diff --git a/ui/src/components/InlineEditor.test.tsx b/ui/src/components/InlineEditor.test.tsx
index 830d2cedc6d..f41a31cc690 100644
--- a/ui/src/components/InlineEditor.test.tsx
+++ b/ui/src/components/InlineEditor.test.tsx
@@ -1,6 +1,6 @@
 // @vitest-environment jsdom
 
-import { act, forwardRef, useImperativeHandle, useRef } from "react";
+import { act, forwardRef, useImperativeHandle, useRef, type ReactNode } from "react";
 import { createRoot } from "react-dom/client";
 import { afterEach, beforeEach, describe, expect, it, vi } from "vitest";
 
@@ -24,8 +24,22 @@ vi.mock("./MarkdownEditor", () => ({
   }),
 }));
 
+vi.mock("./MarkdownBody", () => ({
+  MarkdownBody: ({ children }: { children: ReactNode }) => (
+    <div data-testid="multiline-md-preview">{children}</div>
+  ),
+}));
+
 import { InlineEditor, queueContainedBlurCommit } from "./InlineEditor";
 
+/** Enter multiline edit mode by clicking the preview surface. */
+function enterMultilineEdit(container: HTMLDivElement) {
+  const preview = container.querySelector<HTMLDivElement>('[data-testid="multiline-md-preview"]');
+  if (preview) {
+    preview.dispatchEvent(new MouseEvent("click", { bubbles: true }));
+  }
+}
+
 // eslint-disable-next-line @typescript-eslint/no-explicit-any
 (globalThis as any).IS_REACT_ACT_ENVIRONMENT = true;
 
@@ -139,6 +153,11 @@ describe("InlineEditor", () => {
       root.render(<InlineEditor value="hello" multiline nullable onSave={onSave} />);
     });
 
+    // Non-empty value renders MarkdownBody preview; click to enter edit mode.
+    act(() => {
+      enterMultilineEdit(container);
+    });
+
     const textarea = container.querySelector<HTMLTextAreaElement>('[data-testid="multiline-md-mock"]');
     expect(textarea).not.toBeNull();
 
@@ -165,6 +184,29 @@ describe("InlineEditor", () => {
     outside.remove();
   });
 
+  it("multiline defaults to MarkdownBody preview when value is non-empty, swaps to editor on click", () => {
+    const onSave = vi.fn().mockResolvedValue(undefined);
+    const root = createRoot(container);
+
+    act(() => {
+      root.render(<InlineEditor value="Hello world" multiline onSave={onSave} />);
+    });
+
+    expect(container.querySelector('[data-testid="multiline-md-preview"]')).not.toBeNull();
+    expect(container.querySelector('[data-testid="multiline-md-mock"]')).toBeNull();
+
+    act(() => {
+      enterMultilineEdit(container);
+    });
+
+    expect(container.querySelector('[data-testid="multiline-md-mock"]')).not.toBeNull();
+    expect(container.querySelector('[data-testid="multiline-md-preview"]')).toBeNull();
+
+    act(() => {
+      root.unmount();
+    });
+  });
+
   it("syncs a new multiline value while focused when the user has not edited locally", () => {
     const onSave = vi.fn().mockResolvedValue(undefined);
     const root = createRoot(container);
@@ -200,6 +242,11 @@ describe("InlineEditor", () => {
       root.render(<InlineEditor value="Original" multiline onSave={onSave} />);
     });
 
+    // Non-empty value renders MarkdownBody preview; click to enter edit mode.
+    act(() => {
+      enterMultilineEdit(container);
+    });
+
     const textarea = container.querySelector<HTMLTextAreaElement>('[data-testid="multiline-md-mock"]');
     expect(textarea).not.toBeNull();
 
diff --git a/ui/src/components/InlineEditor.tsx b/ui/src/components/InlineEditor.tsx
index 2c878b3fa22..de45ee2a826 100644
--- a/ui/src/components/InlineEditor.tsx
+++ b/ui/src/components/InlineEditor.tsx
@@ -1,5 +1,6 @@
 import { useState, useRef, useEffect, useCallback } from "react";
 import { cn } from "../lib/utils";
+import { MarkdownBody } from "./MarkdownBody";
 import { MarkdownEditor, type MarkdownEditorRef, type MentionOption } from "./MarkdownEditor";
 import { useAutosaveIndicator } from "../hooks/useAutosaveIndicator";
 
@@ -52,6 +53,7 @@ export function InlineEditor({
   mentions,
 }: InlineEditorProps) {
   const [editing, setEditing] = useState(false);
+  const [multilineEditing, setMultilineEditing] = useState(false);
   const [multilineFocused, setMultilineFocused] = useState(false);
   const [draft, setDraft] = useState(value);
   const lastPropValueRef = useRef(value);
@@ -59,6 +61,8 @@ export function InlineEditor({
   const markdownRef = useRef<MarkdownEditorRef>(null);
   const autosaveDebounceRef = useRef<ReturnType<typeof setTimeout> | null>(null);
   const blurCommitFrameRef = useRef<(() => void) | null>(null);
+  const justEnteredEditRef = useRef(false);
+  const hasBeenFocusedRef = useRef(false);
   const {
     state: autosaveState,
     markDirty,
@@ -106,12 +110,27 @@ export function InlineEditor({
   }, [editing, autoSize]);
 
