diff --git a/packages/types/src/__tests__/global-settings.test.ts b/packages/types/src/__tests__/global-settings.test.ts
index c2040383e8..f2b2e7e8e5 100644
--- a/packages/types/src/__tests__/global-settings.test.ts
+++ b/packages/types/src/__tests__/global-settings.test.ts
@@ -38,3 +38,16 @@ describe("alwaysDenyUnapprovedCommands global setting", () => {
 		expect(() => globalSettingsSchema.parse({ alwaysDenyUnapprovedCommands: "true" })).toThrow()
 	})
 })
+
+describe("collapseCommandOutputByDefault global setting", () => {
+	it.each([true, false, undefined])("round-trips %s through the export/import schema", (value) => {
+		const settings = globalSettingsSchema.parse({ collapseCommandOutputByDefault: value })
+		expect(globalSettingsSchema.parse(JSON.parse(JSON.stringify(settings))).collapseCommandOutputByDefault).toBe(
+			value,
+		)
+		expect(GLOBAL_SETTINGS_KEYS).toContain("collapseCommandOutputByDefault")
+	})
+	it("rejects non-boolean values", () => {
+		expect(globalSettingsSchema.safeParse({ collapseCommandOutputByDefault: "true" }).success).toBe(false)
+	})
+})
diff --git a/packages/types/src/global-settings.ts b/packages/types/src/global-settings.ts
index 16e9751974..3253d1ecf3 100644
--- a/packages/types/src/global-settings.ts
+++ b/packages/types/src/global-settings.ts
@@ -49,6 +49,9 @@ export const DEFAULT_AUTO_CLOSE_ZOO_OPENED_NEW_FILES = false
  */
 export const DEFAULT_DIFF_FUZZY_THRESHOLD = 1.0
 
+// Preserve the existing terminal-dependent output display until users opt in.
+export const DEFAULT_COLLAPSE_COMMAND_OUTPUT_BY_DEFAULT = false
+
 export const DEFAULT_DESTRUCTIVE_COMMAND_GUARD_ENABLED = false
 
 /**
@@ -236,6 +239,7 @@ export const globalSettingsSchema = z.object({
 	terminalOutputPreviewSize: z.enum(["small", "medium", "large"]).optional(),
 	terminalShellIntegrationTimeout: z.number().optional(),
 	terminalShellIntegrationDisabled: z.boolean().optional(),
+	collapseCommandOutputByDefault: z.boolean().optional(),
 	terminalCommandDelay: z.number().optional(),
 	terminalPowershellCounter: z.boolean().optional(),
 	terminalZshClearEolMark: z.boolean().optional(),
diff --git a/packages/types/src/vscode-extension-host.ts b/packages/types/src/vscode-extension-host.ts
index c0e8509105..ac17ecfab4 100644
--- a/packages/types/src/vscode-extension-host.ts
+++ b/packages/types/src/vscode-extension-host.ts
@@ -299,6 +299,7 @@ export type ExtensionState = Pick<
 	| "terminalOutputPreviewSize"
 	| "terminalShellIntegrationTimeout"
 	| "terminalShellIntegrationDisabled"
+	| "collapseCommandOutputByDefault"
 	| "terminalCommandDelay"
 	| "terminalPowershellCounter"
 	| "terminalZshClearEolMark"
diff --git a/src/core/webview/ClineProvider.ts b/src/core/webview/ClineProvider.ts
index b2f0ea8386..bf1ff02f93 100644
--- a/src/core/webview/ClineProvider.ts
+++ b/src/core/webview/ClineProvider.ts
@@ -48,6 +48,7 @@ import {
 	DEFAULT_DIFF_FUZZY_THRESHOLD,
 	DEFAULT_DESTRUCTIVE_COMMAND_GUARD_ENABLED,
 	DEFAULT_ALWAYS_DENY_UNAPPROVED_COMMANDS,
+	DEFAULT_COLLAPSE_COMMAND_OUTPUT_BY_DEFAULT,
 	DEFAULT_AUTO_CLOSE_ZOO_OPENED_FILES,
 	DEFAULT_AUTO_CLOSE_ZOO_OPENED_FILES_AFTER_USER_EDITED,
 	DEFAULT_AUTO_CLOSE_ZOO_OPENED_NEW_FILES,
@@ -2625,6 +2626,7 @@ export class ClineProvider
 			diffFuzzyThreshold,
 			terminalShellIntegrationTimeout,
 			terminalShellIntegrationDisabled,
+			collapseCommandOutputByDefault,
 			terminalCommandDelay,
 			terminalPowershellCounter,
 			terminalZshClearEolMark,
@@ -2797,6 +2799,8 @@ export class ClineProvider
 			diffFuzzyThreshold: diffFuzzyThreshold ?? DEFAULT_DIFF_FUZZY_THRESHOLD,
 			terminalShellIntegrationTimeout: terminalShellIntegrationTimeout ?? Terminal.defaultShellIntegrationTimeout,
 			terminalShellIntegrationDisabled: terminalShellIntegrationDisabled ?? true,
+			collapseCommandOutputByDefault:
+				collapseCommandOutputByDefault ?? DEFAULT_COLLAPSE_COMMAND_OUTPUT_BY_DEFAULT,
 			terminalCommandDelay: terminalCommandDelay ?? 0,
 			terminalPowershellCounter: terminalPowershellCounter ?? false,
 			terminalZshClearEolMark: terminalZshClearEolMark ?? true,
@@ -3033,6 +3037,8 @@ export class ClineProvider
 			terminalShellIntegrationTimeout:
 				stateValues.terminalShellIntegrationTimeout ?? Terminal.defaultShellIntegrationTimeout,
 			terminalShellIntegrationDisabled: stateValues.terminalShellIntegrationDisabled ?? true,
+			collapseCommandOutputByDefault:
+				stateValues.collapseCommandOutputByDefault ?? DEFAULT_COLLAPSE_COMMAND_OUTPUT_BY_DEFAULT,
