diff --git a/crates/anthropic/src/anthropic.rs b/crates/anthropic/src/anthropic.rs
index e886e38976..2c5acfc0f2 100644
--- a/crates/anthropic/src/anthropic.rs
+++ b/crates/anthropic/src/anthropic.rs
@@ -24,6 +24,16 @@ pub struct AnthropicModelCacheConfiguration {
     pub max_cache_anchors: usize,
 }
 
+#[cfg_attr(feature = "schemars", derive(schemars::JsonSchema))]
+#[derive(Clone, Debug, Default, Serialize, Deserialize, PartialEq)]
+pub enum AnthropicModelMode {
+    #[default]
+    Default,
+    Thinking {
+        budget_tokens: Option<u32>,
+    },
+}
+
 #[cfg_attr(feature = "schemars", derive(schemars::JsonSchema))]
 #[derive(Clone, Debug, Default, Serialize, Deserialize, PartialEq, EnumIter)]
 pub enum Model {
@@ -32,6 +42,11 @@ pub enum Model {
     Claude3_5Sonnet,
     #[serde(rename = "claude-3-7-sonnet", alias = "claude-3-7-sonnet-latest")]
     Claude3_7Sonnet,
+    #[serde(
+        rename = "claude-3-7-sonnet-thinking",
+        alias = "claude-3-7-sonnet-thinking-latest"
+    )]
+    Claude3_7SonnetThinking,
     #[serde(rename = "claude-3-5-haiku", alias = "claude-3-5-haiku-latest")]
     Claude3_5Haiku,
     #[serde(rename = "claude-3-opus", alias = "claude-3-opus-latest")]
@@ -54,6 +69,8 @@ pub enum Model {
         default_temperature: Option<f32>,
         #[serde(default)]
         extra_beta_headers: Vec<String>,
+        #[serde(default)]
+        mode: AnthropicModelMode,
     },
 }
 
@@ -61,6 +78,8 @@ impl Model {
     pub fn from_id(id: &str) -> Result<Self> {
         if id.starts_with("claude-3-5-sonnet") {
             Ok(Self::Claude3_5Sonnet)
+        } else if id.starts_with("claude-3-7-sonnet-thinking") {
+            Ok(Self::Claude3_7SonnetThinking)
         } else if id.starts_with("claude-3-7-sonnet") {
             Ok(Self::Claude3_7Sonnet)
         } else if id.starts_with("claude-3-5-haiku") {
@@ -80,6 +99,20 @@ impl Model {
         match self {
             Model::Claude3_5Sonnet => "claude-3-5-sonnet-latest",
             Model::Claude3_7Sonnet => "claude-3-7-sonnet-latest",
+            Model::Claude3_7SonnetThinking => "claude-3-7-sonnet-thinking-latest",
+            Model::Claude3_5Haiku => "claude-3-5-haiku-latest",
+            Model::Claude3Opus => "claude-3-opus-latest",
+            Model::Claude3Sonnet => "claude-3-sonnet-20240229",
+            Model::Claude3Haiku => "claude-3-haiku-20240307",
+            Self::Custom { name, .. } => name,
+        }
+    }
+
+    /// The id of the model that should be used for making API requests
+    pub fn request_id(&self) -> &str {
+        match self {
+            Model::Claude3_5Sonnet => "claude-3-5-sonnet-latest",
+            Model::Claude3_7Sonnet | Model::Claude3_7SonnetThinking => "claude-3-7-sonnet-latest",
             Model::Claude3_5Haiku => "claude-3-5-haiku-latest",
             Model::Claude3Opus => "claude-3-opus-latest",
             Model::Claude3Sonnet => "claude-3-sonnet-20240229",
@@ -92,6 +125,7 @@ impl Model {
         match self {
             Self::Claude3_7Sonnet => "Claude 3.7 Sonnet",
             Self::Claude3_5Sonnet => "Claude 3.5 Sonnet",
+            Self::Claude3_7SonnetThinking => "Claude 3.7 Sonnet Thinking",
             Self::Claude3_5Haiku => "Claude 3.5 Haiku",
             Self::Claude3Opus => "Claude 3 Opus",
             Self::Claude3Sonnet => "Claude 3 Sonnet",
@@ -107,6 +141,7 @@ impl Model {
             Self::Claude3_5Sonnet
             | Self::Claude3_5Haiku
             | Self::Claude3_7Sonnet
+            | Self::Claude3_7SonnetThinking
             | Self::Claude3Haiku => Some(AnthropicModelCacheConfiguration {
                 min_total_token: 2_048,
                 should_speculate: true,
@@ -125,6 +160,7 @@ impl Model {
             Self::Claude3_5Sonnet
             | Self::Claude3_5Haiku
             | Self::Claude3_7Sonnet
+            | Self::Claude3_7SonnetThinking
             | Self::Claude3Opus
             | Self::Claude3Sonnet
             | Self::Claude3Haiku => 200_000,
@@ -135,7 +171,10 @@ impl Model {
     pub fn max_output_tokens(&self) -> u32 {
         match self {
             Self::Claude3Opus | Self::Claude3Sonnet | Self::Claude3Haiku => 4_096,
-            Self::Claude3_5Sonnet | Self::Claude3_7Sonnet | Self::Claude3_5Haiku => 8_192,
+            Self::Claude3_5Sonnet
+            | Self::Claude3_7Sonnet
+            | Self::Claude3_7SonnetThinking
+            | Self::Claude3_5Haiku => 8_192,
             Self::Custom {
                 max_output_tokens, ..
             } => max_output_tokens.unwrap_or(4_096),
@@ -146,6 +185,7 @@ impl Model {
         match self {
             Self::Claude3_5Sonnet
             | Self::Claude3_7Sonnet
+            | Self::Claude3_7SonnetThinking
             | Self::Claude3_5Haiku
             | Self::Claude3Opus
             | Self::Claude3Sonnet
@@ -157,6 +197,21 @@ impl Model {
         }
     }
 
+    pub fn mode(&self) -> AnthropicModelMode {
+        match self {
+            Self::Claude3_5Sonnet
+            | Self::Claude3_7Sonnet
+            | Self::Claude3_5Haiku
+            | Self::Claude3Opus
+            | Self::Claude3Sonnet
+            | Self::Claude3Haiku => AnthropicModelMode::Default,
+            Self::Claude3_7SonnetThinking => AnthropicModelMode::Thinking {
+                budget_tokens: Some(4_096),
+            },
+            Self::Custom { mode, .. } => mode.clone(),
+        }
+    }
+
     pub const DEFAULT_BETA_HEADERS: &[&str] = &["prompt-caching-2024-07-31"];
 
     pub fn beta_headers(&self) -> String {
@@ -188,7 +243,7 @@ impl Model {
         {
             tool_override
         } else {
-            self.id()
+            self.request_id()
         }
     }
 }
@@ -409,6 +464,8 @@ pub async fn extract_tool_args_from_events(
             Err(error) => Some(Err(error)),
             Ok(Event::ContentBlockDelta { index, delta }) => match delta {
                 ContentDelta::TextDelta { .. } => None,
+                ContentDelta::ThinkingDelta { .. } => None,
+                ContentDelta::SignatureDelta { .. } => None,
                 ContentDelta::InputJsonDelta { partial_json } => {
                     if index == tool_use_index {
                         Some(Ok(partial_json))
@@ -487,6 +544,10 @@ pub enum RequestContent {
 pub enum ResponseContent {
     #[serde(rename = "text")]
     Text { text: String },
+    #[serde(rename = "thinking")]
+    Thinking { thinking: String },
+    #[serde(rename = "redacted_thinking")]
+    RedactedThinking { data: String },
     #[serde(rename = "tool_use")]
     ToolUse {
         id: String,
@@ -518,6 +579,12 @@ pub enum ToolChoice {
     Tool { name: String },
 }
 
+#[derive(Debug, Serialize, Deserialize)]
+#[serde(tag = "type", rename_all = "lowercase")]
+pub enum Thinking {
+    Enabled { budget_tokens: Option<u32> },
+}
+
 #[derive(Debug, Serialize, Deserialize)]
 pub struct Request {
     pub model: String,
@@ -526,6 +593,8 @@ pub struct Request {
     #[serde(default, skip_serializing_if = "Vec::is_empty")]
     pub tools: Vec<Tool>,
     #[serde(default, skip_serializing_if = "Option::is_none")]
+    pub thinking: Option<Thinking>,
+    #[serde(default, skip_serializing_if = "Option::is_none")]
     pub tool_choice: Option<ToolChoice>,
     #[serde(default, skip_serializing_if = "Option::is_none")]
     pub system: Option<String>,
@@ -609,6 +678,10 @@ pub enum Event {
 pub enum ContentDelta {
     #[serde(rename = "text_delta")]
     TextDelta { text: String },
+    #[serde(rename = "thinking_delta")]
+    ThinkingDelta { thinking: String },
+    #[serde(rename = "signature_delta")]
+    SignatureDelta { signature: String },
     #[serde(rename = "input_json_delta")]
     InputJsonDelta { partial_json: String },
 }
diff --git a/crates/assistant2/src/active_thread.rs b/crates/assistant2/src/active_thread.rs
index b3363fb73a..f640a663e6 100644
--- a/crates/assistant2/src/active_thread.rs
+++ b/crates/assistant2/src/active_thread.rs
@@ -1,5 +1,6 @@
 use crate::thread::{
-    LastRestoreCheckpoint, MessageId, RequestKind, Thread, ThreadError, ThreadEvent, ThreadFeedback,
+    LastRestoreCheckpoint, MessageId, MessageSegment, RequestKind, Thread, ThreadError,
+    ThreadEvent, ThreadFeedback,
 };
 use crate::thread_store::ThreadStore;
 use crate::tool_use::{ToolUse, ToolUseStatus};
@@ -7,10 +8,10 @@ use crate::ui::ContextPill;
 use collections::HashMap;
 use editor::{Editor, MultiBuffer};
 use gpui::{
-    list, percentage, pulsating_between, AbsoluteLength, Animation, AnimationExt, AnyElement, App,
-    ClickEvent, DefiniteLength, EdgesRefinement, Empty, Entity, Focusable, Length, ListAlignment,
-    ListOffset, ListState, StyleRefinement, Subscription, Task, TextStyleRefinement,
-    Transformation, UnderlineStyle, WeakEntity,
+    linear_color_stop, linear_gradient, list, percentage, pulsating_between, AbsoluteLength,
+    Animation, AnimationExt, AnyElement, App, ClickEvent, DefiniteLength, EdgesRefinement, Empty,
+    Entity, Focusable, Length, ListAlignment, ListOffset, ListState, ScrollHandle, StyleRefinement,
+    Subscription, Task, TextStyleRefinement, Transformation, UnderlineStyle, WeakEntity,
 };
 use language::{Buffer, LanguageRegistry};
 use language_model::{LanguageModelRegistry, LanguageModelToolUseId, Role};
@@ -35,15 +36,175 @@ pub struct ActiveThread {
     save_thread_task: Option<Task<()>>,
     messages: Vec<MessageId>,
     list_state: ListState,
-    rendered_messages_by_id: HashMap<MessageId, Entity<Markdown>>,
+    rendered_messages_by_id: HashMap<MessageId, RenderedMessage>,
     rendered_scripting_tool_uses: HashMap<LanguageModelToolUseId, Entity<Markdown>>,
     rendered_tool_use_labels: HashMap<LanguageModelToolUseId, Entity<Markdown>>,
     editing_message: Option<(MessageId, EditMessageState)>,
     expanded_tool_uses: HashMap<LanguageModelToolUseId, bool>,
+    expanded_thinking_segments: HashMap<(MessageId, usize), bool>,
     last_error: Option<ThreadError>,
     _subscriptions: Vec<Subscription>,
 }
 
