diff --git a/src/vs/workbench/contrib/cortexide/browser/react/src/sidebar-tsx/ErrorDisplay.tsx b/src/vs/workbench/contrib/cortexide/browser/react/src/sidebar-tsx/ErrorDisplay.tsx
index d7787175780..b31b44963cb 100644
--- a/src/vs/workbench/contrib/cortexide/browser/react/src/sidebar-tsx/ErrorDisplay.tsx
+++ b/src/vs/workbench/contrib/cortexide/browser/react/src/sidebar-tsx/ErrorDisplay.tsx
@@ -50,40 +50,45 @@ export const ErrorDisplay = ({
 	const message = normalizedMessage + ''
 
 	return (
-		<div className={`rounded-lg border border-red-200 bg-red-50 p-4 overflow-auto`}>
+		<div className={`rounded-lg border border-red-200 bg-red-50 p-4 overflow-auto error-display-enter shadow-sm`}>
 			{/* Header */}
-			<div className='flex items-start justify-between'>
-				<div className='flex gap-3'>
-					<AlertCircle className='h-5 w-5 text-red-600 mt-0.5' />
-					<div className='flex-1'>
-						<h3 className='font-semibold text-red-800'>
+			<div className='flex items-start justify-between gap-3'>
+				<div className='flex gap-3 flex-1 min-w-0'>
+					<AlertCircle className='h-5 w-5 text-red-600 mt-0.5 flex-shrink-0' />
+					<div className='flex-1 min-w-0'>
+						<h3 className='font-semibold text-red-800 text-sm'>
 							{/* eg Error */}
 							Error
 						</h3>
-						<p className='text-red-700 mt-1'>
+						<p className='text-red-700 mt-1 text-sm break-words'>
 							{/* eg Something went wrong */}
 							{message}
 						</p>
 					</div>
 				</div>
 
-				<div className='flex gap-2'>
+				<div className='flex gap-1 flex-shrink-0'>
 					{isExpandable && (
-						<button className='text-red-600 hover:text-red-800 p-1 rounded'
+						<button
+							className='text-red-600 hover:text-red-800 hover:bg-red-100 p-1.5 rounded transition-colors duration-200'
 							onClick={() => setIsExpanded(!isExpanded)}
+							aria-label={isExpanded ? 'Hide details' : 'Show details'}
+							aria-expanded={isExpanded}
 						>
 							{isExpanded ? (
-								<ChevronUp className='h-5 w-5' />
+								<ChevronUp className='h-4 w-4' />
 							) : (
-								<ChevronDown className='h-5 w-5' />
+								<ChevronDown className='h-4 w-4' />
 							)}
 						</button>
 					)}
 					{showDismiss && onDismiss && (
-						<button className='text-red-600 hover:text-red-800 p-1 rounded'
+						<button
+							className='text-red-600 hover:text-red-800 hover:bg-red-100 p-1.5 rounded transition-colors duration-200'
 							onClick={onDismiss}
+							aria-label='Dismiss error'
 						>
-							<X className='h-5 w-5' />
+							<X className='h-4 w-4' />
 						</button>
 					)}
 				</div>
@@ -94,7 +99,7 @@ export const ErrorDisplay = ({
 				<div className='mt-3 flex gap-2 flex-wrap'>
 					{onRetry && (
 						<button
-							className='flex items-center gap-1 px-3 py-1.5 text-sm bg-red-600 text-white rounded hover:bg-red-700 transition-colors'
+							className='flex items-center gap-1.5 px-3 py-1.5 text-sm bg-red-600 text-white rounded hover:bg-red-700 active:bg-red-800 transition-all duration-200 shadow-sm hover:shadow'
 							onClick={onRetry}
 							aria-label='Retry operation'
 						>
@@ -104,7 +109,7 @@ export const ErrorDisplay = ({
 					)}
 					{onRollback && (
 						<button
-							className='flex items-center gap-1 px-3 py-1.5 text-sm bg-red-500 text-white rounded hover:bg-red-600 transition-colors'
+							className='flex items-center gap-1.5 px-3 py-1.5 text-sm bg-red-500 text-white rounded hover:bg-red-600 active:bg-red-700 transition-all duration-200 shadow-sm hover:shadow'
 							onClick={onRollback}
 							aria-label='Rollback changes'
 						>
@@ -114,7 +119,7 @@ export const ErrorDisplay = ({
 					)}
 					{onOpenLogs && (
 						<button
-							className='flex items-center gap-1 px-3 py-1.5 text-sm border border-red-300 text-red-700 rounded hover:bg-red-50 transition-colors'
+							className='flex items-center gap-1.5 px-3 py-1.5 text-sm border border-red-300 text-red-700 rounded hover:bg-red-50 active:bg-red-100 transition-all duration-200'
 							onClick={onOpenLogs}
 							aria-label='Open logs'
 						>
@@ -127,10 +132,10 @@ export const ErrorDisplay = ({
 
