diff --git a/.squad/skills/agent-collaboration/SKILL.md b/.copilot/skills/agent-collaboration/SKILL.md
similarity index 100%
rename from .squad/skills/agent-collaboration/SKILL.md
rename to .copilot/skills/agent-collaboration/SKILL.md
diff --git a/.squad/skills/agent-conduct/SKILL.md b/.copilot/skills/agent-conduct/SKILL.md
similarity index 100%
rename from .squad/skills/agent-conduct/SKILL.md
rename to .copilot/skills/agent-conduct/SKILL.md
diff --git a/.squad/skills/architectural-proposals/SKILL.md b/.copilot/skills/architectural-proposals/SKILL.md
similarity index 100%
rename from .squad/skills/architectural-proposals/SKILL.md
rename to .copilot/skills/architectural-proposals/SKILL.md
diff --git a/.squad/skills/ci-validation-gates/SKILL.md b/.copilot/skills/ci-validation-gates/SKILL.md
similarity index 100%
rename from .squad/skills/ci-validation-gates/SKILL.md
rename to .copilot/skills/ci-validation-gates/SKILL.md
diff --git a/.squad/skills/cli-wiring/SKILL.md b/.copilot/skills/cli-wiring/SKILL.md
similarity index 100%
rename from .squad/skills/cli-wiring/SKILL.md
rename to .copilot/skills/cli-wiring/SKILL.md
diff --git a/.squad/skills/client-compatibility/SKILL.md b/.copilot/skills/client-compatibility/SKILL.md
similarity index 100%
rename from .squad/skills/client-compatibility/SKILL.md
rename to .copilot/skills/client-compatibility/SKILL.md
diff --git a/.squad/skills/distributed-mesh/SKILL.md b/.copilot/skills/distributed-mesh/SKILL.md
similarity index 98%
rename from .squad/skills/distributed-mesh/SKILL.md
rename to .copilot/skills/distributed-mesh/SKILL.md
index 624db9626..b2e924450 100644
--- a/.squad/skills/distributed-mesh/SKILL.md
+++ b/.copilot/skills/distributed-mesh/SKILL.md
@@ -157,7 +157,7 @@ Ask these questions (adapt phrasing naturally, but get these answers):
 
 ### Step 2: GENERATE `mesh.json`
 
-Using the answers from Step 1, create a `mesh.json` file at the project root. Use `mesh.json.example` from THIS skill's directory (`.squad/skills/distributed-mesh/mesh.json.example`) as the schema template.
+Using the answers from Step 1, create a `mesh.json` file at the project root. Use `mesh.json.example` from THIS skill's directory (`.copilot/skills/distributed-mesh/mesh.json.example`) as the schema template.
 
 Structure:
 
@@ -187,10 +187,10 @@ Write this file to the project root. Do NOT write any other code.
 
 Copy the bundled sync scripts from THIS skill's directory into the project root:
 
-- **Source:** `.squad/skills/distributed-mesh/sync-mesh.sh`
+- **Source:** `.copilot/skills/distributed-mesh/sync-mesh.sh`
 - **Destination:** `sync-mesh.sh` (project root)
 
-- **Source:** `.squad/skills/distributed-mesh/sync-mesh.ps1`
+- **Source:** `.copilot/skills/distributed-mesh/sync-mesh.ps1`
 - **Destination:** `sync-mesh.ps1` (project root)
 
 These are bundled resources. Do NOT generate them — COPY them directly.
diff --git a/.squad/skills/distributed-mesh/mesh.json.example b/.copilot/skills/distributed-mesh/mesh.json.example
similarity index 100%
rename from .squad/skills/distributed-mesh/mesh.json.example
rename to .copilot/skills/distributed-mesh/mesh.json.example
diff --git a/.squad/skills/distributed-mesh/sync-mesh.ps1 b/.copilot/skills/distributed-mesh/sync-mesh.ps1
similarity index 100%
rename from .squad/skills/distributed-mesh/sync-mesh.ps1
rename to .copilot/skills/distributed-mesh/sync-mesh.ps1
diff --git a/.squad/skills/distributed-mesh/sync-mesh.sh b/.copilot/skills/distributed-mesh/sync-mesh.sh
similarity index 100%
rename from .squad/skills/distributed-mesh/sync-mesh.sh
rename to .copilot/skills/distributed-mesh/sync-mesh.sh
diff --git a/.squad/skills/git-workflow/SKILL.md b/.copilot/skills/git-workflow/SKILL.md
similarity index 100%
rename from .squad/skills/git-workflow/SKILL.md
rename to .copilot/skills/git-workflow/SKILL.md
diff --git a/.squad/skills/github-multi-account/SKILL.md b/.copilot/skills/github-multi-account/SKILL.md
similarity index 100%
rename from .squad/skills/github-multi-account/SKILL.md
rename to .copilot/skills/github-multi-account/SKILL.md
diff --git a/.squad/skills/history-hygiene/SKILL.md b/.copilot/skills/history-hygiene/SKILL.md
similarity index 100%
rename from .squad/skills/history-hygiene/SKILL.md
rename to .copilot/skills/history-hygiene/SKILL.md
diff --git a/.squad/skills/init-mode/SKILL.md b/.copilot/skills/init-mode/SKILL.md
similarity index 100%
rename from .squad/skills/init-mode/SKILL.md
rename to .copilot/skills/init-mode/SKILL.md
diff --git a/.squad/skills/model-selection/SKILL.md b/.copilot/skills/model-selection/SKILL.md
similarity index 100%
rename from .squad/skills/model-selection/SKILL.md
rename to .copilot/skills/model-selection/SKILL.md
diff --git a/.squad/skills/release-process/SKILL.md b/.copilot/skills/release-process/SKILL.md
similarity index 100%
rename from .squad/skills/release-process/SKILL.md
rename to .copilot/skills/release-process/SKILL.md
diff --git a/.squad/skills/reskill/SKILL.md b/.copilot/skills/reskill/SKILL.md
similarity index 97%
rename from .squad/skills/reskill/SKILL.md
rename to .copilot/skills/reskill/SKILL.md
index 946de0e0b..ab6571010 100644
--- a/.squad/skills/reskill/SKILL.md
+++ b/.copilot/skills/reskill/SKILL.md
@@ -23,7 +23,7 @@ Read all agent charters and histories. Measure byte sizes. Identify:
 
 ### Step 2: Extract
 For each identified pattern:
-1. Create or update a skill at `.squad/skills/{skill-name}/SKILL.md`
+1. Create or update a skill at `.copilot/skills/{skill-name}/SKILL.md`
 2. Follow the skill template format (frontmatter + Context + Patterns + Examples + Anti-Patterns)
 3. Set confidence: low (first observation), medium (2+ agents), high (team-wide)
 
diff --git a/.squad/skills/reviewer-protocol/SKILL.md b/.copilot/skills/reviewer-protocol/SKILL.md
similarity index 100%
rename from .squad/skills/reviewer-protocol/SKILL.md
rename to .copilot/skills/reviewer-protocol/SKILL.md
diff --git a/.squad/skills/secret-handling/SKILL.md b/.copilot/skills/secret-handling/SKILL.md
similarity index 100%
rename from .squad/skills/secret-handling/SKILL.md
rename to .copilot/skills/secret-handling/SKILL.md
diff --git a/.squad/skills/squad-conventions/SKILL.md b/.copilot/skills/squad-conventions/SKILL.md
similarity index 97%
rename from .squad/skills/squad-conventions/SKILL.md
rename to .copilot/skills/squad-conventions/SKILL.md
index 72eca68ed..eae1d1f6e 100644
--- a/.squad/skills/squad-conventions/SKILL.md
+++ b/.copilot/skills/squad-conventions/SKILL.md
@@ -28,7 +28,7 @@ Colors are defined as constants at the top of `index.js`: `GREEN`, `RED`, `DIM`,
 - `.squad/templates/` — Template files copied from `templates/` (Squad-owned, overwritten on upgrade)
 - `.github/agents/squad.agent.md` — Coordinator prompt (Squad-owned, overwritten on upgrade)
 - `templates/` — Source templates shipped with the npm package
-- `.squad/skills/` — Team skills in SKILL.md format (user-owned)
+- `.copilot/skills/` — Team skills in SKILL.md format (user-owned)
 - `.squad/decisions/inbox/` — Drop-box for parallel decision writes
 
 ### Windows Compatibility
diff --git a/.github/agents/squad.agent.md b/.github/agents/squad.agent.md
index 3ff306728..76e094490 100644
--- a/.github/agents/squad.agent.md
+++ b/.github/agents/squad.agent.md
@@ -29,7 +29,7 @@ Check: Does `.squad/team.md` exist? (fall back to `.ai-team/team.md` for repos m
 
 ## Init Mode
 
-**Skill:** Read `.squad/skills/init-mode/SKILL.md` when entering Init Mode (team.md missing or empty).
+**Skill:** Read `.copilot/skills/init-mode/SKILL.md` when entering Init Mode (team.md missing or empty).
 
