diff --git a/packages/ai-bot/tests/prompt-construction-test.ts b/packages/ai-bot/tests/prompt-construction-test.ts
index c9ae28faeeb..bd63908c008 100644
--- a/packages/ai-bot/tests/prompt-construction-test.ts
+++ b/packages/ai-bot/tests/prompt-construction-test.ts
@@ -41,6 +41,8 @@ import {
   getPromptParts,
   getRelevantCards,
   getTools,
+  isMarkdownSkillFile,
+  parseMarkdownSkill,
   SKILL_INSTRUCTIONS_MESSAGE,
 } from '@cardstack/runtime-common/ai';
 import type { TextContent } from '@cardstack/runtime-common/ai/types';
@@ -7201,3 +7203,39 @@ module('fill missing capability fields from fallback constant', (hooks) => {
     );
   });
 });
+
+module('markdown skills', () => {
+  test('isMarkdownSkillFile detects .md/.markdown by sourceUrl', (assert) => {
+    assert.true(
+      isMarkdownSkillFile({ sourceUrl: 'https://r/skills/x/SKILL.md' } as any),
+    );
+    assert.true(
+      isMarkdownSkillFile({ sourceUrl: 'https://r/notes.markdown' } as any),
+    );
+    assert.false(
+      isMarkdownSkillFile({ sourceUrl: 'https://r/Skill/boxel-dev' } as any),
+    );
+  });
+
+  test('parseMarkdownSkill strips frontmatter and takes title from name', (assert) => {
+    let content =
+      '---\nname: "Source Code Editing"\ndescription: edits\nboxel:\n  kind: skill\n---\n\n# Source Code Editing\n\nUse SEARCH/REPLACE blocks.\n';
+    let { title, body } = parseMarkdownSkill(content, {
+      sourceUrl: 'https://r/skills/source-code-editing/SKILL.md',
+    } as any);
+    assert.strictEqual(title, 'Source Code Editing');
+    assert.strictEqual(
+      body,
+      '# Source Code Editing\n\nUse SEARCH/REPLACE blocks.',
+    );
+    assert.notOk(body.includes('kind: skill'), 'frontmatter is stripped');
+  });
+
+  test('parseMarkdownSkill falls back to the file name when no frontmatter', (assert) => {
+    let { title, body } = parseMarkdownSkill('Just instructions.', {
+      sourceUrl: 'https://r/skills/my-skill/SKILL.md',
+    } as any);
+    assert.strictEqual(title, 'SKILL.md');
+    assert.strictEqual(body, 'Just instructions.');
+  });
+});
diff --git a/packages/host/app/lib/utils.ts b/packages/host/app/lib/utils.ts
index 7faee7a0112..0ab62e3b641 100644
--- a/packages/host/app/lib/utils.ts
+++ b/packages/host/app/lib/utils.ts
@@ -86,3 +86,7 @@ export function skillCardURL(skillId: string): string {
 
 export const devSkillId = `@cardstack/skills/${devSkillLocalPath}`;
 export const envSkillId = `@cardstack/skills/${envSkillLocalPath}`;
+
+// source-code-editing now lives as a markdown SKILL.md in the skills realm and
+// is enabled by URL (loaded on demand), rather than pushed as a Skill card.
+export const sourceCodeEditingSkillUrl = `${skillsRealmURL}skills/source-code-editing/SKILL.md`;
diff --git a/packages/host/app/services/matrix-service.ts b/packages/host/app/services/matrix-service.ts
index a813af53326..b81f3701349 100644
--- a/packages/host/app/services/matrix-service.ts
+++ b/packages/host/app/services/matrix-service.ts
@@ -120,7 +120,11 @@ import { addPatchTools } from '../commands/utils';
 import { getUniqueValidCommandDefinitions } from '../lib/command-definitions';
 import { isSkillCard } from '../lib/file-def-manager';
 import { getSkillSourceCommands, loadSkillSource } from '../lib/skill-commands';
-import { skillCardURL, devSkillId, envSkillId } from '../lib/utils';
+import {
+  devSkillId,
+  envSkillId,
+  sourceCodeEditingSkillUrl,
+} from '../lib/utils';
 import { importResource } from '../resources/import';
 
 import { getRoom } from '../resources/room';
@@ -1801,11 +1805,9 @@ export default class MatrixService extends Service {
   async loadDefaultSkills(submode: Submode) {
     let interactModeDefaultSkills = [envSkillId];
 
