diff --git a/ui/src/App.tsx b/ui/src/App.tsx
index a268f84..4077755 100644
--- a/ui/src/App.tsx
+++ b/ui/src/App.tsx
@@ -13,6 +13,7 @@ import { SetupWizard } from './components/SetupWizard'
 import { AddFeatureForm } from './components/AddFeatureForm'
 import { FeatureModal } from './components/FeatureModal'
 import { DebugLogViewer } from './components/DebugLogViewer'
+import { AgentThought } from './components/AgentThought'
 import { Plus, Loader2 } from 'lucide-react'
 import type { Feature } from './lib/types'
 
@@ -182,6 +183,12 @@ function App() {
               isConnected={wsState.isConnected}
             />
 
+            {/* Agent Thought - shows latest agent narrative */}
+            <AgentThought
+              logs={wsState.logs}
+              agentStatus={wsState.agentStatus}
+            />
+
             {/* Initializing Features State - show when agent is running but no features yet */}
             {features &&
              features.pending.length === 0 &&
diff --git a/ui/src/components/AgentThought.tsx b/ui/src/components/AgentThought.tsx
new file mode 100644
index 0000000..7b46472
--- /dev/null
+++ b/ui/src/components/AgentThought.tsx
@@ -0,0 +1,157 @@
+import { useMemo, useState, useEffect } from 'react'
+import { Brain, Sparkles } from 'lucide-react'
+import type { AgentStatus } from '../lib/types'
+
+interface AgentThoughtProps {
+  logs: Array<{ line: string; timestamp: string }>
+  agentStatus: AgentStatus
+}
+
+const IDLE_TIMEOUT = 30000 // 30 seconds
+
+/**
+ * Determines if a log line is an agent "thought" (narrative text)
+ * vs. tool mechanics that should be hidden
+ */
+function isAgentThought(line: string): boolean {
+  const trimmed = line.trim()
+
+  // Skip tool mechanics
+  if (/^\[Tool:/.test(trimmed)) return false
+  if (/^\s*Input:\s*\{/.test(trimmed)) return false
+  if (/^\[(Done|Error)\]/.test(trimmed)) return false
+  if (/^\[Error\]/.test(trimmed)) return false
+  if (/^Output:/.test(trimmed)) return false
+
+  // Skip JSON and very short lines
+  if (/^[\[\{]/.test(trimmed)) return false
+  if (trimmed.length < 15) return false
+
+  // Skip lines that are just paths or technical output
+  if (/^[A-Za-z]:\\/.test(trimmed)) return false
+  if (/^\/[a-z]/.test(trimmed)) return false
+
+  // Keep narrative text (starts with capital, looks like a sentence)
+  return /^[A-Z]/.test(trimmed) && trimmed.length > 20
+}
+
+/**
+ * Extracts the latest agent thought from logs
+ */
+function getLatestThought(logs: Array<{ line: string; timestamp: string }>): string | null {
+  // Search from most recent
+  for (let i = logs.length - 1; i >= 0; i--) {
+    if (isAgentThought(logs[i].line)) {
+      return logs[i].line.trim()
+    }
+  }
+  return null
+}
+
+export function AgentThought({ logs, agentStatus }: AgentThoughtProps) {
+  const thought = useMemo(() => getLatestThought(logs), [logs])
+  const [displayedThought, setDisplayedThought] = useState<string | null>(null)
+  const [textVisible, setTextVisible] = useState(true)
+  const [isVisible, setIsVisible] = useState(false)
+
+  // Get last log timestamp for idle detection
+  const lastLogTimestamp = logs.length > 0
+    ? new Date(logs[logs.length - 1].timestamp).getTime()
+    : 0
+
+  // Determine if component should be visible
+  const shouldShow = useMemo(() => {
+    if (!thought) return false
+    if (agentStatus === 'running') return true
+    if (agentStatus === 'paused') {
+      return Date.now() - lastLogTimestamp < IDLE_TIMEOUT
+    }
+    return false
+  }, [thought, agentStatus, lastLogTimestamp])
+
+  // Animate text changes using CSS transitions
+  useEffect(() => {
+    if (thought !== displayedThought && thought) {
+      // Fade out
+      setTextVisible(false)
+      // After fade out, update text and fade in
+      const timeout = setTimeout(() => {
+        setDisplayedThought(thought)
+        setTextVisible(true)
+      }, 150) // Match transition duration
+      return () => clearTimeout(timeout)
+    }
+  }, [thought, displayedThought])
+
+  // Handle visibility transitions
+  useEffect(() => {
+    if (shouldShow) {
+      setIsVisible(true)
+    } else {
+      // Delay hiding to allow exit animation
+      const timeout = setTimeout(() => setIsVisible(false), 300)
+      return () => clearTimeout(timeout)
+    }
+  }, [shouldShow])
+
+  if (!isVisible || !displayedThought) return null
+
+  const isRunning = agentStatus === 'running'
+
+  return (
+    <div
+      className={`
+        transition-all duration-300 ease-out overflow-hidden
+        ${shouldShow ? 'opacity-100 max-h-20' : 'opacity-0 max-h-0'}
+      `}
+    >
+      <div
+        className={`
+          relative
+          bg-[var(--color-neo-card)]
+          border-3 border-[var(--color-neo-border)]
+          shadow-[var(--shadow-neo-sm)]
+          px-4 py-3
+          flex items-center gap-3
+          ${isRunning ? 'animate-pulse-neo' : ''}
+        `}
+      >
+        {/* Brain Icon with subtle glow */}
+        <div className="relative shrink-0">
+          <Brain
+            size={22}
+            className="text-[var(--color-neo-progress)]"
+            strokeWidth={2.5}
+          />
+          {isRunning && (
+            <Sparkles
+              size={10}
+              className="absolute -top-1 -right-1 text-[var(--color-neo-pending)] animate-pulse"
+            />
+          )}
+        </div>
+
+        {/* Thought text with fade transition */}
+        <p
+          className="font-mono text-sm text-[var(--color-neo-text)] truncate transition-all duration-150 ease-out"
+          style={{
+            opacity: textVisible ? 1 : 0,
+            transform: textVisible ? 'translateY(0)' : 'translateY(-4px)',
+          }}
+        >
+          {displayedThought?.replace(/:$/, '')}
+        </p>
+
+        {/* Subtle running indicator bar */}
+        {isRunning && (
+          <div className="absolute bottom-0 left-0 right-0 h-0.5 bg-[var(--color-neo-progress)] opacity-50">
+            <div
+              className="h-full bg-[var(--color-neo-progress)] animate-pulse"
+              style={{ width: '100%' }}
+            />
+          </div>
+        )}
+      </div>
+    </div>
+  )
+}
diff --git a/ui/src/styles/globals.css b/ui/src/styles/globals.css
index 51f88fe..2505ba5 100644
--- a/ui/src/styles/globals.css
+++ b/ui/src/styles/globals.css
@@ -332,6 +332,19 @@
   }
 }
 
