diff --git a/crates/acp_thread/src/acp_thread.rs b/crates/acp_thread/src/acp_thread.rs
index f33732f1e0f3623df5ce6833356f3547c5781adb..0fc4e9ef2a297a07e5cf30d5e609a1cdbb1d0f02 100644
--- a/crates/acp_thread/src/acp_thread.rs
+++ b/crates/acp_thread/src/acp_thread.rs
@@ -2240,7 +2240,24 @@ impl AcpThread {
                             this.had_error = true;
                             cx.emit(AcpThreadEvent::Error);
                             log::error!("Max tokens reached. Usage: {:?}", this.token_usage);
-                            return Err(anyhow!("Max tokens reached"));
+
+                            let exceeded_max_output_tokens =
+                                this.token_usage.as_ref().is_some_and(|u| {
+                                    u.max_output_tokens
+                                        .is_some_and(|max| u.output_tokens >= max)
+                                });
+
+                            let message = if exceeded_max_output_tokens {
+                                log::error!(
+                                    "Max output tokens reached. Usage: {:?}",
+                                    this.token_usage
+                                );
+                                "Maximum output tokens reached"
+                            } else {
+                                log::error!("Max tokens reached. Usage: {:?}", this.token_usage);
+                                "Maximum tokens reached"
+                            };
+                            return Err(anyhow!(message));
                         }
 
                         let canceled = matches!(r.stop_reason, acp::StopReason::Cancelled);
diff --git a/crates/agent_ui/src/conversation_view.rs b/crates/agent_ui/src/conversation_view.rs
index 14d85807d33f4d92ea8012c4e981df170294927c..b29b02db7341378b58935d2184d4dc90c7a51098 100644
--- a/crates/agent_ui/src/conversation_view.rs
+++ b/crates/agent_ui/src/conversation_view.rs
@@ -6213,13 +6213,13 @@ pub(crate) mod tests {
             match error {
                 Some(ThreadError::Other { message, .. }) => {
                     assert!(
-                        message.contains("Max tokens reached"),
-                        "Expected 'Max tokens reached' error, got: {}",
+                        message.contains("Maximum tokens reached"),
+                        "Expected 'Maximum tokens reached' error, got: {}",
                         message
                     );
                 }
                 other => panic!(
-                    "Expected ThreadError::Other with 'Max tokens reached', got: {:?}",
+                    "Expected ThreadError::Other with 'Maximum tokens reached', got: {:?}",
                     other.is_some()
                 ),
             }