diff --git a/.changeset/read-stream-utf8.md b/.changeset/read-stream-utf8.md
new file mode 100644
index 00000000000..774ccbcc692
--- /dev/null
+++ b/.changeset/read-stream-utf8.md
@@ -0,0 +1,5 @@
+---
+"@kilocode/cli": patch
+---
+
+Speed up reading large files: the `read` tool now streams UTF-8 content from disk and stops once the line/byte cap is reached, instead of loading the whole file into memory first.
diff --git a/packages/opencode/src/kilocode/text-stream.ts b/packages/opencode/src/kilocode/text-stream.ts
new file mode 100644
index 00000000000..1bb4d55f50e
--- /dev/null
+++ b/packages/opencode/src/kilocode/text-stream.ts
@@ -0,0 +1,70 @@
+import { createReadStream } from "fs"
+import { PassThrough, Readable } from "stream"
+import * as Encoding from "./encoding"
+
+/**
+ * Encoding-aware text streaming for tools that walk a file line by line.
+ * Optimistically stream as UTF-8; fall back to a buffered iconv decode only
+ * when the bytes turn out not to be valid UTF-8.
+ *
+ *   import * as TextStream from "../kilocode/text-stream"
+ */
+
+/** Distinct class so {@link withFallback} can tell us apart from real I/O failures. */
+export class InvalidUtf8Error extends Error {
+  constructor() {
+    super("invalid utf-8")
+  }
+}
+
+/**
+ * UTF-8 text Readable for `filepath`. A leading UTF-8 BOM passes through as
+ * U+FEFF — same as `createReadStream({ encoding: "utf8" })`.
+ */
+export function openUtf8(filepath: string): Readable {
+  const out = new PassThrough({ encoding: "utf8" })
+  const raw = createReadStream(filepath)
+  const decoder = new TextDecoder("utf-8", { fatal: true })
+  raw.on("data", (chunk) => {
+    try {
+      const text = decoder.decode(chunk as Buffer, { stream: true })
+      if (text) out.write(text)
+    } catch {
+      raw.destroy()
+      out.destroy(new InvalidUtf8Error())
+    }
+  })
+  raw.on("end", () => {
+    try {
+      const tail = decoder.decode()
+      if (tail) out.write(tail)
+      out.end()
+    } catch {
+      out.destroy(new InvalidUtf8Error())
+    }
+  })
+  raw.on("error", (err) => out.destroy(err))
+  // Propagate consumer-side teardown so early-exit (line / byte cap, fallback)
+  // stops pulling chunks from disk instead of running to EOF.
+  out.on("close", () => raw.destroy())
+  return out
+}
+
+/** Whole-file UTF-8 Readable via {@link Encoding.read}; buffers the entire decoded file. */
+export async function openDecoded(filepath: string): Promise<Readable> {
+  const decoded = await Encoding.read(filepath)
+  return Readable.from([decoded.text])
+}
+
+/**
+ * Run `fn` against an optimistic UTF-8 stream; on {@link InvalidUtf8Error}
+ * retry once against {@link openDecoded}. Other errors propagate.
+ */
+export async function withFallback<T>(filepath: string, fn: (input: Readable) => Promise<T>): Promise<T> {
+  try {
+    return await fn(openUtf8(filepath))
+  } catch (err) {
+    if (!(err instanceof InvalidUtf8Error)) throw err
+  }
+  return fn(await openDecoded(filepath))
+}
diff --git a/packages/opencode/src/tool/read.ts b/packages/opencode/src/tool/read.ts
index b2b8d643da9..551e3744553 100644
--- a/packages/opencode/src/tool/read.ts
+++ b/packages/opencode/src/tool/read.ts
@@ -1,9 +1,8 @@
 import { lstat } from "fs/promises" // kilocode_change
 import { Effect, Option, Schema, Scope } from "effect"
 import { NonNegativeInt } from "@/util/schema"
-import { createReadStream } from "fs"
 import * as path from "path"
-import { Readable } from "stream" // kilocode_change
+import type { Readable } from "stream" // kilocode_change
 import { createInterface } from "readline"
 import * as Tool from "./tool"
 import { AppFileSystem } from "@opencode-ai/core/filesystem"
@@ -15,6 +14,7 @@ import { Instruction } from "../session/instruction"
 import { isPdfAttachment, sniffAttachmentMime } from "@/util/media"
 // kilocode_change start
 import * as Encoding from "../kilocode/encoding"
+import * as TextStream from "../kilocode/text-stream"
 // kilocode_change end
 
 const DEFAULT_READ_LIMIT = 2000
@@ -354,12 +354,14 @@ export const ReadTool = Tool.define(
   }),
 )
 
-// kilocode_change start
+// kilocode_change start - exported (so readDirectoryFiles can reuse it) and
+// routed through TextStream.withFallback so non-UTF-8 files are decoded via
+// iconv. The body otherwise matches upstream.
 export async function lines(filepath: string, opts: { limit: number; offset: number }) {
-  // kilocode_change end
-  // kilocode_change start - decode with detected encoding; replaces createReadStream(filepath, { encoding: "utf8" })
-  const encoded = await Encoding.read(filepath)
-  const stream = Readable.from([encoded.text])
+  return TextStream.withFallback(filepath, (stream) => readLines(stream, opts))
+}
+
+async function readLines(stream: Readable, opts: { limit: number; offset: number }) {
   // kilocode_change end
   const rl = createInterface({
     input: stream,