diff --git a/AIClasses/Claude/Claude.ts b/AIClasses/Claude/Claude.ts
index 22e009a..6a71549 100644
--- a/AIClasses/Claude/Claude.ts
+++ b/AIClasses/Claude/Claude.ts
@@ -115,6 +115,13 @@ export class Claude extends BaseAIClass {
                     this.accumulatedFunctionName = toolBlock.name || null;
                     this.accumulatedFunctionArgs = "";
                     this.accumulatedFunctionId = toolBlock.id || null;
+
+                    // Return immediately to signal tool call has started
+                    return {
+                        content: "",
+                        isComplete: false,
+                        toolCallStarted: toolBlock.name
+                    };
                 }
             }
 
diff --git a/AIClasses/OpenAI/OpenAI.ts b/AIClasses/OpenAI/OpenAI.ts
index 6e0311d..a449e45 100644
--- a/AIClasses/OpenAI/OpenAI.ts
+++ b/AIClasses/OpenAI/OpenAI.ts
@@ -7,7 +7,7 @@ import { AIProvider, AIProviderURL } from "Enums/ApiProvider";
 import { AIToolCall } from "AIClasses/AIToolCall";
 import { fromString as aiToolFromString } from "Enums/AITool";
 import type { IAIToolDefinition } from "AIClasses/ToolDefinitions/IAIToolDefinition";
-import type { ResponseEvent, ResponseOutputTextDelta, ResponseOutputItemDone, ResponseErrorEvent, ResponseFailedEvent, OpenAIToolTool, ResponsesAPIInput } from "./OpenAITypes";
+import type { ResponseEvent, ResponseOutputTextDelta, ResponseOutputItemAdded, ResponseOutputItemDone, ResponseErrorEvent, ResponseFailedEvent, OpenAIToolTool, ResponsesAPIInput } from "./OpenAITypes";
 import { Exception } from "Helpers/Exception";
 import { ApiError, ApiErrorType } from "Types/ApiError";
 import { MimeType, toMimeType } from "Enums/MimeType";
@@ -138,6 +138,21 @@ export class OpenAI extends BaseAIClass {
                     break;
                 }
 
+                case "response.output_item.added": {
+                    // Function call starting - get name immediately for early UI feedback
+                    const itemAddedEvent = event as ResponseOutputItemAdded;
+
+                    // Check if this is a function call and return tool name immediately
+                    if (itemAddedEvent.item.type === "function_call" && itemAddedEvent.item.name) {
+                        return {
+                            content: "",
+                            isComplete: false,
+                            toolCallStarted: itemAddedEvent.item.name
+                        };
+                    }
+                    break;
+                }
+
                 case "response.output_item.done": {
                     // Complete output item received - this includes function calls with name
                     const itemDoneEvent = event as ResponseOutputItemDone;
@@ -167,7 +182,6 @@ export class OpenAI extends BaseAIClass {
                 case "response.in_progress":
                 case "response.content_part.added":
                 case "response.content_part.done":
-                case "response.output_item.added":
                 case "response.output_text.done":
                 case "response.web_search_call.in_progress":
                 case "response.web_search_call.searching":
diff --git a/AIClasses/OpenAI/OpenAITypes.ts b/AIClasses/OpenAI/OpenAITypes.ts
index 34c4bb6..0985338 100644
--- a/AIClasses/OpenAI/OpenAITypes.ts
+++ b/AIClasses/OpenAI/OpenAITypes.ts
@@ -21,6 +21,19 @@ export interface ResponseToolCallArgumentsDone extends ResponseEvent {
     sequence_number: number;
 }
 
+export interface ResponseOutputItemAdded extends ResponseEvent {
+    type: "response.output_item.added";
+    response_id: string;
+    output_index: number;
+    item: {
+        type: string;
+        id?: string;
+        call_id?: string;
+        name?: string;
+        arguments?: string;
+    };
+}
+
 export interface ResponseOutputItemDone extends ResponseEvent {
     type: "response.output_item.done";
     item_id: string;
diff --git a/Components/ChatArea.svelte b/Components/ChatArea.svelte
index b435405..19d62b4 100644
--- a/Components/ChatArea.svelte
+++ b/Components/ChatArea.svelte
@@ -289,7 +289,7 @@
       {/if}
     {/each}
 