+@keyframes thoughtFade {
+  0% {
+    opacity: 0;
+    transform: translateY(-4px);
+    filter: blur(2px);
+  }
+  100% {
+    opacity: 1;
+    transform: translateY(0);
+    filter: blur(0);
+  }
+}
+
 /* ============================================================================
    Utilities Layer
    ============================================================================ */
@@ -353,6 +366,10 @@
     animation: completePop 0.5s var(--transition-neo-fast);
   }
 
+  .animate-thought-fade {
+    animation: thoughtFade 0.4s cubic-bezier(0.34, 1.56, 0.64, 1) backwards;
+  }
+
   .font-display {
     font-family: var(--font-neo-display);
   }
diff --git a/ui/tsconfig.tsbuildinfo b/ui/tsconfig.tsbuildinfo
index 6792149..4f25603 100644
--- a/ui/tsconfig.tsbuildinfo
+++ b/ui/tsconfig.tsbuildinfo
@@ -1 +1 @@
-{"root":["./src/app.tsx","./src/main.tsx","./src/vite-env.d.ts","./src/components/addfeatureform.tsx","./src/components/agentcontrol.tsx","./src/components/chatmessage.tsx","./src/components/debuglogviewer.tsx","./src/components/featurecard.tsx","./src/components/featuremodal.tsx","./src/components/kanbanboard.tsx","./src/components/kanbancolumn.tsx","./src/components/newprojectmodal.tsx","./src/components/progressdashboard.tsx","./src/components/projectselector.tsx","./src/components/questionoptions.tsx","./src/components/setupwizard.tsx","./src/components/speccreationchat.tsx","./src/components/typingindicator.tsx","./src/hooks/usecelebration.ts","./src/hooks/usefeaturesound.ts","./src/hooks/useprojects.ts","./src/hooks/usespecchat.ts","./src/hooks/usewebsocket.ts","./src/lib/api.ts","./src/lib/types.ts"],"version":"5.6.3"}
\ No newline at end of file
+{"root":["./src/app.tsx","./src/main.tsx","./src/vite-env.d.ts","./src/components/addfeatureform.tsx","./src/components/agentcontrol.tsx","./src/components/agentthought.tsx","./src/components/chatmessage.tsx","./src/components/debuglogviewer.tsx","./src/components/featurecard.tsx","./src/components/featuremodal.tsx","./src/components/kanbanboard.tsx","./src/components/kanbancolumn.tsx","./src/components/newprojectmodal.tsx","./src/components/progressdashboard.tsx","./src/components/projectselector.tsx","./src/components/questionoptions.tsx","./src/components/setupwizard.tsx","./src/components/speccreationchat.tsx","./src/components/typingindicator.tsx","./src/hooks/usecelebration.ts","./src/hooks/usefeaturesound.ts","./src/hooks/useprojects.ts","./src/hooks/usespecchat.ts","./src/hooks/usewebsocket.ts","./src/lib/api.ts","./src/lib/types.ts"],"version":"5.6.3"}
\ No newline at end of file