diff --git a/.github/evidence/pr-1603-before-after.png b/.github/evidence/pr-1603-before-after.png
new file mode 100644
index 000000000..f36bc9650
Binary files /dev/null and b/.github/evidence/pr-1603-before-after.png differ
diff --git a/apps/code/package.json b/apps/code/package.json
index 159dab795..b77cdb6b1 100644
--- a/apps/code/package.json
+++ b/apps/code/package.json
@@ -88,6 +88,7 @@
   },
   "dependencies": {
     "@base-ui/react": "^1.3.0",
+    "@chenglou/pretext": "^0.0.5",
     "@codemirror/lang-angular": "^0.1.4",
     "@codemirror/lang-cpp": "^6.0.3",
     "@codemirror/lang-css": "^6.3.1",
diff --git a/apps/code/src/renderer/features/sessions/components/session-update/FileMentionChip.tsx b/apps/code/src/renderer/features/sessions/components/session-update/FileMentionChip.tsx
index 8d29842fe..ce7a7c4b8 100644
--- a/apps/code/src/renderer/features/sessions/components/session-update/FileMentionChip.tsx
+++ b/apps/code/src/renderer/features/sessions/components/session-update/FileMentionChip.tsx
@@ -3,13 +3,18 @@ import { usePanelLayoutStore } from "@features/panels";
 import { useCwd } from "@features/sidebar/hooks/useCwd";
 import { useTaskStore } from "@features/tasks/stores/taskStore";
 import { useWorkspace } from "@features/workspace/hooks/useWorkspace";
-import { Flex, Text } from "@radix-ui/themes";
+import { Flex, Text, Tooltip } from "@radix-ui/themes";
+import { prepare, layout } from "@chenglou/pretext";
 import { trpcClient } from "@renderer/trpc/client";
 import { handleExternalAppAction } from "@utils/handleExternalAppAction";
 import { isAbsolutePath } from "@utils/path";
-import { memo, useCallback } from "react";
+import { memo, useCallback, useMemo, useState } from "react";
 import { getFilename } from "./toolCallUtils";
 
+const FONT =
+  '12px ui-monospace, "Cascadia Code", "Source Code Pro", Menlo, Consolas, "DejaVu Sans Mono", monospace';
+const LINE_HEIGHT = 16;
+
 interface FileMentionChipProps {
   filePath: string;
 }
@@ -29,6 +34,56 @@ function toRelativePath(absolutePath: string, repoPath: string | null): string {
   return absolutePath;
 }
 
+function fitsInOneLine(text: string, maxWidth: number): boolean {
+  try {
+    const prepared = prepare(text, FONT);
+    const { lineCount } = layout(prepared, maxWidth, LINE_HEIGHT);
+    return lineCount <= 1;
+  } catch {
+    return true;
+  }
+}
+
+/**
+ * Middle-truncate a path, always breaking between slashes.
+ * Keeps first segment(s) + filename, replaces middle with "..."
+ * e.g. "a/b/c/d/file.tsx" → "a/.../d/file.tsx"
+ */
+function middleTruncatePath(
+  path: string,
+  maxWidth: number,
+): { display: string; isTruncated: boolean } {
+  if (fitsInOneLine(path, maxWidth)) {
+    return { display: path, isTruncated: false };
+  }
+
+  const parts = path.split("/");
+  const filename = parts[parts.length - 1];
+
+  // Try keeping first N segments + last M segments, with "..." between
+  // Prefer keeping more leading segments (left-to-right preference)
+  for (let totalRemove = 1; totalRemove < parts.length - 1; totalRemove++) {
+    for (
+      let keepLeading = 1;
+      keepLeading <= parts.length - totalRemove - 1;
+      keepLeading++
+    ) {
+      const candidate = [
+        ...parts.slice(0, keepLeading),
+        "...",
+        ...parts.slice(keepLeading + totalRemove),
+      ].join("/");
+
+      if (fitsInOneLine(candidate, maxWidth)) {
+        return { display: candidate, isTruncated: true };
+      }
+    }
+  }
+
+  // Last resort: just ".../filename"
+  return { display: `.../${filename}`, isTruncated: true };
+}
+
 export const FileMentionChip = memo(function FileMentionChip({
   filePath,
 }: FileMentionChipProps) {
@@ -36,14 +91,32 @@ export const FileMentionChip = memo(function FileMentionChip({
   const repoPath = useCwd(taskId ?? "");
   const workspace = useWorkspace(taskId ?? undefined);
   const openFileInSplit = usePanelLayoutStore((s) => s.openFileInSplit);
+  const [containerWidth, setContainerWidth] = useState<number | null>(null);
 
   const filename = getFilename(filePath);
   const mainRepoPath = workspace?.folderPath;
 
