diff --git a/apps/web/src/app/globals.css b/apps/web/src/app/globals.css
index 6ce03ed..ee7b65a 100755
--- a/apps/web/src/app/globals.css
+++ b/apps/web/src/app/globals.css
@@ -69,6 +69,30 @@ body::after {
   user-select: none;
 }
 
+.mentor-thinking-dots span {
+  animation: mentor-dot-pulse 1.4s infinite;
+  opacity: 0.3;
+}
+
+.mentor-thinking-dots span:nth-child(2) {
+  animation-delay: 0.2s;
+}
+
+.mentor-thinking-dots span:nth-child(3) {
+  animation-delay: 0.4s;
+}
+
+@keyframes mentor-dot-pulse {
+  0%,
+  80%,
+  100% {
+    opacity: 0.3;
+  }
+  40% {
+    opacity: 1;
+  }
+}
+
 .retro-btn {
   background: linear-gradient(180deg, var(--color-surface-raised) 0%, var(--color-surface) 100%);
   border: 2px solid;
diff --git a/apps/web/src/app/mentor/page.tsx b/apps/web/src/app/mentor/page.tsx
index 74d2d1d..ddd3180 100644
--- a/apps/web/src/app/mentor/page.tsx
+++ b/apps/web/src/app/mentor/page.tsx
@@ -1,8 +1,10 @@
 "use client";
 
 import { useQuery, useMutation } from "@tanstack/react-query";
-import { useEffect, useRef, useState } from "react";
+import { useEffect, useState } from "react";
 import { AppShell } from "@/components/layout/app-shell";
+import { MentorChatMessages } from "@/components/features/mentor-chat-messages";
+import { createChatSession, fetchChatSessions, useMentorChat } from "@/hooks/useMentorChat";
 import Link from "next/link";
 
 const SUGGESTED = [
@@ -16,40 +18,37 @@ const SUGGESTED = [
 
 export default function MentorPage() {
   const [sessionId, setSessionId] = useState<string | null>(null);
-  const [input, setInput] = useState("");
   const [tab, setTab] = useState<"chat" | "knows" | "preview">("chat");
-  const bottomRef = useRef<HTMLDivElement>(null);
+  const [previewInput, setPreviewInput] = useState("");
 
   const { data: sessionsData } = useQuery({
     queryKey: ["chat-sessions"],
-    queryFn: async () => {
-      const res = await fetch("/api/ai/chat/sessions");
-      return res.json();
-    },
+    queryFn: fetchChatSessions,
   });
 
   useEffect(() => {
     if (!sessionId && sessionsData?.sessions?.[0]) {
       setSessionId(sessionsData.sessions[0].id);
     } else if (!sessionId) {
-      fetch("/api/ai/chat/sessions", {
-        method: "POST",
-        headers: { "Content-Type": "application/json" },
-        body: JSON.stringify({}),
-      })
-        .then((r) => r.json())
-        .then((d) => setSessionId(d.id));
+      createChatSession().then((d) => setSessionId(d.id));
     }
   }, [sessionId, sessionsData]);
 
-  const { data: chatData, refetch } = useQuery({
-    queryKey: ["chat-session", sessionId],
-    queryFn: async () => {
-      const res = await fetch(`/api/ai/chat/sessions/${sessionId}`);
-      return res.json();
-    },
-    enabled: !!sessionId,
-  });
+  const chat = useMentorChat(sessionId);
+
+  useEffect(() => {
+    if (!chat.archiveSuccess || !sessionId) return;
+    chat.resetArchiveSuccess();
+
+    const remaining = (sessionsData?.sessions ?? []).filter(
+      (s: { id: string }) => s.id !== sessionId
+    );
+    if (remaining.length > 0) {
+      setSessionId(remaining[0].id);
+    } else {
+      createChatSession().then((d) => setSessionId(d.id));
+    }
+  }, [chat.archiveSuccess, sessionId, sessionsData, chat.resetArchiveSuccess]);
 
   const { data: knowsData } = useQuery({
     queryKey: ["ai-knows"],
@@ -61,45 +60,20 @@ export default function MentorPage() {
   });
 
   const { data: previewData, refetch: refetchPreview } = useQuery({
-    queryKey: ["context-preview", input],
+    queryKey: ["context-preview", previewInput],
     queryFn: async () => {
-      const params = new URLSearchParams({ message: input || "hello", feature: "mentor" });
+      const params = new URLSearchParams({ message: previewInput || "hello", feature: "mentor" });
       const res = await fetch(`/api/ai/context/preview?${params}`);
       return res.json();
     },
     enabled: tab === "preview",
   });
 
-  const send = useMutation({
-    mutationFn: async (content: string) => {
-      const res = await fetch(`/api/ai/chat/sessions/${sessionId}`, {
-        method: "POST",
-        headers: { "Content-Type": "application/json" },
-        body: JSON.stringify({ content }),
-      });
-      if (!res.ok) throw new Error("Send failed");
-      return res.json();
-    },
-    onSuccess: () => {
-      refetch();
-      setInput("");
-    },
-  });
-
   const newSession = useMutation({
-    mutationFn: async () => {
-      const res = await fetch("/api/ai/chat/sessions", { method: "POST", headers: { "Content-Type": "application/json" }, body: "{}" });
-      return res.json();
-    },
+    mutationFn: () => createChatSession(),
     onSuccess: (d) => setSessionId(d.id),
   });
 
