diff --git a/packages/kilo-vscode/src/extension.ts b/packages/kilo-vscode/src/extension.ts
index e221f755d..efb8725bb 100644
--- a/packages/kilo-vscode/src/extension.ts
+++ b/packages/kilo-vscode/src/extension.ts
@@ -1,4 +1,6 @@
 import * as vscode from "vscode"
+import * as fs from "fs"
+import * as path from "path"
 import { KiloProvider } from "./KiloProvider"
 import { AgentManagerProvider } from "./AgentManagerProvider"
 import { EXTENSION_DISPLAY_NAME } from "./constants"
@@ -9,6 +11,24 @@ import { BrowserAutomationService } from "./services/browser-automation"
 export function activate(context: vscode.ExtensionContext) {
   console.log("Kilo Code extension is now active")
 
+  // kilocode_change - ensure VS Code directories exist to prevent ENOENT errors during webview hot reload
+  // VS Code 1.109+ checks for these directories during webview initialization
+  try {
+    const userConfigPath = path.join(context.globalStorageUri.fsPath, "..", "..", "..", "User")
+    fs.mkdirSync(path.join(userConfigPath, "prompts"), { recursive: true })
+
+    // Also create .github/agents in workspace roots to prevent workspace-specific ENOENT
+    const workspaceFolders = vscode.workspace.workspaceFolders
+    if (workspaceFolders) {
+      for (const folder of workspaceFolders) {
+        const agentsPath = path.join(folder.uri.fsPath, ".github", "agents")
+        fs.mkdirSync(agentsPath, { recursive: true })
+      }
+    }
+  } catch {
+    // Ignore errors (e.g., permissions, already exists)
+  }
+
   // Create shared connection service (one server for all webviews)
   const connectionService = new KiloConnectionService(context)