diff --git a/src/vs/workbench/contrib/chat/browser/chatEditing/chatEditingSession.ts b/src/vs/workbench/contrib/chat/browser/chatEditing/chatEditingSession.ts
index 8552946891ff1..134c3de87edb3 100644
--- a/src/vs/workbench/contrib/chat/browser/chatEditing/chatEditingSession.ts
+++ b/src/vs/workbench/contrib/chat/browser/chatEditing/chatEditingSession.ts
@@ -18,7 +18,6 @@ import { ITextModel } from '../../../../../editor/common/model.js';
 import { IModelService } from '../../../../../editor/common/services/model.js';
 import { ITextModelService } from '../../../../../editor/common/services/resolverService.js';
 import { localize } from '../../../../../nls.js';
-import { IFileDialogService } from '../../../../../platform/dialogs/common/dialogs.js';
 import { EditorActivation } from '../../../../../platform/editor/common/editor.js';
 import { IFileService } from '../../../../../platform/files/common/files.js';
 import { IInstantiationService } from '../../../../../platform/instantiation/common/instantiation.js';
@@ -29,12 +28,10 @@ import { IEditorGroupsService } from '../../../../services/editor/common/editorG
 import { IEditorService } from '../../../../services/editor/common/editorService.js';
 import { MultiDiffEditor } from '../../../multiDiffEditor/browser/multiDiffEditor.js';
 import { MultiDiffEditorInput } from '../../../multiDiffEditor/browser/multiDiffEditorInput.js';
-import { ChatAgentLocation, IChatAgentService } from '../../common/chatAgents.js';
 import { ChatEditingSessionChangeType, ChatEditingSessionState, ChatEditKind, getMultiDiffSourceUri, IChatEditingSession, IModifiedFileEntry, WorkingSetDisplayMetadata, WorkingSetEntryRemovalReason, WorkingSetEntryState } from '../../common/chatEditingService.js';
 import { IChatResponseModel } from '../../common/chatModel.js';
 import { ChatEditingModifiedFileEntry, IModifiedEntryTelemetryInfo, ISnapshotEntry } from './chatEditingModifiedFileEntry.js';
 import { ChatEditingTextModelContentProvider } from './chatEditingTextModelContentProviders.js';
-import { Schemas } from '../../../../../base/common/network.js';
 import { isEqual, joinPath } from '../../../../../base/common/resources.js';
 import { StringSHA1 } from '../../../../../base/common/hash.js';
 import { IEnvironmentService } from '../../../../../platform/environment/common/environment.js';
@@ -94,7 +91,6 @@ export class ChatEditingSession extends Disposable implements IChatEditingSessio
 	 * Contains the contents of a file when the AI first began doing edits to it.
 	 */
 	private readonly _initialFileContents = new ResourceMap<string>();
-	private readonly _filesToSkipCreating = new ResourceSet();
 
 	private readonly _entriesObs = observableValue<readonly ChatEditingModifiedFileEntry[]>(this, []);
 	public get entries(): IObservable<readonly ChatEditingModifiedFileEntry[]> {
@@ -174,10 +170,6 @@ export class ChatEditingSession extends Disposable implements IChatEditingSessio
 		@IBulkEditService public readonly _bulkEditService: IBulkEditService,
 		@IEditorGroupsService private readonly _editorGroupsService: IEditorGroupsService,
 		@IEditorService private readonly _editorService: IEditorService,
-		@IWorkspaceContextService private readonly _workspaceContextService: IWorkspaceContextService,
-		@IFileService private readonly _fileService: IFileService,
-		@IFileDialogService private readonly _dialogService: IFileDialogService,
-		@IChatAgentService private readonly _chatAgentService: IChatAgentService,
 		@IChatService private readonly _chatService: IChatService,
 		@INotebookService private readonly _notebookService: INotebookService,
 	) {
@@ -187,9 +179,6 @@ export class ChatEditingSession extends Disposable implements IChatEditingSessio
 	public async init(): Promise<void> {
 		const restoredSessionState = await this._instantiationService.createInstance(ChatEditingSessionStorage, this.chatSessionId).restoreState();
 		if (restoredSessionState) {
-			for (const uri of restoredSessionState.filesToSkipCreating) {
-				this._filesToSkipCreating.add(uri);
-			}
 			for (const [uri, content] of restoredSessionState.initialFileContents) {
 				this._initialFileContents.set(uri, content);
 			}
@@ -225,7 +214,6 @@ export class ChatEditingSession extends Disposable implements IChatEditingSessio
 	public storeState(): Promise<void> {
 		const storage = this._instantiationService.createInstance(ChatEditingSessionStorage, this.chatSessionId);
 		const state: StoredSessionState = {
-			filesToSkipCreating: [...this._filesToSkipCreating],
 			initialFileContents: this._initialFileContents,
 			pendingSnapshot: this._pendingSnapshot,
 			recentSnapshot: this._createSnapshot(undefined),
@@ -625,26 +613,11 @@ export class ChatEditingSession extends Disposable implements IChatEditingSessio
 	}
 