 			terminalCommandDelay: stateValues.terminalCommandDelay ?? 0,
 			terminalPowershellCounter: stateValues.terminalPowershellCounter ?? false,
 			terminalZshClearEolMark: stateValues.terminalZshClearEolMark ?? true,
diff --git a/src/core/webview/__tests__/ClineProvider.spec.ts b/src/core/webview/__tests__/ClineProvider.spec.ts
index 29b823cf50..a0136f2700 100644
--- a/src/core/webview/__tests__/ClineProvider.spec.ts
+++ b/src/core/webview/__tests__/ClineProvider.spec.ts
@@ -2184,6 +2184,16 @@ describe("ClineProvider", () => {
 		expect(state.writeDelayMs).toBe(DEFAULT_WRITE_DELAY_MS)
 	})
 
+	test.each([true, false, undefined])(
+		"returns the saved output collapse preference (%s) to the webview",
+		async (value) => {
+			await provider.resolveWebviewView(mockWebviewView)
+			await provider.contextProxy.setValue("collapseCommandOutputByDefault", value)
+			expect((await provider.getState()).collapseCommandOutputByDefault).toBe(value ?? false)
+			expect((await provider.getStateToPostToWebview()).collapseCommandOutputByDefault).toBe(value ?? false)
+		},
+	)
+
 	test("getState applies fallback defaults for write, diff, and terminal settings", async () => {
 		// Mock globalState.get to return undefined for the fallback settings
 		// (typed reassignment — Memento.get has no mock type, same pattern as the
diff --git a/src/core/webview/__tests__/webviewMessageHandler.spec.ts b/src/core/webview/__tests__/webviewMessageHandler.spec.ts
index c57e9f3ac3..2e8aa582c4 100644
--- a/src/core/webview/__tests__/webviewMessageHandler.spec.ts
+++ b/src/core/webview/__tests__/webviewMessageHandler.spec.ts
@@ -2368,3 +2368,20 @@ describe("webviewMessageHandler - telemetrySetting", () => {
 		expect(TelemetryService.instance.updateTelemetryState).not.toHaveBeenCalled()
 	})
 })
+
+it.each([true, false, undefined])(
+	"persists the output collapse preference (%s) without changing terminal mode",
+	async (value) => {
+		vi.clearAllMocks()
+		await webviewMessageHandler(mockClineProvider, {
+			type: "updateSettings",
+			updatedSettings: { collapseCommandOutputByDefault: value },
+		})
+		expect(mockClineProvider.contextProxy.setValue).toHaveBeenCalledWith("collapseCommandOutputByDefault", value)
+		expect(mockClineProvider.contextProxy.setValue).not.toHaveBeenCalledWith(
+			"terminalShellIntegrationDisabled",
+			expect.anything(),
+		)
+		expect(mockClineProvider.postStateToWebview).toHaveBeenCalledTimes(1)
+	},
+)
diff --git a/webview-ui/playwright/gallery/stories.tsx b/webview-ui/playwright/gallery/stories.tsx
index 17c53f40d4..9ce05c1b6d 100644
--- a/webview-ui/playwright/gallery/stories.tsx
+++ b/webview-ui/playwright/gallery/stories.tsx
@@ -12,6 +12,33 @@ const mermaidGantt = `gantt
     Ship release :active, release, after scope, 3d`
 
 export const stories: Record<string, Story> = {
+	"terminal-settings": async () => {
+		const [{ AppProviders }, { TerminalSettings }] = await Promise.all([
+			import("../AppProviders"),
+			import("@/components/settings/TerminalSettings"),
+		])
+		function Settings() {
+			const [collapsed, setCollapsed] = useState(false)
+			return (
+				<div
+					className="w-[420px] p-4 bg-vscode-editor-background text-vscode-foreground"
+					data-testid="terminal-settings-story">
+					<TerminalSettings
+						terminalShellIntegrationDisabled={true}
+						collapseCommandOutputByDefault={collapsed}
+						setCachedStateField={(field, value) => {
+							if (field === "collapseCommandOutputByDefault") setCollapsed(Boolean(value))
+						}}
+					/>
+				</div>
+			)
+		}
+		return (
+			<AppProviders>
+				<Settings />
+			</AppProviders>
+		)
+	},
 	"bedrock-output-budget": async ({ model = "anthropic.claude-opus-5" }) => {
 		const [{ AppProviders }, { ThinkingBudget }, { bedrockModels, providerIdentifiers }] = await Promise.all([
 			import("../AppProviders"),
diff --git a/webview-ui/src/components/chat/CommandExecution.tsx b/webview-ui/src/components/chat/CommandExecution.tsx
index 4884d5a8b6..68266d0959 100644
--- a/webview-ui/src/components/chat/CommandExecution.tsx
+++ b/webview-ui/src/components/chat/CommandExecution.tsx
@@ -3,7 +3,12 @@ import { useEvent } from "react-use"
 import { t } from "i18next"
 import { ChevronDown, OctagonX } from "lucide-react"
 
-import { type ExtensionMessage, type CommandExecutionStatus, commandExecutionStatusSchema } from "@roo-code/types"
+import {
+	type ExtensionMessage,
+	type CommandExecutionStatus,
+	commandExecutionStatusSchema,
+	DEFAULT_COLLAPSE_COMMAND_OUTPUT_BY_DEFAULT,
