Summary
In release 1.127 (July 1, 2026), Microsoft introduced sandboxing for terminal commands run by the VS Code agent on macOS and Linux: commands run with network access blocked and filesystem access restricted, and the agent only asks for approval when a command needs to elevate outside the sandbox.
What changed
VS Code 1.127 added terminal command sandboxing on macOS and Linux under Default Approvals mode: network blocked and filesystem restricted, prompting only when a command must run outside the sandbox; toggled via the Permissions dropdown.
Why it matters
Sandboxing agent-run commands lets developers grant more autonomy with fewer approval prompts while containing blast radius, a key unlock for letting coding agents work continuously without constant human gatekeeping.
Evidence excerpt
Commands run with network access blocked and filesystem access restricted, letting the agent work with fewer prompts. The agent only asks for approval when a command needs to elevate and run outside the sandbox.