diff --git a/package.json b/package.json
index 121adffe67..3382430511 100644
--- a/package.json
+++ b/package.json
@@ -4351,6 +4351,7 @@
 		"@shikijs/monaco": "^3.7.0",
 		"@types/chai": "^4.1.4",
 		"@types/glob": "7.1.3",
+		"@types/js-yaml": "^4.0.9",
 		"@types/lru-cache": "^5.1.0",
 		"@types/marked": "^0.7.2",
 		"@types/mocha": "^8.2.2",
@@ -4432,6 +4433,7 @@
 		"debounce": "^1.2.1",
 		"events": "3.2.0",
 		"fast-deep-equal": "^3.1.3",
+		"js-yaml": "^4.1.1",
 		"jsonc-parser": "^3.3.1",
 		"jszip": "^3.10.1",
 		"lru-cache": "6.0.0",
@@ -4452,4 +4454,4 @@
 		"string_decoder": "^1.3.0"
 	},
 	"license": "MIT"
-}
\ No newline at end of file
+}
diff --git a/src/@types/vscode.proposed.chatParticipantAdditions.d.ts b/src/@types/vscode.proposed.chatParticipantAdditions.d.ts
index 71520fa1ec..aa7001a3d2 100644
--- a/src/@types/vscode.proposed.chatParticipantAdditions.d.ts
+++ b/src/@types/vscode.proposed.chatParticipantAdditions.d.ts
@@ -105,6 +105,7 @@ declare module 'vscode' {
 		isComplete?: boolean;
 		toolSpecificData?: ChatTerminalToolInvocationData;
 		fromSubAgent?: boolean;
+		presentation?: 'hidden' | 'hiddenAfterComplete' | undefined;
 
 		constructor(toolName: string, toolCallId: string, isError?: boolean);
 	}
diff --git a/src/github/folderRepositoryManager.ts b/src/github/folderRepositoryManager.ts
index 9dd9002c84..b32a89272f 100644
--- a/src/github/folderRepositoryManager.ts
+++ b/src/github/folderRepositoryManager.ts
@@ -1346,10 +1346,13 @@ export class FolderRepositoryManager extends Disposable {
 	}
 
 	async getIssueTemplates(): Promise<vscode.Uri[]> {
-		const pattern = '{docs,.github}/ISSUE_TEMPLATE/*.md';
-		return vscode.workspace.findFiles(
-			new vscode.RelativePattern(this._repository.rootUri, pattern), null
-		);
+		const mdPattern = '{docs,.github}/ISSUE_TEMPLATE/*.md';
+		const ymlPattern = '{docs,.github}/ISSUE_TEMPLATE/*.yml';
+		const [mdTemplates, ymlTemplates] = await Promise.all([
+			vscode.workspace.findFiles(new vscode.RelativePattern(this._repository.rootUri, mdPattern), null),
+			vscode.workspace.findFiles(new vscode.RelativePattern(this._repository.rootUri, ymlPattern), null)
+		]);
+		return [...mdTemplates, ...ymlTemplates];
 	}
 
 	async getPullRequestTemplateBody(owner: string): Promise<string | undefined> {
diff --git a/src/issues/issueFeatureRegistrar.ts b/src/issues/issueFeatureRegistrar.ts
index a4f253a57d..e3cc9dfec1 100644
--- a/src/issues/issueFeatureRegistrar.ts
+++ b/src/issues/issueFeatureRegistrar.ts
@@ -4,6 +4,7 @@
  *--------------------------------------------------------------------------------------------*/
 
 import { basename } from 'path';
+import * as yaml from 'js-yaml';
 import * as vscode from 'vscode';
 import { CurrentIssue } from './currentIssue';
 import { IssueCompletionProvider } from './issueCompletionProvider';
@@ -56,6 +57,7 @@ import {
 	PermalinkInfo,
 	pushAndCreatePR,
 	USER_EXPRESSION,
+	YamlIssueTemplate,
 } from './util';
 import { truncate } from '../common/utils';
 import { OctokitCommon } from '../github/common';
@@ -1250,6 +1252,19 @@ ${options?.body ?? ''}\n
 	}
 
 	private getDataFromTemplate(template: string): IssueTemplate {
+		// Try to parse as YAML first (YAML templates have a different structure)
+		try {
+			const parsed = yaml.load(template);
+			// Check if it looks like a YAML issue template (has name and body fields)
+			if (parsed && typeof parsed === 'object' && (parsed as YamlIssueTemplate).name && (parsed as YamlIssueTemplate).body) {
+				// This is a YAML template
+				return this.parseYamlTemplate(parsed as YamlIssueTemplate);
+			}
+		} catch (e) {
+			// Not a valid YAML, continue to Markdown parsing
+		}
+
+		// Parse as Markdown frontmatter template
 		const title = template.match(/title:\s*(.*)/)?.[1]?.replace(/^["']|["']$/g, '');
 		const name = template.match(/name:\s*(.*)/)?.[1]?.replace(/^["']|["']$/g, '');
 		const about = template.match(/about:\s*(.*)/)?.[1]?.replace(/^["']|["']$/g, '');
@@ -1257,6 +1272,58 @@ ${options?.body ?? ''}\n
 		return { title, name, about, body };
 	}
 
