diff --git a/cli/azd/extensions/azure.ai.agents/CHANGELOG.md b/cli/azd/extensions/azure.ai.agents/CHANGELOG.md
index a8b7181387b..7a9e08579e9 100644
--- a/cli/azd/extensions/azure.ai.agents/CHANGELOG.md
+++ b/cli/azd/extensions/azure.ai.agents/CHANGELOG.md
@@ -1,5 +1,19 @@
 # Release History
 
+## 0.1.21-preview (2026-04-09)
+
+- [[#7484]](https://github.com/Azure/azure-dev/pull/7484) Detect an `agent.manifest.yaml` in the current directory and prompt to use it when running `azd ai agent init`.
+- [[#7464]](https://github.com/Azure/azure-dev/pull/7464) Prompt for agent communication protocol (responses or invocations) when using `azd ai agent init` with local code.
+- [[#7415]](https://github.com/Azure/azure-dev/pull/7415) Filter `azd ai agent init` prompts to only show locations and models supported for agent scenarios.
+- [[#7410]](https://github.com/Azure/azure-dev/pull/7410) Fix `azd ai agent init --project-id` when `agent.yaml` does not contain a model resource.
+- [[#7545]](https://github.com/Azure/azure-dev/pull/7545) Update agent endpoint handling to use the latest Foundry agent service endpoints.
+- [[#7538]](https://github.com/Azure/azure-dev/pull/7538) Fix `azd ai agent invoke` streaming output to print each SSE data object on its own line.
+- [[#7576]](https://github.com/Azure/azure-dev/pull/7576) Add validation to `azd ai agent init` to ensure the manifest path points to a file, not a directory.
+- [[#7553]](https://github.com/Azure/azure-dev/pull/7553) Update `azd ai agent init` to stop writing `AZURE_AI_PROJECT_ENDPOINT` and `AZURE_OPENAI_ENDPOINT` to `agent.yaml`; `azd ai agent run` now translates `AZURE_AI_*` env vars to `FOUNDRY_*` equivalents for local agent processes.
+- [[#7596]](https://github.com/Azure/azure-dev/pull/7596) Reduce noisy output during `azd ai agent init` by redirecting internal log statements to the debug log file; verbose details are now only visible when `--debug` is used.
+- [[#7607]](https://github.com/Azure/azure-dev/pull/7607) Fix `azd ai agent init` container resource selection to save the chosen CPU/memory tier into `agent.yaml` and pre-select the existing tier on reruns; remove stale replica mention from post-init message.
+- [[#7589]](https://github.com/Azure/azure-dev/pull/7589) Fix `azd ai agent init` to prompt for an existing Foundry project when the agent manifest contains no model resources.
+
 ## 0.1.20-preview (2026-04-02)
 
 - [[#7422]](https://github.com/Azure/azure-dev/pull/7422) Add `/invocations` API support to `azd ai agent invoke`, enabling agents to accept arbitrary input passed directly to the agent.
diff --git a/cli/azd/extensions/azure.ai.agents/extension.yaml b/cli/azd/extensions/azure.ai.agents/extension.yaml
index 3e9d69b22d7..939c5e33bde 100644
--- a/cli/azd/extensions/azure.ai.agents/extension.yaml
+++ b/cli/azd/extensions/azure.ai.agents/extension.yaml
@@ -5,7 +5,7 @@ displayName: Foundry agents (Preview)
 description: Ship agents with Microsoft Foundry from your terminal. (Preview)
 usage: azd ai agent <command> [options]
 # NOTE: Make sure version.txt is in sync with this version.
-version: 0.1.20-preview
+version: 0.1.21-preview
 requiredAzdVersion: ">1.23.13"
 language: go
 capabilities:
diff --git a/cli/azd/extensions/azure.ai.agents/version.txt b/cli/azd/extensions/azure.ai.agents/version.txt
index bb901588aa6..84c8f2d9e45 100644
--- a/cli/azd/extensions/azure.ai.agents/version.txt
+++ b/cli/azd/extensions/azure.ai.agents/version.txt
@@ -1 +1 @@
-0.1.20-preview
\ No newline at end of file
+0.1.21-preview