diff --git a/.changeset/bounded-toolkit-progress.md b/.changeset/bounded-toolkit-progress.md
new file mode 100644
index 00000000000..288709f016e
--- /dev/null
+++ b/.changeset/bounded-toolkit-progress.md
@@ -0,0 +1,5 @@
+---
+"effect": patch
+---
+
+Bound each Toolkit handler's result buffer to 16 entries so preliminary results backpressure slow consumers. Interrupt handlers when their result stream closes, including early termination and cancellation.
diff --git a/packages/effect/src/unstable/ai/Toolkit.ts b/packages/effect/src/unstable/ai/Toolkit.ts
index e8f378d1d6b..47a93b48fb4 100644
--- a/packages/effect/src/unstable/ai/Toolkit.ts
+++ b/packages/effect/src/unstable/ai/Toolkit.ts
@@ -122,6 +122,8 @@ export interface HandlerContext<Tool extends Tool.Any> {
    *
    * Preliminary results are streamed to the caller before the handler completes,
    * enabling real-time progress updates for lengthy operations.
+   * Each tool call buffers up to 16 results. This effect suspends while that
+   * buffer is full, until the caller consumes results from the returned stream.
    */
   readonly preliminary: (result: Tool.Success<Tool>) => Effect.Effect<void>
 }
@@ -336,7 +338,7 @@ const Proto = {
           readonly result: any
           readonly isFailure: boolean
           readonly preliminary: boolean
-        }, Cause.Done>()
+        }, Cause.Done>({ capacity: 16 })
         const context: HandlerContext<any> = {
           toolCallId,
           preliminary: (result) =>
@@ -391,7 +393,7 @@ const Proto = {
             const encodedResult = yield* encodeResult(output.result, output.isFailure)
             return { ...output, encodedResult }
           })),
-          Stream.onEnd(Fiber.interrupt(fiber))
+          Stream.ensuring(Fiber.interrupt(fiber))
         ) satisfies Stream.Stream<Tool.HandlerResult<any>, any>
       })
 
diff --git a/packages/effect/test/unstable/ai/Tool.test.ts b/packages/effect/test/unstable/ai/Tool.test.ts
index 77cca7a18f5..72bfe9110ac 100644
--- a/packages/effect/test/unstable/ai/Tool.test.ts
+++ b/packages/effect/test/unstable/ai/Tool.test.ts
@@ -392,6 +392,93 @@ describe("Tool", () => {
       }))
 
     describe("Preliminary Results", () => {
+      it.effect.each(["success", "failure"] as const)(
+        "should backpressure preliminary results and preserve %s settlement",
+        (settlement) =>
+          Effect.gen(function*() {
+            const toolkit = Toolkit.make(Tool.make("Progress", {
+              success: Schema.Number,
+              failure: Schema.String,
+              failureMode: "return"
+            }))
+            const full = yield* Latch.make()
+            let accepted = 0
+            const handlers = yield* toolkit.pipe(Effect.provide(toolkit.toLayer({
+              Progress: Effect.fnUntraced(function*(_, ctx) {
+                for (let i = 0; i < 64; i++) {
+                  if (i === 16) yield* full.open
+                  yield* ctx.preliminary(i)
+                  accepted++
+                }
+                return settlement === "success" ? 64 : yield* Effect.fail("failed")
+              })
+            })))
+
+            const stream = yield* handlers.handle("Progress", {})
+            yield* full.await
+            yield* Effect.yieldNow
+            strictEqual(accepted, 16)
+
+            const results = yield* Stream.runCollect(stream)
+            strictEqual(accepted, 64)
+            deepStrictEqual(results, [
+              ...Array.from({ length: 64 }, (_, result) => ({
+                result,
+                encodedResult: result,
+                isFailure: false,
+                preliminary: true
+              })),
+              {
+                result: settlement === "success" ? 64 : "failed",
+                encodedResult: settlement === "success" ? 64 : "failed",
+                isFailure: settlement === "failure",
+                preliminary: false
+              }
+            ])
+          })
+      )
+
+      it.effect.each(["early end", "interruption"] as const)(
+        "should finalize a backpressured handler on consumer %s",
+        (termination) =>
+          Effect.gen(function*() {
+            const toolkit = Toolkit.make(Tool.make("Progress", { success: Schema.Number }))
+            const full = yield* Latch.make()
+            const finalized = yield* Latch.make()
+            const handlers = yield* toolkit.pipe(Effect.provide(toolkit.toLayer({
+              Progress: Effect.fnUntraced(function*(_, ctx) {
+                for (let i = 0; i < 64; i++) {
+                  if (i === 16) yield* full.open
+                  yield* ctx.preliminary(i)
+                }
+                return 64
+              }, Effect.ensuring(finalized.open))
+            })))
+
+            // Keep the handler's parent alive so parent cleanup cannot hide a leak.
+            const stream = yield* handlers.handle("Progress", {})
+            yield* full.await
+            yield* Effect.yieldNow
+            assertFalse(Latch.isOpen(finalized))
+
+            if (termination === "early end") {
+              const results = yield* stream.pipe(Stream.take(1), Stream.runCollect)
+              strictEqual(results.length, 1)
+            } else {
+              const consuming = yield* Latch.make()
+              const consumer = yield* stream.pipe(
+                Stream.tap(() => consuming.open.pipe(Effect.andThen(Effect.never))),
+                Stream.runDrain,
+                Effect.forkChild
+              )
+              yield* consuming.await
+              yield* Fiber.interrupt(consumer)
+            }
+
+            assertTrue(Latch.isOpen(finalized))
+          })
+      )
+
       it.effect("should not have preliminary results when generateText is used", () =>
         Effect.gen(function*() {
           const toolkit = Toolkit.make(IncrementalTool)