+struct RenderedMessage {
+    language_registry: Arc<LanguageRegistry>,
+    segments: Vec<RenderedMessageSegment>,
+}
+
+impl RenderedMessage {
+    fn from_segments(
+        segments: &[MessageSegment],
+        language_registry: Arc<LanguageRegistry>,
+        window: &Window,
+        cx: &mut App,
+    ) -> Self {
+        let mut this = Self {
+            language_registry,
+            segments: Vec::with_capacity(segments.len()),
+        };
+        for segment in segments {
+            this.push_segment(segment, window, cx);
+        }
+        this
+    }
+
+    fn append_thinking(&mut self, text: &String, window: &Window, cx: &mut App) {
+        if let Some(RenderedMessageSegment::Thinking {
+            content,
+            scroll_handle,
+        }) = self.segments.last_mut()
+        {
+            content.update(cx, |markdown, cx| {
+                markdown.append(text, cx);
+            });
+            scroll_handle.scroll_to_bottom();
+        } else {
+            self.segments.push(RenderedMessageSegment::Thinking {
+                content: render_markdown(text.into(), self.language_registry.clone(), window, cx),
+                scroll_handle: ScrollHandle::default(),
+            });
+        }
+    }
+
+    fn append_text(&mut self, text: &String, window: &Window, cx: &mut App) {
+        if let Some(RenderedMessageSegment::Text(markdown)) = self.segments.last_mut() {
+            markdown.update(cx, |markdown, cx| markdown.append(text, cx));
+        } else {
+            self.segments
+                .push(RenderedMessageSegment::Text(render_markdown(
+                    SharedString::from(text),
+                    self.language_registry.clone(),
+                    window,
+                    cx,
+                )));
+        }
+    }
+
+    fn push_segment(&mut self, segment: &MessageSegment, window: &Window, cx: &mut App) {
+        let rendered_segment = match segment {
+            MessageSegment::Thinking(text) => RenderedMessageSegment::Thinking {
+                content: render_markdown(text.into(), self.language_registry.clone(), window, cx),
+                scroll_handle: ScrollHandle::default(),
+            },
+            MessageSegment::Text(text) => RenderedMessageSegment::Text(render_markdown(
+                text.into(),
+                self.language_registry.clone(),
+                window,
+                cx,
+            )),
+        };
+        self.segments.push(rendered_segment);
+    }
+}
+
+enum RenderedMessageSegment {
+    Thinking {
+        content: Entity<Markdown>,
+        scroll_handle: ScrollHandle,
+    },
+    Text(Entity<Markdown>),
+}
+
+fn render_markdown(
+    text: SharedString,
+    language_registry: Arc<LanguageRegistry>,
+    window: &Window,
+    cx: &mut App,
+) -> Entity<Markdown> {
+    let theme_settings = ThemeSettings::get_global(cx);
+    let colors = cx.theme().colors();
+    let ui_font_size = TextSize::Default.rems(cx);
+    let buffer_font_size = TextSize::Small.rems(cx);
+    let mut text_style = window.text_style();
+
+    text_style.refine(&TextStyleRefinement {
+        font_family: Some(theme_settings.ui_font.family.clone()),
+        font_fallbacks: theme_settings.ui_font.fallbacks.clone(),
+        font_features: Some(theme_settings.ui_font.features.clone()),
+        font_size: Some(ui_font_size.into()),
+        color: Some(cx.theme().colors().text),
+        ..Default::default()
+    });
+
+    let markdown_style = MarkdownStyle {
+        base_text_style: text_style,
+        syntax: cx.theme().syntax().clone(),
+        selection_background_color: cx.theme().players().local().selection,
+        code_block_overflow_x_scroll: true,
+        table_overflow_x_scroll: true,
+        code_block: StyleRefinement {
+            margin: EdgesRefinement {
+                top: Some(Length::Definite(rems(0.).into())),
+                left: Some(Length::Definite(rems(0.).into())),
+                right: Some(Length::Definite(rems(0.).into())),
+                bottom: Some(Length::Definite(rems(0.5).into())),
+            },
+            padding: EdgesRefinement {
+                top: Some(DefiniteLength::Absolute(AbsoluteLength::Pixels(Pixels(8.)))),
+                left: Some(DefiniteLength::Absolute(AbsoluteLength::Pixels(Pixels(8.)))),
+                right: Some(DefiniteLength::Absolute(AbsoluteLength::Pixels(Pixels(8.)))),
+                bottom: Some(DefiniteLength::Absolute(AbsoluteLength::Pixels(Pixels(8.)))),
+            },
+            background: Some(colors.editor_background.into()),
+            border_color: Some(colors.border_variant),
+            border_widths: EdgesRefinement {
+                top: Some(AbsoluteLength::Pixels(Pixels(1.))),
+                left: Some(AbsoluteLength::Pixels(Pixels(1.))),
+                right: Some(AbsoluteLength::Pixels(Pixels(1.))),
+                bottom: Some(AbsoluteLength::Pixels(Pixels(1.))),
+            },
+            text: Some(TextStyleRefinement {
+                font_family: Some(theme_settings.buffer_font.family.clone()),
+                font_fallbacks: theme_settings.buffer_font.fallbacks.clone(),
+                font_features: Some(theme_settings.buffer_font.features.clone()),
+                font_size: Some(buffer_font_size.into()),
+                ..Default::default()
+            }),
+            ..Default::default()
+        },
+        inline_code: TextStyleRefinement {
+            font_family: Some(theme_settings.buffer_font.family.clone()),
+            font_fallbacks: theme_settings.buffer_font.fallbacks.clone(),
+            font_features: Some(theme_settings.buffer_font.features.clone()),
+            font_size: Some(buffer_font_size.into()),
+            background_color: Some(colors.editor_foreground.opacity(0.1)),
+            ..Default::default()
+        },
+        link: TextStyleRefinement {
+            background_color: Some(colors.editor_foreground.opacity(0.025)),
+            underline: Some(UnderlineStyle {
+                color: Some(colors.text_accent.opacity(0.5)),
+                thickness: px(1.),
+                ..Default::default()
+            }),
+            ..Default::default()
+        },
+        ..Default::default()
+    };
+
+    cx.new(|cx| Markdown::new(text, markdown_style, Some(language_registry), None, cx))
+}
+
 struct EditMessageState {
     editor: Entity<Editor>,
 }
@@ -75,6 +236,7 @@ impl ActiveThread {
             rendered_scripting_tool_uses: HashMap::default(),
             rendered_tool_use_labels: HashMap::default(),
             expanded_tool_uses: HashMap::default(),
+            expanded_thinking_segments: HashMap::default(),
             list_state: ListState::new(0, ListAlignment::Bottom, px(1024.), {
                 let this = cx.entity().downgrade();
                 move |ix, window: &mut Window, cx: &mut App| {
@@ -88,7 +250,7 @@ impl ActiveThread {
         };
 
         for message in thread.read(cx).messages().cloned().collect::<Vec<_>>() {
-            this.push_message(&message.id, message.text.clone(), window, cx);
+            this.push_message(&message.id, &message.segments, window, cx);
 
             for tool_use in thread.read(cx).tool_uses_for_message(message.id, cx) {
                 this.render_tool_use_label_markdown(
@@ -156,7 +318,7 @@ impl ActiveThread {
     fn push_message(
         &mut self,
         id: &MessageId,
-        text: String,
+        segments: &[MessageSegment],
         window: &mut Window,
         cx: &mut Context<Self>,
     ) {
@@ -164,8 +326,9 @@ impl ActiveThread {
         self.messages.push(*id);
         self.list_state.splice(old_len..old_len, 1);
 
-        let markdown = self.render_markdown(text.into(), window, cx);
-        self.rendered_messages_by_id.insert(*id, markdown);
+        let rendered_message =
+            RenderedMessage::from_segments(segments, self.language_registry.clone(), window, cx);
+        self.rendered_messages_by_id.insert(*id, rendered_message);
         self.list_state.scroll_to(ListOffset {
             item_ix: old_len,
             offset_in_item: Pixels(0.0),
@@ -175,7 +338,7 @@ impl ActiveThread {
     fn edited_message(
         &mut self,
         id: &MessageId,
-        text: String,
+        segments: &[MessageSegment],
         window: &mut Window,
         cx: &mut Context<Self>,
     ) {
@@ -183,8 +346,9 @@ impl ActiveThread {
             return;
         };
         self.list_state.splice(index..index + 1, 1);
-        let markdown = self.render_markdown(text.into(), window, cx);
-        self.rendered_messages_by_id.insert(*id, markdown);
+        let rendered_message =
+            RenderedMessage::from_segments(segments, self.language_registry.clone(), window, cx);
+        self.rendered_messages_by_id.insert(*id, rendered_message);
     }
 
     fn deleted_message(&mut self, id: &MessageId) {
@@ -196,94 +360,6 @@ impl ActiveThread {
         self.rendered_messages_by_id.remove(id);
     }
 
-    fn render_markdown(
-        &self,
-        text: SharedString,
-        window: &Window,
-        cx: &mut Context<Self>,
-    ) -> Entity<Markdown> {
-        let theme_settings = ThemeSettings::get_global(cx);
-        let colors = cx.theme().colors();
-        let ui_font_size = TextSize::Default.rems(cx);
-        let buffer_font_size = TextSize::Small.rems(cx);
-        let mut text_style = window.text_style();
-
-        text_style.refine(&TextStyleRefinement {
-            font_family: Some(theme_settings.ui_font.family.clone()),
-            font_fallbacks: theme_settings.ui_font.fallbacks.clone(),
-            font_features: Some(theme_settings.ui_font.features.clone()),
-            font_size: Some(ui_font_size.into()),
-            color: Some(cx.theme().colors().text),
-            ..Default::default()
-        });
-
-        let markdown_style = MarkdownStyle {
-            base_text_style: text_style,
-            syntax: cx.theme().syntax().clone(),
-            selection_background_color: cx.theme().players().local().selection,
-            code_block_overflow_x_scroll: true,
-            table_overflow_x_scroll: true,
-            code_block: StyleRefinement {
-                margin: EdgesRefinement {
-                    top: Some(Length::Definite(rems(0.).into())),
-                    left: Some(Length::Definite(rems(0.).into())),
-                    right: Some(Length::Definite(rems(0.).into())),
-                    bottom: Some(Length::Definite(rems(0.5).into())),
-                },
-                padding: EdgesRefinement {
-                    top: Some(DefiniteLength::Absolute(AbsoluteLength::Pixels(Pixels(8.)))),
-                    left: Some(DefiniteLength::Absolute(AbsoluteLength::Pixels(Pixels(8.)))),
-                    right: Some(DefiniteLength::Absolute(AbsoluteLength::Pixels(Pixels(8.)))),
-                    bottom: Some(DefiniteLength::Absolute(AbsoluteLength::Pixels(Pixels(8.)))),
-                },
-                background: Some(colors.editor_background.into()),
-                border_color: Some(colors.border_variant),
-                border_widths: EdgesRefinement {
-                    top: Some(AbsoluteLength::Pixels(Pixels(1.))),
-                    left: Some(AbsoluteLength::Pixels(Pixels(1.))),
-                    right: Some(AbsoluteLength::Pixels(Pixels(1.))),
-                    bottom: Some(AbsoluteLength::Pixels(Pixels(1.))),
-                },
-                text: Some(TextStyleRefinement {
-                    font_family: Some(theme_settings.buffer_font.family.clone()),
-                    font_fallbacks: theme_settings.buffer_font.fallbacks.clone(),
-                    font_features: Some(theme_settings.buffer_font.features.clone()),
-                    font_size: Some(buffer_font_size.into()),
-                    ..Default::default()
-                }),
-                ..Default::default()
-            },
-            inline_code: TextStyleRefinement {
-                font_family: Some(theme_settings.buffer_font.family.clone()),
-                font_fallbacks: theme_settings.buffer_font.fallbacks.clone(),
-                font_features: Some(theme_settings.buffer_font.features.clone()),
-                font_size: Some(buffer_font_size.into()),
-                background_color: Some(colors.editor_foreground.opacity(0.1)),
-                ..Default::default()
-            },
-            link: TextStyleRefinement {
-                background_color: Some(colors.editor_foreground.opacity(0.025)),
-                underline: Some(UnderlineStyle {
-                    color: Some(colors.text_accent.opacity(0.5)),
-                    thickness: px(1.),
-                    ..Default::default()
-                }),
-                ..Default::default()
-            },
-            ..Default::default()
-        };
-
-        cx.new(|cx| {
-            Markdown::new(
-                text,
-                markdown_style,
-                Some(self.language_registry.clone()),
-                None,
-                cx,
-            )
-        })
-    }
-
     /// Renders the input of a scripting tool use to Markdown.
     ///
     /// Does nothing if the tool use does not correspond to the scripting tool.
@@ -303,8 +379,12 @@ impl ActiveThread {
             .map(|input| input.lua_script)
             .unwrap_or_default();
 