-  useEffect(() => {
-    bottomRef.current?.scrollIntoView({ behavior: "smooth" });
-  }, [chatData?.messages?.length]);
-
-  const messages = chatData?.messages ?? [];
-
   return (
     <AppShell>
       <div className="p-4 pb-20 md:pb-4 max-w-4xl mx-auto">
@@ -141,17 +115,29 @@ export default function MentorPage() {
               ))}
             </div>
             <div className="retro-window md:col-span-3 flex flex-col min-h-[400px]">
+              <div className="flex items-center justify-between gap-2 px-3 py-2 border-b">
+                <span className="text-xs text-[var(--warm-grey)] truncate">
+                  {sessionsData?.sessions?.find((s: { id: string }) => s.id === sessionId)?.title ?? "Chat"}
+                </span>
+                <button
+                  type="button"
+                  className="retro-btn text-[10px] shrink-0 opacity-80"
+                  onClick={chat.deleteChat}
+                  disabled={!sessionId || chat.isDeletePending || chat.isSendPending}
+                >
+                  {chat.isDeletePending ? "..." : "Delete Chat"}
+                </button>
+              </div>
+              {chat.deleteError && (
+                <p className="px-3 py-1 text-xs text-[var(--color-danger)]">{chat.deleteError}</p>
+              )}
               <div className="flex-1 overflow-y-auto p-4 space-y-3">
-                {messages.map((m: { id: string; role: string; content: string; metadata?: { offline?: boolean } }) => (
-                  <div key={m.id} className={`p-3 rounded text-sm ${m.role === "user" ? "bg-white/50 ml-8" : "bg-[var(--xp-blue)]/10 mr-8"}`}>
-                    <span className="text-xs font-bold">{m.role === "user" ? "You" : "Mentor"}</span>
-                    {m.metadata?.offline && (
-                      <span className="text-[10px] ml-2 opacity-60">(offline/local)</span>
-                    )}
-                    <p className="mt-1 whitespace-pre-wrap">{m.content}</p>
-                  </div>
-                ))}
-                <div ref={bottomRef} />
+                <MentorChatMessages
+                  messages={chat.displayMessages}
+                  onRetry={chat.canRetry ? chat.retry : undefined}
+                  retryPending={chat.isSendPending}
+                  bottomRef={chat.bottomRef}
+                />
               </div>
               <div className="p-2 flex flex-wrap gap-1 border-t">
                 {SUGGESTED.map((q) => (
@@ -159,8 +145,8 @@ export default function MentorPage() {
                     key={q}
                     type="button"
                     className="retro-btn text-[10px]"
-                    onClick={() => send.mutate(q)}
-                    disabled={send.isPending}
+                    onClick={() => chat.sendMessage(q)}
+                    disabled={!sessionId || chat.isSendPending}
                   >
                     {q}
                   </button>
@@ -169,18 +155,19 @@ export default function MentorPage() {
               <div className="p-3 flex gap-2 border-t">
                 <input
                   className="retro-window-inset flex-1 p-2 text-sm"
-                  value={input}
-                  onChange={(e) => setInput(e.target.value)}
-                  onKeyDown={(e) => e.key === "Enter" && input.trim() && send.mutate(input.trim())}
+                  value={chat.input}
+                  onChange={(e) => chat.setInput(e.target.value)}
+                  onKeyDown={chat.handleKeyDown}
                   placeholder="Ask the mentor..."
+                  disabled={!sessionId}
                 />
                 <button
                   type="button"
                   className="retro-btn retro-btn-primary"
-                  disabled={!input.trim() || send.isPending}
-                  onClick={() => send.mutate(input.trim())}
+                  disabled={!sessionId || !chat.input.trim() || chat.isSendPending}
+                  onClick={() => chat.sendMessage(chat.input)}
                 >
-                  Send
+                  {chat.isSendPending ? "..." : "Send"}
                 </button>
               </div>
             </div>
@@ -216,8 +203,8 @@ export default function MentorPage() {
             <input
               className="retro-window-inset w-full p-2 text-sm"
               placeholder="Sample message to preview context..."
-              value={input}
-              onChange={(e) => setInput(e.target.value)}
+              value={previewInput}
+              onChange={(e) => setPreviewInput(e.target.value)}
             />
             <button type="button" className="retro-btn text-xs" onClick={() => refetchPreview()}>
               Refresh preview
diff --git a/apps/web/src/components/features/mentor-chat-messages.tsx b/apps/web/src/components/features/mentor-chat-messages.tsx
new file mode 100644
index 0000000..c7e17a2
--- /dev/null
+++ b/apps/web/src/components/features/mentor-chat-messages.tsx
@@ -0,0 +1,128 @@
+"use client";
+
+import type { RefObject } from "react";
+import type { MentorChatMessage } from "@/lib/mentor-chat-utils";
+
+function MentorThinkingBubble({ compact }: { compact?: boolean }) {
+  return (
+    <div
+      className={`rounded bg-[var(--xp-blue)]/10 ${compact ? "p-2 mr-4" : "p-3 mr-8"}`}
+      aria-live="polite"
+      aria-label="Mentor is thinking"
+    >
+      <span className={`font-bold ${compact ? "text-[10px] block mb-1" : "text-xs"}`}>Mentor</span>
+      <p className={`mt-1 text-[var(--warm-grey)] ${compact ? "text-xs" : "text-sm"}`}>
+        AI is thinking
+        <span className="mentor-thinking-dots" aria-hidden="true">
+          <span>.</span>
+          <span>.</span>
+          <span>.</span>
+        </span>
+      </p>
+    </div>
+  );
+}
+
+function MentorErrorBubble({
+  content,
+  onRetry,
+  retryPending,
+  compact,
+}: {
+  content: string;
+  onRetry?: () => void;
+  retryPending?: boolean;
+  compact?: boolean;
+}) {
+  return (
+    <div
+      className={`rounded bg-[var(--color-danger)]/10 border border-[var(--color-danger)]/20 ${compact ? "p-2 mr-4" : "p-3 mr-8"}`}
+      role="alert"
+    >
+      <span className={`font-bold ${compact ? "text-[10px] block mb-1" : "text-xs"}`}>Mentor</span>
+      <p className={`mt-1 whitespace-pre-wrap ${compact ? "text-xs" : "text-sm"}`}>{content}</p>
+      {onRetry && (
+        <button
+          type="button"
+          className="retro-btn text-[10px] mt-2"
+          onClick={onRetry}
+          disabled={retryPending}
+        >
+          {retryPending ? "..." : "Retry"}
+        </button>
+      )}
+    </div>
+  );
+}
+
+function MentorMessageBubble({
+  message,
+  compact,
+}: {
+  message: MentorChatMessage;
+  compact?: boolean;
+}) {
+  const isUser = message.role === "user";
+
+  return (
+    <div
+      className={`rounded ${
+        isUser
+          ? `bg-white/50 ${compact ? "p-2 ml-4" : "p-3 ml-8"}`
+          : `bg-[var(--xp-blue)]/10 ${compact ? "p-2 mr-4" : "p-3 mr-8"}`
+      } ${compact ? "text-xs" : "text-sm"}`}
+    >
+      <span className={`font-bold ${compact ? "text-[10px] block mb-1" : "text-xs"}`}>
+        {isUser ? "You" : "Mentor"}
+      </span>
+      {message.metadata?.offline && (
+        <span className="text-[10px] ml-2 opacity-60">(offline/local)</span>
+      )}
+      <p className="mt-1 whitespace-pre-wrap">{message.content}</p>
+    </div>
+  );
+}
+
+export function MentorChatMessages({
+  messages,
+  emptyMessage,
+  onRetry,
+  retryPending,
+  compact,
+  bottomRef,
+}: {
+  messages: MentorChatMessage[];
+  emptyMessage?: string;
+  onRetry?: () => void;
+  retryPending?: boolean;
+  compact?: boolean;
+  bottomRef?: RefObject<HTMLDivElement | null>;
+}) {
+  return (
+    <>
+      {messages.length === 0 && emptyMessage && (
+        <p className={`text-[var(--warm-grey)] italic ${compact ? "text-xs" : "text-sm"}`}>
+          {emptyMessage}
+        </p>
+      )}
+      {messages.map((m) => {
+        if (m.status === "thinking") {
+          return <MentorThinkingBubble key={m.id} compact={compact} />;
+        }
+        if (m.status === "error") {
+          return (
+            <MentorErrorBubble
+              key={m.id}
+              content={m.content}
+              onRetry={onRetry}
+              retryPending={retryPending}
+              compact={compact}
+            />
+          );
+        }
+        return <MentorMessageBubble key={m.id} message={m} compact={compact} />;
+      })}
+      <div ref={bottomRef} />
+    </>
+  );
+}
diff --git a/apps/web/src/components/features/mentor-panel.tsx b/apps/web/src/components/features/mentor-panel.tsx
index 89d1e0e..a85589d 100644
--- a/apps/web/src/components/features/mentor-panel.tsx
+++ b/apps/web/src/components/features/mentor-panel.tsx
@@ -1,8 +1,9 @@
 "use client";
 