 			{/* Expandable Details (dev mode only, no raw stacks) */}
 			{isExpanded && details && (
-				<div className='mt-4 space-y-3 border-t border-red-200 pt-3 overflow-auto'>
+				<div className='mt-4 space-y-3 border-t border-red-200 pt-3 overflow-auto animate-in fade-in slide-in-from-top-2 duration-200'>
 					<div>
-						<span className='font-semibold text-red-800'>Technical Details: </span>
-						<pre className='text-red-700 text-xs'>{details}</pre>
+						<span className='font-semibold text-red-800 text-xs'>Technical Details: </span>
+						<pre className='text-red-700 text-xs mt-1.5 p-2 bg-red-100/50 rounded border border-red-200/50 overflow-x-auto'>{details}</pre>
 					</div>
 				</div>
 			)}
diff --git a/src/vs/workbench/contrib/cortexide/browser/react/src/sidebar-tsx/SidebarChat.tsx b/src/vs/workbench/contrib/cortexide/browser/react/src/sidebar-tsx/SidebarChat.tsx
index c628e9e5398..cb54da37fcf 100644
--- a/src/vs/workbench/contrib/cortexide/browser/react/src/sidebar-tsx/SidebarChat.tsx
+++ b/src/vs/workbench/contrib/cortexide/browser/react/src/sidebar-tsx/SidebarChat.tsx
@@ -127,31 +127,82 @@ export const IconWarning = ({ size, className = '' }: { size: number, className?
 };
 
 
-export const IconLoading = ({ className = '', showTokenCount }: { className?: string, showTokenCount?: number }) => {
-	const [dots, setDots] = useState(1);
+type LoadingState = 'thinking' | 'typing' | 'processing' | 'default';
+
+// Format token count with k/m suffixes for better readability
+const formatTokenCount = (count: number): string => {
+	if (count >= 1000000) {
+		return `${(count / 1000000).toFixed(1)}M`;
+	} else if (count >= 1000) {
+		return `${(count / 1000).toFixed(1)}k`;
+	}
+	return count.toString();
+}
+
+export const IconLoading = ({
+	className = '',
+	showTokenCount,
+	state = 'default',
+	inline = false
+}: {
+	className?: string,
+	showTokenCount?: number,
+	state?: LoadingState,
+	inline?: boolean
+}) => {
+	// Use CSS animations instead of JavaScript for better performance
+	const [prevTokenCount, setPrevTokenCount] = useState<number | undefined>(undefined);
+	const [shouldPulse, setShouldPulse] = useState(false);
 
 	useEffect(() => {
-		// Optimized: Use requestAnimationFrame for smoother animation, update every 400ms
-		let frameId: number;
-		let lastUpdate = Date.now();
-
-		const animate = () => {
-			const now = Date.now();
-			if (now - lastUpdate >= 400) {
-				setDots(prev => prev >= 3 ? 1 : prev + 1);
-				lastUpdate = now;
-			}
-			frameId = requestAnimationFrame(animate);
-		};
+		if (showTokenCount !== undefined && showTokenCount !== prevTokenCount) {
+			setShouldPulse(true);
+			setPrevTokenCount(showTokenCount);
+			const timer = setTimeout(() => setShouldPulse(false), 300);
+			return () => clearTimeout(timer);
+		}
+	}, [showTokenCount, prevTokenCount]);
 
