diff --git a/packages/coding-agent/CHANGELOG.md b/packages/coding-agent/CHANGELOG.md
index 8a96453f..2c0ce287 100644
--- a/packages/coding-agent/CHANGELOG.md
+++ b/packages/coding-agent/CHANGELOG.md
@@ -24,6 +24,10 @@
 - Unified collision reporting with `ResourceDiagnostic` type for all resource types ([#645](https://github.com/badlogic/pi-mono/issues/645))
 - Show provider alongside the model in the footer if multiple providers are available
 
+### Fixed
+
+- Off-by-one error in bash output "earlier lines" count caused by counting spacing newline as hidden content ([#921](https://github.com/badlogic/pi-mono/issues/921))
+
 ### Changed
 
 - `/reload` now re-renders the entire scrollback so updated extension components are visible immediately
diff --git a/packages/coding-agent/src/modes/interactive/components/tool-execution.ts b/packages/coding-agent/src/modes/interactive/components/tool-execution.ts
index 0df2f4d0..52bda96d 100644
--- a/packages/coding-agent/src/modes/interactive/components/tool-execution.ts
+++ b/packages/coding-agent/src/modes/interactive/components/tool-execution.ts
@@ -368,7 +368,6 @@ export class ToolExecutionComponent extends Container {
 					this.contentBox.addChild(new Text(`\n${styledOutput}`, 0, 0));
 				} else {
 					// Use visual line truncation when collapsed with width-aware caching
-					const textContent = `\n${styledOutput}`;
 					let cachedWidth: number | undefined;
 					let cachedLines: string[] | undefined;
 					let cachedSkipped: number | undefined;
@@ -376,7 +375,7 @@ export class ToolExecutionComponent extends Container {
 					this.contentBox.addChild({
 						render: (width: number) => {
 							if (cachedLines === undefined || cachedWidth !== width) {
-								const result = truncateToVisualLines(textContent, BASH_PREVIEW_LINES, width);
+								const result = truncateToVisualLines(styledOutput, BASH_PREVIEW_LINES, width);
 								cachedLines = result.visualLines;
 								cachedSkipped = result.skippedCount;
 								cachedWidth = width;
@@ -387,7 +386,8 @@ export class ToolExecutionComponent extends Container {
 									` ${keyHint("expandTools", "to expand")})`;
 								return ["", hint, ...cachedLines];
 							}
-							return cachedLines;
+							// Add blank line for spacing (matches expanded case)
+							return ["", ...cachedLines];
 						},
 						invalidate: () => {
 							cachedWidth = undefined;