diff --git a/packages/core/src/core/client.ts b/packages/core/src/core/client.ts
index f8b9a7de..a16a72cc 100644
--- a/packages/core/src/core/client.ts
+++ b/packages/core/src/core/client.ts
@@ -7,14 +7,16 @@
 import {
   EmbedContentParameters,
   GenerateContentConfig,
-  Part,
   SchemaUnion,
   PartListUnion,
   Content,
   Tool,
   GenerateContentResponse,
 } from '@google/genai';
-import { getFolderStructure } from '../utils/getFolderStructure.js';
+import {
+  getDirectoryContextString,
+  getEnvironmentContext,
+} from '../utils/environmentContext.js';
 import {
   Turn,
   ServerGeminiStreamEvent,
@@ -182,112 +184,12 @@ export class GeminiClient {
 
     this.getChat().addHistory({
       role: 'user',
-      parts: [{ text: await this.getDirectoryContext() }],
+      parts: [{ text: await getDirectoryContextString(this.config) }],
     });
   }
 
-  private async getDirectoryContext(): Promise<string> {
-    const workspaceContext = this.config.getWorkspaceContext();
-    const workspaceDirectories = workspaceContext.getDirectories();
-
-    const folderStructures = await Promise.all(
-      workspaceDirectories.map((dir) =>
-        getFolderStructure(dir, {
-          fileService: this.config.getFileService(),
-        }),
-      ),
-    );
-
-    const folderStructure = folderStructures.join('\n');
-    const dirList = workspaceDirectories.map((dir) => `  - ${dir}`).join('\n');
-    const workingDirPreamble = `I'm currently working in the following directories:\n${dirList}\n Folder structures are as follows:\n${folderStructure}`;
-    return workingDirPreamble;
-  }
-
-  private async getEnvironment(): Promise<Part[]> {
-    const today = new Date().toLocaleDateString(undefined, {
-      weekday: 'long',
-      year: 'numeric',
-      month: 'long',
-      day: 'numeric',
-    });
-    const platform = process.platform;
-
-    const workspaceContext = this.config.getWorkspaceContext();
-    const workspaceDirectories = workspaceContext.getDirectories();
-
-    const folderStructures = await Promise.all(
-      workspaceDirectories.map((dir) =>
-        getFolderStructure(dir, {
-          fileService: this.config.getFileService(),
-        }),
-      ),
-    );
-
-    const folderStructure = folderStructures.join('\n');
-
-    let workingDirPreamble: string;
-    if (workspaceDirectories.length === 1) {
-      workingDirPreamble = `I'm currently working in the directory: ${workspaceDirectories[0]}`;
-    } else {
-      const dirList = workspaceDirectories
-        .map((dir) => `  - ${dir}`)
-        .join('\n');
-      workingDirPreamble = `I'm currently working in the following directories:\n${dirList}`;
-    }
-
-    const context = `
-  This is the Gemini CLI. We are setting up the context for our chat.
-  Today's date is ${today}.
-  My operating system is: ${platform}
-  ${workingDirPreamble}
-  Here is the folder structure of the current working directories:\n
-  ${folderStructure}
-          `.trim();
-
-    const initialParts: Part[] = [{ text: context }];
-    const toolRegistry = await this.config.getToolRegistry();
-
-    // Add full file context if the flag is set
-    if (this.config.getFullContext()) {
-      try {
-        const readManyFilesTool = toolRegistry.getTool('read_many_files');
-        if (readManyFilesTool) {
-          const invocation = readManyFilesTool.build({
-            paths: ['**/*'], // Read everything recursively
-            useDefaultExcludes: true, // Use default excludes
-          });
-
-          // Read all files in the target directory
-          const result = await invocation.execute(AbortSignal.timeout(30000));
-          if (result.llmContent) {
-            initialParts.push({
-              text: `\n--- Full File Context ---\n${result.llmContent}`,
-            });
-          } else {
-            console.warn(
-              'Full context requested, but read_many_files returned no content.',
-            );
-          }
-        } else {
-          console.warn(
-            'Full context requested, but read_many_files tool not found.',
-          );
-        }
-      } catch (error) {
-        // Not using reportError here as it's a startup/config phase, not a chat/generation phase error.
-        console.error('Error reading full file context:', error);
-        initialParts.push({
-          text: '\n--- Error reading full file context ---',
-        });
-      }
-    }
-
-    return initialParts;
-  }
-
   async startChat(extraHistory?: Content[]): Promise<GeminiChat> {
-    const envParts = await this.getEnvironment();
+    const envParts = await getEnvironmentContext(this.config);
     const toolRegistry = await this.config.getToolRegistry();
     const toolDeclarations = toolRegistry.getFunctionDeclarations();
     const tools: Tool[] = [{ functionDeclarations: toolDeclarations }];
diff --git a/packages/core/src/core/geminiChat.ts b/packages/core/src/core/geminiChat.ts
index 5f5b22e8..cff23d2d 100644
--- a/packages/core/src/core/geminiChat.ts
+++ b/packages/core/src/core/geminiChat.ts
@@ -242,6 +242,9 @@ export class GeminiChat {
     return null;
   }
 
+  setSystemInstruction(sysInstr: string) {
+    this.generationConfig.systemInstruction = sysInstr;
+  }
   /**
    * Sends a message to the model and returns the response.
    *
diff --git a/packages/core/src/core/subagent.test.ts b/packages/core/src/core/subagent.test.ts
new file mode 100644
index 00000000..889feb45
--- /dev/null
+++ b/packages/core/src/core/subagent.test.ts
@@ -0,0 +1,814 @@
+/**
+ * @license
+ * Copyright 2025 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { vi, describe, it, expect, beforeEach, Mock, afterEach } from 'vitest';
+import {
+  ContextState,
+  SubAgentScope,
+  SubagentTerminateMode,
+  PromptConfig,
+  ModelConfig,
+  RunConfig,
+  OutputConfig,
+  ToolConfig,
+} from './subagent.js';
+import { Config, ConfigParameters } from '../config/config.js';
+import { GeminiChat } from './geminiChat.js';
+import { createContentGenerator } from './contentGenerator.js';
+import { getEnvironmentContext } from '../utils/environmentContext.js';
+import { executeToolCall } from './nonInteractiveToolExecutor.js';
+import { ToolRegistry } from '../tools/tool-registry.js';
+import { DEFAULT_GEMINI_MODEL } from '../config/models.js';
+import {
+  Content,
+  FunctionCall,
+  FunctionDeclaration,
+  GenerateContentConfig,
+  Type,
+} from '@google/genai';
+import { ToolErrorType } from '../tools/tool-error.js';
+
+vi.mock('./geminiChat.js');
+vi.mock('./contentGenerator.js');
+vi.mock('../utils/environmentContext.js');
+vi.mock('./nonInteractiveToolExecutor.js');
+vi.mock('../ide/ide-client.js');
+
+async function createMockConfig(
+  toolRegistryMocks = {},
+): Promise<{ config: Config; toolRegistry: ToolRegistry }> {
+  const configParams: ConfigParameters = {
+    sessionId: 'test-session',
+    model: DEFAULT_GEMINI_MODEL,
+    targetDir: '.',
+    debugMode: false,
+    cwd: process.cwd(),
+  };
+  const config = new Config(configParams);
+  await config.initialize();
+  // eslint-disable-next-line @typescript-eslint/no-explicit-any
+  await config.refreshAuth('test-auth' as any);
+
+  // Mock ToolRegistry
+  const mockToolRegistry = {
+    getTool: vi.fn(),
+    getFunctionDeclarationsFiltered: vi.fn().mockReturnValue([]),
+    ...toolRegistryMocks,
+  } as unknown as ToolRegistry;
+
+  vi.spyOn(config, 'getToolRegistry').mockResolvedValue(mockToolRegistry);
+  return { config, toolRegistry: mockToolRegistry };
+}
+
+// Helper to simulate LLM responses (sequence of tool calls over multiple turns)
+const createMockStream = (
+  functionCallsList: Array<FunctionCall[] | 'stop'>,
+) => {
+  let index = 0;
+  return vi.fn().mockImplementation(() => {
+    const response = functionCallsList[index] || 'stop';
+    index++;
+    return (async function* () {
+      if (response === 'stop') {
+        // When stopping, the model might return text, but the subagent logic primarily cares about the absence of functionCalls.