+} from "@roo-code/types"
 
 import { safeJsonParse } from "@roo/core"
 import { COMMAND_OUTPUT_STRING } from "@roo/combineCommandSequences"
@@ -42,6 +47,7 @@ interface CommandExecutionProps {
 export const CommandExecution = ({ executionId, text, icon, title, isDenied = false }: CommandExecutionProps) => {
 	const {
 		terminalShellIntegrationDisabled = false,
+		collapseCommandOutputByDefault = DEFAULT_COLLAPSE_COMMAND_OUTPUT_BY_DEFAULT,
 		destructiveCommandGuardEnabled = false,
 		allowedCommands = [],
 		deniedCommands = [],
@@ -51,9 +57,8 @@ export const CommandExecution = ({ executionId, text, icon, title, isDenied = fa
 
 	const { command, output: parsedOutput } = useMemo(() => parseCommandAndOutput(text), [text])
 
-	// If we aren't opening the VSCode terminal for this command then we default
-	// to expanding the command execution output.
-	const [isExpanded, setIsExpanded] = useState(terminalShellIntegrationDisabled)
+	// Apply the preference on mount. Manual toggles remain in control afterwards.
+	const [isExpanded, setIsExpanded] = useState(!collapseCommandOutputByDefault && terminalShellIntegrationDisabled)
 	const [streamingOutput, setStreamingOutput] = useState("")
 	// Initialize from the module-level cache so that components mounting after
 	// the "started" event was delivered still show the running indicator.
@@ -159,7 +164,9 @@ export const CommandExecution = ({ executionId, text, icon, title, isDenied = fa
 							// Not a terminal state -- signals a mid-execution retry
 							// via execa after a shell integration failure. A new
 							// "started" event will follow, so leave the cache intact.
-							setIsExpanded(true)
+							if (!collapseCommandOutputByDefault) {
+								setIsExpanded(true)
+							}
 							break
 						case "output":
 							setStreamingOutput(data.output)
@@ -171,7 +178,7 @@ export const CommandExecution = ({ executionId, text, icon, title, isDenied = fa
 				}
 			}
 		},
-		[executionId],
+		[executionId, collapseCommandOutputByDefault],
 	)
 
 	useEvent("message", onMessage)
diff --git a/webview-ui/src/components/chat/__tests__/CommandExecution.collapse.spec.tsx b/webview-ui/src/components/chat/__tests__/CommandExecution.collapse.spec.tsx
new file mode 100644
index 0000000000..e6750fbd91
--- /dev/null
+++ b/webview-ui/src/components/chat/__tests__/CommandExecution.collapse.spec.tsx
@@ -0,0 +1,73 @@
+import { act, fireEvent, screen, renderWithExtensionState } from "@/utils/test-utils"
+import { CommandExecution } from "../CommandExecution"
+
+vi.mock("@/utils/vscode", () => ({ vscode: { postMessage: vi.fn() } }))
+vi.mock("../../common/CodeBlock", () => ({
+	default: ({ source }: { source: string }) => <div>{source}</div>,
+}))
+vi.mock("../TerminalOutput", () => ({
+	TerminalOutput: ({ content }: { content: string }) => <div data-testid="terminal-output">{content}</div>,
+}))
+vi.mock("../CommandPatternSelector", () => ({ CommandPatternSelector: () => null }))
+
+const sendStatus = (data: Record<string, unknown>) => {
+	act(() =>
+		window.dispatchEvent(
+			new MessageEvent("message", {
+				data: {
+					type: "commandExecutionStatus",
+					text: JSON.stringify({ executionId: "collapse-test", ...data }),
+				},
+			}),
+		),
+	)
+}
+const setup = (collapseCommandOutputByDefault?: boolean, terminalShellIntegrationDisabled = true) =>
+	renderWithExtensionState(
+		<CommandExecution executionId="collapse-test" text="npm test\nOutput:\nInitial output" />,
+		{
+			state: { collapseCommandOutputByDefault, terminalShellIntegrationDisabled },
+		},
+	)
+const outputContainer = () => screen.getByTestId("terminal-output").parentElement
+
+describe("command output collapse preference", () => {
+	it.each([
+		[true, true, true],
+		[true, false, true],
+		[false, true, false],
+		[false, false, true],
+		[undefined, true, false],
+		[undefined, false, true],
+	])("applies preference %s with inline mode %s", (preference, inline, collapsed) => {
+		setup(preference, inline)
+		expect(outputContainer()).toHaveClass(collapsed ? "max-h-0" : "max-h-[100%]")
+	})
+	it("keeps streaming and completed output collapsed until manually expanded", () => {
+		setup(true)
+		sendStatus({ status: "started", pid: 123 })
+		sendStatus({ status: "output", output: "Streaming output" })
+		expect(screen.getByTestId("terminal-output")).toHaveTextContent("Streaming output")
+		expect(outputContainer()).toHaveClass("max-h-0")
+		fireEvent.click(screen.getAllByRole("button").at(-1)!)
