diff --git a/crates/terminal_view/src/terminal_panel.rs b/crates/terminal_view/src/terminal_panel.rs
index 76639e74fdfd856e896dbf74d645a2d2059d40ed..90e38bfdd9e9a123ccf02379f048e694cfd18353 100644
--- a/crates/terminal_view/src/terminal_panel.rs
+++ b/crates/terminal_view/src/terminal_panel.rs
@@ -653,6 +653,27 @@ impl TerminalPanel {
         window: &mut Window,
         cx: &mut Context<Workspace>,
     ) {
+        let center_pane = workspace.active_pane();
+        let center_pane_has_focus = center_pane.focus_handle(cx).contains_focused(window, cx);
+        let active_center_item_is_terminal = center_pane
+            .read(cx)
+            .active_item()
+            .is_some_and(|item| item.downcast::<TerminalView>().is_some());
+
+        if center_pane_has_focus && active_center_item_is_terminal {
+            let working_directory = default_working_directory(workspace, cx);
+            let local = action.local;
+            Self::add_center_terminal(workspace, window, cx, move |project, cx| {
+                if local {
+                    project.create_local_terminal(cx)
+                } else {
+                    project.create_terminal_shell(working_directory, cx)
+                }
+            })
+            .detach_and_log_err(cx);
+            return;
+        }
+
         let Some(terminal_panel) = workspace.panel::<Self>(cx) else {
             return;
         };
@@ -1883,6 +1904,436 @@ mod tests {
         );
     }
 
+    async fn init_workspace_with_panel(
+        cx: &mut TestAppContext,
+    ) -> (gpui::WindowHandle<MultiWorkspace>, Entity<TerminalPanel>) {
+        let fs = FakeFs::new(cx.executor());
+        let project = Project::test(fs, [], cx).await;
+        let window_handle =
+            cx.add_window(|window, cx| MultiWorkspace::test_new(project, window, cx));
+
+        let terminal_panel = window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    let panel = cx.new(|cx| TerminalPanel::new(workspace, window, cx));
+                    workspace.add_panel(panel.clone(), window, cx);
+                    panel
+                })
+            })
+            .expect("Failed to initialize workspace with terminal panel");
+
+        (window_handle, terminal_panel)
+    }
+
+    #[gpui::test]
+    async fn test_new_terminal_opens_in_panel_by_default(cx: &mut TestAppContext) {
+        cx.executor().allow_parking();
+        init_test(cx);
+
+        let (window_handle, terminal_panel) = init_workspace_with_panel(cx).await;
+
+        let panel_items_before =
+            terminal_panel.read_with(cx, |panel, cx| panel.active_pane.read(cx).items_len());
+        let center_items_before = window_handle
+            .read_with(cx, |multi_workspace, cx| {
+                multi_workspace
+                    .workspace()
+                    .read(cx)
+                    .active_pane()
+                    .read(cx)
+                    .items_len()
+            })
+            .expect("Failed to read center pane items");
+
+        window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    TerminalPanel::new_terminal(
+                        workspace,
+                        &workspace::NewTerminal::default(),
+                        window,
+                        cx,
+                    );
+                })
+            })
+            .expect("Failed to dispatch new_terminal");
+
+        cx.run_until_parked();
+
+        let panel_items_after =
+            terminal_panel.read_with(cx, |panel, cx| panel.active_pane.read(cx).items_len());
+        let center_items_after = window_handle
+            .read_with(cx, |multi_workspace, cx| {
+                multi_workspace
+                    .workspace()
+                    .read(cx)
+                    .active_pane()
+                    .read(cx)
+                    .items_len()
+            })
+            .expect("Failed to read center pane items");
+
+        assert_eq!(
+            panel_items_after,
+            panel_items_before + 1,
+            "Terminal should be added to the panel when no center terminal is focused"
+        );
+        assert_eq!(
+            center_items_after, center_items_before,
+            "Center pane should not gain a new terminal"
+        );
+    }
+
+    #[gpui::test]
+    async fn test_new_terminal_opens_in_center_when_center_terminal_focused(
+        cx: &mut TestAppContext,
+    ) {
+        cx.executor().allow_parking();
+        init_test(cx);
+
+        let (window_handle, terminal_panel) = init_workspace_with_panel(cx).await;
+
+        window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    TerminalPanel::add_center_terminal(workspace, window, cx, |project, cx| {
+                        project.create_terminal_shell(None, cx)
+                    })
+                })
+            })
+            .expect("Failed to update workspace")
+            .await
+            .expect("Failed to create center terminal");
+        cx.run_until_parked();
+
+        let center_items_before = window_handle
+            .read_with(cx, |multi_workspace, cx| {
+                multi_workspace
+                    .workspace()
+                    .read(cx)
+                    .active_pane()
+                    .read(cx)
+                    .items_len()
+            })
+            .expect("Failed to read center pane items");
+        assert_eq!(center_items_before, 1, "Center pane should have 1 terminal");
+
+        window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    let active_item = workspace
+                        .active_pane()
