diff --git a/src/tui/app.tsx b/src/tui/app.tsx
index 2d7a5347..dcde73fb 100644
--- a/src/tui/app.tsx
+++ b/src/tui/app.tsx
@@ -45,6 +45,10 @@ import {
 } from "./theme.js";
 import { compactToolTranscriptContent } from "./transcript-preview.js";
 import { buildTranscriptClipboardText } from "./transcript-export.js";
+import {
+  buildCollapsedToolSummary,
+  buildToolTranscriptLines,
+} from "./tool-call-collapsible.js";
 import type {
   StepCliTuiComposerState,
   StepCliTuiComposerHistoryState,
@@ -147,6 +151,7 @@ export function StepCliTuiScreen(props: StepCliTuiScreenProps) {
   const [activeRunCount, setActiveRunCount] = useState(0);
   const [spinnerFrameIndex, setSpinnerFrameIndex] = useState(0);
   const [slashSelectionIndex, setSlashSelectionIndex] = useState(0);
+  const [toolOutputExpanded, setToolOutputExpanded] = useState(false);
   const submitting = activeRunCount > 0;
 
   // Voice mode state. The host passes a loadVoiceRuntime factory; we cache
@@ -604,6 +609,12 @@ export function StepCliTuiScreen(props: StepCliTuiScreenProps) {
       return;
     }
 
+    if (key.ctrl && key.name === "o") {
+      key.preventDefault();
+      setToolOutputExpanded((current) => !current);
+      return;
+    }
+
     if (key.name === "up") {
       if (slashPaletteState.visible && slashPaletteState.matches.length > 0) {
         key.preventDefault();
@@ -770,8 +781,14 @@ export function StepCliTuiScreen(props: StepCliTuiScreenProps) {
     [props.scrollConfig, terminal.height],
   );
   const transcriptItems = useMemo(
-    () => buildTranscriptItems(transcriptEntries, transcriptWidth, theme),
-    [theme, transcriptEntries, transcriptWidth],
+    () =>
+      buildTranscriptItems(
+        transcriptEntries,
+        transcriptWidth,
+        theme,
+        toolOutputExpanded,
+      ),
+    [theme, transcriptEntries, transcriptWidth, toolOutputExpanded],
   );
 
   return (
@@ -1522,6 +1539,7 @@ const TranscriptEntry = React.memo(function TranscriptEntry(input: {
   const [firstLine = "", ...restLines] =
     item.lines.length > 0 ? item.lines : [""];
   const badgeStyle = resolveTranscriptBadgeStyle(item.tone, input.theme);
+  const isCollapsed = item.collapsible && !item.expanded;
   const body = (
     <>
       <text fg={input.theme.foreground}>
@@ -1529,17 +1547,23 @@ const TranscriptEntry = React.memo(function TranscriptEntry(input: {
           {" "}
           {item.badge}{" "}
         </span>
-        {item.caption ? (
+        {item.caption && !isCollapsed ? (
           <span fg={input.theme.muted}> {item.caption}</span>
         ) : null}
         {firstLine.length > 0 ? <span> {firstLine}</span> : null}
       </text>
-      {restLines.map((line, index) => (
-        <text key={`${item.id}:${index}`} fg={input.theme.foreground}>
-          <span fg={badgeStyle.railColor}>│ </span>
-          {line.length > 0 ? line : " "}
-        </text>
-      ))}
+      {isCollapsed
+        ? restLines.map((line, index) => (
+            <text key={`${item.id}:${index}`} fg={input.theme.muted}>
+              {line.length > 0 ? line : " "}
+            </text>
+          ))
+        : restLines.map((line, index) => (
+            <text key={`${item.id}:${index}`} fg={input.theme.foreground}>
+              <span fg={badgeStyle.railColor}>│ </span>
+              {line.length > 0 ? line : " "}
+            </text>
+          ))}
       {item.truncated ? (
         <text fg={input.theme.muted}>
           <span fg={badgeStyle.railColor}>│ </span>…
@@ -1911,13 +1935,22 @@ function buildTranscriptItems(
   entries: StepCliTuiTranscriptEntry[],
   width: number,
   theme: StepCliTuiThemeColors,
+  toolOutputExpanded: boolean,
 ): TranscriptItem[] {
   return [
     buildWelcomeTranscriptItem(width),
     ...entries.map((entry, index) => {
       const identity = resolveTranscriptIdentity(entry);
-      const body = compactToolTranscriptContent(entry);
-      const lines = wrapMultiline(body, Math.max(12, width - 4));
+      const isTool = entry.role === "tool";
+      const lines = isTool
+        ? buildToolTranscriptLines(entry, toolOutputExpanded)
+        : wrapMultiline(
+            compactToolTranscriptContent(entry),
+            Math.max(12, width - 4),
+          );
+      const collapsedSummary = isTool
+        ? buildCollapsedToolSummary(entry)
+        : undefined;
       return {
         id:
           entry.id ||
@@ -1927,6 +1960,9 @@ function buildTranscriptItems(
         border: false,
         lines,
         truncated: false,
+        collapsible: isTool,
+        expanded: isTool ? toolOutputExpanded : undefined,
+        expandHint: collapsedSummary?.expandHint,
       };
     }),
   ];
@@ -1936,7 +1972,7 @@ function buildWelcomeTranscriptItem(width: number): TranscriptItem {
   const welcomeLines = [
     "Welcome to STEP.",
     "Start with a prompt, or use /attach to queue an image.",
-    "Enter send · Shift+Enter newline · Ctrl+Y or /copy copy selection/full transcript · Esc quit",
+    "Enter send · Shift+Enter newline · Ctrl+Y or /copy copy selection/full transcript · Ctrl+O expand/collapse tool output · Esc quit",
     "/goal /attach /copy /detach /status /refresh /theme [name] /resume <session_id> /exit",
   ].flatMap((line) => wrapMultiline(line, Math.max(12, width - 4)));
 
