diff --git a/packages/cli/src/ui/AppContainer.test.tsx b/packages/cli/src/ui/AppContainer.test.tsx
index acbf175d35..c8814969f7 100644
--- a/packages/cli/src/ui/AppContainer.test.tsx
+++ b/packages/cli/src/ui/AppContainer.test.tsx
@@ -15,6 +15,7 @@ import {
   type MockedObject,
 } from 'vitest';
 import { render } from '../test-utils/render.js';
+import { waitFor } from '../test-utils/async.js';
 import { cleanup } from 'ink-testing-library';
 import { act, useContext } from 'react';
 import { AppContainer } from './AppContainer.js';
@@ -36,12 +37,18 @@ const mockCoreEvents = vi.hoisted(() => ({
   emit: vi.fn(),
 }));
 
+// Mock IdeClient
+const mockIdeClient = vi.hoisted(() => ({
+  getInstance: vi.fn().mockReturnValue(new Promise(() => {})),
+}));
+
 vi.mock('@google/gemini-cli-core', async (importOriginal) => {
   const actual =
     await importOriginal<typeof import('@google/gemini-cli-core')>();
   return {
     ...actual,
     coreEvents: mockCoreEvents,
+    IdeClient: mockIdeClient,
   };
 });
 import type { LoadedSettings } from '../config/settings.js';
@@ -312,7 +319,7 @@ describe('AppContainer State Management', () => {
       // Add other properties if AppContainer uses them
     });
     mockedUseLogger.mockReturnValue({
-      getPreviousUserMessages: vi.fn().mockResolvedValue([]),
+      getPreviousUserMessages: vi.fn().mockReturnValue(new Promise(() => {})),
     });
     mockedUseLoadingIndicator.mockReturnValue({
       elapsedTime: '0.0s',
@@ -367,9 +374,7 @@ describe('AppContainer State Management', () => {
   describe('Basic Rendering', () => {
     it('renders without crashing with minimal props', async () => {
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
       unmount();
     });
 
@@ -377,9 +382,7 @@ describe('AppContainer State Management', () => {
       const startupWarnings = ['Warning 1', 'Warning 2'];
 
       const { unmount } = renderAppContainer({ startupWarnings });
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
       unmount();
     });
   });
@@ -394,9 +397,7 @@ describe('AppContainer State Management', () => {
       const { unmount } = renderAppContainer({
         initResult: initResultWithError,
       });
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
       unmount();
     });
 
@@ -413,9 +414,7 @@ describe('AppContainer State Management', () => {
   describe('Context Providers', () => {
     it('provides AppContext with correct values', async () => {
       const { unmount } = renderAppContainer({ version: '2.0.0' });
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
 
       // Should render and unmount cleanly
       expect(() => unmount()).not.toThrow();
@@ -423,25 +422,19 @@ describe('AppContainer State Management', () => {
 
     it('provides UIStateContext with state management', async () => {
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
       unmount();
     });
 
     it('provides UIActionsContext with action handlers', async () => {
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
       unmount();
     });
 
     it('provides ConfigContext with config object', async () => {
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
       unmount();
     });
   });
@@ -458,9 +451,7 @@ describe('AppContainer State Management', () => {
       } as unknown as LoadedSettings;
 
       const { unmount } = renderAppContainer({ settings: settingsAllHidden });
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
       unmount();
     });
 
@@ -475,9 +466,7 @@ describe('AppContainer State Management', () => {
       } as unknown as LoadedSettings;
 
       const { unmount } = renderAppContainer({ settings: settingsWithMemory });
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
       unmount();
     });
   });
@@ -487,9 +476,7 @@ describe('AppContainer State Management', () => {
       'handles version format: %s',
       async (version) => {
         const { unmount } = renderAppContainer({ version });
-        await act(async () => {
-          await new Promise((resolve) => setTimeout(resolve, 0));
-        });
+        await waitFor(() => expect(capturedUIState).toBeTruthy());
         unmount();
       },
     );
@@ -504,9 +491,6 @@ describe('AppContainer State Management', () => {
 
       // Should still render without crashing - errors should be handled internally
       const { unmount } = renderAppContainer({ config: errorConfig });
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
       unmount();
     });
 