+		expect(outputContainer()).not.toHaveClass("max-h-0")
+		sendStatus({ status: "output", output: "More output" })
+		sendStatus({ status: "exited", exitCode: 0 })
+		expect(outputContainer()).not.toHaveClass("max-h-0")
+		fireEvent.click(screen.getAllByRole("button").at(-1)!)
+		expect(outputContainer()).toHaveClass("max-h-0")
+	})
+
+	it("preserves a manual expansion through fallback and new output", () => {
+		setup(true, false)
+		fireEvent.click(screen.getAllByRole("button").at(-1)!)
+		sendStatus({ status: "fallback" })
+		sendStatus({ status: "output", output: "Fallback output" })
+		expect(outputContainer()).not.toHaveClass("max-h-0")
+	})
+	it.each([true, false, undefined])("respects preference %s during shell integration fallback", (preference) => {
+		setup(preference, false)
+		sendStatus({ status: "fallback" })
+		expect(outputContainer()).toHaveClass(preference ? "max-h-0" : "max-h-[100%]")
+	})
+})
diff --git a/webview-ui/src/components/settings/SettingsView.tsx b/webview-ui/src/components/settings/SettingsView.tsx
index 61ba954dd5..6100a373e1 100644
--- a/webview-ui/src/components/settings/SettingsView.tsx
+++ b/webview-ui/src/components/settings/SettingsView.tsx
@@ -188,6 +188,7 @@ const SettingsView = forwardRef<SettingsViewRef, SettingsViewProps>(({ onDone, t
 		terminalOutputPreviewSize,
 		terminalShellIntegrationTimeout,
 		terminalShellIntegrationDisabled, // Added from upstream
+		collapseCommandOutputByDefault,
 		terminalCommandDelay,
 		terminalPowershellCounter,
 		terminalZshClearEolMark,
@@ -416,6 +417,7 @@ const SettingsView = forwardRef<SettingsViewRef, SettingsViewProps>(({ onDone, t
 					diffFuzzyThreshold,
 					terminalShellIntegrationTimeout: terminalShellIntegrationTimeout ?? 30_000,
 					terminalShellIntegrationDisabled,
+					collapseCommandOutputByDefault,
 					terminalCommandDelay,
 					terminalPowershellCounter,
 					terminalZshClearEolMark,
@@ -897,6 +899,7 @@ const SettingsView = forwardRef<SettingsViewRef, SettingsViewProps>(({ onDone, t
 								terminalOutputPreviewSize={terminalOutputPreviewSize}
 								terminalShellIntegrationTimeout={terminalShellIntegrationTimeout}
 								terminalShellIntegrationDisabled={terminalShellIntegrationDisabled}
+								collapseCommandOutputByDefault={collapseCommandOutputByDefault}
 								terminalCommandDelay={terminalCommandDelay}
 								terminalPowershellCounter={terminalPowershellCounter}
 								terminalZshClearEolMark={terminalZshClearEolMark}
diff --git a/webview-ui/src/components/settings/TerminalSettings.tsx b/webview-ui/src/components/settings/TerminalSettings.tsx
index 3601f1876e..ac7decdb2c 100644
--- a/webview-ui/src/components/settings/TerminalSettings.tsx
+++ b/webview-ui/src/components/settings/TerminalSettings.tsx
@@ -7,7 +7,11 @@ import { buildDocLink } from "@src/utils/docLinks"
 import { useEvent, useMount } from "react-use"
 import { Terminal } from "lucide-react"
 
-import { type ExtensionMessage, type TerminalOutputPreviewSize } from "@roo-code/types"
+import {
+	type ExtensionMessage,
+	type TerminalOutputPreviewSize,
+	DEFAULT_COLLAPSE_COMMAND_OUTPUT_BY_DEFAULT,
+} from "@roo-code/types"
 
 import { cn } from "@/lib/utils"
 import { Select, SelectContent, SelectItem, SelectTrigger, SelectValue, Slider, Button } from "@/components/ui"
@@ -21,6 +25,7 @@ type TerminalSettingsProps = HTMLAttributes<HTMLDivElement> & {
 	terminalOutputPreviewSize?: TerminalOutputPreviewSize
 	terminalShellIntegrationTimeout?: number
 	terminalShellIntegrationDisabled?: boolean
+	collapseCommandOutputByDefault?: boolean
 	terminalCommandDelay?: number
 	terminalPowershellCounter?: boolean
 	terminalZshClearEolMark?: boolean
@@ -33,6 +38,7 @@ type TerminalSettingsProps = HTMLAttributes<HTMLDivElement> & {
 		| "terminalOutputPreviewSize"
 		| "terminalShellIntegrationTimeout"
 		| "terminalShellIntegrationDisabled"
+		| "collapseCommandOutputByDefault"
 		| "terminalCommandDelay"
 		| "terminalPowershellCounter"
 		| "terminalZshClearEolMark"
@@ -51,6 +57,7 @@ export const TerminalSettings = ({
 	terminalOutputPreviewSize,
 	terminalShellIntegrationTimeout,
 	terminalShellIntegrationDisabled,