-        let lua_script =
-            self.render_markdown(format!("```lua\n{lua_script}\n```").into(), window, cx);
+        let lua_script = render_markdown(
+            format!("```lua\n{lua_script}\n```").into(),
+            self.language_registry.clone(),
+            window,
+            cx,
+        );
 
         self.rendered_scripting_tool_uses
             .insert(tool_use_id, lua_script);
@@ -319,7 +399,12 @@ impl ActiveThread {
     ) {
         self.rendered_tool_use_labels.insert(
             tool_use_id,
-            self.render_markdown(tool_label.into(), window, cx),
+            render_markdown(
+                tool_label.into(),
+                self.language_registry.clone(),
+                window,
+                cx,
+            ),
         );
     }
 
@@ -339,33 +424,36 @@ impl ActiveThread {
             }
             ThreadEvent::DoneStreaming => {}
             ThreadEvent::StreamedAssistantText(message_id, text) => {
-                if let Some(markdown) = self.rendered_messages_by_id.get_mut(&message_id) {
-                    markdown.update(cx, |markdown, cx| {
-                        markdown.append(text, cx);
-                    });
+                if let Some(rendered_message) = self.rendered_messages_by_id.get_mut(&message_id) {
+                    rendered_message.append_text(text, window, cx);
+                }
+            }
+            ThreadEvent::StreamedAssistantThinking(message_id, text) => {
+                if let Some(rendered_message) = self.rendered_messages_by_id.get_mut(&message_id) {
+                    rendered_message.append_thinking(text, window, cx);
                 }
             }
             ThreadEvent::MessageAdded(message_id) => {
-                if let Some(message_text) = self
+                if let Some(message_segments) = self
                     .thread
                     .read(cx)
                     .message(*message_id)
-                    .map(|message| message.text.clone())
+                    .map(|message| message.segments.clone())
                 {
-                    self.push_message(message_id, message_text, window, cx);
+                    self.push_message(message_id, &message_segments, window, cx);
                 }
 
                 self.save_thread(cx);
                 cx.notify();
             }
             ThreadEvent::MessageEdited(message_id) => {
-                if let Some(message_text) = self
+                if let Some(message_segments) = self
                     .thread
                     .read(cx)
                     .message(*message_id)
-                    .map(|message| message.text.clone())
+                    .map(|message| message.segments.clone())
                 {
-                    self.edited_message(message_id, message_text, window, cx);
+                    self.edited_message(message_id, &message_segments, window, cx);
                 }
 
                 self.save_thread(cx);
@@ -490,10 +578,16 @@ impl ActiveThread {
     fn start_editing_message(
         &mut self,
         message_id: MessageId,
-        message_text: String,
+        message_segments: &[MessageSegment],
         window: &mut Window,
         cx: &mut Context<Self>,
     ) {
+        // User message should always consist of a single text segment,
+        // therefore we can skip returning early if it's not a text segment.
+        let Some(MessageSegment::Text(message_text)) = message_segments.first() else {
+            return;
+        };
+
         let buffer = cx.new(|cx| {
             MultiBuffer::singleton(cx.new(|cx| Buffer::local(message_text.clone(), cx)), cx)
         });
@@ -534,7 +628,12 @@ impl ActiveThread {
         };
         let edited_text = state.editor.read(cx).text(cx);
         self.thread.update(cx, |thread, cx| {
-            thread.edit_message(message_id, Role::User, edited_text, cx);
+            thread.edit_message(
+                message_id,
+                Role::User,
+                vec![MessageSegment::Text(edited_text)],
+                cx,
+            );
             for message_id in self.messages_after(message_id) {
                 thread.delete_message(*message_id, cx);
             }
@@ -617,7 +716,7 @@ impl ActiveThread {
             return Empty.into_any();
         };
 
-        let Some(markdown) = self.rendered_messages_by_id.get(&message_id) else {
+        let Some(rendered_message) = self.rendered_messages_by_id.get(&message_id) else {
             return Empty.into_any();
         };
 
@@ -759,7 +858,10 @@ impl ActiveThread {
                         .min_h_6()
                         .child(edit_message_editor)
                 } else {
-                    div().min_h_6().text_ui(cx).child(markdown.clone())
+                    div()
+                        .min_h_6()
+                        .text_ui(cx)
+                        .child(self.render_message_content(message_id, rendered_message, cx))
                 },
             )
             .when_some(context, |parent, context| {
@@ -869,11 +971,12 @@ impl ActiveThread {
                                                     Button::new("edit-message", "Edit")
                                                         .label_size(LabelSize::Small)
                                                         .on_click(cx.listener({
-                                                            let message_text = message.text.clone();
+                                                            let message_segments =
+                                                                message.segments.clone();
                                                             move |this, _, window, cx| {
                                                                 this.start_editing_message(
                                                                     message_id,
-                                                                    message_text.clone(),
+                                                                    &message_segments,
                                                                     window,
                                                                     cx,
                                                                 );
@@ -995,6 +1098,190 @@ impl ActiveThread {
             .into_any()
     }
 
+    fn render_message_content(
+        &self,
+        message_id: MessageId,
+        rendered_message: &RenderedMessage,
+        cx: &Context<Self>,
+    ) -> impl IntoElement {
+        let pending_thinking_segment_index = rendered_message
+            .segments
+            .iter()
+            .enumerate()
+            .last()
+            .filter(|(_, segment)| matches!(segment, RenderedMessageSegment::Thinking { .. }))
+            .map(|(index, _)| index);
+
+        div()
+            .text_ui(cx)
+            .gap_2()
+            .children(
+                rendered_message.segments.iter().enumerate().map(
+                    |(index, segment)| match segment {
+                        RenderedMessageSegment::Thinking {
+                            content,
+                            scroll_handle,
+                        } => self
+                            .render_message_thinking_segment(
+                                message_id,
+                                index,
+                                content.clone(),
+                                &scroll_handle,
+                                Some(index) == pending_thinking_segment_index,
+                                cx,
+                            )
+                            .into_any_element(),
+                        RenderedMessageSegment::Text(markdown) => {
+                            div().p_2p5().child(markdown.clone()).into_any_element()
+                        }
+                    },
+                ),
+            )
+    }
+
+    fn render_message_thinking_segment(
+        &self,
+        message_id: MessageId,
+        ix: usize,
+        markdown: Entity<Markdown>,
+        scroll_handle: &ScrollHandle,
+        pending: bool,
+        cx: &Context<Self>,
+    ) -> impl IntoElement {
+        let is_open = self
+            .expanded_thinking_segments
+            .get(&(message_id, ix))
+            .copied()
+            .unwrap_or_default();
+
+        let lighter_border = cx.theme().colors().border.opacity(0.5);
+        let editor_bg = cx.theme().colors().editor_background;
+
+        v_flex()
+            .rounded_lg()
+            .border_1()
+            .border_color(lighter_border)
+            .child(
+                h_flex()
+                    .justify_between()
+                    .py_1()
+                    .pl_1()
+                    .pr_2()
+                    .bg(cx.theme().colors().editor_foreground.opacity(0.025))
+                    .map(|this| {
+                        if is_open {
+                            this.rounded_t_md()
+                                .border_b_1()
+                                .border_color(lighter_border)
+                        } else {
+                            this.rounded_md()
+                        }
+                    })
+                    .child(
+                        h_flex()
+                            .gap_1()
+                            .child(Disclosure::new("thinking-disclosure", is_open).on_click(
+                                cx.listener({
+                                    move |this, _event, _window, _cx| {
+                                        let is_open = this
+                                            .expanded_thinking_segments
+                                            .entry((message_id, ix))
+                                            .or_insert(false);
+
+                                        *is_open = !*is_open;
+                                    }
+                                }),
+                            ))
+                            .child({
+                                if pending {
+                                    Label::new("Thinking…")
+                                        .size(LabelSize::Small)
+                                        .buffer_font(cx)
+                                        .with_animation(
+                                            "pulsating-label",
+                                            Animation::new(Duration::from_secs(2))
+                                                .repeat()
+                                                .with_easing(pulsating_between(0.4, 0.8)),
+                                            |label, delta| label.alpha(delta),
+                                        )
+                                        .into_any_element()
+                                } else {
+                                    Label::new("Thought Process")
+                                        .size(LabelSize::Small)
+                                        .buffer_font(cx)
+                                        .into_any_element()
+                                }
+                            }),
+                    )
+                    .child({
+                        let (icon_name, color, animated) = if pending {
+                            (IconName::ArrowCircle, Color::Accent, true)
+                        } else {
+                            (IconName::Check, Color::Success, false)
+                        };
+
+                        let icon = Icon::new(icon_name).color(color).size(IconSize::Small);
+
+                        if animated {
+                            icon.with_animation(
+                                "arrow-circle",
+                                Animation::new(Duration::from_secs(2)).repeat(),
+                                |icon, delta| {
+                                    icon.transform(Transformation::rotate(percentage(delta)))
+                                },
+                            )
+                            .into_any_element()
+                        } else {
+                            icon.into_any_element()
+                        }
+                    }),
+            )
+            .when(pending && !is_open, |this| {
+                let gradient_overlay = div()
+                    .rounded_b_lg()
+                    .h_20()
+                    .absolute()
+                    .w_full()
+                    .bottom_0()
+                    .left_0()
+                    .bg(linear_gradient(
+                        180.,
+                        linear_color_stop(editor_bg, 1.),
+                        linear_color_stop(editor_bg.opacity(0.2), 0.),
+                    ));
+
+                this.child(
+                    div()
+                        .relative()
+                        .bg(editor_bg)
+                        .rounded_b_lg()
+                        .text_ui_sm(cx)
+                        .child(
+                            div()
+                                .id(("thinking-content", ix))
+                                .p_2()
+                                .h_20()
+                                .track_scroll(scroll_handle)
+                                .child(markdown.clone())
+                                .overflow_hidden(),
+                        )
+                        .child(gradient_overlay),
+                )
+            })
+            .when(is_open, |this| {
+                this.child(
+                    div()
+                        .id(("thinking-content", ix))
+                        .h_full()
+                        .p_2()
+                        .rounded_b_lg()
+                        .bg(editor_bg)
+                        .text_ui_sm(cx)
+                        .child(markdown.clone()),
+                )
+            })
+    }
+
     fn render_tool_use(&self, tool_use: ToolUse, cx: &mut Context<Self>) -> impl IntoElement {
         let is_open = self
             .expanded_tool_uses
@@ -1258,8 +1545,9 @@ impl ActiveThread {
                                         }
                                     }),
                                 ))
-                                .child(div().text_ui_sm(cx).child(self.render_markdown(
+                                .child(div().text_ui_sm(cx).child(render_markdown(
                                     tool_use.ui_text.clone(),
+                                    self.language_registry.clone(),
                                     window,
                                     cx,
                                 )))
diff --git a/crates/assistant2/src/thread.rs b/crates/assistant2/src/thread.rs
index c2cf4fe550..f9c2c40c03 100644
--- a/crates/assistant2/src/thread.rs
+++ b/crates/assistant2/src/thread.rs
@@ -29,7 +29,8 @@ use uuid::Uuid;
 