+        yield { text: 'Done.' };
+      } else if (response.length > 0) {
+        yield { functionCalls: response };
+      } else {
+        yield { text: 'Done.' }; // Handle empty array also as stop
+      }
+    })();
+  });
+};
+
+describe('subagent.ts', () => {
+  describe('ContextState', () => {
+    it('should set and get values correctly', () => {
+      const context = new ContextState();
+      context.set('key1', 'value1');
+      context.set('key2', 123);
+      expect(context.get('key1')).toBe('value1');
+      expect(context.get('key2')).toBe(123);
+      expect(context.get_keys()).toEqual(['key1', 'key2']);
+    });
+
+    it('should return undefined for missing keys', () => {
+      const context = new ContextState();
+      expect(context.get('missing')).toBeUndefined();
+    });
+  });
+
+  describe('SubAgentScope', () => {
+    let mockSendMessageStream: Mock;
+
+    const defaultModelConfig: ModelConfig = {
+      model: 'gemini-1.5-flash-latest',
+      temp: 0.5, // Specific temp to test override
+      top_p: 1,
+    };
+
+    const defaultRunConfig: RunConfig = {
+      max_time_minutes: 5,
+      max_turns: 10,
+    };
+
+    beforeEach(async () => {
+      vi.clearAllMocks();
+
+      vi.mocked(getEnvironmentContext).mockResolvedValue([
+        { text: 'Env Context' },
+      ]);
+      vi.mocked(createContentGenerator).mockResolvedValue({
+        getGenerativeModel: vi.fn(),
+        // eslint-disable-next-line @typescript-eslint/no-explicit-any
+      } as any);
+
+      mockSendMessageStream = vi.fn();
+      // We mock the implementation of the constructor.
+      vi.mocked(GeminiChat).mockImplementation(
+        () =>
+          ({
+            sendMessageStream: mockSendMessageStream,
+          }) as unknown as GeminiChat,
+      );
+    });
+
+    afterEach(() => {
+      vi.restoreAllMocks();
+    });
+
+    // Helper to safely access generationConfig from mock calls
+    const getGenerationConfigFromMock = (
+      callIndex = 0,
+    ): GenerateContentConfig & { systemInstruction?: string | Content } => {
+      const callArgs = vi.mocked(GeminiChat).mock.calls[callIndex];
+      const generationConfig = callArgs?.[2];
+      // Ensure it's defined before proceeding
+      expect(generationConfig).toBeDefined();
+      if (!generationConfig) throw new Error('generationConfig is undefined');
+      return generationConfig as GenerateContentConfig & {
+        systemInstruction?: string | Content;
+      };
+    };
+
+    describe('create (Tool Validation)', () => {
+      const promptConfig: PromptConfig = { systemPrompt: 'Test prompt' };
+
+      it('should create a SubAgentScope successfully with minimal config', async () => {
+        const { config } = await createMockConfig();
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+        );
+        expect(scope).toBeInstanceOf(SubAgentScope);
+      });
+
+      it('should throw an error if a tool requires confirmation', async () => {
+        const mockTool = {
+          schema: { parameters: { type: Type.OBJECT, properties: {} } },
+          build: vi.fn().mockReturnValue({
+            shouldConfirmExecute: vi.fn().mockResolvedValue({
+              type: 'exec',
+              title: 'Confirm',
+              command: 'rm -rf /',
+            }),
+          }),
+        };
+
+        const { config } = await createMockConfig({
+          // eslint-disable-next-line @typescript-eslint/no-explicit-any
+          getTool: vi.fn().mockReturnValue(mockTool as any),
+        });
+
+        const toolConfig: ToolConfig = { tools: ['risky_tool'] };
+
+        await expect(
+          SubAgentScope.create(
+            'test-agent',
+            config,
+            promptConfig,
+            defaultModelConfig,
+            defaultRunConfig,
+            toolConfig,
+          ),
+        ).rejects.toThrow(
+          'Tool "risky_tool" requires user confirmation and cannot be used in a non-interactive subagent.',
+        );
+      });
+
+      it('should succeed if tools do not require confirmation', async () => {
+        const mockTool = {
+          schema: { parameters: { type: Type.OBJECT, properties: {} } },
+          build: vi.fn().mockReturnValue({
+            shouldConfirmExecute: vi.fn().mockResolvedValue(null),
+          }),
+        };
+        const { config } = await createMockConfig({
+          // eslint-disable-next-line @typescript-eslint/no-explicit-any
+          getTool: vi.fn().mockReturnValue(mockTool as any),
+        });
+
+        const toolConfig: ToolConfig = { tools: ['safe_tool'] };
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+          toolConfig,
+        );
+        expect(scope).toBeInstanceOf(SubAgentScope);
+      });
+
+      it('should skip interactivity check and warn for tools with required parameters', async () => {
+        const consoleWarnSpy = vi
+          .spyOn(console, 'warn')
+          .mockImplementation(() => {});
+
+        const mockToolWithParams = {
+          schema: {
+            parameters: {
+              type: Type.OBJECT,
+              properties: {
+                path: { type: Type.STRING },
+              },
+              required: ['path'],
+            },
+          },
+          // build should not be called, but we mock it to be safe
+          build: vi.fn(),
+        };
+
+        const { config } = await createMockConfig({
+          getTool: vi.fn().mockReturnValue(mockToolWithParams),
+        });
+
+        const toolConfig: ToolConfig = { tools: ['tool_with_params'] };
+
+        // The creation should succeed without throwing
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+          toolConfig,
+        );
+
+        expect(scope).toBeInstanceOf(SubAgentScope);
+
+        // Check that the warning was logged
+        expect(consoleWarnSpy).toHaveBeenCalledWith(
+          'Cannot check tool "tool_with_params" for interactivity because it requires parameters. Assuming it is safe for non-interactive use.',
+        );
+
+        // Ensure build was never called
+        expect(mockToolWithParams.build).not.toHaveBeenCalled();
+
+        consoleWarnSpy.mockRestore();
+      });
+    });
+
+    describe('runNonInteractive - Initialization and Prompting', () => {
+      it('should correctly template the system prompt and initialize GeminiChat', async () => {
+        const { config } = await createMockConfig();
+
+        vi.mocked(GeminiChat).mockClear();
+
+        const promptConfig: PromptConfig = {
+          systemPrompt: 'Hello ${name}, your task is ${task}.',
+        };
+        const context = new ContextState();
+        context.set('name', 'Agent');
+        context.set('task', 'Testing');
+
+        // Model stops immediately
+        mockSendMessageStream.mockImplementation(createMockStream(['stop']));
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+        );
+
+        await scope.runNonInteractive(context);
+
+        // Check if GeminiChat was initialized correctly by the subagent
+        expect(GeminiChat).toHaveBeenCalledTimes(1);
+        const callArgs = vi.mocked(GeminiChat).mock.calls[0];
+
+        // Check Generation Config
+        const generationConfig = getGenerationConfigFromMock();
+
+        // Check temperature override
+        expect(generationConfig.temperature).toBe(defaultModelConfig.temp);
+        expect(generationConfig.systemInstruction).toContain(
+          'Hello Agent, your task is Testing.',
+        );
+        expect(generationConfig.systemInstruction).toContain(
+          'Important Rules:',
+        );
+
+        // Check History (should include environment context)
+        const history = callArgs[3];
+        expect(history).toEqual([
+          { role: 'user', parts: [{ text: 'Env Context' }] },
+          {
+            role: 'model',
+            parts: [{ text: 'Got it. Thanks for the context!' }],
+          },
+        ]);
+      });
+
+      it('should include output instructions in the system prompt when outputs are defined', async () => {
+        const { config } = await createMockConfig();
+        vi.mocked(GeminiChat).mockClear();
+
+        const promptConfig: PromptConfig = { systemPrompt: 'Do the task.' };
+        const outputConfig: OutputConfig = {
+          outputs: {
+            result1: 'The first result',
+          },
+        };
+        const context = new ContextState();
+
+        // Model stops immediately
+        mockSendMessageStream.mockImplementation(createMockStream(['stop']));
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+          undefined, // ToolConfig
+          outputConfig,
+        );
+
+        await scope.runNonInteractive(context);
+
+        const generationConfig = getGenerationConfigFromMock();
+        const systemInstruction = generationConfig.systemInstruction as string;
+
+        expect(systemInstruction).toContain('Do the task.');
+        expect(systemInstruction).toContain(
+          'you MUST emit the required output variables',
+        );
+        expect(systemInstruction).toContain(
+          "Use 'self.emitvalue' to emit the 'result1' key",
+        );
+      });
+
+      it('should use initialMessages instead of systemPrompt if provided', async () => {
+        const { config } = await createMockConfig();
+        vi.mocked(GeminiChat).mockClear();
+
+        const initialMessages: Content[] = [
+          { role: 'user', parts: [{ text: 'Hi' }] },
+        ];
+        const promptConfig: PromptConfig = { initialMessages };
+        const context = new ContextState();
+
+        // Model stops immediately
+        mockSendMessageStream.mockImplementation(createMockStream(['stop']));
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+        );
+
+        await scope.runNonInteractive(context);
+
+        const callArgs = vi.mocked(GeminiChat).mock.calls[0];
+        const generationConfig = getGenerationConfigFromMock();
+        const history = callArgs[3];
+
+        expect(generationConfig.systemInstruction).toBeUndefined();
+        expect(history).toEqual([
+          { role: 'user', parts: [{ text: 'Env Context' }] },
+          {
+            role: 'model',
+            parts: [{ text: 'Got it. Thanks for the context!' }],
+          },
+          ...initialMessages,
+        ]);
+      });
+
+      it('should throw an error if template variables are missing', async () => {
+        const { config } = await createMockConfig();
+        const promptConfig: PromptConfig = {
+          systemPrompt: 'Hello ${name}, you are missing ${missing}.',
+        };
+        const context = new ContextState();
+        context.set('name', 'Agent');
+        // 'missing' is not set
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+        );
+
+        // The error from templating causes the runNonInteractive to reject and the terminate_reason to be ERROR.