-import { useQuery, useMutation, useQueryClient } from "@tanstack/react-query";
-import { useEffect, useRef, useState } from "react";
+import { useEffect, useState } from "react";
 import Link from "next/link";
+import { MentorChatMessages } from "@/components/features/mentor-chat-messages";
+import { createChatSession, useMentorChat } from "@/hooks/useMentorChat";
 
 const SUGGESTED = [
   "What should I focus on today?",
@@ -14,58 +15,35 @@ const SUGGESTED = [
 
 export function MentorPanel({ onClose }: { onClose?: () => void }) {
   const [sessionId, setSessionId] = useState<string | null>(null);
-  const [input, setInput] = useState("");
-  const bottomRef = useRef<HTMLDivElement>(null);
-  const qc = useQueryClient();
 
   useEffect(() => {
     if (!sessionId) {
-      fetch("/api/ai/chat/sessions", {
-        method: "POST",
-        headers: { "Content-Type": "application/json" },
-        body: JSON.stringify({ title: "Quick chat" }),
-      })
-        .then((r) => r.json())
-        .then((d) => setSessionId(d.id));
+      createChatSession("Quick chat").then((d) => setSessionId(d.id));
     }
   }, [sessionId]);
 
-  const { data, refetch } = useQuery({
-    queryKey: ["chat-session", sessionId],
-    queryFn: async () => {
-      const res = await fetch(`/api/ai/chat/sessions/${sessionId}`);
-      return res.json();
-    },
-    enabled: !!sessionId,
-  });
-
-  const send = useMutation({
-    mutationFn: async (content: string) => {
-      const res = await fetch(`/api/ai/chat/sessions/${sessionId}`, {
-        method: "POST",
-        headers: { "Content-Type": "application/json" },
-        body: JSON.stringify({ content }),
-      });
-      if (!res.ok) throw new Error("Send failed");
-      return res.json();
-    },
-    onSuccess: () => {
-      refetch();
-      setInput("");
-    },
-  });
+  const chat = useMentorChat(sessionId);
 
   useEffect(() => {
-    bottomRef.current?.scrollIntoView({ behavior: "smooth" });
-  }, [data?.messages?.length]);
-
-  const messages = data?.messages ?? [];
+    if (!chat.archiveSuccess) return;
+    chat.resetArchiveSuccess();
+    setSessionId(null);
+    createChatSession("Quick chat").then((d) => setSessionId(d.id));
+  }, [chat.archiveSuccess, chat.resetArchiveSuccess]);
 