 use crate::context::{attach_context_to_message, ContextId, ContextSnapshot};
 use crate::thread_store::{
-    SerializedMessage, SerializedThread, SerializedToolResult, SerializedToolUse,
+    SerializedMessage, SerializedMessageSegment, SerializedThread, SerializedToolResult,
+    SerializedToolUse,
 };
 use crate::tool_use::{PendingToolUse, ToolUse, ToolUseState};
 
@@ -69,7 +70,47 @@ impl MessageId {
 pub struct Message {
     pub id: MessageId,
     pub role: Role,
-    pub text: String,
+    pub segments: Vec<MessageSegment>,
+}
+
+impl Message {
+    pub fn push_thinking(&mut self, text: &str) {
+        if let Some(MessageSegment::Thinking(segment)) = self.segments.last_mut() {
+            segment.push_str(text);
+        } else {
+            self.segments
+                .push(MessageSegment::Thinking(text.to_string()));
+        }
+    }
+
+    pub fn push_text(&mut self, text: &str) {
+        if let Some(MessageSegment::Text(segment)) = self.segments.last_mut() {
+            segment.push_str(text);
+        } else {
+            self.segments.push(MessageSegment::Text(text.to_string()));
+        }
+    }
+
+    pub fn to_string(&self) -> String {
+        let mut result = String::new();
+        for segment in &self.segments {
+            match segment {
+                MessageSegment::Text(text) => result.push_str(text),
+                MessageSegment::Thinking(text) => {
+                    result.push_str("<think>");
+                    result.push_str(text);
+                    result.push_str("</think>");
+                }
+            }
+        }
+        result
+    }
+}
+
+#[derive(Debug, Clone)]
+pub enum MessageSegment {
+    Text(String),
+    Thinking(String),
 }
 
 #[derive(Debug, Clone, Serialize, Deserialize)]
@@ -226,7 +267,16 @@ impl Thread {
                 .map(|message| Message {
                     id: message.id,
                     role: message.role,
-                    text: message.text,
+                    segments: message
+                        .segments
+                        .into_iter()
+                        .map(|segment| match segment {
+                            SerializedMessageSegment::Text { text } => MessageSegment::Text(text),
+                            SerializedMessageSegment::Thinking { text } => {
+                                MessageSegment::Thinking(text)
+                            }
+                        })
+                        .collect(),
                 })
                 .collect(),
             next_message_id,
@@ -419,7 +469,8 @@ impl Thread {
         checkpoint: Option<GitStoreCheckpoint>,
         cx: &mut Context<Self>,
     ) -> MessageId {
-        let message_id = self.insert_message(Role::User, text, cx);
+        let message_id =
+            self.insert_message(Role::User, vec![MessageSegment::Text(text.into())], cx);
         let context_ids = context.iter().map(|context| context.id).collect::<Vec<_>>();
         self.context
             .extend(context.into_iter().map(|context| (context.id, context)));
@@ -433,15 +484,11 @@ impl Thread {
     pub fn insert_message(
         &mut self,
         role: Role,
-        text: impl Into<String>,
+        segments: Vec<MessageSegment>,
         cx: &mut Context<Self>,
     ) -> MessageId {
         let id = self.next_message_id.post_inc();
-        self.messages.push(Message {
-            id,
-            role,
-            text: text.into(),
-        });
+        self.messages.push(Message { id, role, segments });
         self.touch_updated_at();
         cx.emit(ThreadEvent::MessageAdded(id));
         id
@@ -451,14 +498,14 @@ impl Thread {
         &mut self,
         id: MessageId,
         new_role: Role,
-        new_text: String,
+        new_segments: Vec<MessageSegment>,
         cx: &mut Context<Self>,
     ) -> bool {
         let Some(message) = self.messages.iter_mut().find(|message| message.id == id) else {
             return false;
         };
         message.role = new_role;
-        message.text = new_text;
+        message.segments = new_segments;
         self.touch_updated_at();
         cx.emit(ThreadEvent::MessageEdited(id));
         true
@@ -489,7 +536,14 @@ impl Thread {
             });
             text.push('\n');
 
-            text.push_str(&message.text);
+            for segment in &message.segments {
+                match segment {
+                    MessageSegment::Text(content) => text.push_str(content),
+                    MessageSegment::Thinking(content) => {
+                        text.push_str(&format!("<think>{}</think>", content))
+                    }
+                }
+            }
             text.push('\n');
         }
 
@@ -502,6 +556,7 @@ impl Thread {
         cx.spawn(async move |this, cx| {
             let initial_project_snapshot = initial_project_snapshot.await;
             this.read_with(cx, |this, cx| SerializedThread {
+                version: SerializedThread::VERSION.to_string(),
                 summary: this.summary_or_default(),
                 updated_at: this.updated_at(),
                 messages: this
@@ -509,7 +564,18 @@ impl Thread {
                     .map(|message| SerializedMessage {
                         id: message.id,
                         role: message.role,
-                        text: message.text.clone(),
+                        segments: message
+                            .segments
+                            .iter()
+                            .map(|segment| match segment {
+                                MessageSegment::Text(text) => {
+                                    SerializedMessageSegment::Text { text: text.clone() }
+                                }
+                                MessageSegment::Thinking(text) => {
+                                    SerializedMessageSegment::Thinking { text: text.clone() }
+                                }
+                            })
+                            .collect(),
                         tool_uses: this
                             .tool_uses_for_message(message.id, cx)
                             .into_iter()
@@ -733,10 +799,10 @@ impl Thread {
                 }
             }
 
-            if !message.text.is_empty() {
+            if !message.segments.is_empty() {
                 request_message
                     .content
-                    .push(MessageContent::Text(message.text.clone()));
+                    .push(MessageContent::Text(message.to_string()));
             }
 
             match request_kind {
@@ -826,7 +892,11 @@ impl Thread {
                     thread.update(cx, |thread, cx| {
                         match event {
                             LanguageModelCompletionEvent::StartMessage { .. } => {
-                                thread.insert_message(Role::Assistant, String::new(), cx);
+                                thread.insert_message(
+                                    Role::Assistant,
+                                    vec![MessageSegment::Text(String::new())],
+                                    cx,
+                                );
                             }
                             LanguageModelCompletionEvent::Stop(reason) => {
                                 stop_reason = reason;
@@ -840,7 +910,7 @@ impl Thread {
                             LanguageModelCompletionEvent::Text(chunk) => {
                                 if let Some(last_message) = thread.messages.last_mut() {
                                     if last_message.role == Role::Assistant {
-                                        last_message.text.push_str(&chunk);
+                                        last_message.push_text(&chunk);
                                         cx.emit(ThreadEvent::StreamedAssistantText(
                                             last_message.id,
                                             chunk,
@@ -851,7 +921,33 @@ impl Thread {
                                         //
                                         // Importantly: We do *not* want to emit a `StreamedAssistantText` event here, as it
                                         // will result in duplicating the text of the chunk in the rendered Markdown.
-                                        thread.insert_message(Role::Assistant, chunk, cx);
+                                        thread.insert_message(
+                                            Role::Assistant,
+                                            vec![MessageSegment::Text(chunk.to_string())],
+                                            cx,
+                                        );
+                                    };
+                                }
+                            }
+                            LanguageModelCompletionEvent::Thinking(chunk) => {
+                                if let Some(last_message) = thread.messages.last_mut() {
+                                    if last_message.role == Role::Assistant {
+                                        last_message.push_thinking(&chunk);
+                                        cx.emit(ThreadEvent::StreamedAssistantThinking(
+                                            last_message.id,
+                                            chunk,
+                                        ));
+                                    } else {
+                                        // If we won't have an Assistant message yet, assume this chunk marks the beginning
+                                        // of a new Assistant response.
+                                        //
+                                        // Importantly: We do *not* want to emit a `StreamedAssistantText` event here, as it
+                                        // will result in duplicating the text of the chunk in the rendered Markdown.
+                                        thread.insert_message(
+                                            Role::Assistant,
+                                            vec![MessageSegment::Thinking(chunk.to_string())],
+                                            cx,
+                                        );
                                     };
                                 }
                             }
@@ -1357,7 +1453,14 @@ impl Thread {
                     Role::System => "System",
                 }
             )?;
-            writeln!(markdown, "{}\n", message.text)?;
+            for segment in &message.segments {
+                match segment {
+                    MessageSegment::Text(text) => writeln!(markdown, "{}\n", text)?,
+                    MessageSegment::Thinking(text) => {
+                        writeln!(markdown, "<think>{}</think>\n", text)?
+                    }
+                }
+            }
 
             for tool_use in self.tool_uses_for_message(message.id, cx) {
                 writeln!(
@@ -1416,6 +1519,7 @@ pub enum ThreadEvent {
     ShowError(ThreadError),
     StreamedCompletion,
     StreamedAssistantText(MessageId, String),
+    StreamedAssistantThinking(MessageId, String),
     DoneStreaming,
     MessageAdded(MessageId),
     MessageEdited(MessageId),
diff --git a/crates/assistant2/src/thread_store.rs b/crates/assistant2/src/thread_store.rs
index cfdeb674d9..7c54eef658 100644
--- a/crates/assistant2/src/thread_store.rs
+++ b/crates/assistant2/src/thread_store.rs
@@ -1,3 +1,4 @@
+use std::borrow::Cow;
 use std::path::PathBuf;
 use std::sync::Arc;
 
@@ -12,7 +13,7 @@ use futures::FutureExt as _;
 use gpui::{
     prelude::*, App, BackgroundExecutor, Context, Entity, Global, ReadGlobal, SharedString, Task,
 };
-use heed::types::{SerdeBincode, SerdeJson};
+use heed::types::SerdeBincode;
 use heed::Database;
 use language_model::{LanguageModelToolUseId, Role};
 use project::Project;
@@ -259,6 +260,7 @@ pub struct SerializedThreadMetadata {
 
 #[derive(Serialize, Deserialize)]
 pub struct SerializedThread {
+    pub version: String,
     pub summary: SharedString,
     pub updated_at: DateTime<Utc>,
     pub messages: Vec<SerializedMessage>,
@@ -266,17 +268,55 @@ pub struct SerializedThread {
     pub initial_project_snapshot: Option<Arc<ProjectSnapshot>>,
 }
 