 **Core rules (always loaded):**
 - Phase 1: Propose team → use `ask_user` → **STOP** and wait for confirmation
@@ -207,7 +207,7 @@ The routing table determines **WHO** handles work. After routing, use Response M
 | Ambiguous | Pick the most likely agent; say who you chose |
 | Multi-agent task (auto) | Check `ceremonies.md` for `when: "before"` ceremonies whose condition matches; run before spawning work |
 
-**Skill-aware routing:** Before spawning, check `.squad/skills/` for skills relevant to the task domain. If a matching skill exists, add to the spawn prompt: `Relevant skill: .squad/skills/{name}/SKILL.md — read before starting.` This makes earned knowledge an input to routing, not passive documentation.
+**Skill-aware routing:** Before spawning, check `.copilot/skills/` for skills relevant to the task domain. If a matching skill exists, add to the spawn prompt: `Relevant skill: .copilot/skills/{name}/SKILL.md — read before starting.` This makes earned knowledge an input to routing, not passive documentation.
 
 ### Skill Confidence Lifecycle
 
@@ -287,7 +287,7 @@ For read-only queries, use the explore agent: `agent_type: "explore"` with `"You
 
 ### Per-Agent Model Selection
 
-**Skill:** Read `.squad/skills/model-selection/SKILL.md` before spawning any agent.
+**Skill:** Read `.copilot/skills/model-selection/SKILL.md` before spawning any agent.
 
 **Core rules (always loaded):**
 - 4-layer hierarchy: User Override → Charter Preference → Task-Aware Auto → Default (haiku)
@@ -298,7 +298,7 @@ For read-only queries, use the explore agent: `agent_type: "explore"` with `"You
 
 ### Client Compatibility
 
-**Skill:** Read `.squad/skills/client-compatibility/SKILL.md` for platform detection and adaptive spawning patterns.
+**Skill:** Read `.copilot/skills/client-compatibility/SKILL.md` for platform detection and adaptive spawning patterns.
 
 **Core rules (always loaded):**
 - Platform detection: `task` available → CLI (full control), `runSubagent` → VS Code (session model, parallel in one turn), neither → inline fallback
@@ -310,7 +310,7 @@ For read-only queries, use the explore agent: `agent_type: "explore"` with `"You
 
 MCP (Model Context Protocol) servers extend Squad with tools for external services — Trello, Aspire dashboards, Azure, Notion, and more. The user configures MCP servers in their environment; Squad discovers and uses them.
 
-> **Full patterns:** Read `.squad/skills/mcp-tool-discovery/SKILL.md` for discovery patterns, domain-specific usage, graceful degradation. Read `.squad/templates/mcp-config.md` for config file locations, sample configs, and authentication notes.
+> **Full patterns:** Read `.copilot/skills/mcp-tool-discovery/SKILL.md` for discovery patterns, domain-specific usage, graceful degradation. Read `.squad/templates/mcp-config.md` for config file locations, sample configs, and authentication notes.
 
 #### Detection
 
@@ -506,7 +506,7 @@ prompt: |
   Read .squad/decisions.md (team decisions to respect).
   If .squad/identity/wisdom.md exists, read it before starting work.
   If .squad/identity/now.md exists, read it at spawn time.
-  If .squad/skills/ has relevant SKILL.md files, read them before working.
+  If .copilot/skills/ has relevant SKILL.md files, read them before working.
   
   {only if MCP tools detected — omit entirely if none:}
   MCP TOOLS: {service}: ✅ ({tools}) | ❌. Fall back to CLI when unavailable.
@@ -530,7 +530,7 @@ prompt: |
   2. If you made a team-relevant decision, write to:
      .squad/decisions/inbox/{name}-{brief-slug}.md
   3. SKILL EXTRACTION: If you found a reusable pattern, write/update
-     .squad/skills/{skill-name}/SKILL.md (read templates/skill.md for format).
+     .copilot/skills/{skill-name}/SKILL.md (read templates/skill.md for format).
   
   ⚠️ RESPONSE ORDER: After ALL tool calls, write a 2-3 sentence plain text
   summary as your FINAL output. No tool calls after this summary.
@@ -615,7 +615,7 @@ Ceremonies are structured team meetings where agents align before or after work.
 
 If the user says "I need a designer" or "add someone for DevOps":
 1. **Allocate a name** from the current assignment's universe (read from `.squad/casting/history.json`). If the universe is exhausted, apply overflow handling (see Casting & Persistent Naming → Overflow Handling).
-2. **Check plugin marketplaces.** If `.squad/plugins/marketplaces.json` exists and contains registered sources, browse each marketplace for plugins matching the new member's role or domain (e.g., "azure-cloud-development" for an Azure DevOps role). Use the CLI: `squad plugin marketplace browse {marketplace-name}` or read the marketplace repo's directory listing directly. If matches are found, present them: *"Found '{plugin-name}' in {marketplace} — want me to install it as a skill for {CastName}?"* If the user accepts, copy the plugin content into `.squad/skills/{plugin-name}/SKILL.md` or merge relevant instructions into the agent's charter. If no marketplaces are configured, skip silently. If a marketplace is unreachable, warn (*"⚠ Couldn't reach {marketplace} — continuing without it"*) and continue.
+2. **Check plugin marketplaces.** If `.squad/plugins/marketplaces.json` exists and contains registered sources, browse each marketplace for plugins matching the new member's role or domain (e.g., "azure-cloud-development" for an Azure DevOps role). Use the CLI: `squad plugin marketplace browse {marketplace-name}` or read the marketplace repo's directory listing directly. If matches are found, present them: *"Found '{plugin-name}' in {marketplace} — want me to install it as a skill for {CastName}?"* If the user accepts, copy the plugin content into `.copilot/skills/{plugin-name}/SKILL.md` or merge relevant instructions into the agent's charter. If no marketplaces are configured, skip silently. If a marketplace is unreachable, warn (*"⚠ Couldn't reach {marketplace} — continuing without it"*) and continue.
 3. Generate a new charter.md + history.md (seeded with project context from team.md), using the cast name. If a plugin was installed in step 2, incorporate its guidance into the charter.
 4. **Update `.squad/casting/registry.json`** with the new agent entry.
 5. Add to team.md roster.
@@ -638,7 +638,7 @@ If the user wants to remove someone:
 **Core rules (always loaded):**
 - Check `.squad/plugins/marketplaces.json` during Add Team Member flow (after name allocation, before charter)
 - Present matching plugins for user approval
-- Install: copy to `.squad/skills/{plugin-name}/SKILL.md`, log to history.md
+- Install: copy to `.copilot/skills/{plugin-name}/SKILL.md`, log to history.md
 - Skip silently if no marketplaces configured
 
 ---
@@ -741,7 +741,7 @@ When `.squad/team.md` exists but `.squad/casting/` does not:
 
 ## Reviewer Rejection Protocol
 
-**Skill:** Read `.squad/skills/reviewer-protocol/SKILL.md` when a Reviewer rejects work.
+**Skill:** Read `.copilot/skills/reviewer-protocol/SKILL.md` when a Reviewer rejects work.
 
 **Core rules (always loaded):**
 - On rejection: original author is **locked out** — may NOT self-revise, no exceptions
diff --git a/packages/squad-cli/bradygaster-squad-cli-0.8.25-build.10.tgz b/packages/squad-cli/bradygaster-squad-cli-0.8.25-build.10.tgz
new file mode 100644
index 000000000..9c2449f49
Binary files /dev/null and b/packages/squad-cli/bradygaster-squad-cli-0.8.25-build.10.tgz differ
diff --git a/packages/squad-cli/src/cli/commands/build.ts b/packages/squad-cli/src/cli/commands/build.ts
index e2261a8a7..dee7b1c3d 100644
--- a/packages/squad-cli/src/cli/commands/build.ts
+++ b/packages/squad-cli/src/cli/commands/build.ts
@@ -270,7 +270,7 @@ function generateCeremoniesDispatchTable(ceremonies: readonly CeremonyDefinition
     const schedule = c.schedule ?? '—';
     const participants = c.participants?.join(', ') ?? '—';
     const slug = c.name.toLowerCase().replace(/[^a-z0-9]+/g, '-').replace(/(^-|-$)/g, '');
-    const skillPath = `.squad/skills/ceremony-${slug}/SKILL.md`;
+    const skillPath = `.copilot/skills/ceremony-${slug}/SKILL.md`;
     lines.push(`| ${c.name} | ${trigger} | ${schedule} | ${participants} | \`${skillPath}\` |`);
   }
 
@@ -382,7 +382,7 @@ function buildFilePlan(config: SquadSDKConfig): GeneratedFile[] {
       for (const c of config.ceremonies) {
         const slug = c.name.toLowerCase().replace(/[^a-z0-9]+/g, '-').replace(/(^-|-$)/g, '');
         files.push({
-          relPath: `.squad/skills/ceremony-${slug}/SKILL.md`,
+          relPath: `.copilot/skills/ceremony-${slug}/SKILL.md`,
           content: generateCeremonySkillFile(c),
         });
       }
@@ -399,7 +399,7 @@ function buildFilePlan(config: SquadSDKConfig): GeneratedFile[] {
   if (config.skills && config.skills.length > 0) {
     for (const skill of config.skills) {
       files.push({
-        relPath: `.squad/skills/${skill.name}/SKILL.md`,
+        relPath: `.copilot/skills/${skill.name}/SKILL.md`,
         content: generateSkillFile(skill),
       });
     }
diff --git a/packages/squad-cli/src/cli/commands/export.ts b/packages/squad-cli/src/cli/commands/export.ts
index 30f4687c1..9cb64bd11 100644
--- a/packages/squad-cli/src/cli/commands/export.ts
+++ b/packages/squad-cli/src/cli/commands/export.ts
@@ -71,11 +71,18 @@ export async function runExport(dest: string, outPath?: string): Promise<void> {
   }
 
