diff --git a/python/packages/orchestrations/agent_framework_orchestrations/_group_chat.py b/python/packages/orchestrations/agent_framework_orchestrations/_group_chat.py
index eb12cfbac8a..0ac34212c1c 100644
--- a/python/packages/orchestrations/agent_framework_orchestrations/_group_chat.py
+++ b/python/packages/orchestrations/agent_framework_orchestrations/_group_chat.py
@@ -52,7 +52,7 @@
 )
 from ._feature_usage import FeatureIndex
 from ._orchestration_request_info import AgentApprovalExecutor
-from ._orchestrator_helpers import clean_conversation_for_handoff
+from ._orchestrator_helpers import clean_conversation_for_handoff, extract_markdown_fence_bodies
 from ._participant_output_config import (
     UNSET,
     _coalesce_output_from,  # pyright: ignore[reportPrivateUsage]
@@ -450,7 +450,9 @@ def _parse_agent_output(cls, agent_response: Any) -> AgentOrchestrationOutput:
 
         Preferred path is structured output (`agent_response.value`) when available.
         If only text is available, first attempt strict JSON parsing and then apply a
-        temporary concatenated-JSON fallback as a stop-gap.
+        temporary concatenated-JSON fallback as a stop-gap. Providers that ignore
+        `response_format` often wrap the JSON in a Markdown code fence, so the body of
+        the last fenced block is tried as well.
         """
         try:
             structured_value = agent_response.value
@@ -470,6 +472,11 @@ def _parse_agent_output(cls, agent_response: Any) -> AgentOrchestrationOutput:
         if response_text and response_text not in text_candidates:
             text_candidates.append(response_text)
 
+        for candidate in list(text_candidates):
+            fence_bodies = extract_markdown_fence_bodies(candidate)
+            if fence_bodies and fence_bodies[-1] not in text_candidates:
+                text_candidates.append(fence_bodies[-1])
+
         last_error: Exception | None = None
         for candidate in text_candidates:
             try:
diff --git a/python/packages/orchestrations/agent_framework_orchestrations/_magentic.py b/python/packages/orchestrations/agent_framework_orchestrations/_magentic.py
index fc828b0e095..6206022f043 100644
--- a/python/packages/orchestrations/agent_framework_orchestrations/_magentic.py
+++ b/python/packages/orchestrations/agent_framework_orchestrations/_magentic.py
@@ -4,7 +4,6 @@
 import contextlib
 import json
 import logging
-import re
 import sys
 from abc import ABC, abstractmethod
 from collections.abc import Callable, Sequence
@@ -39,6 +38,7 @@
     ParticipantRegistry,
 )
 from ._feature_usage import FeatureIndex
+from ._orchestrator_helpers import extract_markdown_fence_bodies
 from ._participant_output_config import (
     UNSET,
     _coalesce_output_from,  # pyright: ignore[reportPrivateUsage]
@@ -414,9 +414,12 @@ def _extract_json(text: str) -> dict[str, Any]:
 
     The `text` method is concatenating multiple text contents from diff msgs into a single string.
     """
-    fence = re.search(r"```(?:json)?\s*(\{[\s\S]*?\})\s*```", text, flags=re.IGNORECASE)
-    if fence:
-        candidate = fence.group(1)
+    fenced_object = next(
+        (body for body in extract_markdown_fence_bodies(text) if body.startswith("{") and body.endswith("}")),
+        None,
+    )
+    if fenced_object is not None:
+        candidate = fenced_object
     else:
         # Find first balanced JSON object
         start = text.find("{")
diff --git a/python/packages/orchestrations/agent_framework_orchestrations/_orchestrator_helpers.py b/python/packages/orchestrations/agent_framework_orchestrations/_orchestrator_helpers.py
index b4da5b7e282..776110cf178 100644
--- a/python/packages/orchestrations/agent_framework_orchestrations/_orchestrator_helpers.py
+++ b/python/packages/orchestrations/agent_framework_orchestrations/_orchestrator_helpers.py
@@ -92,3 +92,72 @@ def create_completion_message(
         contents=[message_text],
         author_name=author_name,
     )
+
+
+_FENCE_MARKER = "```"
+
+
+def _backtick_run_end(text: str, start: int) -> int:
+    """Return the index just past the run of backticks that begins at ``start``."""
+    end = start
+    while end < len(text) and text[end] == "`":
+        end += 1
+    return end
+
+
+def _fence_info_string_end(text: str, start: int) -> int:
+    """Return the index just past the info string of an opening fence such as ``json`` or ``application/json``.
+
+    An info string has to start with a letter, so a same-line body such as ``{"a": 1}`` that
+    follows the fence directly is left in place.
+    """
+    index = start
+    while index < len(text) and text[index] in " \t":
+        index += 1
+    if index >= len(text) or not text[index].isalpha():
+        return start
+    while index < len(text) and (text[index].isalnum() or text[index] in "_-+./"):
+        index += 1
+    return index
+
+
+def extract_markdown_fence_bodies(text: str) -> list[str]:
+    """Return the stripped bodies of the Markdown code fences in ``text``, in source order.
+
+    Model output that ignores ``response_format`` often wraps JSON in a fence. An opening fence
+    is a run of three or more backticks followed by an optional info string. The closing fence
+    is the next run that is at least as long and ends its line, so backticks inside a JSON
+    string value (which always end in a quote on the same line) never close the block, and an
+    outer fence can use more backticks than the ones inside it. A fence that is never closed
+    yields nothing.
+
+    The scan advances through ``text`` without backtracking, so it stays linear in the input
+    length for malformed output such as an unterminated fence followed by whitespace.
+    """
+    bodies: list[str] = []
+    length = len(text)
+    open_start = text.find(_FENCE_MARKER)
+    while open_start != -1:
+        open_end = _backtick_run_end(text, open_start)
+        closing_marker = text[open_start:open_end]
+        body_start = _fence_info_string_end(text, open_end)
+
+        search_from = body_start
+        close_start = close_end = -1
+        while (run_start := text.find(closing_marker, search_from)) != -1:
+            run_end = _backtick_run_end(text, run_start)
+            line_end = run_end
+            while line_end < length and text[line_end] in " \t\r":
+                line_end += 1
+            if line_end == length or text[line_end] == "\n":
+                close_start, close_end = run_start, run_end
+                break
+            search_from = line_end
+        if close_start == -1:
+            break
+
+        body = text[body_start:close_start].strip()
+        if body:
+            bodies.append(body)
+        open_start = text.find(_FENCE_MARKER, close_end)
+    return bodies
diff --git a/python/packages/orchestrations/tests/test_group_chat.py b/python/packages/orchestrations/tests/test_group_chat.py
index 961ba2ed2c7..eb2b7fa7369 100644
--- a/python/packages/orchestrations/tests/test_group_chat.py
+++ b/python/packages/orchestrations/tests/test_group_chat.py
@@ -1,5 +1,7 @@
 # Copyright (c) Microsoft. All rights reserved.
 
