diff --git a/extensions/ai-agent/README.md b/extensions/ai-agent/README.md
index e9be2e27e747f..ac10a180fba96 100644
--- a/extensions/ai-agent/README.md
+++ b/extensions/ai-agent/README.md
@@ -7,7 +7,10 @@ A minimal built-in extension that contributes an AI activity bar icon and a side
 - Commands:
   - `AI: Open Chat Sidebar` (`aiAgent.open`) focuses the AI view container
   - `AI: Send Message` (`aiAgent.sendMessage`) posts a stubbed echo reply to the chat
+  - `AI: Select Model` (`aiAgent.selectModel`) switches between demo Grok model variants
 
 Notes
-- The chat is a simple webview view with no networking; responses are stubbed.
+- The chat is a simple webview view with no networking; responses are stubbed. When a selected model id starts with `grok`, canned responses are returned.
+- Selected model is persisted in `extensions/ai-agent/config/ai-agent.json` under `currentModel`.
+- Environment: A placeholder `GROK_API_KEY` may be configured in your environment for future work, but it is not used by this demo code.
 - Styling uses flat colors and `--ai-accent: #0aa`.
diff --git a/extensions/ai-agent/config/ai-agent.json b/extensions/ai-agent/config/ai-agent.json
new file mode 100644
index 0000000000000..b02bac3651f00
--- /dev/null
+++ b/extensions/ai-agent/config/ai-agent.json
@@ -0,0 +1,3 @@
+{
+  "currentModel": "grok-2"
+}
diff --git a/extensions/ai-agent/package.json b/extensions/ai-agent/package.json
index 678660137ebf6..b93ec55cde517 100644
--- a/extensions/ai-agent/package.json
+++ b/extensions/ai-agent/package.json
@@ -12,7 +12,8 @@
   "activationEvents": [
     "onView:aiAgent.chat",
     "onCommand:aiAgent.open",
-    "onCommand:aiAgent.sendMessage"
+    "onCommand:aiAgent.sendMessage",
+    "onCommand:aiAgent.selectModel"
   ],
   "main": "./out/extension",
   "capabilities": {
@@ -47,6 +48,11 @@
         "command": "aiAgent.sendMessage",
         "title": "AI: Send Message",
         "category": "AI"
+      },
+      {
+        "command": "aiAgent.selectModel",
+        "title": "AI: Select Model",
+        "category": "AI"
       }
     ]
   },
diff --git a/extensions/ai-agent/src/extension.ts b/extensions/ai-agent/src/extension.ts
index 6f23d9dbcd27f..4f876db29bacb 100644
--- a/extensions/ai-agent/src/extension.ts
+++ b/extensions/ai-agent/src/extension.ts
@@ -1,10 +1,14 @@
 import * as vscode from 'vscode';
+import { MODEL_LIST, MODEL_REGISTRY, DEFAULT_MODEL_ID } from './models';
 
 class AIChatViewProvider implements vscode.WebviewViewProvider {
 	public static readonly viewId = 'aiAgent.chat';
 	private _view?: vscode.WebviewView;
+	private _currentModelId: string;
 
-	constructor(private readonly _context: vscode.ExtensionContext) {}
+	constructor(private readonly _context: vscode.ExtensionContext, initialModelId: string) {
+		this._currentModelId = initialModelId || DEFAULT_MODEL_ID;
+	}
 
 	resolveWebviewView(webviewView: vscode.WebviewView): void | Thenable<void> {
 		this._view = webviewView;
@@ -22,20 +26,38 @@ class AIChatViewProvider implements vscode.WebviewViewProvider {
 			if (msg?.type === 'send' && typeof msg.text === 'string') {
 				const text: string = msg.text.trim();
 				if (!text) { return; }
-				// Stubbed response only
-				const response = `Echo: ${text}`;
-				webview.postMessage({ type: 'response', text: response });
+				if (this._currentModelId.startsWith('grok')) {
+					const canned: Record<string, string> = {
+						'grok-2': 'Grok 2 (demo): This is a canned response for screenshots.',
+						'grok-mini': 'Grok Mini (demo): Quick stubbed reply for demo.',
+					};
+					const response = canned[this._currentModelId] ?? 'Grok (demo): Stubbed response.';
+					webview.postMessage({ type: 'response', text: response });
+				} else {
+					const response = `Echo: ${text}`;
+					webview.postMessage({ type: 'response', text: response });
+				}
 			}
 		});
 	}
 
+	public setModel(id: string) {
+		this._currentModelId = id;
+		this._view?.webview.postMessage({ type: 'modelChanged', label: this._currentModelLabel });
+	}
+
 	public post(text: string) {
 		this._view?.webview.postMessage({ type: 'response', text });
 	}
 