-		frameId = requestAnimationFrame(animate);
-		return () => cancelAnimationFrame(frameId);
-	}, []);
+	const tokenText = showTokenCount !== undefined
+		? ` (${formatTokenCount(showTokenCount)} tokens)`
+		: '';
+
+	// Different animation speeds for different states
+	const animationSpeed = state === 'thinking' ? '1.6s' : state === 'processing' ? '1.2s' : '1.4s';
 
-	const dotsText = '.'.repeat(dots);
-	const tokenText = showTokenCount !== undefined ? ` (${showTokenCount} tokens)` : '';
+	const dots = (
+		<span
+			className={`inline-flex items-center gap-0.5 ${inline ? 'ml-1' : ''}`}
+			style={{ animationDuration: animationSpeed }}
+			aria-label={state === 'thinking' ? 'Thinking' : state === 'typing' ? 'Typing' : state === 'processing' ? 'Processing' : 'Loading'}
+			role="status"
+		>
+			<span className="loading-dot" />
+			<span className="loading-dot" />
+			<span className="loading-dot" />
+		</span>
+	);
 
-	return <div className={`${className}`}>{dotsText}{tokenText}</div>;
+	return (
+		<div className={`inline-flex items-center gap-1 ${className}`}>
+			{dots}
+			{tokenText && (
+				<span className={`text-xs opacity-70 ${shouldPulse ? 'token-count-update' : ''}`}>
+					{tokenText}
+				</span>
+			)}
+		</div>
+	);
+}
+
+// Typing cursor component for inline use at end of streaming content
+export const TypingCursor = ({ className = '' }: { className?: string }) => {
+	return (
+		<span
+			className={`typing-cursor ${className}`}
+			aria-hidden="true"
+		/>
+	);
 }
 
 
@@ -635,9 +686,12 @@ export const ButtonSubmit = ({ className, disabled, ...props }: ButtonProps & Re
 	return <button
 		type='button'
 		className={`rounded-full flex-shrink-0 flex-grow-0 flex items-center justify-center
-			${disabled ? 'bg-vscode-disabled-fg cursor-default' : 'bg-white cursor-pointer'}
+			button-press-animation
+			${disabled ? 'bg-vscode-disabled-fg cursor-default opacity-50' : 'bg-white cursor-pointer hover:bg-gray-50'}
 			${className}
 		`}
+		disabled={disabled}
+		aria-label="Send message"
 		// data-tooltip-id='void-tooltip'
 		// data-tooltip-content={'Send'}
 		// data-tooltip-place='left'
@@ -650,13 +704,14 @@ export const ButtonSubmit = ({ className, disabled, ...props }: ButtonProps & Re
 export const ButtonStop = ({ className, ...props }: ButtonHTMLAttributes<HTMLButtonElement>) => {
 	return <button
 		className={`rounded-full flex-shrink-0 flex-grow-0 cursor-pointer flex items-center justify-center
-			bg-white
+			bg-white hover:bg-red-50 button-press-animation
 			${className}
 		`}
 		type='button'
+		aria-label="Stop generation"
 		{...props}
 	>
-		<IconSquare size={DEFAULT_BUTTON_SIZE} className="stroke-[3] p-[7px]" />
+		<IconSquare size={DEFAULT_BUTTON_SIZE} className="stroke-[3] p-[7px] text-red-600" />
 	</button>
 }
 
@@ -1607,7 +1662,12 @@ const AssistantMessageComponent = React.memo(({ chatMessage, isCheckpointGhost,
 
