diff --git a/backend/open_webui/utils/middleware.py b/backend/open_webui/utils/middleware.py
index 2f60d0aa9b..9710b14177 100644
--- a/backend/open_webui/utils/middleware.py
+++ b/backend/open_webui/utils/middleware.py
@@ -258,12 +258,7 @@ def build_terminal_file_tool_result(
     if isinstance(tool_result, (list, tuple)) and tool_result and isinstance(tool_result[0], dict):
         tool_result = tool_result[0]
 
-    if (
-        tool_function_name != 'display_file'
-        or tool_function_params.get('inline') is not True
-        or not isinstance(tool_result, dict)
-        or tool_result.get('exists') is False
-    ):
+    if tool_function_name != 'display_file' or not isinstance(tool_result, dict) or tool_result.get('exists') is False:
         return None
 
     tool_id = (tool or {}).get('tool_id', '')
@@ -284,7 +279,7 @@ def build_terminal_file_tool_result(
         **tool_result,
         'type': 'file',
         'source': 'open_terminal',
-        'displayed': True,
+        **({'displayed': True} if tool_function_params.get('inline') is True else {}),
         'terminal_selector': terminal_selector,
         **({'terminal_id': terminal_id} if terminal_id else {}),
         **({'terminal_url': server_url} if server_url and not terminal_id else {}),
diff --git a/src/lib/components/chat/Chat.svelte b/src/lib/components/chat/Chat.svelte
index 741c78632b..875aee0e07 100644
--- a/src/lib/components/chat/Chat.svelte
+++ b/src/lib/components/chat/Chat.svelte
@@ -1144,6 +1144,7 @@
 	const terminalEventHandler = (type: string, data: any) => {
 		if (type === 'terminal:display_file') {
 			if (!data?.path) return;
+			if ($settings?.terminalFileDisplay === 'inline') return;
 			displayFileHandler(data.path, { showControls, showFileNavPath }, { page: data?.page });
 		} else if (type === 'terminal:write_file' || type === 'terminal:replace_file_content') {
 			if (!data?.path) return;
diff --git a/src/lib/components/chat/Messages/StructuredOutputRenderer.svelte b/src/lib/components/chat/Messages/StructuredOutputRenderer.svelte
index faeff5f179..3fd496707d 100644
--- a/src/lib/components/chat/Messages/StructuredOutputRenderer.svelte
+++ b/src/lib/components/chat/Messages/StructuredOutputRenderer.svelte
@@ -163,7 +163,9 @@
 			</div>
 		</ConsecutiveDetailsGroup>
 	{:else if displayItem.type === 'file'}
-		<TerminalOutputFile item={displayItem.item} {chatId} />
+		{#if displayItem.item?.displayed || $settings?.terminalFileDisplay === 'inline'}
+			<TerminalOutputFile item={displayItem.item} {chatId} />
+		{/if}
 	{:else}
 		{@const detailToken = displayItem.token}
 		{#if detailToken.attributes?.type === 'tool_calls'}
diff --git a/src/lib/components/chat/Messages/structuredOutput.ts b/src/lib/components/chat/Messages/structuredOutput.ts
index 612aca3dbe..969ecb7be6 100644
--- a/src/lib/components/chat/Messages/structuredOutput.ts
+++ b/src/lib/components/chat/Messages/structuredOutput.ts
@@ -179,7 +179,6 @@ function getInlineFileFromToolOutput(callItem?: OutputItem, resultItem?: OutputI
 		typeof result !== 'object' ||
 		result.type !== 'file' ||
 		result.source !== 'open_terminal' ||
-		result.displayed !== true ||
 		result.exists === false ||
 		!result.path ||
 		!result.terminal_selector