+impl SerializedThread {
+    pub const VERSION: &'static str = "0.1.0";
+
+    pub fn from_json(json: &[u8]) -> Result<Self> {
+        let saved_thread_json = serde_json::from_slice::<serde_json::Value>(json)?;
+        match saved_thread_json.get("version") {
+            Some(serde_json::Value::String(version)) => match version.as_str() {
+                SerializedThread::VERSION => Ok(serde_json::from_value::<SerializedThread>(
+                    saved_thread_json,
+                )?),
+                _ => Err(anyhow!(
+                    "unrecognized serialized thread version: {}",
+                    version
+                )),
+            },
+            None => {
+                let saved_thread =
+                    serde_json::from_value::<LegacySerializedThread>(saved_thread_json)?;
+                Ok(saved_thread.upgrade())
+            }
+            version => Err(anyhow!(
+                "unrecognized serialized thread version: {:?}",
+                version
+            )),
+        }
+    }
+}
+
 #[derive(Debug, Serialize, Deserialize)]
 pub struct SerializedMessage {
     pub id: MessageId,
     pub role: Role,
-    pub text: String,
+    #[serde(default)]
+    pub segments: Vec<SerializedMessageSegment>,
     #[serde(default)]
     pub tool_uses: Vec<SerializedToolUse>,
     #[serde(default)]
     pub tool_results: Vec<SerializedToolResult>,
 }
 
+#[derive(Debug, Serialize, Deserialize)]
+#[serde(tag = "type")]
+pub enum SerializedMessageSegment {
+    #[serde(rename = "text")]
+    Text { text: String },
+    #[serde(rename = "thinking")]
+    Thinking { text: String },
+}
+
 #[derive(Debug, Serialize, Deserialize)]
 pub struct SerializedToolUse {
     pub id: LanguageModelToolUseId,
@@ -291,6 +331,50 @@ pub struct SerializedToolResult {
     pub content: Arc<str>,
 }
 
+#[derive(Serialize, Deserialize)]
+struct LegacySerializedThread {
+    pub summary: SharedString,
+    pub updated_at: DateTime<Utc>,
+    pub messages: Vec<LegacySerializedMessage>,
+    #[serde(default)]
+    pub initial_project_snapshot: Option<Arc<ProjectSnapshot>>,
+}
+
+impl LegacySerializedThread {
+    pub fn upgrade(self) -> SerializedThread {
+        SerializedThread {
+            version: SerializedThread::VERSION.to_string(),
+            summary: self.summary,
+            updated_at: self.updated_at,
+            messages: self.messages.into_iter().map(|msg| msg.upgrade()).collect(),
+            initial_project_snapshot: self.initial_project_snapshot,
+        }
+    }
+}
+
+#[derive(Debug, Serialize, Deserialize)]
+struct LegacySerializedMessage {
+    pub id: MessageId,
+    pub role: Role,
+    pub text: String,
+    #[serde(default)]
+    pub tool_uses: Vec<SerializedToolUse>,
+    #[serde(default)]
+    pub tool_results: Vec<SerializedToolResult>,
+}
+
+impl LegacySerializedMessage {
+    fn upgrade(self) -> SerializedMessage {
+        SerializedMessage {
+            id: self.id,
+            role: self.role,
+            segments: vec![SerializedMessageSegment::Text { text: self.text }],
+            tool_uses: self.tool_uses,
+            tool_results: self.tool_results,
+        }
+    }
+}
+
 struct GlobalThreadsDatabase(
     Shared<BoxFuture<'static, Result<Arc<ThreadsDatabase>, Arc<anyhow::Error>>>>,
 );
@@ -300,7 +384,25 @@ impl Global for GlobalThreadsDatabase {}
 pub(crate) struct ThreadsDatabase {
     executor: BackgroundExecutor,
     env: heed::Env,
-    threads: Database<SerdeBincode<ThreadId>, SerdeJson<SerializedThread>>,
+    threads: Database<SerdeBincode<ThreadId>, SerializedThread>,
+}
+
+impl heed::BytesEncode<'_> for SerializedThread {
+    type EItem = SerializedThread;
+
+    fn bytes_encode(item: &Self::EItem) -> Result<Cow<[u8]>, heed::BoxedError> {
+        serde_json::to_vec(item).map(Cow::Owned).map_err(Into::into)
+    }
+}
+
+impl<'a> heed::BytesDecode<'a> for SerializedThread {
+    type DItem = SerializedThread;
+
+    fn bytes_decode(bytes: &'a [u8]) -> Result<Self::DItem, heed::BoxedError> {
+        // We implement this type manually because we want to call `SerializedThread::from_json`,
+        // instead of the Deserialize trait implementation for `SerializedThread`.
+        SerializedThread::from_json(bytes).map_err(Into::into)
+    }
 }
 
 impl ThreadsDatabase {
diff --git a/crates/assistant_context_editor/src/context.rs b/crates/assistant_context_editor/src/context.rs
index ef15afd05c..1ebb2a9289 100644
--- a/crates/assistant_context_editor/src/context.rs
+++ b/crates/assistant_context_editor/src/context.rs
@@ -162,6 +162,11 @@ pub enum ContextOperation {
         section: SlashCommandOutputSection<language::Anchor>,
         version: clock::Global,
     },
+    ThoughtProcessOutputSectionAdded {
+        timestamp: clock::Lamport,
+        section: ThoughtProcessOutputSection<language::Anchor>,
+        version: clock::Global,
+    },
     BufferOperation(language::Operation),
 }
 
@@ -259,6 +264,20 @@ impl ContextOperation {
                     version: language::proto::deserialize_version(&message.version),
                 })
             }
+            proto::context_operation::Variant::ThoughtProcessOutputSectionAdded(message) => {
+                let section = message.section.context("missing section")?;
+                Ok(Self::ThoughtProcessOutputSectionAdded {
+                    timestamp: language::proto::deserialize_timestamp(
+                        message.timestamp.context("missing timestamp")?,
+                    ),
+                    section: ThoughtProcessOutputSection {
+                        range: language::proto::deserialize_anchor_range(
+                            section.range.context("invalid range")?,
+                        )?,
+                    },
+                    version: language::proto::deserialize_version(&message.version),
+                })
+            }
             proto::context_operation::Variant::BufferOperation(op) => Ok(Self::BufferOperation(
                 language::proto::deserialize_operation(
                     op.operation.context("invalid buffer operation")?,
@@ -370,6 +389,27 @@ impl ContextOperation {
                     },
                 )),
             },
+            Self::ThoughtProcessOutputSectionAdded {
+                timestamp,
+                section,
+                version,
+            } => proto::ContextOperation {
+                variant: Some(
+                    proto::context_operation::Variant::ThoughtProcessOutputSectionAdded(
+                        proto::context_operation::ThoughtProcessOutputSectionAdded {
+                            timestamp: Some(language::proto::serialize_timestamp(*timestamp)),
+                            section: Some({
+                                proto::ThoughtProcessOutputSection {
+                                    range: Some(language::proto::serialize_anchor_range(
+                                        section.range.clone(),
+                                    )),
+                                }
+                            }),
+                            version: language::proto::serialize_version(version),
+                        },
+                    ),
+                ),
+            },
             Self::BufferOperation(operation) => proto::ContextOperation {
                 variant: Some(proto::context_operation::Variant::BufferOperation(
                     proto::context_operation::BufferOperation {
@@ -387,7 +427,8 @@ impl ContextOperation {
             Self::UpdateSummary { summary, .. } => summary.timestamp,
             Self::SlashCommandStarted { id, .. } => id.0,
             Self::SlashCommandOutputSectionAdded { timestamp, .. }
-            | Self::SlashCommandFinished { timestamp, .. } => *timestamp,
+            | Self::SlashCommandFinished { timestamp, .. }
+            | Self::ThoughtProcessOutputSectionAdded { timestamp, .. } => *timestamp,
             Self::BufferOperation(_) => {
                 panic!("reading the timestamp of a buffer operation is not supported")
             }
@@ -402,7 +443,8 @@ impl ContextOperation {
             | Self::UpdateSummary { version, .. }
             | Self::SlashCommandStarted { version, .. }
             | Self::SlashCommandOutputSectionAdded { version, .. }
-            | Self::SlashCommandFinished { version, .. } => version,
+            | Self::SlashCommandFinished { version, .. }
+            | Self::ThoughtProcessOutputSectionAdded { version, .. } => version,
             Self::BufferOperation(_) => {
                 panic!("reading the version of a buffer operation is not supported")
             }
@@ -418,6 +460,8 @@ pub enum ContextEvent {
     MessagesEdited,
     SummaryChanged,
     StreamedCompletion,
+    StartedThoughtProcess(Range<language::Anchor>),
+    EndedThoughtProcess(language::Anchor),
     PatchesUpdated {
         removed: Vec<Range<language::Anchor>>,
         updated: Vec<Range<language::Anchor>>,
@@ -498,6 +542,17 @@ impl MessageMetadata {
     }
 }
 
+#[derive(Clone, Debug, PartialEq, Eq, Serialize, Deserialize)]
+pub struct ThoughtProcessOutputSection<T> {
+    pub range: Range<T>,
+}
+
+impl ThoughtProcessOutputSection<language::Anchor> {
+    pub fn is_valid(&self, buffer: &language::TextBuffer) -> bool {
+        self.range.start.is_valid(buffer) && !self.range.to_offset(buffer).is_empty()
+    }
+}
+
 #[derive(Clone, Debug)]
 pub struct Message {
     pub offset_range: Range<usize>,
@@ -580,6 +635,7 @@ pub struct AssistantContext {
     edits_since_last_parse: language::Subscription,
     slash_commands: Arc<SlashCommandWorkingSet>,
     slash_command_output_sections: Vec<SlashCommandOutputSection<language::Anchor>>,
+    thought_process_output_sections: Vec<ThoughtProcessOutputSection<language::Anchor>>,
     message_anchors: Vec<MessageAnchor>,
     contents: Vec<Content>,
     messages_metadata: HashMap<MessageId, MessageMetadata>,
@@ -682,6 +738,7 @@ impl AssistantContext {
             parsed_slash_commands: Vec::new(),
             invoked_slash_commands: HashMap::default(),
             slash_command_output_sections: Vec::new(),
+            thought_process_output_sections: Vec::new(),
             edits_since_last_parse: edits_since_last_slash_command_parse,
             summary: None,
             pending_summary: Task::ready(None),
@@ -764,6 +821,18 @@ impl AssistantContext {
                     }
                 })
                 .collect(),
+            thought_process_output_sections: self
+                .thought_process_output_sections
+                .iter()
+                .filter_map(|section| {
+                    if section.is_valid(buffer) {
+                        let range = section.range.to_offset(buffer);
+                        Some(ThoughtProcessOutputSection { range })
+                    } else {
+                        None
+                    }
+                })
+                .collect(),
         }
     }
 