+                        .read(cx)
+                        .active_item()
+                        .expect("Center pane should have an active item");
+                    let terminal_view = active_item
+                        .downcast::<TerminalView>()
+                        .expect("Active center item should be a TerminalView");
+                    window.focus(&terminal_view.focus_handle(cx), cx);
+                })
+            })
+            .expect("Failed to focus terminal view");
+        cx.run_until_parked();
+
+        let panel_items_before =
+            terminal_panel.read_with(cx, |panel, cx| panel.active_pane.read(cx).items_len());
+
+        window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    TerminalPanel::new_terminal(
+                        workspace,
+                        &workspace::NewTerminal::default(),
+                        window,
+                        cx,
+                    );
+                })
+            })
+            .expect("Failed to dispatch new_terminal");
+        cx.run_until_parked();
+
+        let center_items_after = window_handle
+            .read_with(cx, |multi_workspace, cx| {
+                multi_workspace
+                    .workspace()
+                    .read(cx)
+                    .active_pane()
+                    .read(cx)
+                    .items_len()
+            })
+            .expect("Failed to read center pane items");
+        let panel_items_after =
+            terminal_panel.read_with(cx, |panel, cx| panel.active_pane.read(cx).items_len());
+
+        assert_eq!(
+            center_items_after,
+            center_items_before + 1,
+            "New terminal should be added to the center pane"
+        );
+        assert_eq!(
+            panel_items_after, panel_items_before,
+            "Terminal panel should not gain a new terminal"
+        );
+    }
+
+    #[gpui::test]
+    async fn test_new_terminal_opens_in_panel_when_panel_focused(cx: &mut TestAppContext) {
+        cx.executor().allow_parking();
+        init_test(cx);
+
+        let (window_handle, terminal_panel) = init_workspace_with_panel(cx).await;
+
+        window_handle
+            .update(cx, |_, window, cx| {
+                terminal_panel.update(cx, |panel, cx| {
+                    panel.add_terminal_shell(None, RevealStrategy::Always, window, cx)
+                })
+            })
+            .expect("Failed to update workspace")
+            .await
+            .expect("Failed to create panel terminal");
+        cx.run_until_parked();
+
+        window_handle
+            .update(cx, |_, window, cx| {
+                window.focus(&terminal_panel.read(cx).focus_handle(cx), cx);
+            })
+            .expect("Failed to focus terminal panel");
+        cx.run_until_parked();
+
+        let panel_items_before =
+            terminal_panel.read_with(cx, |panel, cx| panel.active_pane.read(cx).items_len());
+
+        let center_items_before = window_handle
+            .read_with(cx, |multi_workspace, cx| {
+                multi_workspace
+                    .workspace()
+                    .read(cx)
+                    .active_pane()
+                    .read(cx)
+                    .items_len()
+            })
+            .expect("Failed to read center pane items");
+
+        window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    TerminalPanel::new_terminal(
+                        workspace,
+                        &workspace::NewTerminal::default(),
+                        window,
+                        cx,
+                    );
+                })
+            })
+            .expect("Failed to dispatch new_terminal");
+        cx.run_until_parked();
+
+        let panel_items_after =
+            terminal_panel.read_with(cx, |panel, cx| panel.active_pane.read(cx).items_len());
+        let center_items_after = window_handle
+            .read_with(cx, |multi_workspace, cx| {
+                multi_workspace
+                    .workspace()
+                    .read(cx)
+                    .active_pane()
+                    .read(cx)
+                    .items_len()
+            })
+            .expect("Failed to read center pane items");
+
+        assert_eq!(
+            panel_items_after,
+            panel_items_before + 1,
+            "New terminal should be added to the panel when panel is focused"
+        );
+        assert_eq!(
+            center_items_after, center_items_before,
+            "Center pane should not gain a new terminal"
+        );
+    }
+
+    #[gpui::test]
+    async fn test_new_local_terminal_opens_in_center_when_center_terminal_focused(
+        cx: &mut TestAppContext,
+    ) {
+        cx.executor().allow_parking();
+        init_test(cx);
+
+        let (window_handle, terminal_panel) = init_workspace_with_panel(cx).await;
+
+        window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    TerminalPanel::add_center_terminal(workspace, window, cx, |project, cx| {
+                        project.create_terminal_shell(None, cx)
+                    })
+                })
+            })
+            .expect("Failed to update workspace")
+            .await
+            .expect("Failed to create center terminal");
+        cx.run_until_parked();
+
+        window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    let active_item = workspace
+                        .active_pane()
+                        .read(cx)
+                        .active_item()
+                        .expect("Center pane should have an active item");