+	private parseYamlTemplate(parsed: YamlIssueTemplate): IssueTemplate {
+		const name = parsed.name;
+		const about = parsed.description || parsed.about;
+		const title = parsed.title;
+
+		// Convert YAML body fields to markdown
+		let body = '';
+		if (parsed.body && Array.isArray(parsed.body)) {
+			for (const field of parsed.body) {
+				if (field.type === 'markdown' && field.attributes?.value) {
+					body += field.attributes.value + '\n\n';
+				} else if (field.type === 'textarea' && field.attributes?.label) {
+					body += `## ${field.attributes.label}\n\n`;
+					if (field.attributes.description) {
+						body += `${field.attributes.description}\n\n`;
+					}
+					if (field.attributes.placeholder) {
+						body += `${field.attributes.placeholder}\n\n`;
+					} else if (field.attributes.value) {
+						body += `${field.attributes.value}\n\n`;
+					}
+				} else if (field.type === 'input' && field.attributes?.label) {
+					body += `## ${field.attributes.label}\n\n`;
+					if (field.attributes.description) {
+						body += `${field.attributes.description}\n\n`;
+					}
+					if (field.attributes.placeholder) {
+						body += `${field.attributes.placeholder}\n\n`;
+					}
+				} else if (field.type === 'dropdown' && field.attributes?.label) {
+					body += `## ${field.attributes.label}\n\n`;
+					if (field.attributes.description) {
+						body += `${field.attributes.description}\n\n`;
+					}
+					if (field.attributes.options && Array.isArray(field.attributes.options)) {
+						body += field.attributes.options.map((opt: string | { label?: string }) => typeof opt === 'string' ? `- ${opt}` : `- ${opt.label || ''}`).join('\n') + '\n\n';
+					}
+				} else if (field.type === 'checkboxes' && field.attributes?.label) {
+					body += `## ${field.attributes.label}\n\n`;
+					if (field.attributes.description) {
+						body += `${field.attributes.description}\n\n`;
+					}
+					if (field.attributes.options && Array.isArray(field.attributes.options)) {
+						body += field.attributes.options.map((opt: { label?: string } | string) => `- [ ] ${typeof opt === 'string' ? opt : opt.label || ''}`).join('\n') + '\n\n';
+					}
+				}
+			}
+		}
+
+		return { title, name, about, body: body.trim() || undefined };
+	}
+
 	private async doCreateIssue(
 		document: vscode.TextDocument | undefined,
 		newIssue: NewIssue | undefined,
diff --git a/src/issues/util.ts b/src/issues/util.ts
index 87a4e7e382..39a82e5709 100644
--- a/src/issues/util.ts
+++ b/src/issues/util.ts
@@ -94,6 +94,31 @@ export interface IssueTemplate {
 	body: string | undefined
 }
 
+export interface YamlIssueTemplate {
+	name?: string;
+	description?: string;
+	about?: string;
+	title?: string;
+	labels?: string[];
+	assignees?: string[];
+	body?: YamlTemplateField[];
+}
+
+export interface YamlTemplateField {
+	type: 'markdown' | 'textarea' | 'input' | 'dropdown' | 'checkboxes';
+	id?: string;
+	attributes?: {
+		label?: string;
+		description?: string;
+		placeholder?: string;
+		value?: string;
+		options?: (string | { label?: string; required?: boolean })[];
+	};
+	validations?: {
+		required?: boolean;
+	};
+}
+
 const HEAD = 'HEAD';
 const UPSTREAM = 1;
 const UPS = 2;
diff --git a/yarn.lock b/yarn.lock
index c69c2b7b0f..bfcc228559 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -885,6 +885,11 @@
     "@types/istanbul-lib-coverage" "*"
     "@types/istanbul-lib-report" "*"
 
+"@types/js-yaml@^4.0.9":
+  version "4.0.9"
+  resolved "https://registry.yarnpkg.com/@types/js-yaml/-/js-yaml-4.0.9.tgz#cd82382c4f902fed9691a2ed79ec68c5898af4c2"
+  integrity sha512-k4MGaQl5TGo/iipqb2UDG2UwjXziSWkh0uysQelTlJpX1qGlpUZYm8PnO4DxG1qBomtJUdYJ6qR6xdIah10JLg==
+
 "@types/json-schema@^7.0.15":
   version "7.0.15"
   resolved "https://registry.yarnpkg.com/@types/json-schema/-/json-schema-7.0.15.tgz#596a1747233694d50f6ad8a7869fcb6f56cf5841"
@@ -4760,6 +4765,13 @@ js-yaml@4.1.0, js-yaml@^4.1.0:
   dependencies:
     argparse "^2.0.1"
 
+js-yaml@^4.1.1:
+  version "4.1.1"
+  resolved "https://registry.yarnpkg.com/js-yaml/-/js-yaml-4.1.1.tgz#854c292467705b699476e1a2decc0c8a3458806b"
+  integrity sha512-qQKT4zQxXl8lLwBtHMWwaTcGfFOZviOJet3Oy/xmGk2gZH677CJM9EvtfdSkgWcATZhj/55JZ0rmy3myCT5lsA==
+  dependencies:
+    argparse "^2.0.1"
+
 jsdom-global@3.0.2:
   version "3.0.2"
   resolved "https://registry.yarnpkg.com/jsdom-global/-/jsdom-global-3.0.2.tgz#6bd299c13b0c4626b2da2c0393cd4385d606acb9"