   // Read skills
-  const skillsDir = path.join(squadInfo.path, 'skills');
+  const skillSources = [
+    { dir: path.join(dest, '.copilot', 'skills'), layout: 'nested' as const },
+    { dir: path.join(squadInfo.path, 'skills'), layout: 'nested' as const },
+    { dir: path.join(dest, '.ai-team', 'skills'), layout: 'flat' as const },
+  ];
+  const skillsSource = skillSources.find(({ dir }) => fs.existsSync(dir));
   try {
-    if (fs.existsSync(skillsDir)) {
-      for (const entry of fs.readdirSync(skillsDir)) {
-        const skillFile = path.join(skillsDir, entry, 'SKILL.md');
+    if (skillsSource) {
+      for (const entry of fs.readdirSync(skillsSource.dir)) {
+        const skillFile = skillsSource.layout === 'nested'
+          ? path.join(skillsSource.dir, entry, 'SKILL.md')
+          : path.join(skillsSource.dir, entry);
         if (fs.existsSync(skillFile)) {
           manifest.skills.push(fs.readFileSync(skillFile, 'utf8'));
         }
diff --git a/packages/squad-cli/src/cli/commands/import.ts b/packages/squad-cli/src/cli/commands/import.ts
index 8ac378984..f9009f7c0 100644
--- a/packages/squad-cli/src/cli/commands/import.ts
+++ b/packages/squad-cli/src/cli/commands/import.ts
@@ -70,7 +70,7 @@ export async function runImport(dest: string, importPath: string, force: boolean
   fs.mkdirSync(path.join(squadDir, 'decisions', 'inbox'), { recursive: true });
   fs.mkdirSync(path.join(squadDir, 'orchestration-log'), { recursive: true });
   fs.mkdirSync(path.join(squadDir, 'log'), { recursive: true });
-  fs.mkdirSync(path.join(squadDir, 'skills'), { recursive: true });
+  fs.mkdirSync(path.join(dest, '.copilot', 'skills'), { recursive: true });
 
   // Write empty project-specific files
   fs.writeFileSync(path.join(squadDir, 'decisions.md'), '');
@@ -114,7 +114,7 @@ export async function runImport(dest: string, importPath: string, force: boolean
     const skillName = nameMatch
       ? nameMatch[1]!.trim().toLowerCase().replace(/\s+/g, '-')
       : `skill-${manifest.skills.indexOf(skillContent)}`;
-    const skillDir = path.join(squadDir, 'skills', skillName);
+    const skillDir = path.join(dest, '.copilot', 'skills', skillName);
     fs.mkdirSync(skillDir, { recursive: true });
     fs.writeFileSync(path.join(skillDir, 'SKILL.md'), skillContent);
   }
diff --git a/packages/squad-cli/src/cli/core/migrations.ts b/packages/squad-cli/src/cli/core/migrations.ts
index eb91ba6fa..c9ad3d331 100644
--- a/packages/squad-cli/src/cli/core/migrations.ts
+++ b/packages/squad-cli/src/cli/core/migrations.ts
@@ -46,6 +46,37 @@ const migrations: Migration[] = [
         }
       }
     }
+  },
+  {
+    version: '0.9.0',
+    description: 'Copy legacy .squad skills into .copilot/skills',
+    run(squadDir: string) {
+      const projectRoot = path.dirname(squadDir);
+      const legacySkillsDir = path.join(squadDir, 'skills');
+      if (!fs.existsSync(legacySkillsDir)) {
+        return;
+      }
+
+      const skillNames = fs.readdirSync(legacySkillsDir).filter(entry =>
+        fs.existsSync(path.join(legacySkillsDir, entry, 'SKILL.md')),
+      );
+      if (skillNames.length === 0) {
+        return;
+      }
+
+      const copilotSkillsDir = path.join(projectRoot, '.copilot', 'skills');
+      fs.mkdirSync(copilotSkillsDir, { recursive: true });
+
+      for (const skillName of skillNames) {
+        fs.cpSync(
+          path.join(legacySkillsDir, skillName),
+          path.join(copilotSkillsDir, skillName),
+          { recursive: true, force: false, errorOnExist: false },
+        );
+      }
+
+      success(`Migrated skills to .copilot/skills: ${skillNames.join(', ')}`);
+    }
   }
 ];
 
diff --git a/packages/squad-cli/src/cli/core/templates.ts b/packages/squad-cli/src/cli/core/templates.ts
index c39e9cba0..cef5b3f21 100644
--- a/packages/squad-cli/src/cli/core/templates.ts
+++ b/packages/squad-cli/src/cli/core/templates.ts
@@ -166,7 +166,7 @@ export const TEMPLATE_MANIFEST: TemplateFile[] = [
   // Skills subdirectory (squad-owned)
   {
     source: 'skills/squad-conventions/SKILL.md',
-    destination: 'skills/squad-conventions/SKILL.md',
+    destination: '../.copilot/skills/squad-conventions/SKILL.md',
     overwriteOnUpgrade: true,
     description: 'Squad conventions skill definition',
   },
diff --git a/packages/squad-cli/templates/mcp-config.md b/packages/squad-cli/templates/mcp-config.md
index 2e361ee4b..8ecabecf5 100644
--- a/packages/squad-cli/templates/mcp-config.md
+++ b/packages/squad-cli/templates/mcp-config.md
@@ -2,7 +2,7 @@
 
 MCP (Model Context Protocol) servers extend Squad with tools for external services — Trello, Aspire dashboards, Azure, Notion, and more. The user configures MCP servers in their environment; Squad discovers and uses them.
 
-> **Full patterns:** Read `.squad/skills/mcp-tool-discovery/SKILL.md` for discovery patterns, domain-specific usage, and graceful degradation.
+> **Full patterns:** Read `.copilot/skills/mcp-tool-discovery/SKILL.md` for discovery patterns, domain-specific usage, and graceful degradation.
 
 ## Config File Locations
 
diff --git a/packages/squad-cli/templates/plugin-marketplace.md b/packages/squad-cli/templates/plugin-marketplace.md
index 893632816..efef3d7a1 100644
--- a/packages/squad-cli/templates/plugin-marketplace.md
+++ b/packages/squad-cli/templates/plugin-marketplace.md
@@ -38,7 +38,7 @@ During the **Adding Team Members** flow, AFTER allocating a name but BEFORE gene
 ## How to Install a Plugin
 
 1. Read the plugin content from the marketplace repository (the plugin's `SKILL.md` or equivalent).
-2. Copy it into the agent's skills directory: `.squad/skills/{plugin-name}/SKILL.md`
+2. Copy it into the agent's skills directory: `.copilot/skills/{plugin-name}/SKILL.md`
 3. If the plugin includes charter-level instructions (role boundaries, tool preferences), merge those into the agent's `charter.md`.
 4. Log the installation in the agent's `history.md`: *"📦 Plugin '{plugin-name}' installed from {marketplace}."*
 
diff --git a/packages/squad-cli/templates/squad.agent.md b/packages/squad-cli/templates/squad.agent.md
index 23542b254..dffd7ee10 100644
--- a/packages/squad-cli/templates/squad.agent.md
+++ b/packages/squad-cli/templates/squad.agent.md
@@ -234,7 +234,7 @@ The routing table determines **WHO** handles work. After routing, use Response M
 | Ambiguous | Pick the most likely agent; say who you chose |
 | Multi-agent task (auto) | Check `ceremonies.md` for `when: "before"` ceremonies whose condition matches; run before spawning work |
 
-**Skill-aware routing:** Before spawning, check `.squad/skills/` for skills relevant to the task domain. If a matching skill exists, add to the spawn prompt: `Relevant skill: .squad/skills/{name}/SKILL.md — read before starting.` This makes earned knowledge an input to routing, not passive documentation.
+**Skill-aware routing:** Before spawning, check `.copilot/skills/` for skills relevant to the task domain. If a matching skill exists, add to the spawn prompt: `Relevant skill: .copilot/skills/{name}/SKILL.md — read before starting.` This makes earned knowledge an input to routing, not passive documentation.
 
 ### Skill Confidence Lifecycle
 
@@ -454,7 +454,7 @@ The `sql` tool is **CLI-only**. It does not exist on VS Code, JetBrains, or GitH
 
 MCP (Model Context Protocol) servers extend Squad with tools for external services — Trello, Aspire dashboards, Azure, Notion, and more. The user configures MCP servers in their environment; Squad discovers and uses them.
 
-> **Full patterns:** Read `.squad/skills/mcp-tool-discovery/SKILL.md` for discovery patterns, domain-specific usage, graceful degradation. Read `.squad/templates/mcp-config.md` for config file locations, sample configs, and authentication notes.
+> **Full patterns:** Read `.copilot/skills/mcp-tool-discovery/SKILL.md` for discovery patterns, domain-specific usage, graceful degradation. Read `.squad/templates/mcp-config.md` for config file locations, sample configs, and authentication notes.
 