@@ -516,9 +500,7 @@ describe('AppContainer State Management', () => {
       } as LoadedSettings;
 
       const { unmount } = renderAppContainer({ settings: undefinedSettings });
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
       unmount();
     });
   });
@@ -849,12 +831,10 @@ describe('AppContainer State Management', () => {
     it('passes a null proQuotaRequest to UIStateContext by default', async () => {
       // The default mock from beforeEach already sets proQuotaRequest to null
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
+      await waitFor(() => {
+        // Assert that the context value is as expected
+        expect(capturedUIState.proQuotaRequest).toBeNull();
       });
-
-      // Assert that the context value is as expected
-      expect(capturedUIState.proQuotaRequest).toBeNull();
       unmount();
     });
 
@@ -872,12 +852,10 @@ describe('AppContainer State Management', () => {
 
       // Act: Render the container
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
+      await waitFor(() => {
+        // Assert: The mock request is correctly passed through the context
+        expect(capturedUIState.proQuotaRequest).toEqual(mockRequest);
       });
-
-      // Assert: The mock request is correctly passed through the context
-      expect(capturedUIState.proQuotaRequest).toEqual(mockRequest);
       unmount();
     });
 
@@ -891,13 +869,11 @@ describe('AppContainer State Management', () => {
 
       // Act: Render the container
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
+      await waitFor(() => {
+        // Assert: The action in the context is the mock handler we provided
+        expect(capturedUIActions.handleProQuotaChoice).toBe(mockHandler);
       });
 
-      // Assert: The action in the context is the mock handler we provided
-      expect(capturedUIActions.handleProQuotaChoice).toBe(mockHandler);
-
       // You can even verify that the plumbed function is callable
       act(() => {
         capturedUIActions.handleProQuotaChoice('retry_later');
@@ -1308,13 +1284,7 @@ describe('AppContainer State Management', () => {
       });
 
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
-
-      // Assert: The shell should be resized to a minimum height of 1, not a negative number.
-      // The old code would have tried to set a negative height.
-      expect(resizePtySpy).toHaveBeenCalled();
+      await waitFor(() => expect(resizePtySpy).toHaveBeenCalled());
       const lastCall =
         resizePtySpy.mock.calls[resizePtySpy.mock.calls.length - 1];
       // Check the height argument specifically
@@ -1649,9 +1619,7 @@ describe('AppContainer State Management', () => {
       });
 
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
 
       expect(capturedUIState.isModelDialogOpen).toBe(true);
       unmount();
@@ -1667,9 +1635,7 @@ describe('AppContainer State Management', () => {
       });
 
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
 
       // Verify that the actions are correctly passed through context
       act(() => {
@@ -1683,9 +1649,7 @@ describe('AppContainer State Management', () => {
   describe('CoreEvents Integration', () => {
     it('subscribes to UserFeedback and drains backlog on mount', async () => {
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
 
       expect(mockCoreEvents.on).toHaveBeenCalledWith(
         CoreEvent.UserFeedback,
@@ -1697,9 +1661,7 @@ describe('AppContainer State Management', () => {
 
     it('unsubscribes from UserFeedback on unmount', async () => {
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
 
       unmount();
 
@@ -1711,9 +1673,7 @@ describe('AppContainer State Management', () => {
 
     it('adds history item when UserFeedback event is received', async () => {
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
 
       // Get the registered handler
       const handler = mockCoreEvents.on.mock.calls.find(
@@ -1745,10 +1705,8 @@ describe('AppContainer State Management', () => {
       vi.spyOn(mockConfig, 'getModel').mockReturnValue('initial-model');
 
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await vi.waitFor(() => {
-          expect(capturedUIState?.currentModel).toBe('initial-model');
-        });
+      await waitFor(() => {
+        expect(capturedUIState?.currentModel).toBe('initial-model');
       });
 
       // Get the registered handler for ModelChanged
@@ -1789,11 +1747,7 @@ describe('AppContainer State Management', () => {
       // The main assertion is that the render does not throw.
       const { unmount } = renderAppContainer();
 
