diff --git a/apps/web/src/components/Sidebar.logic.test.ts b/apps/web/src/components/Sidebar.logic.test.ts
index 8c3b47010..83a691ba7 100644
--- a/apps/web/src/components/Sidebar.logic.test.ts
+++ b/apps/web/src/components/Sidebar.logic.test.ts
@@ -1,6 +1,7 @@
 import { describe, expect, it } from "vitest";
 
 import {
+  collectSidebarNonIdleProjectIds,
   hasUnseenCompletion,
   resolveSidebarNewThreadEnvMode,
   resolveThreadRowClassName,
@@ -83,6 +84,55 @@ describe("resolveSidebarNewThreadEnvMode", () => {
   });
 });
 
+describe("collectSidebarNonIdleProjectIds", () => {
+  const projectA = "project-a" as never;
+  const projectB = "project-b" as never;
+  const threadA = { id: "thread-a" as never, projectId: projectA };
+  const threadB = { id: "thread-b" as never, projectId: projectB };
+  const workingStatus = {
+    label: "Working" as const,
+    colorClass: "text-sky-600",
+    dotClass: "bg-sky-500",
+    pulse: true,
+  };
+
+  it("preserves a project when one of its threads has a running terminal", () => {
+    const ids = collectSidebarNonIdleProjectIds({
+      activeProjectId: null,
+      threads: [threadA],
+      threadStatusById: new Map([[threadA.id, null]]),
+      runningTerminalThreadIds: new Set([threadA.id]),
+    });
+
+    expect(ids).toEqual(new Set([projectA]));
+  });
+
+  it("excludes projects that have neither thread status nor running terminals", () => {
+    const ids = collectSidebarNonIdleProjectIds({
+      activeProjectId: null,
+      threads: [threadA, threadB],
+      threadStatusById: new Map([
+        [threadA.id, null],
+        [threadB.id, workingStatus],
+      ]),
+      runningTerminalThreadIds: new Set(),
+    });
+
+    expect(ids).toEqual(new Set([projectB]));
+  });
+
+  it("preserves the active project even without thread status or terminal activity", () => {
+    const ids = collectSidebarNonIdleProjectIds({
+      activeProjectId: projectA,
+      threads: [threadA],
+      threadStatusById: new Map([[threadA.id, null]]),
+      runningTerminalThreadIds: new Set(),
+    });
+
+    expect(ids).toEqual(new Set([projectA]));
+  });
+});
+
 describe("resolveThreadStatusPill", () => {
   const baseThread = {
     interactionMode: "plan" as const,
diff --git a/apps/web/src/components/Sidebar.logic.ts b/apps/web/src/components/Sidebar.logic.ts
index d9b394e4d..32a4f0501 100644
--- a/apps/web/src/components/Sidebar.logic.ts
+++ b/apps/web/src/components/Sidebar.logic.ts
@@ -1,3 +1,4 @@
+import type { ProjectId, ThreadId } from "@t3tools/contracts";
 import type { Thread } from "../types";
 import { cn } from "../lib/utils";
 import {
@@ -50,6 +51,27 @@ export function resolveSidebarNewThreadEnvMode(input: {
   return input.requestedEnvMode ?? input.defaultEnvMode;
 }
 
+export function collectSidebarNonIdleProjectIds(input: {
+  activeProjectId: ProjectId | null;
+  threads: readonly Pick<Thread, "id" | "projectId">[];
+  threadStatusById: ReadonlyMap<ThreadId, ThreadStatusPill | null>;
+  runningTerminalThreadIds: ReadonlySet<ThreadId>;
+}): Set<ProjectId> {
+  const ids = new Set<ProjectId>();
+  if (input.activeProjectId) {
+    ids.add(input.activeProjectId);
+  }
+
+  for (const thread of input.threads) {
+    const threadStatus = input.threadStatusById.get(thread.id) ?? null;
+    if (threadStatus !== null || input.runningTerminalThreadIds.has(thread.id)) {
+      ids.add(thread.projectId);
+    }
+  }
+
+  return ids;
+}
+
 export function resolveThreadRowClassName(input: {
   isActive: boolean;
   isSelected: boolean;
diff --git a/apps/web/src/components/Sidebar.tsx b/apps/web/src/components/Sidebar.tsx
index beacd1d94..f7dc6683f 100644
--- a/apps/web/src/components/Sidebar.tsx
+++ b/apps/web/src/components/Sidebar.tsx
@@ -1,6 +1,7 @@
 import {
   ArrowLeftIcon,
   ChevronRightIcon,
+  FoldVerticalIcon,
   FolderIcon,
   GitPullRequestIcon,
   PlusIcon,
@@ -84,6 +85,7 @@ import { useThreadSelectionStore } from "../threadSelectionStore";
 import { formatWorktreePathForDisplay, getOrphanedWorktreePathForThread } from "../worktreeCleanup";
 import { isNonEmpty as isNonEmptyString } from "effect/String";
 import {
+  collectSidebarNonIdleProjectIds,
   resolveSidebarNewThreadEnvMode,
   resolveThreadRowClassName,
   resolveThreadStatusPill,
@@ -104,12 +106,6 @@ function formatRelativeTime(iso: string): string {
   return `${Math.floor(hours / 24)}d ago`;
 }
 
