diff --git a/packages/coding-agent/src/config.ts b/packages/coding-agent/src/config.ts
index 817b6ea1..0dd06a2b 100644
--- a/packages/coding-agent/src/config.ts
+++ b/packages/coding-agent/src/config.ts
@@ -142,11 +142,16 @@ export function getSettingsPath(): string {
 	return join(getAgentDir(), "settings.json");
 }
 
-/** Get path to tools directory */
+/** Get path to tools directory (deprecated, use extensions/ for JS/TS tools) */
 export function getToolsDir(): string {
 	return join(getAgentDir(), "tools");
 }
 
+/** Get path to managed binaries directory (fd, rg) */
+export function getBinDir(): string {
+	return join(getAgentDir(), "bin");
+}
+
 /** Get path to prompt templates directory */
 export function getPromptsDir(): string {
 	return join(getAgentDir(), "prompts");
diff --git a/packages/coding-agent/src/migrations.ts b/packages/coding-agent/src/migrations.ts
index 7f99774a..3febdd09 100644
--- a/packages/coding-agent/src/migrations.ts
+++ b/packages/coding-agent/src/migrations.ts
@@ -3,9 +3,9 @@
  */
 
 import chalk from "chalk";
-import { existsSync, mkdirSync, readdirSync, readFileSync, renameSync, writeFileSync } from "fs";
+import { existsSync, mkdirSync, readdirSync, readFileSync, renameSync, rmSync, writeFileSync } from "fs";
 import { dirname, join } from "path";
-import { CONFIG_DIR_NAME, getAgentDir } from "./config.js";
+import { CONFIG_DIR_NAME, getAgentDir, getBinDir } from "./config.js";
 
 const MIGRATION_GUIDE_URL =
 	"https://github.com/badlogic/pi-mono/blob/main/packages/coding-agent/CHANGELOG.md#extensions-migration";
@@ -152,6 +152,50 @@ function migrateCommandsToPrompts(baseDir: string, label: string): boolean {
 	return false;
 }
 
+/**
+ * Move fd/rg binaries from tools/ to bin/ if they exist.
+ */
+function migrateToolsToBin(): void {
+	const agentDir = getAgentDir();
+	const toolsDir = join(agentDir, "tools");
+	const binDir = getBinDir();
+
+	if (!existsSync(toolsDir)) return;
+
+	const binaries = ["fd", "rg", "fd.exe", "rg.exe"];
+	let movedAny = false;
+
+	for (const bin of binaries) {
+		const oldPath = join(toolsDir, bin);
+		const newPath = join(binDir, bin);
+
+		if (existsSync(oldPath)) {
+			if (!existsSync(binDir)) {
+				mkdirSync(binDir, { recursive: true });
+			}
+			if (!existsSync(newPath)) {
+				try {
+					renameSync(oldPath, newPath);
+					movedAny = true;
+				} catch {
+					// Ignore errors
+				}
+			} else {
+				// Target exists, just delete the old one
+				try {
+					rmSync?.(oldPath, { force: true });
+				} catch {
+					// Ignore
+				}
+			}
+		}
+	}
+
+	if (movedAny) {
+		console.log(chalk.green(`Migrated managed binaries tools/ → bin/`));
+	}
+}
+
 /**
  * Check for deprecated hooks/ and tools/ directories.
  * Note: tools/ may contain fd/rg binaries extracted by pi, so only warn if it has other files.
@@ -169,7 +213,16 @@ function checkDeprecatedExtensionDirs(baseDir: string, label: string): string[]
 		// Check if tools/ contains anything other than fd/rg (which are auto-extracted binaries)
 		try {
 			const entries = readdirSync(toolsDir);
-			const customTools = entries.filter((e) => e !== "fd" && e !== "rg" && e !== "fd.exe" && e !== "rg.exe");
+			const customTools = entries.filter((e) => {
+				const lower = e.toLowerCase();
+				return (
+					lower !== "fd" &&
+					lower !== "rg" &&
+					lower !== "fd.exe" &&
+					lower !== "rg.exe" &&
+					!e.startsWith(".") // Ignore .DS_Store and other hidden files
+				);
+			});
 			if (customTools.length > 0) {
 				warnings.push(
 					`${label} tools/ directory contains custom tools. Custom tools have been merged into extensions.`,
@@ -240,6 +293,7 @@ export function runMigrations(cwd: string = process.cwd()): {
 } {
 	const migratedAuthProviders = migrateAuthToAuthJson();
 	migrateSessionsFromAgentRoot();
+	migrateToolsToBin();
 	const deprecationWarnings = migrateExtensionSystem(cwd);
 	return { migratedAuthProviders, deprecationWarnings };
 }
diff --git a/packages/coding-agent/src/utils/tools-manager.ts b/packages/coding-agent/src/utils/tools-manager.ts
index e969950c..ebb4ca10 100644
--- a/packages/coding-agent/src/utils/tools-manager.ts
+++ b/packages/coding-agent/src/utils/tools-manager.ts
@@ -5,9 +5,9 @@ import { arch, platform } from "os";
 import { join } from "path";
 import { Readable } from "stream";
 import { finished } from "stream/promises";
-import { APP_NAME, getToolsDir } from "../config.js";
+import { APP_NAME, getBinDir } from "../config.js";
 
-const TOOLS_DIR = getToolsDir();
+const TOOLS_DIR = getBinDir();
 
 interface ToolConfig {
 	name: string;