Rule Application Dropdown Not Appearing and Unexpected File Creation in Cursor Rules

[Pritam_Shrestha]

Where does the bug appear (feature/product)?

Cursor IDE

Describe the Bug

Rule application dropdown missing, unexpected file creation behavior, and missing documentation for Cursor Rules

Description

Multiple issues with Cursor Rules functionality:

1. The dropdown to configure rule application mode does not appear when editing rule files in .cursor/rules/
2. When creating a new Cursor Rule (via “File: New Cursor Rule”), it creates a skills.md file inside a skills directory instead of the expected location
3. Documentation does not explain how to use or manage Cursor Rules

Expected Behavior

1. When opening or editing a rule file in .cursor/rules/, a dropdown should appear allowing users to configure how the rule is applied
2. Creating a new Cursor Rule should follow a predictable pattern (e.g., creating the file in .cursor/rules/ with appropriate naming)
3. Documentation should explain how to create, manage, and use Cursor Rules

Actual Behavior

1. No dropdown appears when viewing/editing .cursor/rules/code-convention/backend/RULE.md
2. Using “File: New Cursor Rule” creates skills.md inside a skills directory, which is unexpected
3. No documentation available explaining how to use Cursor Rules

Steps to Reproduce

Issue 1: Missing Dropdown

1. Open .cursor/rules/code-convention/backend/RULE.md in Cursor
2. Click on or focus the frontmatter section (lines 1-5)
3. Look for the rule application dropdown near the file header or frontmatter
4. Expected: Dropdown appears with rule application options
5. Actual: No dropdown appears

Issue 2: Unexpected File Creation

1. Trigger the command to create a new Cursor Rule (e.g., via command palette: “File: New Cursor Rule”)
2. Expected: File created in .cursor/rules/ with appropriate naming/structure
3. Actual: Creates SKILLS.md inside a skills directory instead

Issue 3: Missing Documentation

1. Look for documentation on Cursor Rules usage
2. Expected: Documentation explaining rule creation, management, and usage
3. Actual: No documentation found

File Details

Affected File:

• Path: .cursor/rules/code-convention/backend/RULE.md
• Frontmatter:

---
description: "Node.js v18 + LoopBack 2.x backend standards"
globs: ["server/**/*.js", "common/models/**/*.js"]
alwaysApply: false
---

Unexpected File Creation:

• When using “File: New Cursor Rule”, creates: skills/SKILLS.md
• Expected location: .cursor/rules/ directory

Comparison Files (for reference):

• .cursor/rules/code-convention/frontend/RULE.md - Has similar structure (multi-line globs format)
• .cursor/rules/comments/RULE.md - Has alwaysApply: true and no globs field

Environment

Version: 2.3.34 (Universal)
VSCode Version: 1.105.1
Commit: 643ba67cd252e2888e296dd0cf34a0c5d7625b90
Date: 2026-01-10T21:17:10.428Z
Electron: 37.7.0
Chromium: 138.0.7204.251
Node.js: 22.20.0
V8: 13.8.258.32-electron.0
OS: Darwin arm64 24.6.0

Impact

• Unable to configure rule application modes via UI
• Confusing file creation behavior makes rule management difficult
• Lack of documentation hinders adoption and proper usage of Cursor Rules

Additional Context

• The file structure appears correct with valid YAML frontmatter
• The file is located in the expected .cursor/rules/ directory structure
• Other rule files in the same workspace may or may not show the dropdown (needs verification)
• The globs field uses single-line array format (vs. multi-line in frontend rule file)
• Tried reloading the window, but issue persists

Steps to Reproduce

Steps to Reproduce

Issue 1: Missing Rule Application Dropdown

1. Open Cursor IDE
2. Open a workspace that contains a .cursor/rules/ directory
3. Navigate to any rule file, for example: .cursor/rules/code-convention/backend/RULE.md
4. Open the file (should display valid YAML frontmatter with description, globs, and alwaysApply fields)
5. Click on or focus the frontmatter section (lines 1-5, between the --- markers)
6. Look for a dropdown UI element near the file header, frontmatter area, or top of the editor
7. Expected: A dropdown appears with options: “Always Apply”, “Apply Intelligently”, “Apply to Specific Files”, “Apply Manually”
8. Actual: No dropdown appears anywhere in the UI

Issue 2: Unexpected File Creation with “New Cursor Rule”

1. Open Cursor IDE
2. Open any workspace
3. Open the Command Palette (Cmd+Shift+P on macOS, Ctrl+Shift+P on Windows/Linux)
4. Type or select: “File: New Cursor Rule” (or similar command to create a new Cursor Rule)
5. Execute the command
6. Expected: A new rule file is created in .cursor/rules/ directory with appropriate naming
7. Actual: A file skills.md is created inside a skills directory instead of .cursor/rules/

Issue 3: Missing Documentation

1. Open Cursor IDE
2. Attempt to find documentation about Cursor Rules by:
   • Checking Help menu → Documentation
   • Searching in Command Palette for “Cursor Rules” or “Rules documentation”
   • Checking Cursor’s official documentation/website
   • Looking for in-app help or tooltips related to rules
3. Expected: Documentation explaining:
   • How to create Cursor Rules
   • How to manage rules
   • How rule application modes work (Always Apply, Apply Intelligently, etc.)
   • How to use rules effectively
4. Actual: No documentation found explaining how to use or manage Cursor Rules

Additional Verification Steps

To verify if the dropdown issue is specific to certain files:

1. Try opening other rule files in .cursor/rules/ (e.g., code-convention/frontend/RULE.md or comments/RULE.md)
2. Check if the dropdown appears in those files (comparison test)

To verify the file creation issue:

1. Check the workspace root directory
2. Look for a skills/ directory
3. Check if skills.md exists inside it
4. Note the location where it was created (should be unexpected based on the command used)

Operating System

MacOS

Current Cursor Version (Menu → About Cursor → Copy)

Version: 2.3.34 (Universal)
VSCode Version: 1.105.1
Commit: 643ba67cd252e2888e296dd0cf34a0c5d7625b90
Date: 2026-01-10T21:17:10.428Z
Electron: 37.7.0
Chromium: 138.0.7204.251
Node.js: 22.20.0
V8: 13.8.258.32-electron.0
OS: Darwin arm64 24.6.0

Does this stop you from using Cursor

No - Cursor works, but with this issue

[deanrie]

Hey, thanks for the report.

On creating skills.md instead of rules - that was a known bug that’s already fixed. You’ve got version 2.3.34, the fix should be there. Try restarting Cursor and running the command again. If the issue persists - let me know.

On the dropdown for rule type - the dropdown appears at the top of the editor when you open the RULE.md file. A few points:

• The dropdown only works for files in the correct structure: .cursor/rules/rule-name/RULE.md
• From your path .cursor/rules/code-convention/backend/RULE.md - that’s a nested structure (code-convention/backend). The dropdown might not show due to this nesting - try creating a rule directly in .cursor/rules/ without intermediate folders and check if the dropdown appears.

On the documentation - it’s available here: Rules | Cursor Docs

If the dropdown still doesn’t appear after checking the folder structure - send a screenshot of how the editor looks when opening the RULE.md file.

[koala]

Not fixed: see screenshot.

[DonVictorio (victor romano)]

I have same issue

[koala]

Also, the docs are not consistent with the CLI.

The CLI creates rules as single .mdc files under .cursor/, not as folders under .cursor/rules