Microsoft Pushes VS Code Deeper Into Multi Agent Development

Visual Studio Code 1.139 arrived last week, and Microsoft has already followed it with another major update.

Visual Studio Code 1.140 expands AI agent workflows, improves worktree support, and adds new controls for organizations managing AI features across development teams.

Copilot harness brings new agent capabilities

One of the biggest additions is the new Copilot harness, which brings additional agent functionality directly into VS Code while keeping the existing chat workflow.

Microsoft built the harness on the Copilot SDK, giving it capabilities and behavior consistent with the GitHub Copilot app and Copilot CLI.

Multi-folder sessions coordinate work across repositories

VS Code 1.140 also introduces experimental multi-folder sessions for developers working across multiple repositories or isolated worktrees.

Each chat inside a multi-chat session can use its own folder or worktree. Changes made in one chat’s worktree remain isolated and do not affect worktrees assigned to other chats.

This setup should make it easier to split larger development tasks between multiple AI agents without mixing their changes.

Remote agents can run from the Agents window

Microsoft is also testing support for delegating tasks to remote agent hosts directly from the Agents window.

Developers no longer need to manually select a host for every task. Remote sessions do not receive a workspace automatically, however, so users need to specify one when required.

The experimental feature can be enabled through the chat.remoteAgentHostsEnabled setting.

HydraFusion lets multiple AI models work together

The update also includes HydraFusion, which Microsoft currently offers as a research preview.

HydraFusion allows multiple AI models to independently draft, critique, and revise solutions to coding tasks without requiring developers to coordinate each model manually.

Microsoft is also testing Shared worktree folders, which allow ignored folders to be reused across different worktrees.

Enterprise controls expand AI management

Visual Studio Code 1.140 adds more controls for organizations that want to standardize how developers use AI features.

Administrators can enforce AI version requirements and configure a default Auto model tier based on efficiency, balance, or intelligence.

Developers can still select another Auto tier even when an organization has configured a default setting.

Microsoft has been expanding its AI development tools across its wider developer ecosystem. The company recently released the Visual Studio September 2026 Update with its new BYOM Agent and NuGet Audit Fixer.

Microsoft also recently made WSL Containers generally available, adding new CLI, API, and enterprise management capabilities.