diff --git a/extensions/user-input-fold/index.test.ts b/extensions/user-input-fold/index.test.ts
new file mode 100644
index 00000000..48844996
--- /dev/null
+++ b/extensions/user-input-fold/index.test.ts
@@ -0,0 +1,250 @@
+import assert from "node:assert/strict";
+import test from "node:test";
+import { foldUserMessage, transformUserMarkdown } from "./index.ts";
+
+const MARKER = "… folded";
+
+const numberedLines = (count: number) =>
+  Array.from(
+    { length: count },
+    (_, i) => `line ${String(i + 1).padStart(2, "0")}`,
+  );
+
+const giantBlock = [
+  "```js",
+  ...Array.from({ length: 300 }, (_, i) => `console.log(${i});`),
+  "```",
+].join("\n");
+
+test("messages below both thresholds round-trip byte-identical", () => {
+  const messages = [
+    "hi",
+    "hello\n",
+    "a\r\nb",
+    "  spaced  \n\n",
+    "explanation\n```js\nfoo();\nbar();\n```\ndone",
+    "x".repeat(1200),
+    numberedLines(20).join("\n"),
+  ];
+  for (const message of messages) {
+    assert.equal(foldUserMessage(message), message);
+  }
+});
+
+test("a message at exactly the line threshold is unchanged", () => {
+  const message = numberedLines(20).join("\n");
+  assert.equal(foldUserMessage(message), message);
+});
+
+test("one line over the line threshold folds to a twelve-line preview", () => {
+  const message = numberedLines(21).join("\n");
+  const out = foldUserMessage(message);
+  assert.ok(out.startsWith("line 01"));
+  assert.ok(out.includes("line 12"));
+  assert.ok(!out.includes("line 13"));
+  assert.equal(out.split("\n").length, 13); // 12 preview lines + marker
+  assert.ok(
+    out.endsWith("… folded 9 lines · full content was sent to the model"),
+  );
+});
+
+test("a message at exactly the character threshold is unchanged", () => {
+  const message = "x".repeat(1200);
+  assert.equal(foldUserMessage(message), message);
+});
+
+test("one char over the char threshold with one line to hide is left alone", () => {
+  // Over the character threshold, but the fold would hide a single (mid-cut)
+  // line — far below the minimum-benefit gate, so it renders in full.
+  const message = "x".repeat(1201);
+  assert.equal(foldUserMessage(message), message);
+});
+
+test("long wrapped lines fold by character count, not just line count", () => {
+  // 20 lines of 61 chars: at the line threshold but 1239 chars overall.
+  const message = Array.from({ length: 20 }, () => "y".repeat(61)).join("\n");
+  const out = foldUserMessage(message);
+  assert.equal(out.split("\n").length, 13);
+  assert.ok(
+    out.endsWith("… folded 8 lines · full content was sent to the model"),
+  );
+});
+
+test("a char-heavy message with only a few foldable lines stays unchanged", () => {
+  // Like the /openpi-setup prompt: short config-recap lines plus one very
+  // long guidance line. Over the char threshold, but the fold would only
+  // hide a handful of lines the user is meant to read.
+  const shortLines = Array.from(
+    { length: 15 },
+    (_, i) => `config line ${i}: ${"c".repeat(20)}`,
+  );
+  const message = [
+    "Configure the installed OpenPI package according to this request:",
+    ...shortLines,
+    "g".repeat(700),
+  ].join("\n");
+  assert.ok(message.length > 1200);
+  assert.ok(message.split("\n").length <= 20);
+  assert.equal(foldUserMessage(message), message);
+});
+
+test("folding must hide at least 8 lines to earn its keep", () => {
+  // 19 lines of 70 chars: char-triggered (1348 chars), fold would hide 7.
+  const sevenHidden = Array.from({ length: 19 }, () => "z".repeat(70)).join(
+    "\n",
+  );
+  assert.ok(sevenHidden.length > 1200);
+  assert.equal(foldUserMessage(sevenHidden), sevenHidden);
+
+  // 20 lines of 70 chars: char-triggered (1419 chars), fold hides exactly 8.
