Visual Studio Code 1.129 landed on July 15, 2026, and it’s one of the more architecturally significant releases in recent memory. The headline? VS Code is rearchitecting how agent sessions work around a dedicated process called the agent host — and that’s just the start. There’s also a new editor panel in the Agents window, the ability to run terminal commands straight from chat, and a first look at a modernized UI.

Let’s break down everything that shipped.

The Agent Host: A New Foundation for AI Sessions

The biggest change in 1.129 is the agent host — a dedicated process that runs agent harnesses such as Copilot, Claude, and Codex. It’s built on the open Agent Host Protocol (AHP), and it fundamentally changes how agent sessions work in VS Code.

Here’s why it matters: because a session lives in its own process, the same session can be connected to and rendered from multiple VS Code windows at once. You can have an agent session running and view it from your main editor window, your Agents window, or any other connected window — all simultaneously.

The Copilot agent in the agent host is powered by the Copilot SDK, which means its behavior is aligned with the Copilot CLI, the standalone GitHub Copilot app, and other Copilot products. This is a meaningful unification — if you learn how Copilot works in one surface, that knowledge transfers everywhere.

To enable it, turn on chat.agentHost.enabled and pick an agent host harness from the dropdown. For the Claude agent specifically, you can also set chat.agents.claude.preferAgentHost.

Microsoft is actively developing the agent host and rolling it out gradually. Some new features in this release are only available when an agent runs on the agent host, so it’s worth opting in early.

New Editor Panel in the Agents Window (Experimental)

The Agents window has historically shown your conversation with an agent next to a detail area for files and changes. This release introduces a redesigned editor panel that brings the editor and detail area together into one docked pane with a shared tab bar.

The result? Reviewing an agent’s work now feels like working in the main editor instead of switching between separate panels. Specifically, you can:

  • Open files and diffs directly inside the docked editor, right next to your chat, with a New Tab action that matches the chat tab strip
  • Review changes with an improved diff experience: toggle between inline and side-by-side views, expand or collapse all files at once, and read changes in a more compact diff representation that fits more on screen
  • Pick up where you left off: each session restores its side-pane width, open editors, active editor, and per-file collapsed state across session switches and window reloads

The next action (like Create Pull Request) is available right from the editor tab title, and editor keybindings like toggling the diff view work the same as in the main VS Code window.

This is an experimental, opt-in layout. Enable sessions.layout.singlePaneDetailPanel and reload the window (the setting is read once at startup).

Session-Management Tools for Agents

Agents running on the agent host (Copilot, Claude, and Codex) now have access to session-management tools. This means an agent can:

  • List your sessions with their status, workspace, and changes — so it can find the right one to act on
  • Read another session’s recent conversation to understand what it’s doing
  • Create a new session or a new chat within an existing session to hand off a sub-task, rather than overloading a single conversation
  • Send a message to a session or chat it created to kick off or steer that work

Whenever a tool creates or targets a session, VS Code renders an Open Session pill so you can jump straight to it. Sending a message to another session always asks for your confirmation first. An agent can’t message its own chat, and a burst of sends is capped so a single request can’t fan out into an unbounded number of sessions.

This is a significant step toward multi-agent orchestration within VS Code — agents can now coordinate work across sessions without you manually switching contexts.

Run Commands with ! Prefix

This is one of those small features that has an outsized impact on daily workflow. You can now prefix chat messages with ! to run their contents as terminal commands directly from chat.

Type ! npm test in the chat input, and it executes as a terminal command — no switching to the terminal, no context-switching overhead. This works in agent host sessions both in the editor and the Agents window.

It’s a simple addition that makes the chat-first workflow meaningfully smoother, especially for quick verification commands during an agent session.

Agents Window Improvements

Two smaller but welcome improvements to the new-session flow:

  • Remembered new-session defaults: The new-session picker now remembers your last agent mode and approvals choices and uses them as defaults the next time you create a session. No more reselecting the same options every time.
  • Worktree checkbox: Instead of choosing between folder and worktree isolation from a dropdown, you now get a single “New Worktree” checkbox. Check it for Git worktree isolation (keeping the agent’s changes in a separate folder until you’re ready to merge), or leave it unchecked for folder isolation.

BYOK Models with Copilot Agent Harness

Bring Your Own Key (BYOK) models can now be used in the Agents window when you select the Copilot harness running on the agent host. This is a notable expansion — previously, BYOK was limited in which harnesses it could work with. Now you can bring your own model API keys and use them with the Copilot agent on the new agent host architecture.

Migrate Prompt Files to Skills (Experimental)

Prompt files (*.prompt.md) are used to describe custom slash commands, but they’re only supported in the Local agent harness. Other harnesses express slash commands with skills instead.