 #### Detection
 
@@ -649,7 +649,7 @@ prompt: |
   Read .squad/decisions.md (team decisions to respect).
   If .squad/identity/wisdom.md exists, read it before starting work.
   If .squad/identity/now.md exists, read it at spawn time.
-  If .squad/skills/ has relevant SKILL.md files, read them before working.
+  If .copilot/skills/ has relevant SKILL.md files, read them before working.
   
   {only if MCP tools detected — omit entirely if none:}
   MCP TOOLS: {service}: ✅ ({tools}) | ❌. Fall back to CLI when unavailable.
@@ -671,7 +671,7 @@ prompt: |
   2. If you made a team-relevant decision, write to:
      .squad/decisions/inbox/{name}-{brief-slug}.md
   3. SKILL EXTRACTION: If you found a reusable pattern, write/update
-     .squad/skills/{skill-name}/SKILL.md (read templates/skill.md for format).
+     .copilot/skills/{skill-name}/SKILL.md (read templates/skill.md for format).
   
   ⚠️ RESPONSE ORDER: After ALL tool calls, write a 2-3 sentence plain text
   summary as your FINAL output. No tool calls after this summary.
@@ -756,7 +756,7 @@ Ceremonies are structured team meetings where agents align before or after work.
 
 If the user says "I need a designer" or "add someone for DevOps":
 1. **Allocate a name** from the current assignment's universe (read from `.squad/casting/history.json`). If the universe is exhausted, apply overflow handling (see Casting & Persistent Naming → Overflow Handling).
-2. **Check plugin marketplaces.** If `.squad/plugins/marketplaces.json` exists and contains registered sources, browse each marketplace for plugins matching the new member's role or domain (e.g., "azure-cloud-development" for an Azure DevOps role). Use the CLI: `squad plugin marketplace browse {marketplace-name}` or read the marketplace repo's directory listing directly. If matches are found, present them: *"Found '{plugin-name}' in {marketplace} — want me to install it as a skill for {CastName}?"* If the user accepts, copy the plugin content into `.squad/skills/{plugin-name}/SKILL.md` or merge relevant instructions into the agent's charter. If no marketplaces are configured, skip silently. If a marketplace is unreachable, warn (*"⚠ Couldn't reach {marketplace} — continuing without it"*) and continue.
+2. **Check plugin marketplaces.** If `.squad/plugins/marketplaces.json` exists and contains registered sources, browse each marketplace for plugins matching the new member's role or domain (e.g., "azure-cloud-development" for an Azure DevOps role). Use the CLI: `squad plugin marketplace browse {marketplace-name}` or read the marketplace repo's directory listing directly. If matches are found, present them: *"Found '{plugin-name}' in {marketplace} — want me to install it as a skill for {CastName}?"* If the user accepts, copy the plugin content into `.copilot/skills/{plugin-name}/SKILL.md` or merge relevant instructions into the agent's charter. If no marketplaces are configured, skip silently. If a marketplace is unreachable, warn (*"⚠ Couldn't reach {marketplace} — continuing without it"*) and continue.
 3. Generate a new charter.md + history.md (seeded with project context from team.md), using the cast name. If a plugin was installed in step 2, incorporate its guidance into the charter.
 4. **Update `.squad/casting/registry.json`** with the new agent entry.
 5. Add to team.md roster.
@@ -779,7 +779,7 @@ If the user wants to remove someone:
 **Core rules (always loaded):**
 - Check `.squad/plugins/marketplaces.json` during Add Team Member flow (after name allocation, before charter)
 - Present matching plugins for user approval
-- Install: copy to `.squad/skills/{plugin-name}/SKILL.md`, log to history.md
+- Install: copy to `.copilot/skills/{plugin-name}/SKILL.md`, log to history.md
 - Skip silently if no marketplaces configured
 
 ---
diff --git a/packages/squad-sdk/bradygaster-squad-sdk-0.8.25-build.10.tgz b/packages/squad-sdk/bradygaster-squad-sdk-0.8.25-build.10.tgz
new file mode 100644
index 000000000..3a2b7c71b
Binary files /dev/null and b/packages/squad-sdk/bradygaster-squad-sdk-0.8.25-build.10.tgz differ
diff --git a/packages/squad-sdk/src/config/init.ts b/packages/squad-sdk/src/config/init.ts
index 9a768e710..a2978f439 100644
--- a/packages/squad-sdk/src/config/init.ts
+++ b/packages/squad-sdk/src/config/init.ts
@@ -682,7 +682,7 @@ export async function initSquad(options: InitOptions): Promise<InitResult> {
     join(squadDir, 'casting'),
     join(squadDir, 'decisions'),
     join(squadDir, 'decisions', 'inbox'),
-    join(squadDir, 'skills'),
+    join(teamRoot, '.copilot', 'skills'),
     join(squadDir, 'plugins'),
     join(squadDir, 'identity'),
     join(squadDir, 'orchestration-log'),
@@ -901,13 +901,13 @@ ${projectDescription ? `- **Description:** ${projectDescription}\n` : ''}- **Cre
   // Copy starter skills
   // -------------------------------------------------------------------------
   
-  const skillsDir = join(squadDir, 'skills');
+  const skillsDir = join(teamRoot, '.copilot', 'skills');
   if (templatesDir && existsSync(join(templatesDir, 'skills'))) {
     const skillsSrc = join(templatesDir, 'skills');
     const existingSkills = existsSync(skillsDir) ? readdirSync(skillsDir) : [];
     if (existingSkills.length === 0) {
       cpSync(skillsSrc, skillsDir, { recursive: true });
-      createdFiles.push('.squad/skills');
+      createdFiles.push('.copilot/skills');
     }
   }
   
diff --git a/packages/squad-sdk/src/sharing/consult.ts b/packages/squad-sdk/src/sharing/consult.ts
index 03b761f81..2bd2d4fbf 100644
--- a/packages/squad-sdk/src/sharing/consult.ts
+++ b/packages/squad-sdk/src/sharing/consult.ts
@@ -177,7 +177,7 @@ You are **Squad (Consultant)** — working on **${projectName}** using a copy of
 - **Team:** \`.squad/team.md\` for roster and roles
 - **Routing:** \`.squad/routing.md\` for task routing rules  
 - **Decisions:** \`.squad/decisions.md\` for your established patterns
-- **Skills:** \`.squad/skills/\` for reusable capabilities
+- **Skills:** \`.copilot/skills/\` for reusable capabilities
 - **Agents:** \`.squad/agents/\` for your squad agents
 
 Work as you would with your personal squad, but in this external codebase.
@@ -1006,7 +1006,7 @@ function extractSkillName(content: string): string | null {
 /**
  * Merge staged learnings into personal squad.
  *
- * Routes skills to personal squad directory via resolveGlobalSquadPath() to skills/{name}/SKILL.md
+ * Routes skills to personal squad directory via resolveGlobalSquadPath() to .copilot/skills/{name}/SKILL.md
  * Routes decisions to decisions.md in personal squad directory (with smart merge)
  *
  * @param learnings - Staged learnings to merge
@@ -1035,8 +1035,8 @@ export async function mergeToPersonalSquad(
     }
   }
 
-  // Route skills to personal squad directory (via resolveGlobalSquadPath()) at skills/{name}/SKILL.md
-  const skillsDir = path.join(personalSquadRoot, 'skills');
+  // Route skills to personal squad directory (via resolveGlobalSquadPath()) at .copilot/skills/{name}/SKILL.md
+  const skillsDir = path.join(path.dirname(personalSquadRoot), '.copilot', 'skills');
   for (const skill of skills) {
     const skillName = extractSkillName(skill.content) || skill.filename.replace('.md', '');
     const skillDir = path.join(skillsDir, skillName);
diff --git a/packages/squad-sdk/src/sharing/export.ts b/packages/squad-sdk/src/sharing/export.ts
index 1e2a0ecf0..2829bb33f 100644
--- a/packages/squad-sdk/src/sharing/export.ts
+++ b/packages/squad-sdk/src/sharing/export.ts
@@ -127,10 +127,22 @@ export function exportSquadConfig(projectDir: string, options?: ExportOptions):
   const skills: string[] = [];
 
   if (opts.includeSkills) {
-    const skillsDir = join(projectDir, '.ai-team', 'skills');
-    if (existsSync(skillsDir)) {
-      const skillFiles = readdirSync(skillsDir).filter(f => f.endsWith('.md'));
-      skills.push(...skillFiles.map(f => basename(f, '.md')));
+    const skillSources = [
+      { dir: join(projectDir, '.copilot', 'skills'), layout: 'nested' as const },
+      { dir: join(projectDir, '.squad', 'skills'), layout: 'nested' as const },
+      { dir: join(projectDir, '.ai-team', 'skills'), layout: 'flat' as const },
+    ];
+    const source = skillSources.find(({ dir }) => existsSync(dir));
+    if (source) {
+      if (source.layout === 'nested') {
+        const skillDirs = readdirSync(source.dir, { withFileTypes: true })
+          .filter(entry => entry.isDirectory() && existsSync(join(source.dir, entry.name, 'SKILL.md')))
+          .map(entry => entry.name);
+        skills.push(...skillDirs);
+      } else {
+        const skillFiles = readdirSync(source.dir).filter(f => f.endsWith('.md'));
+        skills.push(...skillFiles.map(f => basename(f, '.md')));
+      }
     }
   }
 
