diff --git a/crates/agent_ui/src/agent_panel.rs b/crates/agent_ui/src/agent_panel.rs
index b363d6a42a..8a09f93999 100644
--- a/crates/agent_ui/src/agent_panel.rs
+++ b/crates/agent_ui/src/agent_panel.rs
@@ -33,7 +33,7 @@ use crate::DEFAULT_THREAD_TITLE;
 use crate::ExpandMessageEditor;
 use crate::ManageProfiles;
 use crate::agent_connection_store::AgentConnectionStore;
-use crate::thread_metadata_store::{ThreadId, ThreadMetadataStore};
+use crate::thread_metadata_store::{ThreadId, ThreadMetadataStore, ThreadMetadataStoreEvent};
 use crate::{
     AddContextServer, AgentDiffPane, ConversationView, CopyThreadToClipboard, Follow,
     InlineAssistant, LoadThreadFromClipboard, NewThread, OpenActiveThreadAsMarkdown, OpenAgentDiff,
@@ -708,6 +708,7 @@ pub struct AgentPanel {
     show_trust_workspace_message: bool,
     _base_view_observation: Option<Subscription>,
     _draft_editor_observation: Option<Subscription>,
+    _thread_metadata_store_subscription: Subscription,
 }
 
 impl AgentPanel {
@@ -1022,6 +1023,17 @@ impl AgentPanel {
                 }
                 _ => {}
             });
+
+        let _thread_metadata_store_subscription = cx.subscribe(
+            &ThreadMetadataStore::global(cx),
+            |this, _store, event, cx| {
+                let ThreadMetadataStoreEvent::ThreadArchived(thread_id) = event;
+                if this.retained_threads.remove(thread_id).is_some() {
+                    cx.notify();
+                }
+            },
+        );
+
         let mut panel = Self {
             workspace_id,
             base_view,
@@ -1055,6 +1067,7 @@ impl AgentPanel {
             new_user_onboarding_upsell_dismissed: AtomicBool::new(OnboardingUpsell::dismissed(cx)),
             _base_view_observation: None,
             _draft_editor_observation: None,
+            _thread_metadata_store_subscription,
         };
 
         // Initial sync of agent servers from extensions
diff --git a/crates/agent_ui/src/thread_metadata_store.rs b/crates/agent_ui/src/thread_metadata_store.rs
index 21ac2af099..0b7e023e2c 100644
--- a/crates/agent_ui/src/thread_metadata_store.rs
+++ b/crates/agent_ui/src/thread_metadata_store.rs
@@ -785,6 +785,8 @@ impl ThreadMetadataStore {
         if let Some(job) = archive_job {
             self.in_flight_archives.insert(thread_id, job);
         }
+
+        cx.emit(ThreadMetadataStoreEvent::ThreadArchived(thread_id));
     }
 
     pub fn unarchive(&mut self, thread_id: ThreadId, cx: &mut Context<Self>) {
@@ -1228,6 +1230,13 @@ impl ThreadMetadataStore {
 
 impl Global for ThreadMetadataStore {}
 
+#[derive(Clone, Debug)]
+pub enum ThreadMetadataStoreEvent {
+    ThreadArchived(ThreadId),
+}
+
+impl gpui::EventEmitter<ThreadMetadataStoreEvent> for ThreadMetadataStore {}
+
 struct ThreadMetadataDb(ThreadSafeConnection);
 
 impl Domain for ThreadMetadataDb {
diff --git a/crates/sidebar/src/sidebar_tests.rs b/crates/sidebar/src/sidebar_tests.rs
index 2de895114d..9224edc3be 100644
--- a/crates/sidebar/src/sidebar_tests.rs
+++ b/crates/sidebar/src/sidebar_tests.rs
@@ -6141,6 +6141,45 @@ async fn test_archive_thread_keeps_metadata_but_hides_from_sidebar(cx: &mut Test
     });
 }
 
+#[gpui::test]
+async fn test_archive_thread_drops_retained_conversation_view(cx: &mut TestAppContext) {
+    let project = init_test_project_with_agent_panel("/project-a", cx).await;
+    let (multi_workspace, cx) =
+        cx.add_window_view(|window, cx| MultiWorkspace::test_new(project.clone(), window, cx));
+    let (sidebar, panel) = setup_sidebar_with_agent_panel(&multi_workspace, cx);
+    cx.run_until_parked();
+
+    let connection = acp_thread::StubAgentConnection::new();
+    connection.set_next_prompt_updates(vec![acp::SessionUpdate::AgentMessageChunk(
+        acp::ContentChunk::new("Done".into()),
+    )]);
+    open_thread_with_connection(&panel, connection, cx);
+    send_message(&panel, cx);
+    let session_id = active_session_id(&panel, cx);
+    let thread_id = active_thread_id(&panel, cx);
+    cx.run_until_parked();
+
+    sidebar.read_with(cx, |sidebar, _| {
+        assert!(
+            is_active_session(sidebar, &session_id),
+            "expected the newly created thread to be active before archiving",
+        );
+    });
+
+    sidebar.update_in(cx, |sidebar, window, cx| {
+        sidebar.archive_thread(&session_id, window, cx);
+    });
+    cx.run_until_parked();
+
+    panel.read_with(cx, |panel, _| {
+        assert!(
+            !panel.is_retained_thread(&thread_id),
+            "archiving a thread must drop its ConversationView from retained_threads, \
+             but the archived thread id {thread_id:?} is still retained",
+        );
+    });
+}
+
 #[gpui::test]
 async fn test_archive_thread_active_entry_management(cx: &mut TestAppContext) {
     // Tests two archive scenarios: