diff --git a/apps/bubblelab-api/src/services/ai/milktea.ts b/apps/bubblelab-api/src/services/ai/milktea.ts
index f8dd1959..d2ac38bd 100644
--- a/apps/bubblelab-api/src/services/ai/milktea.ts
+++ b/apps/bubblelab-api/src/services/ai/milktea.ts
@@ -514,12 +514,18 @@ export async function runMilkTea(
     let agentOutput: MilkTeaAgentOutput;
     try {
       const responseText = result.data?.response || '';
-      agentOutput = MilkTeaAgentOutputSchema.parse(JSON.parse(responseText));
+      // Use parseJsonWithFallbacks to handle markdown code blocks (e.g., ```json ... ```)
+      const parseResult = parseJsonWithFallbacks(responseText);
+      if (!parseResult.success || !parseResult.parsed) {
+        throw new Error(parseResult.error || 'Failed to parse JSON response');
+      }
+      agentOutput = MilkTeaAgentOutputSchema.parse(parseResult.parsed);
     } catch (error) {
       console.error('[MilkTea] Failed to parse agent output:', error);
       return {
         type: 'reject',
-        message: 'Failed to parse agent response',
+        message:
+          'Failed to process your request. Please try rephrasing your question.',
         success: false,
         error: error instanceof Error ? error.message : 'Unknown parsing error',
       };
diff --git a/apps/bubblelab-api/src/services/ai/pearl.ts b/apps/bubblelab-api/src/services/ai/pearl.ts
index d50db513..8daa9447 100644
--- a/apps/bubblelab-api/src/services/ai/pearl.ts
+++ b/apps/bubblelab-api/src/services/ai/pearl.ts
@@ -588,8 +588,13 @@ export async function runPearl(
       const responseText = result.data?.response || '';
       try {
         console.log('[Pearl] Agent response:', responseText);
-        // Try to parse as object first, then as array (take first element)
-        let parsedResponse = JSON.parse(responseText);
+        // Use parseJsonWithFallbacks to handle markdown code blocks (e.g., ```json ... ```)
+        // that the AI might wrap around the JSON response
+        const parseResult = parseJsonWithFallbacks(responseText);
+        if (!parseResult.success || !parseResult.parsed) {
+          throw new Error(parseResult.error || 'Failed to parse JSON response');
+        }
+        let parsedResponse = parseResult.parsed;
         if (Array.isArray(parsedResponse) && parsedResponse.length > 0) {
           parsedResponse = parsedResponse[0];
         }
@@ -607,8 +612,7 @@ export async function runPearl(
           return {
             type: 'reject',
             message:
-              'Error parsing agent response, original response: ' +
-              responseText,
+              'Unable to understand your request. Please try rephrasing your question.',
             success: false,
           };
         }
@@ -668,11 +672,12 @@ export async function runPearl(
           continue;
         }
 
+        // Don't include raw responseText in user-facing message as it may contain markdown formatting
+        // The detailed error is logged above and available in the error field
         return {
           type: 'reject',
           message:
-            'Failed to parse agent response, original response: ' +
-            responseText,
+            'Failed to process your request. Please try rephrasing your question or try again.',
           success: false,
           error:
             error instanceof Error ? error.message : 'Unknown parsing error',