@@ -957,6 +1026,16 @@ impl AssistantContext {
                         cx.emit(ContextEvent::SlashCommandOutputSectionAdded { section });
                     }
                 }
+                ContextOperation::ThoughtProcessOutputSectionAdded { section, .. } => {
+                    let buffer = self.buffer.read(cx);
+                    if let Err(ix) = self
+                        .thought_process_output_sections
+                        .binary_search_by(|probe| probe.range.cmp(&section.range, buffer))
+                    {
+                        self.thought_process_output_sections
+                            .insert(ix, section.clone());
+                    }
+                }
                 ContextOperation::SlashCommandFinished {
                     id,
                     error_message,
@@ -1020,6 +1099,9 @@ impl AssistantContext {
             ContextOperation::SlashCommandOutputSectionAdded { section, .. } => {
                 self.has_received_operations_for_anchor_range(section.range.clone(), cx)
             }
+            ContextOperation::ThoughtProcessOutputSectionAdded { section, .. } => {
+                self.has_received_operations_for_anchor_range(section.range.clone(), cx)
+            }
             ContextOperation::SlashCommandFinished { .. } => true,
             ContextOperation::BufferOperation(_) => {
                 panic!("buffer operations should always be applied")
@@ -1128,6 +1210,12 @@ impl AssistantContext {
         &self.slash_command_output_sections
     }
 
+    pub fn thought_process_output_sections(
+        &self,
+    ) -> &[ThoughtProcessOutputSection<language::Anchor>] {
+        &self.thought_process_output_sections
+    }
+
     pub fn contains_files(&self, cx: &App) -> bool {
         let buffer = self.buffer.read(cx);
         self.slash_command_output_sections.iter().any(|section| {
@@ -2168,6 +2256,35 @@ impl AssistantContext {
         );
     }
 
+    fn insert_thought_process_output_section(
+        &mut self,
+        section: ThoughtProcessOutputSection<language::Anchor>,
+        cx: &mut Context<Self>,
+    ) {
+        let buffer = self.buffer.read(cx);
+        let insertion_ix = match self
+            .thought_process_output_sections
+            .binary_search_by(|probe| probe.range.cmp(&section.range, buffer))
+        {
+            Ok(ix) | Err(ix) => ix,
+        };
+        self.thought_process_output_sections
+            .insert(insertion_ix, section.clone());
+        // cx.emit(ContextEvent::ThoughtProcessOutputSectionAdded {
+        //     section: section.clone(),
+        // });
+        let version = self.version.clone();
+        let timestamp = self.next_timestamp();
+        self.push_op(
+            ContextOperation::ThoughtProcessOutputSectionAdded {
+                timestamp,
+                section,
+                version,
+            },
+            cx,
+        );
+    }
+
     pub fn completion_provider_changed(&mut self, cx: &mut Context<Self>) {
         self.count_remaining_tokens(cx);
     }
@@ -2220,6 +2337,10 @@ impl AssistantContext {
                     let request_start = Instant::now();
                     let mut events = stream.await?;
                     let mut stop_reason = StopReason::EndTurn;
+                    let mut thought_process_stack = Vec::new();
+
+                    const THOUGHT_PROCESS_START_MARKER: &str = "<think>\n";
+                    const THOUGHT_PROCESS_END_MARKER: &str = "\n</think>";
 
                     while let Some(event) = events.next().await {
                         if response_latency.is_none() {
@@ -2227,6 +2348,9 @@ impl AssistantContext {
                         }
                         let event = event?;
 
+                        let mut context_event = None;
+                        let mut thought_process_output_section = None;
+
                         this.update(cx, |this, cx| {
                             let message_ix = this
                                 .message_anchors
@@ -2245,7 +2369,50 @@ impl AssistantContext {
                                     LanguageModelCompletionEvent::Stop(reason) => {
                                         stop_reason = reason;
                                     }
-                                    LanguageModelCompletionEvent::Text(chunk) => {
+                                    LanguageModelCompletionEvent::Thinking(chunk) => {
+                                        if thought_process_stack.is_empty() {
+                                            let start =
+                                                buffer.anchor_before(message_old_end_offset);
+                                            thought_process_stack.push(start);
+                                            let chunk =
+                                                format!("{THOUGHT_PROCESS_START_MARKER}{chunk}{THOUGHT_PROCESS_END_MARKER}");
+                                            let chunk_len = chunk.len();
+                                            buffer.edit(
+                                                [(
+                                                    message_old_end_offset..message_old_end_offset,
+                                                    chunk,
+                                                )],
+                                                None,
+                                                cx,
+                                            );
+                                            let end = buffer
+                                                .anchor_before(message_old_end_offset + chunk_len);
+                                            context_event = Some(
+                                                ContextEvent::StartedThoughtProcess(start..end),
+                                            );
+                                        } else {
+                                            // This ensures that all the thinking chunks are inserted inside the thinking tag
+                                            let insertion_position =
+                                                message_old_end_offset - THOUGHT_PROCESS_END_MARKER.len();
+                                            buffer.edit(
+                                                [(insertion_position..insertion_position, chunk)],
+                                                None,
+                                                cx,
+                                            );
+                                        }
+                                    }
+                                    LanguageModelCompletionEvent::Text(mut chunk) => {
+                                        if let Some(start) = thought_process_stack.pop() {
+                                            let end = buffer.anchor_before(message_old_end_offset);
+                                            context_event =
+                                                Some(ContextEvent::EndedThoughtProcess(end));
+                                            thought_process_output_section =
+                                                Some(ThoughtProcessOutputSection {
+                                                    range: start..end,
+                                                });
+                                            chunk.insert_str(0, "\n\n");
+                                        }
+
                                         buffer.edit(
                                             [(
                                                 message_old_end_offset..message_old_end_offset,
@@ -2260,6 +2427,13 @@ impl AssistantContext {
                                 }
                             });
 
+                            if let Some(section) = thought_process_output_section.take() {
+                                this.insert_thought_process_output_section(section, cx);
+                            }
+                            if let Some(context_event) = context_event.take() {
+                                cx.emit(context_event);
+                            }
+
                             cx.emit(ContextEvent::StreamedCompletion);
 
                             Some(())
@@ -3127,6 +3301,8 @@ pub struct SavedContext {
     pub summary: String,
     pub slash_command_output_sections:
         Vec<assistant_slash_command::SlashCommandOutputSection<usize>>,
+    #[serde(default)]
+    pub thought_process_output_sections: Vec<ThoughtProcessOutputSection<usize>>,
 }
 
 impl SavedContext {
@@ -3228,6 +3404,20 @@ impl SavedContext {
             version.observe(timestamp);
         }
 
+        for section in self.thought_process_output_sections {
+            let timestamp = next_timestamp.tick();
+            operations.push(ContextOperation::ThoughtProcessOutputSectionAdded {
+                timestamp,
+                section: ThoughtProcessOutputSection {
+                    range: buffer.anchor_after(section.range.start)
+                        ..buffer.anchor_before(section.range.end),
+                },
+                version: version.clone(),
+            });
+
+            version.observe(timestamp);
+        }
+
         let timestamp = next_timestamp.tick();
         operations.push(ContextOperation::UpdateSummary {
             summary: ContextSummary {
@@ -3302,6 +3492,7 @@ impl SavedContextV0_3_0 {
                 .collect(),
             summary: self.summary,
             slash_command_output_sections: self.slash_command_output_sections,
+            thought_process_output_sections: Vec::new(),
         }
     }
 }
diff --git a/crates/assistant_context_editor/src/context_editor.rs b/crates/assistant_context_editor/src/context_editor.rs
index bdc5a51a92..8fc2433476 100644
--- a/crates/assistant_context_editor/src/context_editor.rs
+++ b/crates/assistant_context_editor/src/context_editor.rs
@@ -64,7 +64,10 @@ use workspace::{
     Workspace,
 };
 
-use crate::{slash_command::SlashCommandCompletionProvider, slash_command_picker};
+use crate::{
+    slash_command::SlashCommandCompletionProvider, slash_command_picker,
+    ThoughtProcessOutputSection,
+};
 use crate::{
     AssistantContext, AssistantPatch, AssistantPatchStatus, CacheStatus, Content, ContextEvent,
     ContextId, InvokedSlashCommandId, InvokedSlashCommandStatus, Message, MessageId,
@@ -120,6 +123,11 @@ enum AssistError {
     Message(SharedString),
 }
 
+pub enum ThoughtProcessStatus {
+    Pending,
+    Completed,
+}
+
 pub trait AssistantPanelDelegate {
     fn active_context_editor(
         &self,
@@ -178,6 +186,7 @@ pub struct ContextEditor {
     project: Entity<Project>,
     lsp_adapter_delegate: Option<Arc<dyn LspAdapterDelegate>>,
     editor: Entity<Editor>,
+    pending_thought_process: Option<(CreaseId, language::Anchor)>,
     blocks: HashMap<MessageId, (MessageHeader, CustomBlockId)>,
     image_blocks: HashSet<CustomBlockId>,
     scroll_position: Option<ScrollPosition>,
@@ -253,7 +262,8 @@ impl ContextEditor {
             cx.observe_global_in::<SettingsStore>(window, Self::settings_changed),
         ];
 
-        let sections = context.read(cx).slash_command_output_sections().to_vec();
+        let slash_command_sections = context.read(cx).slash_command_output_sections().to_vec();
+        let thought_process_sections = context.read(cx).thought_process_output_sections().to_vec();
         let patch_ranges = context.read(cx).patch_ranges().collect::<Vec<_>>();
         let slash_commands = context.read(cx).slash_commands().clone();
         let mut this = Self {
@@ -265,6 +275,7 @@ impl ContextEditor {
             image_blocks: Default::default(),
             scroll_position: None,
             remote_id: None,
+            pending_thought_process: None,
             fs: fs.clone(),
             workspace,
             project,
@@ -294,7 +305,14 @@ impl ContextEditor {
         };
         this.update_message_headers(cx);
         this.update_image_blocks(cx);
-        this.insert_slash_command_output_sections(sections, false, window, cx);
+        this.insert_slash_command_output_sections(slash_command_sections, false, window, cx);
+        this.insert_thought_process_output_sections(
+            thought_process_sections
+                .into_iter()
+                .map(|section| (section, ThoughtProcessStatus::Completed)),
+            window,
+            cx,
+        );
         this.patches_updated(&Vec::new(), &patch_ranges, window, cx);
         this
     }
@@ -599,6 +617,47 @@ impl ContextEditor {
                     context.save(Some(Duration::from_millis(500)), self.fs.clone(), cx);
                 });
             }
+            ContextEvent::StartedThoughtProcess(range) => {
+                let creases = self.insert_thought_process_output_sections(
+                    [(
+                        ThoughtProcessOutputSection {
+                            range: range.clone(),
+                        },
+                        ThoughtProcessStatus::Pending,
+                    )],
+                    window,
+                    cx,
+                );
+                self.pending_thought_process = Some((creases[0], range.start));
+            }
+            ContextEvent::EndedThoughtProcess(end) => {
+                if let Some((crease_id, start)) = self.pending_thought_process.take() {
+                    self.editor.update(cx, |editor, cx| {
+                        let multi_buffer_snapshot = editor.buffer().read(cx).snapshot(cx);
+                        let (excerpt_id, _, _) = multi_buffer_snapshot.as_singleton().unwrap();
+                        let start_anchor = multi_buffer_snapshot
+                            .anchor_in_excerpt(*excerpt_id, start)
+                            .unwrap();
+
+                        editor.display_map.update(cx, |display_map, cx| {
+                            display_map.unfold_intersecting(
+                                vec![start_anchor..start_anchor],
+                                true,
+                                cx,
+                            );
+                        });
+                        editor.remove_creases(vec![crease_id], cx);
+                    });
+                    self.insert_thought_process_output_sections(
+                        [(
+                            ThoughtProcessOutputSection { range: start..*end },
+                            ThoughtProcessStatus::Completed,
+                        )],
+                        window,
+                        cx,
+                    );
+                }
+            }
             ContextEvent::StreamedCompletion => {
                 self.editor.update(cx, |editor, cx| {
                     if let Some(scroll_position) = self.scroll_position {
@@ -946,6 +1005,62 @@ impl ContextEditor {
         self.update_active_patch(window, cx);
     }
 