 		{/* assistant message */}
 		{chatMessage.displayContent &&
-			<div className={`${isCheckpointGhost ? 'opacity-50' : ''}`}>
+			<div
+				className={`${isCheckpointGhost ? 'opacity-50' : ''} ${!isCommitted ? 'streaming-content-chunk' : ''}`}
+				role={!isCommitted ? "status" : undefined}
+				aria-live={!isCommitted ? "polite" : undefined}
+				aria-atomic={!isCommitted ? "false" : undefined}
+			>
 				<ProseWrapper>
 					<ChatMarkdownRender
 						string={chatMessage.displayContent || ''}
@@ -1615,6 +1675,7 @@ const AssistantMessageComponent = React.memo(({ chatMessage, isCheckpointGhost,
 						isApplyEnabled={true}
 						isLinkDetectionEnabled={true}
 					/>
+					{!isCommitted && <TypingCursor className="text-void-fg-2" aria-label="Streaming content" />}
 				</ProseWrapper>
 			</div>
 		}
@@ -1636,7 +1697,7 @@ const ReasoningWrapper = ({ isDoneReasoning, isStreaming, children }: { isDoneRe
 	useEffect(() => {
 		if (!isWriting) setIsOpen(false) // if just finished reasoning, close
 	}, [isWriting])
-	return <ToolHeaderWrapper title='Reasoning' desc1={isWriting ? <IconLoading /> : ''} isOpen={isOpen} onClick={() => setIsOpen(v => !v)}>
+	return <ToolHeaderWrapper title='Reasoning' desc1={isWriting ? <IconLoading state="thinking" inline /> : ''} isOpen={isOpen} onClick={() => setIsOpen(v => !v)}>
 		<ToolChildrenWrapper>
 			<div className='!select-text cursor-auto'>
 				{children}
@@ -1651,9 +1712,9 @@ const ReasoningWrapper = ({ isDoneReasoning, isStreaming, children }: { isDoneRe
 // should either be past or "-ing" tense, not present tense. Eg. when the LLM searches for something, the user expects it to say "I searched for X" or "I am searching for X". Not "I search X".
 
 const loadingTitleWrapper = (item: React.ReactNode): React.ReactNode => {
-	return <span className='flex items-center flex-nowrap'>
+	return <span className='flex items-center flex-nowrap gap-1'>
 		{item}
-		<IconLoading className='w-3 text-sm' />
+		<IconLoading state="processing" inline className='w-3 text-sm' />
 	</span>
 }
 
@@ -2750,7 +2811,7 @@ const builtinToolNameToComponent: { [T in BuiltinToolName]: { resultWrapper: Res
 				const componentParams: ToolHeaderParams = { title, desc1, desc1Info, isError: false, icon, isRejected: false }
 				componentParams.children = <ToolChildrenWrapper>
 					<div className='flex items-center gap-2 text-sm text-void-fg-3'>
-						<IconLoading />
+						<IconLoading state="processing" inline />
 						<span>Searching the web...</span>
 					</div>
 				</ToolChildrenWrapper>
@@ -2825,7 +2886,7 @@ const builtinToolNameToComponent: { [T in BuiltinToolName]: { resultWrapper: Res
 				const componentParams: ToolHeaderParams = { title, desc1, desc1Info, isError: false, icon, isRejected: false }
 				componentParams.children = <ToolChildrenWrapper>
 					<div className='flex items-center gap-2 text-sm text-void-fg-3'>
-						<IconLoading />
+						<IconLoading state="processing" inline />
 						<span>Fetching content from URL...</span>
 					</div>
 				</ToolChildrenWrapper>
@@ -3490,7 +3551,9 @@ const ReviewComponent = ({ message, isCheckpointGhost }: { message: ReviewMessag
 
 const ChatBubble = React.memo((props: ChatBubbleProps) => {
 	return <ErrorBoundary>
-		<_ChatBubble {...props} />
+		<div className="message-enter">
+			<_ChatBubble {...props} />
+		</div>
 	</ErrorBoundary>
 }, (prev, next) => {
 	// Custom comparison: only re-render if props actually changed
@@ -3873,11 +3936,11 @@ const EditToolSoFar = ({ toolCallSoFar, }: { toolCallSoFar: RawToolCallObj }) =>
 	const title = titleOfBuiltinToolName[toolCallSoFar.name].proposed
 
 	const uriDone = toolCallSoFar.doneParams.includes('uri')
-	const desc1 = <span className='flex items-center'>
+	const desc1 = <span className='flex items-center gap-1'>
 		{uriDone ?
 			getBasename(toolCallSoFar.rawParams['uri'] ?? 'unknown')
 			: `Generating`}
-		<IconLoading />
+		<IconLoading state="processing" inline />
 	</span>
 
 	const desc1OnClick = () => { uri && voidOpenFileFn(uri, accessor) }
@@ -3893,7 +3956,7 @@ const EditToolSoFar = ({ toolCallSoFar, }: { toolCallSoFar: RawToolCallObj }) =>
 			code={toolCallSoFar.rawParams.search_replace_blocks ?? toolCallSoFar.rawParams.new_content ?? ''}
 			type={'rewrite'} // as it streams, show in rewrite format, don't make a diff editor
 		/>
-		<IconLoading />
+		<IconLoading state="processing" inline />
 	</ToolHeaderWrapper>
 
