diff --git a/src/vs/sessions/contrib/chat/browser/folderPicker.ts b/src/vs/sessions/contrib/chat/browser/folderPicker.ts
index 2a1872ad461d6c..dbc253e1cbfa21 100644
--- a/src/vs/sessions/contrib/chat/browser/folderPicker.ts
+++ b/src/vs/sessions/contrib/chat/browser/folderPicker.ts
@@ -58,9 +58,6 @@ export class FolderPicker extends Disposable {
 	 */
 	setNewSession(session: INewSession | undefined): void {
 		this._newSession = session;
-		if (session && this._selectedFolderUri) {
-			session.setRepoUri(this._selectedFolderUri);
-		}
 	}
 
 	constructor(
diff --git a/src/vs/sessions/contrib/sessions/browser/sessionsManagementService.ts b/src/vs/sessions/contrib/sessions/browser/sessionsManagementService.ts
index d929df11a2d289..6e830f21c67000 100644
--- a/src/vs/sessions/contrib/sessions/browser/sessionsManagementService.ts
+++ b/src/vs/sessions/contrib/sessions/browser/sessionsManagementService.ts
@@ -260,7 +260,7 @@ export class SessionsManagementService extends Disposable implements ISessionsMa
 		}
 
 		let newSession: INewSession;
-		if (target === AgentSessionProviders.Background || target === AgentSessionProviders.Local) {
+		if (target === AgentSessionProviders.Background) {
 			newSession = this.instantiationService.createInstance(LocalNewSession, sessionResource, defaultRepoUri);
 		} else {
 			newSession = this.instantiationService.createInstance(RemoteNewSession, sessionResource, target);
@@ -414,8 +414,8 @@ export class SessionsManagementService extends Disposable implements ISessionsMa
 		if (this.isNewChatSessionContext.get()) {
 			return;
 		}
-		this.isNewChatSessionContext.set(true);
 		this.setActiveSession(undefined);
+		this.isNewChatSessionContext.set(true);
 	}
 
 	private setActiveSession(session: IAgentSession | INewSession | undefined): void {