diff --git a/extensions/copilot/src/platform/configuration/common/configurationService.ts b/extensions/copilot/src/platform/configuration/common/configurationService.ts
index cc9a951e1ef..bc538e2cf2b 100644
--- a/extensions/copilot/src/platform/configuration/common/configurationService.ts
+++ b/extensions/copilot/src/platform/configuration/common/configurationService.ts
@@ -585,6 +585,7 @@ export namespace ConfigKey {
 		export const DebugUseNodeFetchFetcher = defineSetting('advanced.debug.useNodeFetchFetcher', ConfigType.Simple, true);
 		export const DebugUseNodeFetcher = defineSetting('advanced.debug.useNodeFetcher', ConfigType.Simple, false);
 		export const DebugUseElectronFetcher = defineSetting('advanced.debug.useElectronFetcher', ConfigType.Simple, true);
+		export const DebugNodeFetchCache = defineSetting<'off' | 'memory' | 'persistent'>('advanced.debug.nodeFetchCache', ConfigType.Simple, 'memory');
 		export const AuthProvider = defineSetting<AuthProviderId>('advanced.authProvider', ConfigType.Simple, AuthProviderId.GitHub);
 		export const AuthPermissions = defineSetting<AuthPermissionMode>('advanced.authPermissions', ConfigType.Simple, AuthPermissionMode.Default);
 	}
diff --git a/extensions/copilot/src/platform/networking/common/fetcherService.ts b/extensions/copilot/src/platform/networking/common/fetcherService.ts
index ae22b33ad8d..8199d237e25 100644
--- a/extensions/copilot/src/platform/networking/common/fetcherService.ts
+++ b/extensions/copilot/src/platform/networking/common/fetcherService.ts
@@ -71,8 +71,16 @@ export interface FetchTelemetryEvent {
 	latencyMs: number;
 	statusCode: number | undefined;
 	success: boolean;
+	/**
+	 * Cache outcome when the caller opted in via {@link FetchOptions.cache}.
+	 * `undefined` when the caller did not opt in or the selected fetcher does
+	 * not implement caching.
+	 */
+	cacheStatus?: CacheStatus;
 }
 
+export type CacheStatus = 'hit' | 'stale-hit' | 'revalidated' | 'miss' | 'bypass';
+
 /** A basic version of http://developer.mozilla.org/en-US/docs/Web/API/Response */
 export class Response {
 	ok = this.status >= 200 && this.status < 300;
@@ -92,6 +100,7 @@ export class Response {
 		private readonly _reportEvent: ReportFetchEvent,
 		private readonly _internalId: string,
 		private readonly _hostname: string,
+		readonly cacheStatus?: CacheStatus,
 	) {
 		const transformer = {
 			transform: (chunk: Uint8Array, controller: TransformStreamDefaultController<Uint8Array>) => {
@@ -169,6 +178,13 @@ export interface FetchOptions {
 	expectJSON?: boolean;
 	useFetcher?: FetcherId;
 	suppressIntegrationId?: boolean;
+	/**
+	 * Opportunistic cache hint. When set to `true`, fetchers that implement
+	 * caching (today only the Node fetch fetcher) will route the request
+	 * through an RFC 9111 cache. Fetchers without cache support ignore this
+	 * flag, and fallback to other fetchers continues to work normally.
+	 */
+	cache?: boolean;
 }
 
 export interface PaginationOptions<T> extends FetchOptions {
diff --git a/extensions/copilot/src/platform/networking/node/baseFetchFetcher.ts b/extensions/copilot/src/platform/networking/node/baseFetchFetcher.ts
index f921570c53a..b7621ae704f 100644
--- a/extensions/copilot/src/platform/networking/node/baseFetchFetcher.ts
+++ b/extensions/copilot/src/platform/networking/node/baseFetchFetcher.ts
@@ -7,13 +7,20 @@
 import { generateUuid } from '../../../util/vs/base/common/uuid';
 import { IEnvService } from '../../env/common/envService';
 import { collectSingleLineErrorMessage } from '../../log/common/logService';
-import { FetcherId, FetchOptions, IAbortController, isAbortError, PaginationOptions, ReportFetchEvent, Response, safeGetHostname } from '../common/fetcherService';
+import { CacheStatus, FetcherId, FetchOptions, IAbortController, isAbortError, PaginationOptions, ReportFetchEvent, Response, safeGetHostname } from '../common/fetcherService';
 import { IFetcher, userAgentLibraryHeader } from '../common/networking';
+import { VSCODE_CACHE_STATUS_HEADER } from './taggedCacheInterceptor';
+
+export type FetchImpl = (
+	input: string | globalThis.Request,
+	init?: RequestInit,
+	useCache?: boolean,
+) => Promise<globalThis.Response>;
 
 export abstract class BaseFetchFetcher implements IFetcher {
 
 	constructor(
-		private readonly _fetchImpl: typeof fetch | typeof import('electron').net.fetch,
+		private readonly _fetchImpl: FetchImpl,
 		private readonly _envService: IEnvService,
 		private readonly _fetcherId: FetcherId,
 		private readonly _reportEvent: ReportFetchEvent,
@@ -52,7 +59,7 @@ export abstract class BaseFetchFetcher implements IFetcher {
 		const internalId = generateUuid();
 		const hostname = safeGetHostname(url);
 		try {
-			const response = await this._fetch(url, method, headers, body, signal, internalId, hostname);
+			const response = await this._fetch(url, method, headers, body, signal, internalId, hostname, options);
 			this._reportEvent({ internalId, timestamp: Date.now(), outcome: 'success', phase: 'requestResponse', fetcher: this._fetcherId, hostname, statusCode: response.status });
 			return response;
 		} catch (e) {
@@ -89,8 +96,8 @@ export abstract class BaseFetchFetcher implements IFetcher {
 		return items;
 	}
 
-	private async _fetch(url: string, method: 'GET' | 'POST' | 'PUT' | 'DELETE', headers: { [name: string]: string }, body: string | undefined, signal: AbortSignal, internalId: string, hostname: string): Promise<Response> {
-		const resp = await this._fetchImpl(url, { method, headers, body, signal });
+	private async _fetch(url: string, method: 'GET' | 'POST' | 'PUT' | 'DELETE', headers: { [name: string]: string }, body: string | undefined, signal: AbortSignal, internalId: string, hostname: string, options: FetchOptions): Promise<Response> {
+		const resp = await this._fetchImpl(url, { method, headers, body, signal }, !!options.cache);
 		return new Response(
 			resp.status,
 			resp.statusText,
@@ -100,9 +107,24 @@ export abstract class BaseFetchFetcher implements IFetcher {
 			this._reportEvent,
 			internalId,
 			hostname,
+			this._readCacheStatus(resp.headers, options),
 		);
 	}
 
+	private _readCacheStatus(headers: { get(name: string): string | null }, options: FetchOptions): CacheStatus | undefined {
+		if (!options.cache) {
+			return undefined;
+		}
+		const stamped = headers.get(VSCODE_CACHE_STATUS_HEADER);
+		if (stamped === 'hit' || stamped === 'stale-hit' || stamped === 'revalidated' || stamped === 'miss') {
+			return stamped;
+		}
+		// Caller opted in but the response carried no marker — either the
+		// fetcher does not implement caching or the cache interceptor skipped
+		// this request.
