diff --git a/packages/coding-agent/CHANGELOG.md b/packages/coding-agent/CHANGELOG.md
index f4de7060..761aef6f 100644
--- a/packages/coding-agent/CHANGELOG.md
+++ b/packages/coding-agent/CHANGELOG.md
@@ -5,6 +5,7 @@
 ### Added
 
 - `markdown.codeBlockIndent` setting to customize code block indentation in rendered output
+- Added `inline-bash.ts` example extension for expanding `!{command}` patterns in prompts
 
 ### Fixed
 
diff --git a/packages/coding-agent/examples/extensions/README.md b/packages/coding-agent/examples/extensions/README.md
index 48b75dd6..fb8f3cc4 100644
--- a/packages/coding-agent/examples/extensions/README.md
+++ b/packages/coding-agent/examples/extensions/README.md
@@ -63,6 +63,7 @@ cp permission-gate.ts ~/.pi/agent/extensions/
 | `doom-overlay/` | DOOM game running as an overlay at 35 FPS (demonstrates real-time game rendering) |
 | `shutdown-command.ts` | Adds `/quit` command demonstrating `ctx.shutdown()` |
 | `interactive-shell.ts` | Run interactive commands (vim, htop) with full terminal via `user_bash` hook |
+| `inline-bash.ts` | Expands `!{command}` patterns in prompts via `input` event transformation |
 
 ### Git Integration
 
diff --git a/packages/coding-agent/examples/extensions/inline-bash.ts b/packages/coding-agent/examples/extensions/inline-bash.ts
new file mode 100644
index 00000000..07b56d00
--- /dev/null
+++ b/packages/coding-agent/examples/extensions/inline-bash.ts
@@ -0,0 +1,94 @@
+/**
+ * Inline Bash Extension - expands inline bash commands in user prompts.
+ *
+ * Start pi with this extension:
+ *   pi -e ./examples/extensions/inline-bash.ts
+ *
+ * Then type prompts with inline bash:
+ *   What's in !{pwd}?
+ *   The current branch is !{git branch --show-current} and status: !{git status --short}
+ *   My node version is !{node --version}
+ *
+ * The !{command} patterns are executed and replaced with their output before
+ * the prompt is sent to the agent.
+ *
+ * Note: Regular !command syntax (whole-line bash) is preserved and works as before.
+ */
+import type { ExtensionAPI } from "@mariozechner/pi-coding-agent";
+
+export default function (pi: ExtensionAPI) {
+	const PATTERN = /!\{([^}]+)\}/g;
+	const TIMEOUT_MS = 30000;
+
+	pi.on("input", async (event, ctx) => {
+		const text = event.text;
+
+		// Don't process if it's a whole-line bash command (starts with !)
+		// This preserves the existing !command behavior
+		if (text.trimStart().startsWith("!") && !text.trimStart().startsWith("!{")) {
+			return { action: "continue" };
+		}
+
+		// Check if there are any inline bash patterns
+		if (!PATTERN.test(text)) {
+			return { action: "continue" };
+		}
+
+		// Reset regex state after test()
+		PATTERN.lastIndex = 0;
+
+		let result = text;
+		const expansions: Array<{ command: string; output: string; error?: string }> = [];
+
+		// Find all matches first (to avoid issues with replacing while iterating)
+		const matches: Array<{ full: string; command: string }> = [];
+		let match = PATTERN.exec(text);
+		while (match) {
+			matches.push({ full: match[0], command: match[1] });
+			match = PATTERN.exec(text);
+		}
+
+		// Execute each command and collect results
+		for (const { full, command } of matches) {
+			try {
+				const bashResult = await pi.exec("bash", ["-c", command], {
+					timeout: TIMEOUT_MS,
+				});
+
+				const output = bashResult.stdout || bashResult.stderr || "";
+				const trimmed = output.trim();
+
+				if (bashResult.code !== 0 && bashResult.stderr) {
+					expansions.push({
+						command,
+						output: trimmed,
+						error: `exit code ${bashResult.code}`,
+					});
+				} else {
+					expansions.push({ command, output: trimmed });
+				}
+
+				result = result.replace(full, trimmed);
+			} catch (err) {
+				const errorMsg = err instanceof Error ? err.message : String(err);
+				expansions.push({ command, output: "", error: errorMsg });
+				result = result.replace(full, `[error: ${errorMsg}]`);
+			}
+		}
+
+		// Show what was expanded (if UI available)
+		if (ctx.hasUI && expansions.length > 0) {
+			const summary = expansions
+				.map((e) => {
+					const status = e.error ? ` (${e.error})` : "";
+					const preview = e.output.length > 50 ? `${e.output.slice(0, 50)}...` : e.output;
+					return `!{${e.command}}${status} -> "${preview}"`;
+				})
+				.join("\n");
+
+			ctx.ui.notify(`Expanded ${expansions.length} inline command(s):\n${summary}`, "info");
+		}
+
+		return { action: "transform", text: result, images: event.images };
+	});
+}