diff --git a/crates/sidebar/src/sidebar.rs b/crates/sidebar/src/sidebar.rs
index 3bb3ea9ea44efe2cf57a4d021b0a1755ac3b3681..eec55f16af8cf7deefdb8adeddeac5b6b4fb4ea9 100644
--- a/crates/sidebar/src/sidebar.rs
+++ b/crates/sidebar/src/sidebar.rs
@@ -677,9 +677,15 @@ impl Sidebar {
                 label,
                 workspace,
                 highlight_positions,
-            } => {
-                self.render_project_header(ix, path_list, label, workspace, highlight_positions, cx)
-            }
+            } => self.render_project_header(
+                ix,
+                path_list,
+                label,
+                workspace,
+                highlight_positions,
+                is_selected,
+                cx,
+            ),
             ListEntry::Thread {
                 session_info,
                 icon,
@@ -730,6 +736,7 @@ impl Sidebar {
         label: &SharedString,
         workspace: &Entity<Workspace>,
         highlight_positions: &[usize],
+        is_selected: bool,
         cx: &mut Context<Self>,
     ) -> AnyElement {
         let id = SharedString::from(format!("project-header-{}", ix));
@@ -770,6 +777,7 @@ impl Sidebar {
         // TODO: if is_selected, draw a blue border around the item.
 
         ListItem::new(id)
+            .selection_outlined(is_selected)
             .group_name(&group)
             .toggle_state(is_active_workspace)
             .child(
@@ -1092,7 +1100,7 @@ impl Sidebar {
         status: AgentThreadStatus,
         workspace: &Entity<Workspace>,
         highlight_positions: &[usize],
-        _is_selected: bool,
+        is_selected: bool,
         cx: &mut Context<Self>,
     ) -> AnyElement {
         let has_notification = self.contents.is_thread_notified(&session_info.session_id);
@@ -1114,6 +1122,7 @@ impl Sidebar {
             .status(status)
             .notified(has_notification)
             .selected(self.focused_thread.as_ref() == Some(&session_info.session_id))
+            .outlined(is_selected)
             .on_click(cx.listener(move |this, _, window, cx| {
                 this.selection = None;
                 this.activate_thread(session_info.clone(), &workspace, window, cx);
@@ -1159,7 +1168,7 @@ impl Sidebar {
         let count = format!("({})", remaining_count);
 
         ListItem::new(id)
-            .toggle_state(is_selected)
+            .selection_outlined(is_selected)
             .child(
                 h_flex()
                     .px_1()
diff --git a/crates/ui/src/components/ai/thread_item.rs b/crates/ui/src/components/ai/thread_item.rs
index 52d91e09824077738bde6be75122b0bf7b9e3d52..c8f5c8a41cdf74dae16a411b4fe3170b2be04bf3 100644
--- a/crates/ui/src/components/ai/thread_item.rs
+++ b/crates/ui/src/components/ai/thread_item.rs
@@ -24,6 +24,7 @@ pub struct ThreadItem {
     notified: bool,
     status: AgentThreadStatus,
     selected: bool,
+    outlined: bool,
     hovered: bool,
     added: Option<usize>,
     removed: Option<usize>,
@@ -47,6 +48,7 @@ impl ThreadItem {
             notified: false,
             status: AgentThreadStatus::default(),
             selected: false,
+            outlined: false,
             hovered: false,
             added: None,
             removed: None,
@@ -90,6 +92,11 @@ impl ThreadItem {
         self
     }
 
+    pub fn outlined(mut self, outlined: bool) -> Self {
+        self.outlined = outlined;
+        self
+    }
+
     pub fn added(mut self, added: usize) -> Self {
         self.added = Some(added);
         self
@@ -221,6 +228,9 @@ impl RenderOnce for ThreadItem {
                 }
             })
             .when(self.selected, |s| s.bg(clr.element_active))
+            .border_1()
+            .border_color(gpui::transparent_black())
+            .when(self.outlined, |s| s.border_color(clr.panel_focused_border))
             .hover(|s| s.bg(clr.element_hover))
             .on_hover(self.on_hover)
             .child(
@@ -409,6 +419,29 @@ impl Component for ThreadItem {
                     )
                     .into_any_element(),
             ),
+            single_example(
+                "Outlined Item (Keyboard Selection)",
+                container()
+                    .child(
+                        ThreadItem::new("ti-7", "Implement keyboard navigation")
+                            .icon(IconName::AiClaude)
+                            .timestamp("4:00 PM")
+                            .outlined(true),
+                    )
+                    .into_any_element(),
+            ),
+            single_example(
+                "Selected + Outlined",
+                container()
+                    .child(
+                        ThreadItem::new("ti-8", "Active and keyboard-focused thread")
+                            .icon(IconName::AiGemini)
+                            .timestamp("5:00 PM")
+                            .selected(true)
+                            .outlined(true),
+                    )
+                    .into_any_element(),
+            ),
         ];
 
         Some(
diff --git a/crates/ui/src/components/list/list_item.rs b/crates/ui/src/components/list/list_item.rs
index d581fad9453d9812f17b7bc9e0297fb9927c8188..cc9c955fd35aa33355be84f9ee3f17f27995ffaf 100644
--- a/crates/ui/src/components/list/list_item.rs
+++ b/crates/ui/src/components/list/list_item.rs
@@ -42,6 +42,7 @@ pub struct ListItem {
     selectable: bool,
     always_show_disclosure_icon: bool,
     outlined: bool,
+    selection_outlined: Option<bool>,
     rounded: bool,
     overflow_x: bool,
     focused: Option<bool>,
@@ -71,6 +72,7 @@ impl ListItem {
             selectable: true,
             always_show_disclosure_icon: false,
             outlined: false,
+            selection_outlined: None,
             rounded: false,
             overflow_x: false,
             focused: None,
@@ -171,6 +173,11 @@ impl ListItem {
         self
     }
 
+    pub fn selection_outlined(mut self, outlined: bool) -> Self {
+        self.selection_outlined = Some(outlined);
+        self
+    }
+
     pub fn rounded(mut self) -> Self {
         self.rounded = true;
         self
@@ -241,6 +248,13 @@ impl RenderOnce for ListItem {
                     })
             })
             .when(self.rounded, |this| this.rounded_sm())
+            .when_some(self.selection_outlined, |this, outlined| {
+                this.border_1()
+                    .border_color(gpui::transparent_black())
+                    .when(outlined, |this| {
+                        this.border_color(cx.theme().colors().panel_focused_border)
+                    })
+            })
             .when_some(self.on_hover, |this, on_hover| this.on_hover(on_hover))
             .child(
                 h_flex()