Agent Loop Engineering

Agent Loop Engineering is the discipline of designing the iterative cycles that power AI agents. Every agent runs in a loop: observe the current state, reason about what to do, execute an action, observe the result, and decide whether to continue or stop. The quality of that loop determines whether the agent completes its task reliably, efficiently, and safely.

The core challenge is not the model. The model is a component. The challenge is the architecture around it: how you structure the reasoning step, what you give the model to work with at each turn, how you determine when to stop, and how you help the agent recover from errors. These are engineering decisions, not prompt tricks.

The mental model

An agent loop has four elements that repeat until a termination condition is met.

Observation. The agent reads its current context: the original request, any instructions, the history of actions taken so far, and the results returned from tools. This context grows with each iteration. Managing what stays in context and what gets summarized or discarded is a core design problem.

Reasoning. The model processes the observation and decides what to do next. This may involve generating an internal thought trace, selecting a tool, constructing tool arguments, or deciding to stop and return a result. The reasoning step is where you can inject structure: explicit planning, step-by-step decomposition, or reflection on prior actions.

Action. The agent executes the chosen step. This might be a tool call that queries a database, writes to a file, sends a message, or calls another agent. The action returns a result that becomes part of the next observation.

Decision. The agent evaluates whether to continue or stop. Termination conditions include producing a final answer, hitting a maximum iteration count, encountering an unrecoverable error, or detecting that no progress is being made.

These four elements form a cycle. The loop continues until a termination condition triggers. The engineering work is deciding how each element works, how they connect, and how you keep the loop on track.

The run loop in detail