diff --git a/assets/agents/toyota-ios-developer.md b/assets/agents/toyota-ios-developer.agent.md
similarity index 100%
rename from assets/agents/toyota-ios-developer.md
rename to assets/agents/toyota-ios-developer.agent.md
diff --git a/assets/setup.sh b/assets/setup.sh
index a7b30ef..fae7f7f 100755
--- a/assets/setup.sh
+++ b/assets/setup.sh
@@ -17,10 +17,10 @@ VERSION="2.1.0"
 
 # ── Configuration (override with env vars) ───────────────────────────
 # Default paths use ~/.agents/ — the tool-agnostic directory.
-# The npx skills CLI copies into tool-specific dirs (~/.copilot/,
-# ~/.claude/, ~/.cursor/) automatically.
+# AGENTS_DIR now defaults to ~/.agents (not ~/.agents/agents) so agent loaders (e.g., VS Code Copilot Chat) can find them.
+# The npx skills CLI copies into tool-specific dirs (~/.copilot/, ~/.claude/, ~/.cursor/) automatically.
 ASSETS_BASE_URL="${ASSETS_BASE_URL:-}"
-AGENTS_DIR="${AGENTS_DIR:-$HOME/.agents/agents}"
+AGENTS_DIR="${AGENTS_DIR:-$HOME/.agents}"
 SKILLS_DIR="${SKILLS_DIR:-$HOME/.agents/skills}"
 INSTRUCTIONS_DIR="${INSTRUCTIONS_DIR:-./instructions}"
 REPO_TOKEN="${REPO_TOKEN:-}"
@@ -261,6 +261,7 @@ cmd_agents() {
   done <<< "$files"
 
   ok "$count agent(s) installed."
+  echo "\n${YELLOW}NOTE:${NC} Agent files are now installed directly in $AGENTS_DIR for compatibility with agent loaders."
 }
 
 # -- instructions ─────────────────────────────────────────────────────
@@ -337,7 +338,7 @@ ${BOLD}EXAMPLES${NC}
 
 ${BOLD}ENVIRONMENT VARIABLES${NC}
   ASSETS_BASE_URL      Base URL for remote downloads (required without clone)
-  AGENTS_DIR           Install location for agents       (default: ~/.agents/agents)
+  AGENTS_DIR           Install location for agents       (default: ~/.agents)
   SKILLS_DIR           Install location for custom skills (default: ~/.agents/skills)
   INSTRUCTIONS_DIR     Install location for instructions (default: ./instructions)
   REPO_TOKEN           Auth token for private repos      (optional)