+    fn insert_thought_process_output_sections(
+        &mut self,
+        sections: impl IntoIterator<
+            Item = (
+                ThoughtProcessOutputSection<language::Anchor>,
+                ThoughtProcessStatus,
+            ),
+        >,
+        window: &mut Window,
+        cx: &mut Context<Self>,
+    ) -> Vec<CreaseId> {
+        self.editor.update(cx, |editor, cx| {
+            let buffer = editor.buffer().read(cx).snapshot(cx);
+            let excerpt_id = *buffer.as_singleton().unwrap().0;
+            let mut buffer_rows_to_fold = BTreeSet::new();
+            let mut creases = Vec::new();
+            for (section, status) in sections {
+                let start = buffer
+                    .anchor_in_excerpt(excerpt_id, section.range.start)
+                    .unwrap();
+                let end = buffer
+                    .anchor_in_excerpt(excerpt_id, section.range.end)
+                    .unwrap();
+                let buffer_row = MultiBufferRow(start.to_point(&buffer).row);
+                buffer_rows_to_fold.insert(buffer_row);
+                creases.push(
+                    Crease::inline(
+                        start..end,
+                        FoldPlaceholder {
+                            render: render_thought_process_fold_icon_button(
+                                cx.entity().downgrade(),
+                                status,
+                            ),
+                            merge_adjacent: false,
+                            ..Default::default()
+                        },
+                        render_slash_command_output_toggle,
+                        |_, _, _, _| Empty.into_any_element(),
+                    )
+                    .with_metadata(CreaseMetadata {
+                        icon: IconName::Ai,
+                        label: "Thinking Process".into(),
+                    }),
+                );
+            }
+
+            let creases = editor.insert_creases(creases, cx);
+
+            for buffer_row in buffer_rows_to_fold.into_iter().rev() {
+                editor.fold_at(&FoldAt { buffer_row }, window, cx);
+            }
+
+            creases
+        })
+    }
+
     fn insert_slash_command_output_sections(
         &mut self,
         sections: impl IntoIterator<Item = SlashCommandOutputSection<language::Anchor>>,
@@ -2652,6 +2767,52 @@ fn find_surrounding_code_block(snapshot: &BufferSnapshot, offset: usize) -> Opti
     None
 }
 
+fn render_thought_process_fold_icon_button(
+    editor: WeakEntity<Editor>,
+    status: ThoughtProcessStatus,
+) -> Arc<dyn Send + Sync + Fn(FoldId, Range<Anchor>, &mut App) -> AnyElement> {
+    Arc::new(move |fold_id, fold_range, _cx| {
+        let editor = editor.clone();
+
+        let button = ButtonLike::new(fold_id).layer(ElevationIndex::ElevatedSurface);
+        let button = match status {
+            ThoughtProcessStatus::Pending => button
+                .child(
+                    Icon::new(IconName::Brain)
+                        .size(IconSize::Small)
+                        .color(Color::Muted),
+                )
+                .child(
+                    Label::new("Thinking…").color(Color::Muted).with_animation(
+                        "pulsating-label",
+                        Animation::new(Duration::from_secs(2))
+                            .repeat()
+                            .with_easing(pulsating_between(0.4, 0.8)),
+                        |label, delta| label.alpha(delta),
+                    ),
+                ),
+            ThoughtProcessStatus::Completed => button
+                .style(ButtonStyle::Filled)
+                .child(Icon::new(IconName::Brain).size(IconSize::Small))
+                .child(Label::new("Thought Process").single_line()),
+        };
+
+        button
+            .on_click(move |_, window, cx| {
+                editor
+                    .update(cx, |editor, cx| {
+                        let buffer_start = fold_range
+                            .start
+                            .to_point(&editor.buffer().read(cx).read(cx));
+                        let buffer_row = MultiBufferRow(buffer_start.row);
+                        editor.unfold_at(&UnfoldAt { buffer_row }, window, cx);
+                    })
+                    .ok();
+            })
+            .into_any_element()
+    })
+}
+
 fn render_fold_icon_button(
     editor: WeakEntity<Editor>,
     icon: IconName,
diff --git a/crates/assistant_eval/src/eval.rs b/crates/assistant_eval/src/eval.rs
index 2268cf78ab..8801472e4d 100644
--- a/crates/assistant_eval/src/eval.rs
+++ b/crates/assistant_eval/src/eval.rs
@@ -120,7 +120,7 @@ impl Eval {
                     .count();
                 Ok(EvalOutput {
                     diff,
-                    last_message: last_message.text.clone(),
+                    last_message: last_message.to_string(),
                     elapsed_time,
                     assistant_response_count,
                     tool_use_counts: assistant.tool_use_counts.clone(),
diff --git a/crates/assistant_eval/src/headless_assistant.rs b/crates/assistant_eval/src/headless_assistant.rs
index 0eb63d84ac..31bbc69f31 100644
--- a/crates/assistant_eval/src/headless_assistant.rs
+++ b/crates/assistant_eval/src/headless_assistant.rs
@@ -89,7 +89,7 @@ impl HeadlessAssistant {
             ThreadEvent::DoneStreaming => {
                 let thread = thread.read(cx);
                 if let Some(message) = thread.messages().last() {
-                    println!("Message: {}", message.text,);
+                    println!("Message: {}", message.to_string());
                 }
                 if thread.all_tools_finished() {
                     self.done_tx.send_blocking(Ok(())).unwrap()
diff --git a/crates/gpui/src/elements/div.rs b/crates/gpui/src/elements/div.rs
index 3e8f497b1a..2f573570f0 100644
--- a/crates/gpui/src/elements/div.rs
+++ b/crates/gpui/src/elements/div.rs
@@ -1240,20 +1240,11 @@ impl Element for Div {
             let mut state = scroll_handle.0.borrow_mut();
             state.child_bounds = Vec::with_capacity(request_layout.child_layout_ids.len());
             state.bounds = bounds;
-            let requested = state.requested_scroll_top.take();
-
-            for (ix, child_layout_id) in request_layout.child_layout_ids.iter().enumerate() {
+            for child_layout_id in &request_layout.child_layout_ids {
                 let child_bounds = window.layout_bounds(*child_layout_id);
                 child_min = child_min.min(&child_bounds.origin);
                 child_max = child_max.max(&child_bounds.bottom_right());
                 state.child_bounds.push(child_bounds);
-
-                if let Some(requested) = requested.as_ref() {
-                    if requested.0 == ix {
-                        *state.offset.borrow_mut() =
-                            bounds.origin - (child_bounds.origin - point(px(0.), requested.1));
-                    }
-                }
             }
             (child_max - child_min).into()
         } else {
@@ -1528,8 +1519,11 @@ impl Interactivity {
         _cx: &mut App,
     ) -> Point<Pixels> {
         if let Some(scroll_offset) = self.scroll_offset.as_ref() {
+            let mut scroll_to_bottom = false;
             if let Some(scroll_handle) = &self.tracked_scroll_handle {
-                scroll_handle.0.borrow_mut().overflow = style.overflow;
+                let mut state = scroll_handle.0.borrow_mut();
+                state.overflow = style.overflow;
+                scroll_to_bottom = mem::take(&mut state.scroll_to_bottom);
             }
 
             let rem_size = window.rem_size();
@@ -1555,8 +1549,14 @@ impl Interactivity {
             // Clamp scroll offset in case scroll max is smaller now (e.g., if children
             // were removed or the bounds became larger).
             let mut scroll_offset = scroll_offset.borrow_mut();
+
             scroll_offset.x = scroll_offset.x.clamp(-scroll_max.width, px(0.));
-            scroll_offset.y = scroll_offset.y.clamp(-scroll_max.height, px(0.));
+            if scroll_to_bottom {
+                scroll_offset.y = -scroll_max.height;
+            } else {
+                scroll_offset.y = scroll_offset.y.clamp(-scroll_max.height, px(0.));
+            }
+
             *scroll_offset
         } else {
             Point::default()
@@ -2861,12 +2861,13 @@ impl ScrollAnchor {
         });
     }
 }
+
 #[derive(Default, Debug)]
 struct ScrollHandleState {
     offset: Rc<RefCell<Point<Pixels>>>,
     bounds: Bounds<Pixels>,
     child_bounds: Vec<Bounds<Pixels>>,
-    requested_scroll_top: Option<(usize, Pixels)>,
+    scroll_to_bottom: bool,
     overflow: Point<Overflow>,
 }
 
@@ -2955,6 +2956,12 @@ impl ScrollHandle {
         }
     }
 
+    /// Scrolls to the bottom.
+    pub fn scroll_to_bottom(&self) {
+        let mut state = self.0.borrow_mut();
+        state.scroll_to_bottom = true;
+    }
+
     /// Set the offset explicitly. The offset is the distance from the top left of the
     /// parent container to the top left of the first child.
     /// As you scroll further down the offset becomes more negative.
@@ -2978,11 +2985,6 @@ impl ScrollHandle {
         }
     }
 
-    /// Set the logical scroll top, based on a child index and a pixel offset.
-    pub fn set_logical_scroll_top(&self, ix: usize, px: Pixels) {
-        self.0.borrow_mut().requested_scroll_top = Some((ix, px));
-    }
-
     /// Get the count of children for scrollable item.
     pub fn children_count(&self) -> usize {
         self.0.borrow().child_bounds.len()
diff --git a/crates/language_model/src/language_model.rs b/crates/language_model/src/language_model.rs
index 8ed190e731..a016ae0b37 100644
--- a/crates/language_model/src/language_model.rs
+++ b/crates/language_model/src/language_model.rs
@@ -59,6 +59,7 @@ pub struct LanguageModelCacheConfiguration {
 pub enum LanguageModelCompletionEvent {
     Stop(StopReason),
     Text(String),
+    Thinking(String),
     ToolUse(LanguageModelToolUse),
     StartMessage { message_id: String },
     UsageUpdate(TokenUsage),
@@ -217,6 +218,7 @@ pub trait LanguageModel: Send + Sync {
                     match result {
                         Ok(LanguageModelCompletionEvent::StartMessage { .. }) => None,
                         Ok(LanguageModelCompletionEvent::Text(text)) => Some(Ok(text)),
+                        Ok(LanguageModelCompletionEvent::Thinking(_)) => None,
                         Ok(LanguageModelCompletionEvent::Stop(_)) => None,
                         Ok(LanguageModelCompletionEvent::ToolUse(_)) => None,
                         Ok(LanguageModelCompletionEvent::UsageUpdate(_)) => None,
diff --git a/crates/language_model/src/model/cloud_model.rs b/crates/language_model/src/model/cloud_model.rs
index 44e2199a84..3a610cad73 100644
--- a/crates/language_model/src/model/cloud_model.rs
+++ b/crates/language_model/src/model/cloud_model.rs
@@ -72,7 +72,9 @@ impl CloudModel {
     pub fn availability(&self) -> LanguageModelAvailability {
         match self {
             Self::Anthropic(model) => match model {
-                anthropic::Model::Claude3_5Sonnet | anthropic::Model::Claude3_7Sonnet => {
+                anthropic::Model::Claude3_5Sonnet
+                | anthropic::Model::Claude3_7Sonnet
+                | anthropic::Model::Claude3_7SonnetThinking => {
                     LanguageModelAvailability::RequiresPlan(Plan::Free)
                 }
                 anthropic::Model::Claude3Opus
diff --git a/crates/language_models/src/provider/anthropic.rs b/crates/language_models/src/provider/anthropic.rs
index 3bc6460ac7..7d2660571d 100644
--- a/crates/language_models/src/provider/anthropic.rs
+++ b/crates/language_models/src/provider/anthropic.rs
@@ -1,6 +1,6 @@
 use crate::ui::InstructionListItem;
 use crate::AllLanguageModelSettings;
-use anthropic::{AnthropicError, ContentDelta, Event, ResponseContent, Usage};
+use anthropic::{AnthropicError, AnthropicModelMode, ContentDelta, Event, ResponseContent, Usage};
 use anyhow::{anyhow, Context as _, Result};
 use collections::{BTreeMap, HashMap};
 use credentials_provider::CredentialsProvider;
@@ -55,6 +55,37 @@ pub struct AvailableModel {
     pub default_temperature: Option<f32>,
     #[serde(default)]
     pub extra_beta_headers: Vec<String>,
+    /// The model's mode (e.g. thinking)
+    pub mode: Option<ModelMode>,
+}
+
+#[derive(Clone, Debug, Default, PartialEq, Serialize, Deserialize, JsonSchema)]
+#[serde(tag = "type", rename_all = "lowercase")]
+pub enum ModelMode {
+    #[default]
+    Default,
+    Thinking {
+        /// The maximum number of tokens to use for reasoning. Must be lower than the model's `max_output_tokens`.
+        budget_tokens: Option<u32>,
+    },
+}
+
+impl From<ModelMode> for AnthropicModelMode {
+    fn from(value: ModelMode) -> Self {
+        match value {
+            ModelMode::Default => AnthropicModelMode::Default,
+            ModelMode::Thinking { budget_tokens } => AnthropicModelMode::Thinking { budget_tokens },
+        }
+    }
+}
+
+impl From<AnthropicModelMode> for ModelMode {
+    fn from(value: AnthropicModelMode) -> Self {
+        match value {
+            AnthropicModelMode::Default => ModelMode::Default,
+            AnthropicModelMode::Thinking { budget_tokens } => ModelMode::Thinking { budget_tokens },
+        }
+    }
 }
 