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
-
-      expect(resizePtySpy).toHaveBeenCalled();
+      await waitFor(() => expect(resizePtySpy).toHaveBeenCalled());
       unmount();
     });
   });
@@ -1805,13 +1759,70 @@ describe('AppContainer State Management', () => {
         apiKey: 'fake-key',
       });
       const { unmount } = renderAppContainer();
-      await act(async () => {
-        await new Promise((resolve) => setTimeout(resolve, 0));
-      });
-      await vi.waitFor(() => {
+      await waitFor(() => {
         expect(capturedUIState.bannerData.defaultText).toBeDefined();
         unmount();
       });
     });
   });
+
+  describe('onCancelSubmit Behavior', () => {
+    let mockSetText: Mock;
+
+    // Helper to extract arguments from the useGeminiStream hook call
+    // This isolates the positional argument dependency to a single location
+    const extractUseGeminiStreamArgs = (args: unknown[]) => ({
+      onCancelSubmit: args[14] as (shouldRestorePrompt?: boolean) => void,
+    });
+
+    beforeEach(() => {
+      mockSetText = vi.fn();
+      mockedUseTextBuffer.mockReturnValue({
+        text: '',
+        setText: mockSetText,
+      });
+    });
+
+    it('clears the prompt when onCancelSubmit is called with shouldRestorePrompt=false', async () => {
+      const { unmount } = renderAppContainer();
+      await waitFor(() => expect(capturedUIState).toBeTruthy());
+
+      const { onCancelSubmit } = extractUseGeminiStreamArgs(
+        mockedUseGeminiStream.mock.lastCall!,
+      );
+
+      act(() => {
+        onCancelSubmit(false);
+      });
+
+      expect(mockSetText).toHaveBeenCalledWith('');
+
+      unmount();
+    });
+
+    it('restores the prompt when onCancelSubmit is called with shouldRestorePrompt=true (or undefined)', async () => {
+      mockedUseLogger.mockReturnValue({
+        getPreviousUserMessages: vi
+          .fn()
+          .mockResolvedValue(['previous message']),
+      });
+
+      const { unmount } = renderAppContainer();
+      await waitFor(() =>
+        expect(capturedUIState.userMessages).toContain('previous message'),
+      );
+
+      const { onCancelSubmit } = extractUseGeminiStreamArgs(
+        mockedUseGeminiStream.mock.lastCall!,
+      );
+
+      await act(async () => {
+        onCancelSubmit(true);
+      });
+
+      expect(mockSetText).toHaveBeenCalledWith('previous message');
+
+      unmount();
+    });
+  });
 });
diff --git a/packages/cli/src/ui/AppContainer.tsx b/packages/cli/src/ui/AppContainer.tsx
index 22e4537cec..a827483cd9 100644
--- a/packages/cli/src/ui/AppContainer.tsx
+++ b/packages/cli/src/ui/AppContainer.tsx
@@ -648,15 +648,17 @@ Logging in with Google... Please restart Gemini CLI to continue.
     }
   }, [config, historyManager]);
 
-  const cancelHandlerRef = useRef<() => void>(() => {});
+  const cancelHandlerRef = useRef<(shouldRestorePrompt?: boolean) => void>(
+    () => {},
+  );
 
   const getPreferredEditor = useCallback(
     () => settings.merged.general?.preferredEditor as EditorType,
     [settings.merged.general?.preferredEditor],
   );
 
-  const onCancelSubmit = useCallback(() => {
-    cancelHandlerRef.current();
+  const onCancelSubmit = useCallback((shouldRestorePrompt?: boolean) => {
+    cancelHandlerRef.current(shouldRestorePrompt);
   }, []);
 
   const {
@@ -710,36 +712,39 @@ Logging in with Google... Please restart Gemini CLI to continue.
     submitQuery,
   });
 
-  cancelHandlerRef.current = useCallback(() => {
-    const pendingHistoryItems = [
-      ...pendingSlashCommandHistoryItems,
-      ...pendingGeminiHistoryItems,
-    ];
-    if (isToolExecuting(pendingHistoryItems)) {
-      buffer.setText(''); // Just clear the prompt
-      return;
-    }
+  cancelHandlerRef.current = useCallback(
+    (shouldRestorePrompt: boolean = true) => {
+      const pendingHistoryItems = [
+        ...pendingSlashCommandHistoryItems,
+        ...pendingGeminiHistoryItems,
+      ];
+      if (isToolExecuting(pendingHistoryItems)) {
+        buffer.setText(''); // Just clear the prompt
+        return;
+      }
 