+import json
+import time
 from collections.abc import AsyncIterable, Callable, Sequence
 from typing import Any, cast
 
@@ -30,7 +32,8 @@
     MagenticProgressLedgerItem,
 )
 
-from agent_framework_orchestrations import BaseGroupChatOrchestrator
+from agent_framework_orchestrations import AgentBasedGroupChatOrchestrator, BaseGroupChatOrchestrator
+from agent_framework_orchestrations._orchestrator_helpers import extract_markdown_fence_bodies
 
 
 class StubAgent(BaseAgent):
@@ -178,6 +181,40 @@ async def run(  # type: ignore[override]  # ty: ignore[invalid-method-override]
         )
 
 
+class FencedJsonManagerAgent(Agent):
+    """Manager agent that ignores response_format and wraps its JSON in a Markdown code fence."""
+
+    def __init__(self) -> None:
+        super().__init__(client=cast(Any, MockChatClient()), name="fenced_manager", description="Fenced JSON manager")
+        self._call_count = 0
+
+    async def run(  # type: ignore[override]  # ty: ignore[invalid-method-override]
+        self,
+        messages: str | Content | Message | Sequence[str | Content | Message] | None = None,
+        *,
+        session: AgentSession | None = None,
+        **kwargs: Any,
+    ) -> AgentResponse[Any]:
+        if self._call_count == 0:
+            self._call_count += 1
+            text = (
+                "```json\n"
+                '{"terminate": false, "reason": "delegate", "next_speaker": "agent", "final_message": null}\n'
+                "```"
+            )
+        else:
+            text = (
+                "```json\n"
+                "{\n"
+                '  "terminate": true,\n'
+                '  "reason": "Task complete",\n'
+                '  "final_message": "fenced manager final"\n'
+                "}\n"
+                "```"
+            )
+        return AgentResponse(messages=[Message(role="assistant", contents=[text], author_name=self.name)])
+
+
 def make_sequence_selector() -> Callable[[GroupChatState], str]:
     state_counter = {"value": 0}
 
@@ -411,6 +448,100 @@ async def test_agent_manager_handles_concatenated_json_output() -> None:
     assert final_update.text == "concatenated manager final"
 