 }
@@ -4447,24 +4510,39 @@ export const SidebarChat = () => {
 		{/* Generating tool */}
 		{generatingTool}
 
-		{/* loading indicator with token count */}
-		{(isRunning === 'LLM' || isRunning === 'preparing') ? <ProseWrapper>
-			<IconLoading
-				className='opacity-50 text-sm'
-				showTokenCount={
-					// Only show token count when actively streaming (LLM)
-					// When isRunning is 'idle' or undefined, the message is complete and token count should stop
-					displayContentSoFar && isRunning === 'LLM'
-						? Math.ceil(displayContentSoFar.length / 4)
-						: undefined
-				}
-			/>
-		</ProseWrapper> : null}
+		{/* loading indicator with status message - only show when no content is streaming yet */}
+		{(isRunning === 'LLM' || isRunning === 'preparing') && !displayContentSoFar && !reasoningSoFar ? (
+			<ProseWrapper>
+				<div
+					className="flex items-center gap-2 text-sm opacity-70 loading-state-transition"
+					role="status"
+					aria-live="polite"
+					aria-atomic="true"
+				>
+					{isRunning === 'preparing' && currThreadStreamState?.llmInfo?.displayContentSoFar ? (
+						<>
+							<span className="text-void-fg-2" aria-hidden="false">{currThreadStreamState.llmInfo.displayContentSoFar}</span>
+							<IconLoading state="thinking" inline />
+						</>
+					) : isRunning === 'preparing' ? (
+						<>
+							<span className="text-void-fg-2" aria-hidden="false">Preparing request</span>
+							<IconLoading state="thinking" inline />
+						</>
+					) : (
+						<>
+							<span className="text-void-fg-2" aria-hidden="false">Generating response</span>
+							<IconLoading state="typing" inline />
+						</>
+					)}
+				</div>
+			</ProseWrapper>
+		) : null}
 
 
 		{/* error message */}
 		{latestError === undefined ? null :
-			<div className='px-2 my-1'>
+			<div className='px-2 my-1 message-enter'>
 				<ErrorDisplay
 					message={latestError.message}
 					fullError={latestError.fullError}
diff --git a/src/vs/workbench/contrib/cortexide/browser/react/src/styles.css b/src/vs/workbench/contrib/cortexide/browser/react/src/styles.css
index 0b595a28823..4d4999611c4 100644
--- a/src/vs/workbench/contrib/cortexide/browser/react/src/styles.css
+++ b/src/vs/workbench/contrib/cortexide/browser/react/src/styles.css
@@ -147,7 +147,162 @@
 	color: var(--vscode-warningForeground);
 }
 