 	private async _acceptTextEdits(resource: URI, textEdits: TextEdit[], isLastEdits: boolean, responseModel: IChatResponseModel): Promise<void> {
-		if (this._filesToSkipCreating.has(resource)) {
-			return;
-		}
-
 		if (!this._entriesObs.get().find(e => isEqual(e.modifiedURI, resource)) && this._entriesObs.get().length >= (await this.editingSessionFileLimitPromise)) {
 			// Do not create files in a single editing session that would be in excess of our limit
 			return;
 		}
 
-		if (resource.scheme !== Schemas.untitled && !this._workspaceContextService.getWorkspaceFolder(resource) && !(await this._fileService.exists(resource))) {
-			// if the file doesn't exist yet and is outside the workspace, prompt the user for a location to save it to
-			const saveLocation = await this._dialogService.showSaveDialog({ title: localize('chatEditing.fileSave', '{0} wants to create a file. Choose where it should be saved.', this._chatAgentService.getDefaultAgent(ChatAgentLocation.EditingSession)?.fullName ?? 'Chat') });
-			if (!saveLocation) {
-				// don't ask the user to create the file again when the next text edit for this same resource streams in
-				this._filesToSkipCreating.add(resource);
-				return;
-			}
-			resource = saveLocation;
-		}
-
 		// Make these getters because the response result is not available when the file first starts to be edited
 		const telemetryInfo = new class {
 			get agentId() { return responseModel.agent?.id; }
@@ -730,7 +703,6 @@ export class ChatEditingSession extends Disposable implements IChatEditingSessio
 }
 
 interface StoredSessionState {
-	readonly filesToSkipCreating: URI[];
 	readonly initialFileContents: ResourceMap<string>;
 	readonly pendingSnapshot?: IChatEditingSessionSnapshot;
 	readonly recentSnapshot: IChatEditingSessionSnapshot;
@@ -801,7 +773,6 @@ class ChatEditingSessionStorage {
 			}
 
 			const linearHistory = await Promise.all(data.linearHistory.map(deserializeChatEditingSessionSnapshot));
-			const filesToSkipCreating = data.filesToSkipCreating.map((uriStr: string) => URI.parse(uriStr));
 
 			const initialFileContents = new ResourceMap<string>();
 			for (const fileContentDTO of data.initialFileContents) {
@@ -811,7 +782,6 @@ class ChatEditingSessionStorage {
 			const recentSnapshot = await deserializeChatEditingSessionSnapshot(data.recentSnapshot);
 
 			return {
-				filesToSkipCreating,
 				initialFileContents,
 				pendingSnapshot,
 				recentSnapshot,
@@ -889,7 +859,6 @@ class ChatEditingSessionStorage {
 				initialFileContents: serializeResourceMap(state.initialFileContents, value => addFileContent(value)),
 				pendingSnapshot: state.pendingSnapshot ? serializeChatEditingSessionSnapshot(state.pendingSnapshot) : undefined,
 				recentSnapshot: serializeChatEditingSessionSnapshot(state.recentSnapshot),
-				filesToSkipCreating: state.filesToSkipCreating.map(uri => uri.toString()),
 			} satisfies IChatEditingSessionDTO;
 
 			this._logService.debug(`chatEditingSession: Storing editing session at ${storageFolder.toString()}: ${fileContents.size} files`);
@@ -959,5 +928,4 @@ interface IChatEditingSessionDTO {
 	readonly linearHistoryIndex: number;
 	readonly pendingSnapshot: IChatEditingSessionSnapshotDTO | undefined;
 	readonly initialFileContents: ResourceMapDTO<string>;
-	readonly filesToSkipCreating: string[];
 }