diff --git a/packages/client/src/lib/__tests__/event-reducer.test.ts b/packages/client/src/lib/__tests__/event-reducer.test.ts
index 525872475..d547f3ee1 100644
--- a/packages/client/src/lib/__tests__/event-reducer.test.ts
+++ b/packages/client/src/lib/__tests__/event-reducer.test.ts
@@ -3354,3 +3354,188 @@ describe("advisor message_end rows", () => {
     expect(unrelated.messages).toHaveLength(0);
   });
 });
+describe("issue #126: live thinking flush on mid-turn tool execution", () => {
+  it("flushes streamingThinking into a thinking row when tool_execution_start occurs", () => {
+    let state = createInitialState();
+    const t0 = 1000;
+
+    state = reduceEvent(
+      state,
+      {
+        eventType: "message_update",
+        timestamp: t0,
+        data: { assistantMessageEvent: { type: "thinking_start" } },
+      },
+      { isLive: true },
+    );
+    state = reduceEvent(
+      state,
+      {
+        eventType: "message_update",
+        timestamp: t0 + 10,
+        data: { assistantMessageEvent: { type: "thinking_delta", delta: "Analyzing code..." } },
+      },
+      { isLive: true },
+    );
+
+    expect(state.streamingThinking).toBe("Analyzing code...");
+    expect(state.messages).toHaveLength(0);
+
+    state = reduceEvent(
+      state,
+      {
+        eventType: "tool_execution_start",
+        timestamp: t0 + 20,
+        data: { toolCallId: "call_sub126", toolName: "agent" },
+      },
+      { isLive: true },
+    );
+
+    expect(state.streamingThinking).toBe("");
+    expect(state.thinkingStartedAt).toBeUndefined();
+
+    expect(state.messages).toHaveLength(2);
+    expect(state.messages[0]).toMatchObject({
+      role: "thinking",
+      content: "Analyzing code...",
+      streamedLive: true,
+      startedAt: t0,
+      duration: 20,
+    });
+    expect(state.messages[1]).toMatchObject({
+      role: "toolResult",
+      toolCallId: "call_sub126",
+      toolName: "agent",
+    });
+  });
+
+  it("does not create a duplicate thinking row when thinking_end fires after flush", () => {
+    let state = createInitialState();
+    const t0 = 1000;
+
+    state = reduceEvent(
+      state,
+      {
+        eventType: "message_update",
+        timestamp: t0,
+        data: { assistantMessageEvent: { type: "thinking_start" } },
+      },
+      { isLive: true },
+    );
+    state = reduceEvent(
+      state,
+      {
+        eventType: "message_update",
+        timestamp: t0 + 10,
+        data: { assistantMessageEvent: { type: "thinking_delta", delta: "Subagent prompt" } },
+      },
+      { isLive: true },
+    );
+    state = reduceEvent(
+      state,
+      {
+        eventType: "tool_execution_start",
+        timestamp: t0 + 20,
+        data: { toolCallId: "call_1", toolName: "task" },
+      },
+      { isLive: true },
+    );
+
+    expect(state.messages.filter((m) => m.role === "thinking")).toHaveLength(1);
+
+    state = reduceEvent(
+      state,
+      {
+        eventType: "message_update",
+        timestamp: t0 + 30,
+        data: { assistantMessageEvent: { type: "thinking_end" } },
+      },
+      { isLive: true },
+    );
+
+    expect(state.messages.filter((m) => m.role === "thinking")).toHaveLength(1);
+  });
+
+  it("flushes previous thinking block when a new thinking_start arrives before thinking_end", () => {
+    let state = createInitialState();
+    const t0 = 1000;
+
+    state = reduceEvent(
+      state,
+      {
+        eventType: "message_update",
+        timestamp: t0,
+        data: { assistantMessageEvent: { type: "thinking_start" } },
+      },
+      { isLive: true },
+    );
+    state = reduceEvent(
+      state,
+      {
+        eventType: "message_update",
+        timestamp: t0 + 10,
+        data: { assistantMessageEvent: { type: "thinking_delta", delta: "First block" } },
+      },
+      { isLive: true },
+    );
+
+    state = reduceEvent(
+      state,
+      {
+        eventType: "message_update",
+        timestamp: t0 + 50,
+        data: { assistantMessageEvent: { type: "thinking_start" } },
+      },
+      { isLive: true },
+    );
+
+    expect(state.messages).toHaveLength(1);
+    expect(state.messages[0]).toMatchObject({
+      role: "thinking",
+      content: "First block",
+    });
+    expect(state.streamingThinking).toBe("");