+  const measuredRef = useCallback((node: HTMLDivElement | null) => {
+    if (node) {
+      const available = node.parentElement?.clientWidth ?? 0;
+      // Account for icon (~16px) and gap (4px)
+      setContainerWidth(Math.max(available - 20, 60));
+    }
+  }, []);
+
+  const relativePath = toRelativePath(filePath, repoPath ?? null);
+
+  const truncated = useMemo(() => {
+    if (!containerWidth || !relativePath) {
+      return { display: relativePath || filename, isTruncated: false };
+    }
+    return middleTruncatePath(relativePath, containerWidth);
+  }, [relativePath, filename, containerWidth]);
+
   const handleClick = useCallback(() => {
     if (!taskId) return;
-    const relativePath = toRelativePath(filePath, repoPath ?? null);
-    openFileInSplit(taskId, relativePath, true);
+    const relPath = toRelativePath(filePath, repoPath ?? null);
+    openFileInSplit(taskId, relPath, true);
   }, [taskId, filePath, repoPath, openFileInSplit]);
 
   const handleContextMenu = useCallback(
@@ -76,19 +149,26 @@ export const FileMentionChip = memo(function FileMentionChip({
 
   const isClickable = !!taskId;
 
-  return (
+  const content = (
     <Flex
+      ref={measuredRef}
       align="center"
       gap="1"
       asChild
       onClick={isClickable ? handleClick : undefined}
       onContextMenu={handleContextMenu}
-      className={isClickable ? "cursor-pointer hover:underline" : ""}
+      className={`min-w-0 shrink ${isClickable ? "cursor-pointer hover:underline" : ""}`}
     >
       <Text size="1">
         <FileIcon filename={filename} size={12} />
-        <span className="font-mono">{filename}</span>
+        <span className="font-mono">{truncated.display}</span>
       </Text>
     </Flex>
   );
+
+  if (truncated.isTruncated) {
+    return <Tooltip content={relativePath}>{content}</Tooltip>;
+  }
+
+  return content;
 });
diff --git a/pnpm-lock.yaml b/pnpm-lock.yaml
index 33bbe2522..31fee2a28 100644
--- a/pnpm-lock.yaml
+++ b/pnpm-lock.yaml
@@ -43,6 +43,9 @@ importers:
       '@base-ui/react':
         specifier: ^1.3.0
         version: 1.3.0(@types/react@19.2.11)(react-dom@19.1.0(react@19.1.0))(react@19.1.0)
+      '@chenglou/pretext':
+        specifier: ^0.0.5
+        version: 0.0.5
       '@codemirror/lang-angular':
         specifier: ^0.1.4
         version: 0.1.4
@@ -1463,6 +1466,9 @@ packages:
     cpu: [x64]
     os: [win32]
 
+  '@chenglou/pretext@0.0.5':
+    resolution: {integrity: sha512-A8GZN10REdFGsyuiUgLV8jjPDDFMg5GmgxGWV0I3igxBOnzj+jgz2VMmVD7g+SFyoctfeqHFxbNatKSzVRWtRg==}
+
   '@codemirror/autocomplete@6.20.0':
     resolution: {integrity: sha512-bOwvTOIJcG5FVo5gUUupiwYh8MioPLQ4UcqbcRf7UQ98X90tCa9E1kZ3Z7tqwpZxYyOvh1YTYbmZE9RTfTp5hg==}
 
@@ -12171,6 +12177,8 @@ snapshots:
   '@biomejs/cli-win32-x64@2.2.4':
     optional: true
 
+  '@chenglou/pretext@0.0.5': {}
+
   '@codemirror/autocomplete@6.20.0':
     dependencies:
       '@codemirror/language': 6.12.2