+		return 'bypass';
+	}
+
 	async disconnectAll(): Promise<void> {
 		// Nothing to do
 	}
diff --git a/extensions/copilot/src/platform/networking/node/nodeFetchFetcher.ts b/extensions/copilot/src/platform/networking/node/nodeFetchFetcher.ts
index fd0fc99410f..68d9c3da7c7 100644
--- a/extensions/copilot/src/platform/networking/node/nodeFetchFetcher.ts
+++ b/extensions/copilot/src/platform/networking/node/nodeFetchFetcher.ts
@@ -8,7 +8,22 @@ import * as undici from 'undici';
 import { Lazy } from '../../../util/vs/base/common/lazy';
 import { IEnvService } from '../../env/common/envService';
 import { HeadersImpl, IHeaders, ReportFetchEvent, WebSocketConnection, WebSocketConnectOptions } from '../common/fetcherService';
-import { BaseFetchFetcher } from './baseFetchFetcher';
+import { BaseFetchFetcher, FetchImpl } from './baseFetchFetcher';
+import { taggedCacheInterceptor } from './taggedCacheInterceptor';
+
+type CacheInterceptorOptions = NonNullable<Parameters<typeof undici.interceptors.cache>[0]>;
+type CacheStore = NonNullable<CacheInterceptorOptions['store']>;
+
+type FetchPatchFactory = (options?: {
+	interceptors?: readonly undici.Dispatcher.DispatcherComposeInterceptor[];
+}) => typeof globalThis.fetch;
+
+export type NodeFetchCacheMode = 'off' | 'memory' | 'persistent';
+
+export interface NodeFetchCacheOptions {
+	readonly mode: NodeFetchCacheMode;
+	readonly storeLocation?: string;
+}
 
 export class NodeFetchFetcher extends BaseFetchFetcher {
 
@@ -18,8 +33,14 @@ export class NodeFetchFetcher extends BaseFetchFetcher {
 		envService: IEnvService,
 		reportEvent: ReportFetchEvent = () => { },
 		userAgentLibraryUpdate?: (original: string) => string,
+		cacheOptions: NodeFetchCacheOptions = { mode: 'memory' },
 	) {
-		super(getFetch(), envService, NodeFetchFetcher.ID, reportEvent, userAgentLibraryUpdate);
+		// Caching requires the host-provided fetch-patch factory so cached requests
+		// still go through the proxy/CA-injection patch. On older hosts that lack
+		// the factory, caching is silently disabled.
+		const factory = (globalThis as any).__vscodeCreateFetchPatch as FetchPatchFactory | undefined;
+		const interceptor = cacheOptions.mode !== 'off' && factory ? createCacheInterceptor(cacheOptions) : undefined;
+		super(getFetch(interceptor, factory), envService, NodeFetchFetcher.ID, reportEvent, userAgentLibraryUpdate);
 	}
 
 	getUserAgentLibrary(): string {
@@ -35,10 +56,44 @@ export class NodeFetchFetcher extends BaseFetchFetcher {
 	}
 }
 
-function getFetch(): typeof globalThis.fetch {
-	const fetch = (globalThis as any).__vscodePatchedFetch || globalThis.fetch;
-	return function (input: string | URL | globalThis.Request, init?: RequestInit) {
-		return fetch(input, { dispatcher: agent.value, ...init });
+function createCacheInterceptor(options: NodeFetchCacheOptions): undici.Dispatcher.DispatcherComposeInterceptor | undefined {
+	const store = createCacheStore(options);
+	if (!store) {
+		return undefined;
+	}
+	return taggedCacheInterceptor({ store, type: 'private' });
+}
+
+function createCacheStore(options: NodeFetchCacheOptions): CacheStore | undefined {
+	if (options.mode === 'persistent') {
+		const SqliteCacheStore = (undici as unknown as { cacheStores?: { SqliteCacheStore?: new (init?: object) => CacheStore } }).cacheStores?.SqliteCacheStore;
+		if (SqliteCacheStore && options.storeLocation) {
+			try {
+				return new SqliteCacheStore({
+					location: options.storeLocation,
+					maxCount: 5000,
+					maxEntrySize: 5 * 1024 * 1024,
+				});
+			} catch {
+			}
+		}
+	}
+	const MemoryCacheStore = (undici as unknown as { cacheStores?: { MemoryCacheStore?: new (init?: object) => CacheStore } }).cacheStores?.MemoryCacheStore;
+	if (!MemoryCacheStore) {
+		return undefined;
+	}
+	return new MemoryCacheStore({ maxCount: 1000, maxEntrySize: 5 * 1024 * 1024 });
+}
+
+function getFetch(cacheInterceptor: undici.Dispatcher.DispatcherComposeInterceptor | undefined, createFetchPatch: FetchPatchFactory | undefined): FetchImpl {
+	const defaultFetch = (globalThis as any).__vscodePatchedFetch || globalThis.fetch;
+	const cachedFetch = cacheInterceptor && createFetchPatch ? createFetchPatch({ interceptors: [cacheInterceptor] }) : undefined;
+	return function (input, init, useCache) {
+		if (useCache && cachedFetch) {
+			return cachedFetch(input, init);
+		}
+		const dispatcher = (init as { dispatcher?: undici.Dispatcher } | undefined)?.dispatcher ?? agent.value;
+		return defaultFetch(input, { ...init, dispatcher });
 	};
 }
 
diff --git a/extensions/copilot/src/platform/networking/node/taggedCacheInterceptor.ts b/extensions/copilot/src/platform/networking/node/taggedCacheInterceptor.ts
new file mode 100644
index 00000000000..ff1823cd136
--- /dev/null
+++ b/extensions/copilot/src/platform/networking/node/taggedCacheInterceptor.ts
@@ -0,0 +1,102 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import * as undici from 'undici';
+
+/**
+ * Internal response header stamped by {@link taggedCacheInterceptor} so the
+ * fetcher can attribute a response to the cache for telemetry purposes.