+  const eightHidden = `${sevenHidden}\n${"z".repeat(70)}`;
+  const out = foldUserMessage(eightHidden);
+  assert.equal(out.split("\n").length, 13);
+  assert.ok(
+    out.endsWith("… folded 8 lines · full content was sent to the model"),
+  );
+});
+
+test("a single giant fenced block folds to its first content lines", () => {
+  const out = foldUserMessage(giantBlock);
+  assert.ok(out.startsWith("```js"));
+  assert.ok(out.includes("console.log(3);"));
+  assert.ok(!out.includes("console.log(4);"));
+  assert.equal(out.split("\n").length, 8); // fence + 4 lines + … + fence + marker
+  assert.ok(
+    out.endsWith("… folded 296 lines · full content was sent to the model"),
+  );
+});
+
+test("multiple fenced blocks fold per block while prose shares one budget", () => {
+  const message = [
+    "intro prose",
+    "```js",
+    ...Array.from({ length: 10 }, (_, i) => `js-${i};`),
+    "```",
+    "middle prose",
+    "```py",
+    ...Array.from({ length: 10 }, (_, i) => `py-${i}`),
+    "```",
+    "tail prose",
+  ].join("\n");
+  const out = foldUserMessage(message);
+  assert.ok(out.includes("intro prose"));
+  assert.ok(out.includes("js-3;"));
+  assert.ok(!out.includes("js-4;"));
+  assert.ok(out.includes("middle prose"));
+  assert.ok(out.includes("py-3"));
+  assert.ok(!out.includes("py-4"));
+  assert.ok(out.includes("tail prose"));
+  assert.ok(
+    out.endsWith("… folded 12 lines · full content was sent to the model"),
+  );
+});
+
+test("CRLF messages fold without losing their line endings", () => {
+  const message = Array.from(
+    { length: 21 },
+    (_, i) => `row ${String(i).padStart(2, "0")}`,
+  ).join("\r\n");
+  const out = foldUserMessage(message);
+  assert.ok(out.includes("row 00\r"));
+  assert.ok(out.includes("row 11\r"));
+  assert.ok(!out.includes("row 12"));
+  assert.ok(
+    out.endsWith("… folded 9 lines · full content was sent to the model"),
+  );
+});
+
+test("trailing newlines neither fold short messages nor pad the count", () => {
+  assert.equal(foldUserMessage("hello\n"), "hello\n");
+  assert.equal(foldUserMessage("hello\n\n"), "hello\n\n");
+  const withTrailing = `${numberedLines(21).join("\n")}\n`;
+  assert.ok(
+    foldUserMessage(withTrailing).endsWith(
+      "… folded 9 lines · full content was sent to the model",
+    ),
+  );
+});
+
+test("a fenced message under the thresholds is not folded at all", () => {
+  const message = "explanation\n```js\nfoo();\nbar();\n```\ndone";
+  assert.equal(foldUserMessage(message), message);
+});
+
+test("empty and whitespace-only messages are left alone", () => {
+  for (const message of ["", " ", "\n", "\t", "  \n  \n"]) {
+    assert.equal(foldUserMessage(message), message);
+  }
+});
+
+test("an unterminated fence folds conservatively as plain text", () => {
+  const message = [
+    "```js",
+    ...Array.from({ length: 30 }, (_, i) => `stmt ${i};`),
+  ].join("\n");
+  const out = foldUserMessage(message);
+  assert.ok(out.startsWith("```js"));
+  assert.ok(out.includes("stmt 10;"));
+  assert.ok(!out.includes("stmt 12;"));
+  assert.ok(
+    out.endsWith("… folded 19 lines · full content was sent to the model"),
+  );
+});
+
+test("many individually short code blocks share one bounded preview budget", () => {
+  const block = ["```", "a", "b", "c", "d", "```"].join("\n");
+  const message = Array.from({ length: 5 }, () => block).join("\n");
+  const out = foldUserMessage(message);
+  assert.notEqual(out, message);
+  assert.ok(out.split("\n").length <= 21);
+  assert.equal((out.match(/```/g) ?? []).length % 2, 0);
+  assert.ok(
+    out.endsWith("… folded 12 lines · full content was sent to the model"),
+  );
+});
+
+test("many truncated code blocks cannot make the folded output longer than the input", () => {
+  const block = ["```js", "a", "b", "c", "d", "e", "```"].join("\n");
+  const message = Array.from({ length: 100 }, () => block).join("\n");
+  const out = foldUserMessage(message);
+  assert.equal(message.split("\n").length, 700);
+  assert.ok(out.split("\n").length <= 21);
+  assert.ok(out.length < message.length);
+  assert.equal((out.match(/```/g) ?? []).length % 2, 0);
+  assert.ok(
+    out.endsWith("… folded 683 lines · full content was sent to the model"),
+  );
+});
+
+test("folding is pure: the input is untouched and repeat calls agree", () => {
+  const snapshot = giantBlock;
+  const first = foldUserMessage(giantBlock);
+  const second = foldUserMessage(giantBlock);
