Microsoft released Visual Studio VS Code 1.140 as a stable update on September 30, 2026. The release puts a lot of emphasis on agent workflows, worktree reuse, and enterprise AI controls. Version 1.139 was more about remote execution and Dev Containers.
In 1.140, the focus shifted toward multi-folder coordination, remote delegation, the Copilot harness, and HydraFusion model coordination. The focus is not just another AI coding option. It is more about giving developers new ways to manage how agents, repos, worktrees, and models fit together.
Multi-folder sessions
A key experimental update is multi-folder sessions. In earlier multi-chat setups, chats shared the same folder and checkout. Now each chat can point to its own folder. It can also use its own repository or an isolated worktree. That means one chat can stay in repo A. Another chat in the same session can switch to repo B, or it can use a separate isolated worktree. Each chat keeps its own terminal.
It also tracks its own tasks and file changes. Pull requests are kept separate too. The agent merge state is separate for each chat. This can help when a single feature spans more than one repo. It can also help if you want to test two approaches side by side in different worktrees.VS Code documentation describes a flow where the main chat starts with peer chats. Those peer chats use fresh worktrees.
Each approach then has its own branch, its own changes, and its own pull request. The feature is experimental, and it is off by default. There is no special screen to pick a folder for a peer chat. Right now, you ask the main chat to create the peer chat.
HydraFusion for model-level coordination
VS Code 1.140 adds experimental multi-folder sessions. Chats in one session can now point to different folders. They can also target different repositories or other isolated worktrees. This is different from sharing one checkout for everything. This helps when one feature touches multiple repos.
One agent can focus on one codebase. Another agent can work on a linked part in a different place. Teams can also set up separate worktrees. That way, edits in one chat do not spill into another chat. This is still marked as experimental. It is off by default. Microsoft does not frame it as a complete swap for regular project setup.
HydraFusion Is Not Just One AI Model
HydraFusion is a new addition. It works in a different place than a single model. It is not one model you talk to directly. GitHub calls it an adaptive system. It picks which models and which steps to use based on the coding task. It tests three workflow paths. First, Single. HydraFusion uses one model to handle the whole task. Second, Cascade. A smaller or faster model tries to answer first.
Then a quality check reviews the draft. If the check is not satisfied, the work moves to a stronger model. Third, Critique. One model writes a draft. A separate critic model then checks the draft. The critic is read-only. After that, the first model updates the result one time. This is different from multi-folder session orchestration. HydraFusion chooses the workflow for each task on its own. Developers do not need to manage model switching by hand. This is a research preview. It is not a normal feature that is available to every VS Code user.
It shows up for Copilot Pro, Pro+, Business, and Enterprise customers. For Business and Enterprise, admins may need to turn on the preview. If HydraFusion does not show up, users can enable preview features
Remote delegation adds a new layer to agent work in 1.140
Instead of only running an agent on another machine, the experimental tools let that agent find other connected hosts. It can then look at what resources are available on those machines. After that, it may start a remote session. An agent can also choose a host using things like the operating system and how much memory and CPU power the host has. It can check how the remote session is doing.
Then it can send follow-up tasks or the results back to the chat where the work began. This option is turned off by default. It also needs remote hosts to be connected first. It does not copy the original workspace to the remote machine on its own.
Final Thoughts
VS Code 1.140 feels like a new focus. In the past, the big questions were about where an agent should run. Now the release leans more toward how multiple agents fit together. It also looks at how repositories, worktrees, and models should coordinate. You can see this theme in multi-folder sessions. You can also see it in setups that allow competing worktrees. There are judge-agent style comparisons too.
Remote delegation plays a role as well. The Copilot harness points the same way. HydraFusion goes a step further. It lets a system pick among model workflows on its own. Developers do not have to line up every model step by step. That said, not everything is equally ready. Some parts are still marked as experimental. HydraFusion is called out as a research preview in particular.
Even with those limits, VS Code 1.140 reads like Microsoft pushing the editor beyond AI help for code. It seems aimed at an AI agent coordination layer for building software.
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