+ */
+export const VSCODE_CACHE_STATUS_HEADER = 'x-vscode-cache-status';
+
+export type CacheStatus = 'hit' | 'stale-hit' | 'revalidated' | 'miss';
+
+/**
+ * Wraps undici's built-in `interceptors.cache(...)` and stamps the served
+ * response with {@link VSCODE_CACHE_STATUS_HEADER} so downstream code can
+ * tell whether the response came from the cache without relying on header
+ * heuristics.
+ *
+ * Detection is based on observing whether the cache interceptor invoked the
+ * downstream dispatcher for a given request and whether it added conditional
+ * revalidation headers — both of which are deterministic for a given code
+ * path in `undici/lib/interceptor/cache.js`.
+ */
+export function taggedCacheInterceptor(
+	cacheOpts: Parameters<typeof undici.interceptors.cache>[0],
+): undici.Dispatcher.DispatcherComposeInterceptor {
+	const cacheInterceptor = undici.interceptors.cache(cacheOpts);
+
+	return (dispatch) => (opts, handler) => {
+		const state = { networkCalled: false, conditional: false };
+
+		const countingDispatch: typeof dispatch = (dOpts, dHandler) => {
+			state.networkCalled = true;
+			const h = dOpts.headers as Record<string, string> | undefined;
+			state.conditional = !!(h && (h['if-modified-since'] || h['if-none-match']));
+			return dispatch(dOpts, dHandler);
+		};
+
+		const taggingHandler = new Proxy(handler, {
+			get(target, prop, receiver) {
+				if (prop === 'onResponseStart') {
+					return (
+						controller: Parameters<NonNullable<undici.Dispatcher.DispatchHandler['onResponseStart']>>[0],
+						statusCode: number,
+						headers: unknown,
+						statusMessage?: string,
+					) => {
+						const status = classify(state, headers);
+						stampStatus(headers, status);
+						const orig = Reflect.get(target, prop, receiver) as undici.Dispatcher.DispatchHandler['onResponseStart'];
+						return orig?.call(target, controller, statusCode, headers as Parameters<NonNullable<undici.Dispatcher.DispatchHandler['onResponseStart']>>[2], statusMessage);
+					};
+				}
+				const value = Reflect.get(target, prop, receiver);
+				return typeof value === 'function' ? value.bind(target) : value;
+			},
+		}) as undici.Dispatcher.DispatchHandler;
+
+		return cacheInterceptor(countingDispatch)(opts, taggingHandler);
+	};
+}
+
+function classify(
+	state: { networkCalled: boolean; conditional: boolean },
+	headers: unknown,
+): CacheStatus {
+	if (!state.networkCalled) {
+		return isStaleWarning(headers) ? 'stale-hit' : 'hit';
+	}
+	if (state.conditional) {
+		return 'revalidated';
+	}
+	return 'miss';
+}
+
+function isStaleWarning(headers: unknown): boolean {
+	const value = readHeader(headers, 'warning');
+	return typeof value === 'string' && value.startsWith('110');
+}
+
+function readHeader(headers: unknown, name: string): string | undefined {
+	if (!headers || typeof headers !== 'object') {
+		return undefined;
+	}
+	const value = (headers as Record<string, unknown>)[name];
+	if (typeof value === 'string') {
+		return value;
+	}
+	if (Array.isArray(value) && typeof value[0] === 'string') {
+		return value[0];
+	}
+	return undefined;
+}
+
+function stampStatus(headers: unknown, status: CacheStatus): void {
+	if (headers && typeof headers === 'object' && !Array.isArray(headers)) {
+		(headers as Record<string, string>)[VSCODE_CACHE_STATUS_HEADER] = status;
+	}
+}
diff --git a/extensions/copilot/src/platform/networking/node/test/taggedCacheInterceptor.spec.ts b/extensions/copilot/src/platform/networking/node/test/taggedCacheInterceptor.spec.ts
new file mode 100644
index 00000000000..ad737da829a
--- /dev/null
+++ b/extensions/copilot/src/platform/networking/node/test/taggedCacheInterceptor.spec.ts
@@ -0,0 +1,129 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import type * as undici from 'undici';
+import { beforeEach, describe, expect, it, vi } from 'vitest';
+
+vi.mock('undici', () => {
+	const stub = {
+		interceptors: { cache: vi.fn() },
+	};
+	return { ...stub, default: stub };
+});
+
+type FakeDispatch = (opts: { headers?: Record<string, string> }, handler: undici.Dispatcher.DispatchHandler) => boolean;
+type CacheMiddleware = (dispatch: FakeDispatch) => FakeDispatch;
+
+async function importTagger() {
+	vi.resetModules();
+	const { taggedCacheInterceptor, VSCODE_CACHE_STATUS_HEADER } = await import('../taggedCacheInterceptor');
+	const undiciMock = (await import('undici')) as unknown as { interceptors: { cache: ReturnType<typeof vi.fn> } };
+	return { taggedCacheInterceptor, VSCODE_CACHE_STATUS_HEADER, undiciMock };
+}
+
+function makeController(): undici.Dispatcher.DispatchController {
+	return {} as undici.Dispatcher.DispatchController;
+}
+
+async function runTagger(middleware: CacheMiddleware): Promise<{ stamped: string | undefined; downstream: ReturnType<typeof vi.fn> }> {
+	const { taggedCacheInterceptor, VSCODE_CACHE_STATUS_HEADER, undiciMock } = await importTagger();
+	undiciMock.interceptors.cache.mockReturnValue(middleware);
+