   return (
     <div className="flex flex-col h-full">
       <div className="retro-titlebar flex items-center justify-between">
         <span>Mentor</span>
-        <div className="flex gap-2">
+        <div className="flex gap-2 items-center">
+          <button
+            type="button"
+            className="text-[10px] font-normal opacity-80"
+            onClick={chat.deleteChat}
+            disabled={!sessionId || chat.isDeletePending || chat.isSendPending}
+          >
+            {chat.isDeletePending ? "..." : "Delete Chat"}
+          </button>
           <Link href="/mentor" className="text-xs underline font-normal" onClick={onClose}>
             Open full
           </Link>
@@ -76,22 +54,18 @@ export function MentorPanel({ onClose }: { onClose?: () => void }) {
           )}
         </div>
       </div>
+      {chat.deleteError && (
+        <p className="px-2 py-1 text-[10px] text-[var(--color-danger)]">{chat.deleteError}</p>
+      )}
       <div className="flex-1 overflow-y-auto p-3 space-y-2 text-sm min-h-[200px] max-h-[50vh]">
-        {messages.length === 0 && (
-          <p className="text-xs text-[var(--warm-grey)] italic">
-            Ask anything about your journey. I use your saved memories — nothing hidden.
-          </p>
-        )}
-        {messages.map((m: { id: string; role: string; content: string }) => (
-          <div
-            key={m.id}
-            className={`p-2 rounded ${m.role === "user" ? "bg-white/50 ml-4" : "bg-[var(--xp-blue)]/10 mr-4"}`}
-          >
-            <span className="text-[10px] font-bold block mb-1">{m.role === "user" ? "You" : "Mentor"}</span>
-            {m.content}
-          </div>
-        ))}
-        <div ref={bottomRef} />
+        <MentorChatMessages
+          messages={chat.displayMessages}
+          emptyMessage="Ask anything about your journey. I use your saved memories — nothing hidden."
+          onRetry={chat.canRetry ? chat.retry : undefined}
+          retryPending={chat.isSendPending}
+          compact
+          bottomRef={chat.bottomRef}
+        />
       </div>
       <div className="p-2 border-t flex flex-wrap gap-1">
         {SUGGESTED.slice(0, 3).map((q) => (
@@ -99,8 +73,8 @@ export function MentorPanel({ onClose }: { onClose?: () => void }) {
             key={q}
             type="button"
             className="retro-btn text-[10px]"
-            onClick={() => send.mutate(q)}
-            disabled={!sessionId || send.isPending}
+            onClick={() => chat.sendMessage(q)}
+            disabled={!sessionId || chat.isSendPending}
           >
             {q}
           </button>
@@ -109,18 +83,19 @@ export function MentorPanel({ onClose }: { onClose?: () => void }) {
       <div className="p-2 flex gap-2">
         <input
           className="retro-window-inset flex-1 p-1 text-sm"
-          value={input}
-          onChange={(e) => setInput(e.target.value)}
-          onKeyDown={(e) => e.key === "Enter" && input.trim() && send.mutate(input.trim())}
+          value={chat.input}
+          onChange={(e) => chat.setInput(e.target.value)}
+          onKeyDown={chat.handleKeyDown}
           placeholder="Ask the mentor..."
+          disabled={!sessionId}
         />
         <button
           type="button"
           className="retro-btn retro-btn-primary text-xs"
-          disabled={!input.trim() || send.isPending}
-          onClick={() => send.mutate(input.trim())}
+          disabled={!sessionId || !chat.input.trim() || chat.isSendPending}
+          onClick={() => chat.sendMessage(chat.input)}
         >
-          Send
+          {chat.isSendPending ? "..." : "Send"}
         </button>
       </div>
     </div>
diff --git a/apps/web/src/components/features/template-editor.tsx b/apps/web/src/components/features/template-editor.tsx
index 5a087c5..088809e 100755
--- a/apps/web/src/components/features/template-editor.tsx
+++ b/apps/web/src/components/features/template-editor.tsx
@@ -2,6 +2,7 @@
 
 import { useMutation, useQuery, useQueryClient } from "@tanstack/react-query";
 import { useState } from "react";
+import type { DragEvent } from "react";
 import type { TemplateData, AdventureItemType } from "@adventureos/shared";
 
 const DAY_LABELS = ["Sun", "Mon", "Tue", "Wed", "Thu", "Fri", "Sat"];
@@ -14,10 +15,19 @@ const ITEM_TYPES: AdventureItemType[] = [
   "note",
 ];
 
+function moveEntry<T>(entries: T[], fromIndex: number, toIndex: number) {
+  const next = [...entries];
+  const [moved] = next.splice(fromIndex, 1);
+  next.splice(toIndex, 0, moved);
+  return next;
+}
+
 export function TemplateEditor() {
   const qc = useQueryClient();
   const [selectedId, setSelectedId] = useState<string | null>(null);
   const [newName, setNewName] = useState("");
+  const [draggedTemplateId, setDraggedTemplateId] = useState<string | null>(null);
+  const [draggedItemId, setDraggedItemId] = useState<string | null>(null);
 
   const { data: templates = [], isLoading } = useQuery<TemplateData[]>({
     queryKey: ["templates"],
@@ -60,6 +70,32 @@ export function TemplateEditor() {
     onSuccess: invalidate,
   });
 