-    let codeModeDefaultSkills = [
-      devSkillId,
-      envSkillId,
-      skillCardURL('source-code-editing'),
-    ];
+    // source-code-editing is enabled separately as a markdown skill (see
+    // activateCodingSkill), so it is no longer pushed here as a card.
+    let codeModeDefaultSkills = [devSkillId, envSkillId];
 
     let defaultSkills;
 
@@ -2690,7 +2692,12 @@ export default class MatrixService extends Service {
     let defaultSkills = await this.loadDefaultSkills('code');
     await updateRoomSkillsCommand.execute({
       roomId: this.currentRoomId,
-      skillCardIdsToActivate: defaultSkills.map((s) => s.id),
+      // The card skills plus source-code-editing as a markdown skill (enabled
+      // by URL; UpdateRoomSkillsCommand loads .md files on demand).
+      skillCardIdsToActivate: [
+        ...defaultSkills.map((s) => s.id),
+        sourceCodeEditingSkillUrl,
+      ],
     });
   }
 
diff --git a/packages/runtime-common/ai/prompt.ts b/packages/runtime-common/ai/prompt.ts
index ea2e54266c7..68d5f7c28cc 100644
--- a/packages/runtime-common/ai/prompt.ts
+++ b/packages/runtime-common/ai/prompt.ts
@@ -436,14 +436,56 @@ async function getEnabledSkills(
   if (enabledSkillCards?.length) {
     return await Promise.all(
       enabledSkillCards?.map(async (cardFileDef: SerializedFileDef) => {
-        let cardContent = await downloadFile(client, cardFileDef);
-        return (JSON.parse(cardContent) as LooseSingleCardDocument)?.data;
+        let content = await downloadFile(client, cardFileDef);
+        // A markdown skill (SKILL.md) is a plain file, not a card document:
+        // its body is the instructions. Present it in the same card-shaped
+        // form the rest of the prompt pipeline expects, so skillCardsToMessages
+        // and getTools need no special-casing.
+        if (isMarkdownSkillFile(cardFileDef)) {
+          let { title, body } = parseMarkdownSkill(content, cardFileDef);
+          return {
+            id: cardFileDef.sourceUrl,
+            type: 'card',
+            attributes: { title, instructions: body },
+          } as unknown as LooseCardResource;
+        }
+        return (JSON.parse(content) as LooseSingleCardDocument)?.data;
       }),
     );
   }
   return [];
 }
 
+// A skill enabled as a markdown file (SKILL.md), rather than a Skill card.
+export function isMarkdownSkillFile(fileDef: SerializedFileDef): boolean {
+  return /\.(md|markdown)$/i.test(fileDef.sourceUrl ?? fileDef.name ?? '');
+}
+
+// Splits a markdown skill into its instruction body and a title. The body is
+// everything after the leading `--- frontmatter ---` block (the frontmatter is
+// metadata, not instructions); the title is the frontmatter `name`, falling
+// back to the file name.
+export function parseMarkdownSkill(
+  content: string,
+  fileDef: SerializedFileDef,
+): { title: string; body: string } {
+  let body = content;
+  let title: string | undefined;
+  let match = content.match(/^---\r?\n([\s\S]*?)\r?\n---\r?\n?/);
+  if (match) {
+    body = content.slice(match[0].length);
+    let nameLine = match[1].match(/^name:\s*(.+)$/m);
+    if (nameLine) {
+      title = nameLine[1].trim().replace(/^["']|["']$/g, '');
+    }
+  }
+  if (!title) {
+    let path = fileDef.sourceUrl ?? fileDef.name ?? '';
+    title = path.split('/').filter(Boolean).pop() ?? 'Skill';
+  }
+  return { title, body: body.trim() };
+}
+
 export async function getDisabledSkillIds(
   eventList: DiscreteMatrixEvent[],
 ): Promise<string[]> {