   useEffect(() => {
-    if (!editing || !multiline) return;
-    const frame = requestAnimationFrame(() => {
-      markdownRef.current?.focus();
-    });
-    return () => cancelAnimationFrame(frame);
-  }, [editing, multiline]);
+    if (!multilineEditing || !multiline) return;
+    if (!justEnteredEditRef.current) return;
+    justEnteredEditRef.current = false;
+    markdownRef.current?.focus();
+  }, [multilineEditing, multiline]);
+
+  // Once the editor has been focused at least once, it's blurred, and any
+  // autosave has settled, swap back to the MarkdownBody preview so inline
+  // issue refs render with status + quicklook.
+  useEffect(() => {
+    if (multilineFocused) {
+      hasBeenFocusedRef.current = true;
+      return;
+    }
+    if (!multiline || !multilineEditing) return;
+    if (!hasBeenFocusedRef.current) return;
+    if (autosaveState !== "idle") return;
+    hasBeenFocusedRef.current = false;
+    setMultilineEditing(false);
+  }, [multiline, multilineEditing, multilineFocused, autosaveState]);
+
 
   const commit = useCallback(async (nextValue = draft) => {
     const valueToSave = nextValue.trim();
@@ -176,6 +195,8 @@ export function InlineEditor({
       setDraft(value);
       if (multiline) {
         setMultilineFocused(false);
+        setMultilineEditing(false);
+        hasBeenFocusedRef.current = false;
         if (document.activeElement instanceof HTMLElement) {
           document.activeElement.blur();
         }
@@ -212,6 +233,36 @@ export function InlineEditor({
   }, [autosaveState, commit, draft, markDirty, multiline, multilineFocused, nullable, reset, runSave, value]);
 
   if (multiline) {
+    const hasValue = Boolean(value.trim());
+    const showEditor = multilineEditing || multilineFocused || !hasValue;
+
+    if (!showEditor) {
+      const enterEditMode = () => {
+        justEnteredEditRef.current = true;
+        setMultilineEditing(true);
+      };
+      return (
+        <div
+          className={cn(markdownPad, "rounded transition-colors hover:bg-accent/20")}
+          onClick={(event) => {
+            if (event.defaultPrevented) return;
+            const target = event.target as HTMLElement | null;
+            if (target && target.closest("a,button,[data-mention-kind],[data-radix-popper-content-wrapper]")) {
+              return;
+            }
+            enterEditMode();
+          }}
+          onDragEnter={() => enterEditMode()}
+          role="textbox"
+          aria-label={placeholder}
+        >
+          <MarkdownBody className={cn("paperclip-edit-in-place-content", className)}>
+            {value}
+          </MarkdownBody>
+        </div>
+      );
+    }
+
     return (
       <div
         className={cn(
@@ -219,7 +270,11 @@ export function InlineEditor({
           "rounded transition-colors",
           multilineFocused ? "bg-transparent" : "hover:bg-accent/20",
         )}
-        onFocusCapture={() => {
+        onFocusCapture={(event) => {
+          // Ignore focus events where the active element isn't actually inside
+          // the wrapper (React 19 can emit a synthetic focus after a blur).
+          const active = document.activeElement;
+          if (!(active instanceof Node) || !event.currentTarget.contains(active)) return;
           cancelPendingBlurCommit();
           setMultilineFocused(true);
         }}
diff --git a/ui/src/index.css b/ui/src/index.css
index 95643466a50..12077489d8b 100644
--- a/ui/src/index.css
+++ b/ui/src/index.css
@@ -448,11 +448,23 @@
   font-size: 0.75rem;
   line-height: 1.3;
   text-decoration: none;
-  vertical-align: middle;
+  vertical-align: baseline;
   white-space: nowrap;
   user-select: none;
 }
 
+/* Strip the MDXEditor's default inline-code styling from the text inside chips
+   (the link label otherwise picks up a monospace font + gray tint). */
+.paperclip-mdxeditor-content a.paperclip-mention-chip,
+.paperclip-mdxeditor-content a.paperclip-mention-chip code,
+.paperclip-mdxeditor-content a.paperclip-project-mention-chip,
+.paperclip-mdxeditor-content a.paperclip-project-mention-chip code {
+  font-family: inherit;
+  background: none;
+  color: inherit;
+  padding: 0;
+}
+
 .paperclip-mdxeditor-content a.paperclip-mention-chip::before,
 a.paperclip-mention-chip::before {
   content: "";
@@ -832,9 +844,11 @@ a.paperclip-mention-chip[data-mention-kind="agent"]::before {
   background: transparent;
 }
 
-/* Project mention chips rendered inside MarkdownBody */
+/* Mention chips rendered inline in prose (MarkdownBody or inline anchors) */
 a.paperclip-mention-chip,
-a.paperclip-project-mention-chip {
+a.paperclip-project-mention-chip,
+span.paperclip-mention-chip,
+span.paperclip-project-mention-chip {
   display: inline-flex;
   align-items: center;
   gap: 0.25rem;
@@ -845,10 +859,25 @@ a.paperclip-project-mention-chip {
   font-size: 0.75rem;
   line-height: 1.3;
   text-decoration: none;
-  vertical-align: middle;
+  /* Align the pill relative to the surrounding text baseline instead of its
+     x-height midpoint so it sits on the text line rather than floating above. */
+  vertical-align: baseline;
   white-space: nowrap;
 }
 
+/* When the identifier inside a chip is backtick-wrapped in markdown, strip the
+   inline-code monospace/gray styling so the pill label reads cleanly. */
+.paperclip-markdown a.paperclip-mention-chip code,
+.paperclip-markdown a.paperclip-project-mention-chip code,
+.paperclip-markdown span.paperclip-mention-chip code,
+.paperclip-markdown span.paperclip-project-mention-chip code {
+  font-family: inherit;
+  background: none;
+  color: inherit;
+  padding: 0;
+  font-size: inherit;
+}
+
 /* Keep MDXEditor popups above app dialogs, even when they portal to <body>. */
 [class*="_popupContainer_"] {
   z-index: 81 !important;