-    <ThoughtIndicator thought={currentThought} bind:thoughtIndicatorElement={thoughtIndicatorElement}/>
+    <ThoughtIndicator thought={currentThought} {editModeActive} bind:thoughtIndicatorElement={thoughtIndicatorElement}/>
     {#if isSubmitting}
       <StreamingIndicator editModeActive={editModeActive} bind:streamingIndicatorElement={streamingIndicatorElement}/>
     {/if}
diff --git a/Components/ChatPlanArea.svelte b/Components/ChatPlanArea.svelte
index c4763b6..ab43110 100644
--- a/Components/ChatPlanArea.svelte
+++ b/Components/ChatPlanArea.svelte
@@ -114,7 +114,7 @@
 
 {#if busyPlanning}
     <div id="chat-planning-in-progress" transition:slide>
-        <Spinner {editModeActive}/>
+        <Spinner {editModeActive} alternateBackground={true}/>
         <span id="chat-planning-in-progress-text">{$executionPlanState.plan?.isReplan ? "Replanning in progress..." : "Planning in progress..."}</span>
     </div>
 {/if}
diff --git a/Components/ChatWindow.svelte b/Components/ChatWindow.svelte
index 7e3b91e..78d878b 100644
--- a/Components/ChatWindow.svelte
+++ b/Components/ChatWindow.svelte
@@ -20,6 +20,7 @@
 	import type { ExecutionPlanStore } from "Stores/ExecutionPlanStore";
 	import type { StreamingMarkdownService } from "Services/StreamingMarkdownService";
 	import { HTMLService } from "Services/HTMLService";
+	import { AITool, fromString } from "Enums/AITool";
 
   const plugin: VaultkeeperAIPlugin = Resolve<VaultkeeperAIPlugin>(Services.VaultkeeperAIPlugin);
   const executionPlanStore: ExecutionPlanStore = Resolve<ExecutionPlanStore>(Services.ExecutionPlanStore);
@@ -121,6 +122,19 @@
           currentThought = thought;
         }
       },
+      onToolCallStarted: (toolName: string) => {
+        const tool = fromString(toolName);
+        switch(tool) {
+          case AITool.WriteVaultFile:
+          case AITool.PatchVaultFile:
+            currentThought = Copy.AIThoughtGeneratingNote;
+            break;
+          case AITool.AskUserQuestionPlanning:
+          case AITool.AskUserQuestionExecution:
+            currentThought = Copy.AIThoughtPreparingQuery;
+            break;
+        }
+      },
       onPlanningStarted: () => {
         busyPlanning = true;
       },
diff --git a/Components/Spinner.svelte b/Components/Spinner.svelte
index b913e4b..89e5b4b 100644
--- a/Components/Spinner.svelte
+++ b/Components/Spinner.svelte
@@ -2,6 +2,7 @@
   export let width: string = "18px";
   export let height: string = "18px";
   export let editModeActive: boolean = false;
+  export let alternateBackground: boolean = false;
   export let spinnerElement: HTMLDivElement | undefined = undefined;
 </script>
 
@@ -11,7 +12,7 @@
   style="width: {width}; height: {height};"
   bind:this={spinnerElement}
 >
-  <div class="circle-core"></div>
+  <div class="circle-core" class:alternate-background={alternateBackground}></div>
 </div>
 