+	collapseCommandOutputByDefault,
 	terminalCommandDelay,
 	terminalPowershellCounter,
 	terminalZshClearEolMark,
@@ -151,6 +158,26 @@ export const TerminalSettings = ({
 					</div>
 				</div>
 
+				<SearchableSetting
+					settingId="terminal-collapse-command-output"
+					section="terminal"
+					label={t("settings:terminal.collapseCommandOutput.label")}>
+					<VSCodeCheckbox
+						checked={collapseCommandOutputByDefault ?? DEFAULT_COLLAPSE_COMMAND_OUTPUT_BY_DEFAULT}
+						onChange={(event) =>
+							setCachedStateField(
+								"collapseCommandOutputByDefault",
+								(event.target as HTMLInputElement).checked,
+							)
+						}
+						data-testid="terminal-collapse-command-output-checkbox">
+						<span className="font-medium">{t("settings:terminal.collapseCommandOutput.label")}</span>
+					</VSCodeCheckbox>
+					<div className="text-vscode-descriptionForeground text-sm mt-1">
+						{t("settings:terminal.collapseCommandOutput.description")}
+					</div>
+				</SearchableSetting>
+
 				{/* Advanced Settings */}
 				<div className="flex flex-col gap-3">
 					<div className="flex flex-col gap-1">
diff --git a/webview-ui/src/components/settings/__tests__/SettingsView.spec.tsx b/webview-ui/src/components/settings/__tests__/SettingsView.spec.tsx
index 97b390f6f4..0835f255f9 100644
--- a/webview-ui/src/components/settings/__tests__/SettingsView.spec.tsx
+++ b/webview-ui/src/components/settings/__tests__/SettingsView.spec.tsx
@@ -428,6 +428,47 @@ describe("SettingsView - Sound Settings", () => {
 		)
 	})
 
+	it.each([true, false, undefined])("buffers the output collapse preference (%s) until Save", (savedValue) => {
+		renderWithExtensionState(<SettingsView onDone={vi.fn()} targetSection="terminal" />, {
+			state: { collapseCommandOutputByDefault: savedValue, terminalShellIntegrationDisabled: true },
+		})
+		const checkbox = within(screen.getByTestId("settings-content")).getByTestId(
+			"terminal-collapse-command-output-checkbox",
+		)
+		expect(checkbox).toHaveProperty("checked", savedValue ?? false)
+		vi.mocked(vscode.postMessage).mockClear()
+		fireEvent.click(checkbox)
+		expect(checkbox).toHaveProperty("checked", !(savedValue ?? false))
+		expect(vscode.postMessage).not.toHaveBeenCalledWith(expect.objectContaining({ type: "updateSettings" }))
+		fireEvent.click(screen.getByTestId("save-button"))
+		expect(vscode.postMessage).toHaveBeenCalledWith(
+			expect.objectContaining({
+				type: "updateSettings",
+				updatedSettings: expect.objectContaining({
+					collapseCommandOutputByDefault: !(savedValue ?? false),
+					terminalShellIntegrationDisabled: true,
+				}),
+			}),
+		)
+	})
+
+	it("keeps the buffered collapse preference during an unrelated live state refresh", async () => {
+		const { getSettingsContent, activateTab } = renderSettingsView({ settingsImportedAt: "initial-collapse-state" })
+		activateTab("terminal")
+		const checkbox = await within(getSettingsContent()).findByTestId("terminal-collapse-command-output-checkbox")
+		fireEvent.click(checkbox)
+		act(() =>
+			mockPostMessage({ collapseCommandOutputByDefault: false, settingsImportedAt: "initial-collapse-state" }),
+		)
+		expect(checkbox).toHaveProperty("checked", true)
+		fireEvent.click(screen.getByTestId("save-button"))
+		expect(vscode.postMessage).toHaveBeenCalledWith(
+			expect.objectContaining({
+				type: "updateSettings",
+				updatedSettings: expect.objectContaining({ collapseCommandOutputByDefault: true }),
+			}),
+		)
+	})
 	it("saves the selected chat font size and persists null on reset", () => {
 		const { activateTab, getSettingsContent } = renderSettingsView()
 
diff --git a/webview-ui/src/components/settings/__tests__/TerminalSettings.visual.tsx b/webview-ui/src/components/settings/__tests__/TerminalSettings.visual.tsx
new file mode 100644
index 0000000000..4dadb1ed26
--- /dev/null
+++ b/webview-ui/src/components/settings/__tests__/TerminalSettings.visual.tsx
@@ -0,0 +1,13 @@
+import { expect, test } from "../../../../playwright/coverage-fixture"
+import { mountedStory } from "../../../../playwright/mounted-story"
