diff --git a/actions/setup/js/safe_output_project_handler_manager.cjs b/actions/setup/js/safe_output_project_handler_manager.cjs
index 5fd80ec3860..834379563d4 100644
--- a/actions/setup/js/safe_output_project_handler_manager.cjs
+++ b/actions/setup/js/safe_output_project_handler_manager.cjs
@@ -111,6 +111,9 @@ async function processMessages(messageHandlers, messages) {
   const results = [];
   let processedCount = 0;
 
+  // Build a temporary project ID map as we process create_project messages
+  const temporaryProjectMap = new Map();
+
   core.info(`Processing ${messages.length} project-related message(s)...`);
 
   // Process messages in order of appearance
@@ -136,8 +139,8 @@ async function processMessages(messageHandlers, messages) {
       core.info(`Processing message ${i + 1}/${messages.length}: ${messageType}`);
 
       // Call the message handler with the individual message
-      // Note: Project handlers don't use temporary ID resolution
-      const result = await messageHandler(message, {});
+      // Pass the temporary project map for resolution
+      const result = await messageHandler(message, temporaryProjectMap);
 
       // Check if the handler explicitly returned a failure
       if (result && result.success === false) {
@@ -152,6 +155,12 @@ async function processMessages(messageHandlers, messages) {
         continue;
       }
 
+      // If this was a create_project, store the mapping
+      if (messageType === "create_project" && result && result.projectUrl && message.temporary_id) {
+        temporaryProjectMap.set(message.temporary_id.toLowerCase(), result.projectUrl);
+        core.info(`✓ Stored project mapping: ${message.temporary_id} -> ${result.projectUrl}`);
+      }
+
       results.push({
         type: messageType,
         messageIndex: i,
diff --git a/actions/setup/js/safe_outputs_handlers.cjs b/actions/setup/js/safe_outputs_handlers.cjs
index 6ad14f74653..5e3425b9f4a 100644
--- a/actions/setup/js/safe_outputs_handlers.cjs
+++ b/actions/setup/js/safe_outputs_handlers.cjs
@@ -341,11 +341,43 @@ function createHandlers(server, appendSafeOutput, config = {}) {
     };
   };
 
+  /**
+   * Handler for create_project tool
+   * Auto-generates a temporary ID if not provided and returns it to the agent
+   */
+  const createProjectHandler = args => {
+    const entry = { ...(args || {}), type: "create_project" };
+
+    // Generate temporary_id if not provided
+    if (!entry.temporary_id) {
+      entry.temporary_id = "aw_" + crypto.randomBytes(6).toString("hex");
+      server.debug(`Auto-generated temporary_id for create_project: ${entry.temporary_id}`);
+    }
+
+    // Append to safe outputs
+    appendSafeOutput(entry);
+
+    // Return the temporary_id to the agent so it can reference this project
+    return {
+      content: [
+        {
+          type: "text",
+          text: JSON.stringify({
+            result: "success",
+            temporary_id: entry.temporary_id,
+            project: `#${entry.temporary_id}`,
+          }),
+        },
+      ],
+    };
+  };
+
   return {
     defaultHandler,
     uploadAssetHandler,
     createPullRequestHandler,
     pushToPullRequestBranchHandler,
+    createProjectHandler,
   };
 }
 
diff --git a/actions/setup/js/safe_outputs_tools.json b/actions/setup/js/safe_outputs_tools.json
index fc4ac40ca5f..124796dbb6b 100644
--- a/actions/setup/js/safe_outputs_tools.json
+++ b/actions/setup/js/safe_outputs_tools.json
@@ -607,8 +607,8 @@
       "properties": {
         "project": {
           "type": "string",
-          "pattern": "^https://github\\.com/(orgs|users)/[^/]+/projects/\\d+$",
-          "description": "Full GitHub project URL (e.g., 'https://github.com/orgs/myorg/projects/42' or 'https://github.com/users/username/projects/5'). Project names or numbers alone are NOT accepted."
+          "pattern": "^(https://github\\.com/(orgs|users)/[^/]+/projects/\\d+|#?aw_[0-9a-f]{12})$",
+          "description": "Full GitHub project URL (e.g., 'https://github.com/orgs/myorg/projects/42' or 'https://github.com/users/username/projects/5'), or a temporary project ID from a recent create_project call (e.g., '#aw_abc123def456' or 'aw_abc123def456'). Project names or numbers alone are NOT accepted."
         },
         "operation": {
           "type": "string",
@@ -729,7 +729,7 @@
   },
   {
     "name": "create_project",
-    "description": "Create a new empty GitHub Projects v2 board. Use this to create a project board for organizing work. The project is created empty and can be populated with issues and custom fields after creation.",
+    "description": "Create a new empty GitHub Projects v2 board. Use this to create a project board for organizing work. The project is created empty and can be populated with issues and custom fields after creation. Returns a temporary project ID that can be used in subsequent update_project calls before the actual project URL is available.",
     "inputSchema": {
       "type": "object",
       "required": [],
@@ -751,6 +751,11 @@
           "type": "string",
           "pattern": "^https://github\\\\.com/[^/]+/[^/]+/issues/\\\\d+$",
           "description": "Optional GitHub issue URL to add as the first item to the project (e.g., 'https://github.com/owner/repo/issues/123')."
+        },
+        "temporary_id": {
+          "type": "string",
+          "pattern": "^aw_[0-9a-f]{12}$",
+          "description": "Optional temporary identifier for referencing this project before it's created. Format: 'aw_' followed by 12 hex characters (e.g., 'aw_abc123def456'). If not provided, one will be auto-generated and returned in the response. Use '#aw_ID' in update_project to reference this project by its temporary_id."
         }
       },
       "additionalProperties": false
diff --git a/actions/setup/js/safe_outputs_tools_loader.cjs b/actions/setup/js/safe_outputs_tools_loader.cjs
index 6d463a410c6..2f6f126dbbf 100644
--- a/actions/setup/js/safe_outputs_tools_loader.cjs
+++ b/actions/setup/js/safe_outputs_tools_loader.cjs
@@ -46,6 +46,7 @@ function attachHandlers(tools, handlers) {
     create_pull_request: handlers.createPullRequestHandler,
     push_to_pull_request_branch: handlers.pushToPullRequestBranchHandler,
     upload_asset: handlers.uploadAssetHandler,
+    create_project: handlers.createProjectHandler,
   };
 
