Microsoft unleashes VS Code 1.117 with custom AI model support and fluid chat animations

The latest Visual Studio Code update lets you plug in any API key via BYOK and introduces a stunning new incremental rendering engine for AI chat.

Microsoft has just dropped its latest weekly installment of Visual Studio Code, version 1.117. This week brings three notable changes including Bring Your Own Key for Copilot Business and Enterprise, incremental chat rendering that gives you a more fluid streaming of chat responses, and terminal improvements that let you launch Copilot CLI from any terminal profile.

BYOK for Copilot Business and Enterprise will let these customers plug in their own API keys for providers like OpenRouter, Ollama, Google, OpenAI, and more, so that these models can be used directly in VS Code chat. This is excellent from the infrastructure point of view as it allows MIcrosoft to alleviate the demand on its own servers and place it elsewhere, including local machines via Ollama.

An experimental change that Microsoft has added this week is the incremental rendering of chat responses. This makes chat responses feel more fluid and natural by stream content block-by-block with optional animations as tokens arrive. Compared the default timer-based rendering, this approach renders each block as it becomes ready, making responses seem quicker. You can enable with with the following options:

• chat.experimental.incrementalRendering.enabled : Enable or disable incremental response rendering with optional block-level animation when streaming chat responses. Default: true.
• chat.experimental.incrementalRendering.animationStyle : Configure the animation style for incremental response rendering. Options: none, fade, rise, blur, scale, slide, reveal. Default: fade.
• chat.experimental.incrementalRendering.buffering : Configure how content is buffered before rendering during incremental response rendering. Lower buffering levels render faster but may show incomplete sentences or partially-formed Markdown. Options: off, word, paragraph. Default: off.

Finally, with this update, Microsoft lets the Copilot CLI terminal profile launch from the terminal panel, even when your default terminal profile is set to a non-default shell, such as fish on macOS or Linux or Git Bash on Windows. Before this update, selecting GitHub Copilot CLI from the terminal profile picker in this configuration led to the terminal failing to start.

If you run Visual Studio Code on Windows or macOS, it should update automatically. On Linux you’ll need to check your update manager.

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Posted Thursday 23 April 2026 at 5:48 pm AEST (my time).

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