+    expect(state.thinkingStartedAt).toBe(t0 + 50);
+  });
+
+  it("respects isLive flag for streamedLive and isolates subagent state", () => {
+    let state = createInitialState();
+    const t0 = 1000;
+
+    state = reduceEvent(
+      state,
+      {
+        eventType: "message_update",
+        timestamp: t0,
+        data: { assistantMessageEvent: { type: "thinking_start" } },
+      },
+      { isLive: false },
+    );
+    state = reduceEvent(
+      state,
+      {
+        eventType: "message_update",
+        timestamp: t0 + 10,
+        data: { assistantMessageEvent: { type: "thinking_delta", delta: "Cold replay thinking" } },
+      },
+      { isLive: false },
+    );
+    state = reduceEvent(
+      state,
+      {
+        eventType: "tool_execution_start",
+        timestamp: t0 + 20,
+        data: { toolCallId: "call_sub", toolName: "agent" },
+      },
+      { isLive: false },
+    );
+
+    expect(state.messages[0]).toMatchObject({
+      role: "thinking",
+      content: "Cold replay thinking",
+      streamedLive: false,
+    });
+
+    expect(state.subagents.size).toBe(0);
+  });
+});
diff --git a/packages/client/src/lib/event-reducer.ts b/packages/client/src/lib/event-reducer.ts
index d0df2c33a..c09d4cf70 100644
--- a/packages/client/src/lib/event-reducer.ts
+++ b/packages/client/src/lib/event-reducer.ts
@@ -727,6 +727,59 @@ const TURN_BOUNDARY_ROLES: ReadonlySet<ChatMessage["role"]> = new Set([
  * @param timestamp Event timestamp (used as the row's `timestamp`)
  * @param toolCallId Id of the upcoming tool — used as the row's stable id anchor
  */
+/**
+ * Flush the current `streamingThinking` into a permanent `thinking` ChatMessage
+ * row. Called when a tool/subagent is executed mid-thought or when a new thinking
+ * block begins before `thinking_end` fires.
+ */
+export function flushStreamingThinkingAsRow(
+  state: SessionState,
+  timestamp: number,
+  isLive: boolean,
+  seq?: number,
+  toolCallId?: string,
+): SessionState {
+  if (!state.streamingThinking) return state;
+
+  const startedAt = state.thinkingStartedAt;
+  const duration = startedAt ? timestamp - startedAt : undefined;
+  const id = toolCallId
+    ? seq !== undefined
+      ? `thinking-${seq}-flush-${toolCallId}`
+      : `thinking-${state.messages.length}-flush-${toolCallId}`
+    : seq !== undefined
+      ? `thinking-${seq}-0`
+      : `thinking-${state.messages.length}`;
+
+  if (state.messages.some((m) => m.id === id)) {
+    return {
+      ...state,
+      streamingThinking: "",
+      streamingThinkingCollapsed: false,
+      thinkingStartedAt: undefined,
+    };
+  }
+
+  const thinkingRow: ChatMessage = {
+    id,
+    role: "thinking",
+    content: state.streamingThinking,
+    timestamp,
+    startedAt,
+    duration,
+    streamedLive: state.streamingThinkingCollapsed ? false : isLive,
+    seq,
+  };
+
+  return {
+    ...state,
+    messages: [...state.messages, thinkingRow],
+    streamingThinking: "",
+    streamingThinkingCollapsed: false,
+    thinkingStartedAt: undefined,
+  };
+}
+
 export function flushStreamingTextAsAssistantRow(
   state: SessionState,
   timestamp: number,
@@ -1589,6 +1642,12 @@ export function reduceEvent(
       // Handle thinking events from assistantMessageEvent
       if (assistantEvent) {
         if (assistantEvent.type === "thinking_start") {
+          if (next.streamingThinking) {
+            Object.assign(
+              next,
+              flushStreamingThinkingAsRow(next, event.timestamp, isLive, seq),
+            );
+          }
           next.pendingThinking = "";
           next.streamingThinking = "";
           next.streamingThinkingCollapsed = false;
@@ -1848,6 +1907,12 @@ export function reduceEvent(
       // See change: fix-reducer-crash-undefined-toolname.
       const toolName = typeof data.toolName === "string" ? data.toolName : "unknown";
 
+      if (next.streamingThinking) {
+        Object.assign(
+          next,
+          flushStreamingThinkingAsRow(next, event.timestamp, isLive, seq, toolCallId),
+        );
+      }
       // Flush any pending streamingText into a permanent assistant row
       // BEFORE pushing the new toolResult, so the message's content-array
       // order is preserved in messages[] for the entire tool runtime —