@@ -2317,6 +2353,12 @@ interface TranscriptItem {
   border: boolean;
   lines: string[];
   truncated: boolean;
+  /** When true, the entry can be expanded/collapsed with Ctrl+O. */
+  collapsible?: boolean;
+  /** Current expansion state (only meaningful when collapsible is true). */
+  expanded?: boolean;
+  /** Hint shown when collapsed. */
+  expandHint?: string;
 }
 
 interface SlashPaletteState {
diff --git a/src/tui/tool-call-collapsible.test.ts b/src/tui/tool-call-collapsible.test.ts
new file mode 100644
index 00000000..04d6108d
--- /dev/null
+++ b/src/tui/tool-call-collapsible.test.ts
@@ -0,0 +1,93 @@
+import { describe, expect, it } from "vitest";
+import {
+  buildCollapsedToolSummary,
+  buildToolTranscriptLines,
+} from "./tool-call-collapsible.js";
+import type { StepCliTuiTranscriptEntry } from "./types.js";
+
+function makeToolEntry(
+  content: string,
+  caption: string | null = "Bash",
+): StepCliTuiTranscriptEntry {
+  return {
+    id: "test-tool-id",
+    role: "tool",
+    caption,
+    content,
+  };
+}
+
+describe("buildCollapsedToolSummary", () => {
+  it("returns status and first detail in headline", () => {
+    const entry = makeToolEntry(
+      "[completed] completed\nargs ls -la\nresult line 1\nresult line 2",
+    );
+    const summary = buildCollapsedToolSummary(entry);
+    expect(summary.headline).toBe("Bash · [completed] args ls -la");
+    expect(summary.previewLines).toEqual(["result line 1", "result line 2"]);
+    expect(summary.hiddenLineCount).toBe(0);
+  });
+
+  it("reports hidden line count when content exceeds preview", () => {
+    const entry = makeToolEntry(
+      "[completed] completed\nargs ls -la\nline 1\nline 2\nline 3\nline 4",
+    );
+    const summary = buildCollapsedToolSummary(entry);
+    expect(summary.previewLines).toEqual(["line 1", "line 2"]);
+    expect(summary.hiddenLineCount).toBe(2);
+    expect(summary.expandHint).toBe("... (2 more lines, ctrl-o to expand)");
+  });
+
+  it("truncates very long first detail lines", () => {
+    const longCommand = "x".repeat(120);
+    const entry = makeToolEntry(`[completed] completed\n${longCommand}`);
+    const summary = buildCollapsedToolSummary(entry);
+    expect(summary.headline).toBe(`Bash · [completed] ${"x".repeat(77)}...`);
+    expect(summary.previewLines).toEqual([]);
+    expect(summary.hiddenLineCount).toBe(0);
+  });
+
+  it("does not show expand hint for a single-line result", () => {
+    const entry = makeToolEntry("[completed] completed");
+    const summary = buildCollapsedToolSummary(entry);
+    expect(summary.headline).toBe("Bash · [completed]");
+    expect(summary.previewLines).toEqual([]);
+    expect(summary.hiddenLineCount).toBe(0);
+  });
+
+  it("falls back to 'completed' when no status tag is present", () => {
+    const entry = makeToolEntry("plain output\nmore output\nthird line");
+    const summary = buildCollapsedToolSummary(entry);
+    expect(summary.headline).toBe("Bash · [completed] plain output");
+    expect(summary.previewLines).toEqual(["more output", "third line"]);
+    expect(summary.hiddenLineCount).toBe(0);
+  });
+});
+
+describe("buildToolTranscriptLines", () => {
+  it("collapses tool entries by default with preview lines and hint", () => {
+    const entry = makeToolEntry(
+      "[completed] completed\nargs ls -la\nline 1\nline 2\nline 3",