+        await expect(scope.runNonInteractive(context)).rejects.toThrow(
+          'Missing context values for the following keys: missing',
+        );
+        expect(scope.output.terminate_reason).toBe(SubagentTerminateMode.ERROR);
+      });
+
+      it('should validate that systemPrompt and initialMessages are mutually exclusive', async () => {
+        const { config } = await createMockConfig();
+        const promptConfig: PromptConfig = {
+          systemPrompt: 'System',
+          initialMessages: [{ role: 'user', parts: [{ text: 'Hi' }] }],
+        };
+        const context = new ContextState();
+
+        const agent = await SubAgentScope.create(
+          'TestAgent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+        );
+
+        await expect(agent.runNonInteractive(context)).rejects.toThrow(
+          'PromptConfig cannot have both `systemPrompt` and `initialMessages` defined.',
+        );
+        expect(agent.output.terminate_reason).toBe(SubagentTerminateMode.ERROR);
+      });
+    });
+
+    describe('runNonInteractive - Execution and Tool Use', () => {
+      const promptConfig: PromptConfig = { systemPrompt: 'Execute task.' };
+
+      it('should terminate with GOAL if no outputs are expected and model stops', async () => {
+        const { config } = await createMockConfig();
+        // Model stops immediately
+        mockSendMessageStream.mockImplementation(createMockStream(['stop']));
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+          // No ToolConfig, No OutputConfig
+        );
+
+        await scope.runNonInteractive(new ContextState());
+
+        expect(scope.output.terminate_reason).toBe(SubagentTerminateMode.GOAL);
+        expect(scope.output.emitted_vars).toEqual({});
+        expect(mockSendMessageStream).toHaveBeenCalledTimes(1);
+        // Check the initial message
+        expect(mockSendMessageStream.mock.calls[0][0].message).toEqual([
+          { text: 'Get Started!' },
+        ]);
+      });
+
+      it('should handle self.emitvalue and terminate with GOAL when outputs are met', async () => {
+        const { config } = await createMockConfig();
+        const outputConfig: OutputConfig = {
+          outputs: { result: 'The final result' },
+        };
+
+        // Turn 1: Model responds with emitvalue call
+        // Turn 2: Model stops after receiving the tool response
+        mockSendMessageStream.mockImplementation(
+          createMockStream([
+            [
+              {
+                name: 'self.emitvalue',
+                args: {
+                  emit_variable_name: 'result',
+                  emit_variable_value: 'Success!',
+                },
+              },
+            ],
+            'stop',
+          ]),
+        );
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+          undefined,
+          outputConfig,
+        );
+
+        await scope.runNonInteractive(new ContextState());
+
+        expect(scope.output.terminate_reason).toBe(SubagentTerminateMode.GOAL);
+        expect(scope.output.emitted_vars).toEqual({ result: 'Success!' });
+        expect(mockSendMessageStream).toHaveBeenCalledTimes(2);
+
+        // Check the tool response sent back in the second call
+        const secondCallArgs = mockSendMessageStream.mock.calls[1][0];
+        expect(secondCallArgs.message).toEqual([
+          { text: 'Emitted variable result successfully' },
+        ]);
+      });
+
+      it('should execute external tools and provide the response to the model', async () => {
+        const listFilesToolDef: FunctionDeclaration = {
+          name: 'list_files',
+          description: 'Lists files',
+          parameters: { type: Type.OBJECT, properties: {} },
+        };
+
+        const { config, toolRegistry } = await createMockConfig({
+          getFunctionDeclarationsFiltered: vi
+            .fn()
+            .mockReturnValue([listFilesToolDef]),
+        });
+        const toolConfig: ToolConfig = { tools: ['list_files'] };
+
+        // Turn 1: Model calls the external tool
+        // Turn 2: Model stops
+        mockSendMessageStream.mockImplementation(
+          createMockStream([
+            [
+              {
+                id: 'call_1',
+                name: 'list_files',
+                args: { path: '.' },
+              },
+            ],
+            'stop',
+          ]),
+        );
+
+        // Mock the tool execution result
+        vi.mocked(executeToolCall).mockResolvedValue({
+          callId: 'call_1',
+          responseParts: 'file1.txt\nfile2.ts',
+          resultDisplay: 'Listed 2 files',
+          error: undefined,
+          errorType: undefined, // Or ToolErrorType.NONE if available and appropriate
+        });
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+          toolConfig,
+        );
+
+        await scope.runNonInteractive(new ContextState());
+
+        // Check tool execution
+        expect(executeToolCall).toHaveBeenCalledWith(
+          config,
+          expect.objectContaining({ name: 'list_files', args: { path: '.' } }),
+          toolRegistry,
+          expect.any(AbortSignal),
+        );
+
+        // Check the response sent back to the model
+        const secondCallArgs = mockSendMessageStream.mock.calls[1][0];
+        expect(secondCallArgs.message).toEqual([
+          { text: 'file1.txt\nfile2.ts' },
+        ]);
+
+        expect(scope.output.terminate_reason).toBe(SubagentTerminateMode.GOAL);
+      });
+
+      it('should provide specific tool error responses to the model', async () => {
+        const { config } = await createMockConfig();
+        const toolConfig: ToolConfig = { tools: ['failing_tool'] };
+
+        // Turn 1: Model calls the failing tool
+        // Turn 2: Model stops after receiving the error response
+        mockSendMessageStream.mockImplementation(
+          createMockStream([
+            [
+              {
+                id: 'call_fail',
+                name: 'failing_tool',
+                args: {},
+              },
+            ],
+            'stop',
+          ]),
+        );
+
+        // Mock the tool execution failure.
+        vi.mocked(executeToolCall).mockResolvedValue({
+          callId: 'call_fail',
+          responseParts: 'ERROR: Tool failed catastrophically', // This should be sent to the model
+          resultDisplay: 'Tool failed catastrophically',
+          error: new Error('Failure'),
+          errorType: ToolErrorType.INVALID_TOOL_PARAMS,
+        });
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+          toolConfig,
+        );
+
+        await scope.runNonInteractive(new ContextState());
+
+        // The agent should send the specific error message from responseParts.