+import { applyVisualTheme, visualThemes } from "../../../../playwright/themes"
+
+for (const theme of visualThemes) {
+	test(`renders terminal settings in the VS Code ${theme.name} theme`, async ({ mount, page }) => {
+		const component = mountedStory(await mount("terminal-settings"))
+		await applyVisualTheme(page, theme)
+		const story = component.getByTestId("terminal-settings-story")
+		await expect(story.getByTestId("terminal-collapse-command-output-checkbox")).toBeVisible()
+		await expect(story).toHaveScreenshot(`terminal-settings-${theme.name}.png`)
+	})
+}
diff --git a/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-dark.png b/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-dark.png
new file mode 100644
index 0000000000..986777086d
Binary files /dev/null and b/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-dark.png differ
diff --git a/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-high-contrast-light.png b/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-high-contrast-light.png
new file mode 100644
index 0000000000..209b7b5347
Binary files /dev/null and b/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-high-contrast-light.png differ
diff --git a/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-high-contrast.png b/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-high-contrast.png
new file mode 100644
index 0000000000..a5f7237253
Binary files /dev/null and b/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-high-contrast.png differ
diff --git a/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-light.png b/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-light.png
new file mode 100644
index 0000000000..0572a168b0
Binary files /dev/null and b/webview-ui/src/components/settings/__tests__/__screenshots__/terminal-settings-light.png differ
diff --git a/webview-ui/src/i18n/locales/ca/settings.json b/webview-ui/src/i18n/locales/ca/settings.json
index f599e40db9..7afa677cee 100644
--- a/webview-ui/src/i18n/locales/ca/settings.json
+++ b/webview-ui/src/i18n/locales/ca/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Replega la sortida de les ordres per defecte",
+			"description": "Mostra replegada la sortida de les ordres, inclosa la del terminal en línia. Podeu desplegar-la manualment. Això no canvia com s’executen les ordres."
+		},
 		"basic": {
 			"label": "Configuració del terminal: Bàsica",
 			"description": "Configuració bàsica del terminal"
diff --git a/webview-ui/src/i18n/locales/de/settings.json b/webview-ui/src/i18n/locales/de/settings.json
index 845c9e575f..f564e0c67c 100644
--- a/webview-ui/src/i18n/locales/de/settings.json
+++ b/webview-ui/src/i18n/locales/de/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Befehlsausgabe standardmäßig einklappen",
+			"description": "Befehlsausgaben werden zunächst eingeklappt, auch im Inline-Terminal. Bei Bedarf manuell aufklappen. Die Befehlsausführung bleibt unverändert."
+		},
 		"basic": {
 			"label": "Terminal-Einstellungen: Grundlegend",
 			"description": "Grundlegende Terminal-Einstellungen"
diff --git a/webview-ui/src/i18n/locales/en/settings.json b/webview-ui/src/i18n/locales/en/settings.json
index de36f7ac3a..5101658c17 100644
--- a/webview-ui/src/i18n/locales/en/settings.json
+++ b/webview-ui/src/i18n/locales/en/settings.json
@@ -915,6 +915,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Collapse command output by default",
+			"description": "Start command output collapsed, including Inline Terminal output. Expand it manually when needed. This does not change how commands run."
+		},
 		"basic": {
 			"label": "Terminal Settings: Basic",
 			"description": "Basic terminal settings"
diff --git a/webview-ui/src/i18n/locales/es/settings.json b/webview-ui/src/i18n/locales/es/settings.json
index 1e6f87d553..a4b48e2b72 100644
--- a/webview-ui/src/i18n/locales/es/settings.json
+++ b/webview-ui/src/i18n/locales/es/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Contraer la salida de comandos por defecto",
+			"description": "Muestra contraída la salida de comandos, incluida la del terminal en línea. Puede expandirla manualmente. Esto no cambia cómo se ejecutan los comandos."
