diff --git a/packages/core/src/tool/shell.ts b/packages/core/src/tool/shell.ts
index 300acf8cd5..37c0d37b8e 100644
--- a/packages/core/src/tool/shell.ts
+++ b/packages/core/src/tool/shell.ts
@@ -17,6 +17,7 @@ export const name = "shell"
 export const DEFAULT_TIMEOUT_MS = 2 * 60 * 1_000
 export const MAX_TIMEOUT_MS = 10 * 60 * 1_000
 export const MAX_CAPTURE_BYTES = 1024 * 1024
+export const PROGRESS_LINES = 25
 
 const BACKGROUND_STARTED = "The command was moved to the background."
 const BACKGROUND_INSTRUCTION =
@@ -210,6 +211,23 @@ export const Plugin = {
                   }
                 })
 
+                const captureProgress = Effect.fn("ShellTool.captureProgress")(function* () {
+                  const latest = yield* shell.output(info.id, { cursor: Number.MAX_SAFE_INTEGER })
+                  const start = Math.max(0, latest.size - MAX_CAPTURE_BYTES)
+                  const page = yield* shell.output(info.id, { cursor: start, limit: MAX_CAPTURE_BYTES })
+                  const trailingNewline = page.output.endsWith("\n")
+                  const lines = trailingNewline ? page.output.split("\n").slice(0, -1) : page.output.split("\n")
+                  const truncated = start > 0 || lines.length > PROGRESS_LINES
+                  const output = lines.slice(-PROGRESS_LINES).join("\n") + (trailingNewline ? "\n" : "")
+                  const notice = truncated
+                    ? `[output truncated; showing last ${PROGRESS_LINES} lines. Full output saved to: ${info.file}]\n\n`
+                    : ""
+                  return {
+                    output: `${notice}${output || "(no output)"}`,
+                    truncated,
+                  }
+                })
+
                 const settleShell = Effect.fn("ShellTool.settleShell")(function* () {
                   const final = yield* shell.wait(info.id)
 
@@ -258,7 +276,7 @@ export const Plugin = {
 
                 const progress = yield* Effect.sleep("1 second").pipe(
                   Effect.andThen(
-                    captureShell().pipe(
+                    captureProgress().pipe(
                       Effect.flatMap((capture) =>
                         context.progress({
                           structured: { truncated: capture.truncated },
diff --git a/packages/core/test/tool-shell.test.ts b/packages/core/test/tool-shell.test.ts
index 007099b000..ad4795a259 100644
--- a/packages/core/test/tool-shell.test.ts
+++ b/packages/core/test/tool-shell.test.ts
@@ -166,10 +166,10 @@ const overflowCommand = (bytes: number) =>
   isWindows
     ? `[Console]::Out.Write(('x' * ${bytes})); Start-Sleep -Milliseconds 100`
     : `head -c ${bytes} /dev/zero | tr '\\0' 'x'`
-const progressOverflowCommand = (bytes: number) =>
+const progressLinesCommand = (lines: number) =>
   isWindows
-    ? `[Console]::Out.Write(('x' * ${bytes})); Start-Sleep -Milliseconds 1500`
-    : `head -c ${bytes} /dev/zero | tr '\\0' 'x'; sleep 1.5`
+    ? `1..${lines} | ForEach-Object { [Console]::Out.WriteLine(('line {0:d2}' -f $_)) }; Start-Sleep -Milliseconds 1500`
+    : `i=1; while [ $i -le ${lines} ]; do printf 'line %02d\\n' "$i"; i=$((i+1)); done; sleep 1.5`
 
 const withSession = <A, E, R>(directory: string, body: (registry: ToolRegistry.Interface) => Effect.Effect<A, E, R>) =>
   Effect.gen(function* () {
@@ -417,17 +417,17 @@ describe("ShellTool", () => {
     ),
   )
 
-  it.live("reports bounded output progress for a running command", () =>
+  it.live("reports the latest output lines for a running command", () =>
     Effect.acquireUseRelease(
       Effect.promise(() => tmpdir()),
       (tmp) => {
         reset()
-        const bytes = ShellTool.MAX_CAPTURE_BYTES + 1024
+        const lines = ShellTool.PROGRESS_LINES + 10
         return withSession(tmp.path, (registry) =>
           Effect.gen(function* () {
             const progress: ToolRegistry.Progress[] = []
             yield* settleTool(registry, {
-              ...call({ command: progressOverflowCommand(bytes) }, "call-progress"),
+              ...call({ command: progressLinesCommand(lines) }, "call-progress"),
               progress: (update) => Effect.sync(() => progress.push(update)),
             })
 
@@ -436,9 +436,12 @@ describe("ShellTool", () => {
             const content = progress[0]?.content[0]
             expect(content?.type).toBe("text")
             if (content?.type !== "text") return
-            expect(content.text.indexOf("\n\n[output truncated; full output saved to:")).toBe(
-              ShellTool.MAX_CAPTURE_BYTES,
+            expect(content.text).toStartWith(
+              `[output truncated; showing last ${ShellTool.PROGRESS_LINES} lines. Full output saved to:`,
             )
+            expect(content.text).not.toContain("line 10\n")
+            expect(content.text).toContain("line 11\n")
+            expect(content.text).toContain(`line ${lines}\n`)
           }),
         )
       },