+	const downstream = vi.fn(((_opts: { headers?: Record<string, string> }, _handler: undici.Dispatcher.DispatchHandler) => true) as FakeDispatch);
+	const tagger = taggedCacheInterceptor({} as Parameters<typeof undici.interceptors.cache>[0]);
+	const intercepted = tagger(downstream as unknown as undici.Dispatcher['dispatch']);
+
+	let stamped: string | undefined;
+	intercepted({ headers: {} } as undici.Dispatcher.DispatchOptions, {
+		onResponseStart: (_c, _s, headers) => {
+			stamped = (headers as Record<string, string>)[VSCODE_CACHE_STATUS_HEADER];
+		},
+	});
+	return { stamped, downstream };
+}
+
+describe('taggedCacheInterceptor', () => {
+	beforeEach(() => {
+		vi.resetModules();
+	});
+
+	it('classifies a cache hit when the downstream dispatch is never invoked', async () => {
+		const { stamped, downstream } = await runTagger(() => (_opts, handler) => {
+			handler.onResponseStart?.(makeController(), 200, { age: '60' }, 'OK');
+			return true;
+		});
+
+		expect(stamped).toBe('hit');
+		expect(downstream).not.toHaveBeenCalled();
+	});
+
+	it('classifies a stale hit when the served response carries a 110 warning', async () => {
+		const { stamped } = await runTagger(() => (_opts, handler) => {
+			handler.onResponseStart?.(makeController(), 200, { age: '120', warning: '110 - "response is stale"' }, 'OK');
+			return true;
+		});
+
+		expect(stamped).toBe('stale-hit');
+	});
+
+	it('classifies a revalidation when conditional headers reach the origin', async () => {
+		const { stamped, downstream } = await runTagger((dispatch) => (_opts, handler) => {
+			dispatch({ headers: { 'if-none-match': '"abc"' } }, {} as undici.Dispatcher.DispatchHandler);
+			handler.onResponseStart?.(makeController(), 200, {}, 'OK');
+			return true;
+		});
+
+		expect(stamped).toBe('revalidated');
+		expect(downstream).toHaveBeenCalledTimes(1);
+	});
+
+	it('classifies a miss when the cache passes the request through unchanged', async () => {
+		const { stamped, downstream } = await runTagger((dispatch) => (opts, handler) => {
+			dispatch(opts, {} as undici.Dispatcher.DispatchHandler);
+			handler.onResponseStart?.(makeController(), 200, {}, 'OK');
+			return true;
+		});
+
+		expect(stamped).toBe('miss');
+		expect(downstream).toHaveBeenCalledTimes(1);
+	});
+
+	it('does not throw when response headers are an array (raw wire format)', async () => {
+		const { taggedCacheInterceptor, undiciMock } = await importTagger();
+		const middleware: CacheMiddleware = () => (_opts, handler) => {
+			handler.onResponseStart?.(makeController(), 200, ['age', '60'] as unknown as Record<string, string>, 'OK');
+			return true;
+		};
+		undiciMock.interceptors.cache.mockReturnValue(middleware);
+
+		const tagger = taggedCacheInterceptor({} as Parameters<typeof undici.interceptors.cache>[0]);
+		const intercepted = tagger((() => true) as unknown as undici.Dispatcher['dispatch']);
+		expect(() => intercepted({ headers: {} } as undici.Dispatcher.DispatchOptions, { onResponseStart: () => { } })).not.toThrow();
+	});
+
+	it('forwards prototype-defined handler methods through the tagging proxy', async () => {
+		const { taggedCacheInterceptor, undiciMock } = await importTagger();
+		const middleware: CacheMiddleware = () => (_opts, handler) => {
+			handler.onResponseStart?.(makeController(), 200, {}, 'OK');
+			handler.onResponseData?.(makeController(), Buffer.from('chunk'));
+			handler.onResponseEnd?.(makeController(), {});
+			return true;
+		};
+		undiciMock.interceptors.cache.mockReturnValue(middleware);
+
+		const calls: string[] = [];
+		class ProtoHandler {
+			onResponseStart() { calls.push('start'); }
+			onResponseData() { calls.push('data'); }
+			onResponseEnd() { calls.push('end'); }
+		}
+
+		const tagger = taggedCacheInterceptor({} as Parameters<typeof undici.interceptors.cache>[0]);
+		const intercepted = tagger((() => true) as unknown as undici.Dispatcher['dispatch']);
+		intercepted({ headers: {} } as undici.Dispatcher.DispatchOptions, new ProtoHandler() as unknown as undici.Dispatcher.DispatchHandler);
+
+		expect(calls).toEqual(['start', 'data', 'end']);
+	});
+});
diff --git a/extensions/copilot/src/platform/networking/vscode-node/fetcherServiceImpl.ts b/extensions/copilot/src/platform/networking/vscode-node/fetcherServiceImpl.ts
index 13b03bf86e6..4c3fe7725ad 100644
--- a/extensions/copilot/src/platform/networking/vscode-node/fetcherServiceImpl.ts
+++ b/extensions/copilot/src/platform/networking/vscode-node/fetcherServiceImpl.ts
@@ -3,11 +3,13 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
+import * as path from 'path';
 import { Emitter } from '../../../util/vs/base/common/event';
 import { Disposable } from '../../../util/vs/base/common/lifecycle';
 import { Config, ConfigKey, ExperimentBasedConfig, ExperimentBasedConfigType, IConfigurationService } from '../../configuration/common/configurationService';
 import { INTEGRATION_ID } from '../../endpoint/common/licenseAgreement';