+		},
 		"basic": {
 			"label": "Configuración del terminal: Básica",
 			"description": "Configuración básica del terminal"
diff --git a/webview-ui/src/i18n/locales/fr/settings.json b/webview-ui/src/i18n/locales/fr/settings.json
index ec6ee0f692..87d71298d0 100644
--- a/webview-ui/src/i18n/locales/fr/settings.json
+++ b/webview-ui/src/i18n/locales/fr/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Replier la sortie des commandes par défaut",
+			"description": "Replie la sortie des commandes, y compris celle du terminal intégré. Dépliez-la manuellement si nécessaire. Cela ne change pas leur exécution."
+		},
 		"basic": {
 			"label": "Paramètres du terminal : Base",
 			"description": "Paramètres de base du terminal"
diff --git a/webview-ui/src/i18n/locales/hi/settings.json b/webview-ui/src/i18n/locales/hi/settings.json
index fa725cd2c5..112ae409e0 100644
--- a/webview-ui/src/i18n/locales/hi/settings.json
+++ b/webview-ui/src/i18n/locales/hi/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "कमांड आउटपुट डिफ़ॉल्ट रूप से संक्षिप्त करें",
+			"description": "इनलाइन टर्मिनल सहित कमांड आउटपुट को संक्षिप्त दिखाएँ। ज़रूरत पड़ने पर इसे मैन्युअल रूप से फैलाएँ। इससे कमांड चलाने का तरीका नहीं बदलता।"
+		},
 		"basic": {
 			"label": "टर्मिनल सेटिंग्स: मूल",
 			"description": "मूल टर्मिनल सेटिंग्स"
diff --git a/webview-ui/src/i18n/locales/id/settings.json b/webview-ui/src/i18n/locales/id/settings.json
index bd3e0fcc96..45bd88cbe7 100644
--- a/webview-ui/src/i18n/locales/id/settings.json
+++ b/webview-ui/src/i18n/locales/id/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Ciutkan keluaran perintah secara default",
+			"description": "Tampilkan keluaran perintah dalam keadaan diciutkan, termasuk terminal inline. Perluas secara manual bila diperlukan. Cara perintah dijalankan tidak berubah."
+		},
 		"basic": {
 			"label": "Pengaturan Terminal: Dasar",
 			"description": "Pengaturan terminal dasar"
diff --git a/webview-ui/src/i18n/locales/it/settings.json b/webview-ui/src/i18n/locales/it/settings.json
index 2b604e720f..e0e85cbbe5 100644
--- a/webview-ui/src/i18n/locales/it/settings.json
+++ b/webview-ui/src/i18n/locales/it/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Comprimi l’output dei comandi per impostazione predefinita",
+			"description": "Mostra compresso l’output dei comandi, incluso quello del terminale inline. Espandilo manualmente quando necessario. L’esecuzione dei comandi non cambia."
+		},
 		"basic": {
 			"label": "Impostazioni terminale: Base",
 			"description": "Impostazioni base del terminale"
diff --git a/webview-ui/src/i18n/locales/ja/settings.json b/webview-ui/src/i18n/locales/ja/settings.json
index 2ca3ef0396..df104d1cd1 100644
--- a/webview-ui/src/i18n/locales/ja/settings.json
+++ b/webview-ui/src/i18n/locales/ja/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "コマンド出力をデフォルトで折りたたむ",
+			"description": "インラインターミナルを含むコマンド出力を折りたたんで表示します。必要に応じて手動で展開できます。コマンドの実行方法は変わりません。"
+		},
 		"basic": {
 			"label": "ターミナル設定：基本",
 			"description": "基本的なターミナル設定"
diff --git a/webview-ui/src/i18n/locales/ko/settings.json b/webview-ui/src/i18n/locales/ko/settings.json
index 89dcd74c40..a6d4caba5d 100644
--- a/webview-ui/src/i18n/locales/ko/settings.json
+++ b/webview-ui/src/i18n/locales/ko/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "명령 출력을 기본적으로 접기",
+			"description": "인라인 터미널을 포함한 명령 출력을 접어서 표시합니다. 필요할 때 수동으로 펼칠 수 있습니다. 명령 실행 방식은 변경되지 않습니다."
+		},
 		"basic": {
 			"label": "터미널 설정: 기본",
 			"description": "기본 터미널 설정"
diff --git a/webview-ui/src/i18n/locales/nl/settings.json b/webview-ui/src/i18n/locales/nl/settings.json
index 2eeea89e92..42b157468b 100644
--- a/webview-ui/src/i18n/locales/nl/settings.json
+++ b/webview-ui/src/i18n/locales/nl/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Opdrachtuitvoer standaard inklappen",
+			"description": "Toon opdrachtuitvoer ingeklapt, ook van de inline-terminal. Klap deze indien nodig handmatig uit. Dit verandert de uitvoering van opdrachten niet."