+/* Loading indicator animations - Claude-style pulsing dots */
+@keyframes loading-dot-pulse {
+	0%, 80%, 100% {
+		opacity: 0.3;
+		transform: scale(0.8);
+	}
+	40% {
+		opacity: 1;
+		transform: scale(1);
+	}
+}
+
+.loading-dot {
+	display: inline-block;
+	width: 0.4em;
+	height: 0.4em;
+	border-radius: 50%;
+	background-color: currentColor;
+	animation: loading-dot-pulse 1.4s ease-in-out infinite;
+}
+
+.loading-dot:nth-child(1) {
+	animation-delay: 0s;
+}
+
+.loading-dot:nth-child(2) {
+	animation-delay: 0.2s;
+}
+
+.loading-dot:nth-child(3) {
+	animation-delay: 0.4s;
+}
+
+/* Typing cursor animation - smooth blinking like Claude */
+@keyframes typing-cursor-blink {
+	0%, 50% {
+		opacity: 1;
+	}
+	51%, 100% {
+		opacity: 0.3;
+	}
+}
+
+.typing-cursor {
+	display: inline-block;
+	width: 2px;
+	height: 1em;
+	background-color: currentColor;
+	animation: typing-cursor-blink 1s step-end infinite;
+	margin-left: 2px;
+	vertical-align: baseline;
+	transition: opacity 0.15s ease-in-out;
+}
+
+/* Smooth fade-in for streaming content */
+@keyframes content-fade-in {
+	from {
+		opacity: 0;
+		transform: translateY(2px);
+	}
+	to {
+		opacity: 1;
+		transform: translateY(0);
+	}
+}
+
+.streaming-content-chunk {
+	animation: content-fade-in 0.2s ease-out;
+}
+
+/* Smooth transitions for loading states */
+.loading-state-transition {
+	transition: opacity 0.2s ease-in-out, transform 0.2s ease-in-out;
+}
+
+.loading-state-enter {
+	opacity: 0;
+	transform: translateY(-4px);
+}
+
+.loading-state-enter-active {
+	opacity: 1;
+	transform: translateY(0);
+}
 
+/* Error display animations */
+@keyframes error-slide-in {
+	from {
+		opacity: 0;
+		transform: translateY(-8px);
+	}
+	to {
+		opacity: 1;
+		transform: translateY(0);
+	}
+}
+
+.error-display-enter {
+	animation: error-slide-in 0.3s ease-out;
+}
+
+/* Message fade-in animation */
+@keyframes message-fade-in {
+	from {
+		opacity: 0;
+		transform: translateY(4px);
+	}
+	to {
+		opacity: 1;
+		transform: translateY(0);
+	}
+}
+
+.message-enter {
+	animation: message-fade-in 0.25s ease-out;
+}
+
+/* Button animations */
+@keyframes button-press {
+	0% {
+		transform: scale(1);
+	}
+	50% {
+		transform: scale(0.95);
+	}
+	100% {
+		transform: scale(1);
+	}
+}
+
+.button-press-animation {
+	transition: transform 0.1s ease-out, opacity 0.2s ease-out, background-color 0.2s ease-out;
+}
+
+.button-press-animation:active {
+	transform: scale(0.95);
+}
+
+.button-press-animation:hover:not(:disabled) {
+	transform: scale(1.05);
+	opacity: 0.9;
+}
+
+/* Token count pulse animation for updates */
+@keyframes token-count-pulse {
+	0%, 100% {
+		opacity: 1;
+	}
+	50% {
+		opacity: 0.7;
+	}
+}
+
+.token-count-update {
+	animation: token-count-pulse 0.3s ease-in-out;
+}
 
 /* html {
 	font-size: var(--vscode-font-size);
diff --git a/src/vs/workbench/contrib/cortexide/browser/react/src/void-settings-tsx/Settings.tsx b/src/vs/workbench/contrib/cortexide/browser/react/src/void-settings-tsx/Settings.tsx
index b9011c3a5cf..f0085e17819 100644
--- a/src/vs/workbench/contrib/cortexide/browser/react/src/void-settings-tsx/Settings.tsx
+++ b/src/vs/workbench/contrib/cortexide/browser/react/src/void-settings-tsx/Settings.tsx
@@ -1408,7 +1408,7 @@ export const OneClickSwitchButton = ({ fromEditor = 'VS Code', className = '' }:
 	return <>
 		<VoidButtonBgDarken className={`max-w-48 p-4 ${className}`} disabled={transferState.type !== 'done'} onClick={onClick}>
 			{transferState.type === 'done' ? `Transfer from ${fromEditor}`
-				: transferState.type === 'loading' ? <span className='text-nowrap flex flex-nowrap'>Transferring<IconLoading /></span>
+				: transferState.type === 'loading' ? <span className='text-nowrap flex flex-nowrap items-center gap-1'>Transferring<IconLoading state="processing" inline /></span>
 					: transferState.type === 'justfinished' ? <AnimatedCheckmarkButton text='Settings Transferred' className='bg-none' />
 						: null
 			}