 import { IEnvService } from '../../env/common/envService';
+import { IVSCodeExtensionContext } from '../../extContext/common/extensionContext';
 import { ILogService } from '../../log/common/logService';
 import { IExperimentationService } from '../../telemetry/common/nullExperimentationService';
 import { ITelemetryService } from '../../telemetry/common/telemetry';
@@ -15,7 +17,7 @@ import { FetchEvent, FetchOptions, FetchTelemetryEvent, IAbortController, IFetch
 import { IFetcher } from '../common/networking';
 import { fetchWithFallbacks } from '../node/fetcherFallback';
 import { NodeFetcher } from '../node/nodeFetcher';
-import { createWebSocket, NodeFetchFetcher } from '../node/nodeFetchFetcher';
+import { createWebSocket, NodeFetchCacheMode, NodeFetchCacheOptions, NodeFetchFetcher } from '../node/nodeFetchFetcher';
 import { ElectronFetcher } from './electronFetcher';
 
 export class FetcherService extends Disposable implements IFetcherService {
@@ -35,6 +37,7 @@ export class FetcherService extends Disposable implements IFetcherService {
 		@ILogService private readonly _logService: ILogService,
 		@IEnvService private readonly _envService: IEnvService,
 		@IConfigurationService private readonly _configurationService: IConfigurationService,
+		@IVSCodeExtensionContext private readonly _extensionContext: IVSCodeExtensionContext,
 	) {
 		super();
 		this._availableFetchers = fetcher ? [fetcher] : undefined;
@@ -106,7 +109,7 @@ export class FetcherService extends Disposable implements IFetcherService {
 		}
 
 		// Node fetch preferred over Node https in fallbacks. (HTTP2 support)
-		const nodeFetchFetcher = new NodeFetchFetcher(envService, reportEvent);
+		const nodeFetchFetcher = new NodeFetchFetcher(envService, reportEvent, undefined, this._resolveNodeFetchCacheOptions(configurationService));
 		if (useNodeFetchFetcher) {
 			this._logService.info(`Using the Node fetch fetcher.`);
 			fetchers.unshift(nodeFetchFetcher);
@@ -125,6 +128,23 @@ export class FetcherService extends Disposable implements IFetcherService {
 		return fetchers;
 	}
 
+	private _resolveNodeFetchCacheOptions(configurationService: IConfigurationService): NodeFetchCacheOptions {
+		const mode = configurationService.getConfig(ConfigKey.Shared.DebugNodeFetchCache) as NodeFetchCacheMode;
+		if (mode === 'off') {
+			return { mode: 'off' };
+		}
+		if (mode === 'persistent') {
+			const storageUri = this._extensionContext.globalStorageUri;
+			if (storageUri && storageUri.scheme === 'file') {
+				return {
+					mode: 'persistent',
+					storeLocation: path.join(storageUri.fsPath, 'undici-cache.v1.sqlite'),
+				};
+			}
+		}
+		return { mode: 'memory' };
+	}
+
 	getUserAgentLibrary(): string {
 		return this._getAvailableFetchers()[0].getUserAgentLibrary();
 	}
@@ -154,6 +174,7 @@ export class FetcherService extends Disposable implements IFetcherService {
 					latencyMs: Date.now() - start,
 					statusCode: res.status,
 					success: res.ok,
+					cacheStatus: res.cacheStatus,
 				});
 			}
 			return res;
diff --git a/extensions/copilot/src/platform/networking/vscode-node/test/fetcherServiceCrash.spec.ts b/extensions/copilot/src/platform/networking/vscode-node/test/fetcherServiceCrash.spec.ts
index 3a3d638c28b..f01e42bf919 100644
--- a/extensions/copilot/src/platform/networking/vscode-node/test/fetcherServiceCrash.spec.ts
+++ b/extensions/copilot/src/platform/networking/vscode-node/test/fetcherServiceCrash.spec.ts
@@ -33,6 +33,7 @@ describe('FetcherService network process crash handling', () => {
 			logService,
 			{ machineId: '', sessionId: '', vscodeVersion: '', getName: () => 'test', getVersion: () => '0.0.0', getBuildType: () => 'development' as any } as any,
 			configurationService,
+			{ globalStorageUri: undefined } as any,
 		);
 		service.setExperimentationService(experimentationService);
 		// Inject the fetchers directly
@@ -215,6 +216,7 @@ describe('FetcherService network process crash handling', () => {
 				logService,
 				{ machineId: '', sessionId: '', vscodeVersion: '', getName: () => 'test', getVersion: () => '0.0.0', getBuildType: () => 'development' as any } as any,
 				configurationService,
+				{ globalStorageUri: undefined } as any,
 			);
 			(service as any)._availableFetchers = [electronFetcher, nodeFetcher];
 			// Explicitly do NOT call service.setExperimentationService()
diff --git a/extensions/copilot/src/platform/networking/vscode-node/test/nodeFetchFetcherCache.test.ts b/extensions/copilot/src/platform/networking/vscode-node/test/nodeFetchFetcherCache.test.ts
new file mode 100644
index 00000000000..140a60f52bb
--- /dev/null
+++ b/extensions/copilot/src/platform/networking/vscode-node/test/nodeFetchFetcherCache.test.ts
@@ -0,0 +1,210 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import * as assert from 'assert';
+import * as http from 'http';
+import { IFetcherService } from '../../common/fetcherService';