+        const secondCallArgs = mockSendMessageStream.mock.calls[1][0];
+
+        expect(secondCallArgs.message).toEqual([
+          {
+            text: 'ERROR: Tool failed catastrophically',
+          },
+        ]);
+      });
+
+      it('should nudge the model if it stops before emitting all required variables', async () => {
+        const { config } = await createMockConfig();
+        const outputConfig: OutputConfig = {
+          outputs: { required_var: 'Must be present' },
+        };
+
+        // Turn 1: Model stops prematurely
+        // Turn 2: Model responds to the nudge and emits the variable
+        // Turn 3: Model stops
+        mockSendMessageStream.mockImplementation(
+          createMockStream([
+            'stop',
+            [
+              {
+                name: 'self.emitvalue',
+                args: {
+                  emit_variable_name: 'required_var',
+                  emit_variable_value: 'Here it is',
+                },
+              },
+            ],
+            'stop',
+          ]),
+        );
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+          undefined,
+          outputConfig,
+        );
+
+        await scope.runNonInteractive(new ContextState());
+
+        // Check the nudge message sent in Turn 2
+        const secondCallArgs = mockSendMessageStream.mock.calls[1][0];
+
+        // We check that the message contains the required variable name and the nudge phrasing.
+        expect(secondCallArgs.message[0].text).toContain('required_var');
+        expect(secondCallArgs.message[0].text).toContain(
+          'You have stopped calling tools',
+        );
+
+        expect(scope.output.terminate_reason).toBe(SubagentTerminateMode.GOAL);
+        expect(scope.output.emitted_vars).toEqual({
+          required_var: 'Here it is',
+        });
+        expect(mockSendMessageStream).toHaveBeenCalledTimes(3);
+      });
+    });
+
+    describe('runNonInteractive - Termination and Recovery', () => {
+      const promptConfig: PromptConfig = { systemPrompt: 'Execute task.' };
+
+      it('should terminate with MAX_TURNS if the limit is reached', async () => {
+        const { config } = await createMockConfig();
+        const runConfig: RunConfig = { ...defaultRunConfig, max_turns: 2 };
+
+        // Model keeps looping by calling emitvalue repeatedly
+        mockSendMessageStream.mockImplementation(
+          createMockStream([
+            [
+              {
+                name: 'self.emitvalue',
+                args: { emit_variable_name: 'loop', emit_variable_value: 'v1' },
+              },
+            ],
+            [
+              {
+                name: 'self.emitvalue',
+                args: { emit_variable_name: 'loop', emit_variable_value: 'v2' },
+              },
+            ],
+            // This turn should not happen
+            [
+              {
+                name: 'self.emitvalue',
+                args: { emit_variable_name: 'loop', emit_variable_value: 'v3' },
+              },
+            ],
+          ]),
+        );
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          runConfig,
+        );
+
+        await scope.runNonInteractive(new ContextState());
+
+        expect(mockSendMessageStream).toHaveBeenCalledTimes(2);
+        expect(scope.output.terminate_reason).toBe(
+          SubagentTerminateMode.MAX_TURNS,
+        );
+      });
+
+      it('should terminate with TIMEOUT if the time limit is reached during an LLM call', async () => {
+        // Use fake timers to reliably test timeouts
+        vi.useFakeTimers();
+
+        const { config } = await createMockConfig();
+        const runConfig: RunConfig = { max_time_minutes: 5, max_turns: 100 };
+
+        // We need to control the resolution of the sendMessageStream promise to advance the timer during execution.
+        let resolveStream: (
+          value: AsyncGenerator<unknown, void, unknown>,
+        ) => void;
+        const streamPromise = new Promise<
+          AsyncGenerator<unknown, void, unknown>
+        >((resolve) => {
+          // eslint-disable-next-line @typescript-eslint/no-explicit-any
+          resolveStream = resolve as any;
+        });
+
+        // The LLM call will hang until we resolve the promise.
+        mockSendMessageStream.mockReturnValue(streamPromise);
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          runConfig,
+        );
+
+        const runPromise = scope.runNonInteractive(new ContextState());
+
+        // Advance time beyond the limit (6 minutes) while the agent is awaiting the LLM response.
+        await vi.advanceTimersByTimeAsync(6 * 60 * 1000);
+
+        // Now resolve the stream. The model returns 'stop'.
+        // eslint-disable-next-line @typescript-eslint/no-explicit-any
+        resolveStream!(createMockStream(['stop'])() as any);
+
+        await runPromise;
+
+        expect(scope.output.terminate_reason).toBe(
+          SubagentTerminateMode.TIMEOUT,
+        );
+        expect(mockSendMessageStream).toHaveBeenCalledTimes(1);
+
+        vi.useRealTimers();
+      });
+
+      it('should terminate with ERROR if the model call throws', async () => {
+        const { config } = await createMockConfig();
+        mockSendMessageStream.mockRejectedValue(new Error('API Failure'));
+
+        const scope = await SubAgentScope.create(
+          'test-agent',
+          config,
+          promptConfig,
+          defaultModelConfig,
+          defaultRunConfig,
+        );
+
+        await expect(
+          scope.runNonInteractive(new ContextState()),
+        ).rejects.toThrow('API Failure');
+        expect(scope.output.terminate_reason).toBe(SubagentTerminateMode.ERROR);
+      });
+    });
+  });
+});
diff --git a/packages/core/src/core/subagent.ts b/packages/core/src/core/subagent.ts
new file mode 100644
index 00000000..e11a5209
--- /dev/null
+++ b/packages/core/src/core/subagent.ts
@@ -0,0 +1,681 @@
+/**
+ * @license
+ * Copyright 2025 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { reportError } from '../utils/errorReporting.js';
+import { ToolRegistry } from '../tools/tool-registry.js';
+import { Config } from '../config/config.js';
+import { ToolCallRequestInfo } from './turn.js';
+import { executeToolCall } from './nonInteractiveToolExecutor.js';
+import { createContentGenerator } from './contentGenerator.js';
+import { getEnvironmentContext } from '../utils/environmentContext.js';
+import {
+  Content,
+  Part,
+  FunctionCall,
+  GenerateContentConfig,
+  FunctionDeclaration,
+  Type,
+} from '@google/genai';
+import { GeminiChat } from './geminiChat.js';
+
+/**
+ * @fileoverview Defines the configuration interfaces for a subagent.
+ *
+ * These interfaces specify the structure for defining the subagent's prompt,
+ * the model parameters, and the execution settings.
+ */
+
+/**
+ * Describes the possible termination modes for a subagent.
+ * This enum provides a clear indication of why a subagent's execution might have ended.
+ */
+export enum SubagentTerminateMode {
+  /**
+   * Indicates that the subagent's execution terminated due to an unrecoverable error.
+   */
+  ERROR = 'ERROR',
+  /**
+   * Indicates that the subagent's execution terminated because it exceeded the maximum allowed working time.
+   */
+  TIMEOUT = 'TIMEOUT',
+  /**
+   * Indicates that the subagent's execution successfully completed all its defined goals.
+   */
+  GOAL = 'GOAL',
+  /**
+   * Indicates that the subagent's execution terminated because it exceeded the maximum number of turns.
+   */
+  MAX_TURNS = 'MAX_TURNS',
+}
+
+/**
+ * Represents the output structure of a subagent's execution.
+ * This interface defines the data that a subagent will return upon completion,
+ * including any emitted variables and the reason for its termination.
+ */
+export interface OutputObject {
+  /**
+   * A record of key-value pairs representing variables emitted by the subagent
+   * during its execution. These variables can be used by the calling agent.
+   */
+  emitted_vars: Record<string, string>;
+  /**
+   * The reason for the subagent's termination, indicating whether it completed
+   * successfully, timed out, or encountered an error.
+   */
+  terminate_reason: SubagentTerminateMode;
+}
+
+/**
+ * Configures the initial prompt for the subagent.
+ */
+export interface PromptConfig {
+  /**
+   * A single system prompt string that defines the subagent's persona and instructions.
+   * Note: You should use either `systemPrompt` or `initialMessages`, but not both.
+   */
+  systemPrompt?: string;
+
+  /**
+   * An array of user/model content pairs to seed the chat history for few-shot prompting.
+   * Note: You should use either `systemPrompt` or `initialMessages`, but not both.