-interface TerminalStatusIndicator {
-  label: "Terminal process running";
-  colorClass: string;
-  pulse: boolean;
-}
-
 interface PrStatusIndicator {
   label: "PR open" | "PR closed" | "PR merged";
   colorClass: string;
@@ -119,19 +115,6 @@ interface PrStatusIndicator {
 
 type ThreadPr = GitStatusResult["pr"];
 
-function terminalStatusFromRunningIds(
-  runningTerminalIds: string[],
-): TerminalStatusIndicator | null {
-  if (runningTerminalIds.length === 0) {
-    return null;
-  }
-  return {
-    label: "Terminal process running",
-    colorClass: "text-teal-600 dark:text-teal-300/90",
-    pulse: true,
-  };
-}
-
 function prStatusIndicator(pr: ThreadPr): PrStatusIndicator | null {
   if (!pr) return null;
 
@@ -255,6 +238,7 @@ export default function Sidebar() {
   const projects = useStore((store) => store.projects);
   const threads = useStore((store) => store.threads);
   const markThreadUnread = useStore((store) => store.markThreadUnread);
+  const setProjectExpanded = useStore((store) => store.setProjectExpanded);
   const toggleProject = useStore((store) => store.toggleProject);
   const reorderProjects = useStore((store) => store.reorderProjects);
   const clearComposerDraftForThread = useComposerDraftStore((store) => store.clearThreadDraft);
@@ -359,6 +343,51 @@ export default function Sidebar() {
     return map;
   }, [threadGitStatusCwds, threadGitStatusQueries, threadGitTargets]);
 
+  const threadStatusById = useMemo(() => {
+    const map = new Map<ThreadId, ReturnType<typeof resolveThreadStatusPill>>();
+    for (const thread of threads) {
+      map.set(
+        thread.id,
+        resolveThreadStatusPill({
+          thread,
+          hasPendingApprovals: derivePendingApprovals(thread.activities).length > 0,
+          hasPendingUserInput: derivePendingUserInputs(thread.activities).length > 0,
+        }),
+      );
+    }
+    return map;
+  }, [threads]);
+
+  const runningTerminalThreadIds = useMemo(() => {
+    const ids = new Set<ThreadId>();
+    for (const thread of threads) {
+      if (selectThreadTerminalState(terminalStateByThreadId, thread.id).runningTerminalIds.length) {
+        ids.add(thread.id);
+      }
+    }
+    return ids;
+  }, [terminalStateByThreadId, threads]);
+
+  const activeThread = routeThreadId
+    ? threads.find((thread) => thread.id === routeThreadId)
+    : undefined;
+  const activeDraftThread = useComposerDraftStore((store) =>
+    routeThreadId ? store.draftThreadsByThreadId[routeThreadId] : undefined,
+  );
+  const activeProjectId = activeThread?.projectId ?? activeDraftThread?.projectId ?? null;
+
+  // Currently active project and projects with a thread status or running terminal
+  const nonIdleProjectIds = useMemo(
+    () =>
+      collectSidebarNonIdleProjectIds({
+        activeProjectId,
+        threads,
+        threadStatusById,
+        runningTerminalThreadIds,
+      }),
+    [activeProjectId, runningTerminalThreadIds, threadStatusById, threads],
+  );
+
   const openPrLink = useCallback((event: React.MouseEvent<HTMLElement>, prUrl: string) => {
     event.preventDefault();
     event.stopPropagation();
@@ -987,6 +1016,15 @@ export default function Sidebar() {
     [toggleProject],
   );
 