+import { createExtensionTestingServices } from '../../../../extension/test/vscode-node/services';
+import { ITestingServicesAccessor } from '../../../test/node/services';
+
+suite('NodeFetchFetcher cache - integration', function () {
+	let server: http.Server;
+	let origin: string;
+	let originHits: number;
+	let accessor: ITestingServicesAccessor;
+	let fetcher: IFetcherService;
+
+	suiteSetup(async function () {
+		if (typeof (globalThis as { __vscodeCreateFetchPatch?: unknown }).__vscodeCreateFetchPatch !== 'function') {
+			this.skip();
+		}
+
+		server = http.createServer((req, res) => {
+			originHits++;
+			const url = req.url ?? '';
+			if (url.startsWith('/cacheable')) {
+				res.writeHead(200, {
+					'content-type': 'application/json',
+					'cache-control': 'public, max-age=60',
+					'x-custom-header': 'preserved',
+				});
+				res.end(JSON.stringify({ hits: originHits, path: url }));
+				return;
+			}
+			if (url.startsWith('/private')) {
+				res.writeHead(200, {
+					'content-type': 'application/json',
+					'cache-control': 'private, max-age=60',
+				});
+				res.end(JSON.stringify({ hits: originHits }));
+				return;
+			}
+			if (url.startsWith('/etag')) {
+				if (req.headers['if-none-match'] === '"v1"') {
+					res.writeHead(304, { 'etag': '"v1"' });
+					res.end();
+					return;
+				}
+				res.writeHead(200, {
+					'content-type': 'application/json',
+					'cache-control': 'public, max-age=60',
+					'etag': '"v1"',
+				});
+				res.end(JSON.stringify({ hits: originHits }));
+				return;
+			}
+			if (url.startsWith('/no-store')) {
+				res.writeHead(200, {
+					'content-type': 'application/json',
+					'cache-control': 'no-store',
+				});
+				res.end(JSON.stringify({ hits: originHits }));
+				return;
+			}
+			res.writeHead(404);
+			res.end();
+		});
+		await new Promise<void>(resolve => server.listen(0, '127.0.0.1', resolve));
+		const port = (server.address() as { port: number }).port;
+		origin = `http://127.0.0.1:${port}`;
+	});
+
+	suiteTeardown(async () => {
+		if (!server) {
+			return;
+		}
+		await new Promise<void>(resolve => server.close(() => resolve()));
+	});
+
+	setup(() => {
+		originHits = 0;
+		accessor = createExtensionTestingServices().createTestingAccessor();
+		fetcher = accessor.get(IFetcherService);
+	});
+
+	test('serves the second cache-opted request from the in-memory store', async () => {
+		const first = await fetcher.fetch(`${origin}/cacheable?key=hit-miss`, { callSite: 'test', cache: true });
+		const firstBody = await first.json();
+		const second = await fetcher.fetch(`${origin}/cacheable?key=hit-miss`, { callSite: 'test', cache: true });
+		const secondBody = await second.json();
+
+		assert.strictEqual(originHits, 1, 'origin should be hit exactly once');
+		assert.strictEqual(first.cacheStatus, 'miss');
+		assert.strictEqual(second.cacheStatus, 'hit');
+		assert.deepStrictEqual(secondBody, firstBody, 'cached body should match origin body');
+		assert.notStrictEqual(second.headers.get('age'), null, 'cache hit should carry age header');
+	});
+
+	test('leaves requests uncached when the caller does not opt in', async () => {
+		const first = await fetcher.fetch(`${origin}/cacheable?key=no-opt-in`, { callSite: 'test' });
+		await first.text();
+		const second = await fetcher.fetch(`${origin}/cacheable?key=no-opt-in`, { callSite: 'test' });
+		await second.text();
+
+		assert.strictEqual(originHits, 2, 'every request should hit the origin');
+		assert.strictEqual(first.cacheStatus, undefined);
+		assert.strictEqual(second.cacheStatus, undefined);
+	});
+
+	test('respects cache-control: no-store from the origin', async () => {
+		const first = await fetcher.fetch(`${origin}/no-store?key=no-store`, { callSite: 'test', cache: true });
+		await first.text();
+		const second = await fetcher.fetch(`${origin}/no-store?key=no-store`, { callSite: 'test', cache: true });
+		await second.text();
+
+		assert.strictEqual(originHits, 2, 'no-store responses must not be served from cache');
+		assert.strictEqual(first.cacheStatus, 'miss');
+		assert.strictEqual(second.cacheStatus, 'miss');
+	});
+
+	test('does not cache POST requests', async () => {
+		const first = await fetcher.fetch(`${origin}/cacheable?key=post`, { callSite: 'test', cache: true, method: 'POST', body: '{}' });
+		await first.text();
+		const second = await fetcher.fetch(`${origin}/cacheable?key=post`, { callSite: 'test', cache: true, method: 'POST', body: '{}' });
+		await second.text();
+
+		assert.strictEqual(originHits, 2, 'POST requests must always reach the origin');
+		assert.strictEqual(first.cacheStatus, 'miss');
+		assert.strictEqual(second.cacheStatus, 'miss');
+	});
+
+	test('caches different URLs independently', async () => {
+		const a1 = await fetcher.fetch(`${origin}/cacheable?key=urlA`, { callSite: 'test', cache: true });
+		await a1.text();
+		const b1 = await fetcher.fetch(`${origin}/cacheable?key=urlB`, { callSite: 'test', cache: true });
+		await b1.text();