 <style>
@@ -47,7 +48,11 @@
   .circle-core {
     width: 100%;
     height: 100%;
-    background-color: var(--background-secondary-alt);
+    background-color: var(--background-secondary);
     border-radius: 50%;
   }
+
+  .circle-core.alternate-background {
+    background-color: var(--background-secondary-alt);
+  }
 </style>
diff --git a/Components/ThoughtIndicator.svelte b/Components/ThoughtIndicator.svelte
index ceb52de..bfaa621 100644
--- a/Components/ThoughtIndicator.svelte
+++ b/Components/ThoughtIndicator.svelte
@@ -1,14 +1,19 @@
 <script lang="ts">
   import { fade } from "svelte/transition";
+	import Spinner from "./Spinner.svelte";
+
   export let thought: string | null = null;
   export let thoughtIndicatorElement: HTMLElement | undefined = undefined;
+  export let editModeActive : boolean = false;
+
   $: isVisible = thought !== null && thought.trim().length > 0;
+
 </script>
 
 {#if isVisible}
   <div class="ai-thought-container" in:fade={{ duration: 200 }} out:fade={{ duration: 200 }} bind:this={thoughtIndicatorElement}>
     <div class="ai-thought-bubble">
-      <span>{thought}</span>
+      <span><Spinner {editModeActive}/> {thought}</span>
     </div>
   </div>
 {/if}
@@ -33,12 +38,15 @@
     z-index: 1;
     background: var(--background-primary-alt);
     border-radius: 10px;
-    padding: 0.75rem 1rem;
+    padding: 0.55rem 0.7rem;
     font-size: var(--font-smallest);
     color: var(--text-muted);
     font-style: italic;
     word-wrap: break-word;
     width: 100%;
+    display: inline-flex;
+    align-items: center;
+    gap: 0.5rem;
   }
 
   .ai-thought-bubble::after {
diff --git a/Enums/Copy.ts b/Enums/Copy.ts
index 615e25d..d584236 100644
--- a/Enums/Copy.ts
+++ b/Enums/Copy.ts
@@ -73,6 +73,8 @@ export enum Copy {
     TooltipLearnMoreFileMonitoring = "Learn more in Plugin Guide",
 
     AIThoughtMessage = "Thinking...",
+    AIThoughtGeneratingNote = "Generating note contents...",
+    AIThoughtPreparingQuery = "Preparing user query...",
 
     // Rate Limit Countdown
     RateLimitCountdown = "Rate limit exceeded retrying in {seconds}...",
diff --git a/Services/AIServices/BaseAgent.ts b/Services/AIServices/BaseAgent.ts
index 89f33dd..12781a2 100644
--- a/Services/AIServices/BaseAgent.ts
+++ b/Services/AIServices/BaseAgent.ts
@@ -138,6 +138,11 @@ export abstract class BaseAgent {
                 break;
             }
 
+            if (chunk.toolCallStarted) {
+                this.debugService?.log("ToolCallStarted", `Tool call started: ${chunk.toolCallStarted}`);
+                callbacks.onToolCallStarted(chunk.toolCallStarted);
+            }
+
             if (chunk.toolCall) {
                 this.debugService?.log("ToolCall", `Function call captured: ${chunk.toolCall.name}`);
                 capturedToolCall = chunk.toolCall;
diff --git a/Services/ChatService.ts b/Services/ChatService.ts
index b1f6562..2b4aa83 100644
--- a/Services/ChatService.ts
+++ b/Services/ChatService.ts
@@ -21,6 +21,7 @@ export interface IChatServiceCallbacks {
 	onSubmit: () => void;
 	onStreamingUpdate: (streamingMessageId: string | null) => void;
 	onThoughtUpdate: (thought: string | null) => void;
+	onToolCallStarted: (toolName: string) => void;
 	onPlanningStarted: () => void;
 	onPlanningFinished: () => void;
 	onUserQuestion: (question: string) => Promise<string>;
diff --git a/Services/StreamingService.ts b/Services/StreamingService.ts
index fa2582f..d90e9b4 100644
--- a/Services/StreamingService.ts
+++ b/Services/StreamingService.ts
@@ -14,6 +14,7 @@ export interface IStreamChunk {
   error?: string;
   errorType?: ApiErrorType;
   toolCall?: AIToolCall;
+  toolCallStarted?: string;
   shouldContinue?: boolean;
 }