diff --git a/packages/coding-agent/CHANGELOG.md b/packages/coding-agent/CHANGELOG.md
index 7bdf6bcd..f71130db 100644
--- a/packages/coding-agent/CHANGELOG.md
+++ b/packages/coding-agent/CHANGELOG.md
@@ -4,6 +4,7 @@
 
 ### Added
 
+- Added default-value expansion for prompt template positional arguments, e.g. `${1:-7}` ([#5507](https://github.com/earendil-works/pi/issues/5507)).
 - Added `areExperimentalFeaturesEnabled` feature guard to allow users to opt-in to early features.
 - Added `ctx.isProjectTrusted()` for extensions to observe the effective project trust decision, including temporary trust decisions ([#5523](https://github.com/earendil-works/pi/issues/5523)).
 - Added a global `defaultProjectTrust` setting to choose whether unresolved project trust asks, always trusts, or never trusts by default.
diff --git a/packages/coding-agent/docs/prompt-templates.md b/packages/coding-agent/docs/prompt-templates.md
index 00450858..d8990bea 100644
--- a/packages/coding-agent/docs/prompt-templates.md
+++ b/packages/coding-agent/docs/prompt-templates.md
@@ -64,10 +64,11 @@ Type `/` followed by the template name in the editor. Autocomplete shows availab
 
 ## Arguments
 
-Templates support positional arguments and simple slicing:
+Templates support positional arguments, defaults, and simple slicing:
 
 - `$1`, `$2`, ... positional args
 - `$@` or `$ARGUMENTS` for all args joined
+- `${1:-default}` uses arg 1 when present/non-empty, otherwise `default`
 - `${@:N}` for args from the Nth position (1-indexed)
 - `${@:N:L}` for `L` args starting at N
 
