diff --git a/hooks/ponytail-runtime.js b/hooks/ponytail-runtime.js
index 37d682f..db0c477 100644
--- a/hooks/ponytail-runtime.js
+++ b/hooks/ponytail-runtime.js
@@ -4,13 +4,28 @@ const os = require('os');
 const { getClaudeDir, getConfigDir } = require('./ponytail-config');
 
 const STATE_FILE = '.ponytail-active';
-const isCopilot = Boolean(process.env.COPILOT_PLUGIN_DATA);
+
+// ponytail: VS Code Copilot never sets COPILOT_PLUGIN_DATA — it only injects
+// CLAUDE_PLUGIN_ROOT, pointed at an install path under .vscode/agent-plugins/
+// (#528). Without this fallback isCopilot was false, so ponytail assumed
+// native Claude Code and emitted the statusline nudge, which VS Code Copilot
+// doesn't read.
+function isVsCodeCopilotRoot(pluginRoot) {
+  if (!pluginRoot) return false;
+  return pluginRoot.split(/[\\/]+/).includes('agent-plugins') &&
+    pluginRoot.toLowerCase().includes('.vscode');
+}
+
+const isCopilot = Boolean(process.env.COPILOT_PLUGIN_DATA) ||
+  isVsCodeCopilotRoot(process.env.CLAUDE_PLUGIN_ROOT);
 const isCodex = !isCopilot && Boolean(process.env.PLUGIN_DATA);
 const isQoder = !isCopilot && !isCodex && Boolean(process.env.QODER_SESSION_ID);
 
 let stateDir = getClaudeDir();
 if (isCodex) stateDir = process.env.PLUGIN_DATA;
-if (isCopilot) stateDir = process.env.COPILOT_PLUGIN_DATA;
+// COPILOT_PLUGIN_DATA is unset under VS Code Copilot, so fall back to
+// getClaudeDir() rather than building a path from undefined.
+if (isCopilot) stateDir = process.env.COPILOT_PLUGIN_DATA || getClaudeDir();
 if (isQoder) stateDir = path.join(os.homedir(), '.qoder');
 
 const statePath = path.join(stateDir, STATE_FILE);
diff --git a/tests/hooks.test.js b/tests/hooks.test.js
index bf4a8eb..44ee922 100644
--- a/tests/hooks.test.js
+++ b/tests/hooks.test.js
@@ -198,6 +198,36 @@ assert.equal(
 output = JSON.parse(result.stdout);
 assert.match(output.additionalContext, /PONYTAIL MODE ACTIVE — level: full/);
 
+// VS Code Copilot never sets COPILOT_PLUGIN_DATA — it only injects
+// CLAUDE_PLUGIN_ROOT pointed at an agent-plugins/.../.vscode install path
+// (#528). Without a fallback, isCopilot was false, so ponytail assumed
+// native Claude Code and emitted the statusline nudge — noise, since VS
+// Code Copilot doesn't read Claude's statusLine setting.
+const vscodeHome = path.join(temp, 'vscode-copilot-home');
+const vscodePluginRoot = path.join(
+  vscodeHome, '.vscode', 'agent-plugins', 'github.com', 'DietrichGebert', 'ponytail', 'hooks',
+);
+fs.mkdirSync(vscodeHome, { recursive: true });
+result = run('ponytail-activate.js', {
+  HOME: vscodeHome,
+  USERPROFILE: vscodeHome,
+  CLAUDE_PLUGIN_ROOT: vscodePluginRoot,
+  PONYTAIL_DEFAULT_MODE: 'full',
+});
+assert.equal(result.status, 0, result.stderr);
+assert.ok(
+  !result.stdout.includes('STATUSLINE SETUP NEEDED'),
+  'VS Code Copilot (detected via CLAUDE_PLUGIN_ROOT) must not get the Claude-only statusline nudge',
+);
+// isCopilot must still resolve a state dir even though COPILOT_PLUGIN_DATA
+// is unset under VS Code — falling back to ~/.claude, not crashing on an
+// undefined path.
+assert.equal(
+  fs.readFileSync(path.join(vscodeHome, '.claude', '.ponytail-active'), 'utf8'),
+  'full',
+  'VS Code Copilot must persist mode state under getClaudeDir(), not a path built from the unset COPILOT_PLUGIN_DATA',
+);
+
 result = run(
   'ponytail-mode-tracker.js',
   {