+  const reorderTemplates = useMutation({
+    mutationFn: async (ordered: TemplateData[]) => {
+      await Promise.all(
+        ordered.map((template, index) =>
+          fetch(`/api/templates/${template.id}`, {
+            method: "PATCH",
+            headers: { "Content-Type": "application/json" },
+            body: JSON.stringify({ sortPriority: ordered.length - index }),
+          }).then((res) => {
+            if (!res.ok) throw new Error("Failed");
+          })
+        )
+      );
+    },
+    onMutate: async (ordered) => {
+      await qc.cancelQueries({ queryKey: ["templates"] });
+      const previous = qc.getQueryData<TemplateData[]>(["templates"]);
+      qc.setQueryData<TemplateData[]>(["templates"], ordered);
+      return { previous };
+    },
+    onError: (_error, _ordered, context) => {
+      if (context?.previous) qc.setQueryData(["templates"], context.previous);
+    },
+    onSettled: invalidate,
+  });
+
   const duplicateTemplate = useMutation({
     mutationFn: async (id: string) => {
       const res = await fetch(`/api/templates/${id}`, {
@@ -102,6 +138,44 @@ export function TemplateEditor() {
     onSuccess: invalidate,
   });
 
+  const reorderItems = useMutation({
+    mutationFn: async (orderedItems: TemplateData["items"]) => {
+      if (!selected) throw new Error("No template selected");
+      await Promise.all(
+        orderedItems.map((item, index) =>
+          fetch(`/api/templates/${selected.id}/items`, {
+            method: "POST",
+            headers: { "Content-Type": "application/json" },
+            body: JSON.stringify({
+              id: item.id,
+              type: item.type,
+              label: item.label,
+              config: item.config,
+              sortOrder: index,
+              enabled: item.enabled,
+            }),
+          }).then((res) => {
+            if (!res.ok) throw new Error("Failed");
+          })
+        )
+      );
+    },
+    onMutate: async (orderedItems) => {
+      await qc.cancelQueries({ queryKey: ["templates"] });
+      const previous = qc.getQueryData<TemplateData[]>(["templates"]);
+      qc.setQueryData<TemplateData[]>(["templates"], (current = []) =>
+        current.map((template) =>
+          template.id === selected?.id ? { ...template, items: orderedItems } : template
+        )
+      );
+      return { previous };
+    },
+    onError: (_error, _ordered, context) => {
+      if (context?.previous) qc.setQueryData(["templates"], context.previous);
+    },
+    onSettled: invalidate,
+  });
+
   const deleteItem = useMutation({
     mutationFn: async ({ templateId, itemId }: { templateId: string; itemId: string }) => {
       const res = await fetch(
@@ -115,6 +189,34 @@ export function TemplateEditor() {
 
   if (isLoading) return <p className="text-sm">Loading templates...</p>;
 
