diff --git a/cli/azd/extensions/microsoft.azd.demo/CHANGELOG.md b/cli/azd/extensions/microsoft.azd.demo/CHANGELOG.md
index 31608e27dcc..6ddf7a5295a 100644
--- a/cli/azd/extensions/microsoft.azd.demo/CHANGELOG.md
+++ b/cli/azd/extensions/microsoft.azd.demo/CHANGELOG.md
@@ -1,5 +1,12 @@
 # Release History
 
+## 0.5.0 (2026-01-23)
+
+### Features Added
+
+- Added metadata capability
+- Added `AZD_EXT_DEBUG=true` support for debugging
+
 ## 0.4.0 (2025-12-03)
 
 ### Features Added
diff --git a/cli/azd/extensions/microsoft.azd.demo/extension.yaml b/cli/azd/extensions/microsoft.azd.demo/extension.yaml
index c978740f1a8..43597be80ce 100644
--- a/cli/azd/extensions/microsoft.azd.demo/extension.yaml
+++ b/cli/azd/extensions/microsoft.azd.demo/extension.yaml
@@ -4,7 +4,7 @@ namespace: demo
 displayName: Demo Extension
 description: This extension provides examples of the AZD extension framework.
 usage: azd demo <command> [options]
-version: 0.4.0
+version: 0.5.0
 language: go
 capabilities:
   - custom-commands
diff --git a/cli/azd/extensions/microsoft.azd.demo/version.txt b/cli/azd/extensions/microsoft.azd.demo/version.txt
index 60a2d3e96c8..79a2734bbf3 100644
--- a/cli/azd/extensions/microsoft.azd.demo/version.txt
+++ b/cli/azd/extensions/microsoft.azd.demo/version.txt
@@ -1 +1 @@
-0.4.0
\ No newline at end of file
+0.5.0
\ No newline at end of file