+		const a2 = await fetcher.fetch(`${origin}/cacheable?key=urlA`, { callSite: 'test', cache: true });
+		await a2.text();
+		const b2 = await fetcher.fetch(`${origin}/cacheable?key=urlB`, { callSite: 'test', cache: true });
+		await b2.text();
+
+		assert.strictEqual(originHits, 2, 'each distinct URL should hit the origin once');
+		assert.strictEqual(a1.cacheStatus, 'miss');
+		assert.strictEqual(b1.cacheStatus, 'miss');
+		assert.strictEqual(a2.cacheStatus, 'hit');
+		assert.strictEqual(b2.cacheStatus, 'hit');
+	});
+
+	test('keys cache entries by query string', async () => {
+		const v1 = await fetcher.fetch(`${origin}/cacheable?v=1`, { callSite: 'test', cache: true });
+		await v1.text();
+		const v2 = await fetcher.fetch(`${origin}/cacheable?v=2`, { callSite: 'test', cache: true });
+		await v2.text();
+
+		assert.strictEqual(originHits, 2, 'different query strings should not collide');
+		assert.strictEqual(v1.cacheStatus, 'miss');
+		assert.strictEqual(v2.cacheStatus, 'miss');
+	});
+
+	test('preserves status, body and response headers on a cache hit', async () => {
+		const first = await fetcher.fetch(`${origin}/cacheable?key=headers`, { callSite: 'test', cache: true });
+		const firstBody = await first.json();
+		const second = await fetcher.fetch(`${origin}/cacheable?key=headers`, { callSite: 'test', cache: true });
+		const secondBody = await second.json();
+
+		assert.strictEqual(originHits, 1);
+		assert.strictEqual(second.status, first.status);
+		assert.strictEqual(second.statusText, first.statusText);
+		assert.strictEqual(second.headers.get('content-type'), 'application/json');
+		assert.strictEqual(second.headers.get('x-custom-header'), 'preserved');
+		assert.deepStrictEqual(secondBody, firstBody);
+	});
+
+	test('caches Cache-Control: private responses in the private store', async () => {
+		const first = await fetcher.fetch(`${origin}/private?key=private`, { callSite: 'test', cache: true });
+		await first.text();
+		const second = await fetcher.fetch(`${origin}/private?key=private`, { callSite: 'test', cache: true });
+		await second.text();
+
+		assert.strictEqual(originHits, 1, 'private responses should be cached in the private store');
+		assert.strictEqual(first.cacheStatus, 'miss');
+		assert.strictEqual(second.cacheStatus, 'hit');
+	});
+
+	test('reports revalidated when the origin returns 304 Not Modified', async () => {
+		const first = await fetcher.fetch(`${origin}/etag?key=etag`, { callSite: 'test', cache: true });
+		const firstBody = await first.json();
+		const second = await fetcher.fetch(`${origin}/etag?key=etag`, { callSite: 'test', cache: true, headers: { 'cache-control': 'no-cache' } });
+		const secondBody = await second.json();
+
+		assert.strictEqual(originHits, 2, 'a 304 still counts as an origin request');
+		assert.strictEqual(first.cacheStatus, 'miss');
+		assert.strictEqual(second.cacheStatus, 'revalidated');
+		assert.strictEqual(second.status, 200, 'revalidated response is served with the cached 200 status');
+		assert.deepStrictEqual(secondBody, firstBody, 'revalidated response carries the cached body');
+	});
+
+	test('coalesces or caches concurrent requests so the second is not an extra miss', async () => {
+		const [a, b] = await Promise.all([
+			fetcher.fetch(`${origin}/cacheable?key=concurrent`, { callSite: 'test', cache: true }),
+			fetcher.fetch(`${origin}/cacheable?key=concurrent`, { callSite: 'test', cache: true }),
+		]);
+		await Promise.all([a.text(), b.text()]);
+		const third = await fetcher.fetch(`${origin}/cacheable?key=concurrent`, { callSite: 'test', cache: true });
+		await third.text();
+		assert.ok(originHits <= 2, `origin hit at most twice for concurrent fetches, got ${originHits}`);
+		assert.strictEqual(third.cacheStatus, 'hit');
+	});
+});
diff --git a/extensions/copilot/src/platform/telemetry/vscode-node/telemetryServiceImpl.ts b/extensions/copilot/src/platform/telemetry/vscode-node/telemetryServiceImpl.ts
index b03c5e1a747..05062a44e3f 100644
--- a/extensions/copilot/src/platform/telemetry/vscode-node/telemetryServiceImpl.ts
+++ b/extensions/copilot/src/platform/telemetry/vscode-node/telemetryServiceImpl.ts
@@ -89,12 +89,14 @@ export class TelemetryService extends BaseTelemetryService {
 						"owner": "lramos15",
 						"comment": "Telemetry about fetch requests made by the extension, tracking request counts and latency per call site.",
 						"callSite": { "classification": "SystemMetaData", "purpose": "PerformanceAndHealth", "comment": "The call site identifier for the fetch request." },
+						"cacheStatus": { "classification": "SystemMetaData", "purpose": "PerformanceAndHealth", "comment": "Cache outcome for callers that opted in: 'hit', 'stale-hit', 'revalidated', 'miss', 'bypass'. Empty string when caching was not requested." },
 						"latencyMs": { "classification": "SystemMetaData", "purpose": "PerformanceAndHealth", "isMeasurement": true, "comment": "The latency of the fetch request in milliseconds." },