+  assert.equal(giantBlock, snapshot); // no mutation of the input
+  assert.equal(first, second); // deterministic
+  assert.notEqual(first, giantBlock); // but something was folded
+  assert.ok(first.length < giantBlock.length);
+});
+
+test("the transformer only folds finalized user messages", () => {
+  const message = numberedLines(21).join("\n");
+  assert.notEqual(
+    transformUserMarkdown(message, { messageType: "user", isStreaming: false }),
+    message,
+  );
+  const untouched = [
+    { messageType: "assistant", isStreaming: false },
+    { messageType: "assistant-thinking", isStreaming: false },
+    { messageType: "assistant", isStreaming: true },
+    { messageType: "user", isStreaming: true },
+  ];
+  for (const context of untouched) {
+    assert.equal(transformUserMarkdown(message, context), message);
+  }
+});
+
+test("the marker always states that the model received the full content", () => {
+  const out = foldUserMessage(giantBlock);
+  assert.ok(out.includes(MARKER));
+  assert.ok(out.includes("full content was sent to the model"));
+});
diff --git a/extensions/user-input-fold/index.ts b/extensions/user-input-fold/index.ts
new file mode 100644
index 00000000..3edbafa7
--- /dev/null
+++ b/extensions/user-input-fold/index.ts
@@ -0,0 +1,185 @@
+/**
+ * Fold very long user messages in the transcript display.
+ *
+ * A pasted log, stack trace, or whole file can wipe out several screens of
+ * chat. When a finalized user message exceeds the fold thresholds, the
+ * display keeps a short preview of the prose and of each fenced code block
+ * and closes with a marker line stating how much was folded.
+ *
+ * A fold that would hide nothing (or almost nothing) is skipped and the
+ * message rendered in full: hiding a handful of lines costs a marker row
+ * while saving almost no screen space, and char-heavy messages with few
+ * long lines do not shrink on screen when logical lines are removed —
+ * folding must hide at least MIN_FOLDED_LINES lines to earn its keep.
+ *
+ * This is display-only. The transformer runs through Pi's
+ * `registerMarkdownTransformer` hook, which changes only what the TUI
+ * renders: the session file and the model context keep the full message
+ * untouched, so the model always receives the complete paste. The pure
+ * `foldUserMessage` helper never mutates its input and has no side effects.
+ */
+
+import type { ExtensionAPI } from "@earendil-works/pi-coding-agent";
+
+/** Fold a user message longer than this many lines. */
+const MAX_LINES = 20;
+/** Fold a user message longer than this many characters. */
+const MAX_CHARS = 1_200;
+/** Prose lines kept when a message is folded. */
+const PROSE_PREVIEW_LINES = 12;
+/** Content lines kept per fenced code block when a message is folded. */
+const BLOCK_PREVIEW_LINES = 4;
+/** Character budget for the prose part of a folded message. */
+const PROSE_PREVIEW_CHARS = 1_200;
+/** Total rendered lines before the fold marker, across prose and code blocks. */
+const MAX_PREVIEW_LINES = 20;
+/** Only fold when at least this many lines would be hidden. */
+const MIN_FOLDED_LINES = 8;
+
+type Segment =
+  | { kind: "prose"; lines: string[] }
+  | { kind: "code"; open: string; content: string[]; close: string };
+
+const FENCE_OPEN = /^ {0,3}`{3,}/;
+const FENCE_CLOSE = /^ {0,3}`{3,}[ \t]*$/;
+
+function countLines(markdown: string) {
+  const parts = markdown.split("\n");
+  // A trailing newline ends the last line; it does not open a new one.
+  return parts.at(-1) === "" ? parts.length - 1 : parts.length;
+}
+
+function splitLines(markdown: string) {
+  const lines = markdown.split("\n");
+  if (lines.at(-1) === "") lines.pop();
+  return lines;
+}
+
+function parseSegments(lines: string[]): Segment[] {
+  const segments: Segment[] = [];
+  let prose: string[] = [];
+  let i = 0;
+  while (i < lines.length) {
+    if (!FENCE_OPEN.test(lines[i])) {
+      prose.push(lines[i]);
+      i += 1;
+      continue;
+    }
+    if (prose.length > 0) {
+      segments.push({ kind: "prose", lines: prose });
+      prose = [];
+    }
+    const open = lines[i];
+    const content: string[] = [];
+    let close: string | undefined;
+    let j = i + 1;
+    while (j < lines.length && close === undefined) {
+      if (FENCE_CLOSE.test(lines[j])) close = lines[j];
+      else content.push(lines[j]);
+      j += 1;
+    }
+    if (close === undefined) {
+      // Unterminated fence: fold the whole message conservatively as text.
