39 @@ suite('Annotations', function () {
 			assert.ok(!md.content.value.includes('_vscodecontentref_'));
 			assert.ok(md.content.value.endsWith('index.ts'));
 		});
+
+		test('inline reference at start of block merges with following markdown', () => {
+			const result = annotateSpecialMarkdownContent([
+				{ kind: 'inlineReference', inlineReference: URI.parse('file:///index.ts'), name: 'index.ts' },
+				{ kind: 'markdownContent', content: new MarkdownString(' is the entry point', { isTrusted: true, supportThemeIcons: true }) },
+			]);
+
+			assert.strictEqual(result.length, 1);
+			const md = result[0] as IChatMarkdownContent;
+			assert.ok(md.content.value.includes('[index.ts]'));
+			assert.ok(md.content.value.includes('_vscodecontentref_'));
+			assert.ok(md.content.value.endsWith(' is the entry point'));
+			assert.ok(md.inlineReferences);
+			assert.strictEqual(md.content.isTrusted, true);
+			assert.strictEqual(md.content.supportThemeIcons, true);
+		});
+
+		test('inline reference after regular text does not force-merge incompatible markdown', () => {
+			const result = annotateSpecialMarkdownContent([
+				content('See '),
+				{ kind: 'inlineReference', inlineReference: URI.parse('file:///index.ts'), name: 'index.ts' },
+				{ kind: 'markdownContent', content: new MarkdownString(' more info', { isTrusted: true, supportThemeIcons: true }) },
+			]);
+
+			// The first item has "See [index.ts](...)" with default markdown properties,
+			// the second item has different properties - they must stay separate.
+			assert.strictEqual(result.length, 2);
+			const first = result[0] as IChatMarkdownContent;
+			assert.ok(first.content.value.startsWith('See '));
+			assert.ok(first.inlineReferences);
+			const second = result[1] as IChatMarkdownContent;
+			assert.strictEqual(second.content.value, ' more info');
+			assert.strictEqual(second.content.isTrusted, true);
+		});
 	});
 });