.claude project level rules not loaded with the "include third-party" toggle enabled

Where does the bug appear (feature/product)?

Cursor IDE

Describe the Bug

In the “Rules, Skills, Subagents” section there is a toggle that says. “Include third-party Plugins, Skills and other configs”. When this enabled, skills and CLAUDE.md files are correctly loaded, but it does not show rules that are part of the .claude/rules directory

Steps to Reproduce

Create a rule in the .claude/rules project directory with “.md” extension and enable the toggle. The rule is not applied to the agent when it should be.

Expected Behavior

The rule should be added to the rules list and applied.

Screenshots / Screen Recordings

Operating System

MacOS

Version Information

Version: 3.0.4
VSCode Version: 1.105.1
Commit: 63715ffc1807793ce209e935e5c3ab9b79fddc80
Date: 2026-04-02T09:36:23.265Z
Layout: editor
Build Type: Stable
Release Track: Default
Electron: 39.8.1
Chromium: 142.0.7444.265
Node.js: 22.22.1
V8: 14.2.231.22-electron.0
OS: Darwin arm64 25.4.0

For AI issues: which model did you use?

claude-4-sonnet

Does this stop you from using Cursor

No - Cursor works, but with this issue

There may also be a general problem with .md files being ignored as rules from the rule list. I tired moving my rule to the .cursor/rules dir and since it is an .md and not a .mdc it does not show up in the list either.

The “Include third-party Plugins, Skills and other configs” toggle picks up CLAUDE.md and .claude/skills/, but .claude/rules/ isn’t a supported location for project rules. For rules, use the .cursor/rules/ directory instead.

Regarding the .md file not showing up: rules in .cursor/rules/ need to use the .mdc extension. Rename checkstyle.md to checkstyle.mdc, and it should appear in the list. More details here: Rules

Thats fair that it is not fully supported but it would make sense to extend the “Include third-party Plugins, Skills and other configs” to include .claude/rules as the skills are already supported. This seems like an inconsistent behavior to include one and not the other.

The following doc rule structure does show that .md should be supported. It also seems like .md are not be followed.

https://cursor.com/docs/rules#rule-file-structure