+		},
 		"basic": {
 			"label": "Terminalinstellingen: Basis",
 			"description": "Basis terminalinstellingen"
diff --git a/webview-ui/src/i18n/locales/pl/settings.json b/webview-ui/src/i18n/locales/pl/settings.json
index 0de3a36c4e..7f4c7ddd8f 100644
--- a/webview-ui/src/i18n/locales/pl/settings.json
+++ b/webview-ui/src/i18n/locales/pl/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Domyślnie zwijaj wyniki poleceń",
+			"description": "Wyniki poleceń, także z terminala wbudowanego, są początkowo zwinięte. Można je ręcznie rozwinąć. Nie zmienia to sposobu wykonywania poleceń."
+		},
 		"basic": {
 			"label": "Ustawienia terminala: Podstawowe",
 			"description": "Podstawowe ustawienia terminala"
diff --git a/webview-ui/src/i18n/locales/pt-BR/settings.json b/webview-ui/src/i18n/locales/pt-BR/settings.json
index 893504febe..4266970161 100644
--- a/webview-ui/src/i18n/locales/pt-BR/settings.json
+++ b/webview-ui/src/i18n/locales/pt-BR/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Recolher a saída dos comandos por padrão",
+			"description": "Mostra recolhida a saída dos comandos, incluindo a do terminal inline. Expanda manualmente quando necessário. Isso não altera a execução dos comandos."
+		},
 		"basic": {
 			"label": "Configurações do terminal: Básicas",
 			"description": "Configurações básicas do terminal"
diff --git a/webview-ui/src/i18n/locales/ru/settings.json b/webview-ui/src/i18n/locales/ru/settings.json
index 3d55ee12d3..257a780e9e 100644
--- a/webview-ui/src/i18n/locales/ru/settings.json
+++ b/webview-ui/src/i18n/locales/ru/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Сворачивать вывод команд по умолчанию",
+			"description": "Вывод команд, включая встроенный терминал, сначала свёрнут. При необходимости разверните его вручную. Способ выполнения команд не меняется."
+		},
 		"basic": {
 			"label": "Настройки терминала: Основные",
 			"description": "Основные настройки терминала"
diff --git a/webview-ui/src/i18n/locales/tr/settings.json b/webview-ui/src/i18n/locales/tr/settings.json
index 5f93ec8035..375b44f7da 100644
--- a/webview-ui/src/i18n/locales/tr/settings.json
+++ b/webview-ui/src/i18n/locales/tr/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Komut çıktısını varsayılan olarak daralt",
+			"description": "Satır içi terminal dahil komut çıktısını daraltılmış gösterir. Gerektiğinde elle genişletebilirsiniz. Komutların çalıştırılma biçimini değiştirmez."
+		},
 		"basic": {
 			"label": "Terminal Ayarları: Temel",
 			"description": "Temel terminal ayarları"
diff --git a/webview-ui/src/i18n/locales/vi/settings.json b/webview-ui/src/i18n/locales/vi/settings.json
index 5ec6e8c105..fa95d789bb 100644
--- a/webview-ui/src/i18n/locales/vi/settings.json
+++ b/webview-ui/src/i18n/locales/vi/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "Thu gọn đầu ra lệnh theo mặc định",
+			"description": "Hiển thị đầu ra lệnh ở trạng thái thu gọn, kể cả terminal nội tuyến. Mở rộng thủ công khi cần. Cách chạy lệnh không thay đổi."
+		},
 		"basic": {
 			"label": "Cài đặt Terminal: Cơ bản",
 			"description": "Cài đặt cơ bản cho terminal"
diff --git a/webview-ui/src/i18n/locales/zh-CN/settings.json b/webview-ui/src/i18n/locales/zh-CN/settings.json
index 9e0a94d908..e025fadef6 100644
--- a/webview-ui/src/i18n/locales/zh-CN/settings.json
+++ b/webview-ui/src/i18n/locales/zh-CN/settings.json
@@ -835,6 +835,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "默认折叠命令输出",
+			"description": "默认折叠命令输出，包括内联终端输出。需要时可手动展开。此设置不会改变命令执行方式。"
+		},
 		"basic": {
 			"label": "终端设置：基础",
 			"description": "基础终端设置"
diff --git a/webview-ui/src/i18n/locales/zh-TW/settings.json b/webview-ui/src/i18n/locales/zh-TW/settings.json
index c2fd65c755..966f20f40a 100644
--- a/webview-ui/src/i18n/locales/zh-TW/settings.json
+++ b/webview-ui/src/i18n/locales/zh-TW/settings.json
@@ -862,6 +862,10 @@
 		}
 	},
 	"terminal": {
+		"collapseCommandOutput": {
+			"label": "預設摺疊命令輸出",
+			"description": "預設摺疊命令輸出，包括內嵌終端機輸出。需要時可手動展開。此設定不會變更命令執行方式。"
+		},
 		"basic": {
 			"label": "終端機設定：基本",
 			"description": "基本終端機設定"