+  const handleTemplateDrop = (event: DragEvent<HTMLButtonElement>, targetId: string) => {
+    event.preventDefault();
+    if (!draggedTemplateId || draggedTemplateId === targetId) return;
+
+    const fromIndex = templates.findIndex((template) => template.id === draggedTemplateId);
+    const toIndex = templates.findIndex((template) => template.id === targetId);
+    if (fromIndex === -1 || toIndex === -1) return;
+
+    reorderTemplates.mutate(moveEntry(templates, fromIndex, toIndex));
+    setDraggedTemplateId(null);
+  };
+
+  const handleItemDrop = (event: DragEvent<HTMLDivElement>, targetId: string) => {
+    event.preventDefault();
+    if (!selected || !draggedItemId || draggedItemId === targetId) return;
+
+    const fromIndex = selected.items.findIndex((item) => item.id === draggedItemId);
+    const toIndex = selected.items.findIndex((item) => item.id === targetId);
+    if (fromIndex === -1 || toIndex === -1) return;
+
+    const orderedItems = moveEntry(selected.items, fromIndex, toIndex).map((item, index) => ({
+      ...item,
+      sortOrder: index,
+    }));
+    reorderItems.mutate(orderedItems);
+    setDraggedItemId(null);
+  };
+
   return (
     <div>
       <h2 className="font-bold mb-3">Adventure Templates</h2>
@@ -126,9 +228,20 @@ export function TemplateEditor() {
         {templates.map((t) => (
           <button
             key={t.id}
-            className={`retro-btn text-xs ${selected?.id === t.id ? "retro-btn-primary" : ""}`}
+            draggable
+            className={`retro-btn text-xs cursor-grab ${
+              draggedTemplateId === t.id ? "opacity-60" : ""
+            } ${selected?.id === t.id ? "retro-btn-primary" : ""}`}
+            onDragStart={(event) => {
+              setDraggedTemplateId(t.id);
+              event.dataTransfer.effectAllowed = "move";
+            }}
+            onDragOver={(event) => event.preventDefault()}
+            onDrop={(event) => handleTemplateDrop(event, t.id)}
+            onDragEnd={() => setDraggedTemplateId(null)}
             onClick={() => setSelectedId(t.id)}
           >
+            <span aria-hidden="true">↕ </span>
             {t.name}
             {t.isSystem && " ★"}
           </button>
@@ -201,7 +314,27 @@ export function TemplateEditor() {
           <p className="text-xs font-bold mb-2">Items</p>
           <div className="space-y-2 mb-4">
             {selected.items.map((item) => (
-              <div key={item.id} className="flex flex-wrap gap-2 items-center text-sm">
+              <div
+                key={item.id}
+                className={`flex flex-wrap gap-2 items-center text-sm ${
+                  draggedItemId === item.id ? "opacity-60" : ""
+                }`}
+                onDragOver={(event) => event.preventDefault()}
+                onDrop={(event) => handleItemDrop(event, item.id)}
+              >
+                <button
+                  type="button"
+                  draggable
+                  className="retro-btn text-xs cursor-grab px-2"
+                  aria-label={`Drag ${item.label}`}
+                  onDragStart={(event) => {
+                    setDraggedItemId(item.id);
+                    event.dataTransfer.effectAllowed = "move";
+                  }}
+                  onDragEnd={() => setDraggedItemId(null)}
+                >
+                  ↕
+                </button>
                 <select
                   className="retro-window-inset p-1 text-xs"
                   value={item.type}
diff --git a/apps/web/src/hooks/useMentorChat.ts b/apps/web/src/hooks/useMentorChat.ts
new file mode 100644
index 0000000..e0d71eb
--- /dev/null
+++ b/apps/web/src/hooks/useMentorChat.ts
@@ -0,0 +1,158 @@
+"use client";
+
+import { useMutation, useQuery, useQueryClient } from "@tanstack/react-query";
+import { useCallback, useEffect, useRef, useState } from "react";
+import {
+  buildDisplayMessages,
+  createPendingStateOnError,
+  createPendingStateOnSend,
+  type MentorChatMessage,
+  type MentorPendingState,
+  shouldBlockSend,
+} from "@/lib/mentor-chat-utils";
+
+const DELETE_CONFIRM_MESSAGE =
+  "Delete this chat? Your saved AI memories will not be affected.";
+
+type ChatSessionData = {
+  session: { id: string; title: string };
+  messages: MentorChatMessage[];
+};
+
+export function useMentorChat(sessionId: string | null) {
+  const queryClient = useQueryClient();
+  const bottomRef = useRef<HTMLDivElement>(null);
+  const [input, setInput] = useState("");
+  const [pendingState, setPendingState] = useState<MentorPendingState | null>(null);
+  const [deleteError, setDeleteError] = useState<string | null>(null);
+
+  const { data: chatData } = useQuery<ChatSessionData>({
+    queryKey: ["chat-session", sessionId],
+    queryFn: async () => {
+      const res = await fetch(`/api/ai/chat/sessions/${sessionId}`);
+      if (!res.ok) throw new Error("Failed to load chat");
+      return res.json();
+    },
+    enabled: !!sessionId,
+  });
+
+  const serverMessages = chatData?.messages ?? [];
+  const displayMessages = buildDisplayMessages(serverMessages, pendingState);
+
+  useEffect(() => {
+    bottomRef.current?.scrollIntoView({ behavior: "smooth" });
+  }, [displayMessages.length, pendingState]);
+
+  const send = useMutation({
+    mutationFn: async (content: string) => {
+      const res = await fetch(`/api/ai/chat/sessions/${sessionId}`, {
+        method: "POST",
+        headers: { "Content-Type": "application/json" },
+        body: JSON.stringify({ content }),
+      });
+      if (!res.ok) {
+        const body = await res.json().catch(() => ({}));
+        throw new Error(body.error ?? "Send failed");
+      }
+      return res.json();
+    },
+    onMutate: (content) => {
+      setInput("");
+      setPendingState(createPendingStateOnSend(content));
+    },
+    onSuccess: () => {
+      setPendingState(null);
+      queryClient.invalidateQueries({ queryKey: ["chat-session", sessionId] });
+      queryClient.invalidateQueries({ queryKey: ["chat-sessions"] });
+    },
+    onError: (_err, content) => {
