Microsoft Open-Sources VS Code Copilot Chat Extension: A Step Towards Transparent AI-Powered Development

Microsoft open-sources VS Code Copilot Chat extension on GitHub

Microsoft has released the source code for the GitHub Copilot Chat extension for VS Code under the MIT license. This provides the community access to the full implementation of the chat-based coding assistant, including the implementation of "agent mode," what contextual data is sent to large language models (LLMs), and the design of system prompts. The GitHub repository hosting the code also details telemetry collection mechanisms, addressing long-standing questions about data transparency in AI-assisted coding tools. The move is considered as the first milestone in the tech giant's plan to integrate AI features directly into the popular open-source code editor, a roadmap that was first outlined in May 2025. Visual Studio Code, launched in 2015, is one of the most widely used code editors globally and a flagship open-source project from Microsoft. It is built on the Electron framework and supports a wide range of programming languages and extensions. GitHub Copilot Chat is an AI assistant extension for VS Code, allowing developers to chat with a GPT4-based model inside the editor to get help with coding tasks. Given the meteoric rise of LLM-assisted coding and trends like "vibe coding," the extension has reached high levels of popularity with more than 35 million installations on the VSCode Marketplace. As the VS Code team explained previously, shifts in AI tooling landscape like the rapid growth of the open-source AI ecosystem and a more level playing field for all have reduced the need for secrecy around prompt engineering and UI design. At the same time, increased targeting of development tools by malicious actors has increased the need for crowdsourcing contributions to rapidly pinpoint problems and develop effective fixes. Essentially, openness is now considered superior from a security perspective. It is important to note that the code for the original GitHub Copilot extension that powers inline code completions remains closed for now. However, Microsoft confirmed plans to transition its functionality into the open Copilot Chat extension over the coming months, consolidating all major AI features into a single open-source module. With the Copilot Chat extension now publicly available on GitHub, developers are invited to explore the code, contribute, and provide their feedback. Also available is a FAQ and complete documentation to guide developers through the architecture and development process.

Microsoft Takes Its First Step to Make VS Code an Open-Source AI Editor | AIM

Microsoft has taken its first concrete step towards making Visual Studio Code an open-source AI editor by open-sourcing the GitHub Copilot Chat extension under the MIT license. The company announced the milestone on June 30 via the VS Code team's blog, calling it a move toward transparency, extensibility, and developer-centric AI tooling. The newly open-sourced code reveals how Copilot Chat handles agent mode, context engineering, and telemetry. According to the blog post, "Everything, from our system prompts, implementation details, to the telemetry we capture, is available in all transparency." Contributions and feedback from developers are welcome on GitHub, with the long-term goal of integrating this extension into the core VS Code codebase. The announcement follows Microsoft CEO Satya Nadella's keynote at Build 2025, where he confirmed the company's commitment to AI-powered development. "This is a big deal. We will integrate these AI-powered capabilities directly into the core of VS Code, bringing them into the same open source repo that powers the world's most loved dev tool," said Nadella. Erich Gamma, creator of VS Code, reinforced the motivation by highlighting that some organisations really don't like closed-source IDEs, and for them, VS Code would be a great choice. The company will also open-source its prompt testing infrastructure to support third-party extension developers. This strategic shift comes amid growing demand for openness in developer tooling. According to Microsoft, the rapid advancement in LLMs and the convergence of best practices across AI coding UIs have reduced the need for proprietary techniques. While the GitHub Copilot extension for inline completions remains closed, Microsoft plans to bring that functionality into the open-sourced Chat extension in the coming months. The move invites comparison with AI-first VS Code forks, such as Cursor and Windsurf, both valued in billions. "Is it just me or is it kinda funny that OpenAI bought Windsurf for $3B and then Microsoft just open-sourced Copilot," quipped a user on X. Whether it's community-driven extensibility or agentic DevOps, Microsoft appears ready to reshape how developers interact with AI, on their own terms, and increasingly in the open.