   tools.forEach(tool => {
diff --git a/actions/setup/js/update_project.cjs b/actions/setup/js/update_project.cjs
index 425358495e0..41804e1d69c 100644
--- a/actions/setup/js/update_project.cjs
+++ b/actions/setup/js/update_project.cjs
@@ -978,10 +978,10 @@ async function main(config = {}) {
   /**
    * Message handler function that processes a single update_project message
    * @param {Object} message - The update_project message to process
-   * @param {Object} resolvedTemporaryIds - Map of temporary IDs (unused for update_project)
+   * @param {Map<string, string>} temporaryProjectMap - Map of temporary project IDs to actual URLs
    * @returns {Promise<Object>} Result with success/error status
    */
-  return async function handleUpdateProject(message, resolvedTemporaryIds) {
+  return async function handleUpdateProject(message, temporaryProjectMap) {
     // Check max limit
     if (processedCount >= maxCount) {
       core.warning(`Skipping update_project: max count of ${maxCount} reached`);
@@ -994,15 +994,38 @@ async function main(config = {}) {
     processedCount++;
 
     try {
+      // Resolve temporary project ID if present
+      let effectiveProjectUrl = message.project;
+
+      if (effectiveProjectUrl && typeof effectiveProjectUrl === "string") {
+        // Strip # prefix if present
+        const projectStr = effectiveProjectUrl.trim();
+        const projectWithoutHash = projectStr.startsWith("#") ? projectStr.substring(1) : projectStr;
+
+        // Check if it's a temporary ID (aw_XXXXXXXXXXXX)
+        if (/^aw_[0-9a-f]{12}$/i.test(projectWithoutHash)) {
+          const resolved = temporaryProjectMap.get(projectWithoutHash.toLowerCase());
+          if (resolved) {
+            core.info(`Resolved temporary project ID ${projectStr} to ${resolved}`);
+            effectiveProjectUrl = resolved;
+          } else {
+            throw new Error(`Temporary project ID '${projectStr}' not found. Ensure create_project was called before update_project.`);
+          }
+        }
+      }
+
+      // Create effective message with resolved project URL
+      const resolvedMessage = { ...message, project: effectiveProjectUrl };
+
       // Store the first project URL for view creation
-      if (!firstProjectUrl && message.project) {
-        firstProjectUrl = message.project;
+      if (!firstProjectUrl && effectiveProjectUrl) {
+        firstProjectUrl = effectiveProjectUrl;
       }
 
       // Create configured fields once before processing the first message
       // This ensures campaign-required fields exist even if the agent doesn't explicitly emit operation=create_fields.
       if (!fieldsCreated && configuredFieldDefinitions.length > 0 && firstProjectUrl) {
-        const operation = typeof message?.operation === "string" ? message.operation : "";
+        const operation = typeof resolvedMessage?.operation === "string" ? resolvedMessage.operation : "";
         if (operation !== "create_fields") {
           fieldsCreated = true;
           core.info(`Creating ${configuredFieldDefinitions.length} configured field(s) on project: ${firstProjectUrl}`);
@@ -1027,7 +1050,7 @@ async function main(config = {}) {
       }
 
       // If the agent requests create_fields but omitted field_definitions, fall back to configured definitions.
-      const effectiveMessage = { ...message };
+      const effectiveMessage = { ...resolvedMessage };
       if (effectiveMessage?.operation === "create_fields" && !effectiveMessage.field_definitions && configuredFieldDefinitions.length > 0) {
         effectiveMessage.field_definitions = configuredFieldDefinitions;
       }