 pub struct AnthropicLanguageModelProvider {
@@ -228,6 +259,7 @@ impl LanguageModelProvider for AnthropicLanguageModelProvider {
                     max_output_tokens: model.max_output_tokens,
                     default_temperature: model.default_temperature,
                     extra_beta_headers: model.extra_beta_headers.clone(),
+                    mode: model.mode.clone().unwrap_or_default().into(),
                 },
             );
         }
@@ -399,9 +431,10 @@ impl LanguageModel for AnthropicModel {
     ) -> BoxFuture<'static, Result<BoxStream<'static, Result<LanguageModelCompletionEvent>>>> {
         let request = into_anthropic(
             request,
-            self.model.id().into(),
+            self.model.request_id().into(),
             self.model.default_temperature(),
             self.model.max_output_tokens(),
+            self.model.mode(),
         );
         let request = self.stream_completion(request, cx);
         let future = self.request_limiter.stream(async move {
@@ -434,6 +467,7 @@ impl LanguageModel for AnthropicModel {
             self.model.tool_model_id().into(),
             self.model.default_temperature(),
             self.model.max_output_tokens(),
+            self.model.mode(),
         );
         request.tool_choice = Some(anthropic::ToolChoice::Tool {
             name: tool_name.clone(),
@@ -464,6 +498,7 @@ pub fn into_anthropic(
     model: String,
     default_temperature: f32,
     max_output_tokens: u32,
+    mode: AnthropicModelMode,
 ) -> anthropic::Request {
     let mut new_messages: Vec<anthropic::Message> = Vec::new();
     let mut system_message = String::new();
@@ -552,6 +587,11 @@ pub fn into_anthropic(
         messages: new_messages,
         max_tokens: max_output_tokens,
         system: Some(system_message),
+        thinking: if let AnthropicModelMode::Thinking { budget_tokens } = mode {
+            Some(anthropic::Thinking::Enabled { budget_tokens })
+        } else {
+            None
+        },
         tools: request
             .tools
             .into_iter()
@@ -607,6 +647,16 @@ pub fn map_to_language_model_completion_events(
                                     state,
                                 ));
                             }
+                            ResponseContent::Thinking { thinking } => {
+                                return Some((
+                                    vec![Ok(LanguageModelCompletionEvent::Thinking(thinking))],
+                                    state,
+                                ));
+                            }
+                            ResponseContent::RedactedThinking { .. } => {
+                                // Redacted thinking is encrypted and not accessible to the user, see:
+                                // https://docs.anthropic.com/en/docs/build-with-claude/extended-thinking#suggestions-for-handling-redacted-thinking-in-production
+                            }
                             ResponseContent::ToolUse { id, name, .. } => {
                                 state.tool_uses_by_index.insert(
                                     index,
@@ -625,6 +675,13 @@ pub fn map_to_language_model_completion_events(
                                     state,
                                 ));
                             }
+                            ContentDelta::ThinkingDelta { thinking } => {
+                                return Some((
+                                    vec![Ok(LanguageModelCompletionEvent::Thinking(thinking))],
+                                    state,
+                                ));
+                            }
+                            ContentDelta::SignatureDelta { .. } => {}
                             ContentDelta::InputJsonDelta { partial_json } => {
                                 if let Some(tool_use) = state.tool_uses_by_index.get_mut(&index) {
                                     tool_use.input_json.push_str(&partial_json);
diff --git a/crates/language_models/src/provider/cloud.rs b/crates/language_models/src/provider/cloud.rs
index 58eef9aafc..798a25084c 100644
--- a/crates/language_models/src/provider/cloud.rs
+++ b/crates/language_models/src/provider/cloud.rs
@@ -1,4 +1,4 @@
-use anthropic::AnthropicError;
+use anthropic::{AnthropicError, AnthropicModelMode};
 use anyhow::{anyhow, Result};
 use client::{
     zed_urls, Client, PerformCompletionParams, UserStore, EXPIRED_LLM_TOKEN_HEADER_NAME,
@@ -91,6 +91,28 @@ pub struct AvailableModel {
     /// Any extra beta headers to provide when using the model.
     #[serde(default)]
     pub extra_beta_headers: Vec<String>,
+    /// The model's mode (e.g. thinking)
+    pub mode: Option<ModelMode>,
+}
+
+#[derive(Default, Clone, Debug, PartialEq, Serialize, Deserialize, JsonSchema)]
+#[serde(tag = "type", rename_all = "lowercase")]
+pub enum ModelMode {
+    #[default]
+    Default,
+    Thinking {
+        /// The maximum number of tokens to use for reasoning. Must be lower than the model's `max_output_tokens`.
+        budget_tokens: Option<u32>,
+    },
+}
+
+impl From<ModelMode> for AnthropicModelMode {
+    fn from(value: ModelMode) -> Self {
+        match value {
+            ModelMode::Default => AnthropicModelMode::Default,
+            ModelMode::Thinking { budget_tokens } => AnthropicModelMode::Thinking { budget_tokens },
+        }
+    }
 }
 
 pub struct CloudLanguageModelProvider {
@@ -299,6 +321,7 @@ impl LanguageModelProvider for CloudLanguageModelProvider {
                     default_temperature: model.default_temperature,
                     max_output_tokens: model.max_output_tokens,
                     extra_beta_headers: model.extra_beta_headers.clone(),
+                    mode: model.mode.unwrap_or_default().into(),
                 }),
                 AvailableProvider::OpenAi => CloudModel::OpenAi(open_ai::Model::Custom {
                     name: model.name.clone(),
@@ -567,9 +590,10 @@ impl LanguageModel for CloudLanguageModel {
             CloudModel::Anthropic(model) => {
                 let request = into_anthropic(
                     request,
-                    model.id().into(),
+                    model.request_id().into(),
                     model.default_temperature(),
                     model.max_output_tokens(),
+                    model.mode(),
                 );
                 let client = self.client.clone();
                 let llm_api_token = self.llm_api_token.clone();
@@ -669,6 +693,7 @@ impl LanguageModel for CloudLanguageModel {
                     model.tool_model_id().into(),
                     model.default_temperature(),
                     model.max_output_tokens(),
+                    model.mode(),
                 );
                 request.tool_choice = Some(anthropic::ToolChoice::Tool {
                     name: tool_name.clone(),
diff --git a/crates/language_models/src/settings.rs b/crates/language_models/src/settings.rs
index a274d8e262..6e25ca3c40 100644
--- a/crates/language_models/src/settings.rs
+++ b/crates/language_models/src/settings.rs
@@ -109,6 +109,7 @@ impl AnthropicSettingsContent {
                                     max_output_tokens,
                                     default_temperature,
                                     extra_beta_headers,
+                                    mode,
                                 } => Some(provider::anthropic::AvailableModel {
                                     name,
                                     display_name,
@@ -124,6 +125,7 @@ impl AnthropicSettingsContent {
                                     max_output_tokens,
                                     default_temperature,
                                     extra_beta_headers,
+                                    mode: Some(mode.into()),
                                 }),
                                 _ => None,
                             })
diff --git a/crates/proto/proto/zed.proto b/crates/proto/proto/zed.proto
index 6573a57c86..f9314a97b5 100644
--- a/crates/proto/proto/zed.proto
+++ b/crates/proto/proto/zed.proto
@@ -2503,6 +2503,10 @@ message SlashCommandOutputSection {
     optional string metadata = 4;
 }
 
+message ThoughtProcessOutputSection {
+    AnchorRange range = 1;
+}
+
 message ContextOperation {
     oneof variant {
         InsertMessage insert_message = 1;
@@ -2512,6 +2516,7 @@ message ContextOperation {
         SlashCommandStarted slash_command_started = 6;
         SlashCommandOutputSectionAdded slash_command_output_section_added = 7;
         SlashCommandCompleted slash_command_completed = 8;
+        ThoughtProcessOutputSectionAdded thought_process_output_section_added = 9;
     }
 
     reserved 4;
@@ -2556,6 +2561,12 @@ message ContextOperation {
         repeated VectorClockEntry version = 5;
     }
 
+    message ThoughtProcessOutputSectionAdded {
+        LamportTimestamp timestamp = 1;
+        ThoughtProcessOutputSection section = 2;
+        repeated VectorClockEntry version = 3;
+    }
+
     message BufferOperation {
         Operation operation = 1;
     }
diff --git a/docs/src/assistant/configuration.md b/docs/src/assistant/configuration.md
index 354a581c66..90d215281c 100644
--- a/docs/src/assistant/configuration.md
+++ b/docs/src/assistant/configuration.md
@@ -68,6 +68,21 @@ You can add custom models to the Anthropic provider by adding the following to y
 
 Custom models will be listed in the model dropdown in the assistant panel.
 
+You can configure a model to use [extended thinking](https://docs.anthropic.com/en/docs/about-claude/models/extended-thinking-models) (if it supports it),
+by changing the mode in of your models configuration to `thinking`, for example:
+
+```json
+{
+  "name": "claude-3-7-sonnet-latest",
+  "display_name": "claude-3-7-sonnet-thinking",
+  "max_tokens": 200000,
+  "mode": {
+    "type": "thinking",
+    "budget_tokens": 4_096
+  }
+}
+```
+
 ### GitHub Copilot Chat {#github-copilot-chat}
 
 You can use GitHub Copilot chat with the Zed assistant by choosing it via the model dropdown in the assistant panel.