+                    let terminal_view = active_item
+                        .downcast::<TerminalView>()
+                        .expect("Active center item should be a TerminalView");
+                    window.focus(&terminal_view.focus_handle(cx), cx);
+                })
+            })
+            .expect("Failed to focus terminal view");
+        cx.run_until_parked();
+
+        let center_items_before = window_handle
+            .read_with(cx, |multi_workspace, cx| {
+                multi_workspace
+                    .workspace()
+                    .read(cx)
+                    .active_pane()
+                    .read(cx)
+                    .items_len()
+            })
+            .expect("Failed to read center pane items");
+        let panel_items_before =
+            terminal_panel.read_with(cx, |panel, cx| panel.active_pane.read(cx).items_len());
+
+        window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    TerminalPanel::new_terminal(
+                        workspace,
+                        &workspace::NewTerminal { local: true },
+                        window,
+                        cx,
+                    );
+                })
+            })
+            .expect("Failed to dispatch new_terminal with local=true");
+        cx.run_until_parked();
+
+        let center_items_after = window_handle
+            .read_with(cx, |multi_workspace, cx| {
+                multi_workspace
+                    .workspace()
+                    .read(cx)
+                    .active_pane()
+                    .read(cx)
+                    .items_len()
+            })
+            .expect("Failed to read center pane items");
+        let panel_items_after =
+            terminal_panel.read_with(cx, |panel, cx| panel.active_pane.read(cx).items_len());
+
+        assert_eq!(
+            center_items_after,
+            center_items_before + 1,
+            "New local terminal should be added to the center pane"
+        );
+        assert_eq!(
+            panel_items_after, panel_items_before,
+            "Terminal panel should not gain a new terminal"
+        );
+    }
+
+    #[gpui::test]
+    async fn test_new_terminal_opens_in_panel_when_panel_focused_and_center_has_terminal(
+        cx: &mut TestAppContext,
+    ) {
+        cx.executor().allow_parking();
+        init_test(cx);
+
+        let (window_handle, terminal_panel) = init_workspace_with_panel(cx).await;
+
+        window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    TerminalPanel::add_center_terminal(workspace, window, cx, |project, cx| {
+                        project.create_terminal_shell(None, cx)
+                    })
+                })
+            })
+            .expect("Failed to update workspace")
+            .await
+            .expect("Failed to create center terminal");
+        cx.run_until_parked();
+
+        window_handle
+            .update(cx, |_, window, cx| {
+                terminal_panel.update(cx, |panel, cx| {
+                    panel.add_terminal_shell(None, RevealStrategy::Always, window, cx)
+                })
+            })
+            .expect("Failed to update workspace")
+            .await
+            .expect("Failed to create panel terminal");
+        cx.run_until_parked();
+
+        window_handle
+            .update(cx, |_, window, cx| {
+                window.focus(&terminal_panel.read(cx).focus_handle(cx), cx);
+            })
+            .expect("Failed to focus terminal panel");
+        cx.run_until_parked();
+
+        let panel_items_before =
+            terminal_panel.read_with(cx, |panel, cx| panel.active_pane.read(cx).items_len());
+        let center_items_before = window_handle
+            .read_with(cx, |multi_workspace, cx| {
+                multi_workspace
+                    .workspace()
+                    .read(cx)
+                    .active_pane()
+                    .read(cx)
+                    .items_len()
+            })
+            .expect("Failed to read center pane items");
+
+        window_handle
+            .update(cx, |multi_workspace, window, cx| {
+                multi_workspace.workspace().update(cx, |workspace, cx| {
+                    TerminalPanel::new_terminal(
+                        workspace,
+                        &workspace::NewTerminal::default(),
+                        window,
+                        cx,
+                    );
+                })
+            })
+            .expect("Failed to dispatch new_terminal");
+        cx.run_until_parked();
+
+        let panel_items_after =
+            terminal_panel.read_with(cx, |panel, cx| panel.active_pane.read(cx).items_len());
+        let center_items_after = window_handle
+            .read_with(cx, |multi_workspace, cx| {
+                multi_workspace
+                    .workspace()
+                    .read(cx)
+                    .active_pane()
+                    .read(cx)
+                    .items_len()
+            })
+            .expect("Failed to read center pane items");
+
+        assert_eq!(
+            panel_items_after,
+            panel_items_before + 1,
+            "New terminal should go to panel when panel is focused, even if center has a terminal"
+        );
+        assert_eq!(
+            center_items_after, center_items_before,
+            "Center pane should not gain a new terminal when panel is focused"
+        );
+    }
+
     fn set_max_tabs(cx: &mut TestAppContext, value: Option<usize>) {
         cx.update_global(|store: &mut SettingsStore, cx| {
             store.update_user_settings(cx, |settings| {