diff --git a/.vscode/cspell-github-user-aliases.txt b/.vscode/cspell-github-user-aliases.txt
index f5dd8809b04..872087e22c4 100644
--- a/.vscode/cspell-github-user-aliases.txt
+++ b/.vscode/cspell-github-user-aliases.txt
@@ -3,7 +3,10 @@ adam-lavrik
 adamra
 AlecAivazis
 alexandair
+amitbhave
+anchenyi
 antriksh
+banrahan
 benbjohnson
 blang
 bmatcuk
diff --git a/cli/azd/extensions/azure.ai.agents/CHANGELOG.md b/cli/azd/extensions/azure.ai.agents/CHANGELOG.md
index 8dad44784c8..7ae8cb5f2c3 100644
--- a/cli/azd/extensions/azure.ai.agents/CHANGELOG.md
+++ b/cli/azd/extensions/azure.ai.agents/CHANGELOG.md
@@ -1,9 +1,11 @@
 # Release History
 
-## Unreleased
+## 0.1.38-preview (2026-06-05)
 
-- Add support for a generic `policies` list in `agent.yaml` to attach governance policies to hosted agents. Each entry has a `type` discriminator; `type: rai_policy` attaches a Responsible AI (content safety) guardrail via `rai_policy_name`, the full ARM resource ID of the RAI policy (for example, `/subscriptions/<sub>/resourceGroups/<rg>/providers/Microsoft.CognitiveServices/accounts/<account>/raiPolicies/<policyName>`). `azd deploy` forwards it to the Foundry data plane as `rai_config.rai_policy_name`.
-- [[#8528]](https://github.com/Azure/azure-dev/issues/8528) .env will now contain a salted RG name after init, where before it was empty (Bicep filled in the default). Anyone scripting against AZURE_RESOURCE_GROUP right after init will see something different.
+- [[#8532]](https://github.com/Azure/azure-dev/pull/8532) Fix Agent Inspector auto-launch for slow-starting local agents by waiting for the local agent port instead of timing out after 30 seconds. Thanks @anchenyi for the contribution!
+- [[#8529]](https://github.com/Azure/azure-dev/pull/8529) Update `azd ai agent init` to write a salted `AZURE_RESOURCE_GROUP` value to `.env`, reducing resource group collisions when recreating projects. Thanks @banrahan for the contribution!
+- [[#8521]](https://github.com/Azure/azure-dev/pull/8521) Add generic `policies` (`rai_policy`) support to the `agent.yaml` manifest for hosted agents so users can attach governance policies via `rai_policy_name`. Thanks @amitbhave10 for the contribution!
+- [[#8522]](https://github.com/Azure/azure-dev/pull/8522) Fix `azd ai agent init` from a manifest in the current directory when the target project is created in a subdirectory. Thanks @v1212 for the contribution!
 
 ## 0.1.37-preview (2026-06-01)
 
diff --git a/cli/azd/extensions/azure.ai.agents/extension.yaml b/cli/azd/extensions/azure.ai.agents/extension.yaml
index 88085555ed6..df9370fdf2b 100644
--- a/cli/azd/extensions/azure.ai.agents/extension.yaml
+++ b/cli/azd/extensions/azure.ai.agents/extension.yaml
@@ -5,7 +5,7 @@ displayName: Foundry agents (Preview)
 description: Ship agents with Microsoft Foundry from your terminal. (Preview)
 usage: azd ai agent <command> [options]
 # NOTE: Make sure version.txt is in sync with this version.
-version: 0.1.37-preview
+version: 0.1.38-preview
 requiredAzdVersion: ">1.25.2"
 dependencies:
   - id: azure.ai.inspector
diff --git a/cli/azd/extensions/azure.ai.agents/version.txt b/cli/azd/extensions/azure.ai.agents/version.txt
index 824c2579823..23a3d8562b8 100644
--- a/cli/azd/extensions/azure.ai.agents/version.txt
+++ b/cli/azd/extensions/azure.ai.agents/version.txt
@@ -1 +1 @@
-0.1.37-preview
+0.1.38-preview