+      setPendingState(createPendingStateOnError(content));
+    },
+  });
+
+  const archive = useMutation({
+    mutationFn: async () => {
+      const res = await fetch(`/api/ai/chat/sessions/${sessionId}`, { method: "DELETE" });
+      if (!res.ok) {
+        const body = await res.json().catch(() => ({}));
+        throw new Error(body.error ?? "Delete failed");
+      }
+      return res.json();
+    },
+    onMutate: () => {
+      setDeleteError(null);
+    },
+    onSuccess: () => {
+      setPendingState(null);
+      setInput("");
+      queryClient.invalidateQueries({ queryKey: ["chat-sessions"] });
+    },
+    onError: (err: Error) => {
+      setDeleteError(err.message || "Could not delete chat. Please try again.");
+    },
+  });
+
+  const sendMessage = useCallback(
+    (content: string) => {
+      if (!sessionId || shouldBlockSend(send.isPending, content)) return;
+      send.mutate(content.trim());
+    },
+    [sessionId, send]
+  );
+
+  const retry = useCallback(() => {
+    const content = pendingState?.lastFailedContent;
+    if (!content || send.isPending) return;
+    setPendingState(null);
+    send.mutate(content);
+  }, [pendingState?.lastFailedContent, send]);
+
+  const deleteChat = useCallback(() => {
+    if (!sessionId || archive.isPending) return;
+    if (!confirm(DELETE_CONFIRM_MESSAGE)) return;
+    archive.mutate();
+  }, [sessionId, archive]);
+
+  const handleKeyDown = useCallback(
+    (e: React.KeyboardEvent<HTMLInputElement>) => {
+      if (e.key === "Enter" && input.trim()) {
+        e.preventDefault();
+        sendMessage(input);
+      }
+    },
+    [input, sendMessage]
+  );
+
+  return {
+    input,
+    setInput,
+    displayMessages,
+    sendMessage,
+    retry,
+    deleteChat,
+    handleKeyDown,
+    bottomRef,
+    isSendPending: send.isPending,
+    isDeletePending: archive.isPending,
+    canRetry: !!pendingState?.lastFailedContent,
+    deleteError,
+    archiveSuccess: archive.isSuccess,
+    resetArchiveSuccess: archive.reset,
+  };
+}
+
+export async function createChatSession(title?: string): Promise<{ id: string }> {
+  const res = await fetch("/api/ai/chat/sessions", {
+    method: "POST",
+    headers: { "Content-Type": "application/json" },
+    body: JSON.stringify(title ? { title } : {}),
+  });
+  if (!res.ok) throw new Error("Failed to create session");
+  return res.json();
+}
+
+export async function fetchChatSessions(): Promise<{ sessions: { id: string; title: string }[] }> {
+  const res = await fetch("/api/ai/chat/sessions");
+  if (!res.ok) throw new Error("Failed to load sessions");
+  return res.json();
+}
diff --git a/apps/web/src/lib/mentor-chat-utils.test.ts b/apps/web/src/lib/mentor-chat-utils.test.ts
new file mode 100644
index 0000000..9f58aa5
--- /dev/null
+++ b/apps/web/src/lib/mentor-chat-utils.test.ts
@@ -0,0 +1,108 @@
+import { describe, it, expect } from "vitest";
+import {
+  appendOptimisticMessages,
+  applySendError,
+  buildDisplayMessages,
+  clearOptimisticMessages,
+  createOptimisticUserMessage,
+  createThinkingMessage,
+  createErrorMessage,
+  shouldBlockSend,
+  createPendingStateOnSend,
+  createPendingStateOnError,
+  DEFAULT_SEND_ERROR_MESSAGE,
+  OPTIMISTIC_THINKING_ID,
+} from "./mentor-chat-utils";
+
+describe("mentor-chat-utils", () => {
+  const serverMessages = [
+    { id: "1", role: "user", content: "Hello" },
+    { id: "2", role: "assistant", content: "Hi there" },
+  ];
+
+  it("appendOptimisticMessages adds user and thinking entries", () => {
+    const result = appendOptimisticMessages(serverMessages, "New question", 1000);
+    expect(result).toHaveLength(4);
+    expect(result[2]).toMatchObject({
+      role: "user",
+      content: "New question",
+      status: "sending",
+      id: "optimistic-user-1000",
+    });
+    expect(result[3]).toMatchObject({
+      role: "assistant",
+      status: "thinking",
+      id: OPTIMISTIC_THINKING_ID,
+    });
+  });
+
+  it("appendOptimisticMessages replaces existing optimistic entries", () => {
+    const withOptimistic = appendOptimisticMessages(serverMessages, "First", 1000);
+    const result = appendOptimisticMessages(withOptimistic, "Second", 2000);
+    const optimistic = result.filter((m) => m.id.startsWith("optimistic"));
+    expect(optimistic).toHaveLength(2);
+    expect(optimistic[0].content).toBe("Second");
+  });
+
+  it("applySendError removes thinking and adds error bubble", () => {
+    const pending = appendOptimisticMessages(serverMessages, "Failed msg", 1000);
+    const result = applySendError(pending, "Custom error", 2000);
+    expect(result.find((m) => m.status === "thinking")).toBeUndefined();
+    expect(result.find((m) => m.status === "error")).toMatchObject({
+      content: "Custom error",
+      role: "assistant",
+    });
+    const userMsg = result.find((m) => m.content === "Failed msg");
+    expect(userMsg?.status).toBe("sent");
+  });
+
+  it("applySendError keeps user message visible", () => {
+    const pending = appendOptimisticMessages([], "My message", 1000);
+    const result = applySendError(pending);
+    expect(result.some((m) => m.role === "user" && m.content === "My message")).toBe(true);
+  });
+
+  it("buildDisplayMessages merges server messages with pending state", () => {
+    const pending = createPendingStateOnSend("Pending question", 1000);
+    const result = buildDisplayMessages(serverMessages, pending);
+    expect(result).toHaveLength(4);
+    expect(result[2].content).toBe("Pending question");
+    expect(result[3].status).toBe("thinking");
+  });
+
+  it("buildDisplayMessages returns server messages when no pending state", () => {
+    expect(buildDisplayMessages(serverMessages, null)).toEqual(serverMessages);
+  });
+
+  it("buildDisplayMessages shows error state from pending", () => {
+    const pending = createPendingStateOnError("Retry me", DEFAULT_SEND_ERROR_MESSAGE, 1000);
+    const result = buildDisplayMessages(serverMessages, pending);
+    expect(result.some((m) => m.status === "error")).toBe(true);
+    expect(result.some((m) => m.content === "Retry me")).toBe(true);