diff --git a/packages/squad-sdk/src/skills/handler-types.ts b/packages/squad-sdk/src/skills/handler-types.ts
index d3ee843ee..ecc79465e 100644
--- a/packages/squad-sdk/src/skills/handler-types.ts
+++ b/packages/squad-sdk/src/skills/handler-types.ts
@@ -1,7 +1,7 @@
 /**
  * Type system for the skill-script model.
  *
- * This module defines the complete type contract for backend skills in `.squad/skills/`.
+ * This module defines the complete type contract for backend skills in `.copilot/skills/`.
  * Skills contain `scripts/` directories with executable JS handlers that replace built-in
  * tool handlers in ToolRegistry.
  *
diff --git a/packages/squad-sdk/src/skills/skill-script-loader.ts b/packages/squad-sdk/src/skills/skill-script-loader.ts
index 27f4e0748..6a8a683f5 100644
--- a/packages/squad-sdk/src/skills/skill-script-loader.ts
+++ b/packages/squad-sdk/src/skills/skill-script-loader.ts
@@ -2,7 +2,7 @@
  * Skill Script Loader
  *
  * Runtime loader for executable skill handlers from backend skill directories.
- * Backend skills in `.squad/skills/{name}/scripts/` contain `.js` handler files
+ * Backend skills in `.copilot/skills/{name}/scripts/` contain `.js` handler files
  * that replace built-in tool handlers in ToolRegistry.
  *
  * Supports:
@@ -86,7 +86,7 @@ function toFileUrl(filePath: string): string {
  *
  * Algorithm:
  * 1. Absolute paths used as-is
- * 2. With teamRoot: strip leading `.squad/` prefix to avoid double-nesting, resolve relative to teamRoot
+ * 2. With teamRoot: resolve `.copilot/` paths from projectRoot and strip legacy `.squad/` paths relative to teamRoot
  * 3. Without teamRoot: resolve relative to projectRoot
  * 4. Path containment check: final path must be within projectRoot or teamRoot
  * 5. Reject paths with `..` segments that escape the boundary (throw Error)
@@ -122,8 +122,15 @@ export function resolveSkillPath(
     return resolved;
   }
 
-  // 2. With teamRoot: strip leading .squad/ prefix, resolve relative to teamRoot
+  // 2. With teamRoot: resolve .copilot/ paths from projectRoot, legacy .squad/ paths from teamRoot
   if (teamRoot) {
+    if (skillPath.startsWith('.copilot/')) {
+      const resolved = path.resolve(projectRoot, skillPath);
+      const real = realOrLogical(resolved);
+      if (!isContained(real, projectRoot)) throw new Error(`Path escapes containment: ${skillPath} resolves outside project root`);
+      return resolved;
+    }
+
     const stripped = skillPath.startsWith('.squad/') ? skillPath.slice(7) : skillPath;
     const resolved = path.resolve(teamRoot, stripped);
     const real = realOrLogical(resolved);
diff --git a/packages/squad-sdk/src/skills/skill-source.ts b/packages/squad-sdk/src/skills/skill-source.ts
index cf27035ee..6cfdc196f 100644
--- a/packages/squad-sdk/src/skills/skill-source.ts
+++ b/packages/squad-sdk/src/skills/skill-source.ts
@@ -39,6 +39,9 @@ export class LocalSkillSource implements SkillSource {
   }
 
   private get skillsDir(): string {
+    const copilotDir = path.join(this.basePath, '.copilot', 'skills');
+    if (fs.existsSync(copilotDir)) return copilotDir;
+    // Backward compat: fall back to legacy location
     return path.join(this.basePath, '.squad', 'skills');
   }
 
@@ -129,7 +132,7 @@ export class GitHubSkillSource implements SkillSource {
     this.owner = parts[0];
     this.repoName = parts[1];
     this.branch = options?.ref;
-    this.pathPrefix = options?.pathPrefix ?? '.squad/skills';
+    this.pathPrefix = options?.pathPrefix ?? '.copilot/skills';
     this.fetcher = options?.fetcher ?? {
       async listDirectory() { throw new Error('No GitHubFetcher configured'); },
       async getFileContent() { throw new Error('No GitHubFetcher configured'); },
diff --git a/packages/squad-sdk/src/tools/index.ts b/packages/squad-sdk/src/tools/index.ts
index cc9180943..52ccce7ff 100644
--- a/packages/squad-sdk/src/tools/index.ts
+++ b/packages/squad-sdk/src/tools/index.ts
@@ -88,7 +88,7 @@ export interface StatusQuery {
 }
 
 export interface SkillRequest {
-  /** Skill name (maps to .squad/skills/{name}/SKILL.md) */
+  /** Skill name (maps to .copilot/skills/{name}/SKILL.md) */
   skillName: string;
   /** Operation: read the skill or write/update it */
   operation: 'read' | 'write';
@@ -490,7 +490,7 @@ export class ToolRegistry {
     // squad_skill: Read/write agent skills
     const squadSkill = defineTool<SkillRequest>({
       name: 'squad_skill',
-      description: 'Read or write agent skill definitions. Skills are stored in .squad/skills/{name}/SKILL.md.',
+      description: 'Read or write agent skill definitions. Skills are stored in .copilot/skills/{name}/SKILL.md.',
       parameters: {
         type: 'object',
         properties: {
@@ -520,7 +520,14 @@ export class ToolRegistry {
           return { textResultForLlm: 'Invalid skill name: must contain only letters, numbers, hyphens, and underscores', resultType: 'failure', error: 'Invalid skillName' };
         }
         try {
-          const skillDir = path.join(this.squadRoot, 'skills', args.skillName);
+          const projectRoot = path.dirname(this.squadRoot);
+          const legacySkillDir = path.join(this.squadRoot, 'skills', args.skillName);
+          const copilotSkillDir = path.join(projectRoot, '.copilot', 'skills', args.skillName);
+          const skillDir = args.operation === 'write'
+            ? copilotSkillDir
+            : fs.existsSync(path.join(copilotSkillDir, 'SKILL.md'))
+              ? copilotSkillDir
+              : legacySkillDir;
           const skillFile = path.join(skillDir, 'SKILL.md');
 
           if (args.operation === 'read') {
@@ -562,7 +569,7 @@ export class ToolRegistry {
             fs.writeFileSync(skillFile, skillContent, 'utf-8');
 
             return {
-              textResultForLlm: `Skill written: ${args.skillName} (skills/${args.skillName}/SKILL.md)`,
+              textResultForLlm: `Skill written: ${args.skillName} (.copilot/skills/${args.skillName}/SKILL.md)`,
               resultType: 'success',
               toolTelemetry: { skillName: args.skillName, operation: 'write', confidence: args.confidence },
             };
diff --git a/packages/squad-sdk/src/upstream/resolver.ts b/packages/squad-sdk/src/upstream/resolver.ts
index c424334f9..a57720f05 100644
--- a/packages/squad-sdk/src/upstream/resolver.ts
+++ b/packages/squad-sdk/src/upstream/resolver.ts
@@ -53,15 +53,24 @@ function findSquadDir(sourcePath: string): string | null {
  * Read all skills from a squad directory's skills/ folder.
  */
 function readSkills(squadDir: string): Array<{ name: string; content: string }> {
-  const skillsDir = path.join(squadDir, 'skills');
-  if (!fs.existsSync(skillsDir)) return [];
+  const projectDir = path.dirname(squadDir);
+  const candidateDirs = [
+    { dir: path.join(projectDir, '.copilot', 'skills'), layout: 'nested' as const },
+    { dir: path.join(squadDir, 'skills'), layout: 'nested' as const },
+    { dir: path.join(projectDir, '.ai-team', 'skills'), layout: 'flat' as const },
+  ];
+  const source = candidateDirs.find(({ dir }) => fs.existsSync(dir));
+  if (!source) return [];
 
   const skills: Array<{ name: string; content: string }> = [];
   try {
-    for (const entry of fs.readdirSync(skillsDir)) {
-      const skillFile = path.join(skillsDir, entry, 'SKILL.md');
+    for (const entry of fs.readdirSync(source.dir)) {
+      const skillFile = source.layout === 'nested'
+        ? path.join(source.dir, entry, 'SKILL.md')
+        : path.join(source.dir, entry);
       if (fs.existsSync(skillFile)) {
-        skills.push({ name: entry, content: fs.readFileSync(skillFile, 'utf8') });
+        const name = source.layout === 'nested' ? entry : path.basename(entry, '.md');
+        skills.push({ name, content: fs.readFileSync(skillFile, 'utf8') });
       }
     }
   } catch {
diff --git a/packages/squad-sdk/templates/mcp-config.md b/packages/squad-sdk/templates/mcp-config.md
index 9ddc78e9b..6293bed11 100644
--- a/packages/squad-sdk/templates/mcp-config.md
+++ b/packages/squad-sdk/templates/mcp-config.md
@@ -2,7 +2,7 @@
 
 MCP (Model Context Protocol) servers extend Squad with tools for external services — Trello, Aspire dashboards, Azure, Notion, and more. The user configures MCP servers in their environment; Squad discovers and uses them.
 
-> **Full patterns:** Read `.squad/skills/mcp-tool-discovery/SKILL.md` for discovery patterns, domain-specific usage, and graceful degradation.
+> **Full patterns:** Read `.copilot/skills/mcp-tool-discovery/SKILL.md` for discovery patterns, domain-specific usage, and graceful degradation.
 
