diff --git a/frontend/src/layouts/MainLayout.vue b/frontend/src/layouts/MainLayout.vue
index c973f4a..ef2d594 100644
--- a/frontend/src/layouts/MainLayout.vue
+++ b/frontend/src/layouts/MainLayout.vue
@@ -82,25 +82,8 @@
             <path d="M11.5 7a4.5 4.5 0 1 1-9 0 4.5 4.5 0 0 1 9 0zm-.82 4.74a6 6 0 1 1 1.06-1.06l3.04 3.04a.75.75 0 1 1-1.06 1.06l-3.04-3.04z" />
           </svg>
         </button>
-        <!-- XO Copilot toggle -->
-        <button
-          class="relative hover:text-[var(--wraith-text-primary)] transition-colors cursor-pointer"
-          :class="copilotStore.isPanelOpen ? 'text-[var(--wraith-accent-blue)]' : ''"
-          title="Toggle XO Copilot (Ctrl+Shift+K)"
-          @click="copilotStore.togglePanel()"
-        >
-          <span class="text-sm">&#x1F47B;</span>
-          <!-- Streaming indicator dot -->
-          <span
-            v-if="copilotStore.isStreaming"
-            class="absolute -top-0.5 -right-0.5 w-1.5 h-1.5 rounded-full bg-[var(--wraith-accent-blue)] animate-pulse"
-          />
-          <!-- Subtle glow when open -->
-          <span
-            v-if="copilotStore.isPanelOpen"
-            class="absolute inset-0 rounded-full bg-[var(--wraith-accent-blue)] opacity-15 blur-sm"
-          />
-        </button>
+        <!-- XO Copilot — removed, will be replaced with embedded terminal running claude -->
+
         <button
           class="hover:text-[var(--wraith-text-primary)] transition-colors cursor-pointer"
           title="Lock vault"
@@ -179,10 +162,7 @@
         <SessionContainer />
       </div>
 
-      <!-- Copilot Panel (slides in from right) -->
-      <transition name="copilot-slide">
-        <CopilotPanel v-if="copilotStore.isPanelOpen" />
-      </transition>
+      <!-- Copilot Panel — removed, will be replaced with embedded terminal running claude -->
     </div>
 
     <!-- Status bar -->
@@ -216,7 +196,7 @@ import { Call, Application } from "@wailsio/runtime";
 import { useAppStore } from "@/stores/app.store";
 import { useConnectionStore } from "@/stores/connection.store";
 import { useSessionStore } from "@/stores/session.store";
-import { useCopilotStore } from "@/stores/copilot.store";
+// copilot removed — will be replaced with embedded terminal running claude
 import SidebarToggle from "@/components/sidebar/SidebarToggle.vue";
 import ConnectionTree from "@/components/sidebar/ConnectionTree.vue";
 import FileTree from "@/components/sftp/FileTree.vue";
@@ -230,7 +210,7 @@ import ThemePicker from "@/components/common/ThemePicker.vue";
 import ImportDialog from "@/components/common/ImportDialog.vue";
 import SettingsModal from "@/components/common/SettingsModal.vue";
 import ConnectionEditDialog from "@/components/connections/ConnectionEditDialog.vue";
-import CopilotPanel from "@/components/copilot/CopilotPanel.vue";
+// CopilotPanel removed
 const SFTP = "github.com/vstockwell/wraith/internal/sftp.SFTPService";
 const CONN = "github.com/vstockwell/wraith/internal/connections.ConnectionService";
 
@@ -241,7 +221,7 @@ import type { FileEntry } from "@/composables/useSftp";
 const appStore = useAppStore();
 const connectionStore = useConnectionStore();
 const sessionStore = useSessionStore();
-const copilotStore = useCopilotStore();
+// copilotStore removed
 
 const sidebarWidth = ref(240);
 const sidebarTab = ref<SidebarTab>("connections");
@@ -395,13 +375,6 @@ async function handleQuickConnect(): Promise<void> {
 
 /** Global keyboard shortcut handler. */
 function handleKeydown(event: KeyboardEvent): void {
-  // Ctrl+Shift+K or Cmd+Shift+K — toggle copilot panel
-  if ((event.ctrlKey || event.metaKey) && event.shiftKey && event.key === "K") {
-    event.preventDefault();
-    copilotStore.togglePanel();
-    return;
-  }
-
   // Ctrl+K or Cmd+K — open command palette
   if ((event.ctrlKey || event.metaKey) && event.key === "k") {
     event.preventDefault();
@@ -421,15 +394,4 @@ onUnmounted(() => {
 </script>
 
 <style scoped>
-.copilot-slide-enter-active,
-.copilot-slide-leave-active {
-  transition: width 0.3s ease, opacity 0.3s ease;
-  overflow: hidden;
-}
-
-.copilot-slide-enter-from,
-.copilot-slide-leave-to {
-  width: 0px !important;
-  opacity: 0;
-}
 </style>
diff --git a/main.go b/main.go
index 79fb0e5..1b2dbfb 100644
--- a/main.go
+++ b/main.go
@@ -40,7 +40,6 @@ func main() {
 			application.NewService(wraith.SSH),
 			application.NewService(wraith.SFTP),
 			application.NewService(wraith.RDP),
-			application.NewService(wraith.AI),
 			application.NewService(wraith.Updater),
 		},
 		Assets: application.AssetOptions{