 						"statusCode": { "classification": "SystemMetaData", "purpose": "PerformanceAndHealth", "isMeasurement": true, "comment": "The HTTP status code returned by the fetch request." }
 					}
 				*/
 				this.sendMSFTTelemetryEvent('fetchTelemetry', {
 					callSite: new TelemetryTrustedValue(event.callSite),
+					cacheStatus: event.cacheStatus ?? '',
 				}, {
 					latencyMs: event.latencyMs,
 					statusCode: event.statusCode,
diff --git a/package-lock.json b/package-lock.json
index d66f20bf3ba..f76a83d76b4 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -29,7 +29,7 @@
         "@vscode/iconv-lite-umd": "0.7.1",
         "@vscode/native-watchdog": "^1.4.6",
         "@vscode/policy-watcher": "^1.3.2",
-        "@vscode/proxy-agent": "^0.41.0",
+        "@vscode/proxy-agent": "^0.42.0",
         "@vscode/ripgrep-universal": "^1.18.0",
         "@vscode/sandbox-runtime": "0.0.1",
         "@vscode/spdlog": "^0.15.8",
@@ -4044,9 +4044,9 @@
       }
     },
     "node_modules/@vscode/proxy-agent": {
-      "version": "0.41.0",
-      "resolved": "https://registry.npmjs.org/@vscode/proxy-agent/-/proxy-agent-0.41.0.tgz",
-      "integrity": "sha512-xdjSPUu6DyC7+RBRftrj06OBG/xVLc0dsxhhwMzwfd9/pOGm8j4Zc70arq1jQb0s7EF4m9dAFoNjmSigfzN25A==",
+      "version": "0.42.0",
+      "resolved": "https://registry.npmjs.org/@vscode/proxy-agent/-/proxy-agent-0.42.0.tgz",
+      "integrity": "sha512-uFEBHiWPtBdbn+BFBVzyCMqqhdxRaRdPawLen1JZ+zM8pdKHsrVO+smmo/PbM6HgHr+MKGezDmxZ9cEHv49gEQ==",
       "license": "MIT",
       "dependencies": {
         "@tootallnate/once": "^3.0.0",
diff --git a/package.json b/package.json
index 5c55cb1c919..6a56b956940 100644
--- a/package.json
+++ b/package.json
@@ -106,7 +106,7 @@
     "@vscode/iconv-lite-umd": "0.7.1",
     "@vscode/native-watchdog": "^1.4.6",
     "@vscode/policy-watcher": "^1.3.2",
-    "@vscode/proxy-agent": "^0.41.0",
+    "@vscode/proxy-agent": "^0.42.0",
     "@vscode/ripgrep-universal": "^1.18.0",
     "@vscode/sandbox-runtime": "0.0.1",
     "@vscode/spdlog": "^0.15.8",
diff --git a/remote/package-lock.json b/remote/package-lock.json
index 98ec6babcd6..34d559ec1ba 100644
--- a/remote/package-lock.json
+++ b/remote/package-lock.json
@@ -17,7 +17,7 @@
         "@vscode/deviceid": "^0.1.1",
         "@vscode/iconv-lite-umd": "0.7.1",
         "@vscode/native-watchdog": "^1.4.6",
-        "@vscode/proxy-agent": "^0.41.0",
+        "@vscode/proxy-agent": "^0.42.0",
         "@vscode/ripgrep-universal": "^1.18.0",
         "@vscode/sandbox-runtime": "0.0.1",
         "@vscode/spdlog": "^0.15.8",
@@ -586,9 +586,9 @@
       "license": "MIT"
     },
     "node_modules/@vscode/proxy-agent": {
-      "version": "0.41.0",
-      "resolved": "https://registry.npmjs.org/@vscode/proxy-agent/-/proxy-agent-0.41.0.tgz",
-      "integrity": "sha512-xdjSPUu6DyC7+RBRftrj06OBG/xVLc0dsxhhwMzwfd9/pOGm8j4Zc70arq1jQb0s7EF4m9dAFoNjmSigfzN25A==",
+      "version": "0.42.0",
+      "resolved": "https://registry.npmjs.org/@vscode/proxy-agent/-/proxy-agent-0.42.0.tgz",
+      "integrity": "sha512-uFEBHiWPtBdbn+BFBVzyCMqqhdxRaRdPawLen1JZ+zM8pdKHsrVO+smmo/PbM6HgHr+MKGezDmxZ9cEHv49gEQ==",
       "license": "MIT",
       "dependencies": {
         "@tootallnate/once": "^3.0.0",
diff --git a/remote/package.json b/remote/package.json
index 8d7a7a7f06e..80e06e711be 100644
--- a/remote/package.json
+++ b/remote/package.json
@@ -12,7 +12,7 @@
     "@vscode/deviceid": "^0.1.1",
     "@vscode/iconv-lite-umd": "0.7.1",
     "@vscode/native-watchdog": "^1.4.6",
-    "@vscode/proxy-agent": "^0.41.0",
+    "@vscode/proxy-agent": "^0.42.0",
     "@vscode/ripgrep-universal": "^1.18.0",
     "@vscode/sandbox-runtime": "0.0.1",
     "@vscode/spdlog": "^0.15.8",
diff --git a/src/vs/workbench/api/node/proxyResolver.ts b/src/vs/workbench/api/node/proxyResolver.ts
index 9a96891bf86..f06627f88c2 100644
--- a/src/vs/workbench/api/node/proxyResolver.ts
+++ b/src/vs/workbench/api/node/proxyResolver.ts
@@ -142,9 +142,12 @@ function patchGlobalFetch(params: ProxyAgentParams, configProvider: ExtHostConfi
 		const originalFetch = globalThis.fetch;
 		// eslint-disable-next-line local/code-no-any-casts
 		(globalThis as any).__vscodeOriginalFetch = originalFetch;
-		const patchedFetch = proxyAgent.createFetchPatch(params, originalFetch, resolveProxyURL);
+		const createPatchedFetch = (options?: proxyAgent.CreateFetchPatchOptions) => proxyAgent.createFetchPatch(params, originalFetch, resolveProxyURL, options);
+		const patchedFetch = createPatchedFetch();
 		// eslint-disable-next-line local/code-no-any-casts
 		(globalThis as any).__vscodePatchedFetch = patchedFetch;
+		// eslint-disable-next-line local/code-no-any-casts
+		(globalThis as any).__vscodeCreateFetchPatch = createPatchedFetch;
 		let useElectronFetch = false;
 		if (!initData.remote.isRemote) {
 			useElectronFetch = configProvider.getConfiguration('http').get<boolean>('electronFetch', useElectronFetchDefault);