-    const lastUserMessage = userMessages.at(-1);
-    let textToSet = lastUserMessage || '';
+      const lastUserMessage = userMessages.at(-1);
+      let textToSet = shouldRestorePrompt ? lastUserMessage || '' : '';
 
-    const queuedText = getQueuedMessagesText();
-    if (queuedText) {
-      textToSet = textToSet ? `${textToSet}\n\n${queuedText}` : queuedText;
-      clearQueue();
-    }
+      const queuedText = getQueuedMessagesText();
+      if (queuedText) {
+        textToSet = textToSet ? `${textToSet}\n\n${queuedText}` : queuedText;
+        clearQueue();
+      }
 
-    if (textToSet) {
-      buffer.setText(textToSet);
-    }
-  }, [
-    buffer,
-    userMessages,
-    getQueuedMessagesText,
-    clearQueue,
-    pendingSlashCommandHistoryItems,
-    pendingGeminiHistoryItems,
-  ]);
+      if (textToSet || !shouldRestorePrompt) {
+        buffer.setText(textToSet);
+      }
+    },
+    [
+      buffer,
+      userMessages,
+      getQueuedMessagesText,
+      clearQueue,
+      pendingSlashCommandHistoryItems,
+      pendingGeminiHistoryItems,
+    ],
+  );
 
   const handleFinalSubmit = useCallback(
     (submittedValue: string) => {
diff --git a/packages/cli/src/ui/hooks/useGeminiStream.test.tsx b/packages/cli/src/ui/hooks/useGeminiStream.test.tsx
index 5019d51d9c..4ebab04c54 100644
--- a/packages/cli/src/ui/hooks/useGeminiStream.test.tsx
+++ b/packages/cli/src/ui/hooks/useGeminiStream.test.tsx
@@ -1050,7 +1050,7 @@ describe('useGeminiStream', () => {
 
       simulateEscapeKeyPress();
 
-      expect(cancelSubmitSpy).toHaveBeenCalled();
+      expect(cancelSubmitSpy).toHaveBeenCalledWith(false);
     });
 
     it('should call setShellInputFocused(false) when escape is pressed', async () => {
@@ -1968,7 +1968,7 @@ describe('useGeminiStream', () => {
 
       // Check that onCancelSubmit was called
       await waitFor(() => {
-        expect(onCancelSubmitSpy).toHaveBeenCalled();
+        expect(onCancelSubmitSpy).toHaveBeenCalledWith(true);
       });
     });
 
diff --git a/packages/cli/src/ui/hooks/useGeminiStream.ts b/packages/cli/src/ui/hooks/useGeminiStream.ts
index d4fd21942d..f23f0f83d0 100644
--- a/packages/cli/src/ui/hooks/useGeminiStream.ts
+++ b/packages/cli/src/ui/hooks/useGeminiStream.ts
@@ -105,7 +105,7 @@ export const useGeminiStream = (
   modelSwitchedFromQuotaError: boolean,
   setModelSwitchedFromQuotaError: React.Dispatch<React.SetStateAction<boolean>>,
   onEditorClose: () => void,
-  onCancelSubmit: () => void,
+  onCancelSubmit: (shouldRestorePrompt?: boolean) => void,
   setShellInputFocused: (value: boolean) => void,
   terminalWidth: number,
   terminalHeight: number,
@@ -324,7 +324,7 @@ export const useGeminiStream = (
       setIsResponding(false);
     }
 
-    onCancelSubmit();
+    onCancelSubmit(false);
     setShellInputFocused(false);
   }, [
     streamingState,
@@ -690,7 +690,7 @@ export const useGeminiStream = (
 
   const handleContextWindowWillOverflowEvent = useCallback(
     (estimatedRequestTokenCount: number, remainingTokenCount: number) => {
-      onCancelSubmit();
+      onCancelSubmit(true);
 
       const limit = tokenLimit(config.getModel());