+   */
+  initialMessages?: Content[];
+}
+
+/**
+ * Configures the tools available to the subagent during its execution.
+ */
+export interface ToolConfig {
+  /**
+   * A list of tool names (from the tool registry) or full function declarations
+   * that the subagent is permitted to use.
+   */
+  tools: Array<string | FunctionDeclaration>;
+}
+
+/**
+ * Configures the expected outputs for the subagent.
+ */
+export interface OutputConfig {
+  /**
+   * A record describing the variables the subagent is expected to emit.
+   * The subagent will be prompted to generate these values before terminating.
+   */
+  outputs: Record<string, string>;
+}
+
+/**
+ * Configures the generative model parameters for the subagent.
+ * This interface specifies the model to be used and its associated generation settings,
+ * such as temperature and top-p values, which influence the creativity and diversity of the model's output.
+ */
+export interface ModelConfig {
+  /**
+   * The name or identifier of the model to be used (e.g., 'gemini-2.5-pro').
+   *
+   * TODO: In the future, this needs to support 'auto' or some other string to support routing use cases.
+   */
+  model: string;
+  /**
+   * The temperature for the model's sampling process.
+   */
+  temp: number;
+  /**
+   * The top-p value for nucleus sampling.
+   */
+  top_p: number;
+}
+
+/**
+ * Configures the execution environment and constraints for the subagent.
+ * This interface defines parameters that control the subagent's runtime behavior,
+ * such as maximum execution time, to prevent infinite loops or excessive resource consumption.
+ *
+ * TODO: Consider adding max_tokens as a form of budgeting.
+ */
+export interface RunConfig {
+  /** The maximum execution time for the subagent in minutes. */
+  max_time_minutes: number;
+  /**
+   * The maximum number of conversational turns (a user message + model response)
+   * before the execution is terminated. Helps prevent infinite loops.
+   */
+  max_turns?: number;
+}
+
+/**
+ * Manages the runtime context state for the subagent.
+ * This class provides a mechanism to store and retrieve key-value pairs
+ * that represent the dynamic state and variables accessible to the subagent
+ * during its execution.
+ */
+export class ContextState {
+  private state: Record<string, unknown> = {};
+
+  /**
+   * Retrieves a value from the context state.
+   *
+   * @param key - The key of the value to retrieve.
+   * @returns The value associated with the key, or undefined if the key is not found.
+   */
+  get(key: string): unknown {
+    return this.state[key];
+  }
+
+  /**
+   * Sets a value in the context state.
+   *
+   * @param key - The key to set the value under.
+   * @param value - The value to set.
+   */
+  set(key: string, value: unknown): void {
+    this.state[key] = value;
+  }
+
+  /**
+   * Retrieves all keys in the context state.
+   *
+   * @returns An array of all keys in the context state.
+   */
+  get_keys(): string[] {
+    return Object.keys(this.state);
+  }
+}
+
+/**
+ * Replaces `${...}` placeholders in a template string with values from a context.
+ *
+ * This function identifies all placeholders in the format `${key}`, validates that
+ * each key exists in the provided `ContextState`, and then performs the substitution.
+ *
+ * @param template The template string containing placeholders.
+ * @param context The `ContextState` object providing placeholder values.
+ * @returns The populated string with all placeholders replaced.
+ * @throws {Error} if any placeholder key is not found in the context.
+ */
+function templateString(template: string, context: ContextState): string {
+  const placeholderRegex = /\$\{(\w+)\}/g;
+
+  // First, find all unique keys required by the template.
+  const requiredKeys = new Set(
+    Array.from(template.matchAll(placeholderRegex), (match) => match[1]),
+  );
+
+  // Check if all required keys exist in the context.
+  const contextKeys = new Set(context.get_keys());
+  const missingKeys = Array.from(requiredKeys).filter(
+    (key) => !contextKeys.has(key),
+  );
+
+  if (missingKeys.length > 0) {
+    throw new Error(
+      `Missing context values for the following keys: ${missingKeys.join(
+        ', ',
+      )}`,
+    );
+  }
+
+  // Perform the replacement using a replacer function.
+  return template.replace(placeholderRegex, (_match, key) =>
+    String(context.get(key)),
+  );
+}
+
+/**
+ * Represents the scope and execution environment for a subagent.
+ * This class orchestrates the subagent's lifecycle, managing its chat interactions,
+ * runtime context, and the collection of its outputs.
+ */
+export class SubAgentScope {
+  output: OutputObject = {
+    terminate_reason: SubagentTerminateMode.ERROR,
+    emitted_vars: {},
+  };
+  private readonly subagentId: string;
+
+  /**
+   * Constructs a new SubAgentScope instance.
+   * @param name - The name for the subagent, used for logging and identification.
+   * @param runtimeContext - The shared runtime configuration and services.
+   * @param promptConfig - Configuration for the subagent's prompt and behavior.
+   * @param modelConfig - Configuration for the generative model parameters.
+   * @param runConfig - Configuration for the subagent's execution environment.
+   * @param toolConfig - Optional configuration for tools available to the subagent.
+   * @param outputConfig - Optional configuration for the subagent's expected outputs.
+   */
+  private constructor(
+    readonly name: string,
+    readonly runtimeContext: Config,
+    private readonly promptConfig: PromptConfig,
+    private readonly modelConfig: ModelConfig,
+    private readonly runConfig: RunConfig,
+    private readonly toolConfig?: ToolConfig,
+    private readonly outputConfig?: OutputConfig,
+  ) {
+    const randomPart = Math.random().toString(36).slice(2, 8);
+    this.subagentId = `${this.name}-${randomPart}`;
+  }
+
+  /**
+   * Creates and validates a new SubAgentScope instance.
+   * This factory method ensures that all tools provided in the prompt configuration
+   * are valid for non-interactive use before creating the subagent instance.
+   * @param {string} name - The name of the subagent.
+   * @param {Config} runtimeContext - The shared runtime configuration and services.
+   * @param {PromptConfig} promptConfig - Configuration for the subagent's prompt and behavior.
+   * @param {ModelConfig} modelConfig - Configuration for the generative model parameters.
+   * @param {RunConfig} runConfig - Configuration for the subagent's execution environment.
+   * @param {ToolConfig} [toolConfig] - Optional configuration for tools.
+   * @param {OutputConfig} [outputConfig] - Optional configuration for expected outputs.
+   * @returns {Promise<SubAgentScope>} A promise that resolves to a valid SubAgentScope instance.
+   * @throws {Error} If any tool requires user confirmation.
+   */
+  static async create(
+    name: string,
+    runtimeContext: Config,
+    promptConfig: PromptConfig,
+    modelConfig: ModelConfig,
+    runConfig: RunConfig,
+    toolConfig?: ToolConfig,
+    outputConfig?: OutputConfig,
+  ): Promise<SubAgentScope> {
+    if (toolConfig) {
+      const toolRegistry: ToolRegistry = await runtimeContext.getToolRegistry();
+      const toolsToLoad: string[] = [];
+      for (const tool of toolConfig.tools) {
+        if (typeof tool === 'string') {
+          toolsToLoad.push(tool);
+        }
+      }
+
+      for (const toolName of toolsToLoad) {
+        const tool = toolRegistry.getTool(toolName);
+        if (tool) {
+          const requiredParams = tool.schema.parameters?.required ?? [];
+          if (requiredParams.length > 0) {
+            // This check is imperfect. A tool might require parameters but still
+            // be interactive (e.g., `delete_file(path)`). However, we cannot
+            // build a generic invocation without knowing what dummy parameters
+            // to provide. Crashing here because `build({})` fails is worse
+            // than allowing a potential hang later if an interactive tool is
+            // used. This is a best-effort check.
+            console.warn(
+              `Cannot check tool "${toolName}" for interactivity because it requires parameters. Assuming it is safe for non-interactive use.`,
+            );
+            continue;
+          }
+
+          const invocation = tool.build({});
+          const confirmationDetails = await invocation.shouldConfirmExecute(
+            new AbortController().signal,
+          );
+          if (confirmationDetails) {
+            throw new Error(
+              `Tool "${toolName}" requires user confirmation and cannot be used in a non-interactive subagent.`,
+            );
+          }
+        }
+      }
+    }
+
+    return new SubAgentScope(
+      name,
+      runtimeContext,
+      promptConfig,
+      modelConfig,
+      runConfig,
+      toolConfig,
+      outputConfig,
+    );
+  }
+
+  /**
+   * Runs the subagent in a non-interactive mode.