@@ -80,6 +81,12 @@ description: Create a component
 Create a React component named $1 with features: $@
 ```
 
+Default values are useful for optional arguments:
+
+```markdown
+Summarize the current state in ${1:-7} bullet points.
+```
+
 Usage: `/component Button "onClick handler" "disabled support"`
 
 ## Loading Rules
diff --git a/packages/coding-agent/src/core/prompt-templates.ts b/packages/coding-agent/src/core/prompt-templates.ts
index 581a34eb..6b5b1e24 100644
--- a/packages/coding-agent/src/core/prompt-templates.ts
+++ b/packages/coding-agent/src/core/prompt-templates.ts
@@ -59,46 +59,45 @@ export function parseCommandArgs(argsString: string): string[] {
  * Supports:
  * - $1, $2, ... for positional args
  * - $@ and $ARGUMENTS for all args
+ * - ${N:-default} for positional arg N with default when missing/empty
  * - ${@:N} for args from Nth onwards (bash-style slicing)
  * - ${@:N:L} for L args starting from Nth
  *
- * Note: Replacement happens on the template string only. Argument values
+ * Note: Replacement happens on the template string only. Argument and default values
  * containing patterns like $1, $@, or $ARGUMENTS are NOT recursively substituted.
  */
 export function substituteArgs(content: string, args: string[]): string {
-	let result = content;
-
-	// Replace $1, $2, etc. with positional args FIRST (before wildcards)
-	// This prevents wildcard replacement values containing $<digit> patterns from being re-substituted
-	result = result.replace(/\$(\d+)/g, (_, num) => {
-		const index = parseInt(num, 10) - 1;
-		return args[index] ?? "";
-	});
-
-	// Replace ${@:start} or ${@:start:length} with sliced args (bash-style)
-	// Process BEFORE simple $@ to avoid conflicts
-	result = result.replace(/\$\{@:(\d+)(?::(\d+))?\}/g, (_, startStr, lengthStr) => {
-		let start = parseInt(startStr, 10) - 1; // Convert to 0-indexed (user provides 1-indexed)
-		// Treat 0 as 1 (bash convention: args start at 1)
-		if (start < 0) start = 0;
-
-		if (lengthStr) {
-			const length = parseInt(lengthStr, 10);
-			return args.slice(start, start + length).join(" ");
-		}
-		return args.slice(start).join(" ");
-	});
-
-	// Pre-compute all args joined (optimization)
 	const allArgs = args.join(" ");
 
-	// Replace $ARGUMENTS with all args joined (new syntax, aligns with Claude, Codex, OpenCode)
-	result = result.replace(/\$ARGUMENTS/g, allArgs);
+	return content.replace(
+		/\$\{(\d+):-([^}]*)\}|\$\{@:(\d+)(?::(\d+))?\}|\$(ARGUMENTS|@|\d+)/g,
+		(_match, defaultNum, defaultValue, sliceStart, sliceLength, simple) => {
+			if (defaultNum) {
+				const index = parseInt(defaultNum, 10) - 1;
+				const value = args[index];
+				return value ? value : defaultValue;
+			}
 
-	// Replace $@ with all args joined (existing syntax)
-	result = result.replace(/\$@/g, allArgs);
+			if (sliceStart) {
+				let start = parseInt(sliceStart, 10) - 1; // Convert to 0-indexed (user provides 1-indexed)
+				// Treat 0 as 1 (bash convention: args start at 1)
+				if (start < 0) start = 0;
 
-	return result;
+				if (sliceLength) {
+					const length = parseInt(sliceLength, 10);
+					return args.slice(start, start + length).join(" ");
+				}
+				return args.slice(start).join(" ");
+			}
+
+			if (simple === "ARGUMENTS" || simple === "@") {
+				return allArgs;
+			}
+
+			const index = parseInt(simple, 10) - 1;
+			return args[index] ?? "";
+		},
+	);
 }
 
 function loadTemplateFromFile(filePath: string, sourceInfo: SourceInfo): PromptTemplate | null {
diff --git a/packages/coding-agent/test/prompt-templates.test.ts b/packages/coding-agent/test/prompt-templates.test.ts
index 1e4bcf5c..681a7c62 100644
--- a/packages/coding-agent/test/prompt-templates.test.ts
+++ b/packages/coding-agent/test/prompt-templates.test.ts
@@ -190,6 +190,52 @@ describe("substituteArgs", () => {
 	});
 });
 
+// ============================================================================
+// substituteArgs - Positional Defaults
+// ============================================================================
+
+describe("substituteArgs - positional defaults", () => {
+	test("should use default when positional arg is missing", () => {
+		expect(substituteArgs(`List exactly \${1:-7} next steps`, [])).toBe("List exactly 7 next steps");
+	});
+
+	test("should use positional arg when present", () => {
+		expect(substituteArgs(`List exactly \${1:-7} next steps`, ["3"])).toBe("List exactly 3 next steps");
+	});
+
+	test("should use default when positional arg is empty", () => {
+		expect(substituteArgs(`Mode: \${1:-brief}`, [""])).toBe("Mode: brief");
+	});
+
+	test("should support multiple positional defaults", () => {
+		expect(substituteArgs(`\${1:-7} \${2:-brief}`, [])).toBe("7 brief");
+		expect(substituteArgs(`\${1:-7} \${2:-brief}`, ["3"])).toBe("3 brief");
+		expect(substituteArgs(`\${1:-7} \${2:-brief}`, ["3", "verbose"])).toBe("3 verbose");
+	});
+
+	test("should not recursively substitute patterns in arg values", () => {
+		expect(substituteArgs(`\${1:-7}`, ["$ARGUMENTS"])).toBe("$ARGUMENTS");
+		expect(substituteArgs(`\${1:-7}`, ["$1"])).toBe("$1");
+	});
+
+	test("should not recursively substitute patterns in default values", () => {
+		expect(substituteArgs(`\${1:-$ARGUMENTS}`, ["a", "b"])).toBe("a");
+		expect(substituteArgs(`\${3:-$ARGUMENTS}`, ["a", "b"])).toBe("$ARGUMENTS");
+	});
+
+	test("should support defaults with spaces", () => {
+		expect(substituteArgs(`\${1:-seven steps}`, [])).toBe("seven steps");
+	});
+
+	test("should support out-of-range positional defaults", () => {
+		expect(substituteArgs(`\${3:-fallback}`, ["a", "b"])).toBe("fallback");
+	});
+
+	test("should mix positional defaults with existing placeholders", () => {
+		expect(substituteArgs(`$1 \${2:-x} $ARGUMENTS`, ["a"])).toBe("a x a");
+	});
+});
+
 // ============================================================================
 // substituteArgs - Array Slicing (Bash-Style)
 // ============================================================================