 ## Security Considerations
 
diff --git a/packages/squad-sdk/templates/plugin-marketplace.md b/packages/squad-sdk/templates/plugin-marketplace.md
index 893632816..efef3d7a1 100644
--- a/packages/squad-sdk/templates/plugin-marketplace.md
+++ b/packages/squad-sdk/templates/plugin-marketplace.md
@@ -38,7 +38,7 @@ During the **Adding Team Members** flow, AFTER allocating a name but BEFORE gene
 ## How to Install a Plugin
 
 1. Read the plugin content from the marketplace repository (the plugin's `SKILL.md` or equivalent).
-2. Copy it into the agent's skills directory: `.squad/skills/{plugin-name}/SKILL.md`
+2. Copy it into the agent's skills directory: `.copilot/skills/{plugin-name}/SKILL.md`
 3. If the plugin includes charter-level instructions (role boundaries, tool preferences), merge those into the agent's `charter.md`.
 4. Log the installation in the agent's `history.md`: *"📦 Plugin '{plugin-name}' installed from {marketplace}."*
 
diff --git a/packages/squad-sdk/templates/squad.agent.md b/packages/squad-sdk/templates/squad.agent.md
index 39a97d2d2..970747bab 100644
--- a/packages/squad-sdk/templates/squad.agent.md
+++ b/packages/squad-sdk/templates/squad.agent.md
@@ -234,7 +234,7 @@ The routing table determines **WHO** handles work. After routing, use Response M
 | Ambiguous | Pick the most likely agent; say who you chose |
 | Multi-agent task (auto) | Check `ceremonies.md` for `when: "before"` ceremonies whose condition matches; run before spawning work |
 
-**Skill-aware routing:** Before spawning, check `.squad/skills/` for skills relevant to the task domain. If a matching skill exists, add to the spawn prompt: `Relevant skill: .squad/skills/{name}/SKILL.md — read before starting.` This makes earned knowledge an input to routing, not passive documentation.
+**Skill-aware routing:** Before spawning, check `.copilot/skills/` for skills relevant to the task domain. If a matching skill exists, add to the spawn prompt: `Relevant skill: .copilot/skills/{name}/SKILL.md — read before starting.` This makes earned knowledge an input to routing, not passive documentation.
 
 ### Skill Confidence Lifecycle
 
@@ -454,7 +454,7 @@ The `sql` tool is **CLI-only**. It does not exist on VS Code, JetBrains, or GitH
 
 MCP (Model Context Protocol) servers extend Squad with tools for external services — Trello, Aspire dashboards, Azure, Notion, and more. The user configures MCP servers in their environment; Squad discovers and uses them.
 
-> **Full patterns:** Read `.squad/skills/mcp-tool-discovery/SKILL.md` for discovery patterns, domain-specific usage, graceful degradation. Read `.squad/templates/mcp-config.md` for config file locations, sample configs, and authentication notes.
+> **Full patterns:** Read `.copilot/skills/mcp-tool-discovery/SKILL.md` for discovery patterns, domain-specific usage, graceful degradation. Read `.squad/templates/mcp-config.md` for config file locations, sample configs, and authentication notes.
 
 #### Detection
 
@@ -649,7 +649,7 @@ prompt: |
   Read .squad/decisions.md (team decisions to respect).
   If .squad/identity/wisdom.md exists, read it before starting work.
   If .squad/identity/now.md exists, read it at spawn time.
-  If .squad/skills/ has relevant SKILL.md files, read them before working.
+  If .copilot/skills/ has relevant SKILL.md files, read them before working.
   
   {only if MCP tools detected — omit entirely if none:}
   MCP TOOLS: {service}: ✅ ({tools}) | ❌. Fall back to CLI when unavailable.
@@ -671,7 +671,7 @@ prompt: |
   2. If you made a team-relevant decision, write to:
      .squad/decisions/inbox/{name}-{brief-slug}.md
   3. SKILL EXTRACTION: If you found a reusable pattern, write/update
-     .squad/skills/{skill-name}/SKILL.md (read templates/skill.md for format).
+     .copilot/skills/{skill-name}/SKILL.md (read templates/skill.md for format).
   
   ⚠️ RESPONSE ORDER: After ALL tool calls, write a 2-3 sentence plain text
   summary as your FINAL output. No tool calls after this summary.
@@ -756,7 +756,7 @@ Ceremonies are structured team meetings where agents align before or after work.
 
 If the user says "I need a designer" or "add someone for DevOps":
 1. **Allocate a name** from the current assignment's universe (read from `.squad/casting/history.json`). If the universe is exhausted, apply overflow handling (see Casting & Persistent Naming → Overflow Handling).
-2. **Check plugin marketplaces.** If `.squad/plugins/marketplaces.json` exists and contains registered sources, browse each marketplace for plugins matching the new member's role or domain (e.g., "azure-cloud-development" for an Azure DevOps role). Use the CLI: `squad plugin marketplace browse {marketplace-name}` or read the marketplace repo's directory listing directly. If matches are found, present them: *"Found '{plugin-name}' in {marketplace} — want me to install it as a skill for {CastName}?"* If the user accepts, copy the plugin content into `.squad/skills/{plugin-name}/SKILL.md` or merge relevant instructions into the agent's charter. If no marketplaces are configured, skip silently. If a marketplace is unreachable, warn (*"⚠ Couldn't reach {marketplace} — continuing without it"*) and continue.
+2. **Check plugin marketplaces.** If `.squad/plugins/marketplaces.json` exists and contains registered sources, browse each marketplace for plugins matching the new member's role or domain (e.g., "azure-cloud-development" for an Azure DevOps role). Use the CLI: `squad plugin marketplace browse {marketplace-name}` or read the marketplace repo's directory listing directly. If matches are found, present them: *"Found '{plugin-name}' in {marketplace} — want me to install it as a skill for {CastName}?"* If the user accepts, copy the plugin content into `.copilot/skills/{plugin-name}/SKILL.md` or merge relevant instructions into the agent's charter. If no marketplaces are configured, skip silently. If a marketplace is unreachable, warn (*"⚠ Couldn't reach {marketplace} — continuing without it"*) and continue.
 3. Generate a new charter.md + history.md (seeded with project context from team.md), using the cast name. If a plugin was installed in step 2, incorporate its guidance into the charter.
 4. **Update `.squad/casting/registry.json`** with the new agent entry.
 5. Add to team.md roster.
@@ -779,7 +779,7 @@ If the user wants to remove someone:
 **Core rules (always loaded):**
 - Check `.squad/plugins/marketplaces.json` during Add Team Member flow (after name allocation, before charter)
 - Present matching plugins for user approval
-- Install: copy to `.squad/skills/{plugin-name}/SKILL.md`, log to history.md
+- Install: copy to `.copilot/skills/{plugin-name}/SKILL.md`, log to history.md
 - Skip silently if no marketplaces configured
 
 ---
diff --git a/test/cli/export-import.test.ts b/test/cli/export-import.test.ts
index 16d4733bd..b25b45a00 100644
--- a/test/cli/export-import.test.ts
+++ b/test/cli/export-import.test.ts
@@ -118,7 +118,7 @@ describe('CLI: export/import commands', () => {
     await writeFile(teamPath, '# Team\n');
     
     // Create a skill
-    const skillDir = join(TEST_ROOT, '.squad', 'skills', 'test-skill');
+    const skillDir = join(TEST_ROOT, '.copilot', 'skills', 'test-skill');
     await mkdir(skillDir, { recursive: true });
     const skillContent = 'name: "Test Skill"\ndescription: "A test skill"';
     await writeFile(join(skillDir, 'SKILL.md'), skillContent);
diff --git a/test/cli/init.test.ts b/test/cli/init.test.ts
index 87a697a4d..c815b476a 100644
--- a/test/cli/init.test.ts
+++ b/test/cli/init.test.ts
@@ -61,7 +61,7 @@ describe('CLI: init command', () => {
     expect(existsSync(join(TEST_ROOT, '.squad', 'decisions', 'inbox'))).toBe(true);
     expect(existsSync(join(TEST_ROOT, '.squad', 'orchestration-log'))).toBe(true);
     expect(existsSync(join(TEST_ROOT, '.squad', 'casting'))).toBe(true);
-    expect(existsSync(join(TEST_ROOT, '.squad', 'skills'))).toBe(true);
+    expect(existsSync(join(TEST_ROOT, '.copilot', 'skills'))).toBe(true);
     expect(existsSync(join(TEST_ROOT, '.squad', 'plugins'))).toBe(true);
     expect(existsSync(join(TEST_ROOT, '.squad', 'identity'))).toBe(true);
   });
@@ -138,7 +138,7 @@ describe('CLI: init command', () => {
   it('should copy starter skills if none exist', async () => {
     await runInit(TEST_ROOT);
     
-    const skillsPath = join(TEST_ROOT, '.squad', 'skills');
+    const skillsPath = join(TEST_ROOT, '.copilot', 'skills');
     const skills = await readdir(skillsPath);
     
     // Should have at least one skill
diff --git a/test/human-journeys.test.ts b/test/human-journeys.test.ts
index 67fc8e133..be781fe3a 100644
--- a/test/human-journeys.test.ts
+++ b/test/human-journeys.test.ts
@@ -110,7 +110,7 @@ describe('Journey 1: I just installed this (squad init)', () => {
 