+   * This method orchestrates the subagent's execution loop, including prompt templating,
+   * tool execution, and termination conditions.
+   * @param {ContextState} context - The current context state containing variables for prompt templating.
+   * @returns {Promise<void>} A promise that resolves when the subagent has completed its execution.
+   */
+  async runNonInteractive(context: ContextState): Promise<void> {
+    const chat = await this.createChatObject(context);
+
+    if (!chat) {
+      this.output.terminate_reason = SubagentTerminateMode.ERROR;
+      return;
+    }
+
+    const abortController = new AbortController();
+    const toolRegistry: ToolRegistry =
+      await this.runtimeContext.getToolRegistry();
+
+    // Prepare the list of tools available to the subagent.
+    const toolsList: FunctionDeclaration[] = [];
+    if (this.toolConfig) {
+      const toolsToLoad: string[] = [];
+      for (const tool of this.toolConfig.tools) {
+        if (typeof tool === 'string') {
+          toolsToLoad.push(tool);
+        } else {
+          toolsList.push(tool);
+        }
+      }
+      toolsList.push(
+        ...toolRegistry.getFunctionDeclarationsFiltered(toolsToLoad),
+      );
+    }
+    // Add local scope functions if outputs are expected.
+    if (this.outputConfig && this.outputConfig.outputs) {
+      toolsList.push(...this.getScopeLocalFuncDefs());
+    }
+
+    let currentMessages: Content[] = [
+      { role: 'user', parts: [{ text: 'Get Started!' }] },
+    ];
+
+    const startTime = Date.now();
+    let turnCounter = 0;
+    try {
+      while (true) {
+        // Check termination conditions.
+        if (
+          this.runConfig.max_turns &&
+          turnCounter >= this.runConfig.max_turns
+        ) {
+          this.output.terminate_reason = SubagentTerminateMode.MAX_TURNS;
+          break;
+        }
+        let durationMin = (Date.now() - startTime) / (1000 * 60);
+        if (durationMin >= this.runConfig.max_time_minutes) {
+          this.output.terminate_reason = SubagentTerminateMode.TIMEOUT;
+          break;
+        }
+
+        const promptId = `${this.runtimeContext.getSessionId()}#${this.subagentId}#${turnCounter++}`;
+        const messageParams = {
+          message: currentMessages[0]?.parts || [],
+          config: {
+            abortSignal: abortController.signal,
+            tools: [{ functionDeclarations: toolsList }],
+          },
+        };
+
+        const responseStream = await chat.sendMessageStream(
+          messageParams,
+          promptId,
+        );
+
+        const functionCalls: FunctionCall[] = [];
+        for await (const resp of responseStream) {
+          if (abortController.signal.aborted) return;
+          if (resp.functionCalls) functionCalls.push(...resp.functionCalls);
+        }
+
+        durationMin = (Date.now() - startTime) / (1000 * 60);
+        if (durationMin >= this.runConfig.max_time_minutes) {
+          this.output.terminate_reason = SubagentTerminateMode.TIMEOUT;
+          break;
+        }
+
+        if (functionCalls.length > 0) {
+          currentMessages = await this.processFunctionCalls(
+            functionCalls,
+            toolRegistry,
+            abortController,
+            promptId,
+          );
+        } else {
+          // Model stopped calling tools. Check if goal is met.
+          if (
+            !this.outputConfig ||
+            Object.keys(this.outputConfig.outputs).length === 0
+          ) {
+            this.output.terminate_reason = SubagentTerminateMode.GOAL;
+            break;
+          }
+
+          const remainingVars = Object.keys(this.outputConfig.outputs).filter(
+            (key) => !(key in this.output.emitted_vars),
+          );
+
+          if (remainingVars.length === 0) {
+            this.output.terminate_reason = SubagentTerminateMode.GOAL;
+            break;
+          }
+
+          const nudgeMessage = `You have stopped calling tools but have not emitted the following required variables: ${remainingVars.join(
+            ', ',
+          )}. Please use the 'self.emitvalue' tool to emit them now, or continue working if necessary.`;
+
+          console.debug(nudgeMessage);
+
+          currentMessages = [
+            {
+              role: 'user',
+              parts: [{ text: nudgeMessage }],
+            },
+          ];
+        }
+      }
+    } catch (error) {
+      console.error('Error during subagent execution:', error);
+      this.output.terminate_reason = SubagentTerminateMode.ERROR;
+      throw error;
+    }
+  }
+
+  /**
+   * Processes a list of function calls, executing each one and collecting their responses.
+   * This method iterates through the provided function calls, executes them using the
+   * `executeToolCall` function (or handles `self.emitvalue` internally), and aggregates
+   * their results. It also manages error reporting for failed tool executions.
+   * @param {FunctionCall[]} functionCalls - An array of `FunctionCall` objects to process.
+   * @param {ToolRegistry} toolRegistry - The tool registry to look up and execute tools.
+   * @param {AbortController} abortController - An `AbortController` to signal cancellation of tool executions.
+   * @returns {Promise<Content[]>} A promise that resolves to an array of `Content` parts representing the tool responses,
+   *          which are then used to update the chat history.
+   */
+  private async processFunctionCalls(
+    functionCalls: FunctionCall[],
+    toolRegistry: ToolRegistry,
+    abortController: AbortController,
+    promptId: string,
+  ): Promise<Content[]> {
+    const toolResponseParts: Part[] = [];
+
+    for (const functionCall of functionCalls) {
+      const callId = functionCall.id ?? `${functionCall.name}-${Date.now()}`;
+      const requestInfo: ToolCallRequestInfo = {
+        callId,
+        name: functionCall.name as string,
+        args: (functionCall.args ?? {}) as Record<string, unknown>,
+        isClientInitiated: true,
+        prompt_id: promptId,
+      };
+
+      let toolResponse;
+
+      // Handle scope-local tools first.
+      if (functionCall.name === 'self.emitvalue') {
+        const valName = String(requestInfo.args['emit_variable_name']);
+        const valVal = String(requestInfo.args['emit_variable_value']);
+        this.output.emitted_vars[valName] = valVal;
+
+        toolResponse = {
+          callId,
+          responseParts: `Emitted variable ${valName} successfully`,
+          resultDisplay: `Emitted variable ${valName} successfully`,
+          error: undefined,
+        };
+      } else {
+        toolResponse = await executeToolCall(
+          this.runtimeContext,
+          requestInfo,
+          toolRegistry,
+          abortController.signal,
+        );
+      }
+
+      if (toolResponse.error) {
+        console.error(
+          `Error executing tool ${functionCall.name}: ${toolResponse.resultDisplay || toolResponse.error.message}`,
+        );
+      }
+
+      if (toolResponse.responseParts) {
+        const parts = Array.isArray(toolResponse.responseParts)
+          ? toolResponse.responseParts
+          : [toolResponse.responseParts];
+        for (const part of parts) {
+          if (typeof part === 'string') {
+            toolResponseParts.push({ text: part });
+          } else if (part) {
+            toolResponseParts.push(part);
+          }
+        }
+      }
+    }
+    // If all tool calls failed, inform the model so it can re-evaluate.