+    );
+    const lines = buildToolTranscriptLines(entry, false);
+    expect(lines).toEqual([
+      "Bash · [completed] args ls -la",
+      "line 1",
+      "line 2",
+      "... (1 more line, ctrl-o to expand)",
+    ]);
+  });
+
+  it("expands tool entries when requested", () => {
+    const entry = makeToolEntry("[completed] completed\nline 1\nline 2");
+    const lines = buildToolTranscriptLines(entry, true);
+    expect(lines.join("\n")).toContain("line 1");
+    expect(lines.join("\n")).toContain("line 2");
+  });
+
+  it("does not show expand hint when everything fits in preview", () => {
+    const entry = makeToolEntry("[completed] completed\nargs ls -la\nline 1");
+    const lines = buildToolTranscriptLines(entry, false);
+    expect(lines).toEqual(["Bash · [completed] args ls -la", "line 1"]);
+  });
+});
diff --git a/src/tui/tool-call-collapsible.ts b/src/tui/tool-call-collapsible.ts
new file mode 100644
index 00000000..b6769daa
--- /dev/null
+++ b/src/tui/tool-call-collapsible.ts
@@ -0,0 +1,74 @@
+import type { StepCliTuiTranscriptEntry } from "./types.js";
+
+const COLLAPSED_TOOL_DETAIL_MAX_LENGTH = 80;
+const TOOL_PREVIEW_LINES = 2;
+const STATUS_LINE_RE = /^\[(\w+)\]\s*(.*)$/;
+
+export interface CollapsedToolSummary {
+  headline: string;
+  previewLines: string[];
+  hiddenLineCount: number;
+  expandHint: string;
+}
+
+export function buildCollapsedToolSummary(
+  entry: StepCliTuiTranscriptEntry,
+): CollapsedToolSummary {
+  const caption = entry.caption ?? "tool";
+  const lines = entry.content.split("\n");
+  const firstLine = lines[0]?.trim() ?? "";
+  const statusMatch = STATUS_LINE_RE.exec(firstLine);
+  const status = statusMatch?.[1] ?? "completed";
+
+  // Detail lines are everything after the status line, skipping empty lines.
+  const detailStartIndex = statusMatch ? 1 : 0;
+  const detailLines = lines
+    .slice(detailStartIndex)
+    .map((line) => line.trimEnd())
+    .filter((line) => line.trim().length > 0);
+
+  const firstDetail = detailLines[0]?.trim() ?? "";
+  const trimmedFirstDetail =
+    firstDetail.length > COLLAPSED_TOOL_DETAIL_MAX_LENGTH
+      ? `${firstDetail.slice(0, COLLAPSED_TOOL_DETAIL_MAX_LENGTH - 3)}...`
+      : firstDetail;
+
+  const headline = trimmedFirstDetail
+    ? `${caption} · [${status}] ${trimmedFirstDetail}`
+    : `${caption} · [${status}]`;
+
+  // Show the next N detail lines after the one already used in the headline.
+  const previewLines = detailLines.slice(1, 1 + TOOL_PREVIEW_LINES);
+  const hiddenLineCount = Math.max(
+    0,
+    detailLines.length - 1 - previewLines.length,
+  );
+
+  const expandHint =
+    hiddenLineCount === 1
+      ? "... (1 more line, ctrl-o to expand)"
+      : `... (${hiddenLineCount} more lines, ctrl-o to expand)`;
+
+  return {
+    headline,
+    previewLines,
+    hiddenLineCount,
+    expandHint,
+  };
+}
+
+export function buildToolTranscriptLines(
+  entry: StepCliTuiTranscriptEntry,
+  expanded: boolean,
+): string[] {
+  if (expanded) {
+    return entry.content.split("\n");
+  }
+
+  const summary = buildCollapsedToolSummary(entry);
+  const collapsedLines = [summary.headline, ...summary.previewLines];
+  if (summary.hiddenLineCount > 0) {
+    collapsedLines.push(summary.expandHint);
+  }
+  return collapsedLines;
+}