Microsoft forked Windows Terminal into a separate AI experiment rather than force agents into the mainline app, a move the company signaled was shaped by lessons from the troubled Recall rollout.
Intelligent Terminal 0.1, announced June 2 at Build 2026, is an open-source MIT-licensed fork of Windows Terminal that bakes native AI agent integration directly into the command line. It installs as a separate app alongside the standard Terminal, which continues unchanged.
"The fork exists purely so the team can experiment with AI paradigms without risking the stability of the mainline terminal tens of millions of developers rely on daily," wrote product lead Kayla Cinnamon on the Windows Developer Blog. "We learned from the Windows Recall rollout that AI features need a careful opt-in path, not a forced update." The terminal ships with an agent status bar, a dockable agent pane, automatic error detection, and support for any Agent Client Protocol-compatible agent. GitHub Copilot CLI is the default, but users can configure local models or custom agents.
When a command fails, the terminal detects the error and loads context into the agent pane so the agent can explain the failure and suggest or auto-run fixes. The core interaction is the agent pane, described by Microsoft as "your pair-programmer in the shell", a context-aware side panel with direct access to shell output. Developers no longer need to copy errors into a browser or a separate AI session. The agent can spin up background tasks in new tabs for complex multi-step operations, keeping the active shell unblocked.
Microsoft is clear this does not signal the end of the standard Windows Terminal, which serves over 30 million monthly active users. Instead, Intelligent Terminal is a sandbox.
"Break it, fork it, PR it, ignore it, it's all valid," Cinnamon wrote. "We'll take the best ideas back into Terminal proper only when the community and our telemetry say they're ready." With this release, Microsoft is deprecating Terminal Chat in Canary. The new fork is available via the Microsoft Store, through winget install Microsoft.IntelligentTerminal, or from its GitHub repository.
It currently only supports Windows, with WSL2 agent support on the roadmap.
Intelligent Terminal sits inside a broader Build 2026 push to position Windows as an operating system for AI agents, not just an OS with AI features bolted on. Alongside the terminal fork, Microsoft announced Windows Development Skills for agentic app-building, Microsoft Execution Containers for policy-based agent sandboxing, and Aion 1.0 Plan, a 14-billion-parameter reasoning model shipping in-box on capable Windows devices.