     // The human sees: a .squad/ directory was created
     expect(existsSync(join(tempDir, '.squad'))).toBe(true);
-    expect(existsSync(join(tempDir, '.squad', 'skills'))).toBe(true);
+    expect(existsSync(join(tempDir, '.copilot', 'skills'))).toBe(true);
     expect(existsSync(join(tempDir, '.squad', 'identity'))).toBe(true);
     expect(existsSync(join(tempDir, '.squad', 'ceremonies.md'))).toBe(true);
   });
diff --git a/test/init-sdk.test.ts b/test/init-sdk.test.ts
index e3d14a23a..63227d251 100644
--- a/test/init-sdk.test.ts
+++ b/test/init-sdk.test.ts
@@ -137,8 +137,8 @@ describe('squad init --sdk flag', () => {
     // Assert: .squad/decisions/inbox/ exists
     expect(existsSync(join(tempDir, '.squad', 'decisions', 'inbox'))).toBe(true);
 
-    // Assert: .squad/skills/ exists
-    expect(existsSync(join(tempDir, '.squad', 'skills'))).toBe(true);
+    // Assert: .copilot/skills/ exists
+    expect(existsSync(join(tempDir, '.copilot', 'skills'))).toBe(true);
 
     // Assert: .squad/identity/ exists
     expect(existsSync(join(tempDir, '.squad', 'identity'))).toBe(true);
diff --git a/test/init.test.ts b/test/init.test.ts
index 824914456..63b883ac5 100644
--- a/test/init.test.ts
+++ b/test/init.test.ts
@@ -136,7 +136,7 @@ describe('Squad Initialization', () => {
       expect(existsSync(join(TEST_ROOT, '.squad', 'agents'))).toBe(true);
       expect(existsSync(join(TEST_ROOT, '.squad', 'casting'))).toBe(true);
       expect(existsSync(join(TEST_ROOT, '.squad', 'decisions'))).toBe(true);
-      expect(existsSync(join(TEST_ROOT, '.squad', 'skills'))).toBe(true);
+      expect(existsSync(join(TEST_ROOT, '.copilot', 'skills'))).toBe(true);
     });
 
     it('should create .gitattributes for merge drivers', async () => {
diff --git a/test/repl-ux-fixes.test.ts b/test/repl-ux-fixes.test.ts
index 699845463..3ecbe93a5 100644
--- a/test/repl-ux-fixes.test.ts
+++ b/test/repl-ux-fixes.test.ts
@@ -102,10 +102,12 @@ describe('#596 — Init creates complete .squad/ directory', () => {
     expect(existsSync(join(squadDir, 'decisions', 'inbox'))).toBe(true);
     expect(existsSync(join(squadDir, 'orchestration-log'))).toBe(true);
     expect(existsSync(join(squadDir, 'casting'))).toBe(true);
-    expect(existsSync(join(squadDir, 'skills'))).toBe(true);
     expect(existsSync(join(squadDir, 'plugins'))).toBe(true);
     expect(existsSync(join(squadDir, 'identity'))).toBe(true);
 
+    // Skills now live in .copilot/skills/ (not .squad/skills/)
+    expect(existsSync(join(tmpRoot, '.copilot', 'skills'))).toBe(true);
+
     // Required files
     expect(existsSync(join(squadDir, 'ceremonies.md'))).toBe(true);
     expect(existsSync(join(squadDir, 'identity', 'now.md'))).toBe(true);
diff --git a/test/skill-script-loader.test.ts b/test/skill-script-loader.test.ts
index 5118e54d3..581901922 100644
--- a/test/skill-script-loader.test.ts
+++ b/test/skill-script-loader.test.ts
@@ -589,12 +589,15 @@ describe('resolveSkillPath()', () => {
     expect(result).toBe(path.resolve(teamRoot, 'skills', 'my-skill'));
   });
 
-  it('should strip .squad/ prefix when teamRoot is provided', () => {
-    // Use forward slash format that the implementation checks for
+  it('should resolve .copilot/ prefix from projectRoot when teamRoot is provided', () => {
+    const relative = '.copilot/skills/my-skill';
+    const result = resolveSkillPath(relative, projectRoot, teamRoot);
+    expect(result).toBe(path.resolve(projectRoot, '.copilot', 'skills', 'my-skill'));
+  });
+
+  it('should strip legacy .squad/ prefix when teamRoot is provided', () => {
     const relative = '.squad/skills/my-skill';
     const result = resolveSkillPath(relative, projectRoot, teamRoot);
-    // Implementation strips .squad/ and resolves from teamRoot
-    // So .squad/skills/my-skill becomes teamRoot/skills/my-skill
     expect(result).toBe(path.resolve(teamRoot, 'skills', 'my-skill'));
   });
 
diff --git a/test/skill-source.test.ts b/test/skill-source.test.ts
index 18eb0de3e..f8d2fb20e 100644
--- a/test/skill-source.test.ts
+++ b/test/skill-source.test.ts
@@ -76,14 +76,14 @@ describe('LocalSkillSource', () => {
     expect(source.type).toBe('local');
   });
 
-  it('should return empty list when .squad/skills/ does not exist', async () => {
+  it('should return empty list when .copilot/skills/ does not exist', async () => {
     const source = new LocalSkillSource(tempDir);
     const skills = await source.listSkills();
     expect(skills).toEqual([]);
   });
 
-  it('should list skills from .squad/skills/ directories', async () => {
-    const skillsDir = path.join(tempDir, '.squad', 'skills', 'ts-testing');
+  it('should list skills from .copilot/skills/ directories', async () => {
+    const skillsDir = path.join(tempDir, '.copilot', 'skills', 'ts-testing');
     fs.mkdirSync(skillsDir, { recursive: true });
     fs.writeFileSync(path.join(skillsDir, 'SKILL.md'), SKILL_MD);
 
@@ -98,7 +98,7 @@ describe('LocalSkillSource', () => {
   });
 
   it('should skip directories without SKILL.md', async () => {
-    const emptyDir = path.join(tempDir, '.squad', 'skills', 'empty-skill');
+    const emptyDir = path.join(tempDir, '.copilot', 'skills', 'empty-skill');
     fs.mkdirSync(emptyDir, { recursive: true });
 
     const source = new LocalSkillSource(tempDir);
@@ -107,7 +107,7 @@ describe('LocalSkillSource', () => {
   });
 
   it('should getSkill by id', async () => {
-    const skillsDir = path.join(tempDir, '.squad', 'skills', 'ts-testing');
+    const skillsDir = path.join(tempDir, '.copilot', 'skills', 'ts-testing');
     fs.mkdirSync(skillsDir, { recursive: true });
     fs.writeFileSync(path.join(skillsDir, 'SKILL.md'), SKILL_MD);
 
@@ -130,7 +130,7 @@ describe('LocalSkillSource', () => {
   });
 
   it('should getContent by id', async () => {
-    const skillsDir = path.join(tempDir, '.squad', 'skills', 'ts-testing');
+    const skillsDir = path.join(tempDir, '.copilot', 'skills', 'ts-testing');
     fs.mkdirSync(skillsDir, { recursive: true });
     fs.writeFileSync(path.join(skillsDir, 'SKILL.md'), SKILL_MD);
 
@@ -145,6 +145,18 @@ describe('LocalSkillSource', () => {
     expect(content).toBeNull();
   });
 
+  it('should fall back to legacy .squad/skills/ when .copilot/skills/ is absent', async () => {
+    const legacyDir = path.join(tempDir, '.squad', 'skills', 'legacy-skill');
+    fs.mkdirSync(legacyDir, { recursive: true });
+    fs.writeFileSync(path.join(legacyDir, 'SKILL.md'), SKILL_MD_MINIMAL);
+
+    const source = new LocalSkillSource(tempDir);
+    const skills = await source.listSkills();
+
+    expect(skills).toHaveLength(1);
+    expect(skills[0].id).toBe('legacy-skill');
+  });
+
   it('should support custom priority', () => {
     const source = new LocalSkillSource(tempDir, 10);
     expect(source.priority).toBe(10);
@@ -165,7 +177,7 @@ describe('GitHubSkillSource', () => {
   it('should list skills from GitHub repo', async () => {
     const fetcher = makeFetcher(
       [{ name: 'ts-testing', type: 'dir' }],
-      { '.squad/skills/ts-testing/SKILL.md': SKILL_MD },
+      { '.copilot/skills/ts-testing/SKILL.md': SKILL_MD },
     );
     const source = new GitHubSkillSource('acme/repo', { fetcher });
 
@@ -189,7 +201,7 @@ describe('GitHubSkillSource', () => {
 
   it('should getSkill from GitHub', async () => {
     const fetcher = makeFetcher([], {
-      '.squad/skills/docker/SKILL.md': SKILL_MD_MINIMAL,
+      '.copilot/skills/docker/SKILL.md': SKILL_MD_MINIMAL,
     });
     const source = new GitHubSkillSource('acme/repo', { fetcher });
 
@@ -210,7 +222,7 @@ describe('GitHubSkillSource', () => {
 
   it('should getContent from GitHub', async () => {
     const fetcher = makeFetcher([], {
-      '.squad/skills/docker/SKILL.md': SKILL_MD_MINIMAL,
+      '.copilot/skills/docker/SKILL.md': SKILL_MD_MINIMAL,
     });
     const source = new GitHubSkillSource('acme/repo', { fetcher });
 
