diff --git a/databricks/sdk/useragent.py b/databricks/sdk/useragent.py
index 0536bb688..da04a5265 100644
--- a/databricks/sdk/useragent.py
+++ b/databricks/sdk/useragent.py
@@ -244,9 +244,6 @@ class _AgentRecord:
     _AgentRecord("CLINE_ACTIVE", "cline"),  # https://github.com/cline/cline (v3.24.0+)
     _AgentRecord("CODEX_CI", "codex"),  # https://github.com/openai/codex
     _AgentRecord("COPILOT_CLI", "copilot-cli"),  # https://github.com/features/copilot
-    _AgentRecord(
-        "COPILOT_MODEL", "copilot-vscode"
-    ),  # VS Code Copilot terminal, best-effort heuristic, not officially identified
     _AgentRecord("CURSOR_AGENT", "cursor"),  # Closed source
     _AgentRecord("GEMINI_CLI", "gemini-cli"),  # https://google-gemini.github.io/gemini-cli
     _AgentRecord(
@@ -255,6 +252,9 @@ class _AgentRecord:
     _AgentRecord("KIRO", "kiro"),  # https://kiro.dev/ (Amazon)
     _AgentRecord("OPENCLAW_SHELL", "openclaw"),  # https://github.com/anthropics/openclaw
     _AgentRecord("OPENCODE", "opencode"),  # https://github.com/opencode-ai/opencode
+    _AgentRecord(
+        "VSCODE_AGENT", "vscode-agent"
+    ),  # Set by VS Code 1.121+ for agent-initiated terminal commands (https://code.visualstudio.com/updates/v1_121)
     _AgentRecord("WINDSURF_AGENT", "windsurf"),  # https://codeium.com/windsurf (Codeium)
 ]
 
@@ -291,12 +291,6 @@ def agent_provider() -> str:
 
     matches = [a.product for a in _KNOWN_AGENTS if a.env_var in os.environ]
 
-    # Known BYOK false positive: Copilot CLI users often set COPILOT_MODEL
-    # alongside COPILOT_CLI. That pair is a single copilot-cli signal, not a
-    # stacked multi-agent setup.
-    if "copilot-cli" in matches and "copilot-vscode" in matches:
-        matches = [m for m in matches if m != "copilot-vscode"]
-
     if len(matches) == 1:
         _agent_provider = matches[0]
     elif len(matches) > 1:
diff --git a/tests/test_user_agent.py b/tests/test_user_agent.py
index c7f440515..fe52675c7 100644
--- a/tests/test_user_agent.py
+++ b/tests/test_user_agent.py
@@ -235,11 +235,11 @@ def test_agent_provider_augment(clean_useragent_env):
     assert useragent.agent_provider() == "augment"
 
 
-def test_agent_provider_copilot_vscode(clean_useragent_env):
-    os.environ["COPILOT_MODEL"] = "gpt-4"
+def test_agent_provider_vscode_agent(clean_useragent_env):
+    os.environ["VSCODE_AGENT"] = "1"
     from databricks.sdk import useragent
 
-    assert useragent.agent_provider() == "copilot-vscode"
+    assert useragent.agent_provider() == "vscode-agent"
 
 
 def test_agent_provider_kiro(clean_useragent_env):
@@ -334,23 +334,11 @@ def test_agent_provider_explicit_goose_wins_over_agent_cursor(clean_useragent_en
     assert useragent.agent_provider() == "goose"
 
 
-def test_agent_provider_copilot_cli_and_vscode_collapses_to_copilot_cli(clean_useragent_env):
-    # Copilot CLI users (BYOK mode) often set COPILOT_MODEL alongside
-    # COPILOT_CLI. Treat the pair as a single copilot-cli signal rather than
-    # a stacked multi-agent setup.
+def test_agent_provider_vscode_agent_and_copilot_cli_reports_multiple(clean_useragent_env):
+    # VSCODE_AGENT can legitimately stack with other agents (e.g. running
+    # Copilot CLI from a VS Code agent terminal).
+    os.environ["VSCODE_AGENT"] = "1"
     os.environ["COPILOT_CLI"] = "1"
-    os.environ["COPILOT_MODEL"] = "gpt-4"
-    from databricks.sdk import useragent
-
-    assert useragent.agent_provider() == "copilot-cli"
-
-
-def test_agent_provider_copilot_byok_collapse_then_still_multiple(clean_useragent_env):
-    # The Copilot BYOK collapse only removes the copilot-vscode match. If
-    # another agent is also present, the result is still "multiple".
-    os.environ["COPILOT_CLI"] = "1"
-    os.environ["COPILOT_MODEL"] = "gpt-4"
-    os.environ["CLAUDECODE"] = "1"
     from databricks.sdk import useragent
 
     assert useragent.agent_provider() == "multiple"