+  });
+
+  it("clearOptimisticMessages removes all optimistic entries", () => {
+    const withOptimistic = appendOptimisticMessages(serverMessages, "Test", 1000);
+    const result = clearOptimisticMessages(withOptimistic);
+    expect(result).toEqual(serverMessages);
+  });
+
+  it("shouldBlockSend blocks when pending or empty", () => {
+    expect(shouldBlockSend(true, "hello")).toBe(true);
+    expect(shouldBlockSend(false, "")).toBe(true);
+    expect(shouldBlockSend(false, "   ")).toBe(true);
+    expect(shouldBlockSend(false, "hello")).toBe(false);
+  });
+
+  it("createOptimisticUserMessage trims content", () => {
+    expect(createOptimisticUserMessage("  hi  ").content).toBe("hi");
+  });
+
+  it("createThinkingMessage has thinking status", () => {
+    expect(createThinkingMessage().status).toBe("thinking");
+  });
+
+  it("createErrorMessage uses default message", () => {
+    expect(createErrorMessage().content).toBe(DEFAULT_SEND_ERROR_MESSAGE);
+  });
+});
diff --git a/apps/web/src/lib/mentor-chat-utils.ts b/apps/web/src/lib/mentor-chat-utils.ts
new file mode 100644
index 0000000..e9cb170
--- /dev/null
+++ b/apps/web/src/lib/mentor-chat-utils.ts
@@ -0,0 +1,135 @@
+export type MentorMessageStatus = "sending" | "thinking" | "error" | "sent";
+
+export type MentorChatMessage = {
+  id: string;
+  role: string;
+  content: string;
+  status?: MentorMessageStatus;
+  metadata?: { offline?: boolean };
+};
+
+export type MentorPendingState = {
+  optimisticUser?: MentorChatMessage;
+  thinking?: MentorChatMessage;
+  error?: MentorChatMessage;
+  lastFailedContent?: string;
+};
+
+export const OPTIMISTIC_USER_PREFIX = "optimistic-user-";
+export const OPTIMISTIC_THINKING_ID = "optimistic-thinking";
+export const OPTIMISTIC_ERROR_ID = "optimistic-error";
+
+export const DEFAULT_SEND_ERROR_MESSAGE =
+  "The AI could not respond just now. Your message is still here — you can retry.";
+
+export function createOptimisticUserMessage(content: string, now = Date.now()): MentorChatMessage {
+  return {
+    id: `${OPTIMISTIC_USER_PREFIX}${now}`,
+    role: "user",
+    content: content.trim(),
+    status: "sending",
+  };
+}
+
+export function createThinkingMessage(): MentorChatMessage {
+  return {
+    id: OPTIMISTIC_THINKING_ID,
+    role: "assistant",
+    content: "",
+    status: "thinking",
+  };
+}
+
+export function createErrorMessage(
+  message = DEFAULT_SEND_ERROR_MESSAGE,
+  now = Date.now()
+): MentorChatMessage {
+  return {
+    id: `${OPTIMISTIC_ERROR_ID}-${now}`,
+    role: "assistant",
+    content: message,
+    status: "error",
+  };
+}
+
+export function isOptimisticMessage(message: MentorChatMessage): boolean {
+  return (
+    message.id.startsWith(OPTIMISTIC_USER_PREFIX) ||
+    message.id === OPTIMISTIC_THINKING_ID ||
+    message.id.startsWith(OPTIMISTIC_ERROR_ID)
+  );
+}
+
+export function appendOptimisticMessages(
+  messages: MentorChatMessage[],
+  content: string,
+  now = Date.now()
+): MentorChatMessage[] {
+  const withoutOptimistic = messages.filter((m) => !isOptimisticMessage(m));
+  return [
+    ...withoutOptimistic,
+    createOptimisticUserMessage(content, now),
+    createThinkingMessage(),
+  ];
+}
+
+export function applySendError(
+  messages: MentorChatMessage[],
+  errorMessage = DEFAULT_SEND_ERROR_MESSAGE,
+  now = Date.now()
+): MentorChatMessage[] {
+  const withoutThinking = messages.filter((m) => m.status !== "thinking");
+  const withSentUser = withoutThinking.map((m) =>
+    m.status === "sending" ? { ...m, status: "sent" as const } : m
+  );
+  return [...withSentUser, createErrorMessage(errorMessage, now)];
+}
+
+export function clearOptimisticMessages(messages: MentorChatMessage[]): MentorChatMessage[] {
+  return messages.filter((m) => !isOptimisticMessage(m));
+}
+
+export function buildDisplayMessages(
+  serverMessages: MentorChatMessage[],
+  pendingState: MentorPendingState | null
+): MentorChatMessage[] {
+  if (!pendingState) return serverMessages;
+
+  const base = clearOptimisticMessages(serverMessages);
+  const result = [...base];
+
+  if (pendingState.optimisticUser) {
+    result.push(pendingState.optimisticUser);
+  }
+  if (pendingState.thinking) {
+    result.push(pendingState.thinking);
+  }
+  if (pendingState.error) {
+    result.push(pendingState.error);
+  }
+
+  return result;
+}
+
+export function shouldBlockSend(isPending: boolean, content: string): boolean {
+  return isPending || !content.trim();
+}
+
+export function createPendingStateOnSend(content: string, now = Date.now()): MentorPendingState {
+  return {
+    optimisticUser: createOptimisticUserMessage(content, now),
+    thinking: createThinkingMessage(),
+  };
+}
+
+export function createPendingStateOnError(
+  content: string,
+  errorMessage = DEFAULT_SEND_ERROR_MESSAGE,
+  now = Date.now()
+): MentorPendingState {
+  return {
+    optimisticUser: { ...createOptimisticUserMessage(content, now), status: "sent" },
+    error: createErrorMessage(errorMessage, now),
+    lastFailedContent: content.trim(),
+  };
+}
diff --git a/apps/web/src/lib/services/adventure/templates.ts b/apps/web/src/lib/services/adventure/templates.ts
index 6de23ce..91167a2 100755
--- a/apps/web/src/lib/services/adventure/templates.ts
+++ b/apps/web/src/lib/services/adventure/templates.ts
@@ -1,4 +1,4 @@
-import { and, eq, isNull, inArray } from "drizzle-orm";
+import { and, desc, eq, isNull, inArray } from "drizzle-orm";
 import { db, adventureTemplates, adventureItems } from "@/lib/db";
 import { recordAction } from "@/lib/services/action-events";
 import { ACTION_TYPES } from "@/lib/config";
@@ -27,7 +27,8 @@ export async function getTemplates(userId: string) {
   const templates = await db
     .select()
     .from(adventureTemplates)
-    .where(and(eq(adventureTemplates.userId, userId), isNull(adventureTemplates.deletedAt)));
+    .where(and(eq(adventureTemplates.userId, userId), isNull(adventureTemplates.deletedAt)))
+    .orderBy(desc(adventureTemplates.sortPriority));
 
   const result = [];
   for (const t of templates) {