diff --git a/docs/cli/settings.md b/docs/cli/settings.md
index 53010578db..37d0c8d4a3 100644
--- a/docs/cli/settings.md
+++ b/docs/cli/settings.md
@@ -60,7 +60,7 @@ they appear in the UI.
 | Hide Tips                            | `ui.hideTips`                          | Hide helpful tips in the UI                                                                                                                                       | `false` |
 | Escape Pasted @ Symbols              | `ui.escapePastedAtSymbols`             | When enabled, @ symbols in pasted text are escaped to prevent unintended @path expansion.                                                                         | `false` |
 | Show Shortcuts Hint                  | `ui.showShortcutsHint`                 | Show the "? for shortcuts" hint above the input.                                                                                                                  | `true`  |
-| Compact Tool Output                  | `ui.compactToolOutput`                 | Display tool outputs (like directory listings and file reads) in a compact, structured format.                                                                    | `false` |
+| Compact Tool Output                  | `ui.compactToolOutput`                 | Display tool outputs (like directory listings and file reads) in a compact, structured format.                                                                    | `true`  |
 | Hide Banner                          | `ui.hideBanner`                        | Hide the application banner                                                                                                                                       | `false` |
 | Hide Context Summary                 | `ui.hideContextSummary`                | Hide the context summary (GEMINI.md, MCP servers) above the input.                                                                                                | `false` |
 | Hide CWD                             | `ui.footer.hideCWD`                    | Hide the current working directory in the footer.                                                                                                                 | `false` |
diff --git a/docs/reference/configuration.md b/docs/reference/configuration.md
index 5d8d7a4ae8..fd11ff4d73 100644
--- a/docs/reference/configuration.md
+++ b/docs/reference/configuration.md
@@ -267,7 +267,7 @@ their corresponding top-level category object in your `settings.json` file.
 - **`ui.compactToolOutput`** (boolean):
   - **Description:** Display tool outputs (like directory listings and file
     reads) in a compact, structured format.
-  - **Default:** `false`
+  - **Default:** `true`
 
 - **`ui.hideBanner`** (boolean):
   - **Description:** Hide the application banner
diff --git a/packages/cli/src/config/settingsSchema.ts b/packages/cli/src/config/settingsSchema.ts
index d90a5f2646..7ccf1f360b 100644
--- a/packages/cli/src/config/settingsSchema.ts
+++ b/packages/cli/src/config/settingsSchema.ts
@@ -576,7 +576,7 @@ const SETTINGS_SCHEMA = {
         label: 'Compact Tool Output',
         category: 'UI',
         requiresRestart: false,
-        default: false,
+        default: true,
         description:
           'Display tool outputs (like directory listings and file reads) in a compact, structured format.',
         showInDialog: true,
diff --git a/schemas/settings.schema.json b/schemas/settings.schema.json
index ffcbb30480..eae2fbc3f5 100644
--- a/schemas/settings.schema.json
+++ b/schemas/settings.schema.json
@@ -327,8 +327,8 @@
         "compactToolOutput": {
           "title": "Compact Tool Output",
           "description": "Display tool outputs (like directory listings and file reads) in a compact, structured format.",
-          "markdownDescription": "Display tool outputs (like directory listings and file reads) in a compact, structured format.\n\n- Category: `UI`\n- Requires restart: `no`\n- Default: `false`",
-          "default": false,
+          "markdownDescription": "Display tool outputs (like directory listings and file reads) in a compact, structured format.\n\n- Category: `UI`\n- Requires restart: `no`\n- Default: `true`",
+          "default": true,
           "type": "boolean"
         },
         "hideBanner": {