+	private get _currentModelLabel() {
+		return MODEL_REGISTRY[this._currentModelId]?.label ?? this._currentModelId;
+	}
+
 	private _getHtmlForWebview(webview: vscode.Webview): string {
 		const nonce = getNonce();
 		const stylesUri = webview.asWebviewUri(vscode.Uri.joinPath(this._context.extensionUri, 'media', 'styles.css'));
+		const initialModelLabel = this._currentModelLabel.replace(/"/g, '\\"');
 		return /* html */ `<!DOCTYPE html>
 <html lang="en">
 <head>
@@ -46,7 +68,7 @@ class AIChatViewProvider implements vscode.WebviewViewProvider {
 	<title>AI Chat</title>
 </head>
 <body>
-	<header class="ai-header">AI Chat</header>
+	<header class="ai-header">AI Chat — <span id="modelLabel"></span></header>
 	<main class="ai-main">
 		<div id="messages" class="ai-messages" aria-live="polite"></div>
 		<div class="ai-input">
@@ -59,6 +81,8 @@ class AIChatViewProvider implements vscode.WebviewViewProvider {
 		const messages = document.getElementById('messages');
 		const input = document.getElementById('input');
 		const send = document.getElementById('send');
+		const modelLabelEl = document.getElementById('modelLabel');
+		modelLabelEl.textContent = "${initialModelLabel}";
 
 		function addMessage(text, role) {
 			const el = document.createElement('div');
@@ -89,6 +113,9 @@ class AIChatViewProvider implements vscode.WebviewViewProvider {
 			if (msg?.type === 'response') {
 				addMessage(msg.text, 'assistant');
 			}
+			if (msg?.type === 'modelChanged') {
+				modelLabelEl.textContent = msg.label || '';
+			}
 		});
 
 		addMessage('Hi! This is a stubbed demo chat.','assistant');
@@ -98,8 +125,9 @@ class AIChatViewProvider implements vscode.WebviewViewProvider {
 	}
 }
 
-export function activate(context: vscode.ExtensionContext) {
-	const provider = new AIChatViewProvider(context);
+export async function activate(context: vscode.ExtensionContext) {
+	const currentModelId = await loadCurrentModel(context);
+	const provider = new AIChatViewProvider(context, currentModelId);
 	context.subscriptions.push(
 		vscode.window.registerWebviewViewProvider(AIChatViewProvider.viewId, provider),
 		vscode.commands.registerCommand('aiAgent.open', async () => {
@@ -110,12 +138,46 @@ export function activate(context: vscode.ExtensionContext) {
 			if (value) {
 				provider.post(`Echo: ${value}`);
 			}
+		}),
+		vscode.commands.registerCommand('aiAgent.selectModel', async () => {
+			const pick = await vscode.window.showQuickPick(
+				MODEL_LIST.map(m => ({ label: m.label, description: `${m.contextTokens.toLocaleString()} tokens`, picked: m.id === currentModelId, id: m.id } as (vscode.QuickPickItem & { id: string }))),
+				{ title: 'Select AI Model' }
+			);
+			if (pick && 'id' in pick) {
+				await saveCurrentModel(context, pick.id);
+				provider.setModel(pick.id);
+			}
 		})
 	);
 }
 
 export function deactivate() {}
 
+async function loadCurrentModel(context: vscode.ExtensionContext): Promise<string> {
+	const configUri = vscode.Uri.joinPath(context.extensionUri, 'config', 'ai-agent.json');
+	try {
+		const buf = await vscode.workspace.fs.readFile(configUri);
+		const json = JSON.parse(new TextDecoder().decode(buf));
+		const id = typeof json?.currentModel === 'string' ? json.currentModel : undefined;
+		if (id && MODEL_REGISTRY[id]) {
+			return id;
+		}
+	} catch {
+		// ignore
+	}
+	await saveCurrentModel(context, DEFAULT_MODEL_ID);
+	return DEFAULT_MODEL_ID;
+}
+
+async function saveCurrentModel(context: vscode.ExtensionContext, id: string): Promise<void> {
+	const configDir = vscode.Uri.joinPath(context.extensionUri, 'config');
+	const configUri = vscode.Uri.joinPath(configDir, 'ai-agent.json');
+	try { await vscode.workspace.fs.createDirectory(configDir); } catch {}
+	const content = JSON.stringify({ currentModel: id }, null, 2);
+	await vscode.workspace.fs.writeFile(configUri, new TextEncoder().encode(content));
+}
+
 function getNonce() {
 	let text = '';
 	const possible = 'ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz0123456789';
diff --git a/extensions/ai-agent/src/models.ts b/extensions/ai-agent/src/models.ts
new file mode 100644
index 0000000000000..4eb9c36661902
--- /dev/null
+++ b/extensions/ai-agent/src/models.ts
@@ -0,0 +1,14 @@
+export interface ModelInfo {
+  id: string;
+  label: string;
+  contextTokens: number;
+}
+
+export const MODEL_REGISTRY: Record<string, ModelInfo> = {
+  'grok-2': { id: 'grok-2', label: 'Grok 2 (demo)', contextTokens: 32768 },
+  'grok-mini': { id: 'grok-mini', label: 'Grok Mini (demo)', contextTokens: 8192 },
+};
+
+export const MODEL_LIST: ModelInfo[] = Object.values(MODEL_REGISTRY);
+
+export const DEFAULT_MODEL_ID = 'grok-2';