🚀 AI Toolkit for VS Code: January 2026 Update

Happy New Year! 🎆

We are kicking off 2026 with a major set of updates designed to streamline how you build, test, and deploy AI agents. This month, we’ve focused on aligning with the latest GitHub Copilot standards, introducing powerful new debugging tools, and enhancing our support for enterprise-grade models via Microsoft Foundry. 

💡 From Copilot Instructions to Agent Skills

The biggest architectural shift following the latest VS Code Copilot standards, in v0.28.1 is the transition from Copilot Instructions to Copilot Skills. This transition has equipped GitHub Copilot specialized skills on developing AI agents using Microsoft Foundry and Agent Framework in a cost-efficient way.

In AI Toolkit, we have migrated our Copilot Tools from the Custom Instructions to Agent Skills. This change allows for a more capable integration within GitHub Copilot Chat. 

• 🔄 Enhanced AIAgentExpert: Our custom agent now has a deeper understanding of workflow code generation and evaluation planning/execution. 
• 🧹Automatic Migration: When you upgrade to v0.28.1, the toolkit will automatically clean up your old instructions to ensure a seamless transition to the new skills-based framework. 

🏗️ Major Enhancements to Agent Development

Our v0.28.0 milestone release brought significant improvements to how agents are authored and authenticated.

🔒 Anthropic & Entra Auth Support

We’ve expanded the Agent Builder and Playground to support Anthropic models using Entra Auth types. This provides enterprise developers with a more secure way to leverage Claude models within the Agent Framework while maintaining strict authentication standards. 

🏢 Foundry-First Development

We are prioritizing the Microsoft Foundry ecosystem to provide a more robust development experience:

• Foundry v2: Code generation for agents now defaults to Foundry v2. ⚡
• Eval Tool: You can now generate evaluation code directly within the toolkit to create and run evaluations in Microsoft Foundry. 📊
• Model Catalog: We’ve optimized the Model Catalog to prioritize Foundry models and improved general loading performance. 🏎️

💻 Performance and Local Models

For developers building on Windows, we continue to optimize the local model experience:

• Profiling for Windows ML: Version 0.28.0 introduces profiling features for Windows ML-based local models, allowing you to monitor performance and resource utilization directly within VS Code. 
• Platform Optimization: To keep the interface clean, we’ve removed the Windows AI API tab from the Model Catalog when running on Linux and macOS platforms. 

🐛 Squashing Bugs & Polishing the Experience

• Codespaces Fix: Resolved a crash occurring when selecting images in the Playground while using GitHub Codespaces.
• Resource Management: Fixed a delay where newly added models wouldn't immediately appear in the "My Resources" view.
• Claude Compatibility: Fixed an issue where non-empty content was required for Claude models when used via the AI Toolkit in GitHub Copilot.

🚀 Getting Started

Ready to experience the future of AI development? Here's how to get started:

• 📥 Download: Install the AI Toolkit from the Visual Studio Code Marketplace
• 📖 Learn: Explore our comprehensive AI Toolkit Documentation
• 🔍 Discover: Check out the complete changelog for v0.24.0

We'd love to hear from you! Whether it's a feature request, bug report, or feedback on your experience, join the conversation and contribute directly on our GitHub repository.

Happy Coding! 💻✨