With chat.customizations.promptMigration.enabled turned on, if you select a harness running on the agent host and you have migratable prompt files, you’ll see a “Migrate Prompts” entry in the AI Customizations overview. The migration interface lets you view prompt files from both workspace (.github/prompts/) and user data locations, migrate selected files to skills, and open the newly created skills.

If you’re working across multiple harnesses, this is the path forward for slash command compatibility.

Editor Experience Updates

Reopen an Editor from the Editor Toolbar

When a file or diff supports multiple editors, you can now switch editors directly from the editor toolbar. Open the “…” menu and select an editor from the Reopen Editor With submenu. This makes alternative editors easier to discover without reaching for the Command Palette.

Modern UI Preview (Experimental)

This is the one that’ll get people talking. You can now preview a modernized VS Code UI that updates the look and feel of the editor workbench.

Enable it with workbench.experimental.modernUI. It’s enabled by default in Insiders builds, so if you’re on the nightly channel you may already be seeing it.

Microsoft is being deliberately cautious here — it’s experimental, opt-in on stable, and clearly still evolving. But it’s a clear signal that the VS Code team is thinking about the visual evolution of the editor, which hasn’t seen a major visual overhaul since its introduction.

GitHub Enterprise Support for Copilot in the Agent Host

This is a big deal for enterprise users. Developers whose GitHub Copilot access is provided through a GitHub Enterprise (GHE) instance can now sign in and use Copilot in VS Code.

Previously, the agent host’s Copilot authentication only supported github.com — so a GHE-backed Copilot subscription couldn’t complete sign-in. Both the OAuth flow and the Copilot token request targeted github.com.

With this release, VS Code can authenticate Copilot against a GitHub Enterprise instance. When you sign in to Copilot, choose your GHE instance, and VS Code runs the sign-in flow and requests Copilot access tokens from that host instead of github.com. This works in both the editor window and the Agents window, and with both the Copilot and Claude agents.

If you’re an organization running GHE, this removes a real adoption barrier for Copilot in VS Code.

Proposed APIs: Custom Editors for Diff and Merge

Custom editors now opt out of diff and merge editors by default. A file can continue to open in a custom editor while its diffs and merges open in the built-in text editors.

To open a diff in another editor, use the Reopen Editor With submenu in the editor toolbar. To always use a specific editor for matching diffs, configure workbench.diffEditorAssociations.

The proposed customEditorPriority API provides separate priorities for files, diffs, and merge editors:

"priority": {
  "textEditor": "default",
  "diffEditor": "option",
  "mergeEditor": "never"
}

The new never priority prevents automatic selection for that editor type while keeping the editor available for explicit selection.

Community Contributors

This release continues the strong tradition of community contributions:

  • @accnops (Arthur Cnops): chat/voice: land voice answers on question carousels
  • @cipheraxat (Akshat Anand): Fix Modern UI editor tab decoration color on full label
  • @danielrobbins (Daniel Robbins): Fix bugs related to setting the right Chat model
  • @dobbydobap (varshitha): Fix second Rerun Last Task failing to launch; Unstick a pinned tab dragged to the start of the unpinned row
  • @JeffreyCA: Update Fig spec for Azure Developer CLI (azd)
  • @Kaidesuyoo (Kaidesuyo): fix persistent workbench UI performance degradation
  • @myselfsiddharth (Siddharth Mehta): debug: right-align toolbar actions in exception widget
  • @theanarkh (theanarkh): workbench: fix ObjectSettingCheckboxWidget memory leaky; fix: make sure register handler when ipc emitter add listener
  • @yavanosta (Dmitry Guketlev): Use startColumn in growUntilVariableBoundaries

Issue tracking contributors: @gjsjohnmurray (John Murray), @RedCMD, @IllusionMH (Andrii Dieiev), @albertosantini (Alberto Santini), @dobbydobap (varshitha), @hogiSp.

The Big Picture

VS Code 1.129 is an architecture release. The agent host is the foundation for how AI sessions will work going forward — a dedicated process, connectable from multiple windows, aligned with the broader Copilot ecosystem through the Copilot SDK, and built on an open protocol (AHP).

The session-management tools give agents the ability to orchestrate work across multiple sessions, the ! prefix makes chat-to-terminal execution frictionless, and the modern UI preview signals that VS Code is thinking about its visual future. GitHub Enterprise support for Copilot removes a real enterprise adoption barrier.

If you’re working with AI agents in VS Code, this release is worth upgrading to immediately. Enable the agent host, try the experimental editor panel and modern UI, and start exploring what multi-session agent orchestration looks like.

Update VS Code by using Check for Updates in the editor, or download the latest version from code.visualstudio.com.

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