+    if (functionCalls.length > 0 && toolResponseParts.length === 0) {
+      toolResponseParts.push({
+        text: 'All tool calls failed. Please analyze the errors and try an alternative approach.',
+      });
+    }
+
+    return [{ role: 'user', parts: toolResponseParts }];
+  }
+
+  private async createChatObject(context: ContextState) {
+    if (!this.promptConfig.systemPrompt && !this.promptConfig.initialMessages) {
+      throw new Error(
+        'PromptConfig must have either `systemPrompt` or `initialMessages` defined.',
+      );
+    }
+    if (this.promptConfig.systemPrompt && this.promptConfig.initialMessages) {
+      throw new Error(
+        'PromptConfig cannot have both `systemPrompt` and `initialMessages` defined.',
+      );
+    }
+
+    const envParts = await getEnvironmentContext(this.runtimeContext);
+    const envHistory: Content[] = [
+      { role: 'user', parts: envParts },
+      { role: 'model', parts: [{ text: 'Got it. Thanks for the context!' }] },
+    ];
+
+    const start_history = [
+      ...envHistory,
+      ...(this.promptConfig.initialMessages ?? []),
+    ];
+
+    const systemInstruction = this.promptConfig.systemPrompt
+      ? this.buildChatSystemPrompt(context)
+      : undefined;
+
+    try {
+      const generationConfig: GenerateContentConfig & {
+        systemInstruction?: string | Content;
+      } = {
+        temperature: this.modelConfig.temp,
+        topP: this.modelConfig.top_p,
+      };
+
+      if (systemInstruction) {
+        generationConfig.systemInstruction = systemInstruction;
+      }
+
+      const contentGenerator = await createContentGenerator(
+        this.runtimeContext.getContentGeneratorConfig(),
+        this.runtimeContext,
+        this.runtimeContext.getSessionId(),
+      );
+
+      this.runtimeContext.setModel(this.modelConfig.model);
+
+      return new GeminiChat(
+        this.runtimeContext,
+        contentGenerator,
+        generationConfig,
+        start_history,
+      );
+    } catch (error) {
+      await reportError(
+        error,
+        'Error initializing Gemini chat session.',
+        start_history,
+        'startChat',
+      );
+      // The calling function will handle the undefined return.
+      return undefined;
+    }
+  }
+
+  /**
+   * Returns an array of FunctionDeclaration objects for tools that are local to the subagent's scope.
+   * Currently, this includes the `self.emitvalue` tool for emitting variables.
+   * @returns An array of `FunctionDeclaration` objects.
+   */
+  private getScopeLocalFuncDefs() {
+    const emitValueTool: FunctionDeclaration = {
+      name: 'self.emitvalue',
+      description: `* This tool emits A SINGLE return value from this execution, such that it can be collected and presented to the calling function.
+        * You can only emit ONE VALUE each time you call this tool. You are expected to call this tool MULTIPLE TIMES if you have MULTIPLE OUTPUTS.`,
+      parameters: {
+        type: Type.OBJECT,
+        properties: {
+          emit_variable_name: {
+            description: 'This is the name of the variable to be returned.',
+            type: Type.STRING,
+          },
+          emit_variable_value: {
+            description:
+              'This is the _value_ to be returned for this variable.',
+            type: Type.STRING,
+          },
+        },
+        required: ['emit_variable_name', 'emit_variable_value'],
+      },
+    };
+
+    return [emitValueTool];
+  }
+
+  /**
+   * Builds the system prompt for the chat based on the provided configurations.
+   * It templates the base system prompt and appends instructions for emitting
+   * variables if an `OutputConfig` is provided.
+   * @param {ContextState} context - The context for templating.
+   * @returns {string} The complete system prompt.
+   */
+  private buildChatSystemPrompt(context: ContextState): string {
+    if (!this.promptConfig.systemPrompt) {
+      // This should ideally be caught in createChatObject, but serves as a safeguard.
+      return '';
+    }
+
+    let finalPrompt = templateString(this.promptConfig.systemPrompt, context);
+
+    // Add instructions for emitting variables if needed.
+    if (this.outputConfig && this.outputConfig.outputs) {
+      let outputInstructions =
+        '\n\nAfter you have achieved all other goals, you MUST emit the required output variables. For each expected output, make one final call to the `self.emitvalue` tool.';
+
+      for (const [key, value] of Object.entries(this.outputConfig.outputs)) {
+        outputInstructions += `\n* Use 'self.emitvalue' to emit the '${key}' key, with a value described as: '${value}'`;
+      }
+      finalPrompt += outputInstructions;
+    }
+
+    // Add general non-interactive instructions.
+    finalPrompt += `
+
+Important Rules:
+ * You are running in a non-interactive mode. You CANNOT ask the user for input or clarification. You must proceed with the information you have.
+ * Once you believe all goals have been met and all required outputs have been emitted, stop calling tools.`;
+
+    return finalPrompt;
+  }
+}
diff --git a/packages/core/src/tools/tool-registry.ts b/packages/core/src/tools/tool-registry.ts
index 73b427d4..c77fab8c 100644
--- a/packages/core/src/tools/tool-registry.ts
+++ b/packages/core/src/tools/tool-registry.ts
@@ -365,6 +365,22 @@ export class ToolRegistry {
     return declarations;
   }
 
+  /**
+   * Retrieves a filtered list of tool schemas based on a list of tool names.
+   * @param toolNames - An array of tool names to include.
+   * @returns An array of FunctionDeclarations for the specified tools.
+   */
+  getFunctionDeclarationsFiltered(toolNames: string[]): FunctionDeclaration[] {
+    const declarations: FunctionDeclaration[] = [];
+    for (const name of toolNames) {
+      const tool = this.tools.get(name);
+      if (tool) {
+        declarations.push(tool.schema);
+      }
+    }
+    return declarations;
+  }
+
   /**
    * Returns an array of all registered and discovered tool instances.
    */
diff --git a/packages/core/src/utils/environmentContext.test.ts b/packages/core/src/utils/environmentContext.test.ts
new file mode 100644
index 00000000..656fb63f
--- /dev/null
+++ b/packages/core/src/utils/environmentContext.test.ts
@@ -0,0 +1,205 @@
+/**
+ * @license
+ * Copyright 2025 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import {
+  describe,
+  it,
+  expect,
+  vi,
+  beforeEach,
+  afterEach,
+  type Mock,
+} from 'vitest';
+import {
+  getEnvironmentContext,
+  getDirectoryContextString,
+} from './environmentContext.js';
+import { Config } from '../config/config.js';
+import { getFolderStructure } from './getFolderStructure.js';
+
+vi.mock('../config/config.js');
+vi.mock('./getFolderStructure.js', () => ({
+  getFolderStructure: vi.fn(),
+}));
+vi.mock('../tools/read-many-files.js');
+
+describe('getDirectoryContextString', () => {
+  let mockConfig: Partial<Config>;
+
+  beforeEach(() => {
+    mockConfig = {
+      getWorkspaceContext: vi.fn().mockReturnValue({
+        getDirectories: vi.fn().mockReturnValue(['/test/dir']),
+      }),
+      getFileService: vi.fn(),
+    };
+    vi.mocked(getFolderStructure).mockResolvedValue('Mock Folder Structure');
+  });
+
+  afterEach(() => {
+    vi.resetAllMocks();
+  });
+
+  it('should return context string for a single directory', async () => {
+    const contextString = await getDirectoryContextString(mockConfig as Config);
+    expect(contextString).toContain(
+      "I'm currently working in the directory: /test/dir",
+    );
+    expect(contextString).toContain(
+      'Here is the folder structure of the current working directories:\n\nMock Folder Structure',
+    );
+  });
+
+  it('should return context string for multiple directories', async () => {
+    (
+      vi.mocked(mockConfig.getWorkspaceContext!)().getDirectories as Mock
+    ).mockReturnValue(['/test/dir1', '/test/dir2']);
+    vi.mocked(getFolderStructure)
+      .mockResolvedValueOnce('Structure 1')
+      .mockResolvedValueOnce('Structure 2');
+
+    const contextString = await getDirectoryContextString(mockConfig as Config);
+    expect(contextString).toContain(
+      "I'm currently working in the following directories:\n  - /test/dir1\n  - /test/dir2",
+    );
+    expect(contextString).toContain(
+      'Here is the folder structure of the current working directories:\n\nStructure 1\nStructure 2',
+    );
+  });
+});
+
+describe('getEnvironmentContext', () => {
+  let mockConfig: Partial<Config>;
+  let mockToolRegistry: { getTool: Mock };