@@ -234,11 +246,11 @@ describe('SkillSourceRegistry', () => {
   it('should list skills from all sources', async () => {
     const fetcher1 = makeFetcher(
       [{ name: 'skill-a', type: 'dir' }],
-      { '.squad/skills/skill-a/SKILL.md': SKILL_MD },
+      { '.copilot/skills/skill-a/SKILL.md': SKILL_MD },
     );
     const fetcher2 = makeFetcher(
       [{ name: 'skill-b', type: 'dir' }],
-      { '.squad/skills/skill-b/SKILL.md': SKILL_MD_MINIMAL },
+      { '.copilot/skills/skill-b/SKILL.md': SKILL_MD_MINIMAL },
     );
 
     const registry = new SkillSourceRegistry();
@@ -252,7 +264,7 @@ describe('SkillSourceRegistry', () => {
 
   it('should find skill across sources', async () => {
     const fetcher = makeFetcher([], {
-      '.squad/skills/docker/SKILL.md': SKILL_MD_MINIMAL,
+      '.copilot/skills/docker/SKILL.md': SKILL_MD_MINIMAL,
     });
 
     const registry = new SkillSourceRegistry();
@@ -274,7 +286,7 @@ describe('SkillSourceRegistry', () => {
 
   it('should get content across sources', async () => {
     const fetcher = makeFetcher([], {
-      '.squad/skills/docker/SKILL.md': SKILL_MD_MINIMAL,
+      '.copilot/skills/docker/SKILL.md': SKILL_MD_MINIMAL,
     });
 
     const registry = new SkillSourceRegistry();
@@ -286,10 +298,10 @@ describe('SkillSourceRegistry', () => {
 
   it('should respect source priority ordering', async () => {
     const fetcherHigh = makeFetcher([], {
-      '.squad/skills/shared/SKILL.md': `---\nname: High Priority\ndomain: hp\ntriggers: []\nroles: []\n---\nHigh priority content.`,
+      '.copilot/skills/shared/SKILL.md': `---\nname: High Priority\ndomain: hp\ntriggers: []\nroles: []\n---\nHigh priority content.`,
     });
     const fetcherLow = makeFetcher([], {
-      '.squad/skills/shared/SKILL.md': `---\nname: Low Priority\ndomain: lp\ntriggers: []\nroles: []\n---\nLow priority content.`,
+      '.copilot/skills/shared/SKILL.md': `---\nname: Low Priority\ndomain: lp\ntriggers: []\nroles: []\n---\nLow priority content.`,
     });
 
     const registry = new SkillSourceRegistry();
diff --git a/test/skills-export-import.test.js b/test/skills-export-import.test.js
index 286cee80e..d88edb044 100644
--- a/test/skills-export-import.test.js
+++ b/test/skills-export-import.test.js
@@ -68,7 +68,7 @@ describe('Skills survive export/import round-trip (#82)', () => {
     initSquad(tmpDir1);
 
     // Create a test skill
-    const skillDir = path.join(tmpDir1, '.ai-team', 'skills', 'test-skill');
+    const skillDir = path.join(tmpDir1, '.copilot', 'skills', 'test-skill');
     fs.mkdirSync(skillDir, { recursive: true });
     const skillContent = `---
 name: test-skill
@@ -109,7 +109,7 @@ This is a test skill for verifying export/import functionality.
     initSquad(tmpDir1);
 
     // Create a test skill with unique content
-    const skillDir = path.join(tmpDir1, '.ai-team', 'skills', 'import-test-skill');
+    const skillDir = path.join(tmpDir1, '.copilot', 'skills', 'import-test-skill');
     fs.mkdirSync(skillDir, { recursive: true });
     const skillContent = `---
 name: import-test-skill
@@ -135,7 +135,7 @@ This skill has unique content to verify import works correctly.
     const exportResult = runSquad(['export'], tmpDir1);
     assert.equal(exportResult.exitCode, 0, `export should succeed: ${exportResult.stdout}`);
 
-    // Initialize squad in second temp dir (to have .ai-team structure)
+    // Initialize squad in second temp dir (to have squad structure)
     initSquad(tmpDir2);
 
     // Import into second temp dir with --force
@@ -143,7 +143,7 @@ This skill has unique content to verify import works correctly.
     assert.equal(importResult.exitCode, 0, `import should succeed: ${importResult.stdout}`);
 
     // Verify the skill exists in the new directory
-    const importedSkillPath = path.join(tmpDir2, '.ai-team', 'skills', 'import-test-skill', 'SKILL.md');
+    const importedSkillPath = path.join(tmpDir2, '.copilot', 'skills', 'import-test-skill', 'SKILL.md');
     assert.ok(fs.existsSync(importedSkillPath), 'imported skill file should exist');
 
     // Verify the content matches
@@ -163,7 +163,7 @@ This skill has unique content to verify import works correctly.
     ];
 
     for (const skill of skills) {
-      const skillDir = path.join(tmpDir1, '.ai-team', 'skills', skill.name);
+      const skillDir = path.join(tmpDir1, '.copilot', 'skills', skill.name);
       fs.mkdirSync(skillDir, { recursive: true });
       const skillContent = `---
 name: ${skill.name}
@@ -196,7 +196,7 @@ ${skill.content}
 
     // Verify all skills exist
     for (const skill of skills) {
-      const importedSkillPath = path.join(tmpDir2, '.ai-team', 'skills', skill.name, 'SKILL.md');
+      const importedSkillPath = path.join(tmpDir2, '.copilot', 'skills', skill.name, 'SKILL.md');
       assert.ok(fs.existsSync(importedSkillPath), `skill ${skill.name} should exist after import`);
 
       const content = fs.readFileSync(importedSkillPath, 'utf8');
@@ -209,7 +209,7 @@ ${skill.content}
     initSquad(tmpDir1);
 
     // Create a skill with high confidence
-    const skillDir = path.join(tmpDir1, '.ai-team', 'skills', 'confidence-test');
+    const skillDir = path.join(tmpDir1, '.copilot', 'skills', 'confidence-test');
     fs.mkdirSync(skillDir, { recursive: true });
     const skillContent = `---
 name: confidence-test
@@ -231,7 +231,7 @@ This skill should maintain its high confidence level after import.
     runSquad(['import', exportPath, '--force'], tmpDir2);
 
     // Verify confidence is preserved
-    const importedSkillPath = path.join(tmpDir2, '.ai-team', 'skills', 'confidence-test', 'SKILL.md');
+    const importedSkillPath = path.join(tmpDir2, '.copilot', 'skills', 'confidence-test', 'SKILL.md');
     const importedContent = fs.readFileSync(importedSkillPath, 'utf8');
     assert.ok(importedContent.includes('confidence: high'), 'skill confidence level should be preserved');
   });
@@ -241,7 +241,7 @@ This skill should maintain its high confidence level after import.
     initSquad(tmpDir1);
 
     // Create a skill
-    const skillDir = path.join(tmpDir1, '.ai-team', 'skills', 'report-test');
+    const skillDir = path.join(tmpDir1, '.copilot', 'skills', 'report-test');
     fs.mkdirSync(skillDir, { recursive: true });
     fs.writeFileSync(path.join(skillDir, 'SKILL.md'), `---
 name: report-test
diff --git a/test/tools.test.ts b/test/tools.test.ts
index 70c735dda..fb23f7ede 100644
--- a/test/tools.test.ts
+++ b/test/tools.test.ts
@@ -578,15 +578,18 @@ describe('squad_status handler', () => {
 describe('squad_skill handler', () => {
   let registry: ToolRegistry;
   let testRoot: string;
+  let projectRoot: string;
 
   beforeEach(() => {
-    testRoot = path.join('.', '.test-squad-skill-' + randomUUID());
+    projectRoot = path.join('.', '.test-squad-skill-' + randomUUID());
+    testRoot = path.join(projectRoot, '.squad');
+    fs.mkdirSync(testRoot, { recursive: true });
     registry = new ToolRegistry(testRoot);
   });
 
   afterEach(() => {
-    if (fs.existsSync(testRoot)) {
-      fs.rmSync(testRoot, { recursive: true, force: true });
+    if (fs.existsSync(projectRoot)) {
+      fs.rmSync(projectRoot, { recursive: true, force: true });
     }
   });
 
@@ -611,7 +614,7 @@ describe('squad_skill handler', () => {
       resultType: 'success',
     });
 
-    const skillFile = path.join(testRoot, 'skills', 'typescript-refactoring', 'SKILL.md');
+    const skillFile = path.join(projectRoot, '.copilot', 'skills', 'typescript-refactoring', 'SKILL.md');
     expect(fs.existsSync(skillFile)).toBe(true);
 
     const content = fs.readFileSync(skillFile, 'utf-8');
@@ -706,7 +709,7 @@ describe('squad_skill handler', () => {
       }
     );
 
-    const skillFile = path.join(testRoot, 'skills', 'test-skill', 'SKILL.md');
+    const skillFile = path.join(projectRoot, '.copilot', 'skills', 'test-skill', 'SKILL.md');
     const content = fs.readFileSync(skillFile, 'utf-8');
     expect(content).toContain('**Confidence:** medium');
   });