 
+async def test_agent_manager_handles_fenced_json_output() -> None:
+    manager = FencedJsonManagerAgent()
+    worker = StubAgent("agent", "worker response")
+
+    workflow = GroupChatBuilder(
+        participants=[worker],
+        orchestrator_agent=manager,
+    ).build()
+
+    updates: list[AgentResponseUpdate] = []
+    async for event in workflow.run("coordinate task", stream=True):
+        if event.type == "output" and isinstance(event.data, AgentResponseUpdate):
+            updates.append(event.data)
+
+    assert updates
+    final_update = updates[-1]
+    # terminate=true inside the fence must end the chat, not fall through to max_rounds.
+    assert final_update.author_name == manager.name
+    assert final_update.text == "fenced manager final"
+
+
+@pytest.mark.parametrize(
+    "text",
+    [
+        '```json\n{"terminate": true, "reason": "done", "final_message": "bye"}\n```',
+        '```\n{"terminate": true, "reason": "done", "final_message": "bye"}\n```',
+        '```JSON\r\n{"terminate": true, "reason": "done", "final_message": "bye"}\r\n```',
+        '```json {"terminate": true, "reason": "done", "final_message": "bye"} ```',
+        'Here is my decision:\n```json\n{"terminate": true, "reason": "done", "final_message": "bye"}\n```',
+        '```application/json\n{"terminate": true, "reason": "done", "final_message": "bye"}\n```',
+        '``` json\n{"terminate": true, "reason": "done", "final_message": "bye"}\n```',
+        '```{"terminate": true, "reason": "done", "final_message": "bye"}```',
+        '````json\n{"terminate": true, "reason": "done", "final_message": "bye"}\n````',
+        (
+            'Draft:\n```json\n{"terminate": false, "reason": "draft"}\n```\n'
+            'Final:\n```json\n{"terminate": true, "reason": "done", "final_message": "bye"}\n```'
+        ),
+    ],
+)
+def test_agent_orchestrator_parses_fenced_json(text: str) -> None:
+    response = AgentResponse(messages=[Message(role="assistant", contents=[text])])
+
+    output = AgentBasedGroupChatOrchestrator._parse_agent_output(response)
+
+    assert output.terminate is True
+    assert output.final_message == "bye"
+
+
+def test_agent_orchestrator_parses_fenced_json_with_nested_fence_in_final_message() -> None:
+    final_message = "Run this:\n```python\nprint('hi')\n```\nDone."
+    payload = json.dumps({"terminate": True, "reason": "done", "final_message": final_message}, indent=2)
+    response = AgentResponse(messages=[Message(role="assistant", contents=[f"```json\n{payload}\n```"])])
+
+    output = AgentBasedGroupChatOrchestrator._parse_agent_output(response)
+
+    assert output.terminate is True
+    assert output.final_message == final_message
+
+
+def test_agent_orchestrator_rejects_unterminated_fence_in_linear_time() -> None:
+    # A backtracking extractor stalled for seconds on an unterminated fence followed by
+    # whitespace, and this parser runs on the event loop.
+    text = "```json\n" + " " * 200_000 + "\n" + "\t" * 200_000
+    response = AgentResponse(messages=[Message(role="assistant", contents=[text])])
+
+    started = time.perf_counter()
+    with pytest.raises(ValueError, match="Failed to parse agent orchestration output"):
+        AgentBasedGroupChatOrchestrator._parse_agent_output(response)
+    assert time.perf_counter() - started < 1.0
+
+
+@pytest.mark.parametrize(
+    ("text", "expected"),
+    [
+        ("no fences here", []),
+        ("```json\n{}\n```", ["{}"]),
+        ("```\nfirst\n```\ntext\n```py\nsecond\n```", ["first", "second"]),
+        ("````md\nouter\n```py\ninner\n```\n````", ["outer\n```py\ninner\n```"]),
+        ('```json\n{"a": "x ``` y"}\n```', ['{"a": "x ``` y"}']),
+        ("```json\n{}", []),
+        ("```\n```", []),
+    ],
+)
+def test_extract_markdown_fence_bodies(text: str, expected: list[str]) -> None:
+    assert extract_markdown_fence_bodies(text) == expected
+
+
+def test_agent_orchestrator_rejects_fenced_non_json() -> None:
+    response = AgentResponse(messages=[Message(role="assistant", contents=["```json\nnot json\n```"])])
+
+    with pytest.raises(ValueError, match="Failed to parse agent orchestration output"):
+        AgentBasedGroupChatOrchestrator._parse_agent_output(response)
+
+
 # Comprehensive tests for group chat functionality
 
 
diff --git a/python/packages/orchestrations/tests/test_magentic.py b/python/packages/orchestrations/tests/test_magentic.py
index e9f8df1fea1..38a3dcc718c 100644
--- a/python/packages/orchestrations/tests/test_magentic.py
+++ b/python/packages/orchestrations/tests/test_magentic.py
@@ -1440,4 +1440,20 @@ def test_standard_manager_checkpoint_restore_empty_state():
     assert mgr.task_ledger is None
 
 
+@pytest.mark.parametrize(
+    "text",
+    [
+        'Ledger:\n```json\n{"is_request_satisfied": true}\n```',
+        '```application/json\n{"is_request_satisfied": true}\n```',
+        '```py\nprint(1)\n```\n```json\n{"is_request_satisfied": true}\n```',
+        '```json\n{"is_request_satisfied": true, "note": "use ```py``` here"}\n```',
+        'No fence: {"is_request_satisfied": true} trailing',
+    ],
+)
+def test_extract_json_reads_first_fenced_object(text: str) -> None:
+    from agent_framework_orchestrations._magentic import _extract_json  # type: ignore
+
+    assert _extract_json(text)["is_request_satisfied"] is True
+
+
 # endregion