+
+  beforeEach(() => {
+    vi.useFakeTimers();
+    vi.setSystemTime(new Date('2025-08-05T12:00:00Z'));
+
+    mockToolRegistry = {
+      getTool: vi.fn(),
+    };
+
+    mockConfig = {
+      getWorkspaceContext: vi.fn().mockReturnValue({
+        getDirectories: vi.fn().mockReturnValue(['/test/dir']),
+      }),
+      getFileService: vi.fn(),
+      getFullContext: vi.fn().mockReturnValue(false),
+      getToolRegistry: vi.fn().mockResolvedValue(mockToolRegistry),
+    };
+
+    vi.mocked(getFolderStructure).mockResolvedValue('Mock Folder Structure');
+  });
+
+  afterEach(() => {
+    vi.useRealTimers();
+    vi.resetAllMocks();
+  });
+
+  it('should return basic environment context for a single directory', async () => {
+    const parts = await getEnvironmentContext(mockConfig as Config);
+
+    expect(parts.length).toBe(1);
+    const context = parts[0].text;
+
+    expect(context).toContain("Today's date is Tuesday, August 5, 2025");
+    expect(context).toContain(`My operating system is: ${process.platform}`);
+    expect(context).toContain(
+      "I'm currently working in the directory: /test/dir",
+    );
+    expect(context).toContain(
+      'Here is the folder structure of the current working directories:\n\nMock Folder Structure',
+    );
+    expect(getFolderStructure).toHaveBeenCalledWith('/test/dir', {
+      fileService: undefined,
+    });
+  });
+
+  it('should return basic environment context for multiple directories', async () => {
+    (
+      vi.mocked(mockConfig.getWorkspaceContext!)().getDirectories as Mock
+    ).mockReturnValue(['/test/dir1', '/test/dir2']);
+    vi.mocked(getFolderStructure)
+      .mockResolvedValueOnce('Structure 1')
+      .mockResolvedValueOnce('Structure 2');
+
+    const parts = await getEnvironmentContext(mockConfig as Config);
+
+    expect(parts.length).toBe(1);
+    const context = parts[0].text;
+
+    expect(context).toContain(
+      "I'm currently working in the following directories:\n  - /test/dir1\n  - /test/dir2",
+    );
+    expect(context).toContain(
+      'Here is the folder structure of the current working directories:\n\nStructure 1\nStructure 2',
+    );
+    expect(getFolderStructure).toHaveBeenCalledTimes(2);
+  });
+
+  it('should include full file context when getFullContext is true', async () => {
+    mockConfig.getFullContext = vi.fn().mockReturnValue(true);
+    const mockReadManyFilesTool = {
+      build: vi.fn().mockReturnValue({
+        execute: vi
+          .fn()
+          .mockResolvedValue({ llmContent: 'Full file content here' }),
+      }),
+    };
+    mockToolRegistry.getTool.mockReturnValue(mockReadManyFilesTool);
+
+    const parts = await getEnvironmentContext(mockConfig as Config);
+
+    expect(parts.length).toBe(2);
+    expect(parts[1].text).toBe(
+      '\n--- Full File Context ---\nFull file content here',
+    );
+    expect(mockToolRegistry.getTool).toHaveBeenCalledWith('read_many_files');
+    expect(mockReadManyFilesTool.build).toHaveBeenCalledWith({
+      paths: ['**/*'],
+      useDefaultExcludes: true,
+    });
+  });
+
+  it('should handle read_many_files returning no content', async () => {
+    mockConfig.getFullContext = vi.fn().mockReturnValue(true);
+    const mockReadManyFilesTool = {
+      build: vi.fn().mockReturnValue({
+        execute: vi.fn().mockResolvedValue({ llmContent: '' }),
+      }),
+    };
+    mockToolRegistry.getTool.mockReturnValue(mockReadManyFilesTool);
+
+    const parts = await getEnvironmentContext(mockConfig as Config);
+
+    expect(parts.length).toBe(1); // No extra part added
+  });
+
+  it('should handle read_many_files tool not being found', async () => {
+    mockConfig.getFullContext = vi.fn().mockReturnValue(true);
+    mockToolRegistry.getTool.mockReturnValue(null);
+
+    const parts = await getEnvironmentContext(mockConfig as Config);
+
+    expect(parts.length).toBe(1); // No extra part added
+  });
+
+  it('should handle errors when reading full file context', async () => {
+    mockConfig.getFullContext = vi.fn().mockReturnValue(true);
+    const mockReadManyFilesTool = {
+      build: vi.fn().mockReturnValue({
+        execute: vi.fn().mockRejectedValue(new Error('Read error')),
+      }),
+    };
+    mockToolRegistry.getTool.mockReturnValue(mockReadManyFilesTool);
+
+    const parts = await getEnvironmentContext(mockConfig as Config);
+
+    expect(parts.length).toBe(2);
+    expect(parts[1].text).toBe('\n--- Error reading full file context ---');
+  });
+});
diff --git a/packages/core/src/utils/environmentContext.ts b/packages/core/src/utils/environmentContext.ts
new file mode 100644
index 00000000..79fb6049
--- /dev/null
+++ b/packages/core/src/utils/environmentContext.ts
@@ -0,0 +1,109 @@
+/**
+ * @license
+ * Copyright 2025 Google LLC
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+import { Part } from '@google/genai';
+import { Config } from '../config/config.js';
+import { getFolderStructure } from './getFolderStructure.js';
+
+/**
+ * Generates a string describing the current workspace directories and their structures.
+ * @param {Config} config - The runtime configuration and services.
+ * @returns {Promise<string>} A promise that resolves to the directory context string.
+ */
+export async function getDirectoryContextString(
+  config: Config,
+): Promise<string> {
+  const workspaceContext = config.getWorkspaceContext();
+  const workspaceDirectories = workspaceContext.getDirectories();
+
+  const folderStructures = await Promise.all(
+    workspaceDirectories.map((dir) =>
+      getFolderStructure(dir, {
+        fileService: config.getFileService(),
+      }),
+    ),
+  );
+
+  const folderStructure = folderStructures.join('\n');
+
+  let workingDirPreamble: string;
+  if (workspaceDirectories.length === 1) {
+    workingDirPreamble = `I'm currently working in the directory: ${workspaceDirectories[0]}`;
+  } else {
+    const dirList = workspaceDirectories.map((dir) => `  - ${dir}`).join('\n');
+    workingDirPreamble = `I'm currently working in the following directories:\n${dirList}`;
+  }
+
+  return `${workingDirPreamble}
+Here is the folder structure of the current working directories:
+
+${folderStructure}`;
+}
+
+/**
+ * Retrieves environment-related information to be included in the chat context.
+ * This includes the current working directory, date, operating system, and folder structure.
+ * Optionally, it can also include the full file context if enabled.
+ * @param {Config} config - The runtime configuration and services.
+ * @returns A promise that resolves to an array of `Part` objects containing environment information.
+ */
+export async function getEnvironmentContext(config: Config): Promise<Part[]> {
+  const today = new Date().toLocaleDateString(undefined, {
+    weekday: 'long',
+    year: 'numeric',
+    month: 'long',
+    day: 'numeric',
+  });
+  const platform = process.platform;
+  const directoryContext = await getDirectoryContextString(config);
+
+  const context = `
+This is the Gemini CLI. We are setting up the context for our chat.
+Today's date is ${today}.
+My operating system is: ${platform}
+${directoryContext}
+        `.trim();
+
+  const initialParts: Part[] = [{ text: context }];
+  const toolRegistry = await config.getToolRegistry();
+
+  // Add full file context if the flag is set
+  if (config.getFullContext()) {
+    try {
+      const readManyFilesTool = toolRegistry.getTool('read_many_files');
+      if (readManyFilesTool) {
+        const invocation = readManyFilesTool.build({
+          paths: ['**/*'], // Read everything recursively
+          useDefaultExcludes: true, // Use default excludes
+        });
+
+        // Read all files in the target directory
+        const result = await invocation.execute(AbortSignal.timeout(30000));
+        if (result.llmContent) {
+          initialParts.push({
+            text: `\n--- Full File Context ---\n${result.llmContent}`,
+          });
+        } else {
+          console.warn(
+            'Full context requested, but read_many_files returned no content.',
+          );
+        }
+      } else {
+        console.warn(
+          'Full context requested, but read_many_files tool not found.',
+        );
+      }
+    } catch (error) {
+      // Not using reportError here as it's a startup/config phase, not a chat/generation phase error.
+      console.error('Error reading full file context:', error);
+      initialParts.push({
+        text: '\n--- Error reading full file context ---',
+      });
+    }
+  }
+
+  return initialParts;
+}