+  const handleCollapseIdleProjects = useCallback(() => {
+    for (const project of projects) {
+      if (!project.expanded || nonIdleProjectIds.has(project.id)) {
+        continue;
+      }
+      setProjectExpanded(project.id, false);
+    }
+  }, [projects, nonIdleProjectIds, setProjectExpanded]);
+
   useEffect(() => {
     const onMouseDown = (event: globalThis.MouseEvent) => {
       if (selectedThreadIds.size === 0) return;
@@ -1230,26 +1268,43 @@ export default function Sidebar() {
             <span className="text-[10px] font-medium uppercase tracking-wider text-muted-foreground/60">
               Projects
             </span>
-            <Tooltip>
-              <TooltipTrigger
-                render={
-                  <button
-                    type="button"
-                    aria-label="Add project"
-                    aria-pressed={shouldShowProjectPathEntry}
-                    className="inline-flex size-5 items-center justify-center rounded-md text-muted-foreground/60 transition-colors hover:bg-accent hover:text-foreground"
-                    onClick={handleStartAddProject}
+            <div className="flex items-center gap-0.5">
+              <Tooltip>
+                <TooltipTrigger
+                  render={
+                    <button
+                      type="button"
+                      aria-label="Collapse idle projects"
+                      className="inline-flex size-5 items-center justify-center rounded-md text-muted-foreground/60 transition-colors hover:bg-accent hover:text-foreground"
+                      onClick={handleCollapseIdleProjects}
+                    />
+                  }
+                >
+                  <FoldVerticalIcon className="size-3.5" />
+                </TooltipTrigger>
+                <TooltipPopup side="right">Collapse idle projects</TooltipPopup>
+              </Tooltip>
+              <Tooltip>
+                <TooltipTrigger
+                  render={
+                    <button
+                      type="button"
+                      aria-label="Add project"
+                      aria-pressed={shouldShowProjectPathEntry}
+                      className="inline-flex size-5 items-center justify-center rounded-md text-muted-foreground/60 transition-colors hover:bg-accent hover:text-foreground"
+                      onClick={handleStartAddProject}
+                    />
+                  }
+                >
+                  <PlusIcon
+                    className={`size-3.5 transition-transform duration-150 ${
+                      shouldShowProjectPathEntry ? "rotate-45" : "rotate-0"
+                    }`}
                   />
-                }
-              >
-                <PlusIcon
-                  className={`size-3.5 transition-transform duration-150 ${
-                    shouldShowProjectPathEntry ? "rotate-45" : "rotate-0"
-                  }`}
-                />
-              </TooltipTrigger>
-              <TooltipPopup side="right">Add project</TooltipPopup>
-            </Tooltip>
+                </TooltipTrigger>
+                <TooltipPopup side="right">Add project</TooltipPopup>
+              </Tooltip>
+            </div>
           </div>
 
           {shouldShowProjectPathEntry && (
@@ -1419,20 +1474,17 @@ export default function Sidebar() {
                                 const isActive = routeThreadId === thread.id;
                                 const isSelected = selectedThreadIds.has(thread.id);
                                 const isHighlighted = isActive || isSelected;
-                                const threadStatus = resolveThreadStatusPill({
-                                  thread,
-                                  hasPendingApprovals:
-                                    derivePendingApprovals(thread.activities).length > 0,
-                                  hasPendingUserInput:
-                                    derivePendingUserInputs(thread.activities).length > 0,
-                                });
+                                const threadStatus = threadStatusById.get(thread.id) ?? null;
                                 const prStatus = prStatusIndicator(
                                   prByThreadId.get(thread.id) ?? null,
                                 );
-                                const terminalStatus = terminalStatusFromRunningIds(
-                                  selectThreadTerminalState(terminalStateByThreadId, thread.id)
-                                    .runningTerminalIds,
-                                );
+                                const terminalStatus = runningTerminalThreadIds.has(thread.id)
+                                  ? {
+                                      label: "Terminal process running",
+                                      colorClass: "text-teal-600 dark:text-teal-300/90",
+                                      pulse: true,
+                                    }
+                                  : null;
 
                                 return (
                                   <SidebarMenuSubItem