+      return [{ kind: "prose", lines }];
+    }
+    segments.push({ kind: "code", open, content, close });
+    i = j;
+  }
+  if (prose.length > 0) segments.push({ kind: "prose", lines: prose });
+  return segments;
+}
+
+/**
+ * Return the Markdown Pi should render instead of a long user message.
+ * Messages at or below both thresholds — and messages whose fold would
+ * hide fewer than MIN_FOLDED_LINES lines — are returned unchanged. Pure:
+ * the input string is never modified, and the model still sees the original.
+ */
+export function foldUserMessage(markdown: string): string {
+  const totalLines = countLines(markdown);
+  if (totalLines <= MAX_LINES && markdown.length <= MAX_CHARS) return markdown;
+
+  const preview: string[] = [];
+  let proseLinesLeft = PROSE_PREVIEW_LINES;
+  let proseCharsLeft = PROSE_PREVIEW_CHARS;
+  let linesShown = 0;
+
+  for (const segment of parseSegments(splitLines(markdown))) {
+    const remainingLines = MAX_PREVIEW_LINES - preview.length;
+    if (remainingLines <= 0) break;
+    if (segment.kind === "code") {
+      if (segment.content.length === 0) {
+        if (remainingLines < 2) break;
+        preview.push(segment.open, segment.close);
+        linesShown += 2;
+        continue;
+      }
+      // A partial block needs opening/closing fences plus an ellipsis. If that
+      // cannot fit, stop before the block instead of emitting broken Markdown.
+      if (remainingLines < 3) break;
+      let shown = Math.min(
+        segment.content.length,
+        BLOCK_PREVIEW_LINES,
+        remainingLines - 2,
+      );
+      const truncated = () => shown < segment.content.length;
+      while (truncated() && shown + 3 > remainingLines) shown -= 1;
+      preview.push(segment.open, ...segment.content.slice(0, shown));
+      if (truncated()) preview.push("…");
+      preview.push(segment.close);
+      linesShown += 2 + shown;
+      continue;
+    }
+    for (const line of segment.lines) {
+      if (proseLinesLeft <= 0 || preview.length >= MAX_PREVIEW_LINES) break;
+      const cost = line.length + (preview.length > 0 ? 1 : 0);
+      if (preview.length > 0 && cost > proseCharsLeft) break;
+      if (preview.length === 0 && line.length > proseCharsLeft) {
+        // A single giant first line is the only case that cuts mid-line.
+        preview.push(`${line.slice(0, proseCharsLeft)}…`);
+        proseLinesLeft = 0;
+        proseCharsLeft = 0;
+        break;
+      }
+      preview.push(line);
+      linesShown += 1;
+      proseLinesLeft -= 1;
+      proseCharsLeft -= cost;
+    }
+  }
+
+  const foldedLines = totalLines - linesShown;
+  if (foldedLines < MIN_FOLDED_LINES) {
+    // Folding must earn its keep. Hiding fewer lines than MIN_FOLDED_LINES
+    // costs a marker row, hides content, and saves almost nothing on screen
+    // (char-heavy messages with few long lines wrap regardless), so render
+    // the message in full instead.
+    return markdown;
+  }
+  const noun = foldedLines === 1 ? "line" : "lines";
+  preview.push(
+    `… folded ${foldedLines} ${noun} · full content was sent to the model`,
+  );
+  return preview.join("\n");
+}
+
+/**
+ * The registered transformer: fold only finalized user messages and leave
+ * assistant text, thinking blocks, and streaming updates untouched.
+ */
+export function transformUserMarkdown(
+  markdown: string,
+  context: { messageType: string; isStreaming: boolean },
+): string {
+  if (context.messageType !== "user" || context.isStreaming) return markdown;
+  try {
+    return foldUserMessage(markdown);
+  } catch {
+    // Display-only: a folding bug must never break rendering.
+    return markdown;
+  }
+}
+
+export default function (pi: ExtensionAPI) {
+  pi.registerMarkdownTransformer(transformUserMarkdown);
+}