Just VS Code, one extension, and an idea.
What if building an AI agent was as easy as filling out a form?
No frameworks to install. No boilerplate to copy-paste from GitHub. No YAML to debug at midnight. Just VS Code, one extension, and an idea.
AI Toolkit for VS Code turns agent development into something anyone can do — whether you're a seasoned developer who wants full code control, or someone who's never touched an AI framework and just wants to see something work.
Let's build an agent. Then let's explore what else this toolkit can do.
Getting Set Up
You need two things:
- VS Code — download and install if you haven't already
- AI Toolkit extension — open VS Code, go to Extensions (Ctrl+Shift+X), search "AI Toolkit", and install it
That's it. No terminal commands. No dependencies to wrangle. When AI Toolkit installs, it brings everything it needs — including the Microsoft Foundry integration and GitHub Copilot skills for agent development.
Once installed, you'll see a new AI Toolkit icon in the left sidebar. Click it. That's your home base for everything we're about to do.
Build an Agent — No Code Required
Open the Command Palette (Ctrl+Shift+P) and type "Create Agent". You'll see a clean panel with two options side by side:
- Design an Agent Without Code — visual builder, perfect for getting started
- Create in Code — full project scaffolding, for when you want complete control
Click "Design an Agent Without Code." Agent Builder opens up.
Now fill in three things:
- Give it a name
Something descriptive. For this example: "Azure Advisor"
- Pick a model
Click the model dropdown. You'll see a list of available models — GPT-4.1, Claude Opus 4.6, and others. Foundry models appear at the top as recommended options. Pick one.
Here's a nice detail: you don't need to know whether your model uses the Chat Completions API or the Responses API. AI Toolkit detects this automatically and handles the switch behind the scenes.
- Write your instructions
This is where you tell the agent who it is and how to behave. Think of it as a personality brief:
Hit Run
That's it. Click Run and start chatting with your agent in the built-in playground.
Want More Control? Build in Code
The no-code path is great for prototyping and prompt engineering. But when you need custom tools, business logic, or multi-agent workflows — switch to code.
From the Create Agent View, choose "Create in Code with Full Control." You get two options:
Scaffold from a template
Pick a pre-built project structure — single agent, multi-agent, or LangGraph workflow. AI Toolkit generates a complete project with proper folder structure, configuration files, and starter code. Open it, customize it, run it.
Generate with GitHub Copilot
Describe your agent in plain English in Copilot Chat:
"Create a customer support agent that can look up order status, process returns, and escalate to a human when the customer is upset."
Copilot generates a full project — agent logic, tool definitions, system prompts, and evaluation tests. It uses the microsoft-foundry skill, the same open-source skill powering GitHub Copilot for Azure. AI Toolkit installs and keeps this skill updated automatically — you never configure it.
The output is structured and production-ready. Real folder structure. Real separation of concerns. Not a single-file script.
Either way, you get a project you can version-control, test, and deploy.
Cool Features You Should Know About
Building the agent is just the beginning. Here's where AI Toolkit gets genuinely impressive.
🔧 Add Real Tools with MCP
Your agent can do more than just talk. Click Add Tool in Agent Builder to connect MCP (Model Context Protocol) servers — these give your agent real capabilities:
- Search the web
- Query a database
- Read files
- Call external APIs
- Interact with any service that has an MCP server
You control how much freedom your agent gets. Set tool approval to Auto (tool runs immediately) or Manual (you approve each call). Perfect for when you trust a read-only search tool but want oversight on anything that takes action.
You can also delete MCP servers directly from the Tool Catalog when you no longer need them — no config file editing required.
🧠 Prompt Optimizer
Not sure if your instructions are good enough? Click the Improve button in Agent Builder. The Foundry Prompt Optimizer analyzes your prompt and rewrites it to be clearer, more structured, and more effective.
It's like having a prompt engineering expert review your work — except it takes seconds.
🕸️ Agent Inspector
When your agent runs, open Agent Inspector to see what's happening under the hood. It visualizes the entire workflow in real time — which tools are called, in what order, and how the agent makes decisions.
💬 Conversations View
Agent Builder includes a Conversations tab where you can review the full history of interactions with your agent. Scroll through past conversations, compare how your agent handled different scenarios, and spot patterns in where it succeeds or struggles.
📁 Everything in One Sidebar
AI Toolkit puts everything in a single My Resources panel:
- Recent Agents — one-click access to agents you've been working on
- Local Resources — your local models, agents, and tools
- Foundry Resources — remote agents and models (if connected)
Why AI Toolkit?
There are other ways to build agents. What makes this different?
Everything is in VS Code. You don't context-switch between a web UI, a CLI, and an IDE. Discovery, building, testing, debugging, and deployment all happen in one place.
No-code and code-first aren't separate products. They're two views of the same agent. Start in Agent Builder, click View Code, and you have a full project. Or go the other way — build in code and test in the visual playground.
Copilot is deeply integrated. Not as a chatbot bolted on the side — as an actual development tool that understands agent architecture and generates production-quality scaffolding.
Wrapping Up:
📥 Install: AI Toolkit on the VS Code Marketplace
📖 Learn: AI Toolkit Documentation
Open VS Code. Ctrl+Shift+P. Type "Create Agent."
Five minutes from now, you'll have an agent running. 🚀
Microsoft
