VS Code deprecates prompt files for Agent Host, points users to Agent Skills

The change is less a shutdown than a staged handover. The documentation keeps prompt files working for the Local agent for now, but says that agent will be removed in a future release, which gives teams time rather than an immediate break.

The deeper shift is in how instructions reach the AI. A prompt file sits waiting until someone types its slash command, while a skill is read in stages: its name and description first, its body only if relevant, and any referenced files only when needed. That is why the author's guidance centres on rewriting the description to state when the skill applies, and on replacing ${input:...} variables, which no longer carry the same meaning.

The conversion tool aligns the file format, but the body's four review points suggest the real work is in the content. Skills that perform irreversible operations can be set to disable-model-invocation: true so they run only when a person calls them, a safeguard the author recommends applying before rolling the rest out.