diff --git a/src/commands/artifact-workflow.ts b/src/commands/artifact-workflow.ts
index a58c2c00bd..a5dfe8a830 100644
--- a/src/commands/artifact-workflow.ts
+++ b/src/commands/artifact-workflow.ts
@@ -313,6 +313,8 @@ function printInstructionsText(instructions: ArtifactInstructions, isBlocked: bo
     outputPath,
     description,
     instruction,
+    context,
+    rules,
     template,
     dependencies,
     unlocks,
@@ -339,9 +341,29 @@ function printInstructionsText(instructions: ArtifactInstructions, isBlocked: bo
   console.log('</task>');
   console.log();
 
-  // Context (dependencies)
+  // Project context (AI constraint - do not include in output)
+  if (context) {
+    console.log('<project_context>');
+    console.log('<!-- This is background information for you. Do NOT include this in your output. -->');
+    console.log(context);
+    console.log('</project_context>');
+    console.log();
+  }
+
+  // Rules (AI constraint - do not include in output)
+  if (rules && rules.length > 0) {
+    console.log('<rules>');
+    console.log('<!-- These are constraints for you to follow. Do NOT include this in your output. -->');
+    for (const rule of rules) {
+      console.log(`- ${rule}`);
+    }
+    console.log('</rules>');
+    console.log();
+  }
+
+  // Dependencies (files to read for context)
   if (dependencies.length > 0) {
-    console.log('<context>');
+    console.log('<dependencies>');
     console.log('Read these files for context before creating this artifact:');
     console.log();
     for (const dep of dependencies) {
@@ -352,7 +374,7 @@ function printInstructionsText(instructions: ArtifactInstructions, isBlocked: bo
       console.log(`  <description>${dep.description}</description>`);
       console.log('</dependency>');
     }
-    console.log('</context>');
+    console.log('</dependencies>');
     console.log();
   }
 
@@ -372,6 +394,7 @@ function printInstructionsText(instructions: ArtifactInstructions, isBlocked: bo
 
   // Template
   console.log('<template>');
+  console.log('<!-- Use this as the structure for your output file. Fill in the sections. -->');
   console.log(template.trim());
   console.log('</template>');
   console.log();
diff --git a/src/core/artifact-graph/instruction-loader.ts b/src/core/artifact-graph/instruction-loader.ts
index 195f403a61..e5852b43dd 100644
--- a/src/core/artifact-graph/instruction-loader.ts
+++ b/src/core/artifact-graph/instruction-loader.ts
@@ -59,7 +59,11 @@ export interface ArtifactInstructions {
   description: string;
   /** Guidance on how to create this artifact (from schema instruction field) */
   instruction: string | undefined;
-  /** Template content (structure to follow) */
+  /** Project context from config (constraints/background for AI, not to be included in output) */
+  context: string | undefined;
+  /** Artifact-specific rules from config (constraints for AI, not to be included in output) */
+  rules: string[] | undefined;
+  /** Template content (structure to follow - this IS the output format) */
   template: string;
   /** Dependencies with completion status and paths */
   dependencies: DependencyInfo[];
@@ -218,14 +222,11 @@ export function generateInstructions(
   const dependencies = getDependencyInfo(artifact, context.graph, context.completed);
   const unlocks = getUnlockedArtifacts(context.graph, artifactId);
 
-  // Build enriched template with project config injections
-  let enrichedTemplate = '';
-  let projectConfig = null;
-
   // Use projectRoot from context if not explicitly provided
   const effectiveProjectRoot = projectRoot ?? context.projectRoot;
 
-  // Try to read project config
+  // Try to read project config for context and rules
+  let projectConfig = null;
   if (effectiveProjectRoot) {
     try {
       projectConfig = readProjectConfig(effectiveProjectRoot);
@@ -252,23 +253,10 @@ export function generateInstructions(
     }
   }
 
-  // 1. Add context (all artifacts)
-  if (projectConfig?.context) {
-    enrichedTemplate += `<context>\n${projectConfig.context}\n</context>\n\n`;
-  }
-
-  // 2. Add rules (only for matching artifact)
+  // Extract context and rules as separate fields (not prepended to template)
+  const configContext = projectConfig?.context?.trim() || undefined;
   const rulesForArtifact = projectConfig?.rules?.[artifactId];
-  if (rulesForArtifact && rulesForArtifact.length > 0) {
-    enrichedTemplate += `<rules>\n`;
-    for (const rule of rulesForArtifact) {
-      enrichedTemplate += `- ${rule}\n`;
-    }
-    enrichedTemplate += `</rules>\n\n`;
-  }
-
-  // 3. Add original template (without wrapper - CLI handles XML structure)
-  enrichedTemplate += templateContent;
+  const configRules = rulesForArtifact && rulesForArtifact.length > 0 ? rulesForArtifact : undefined;
 
   return {
     changeName: context.changeName,
@@ -278,7 +266,9 @@ export function generateInstructions(
     outputPath: artifact.generates,
     description: artifact.description,
     instruction: artifact.instruction,
-    template: enrichedTemplate,
+    context: configContext,
+    rules: configRules,
+    template: templateContent,
     dependencies,
     unlocks,
   };
diff --git a/src/core/templates/skill-templates.ts b/src/core/templates/skill-templates.ts
index 8e705f1c8c..bea1abcb99 100644
--- a/src/core/templates/skill-templates.ts
+++ b/src/core/templates/skill-templates.ts
@@ -434,10 +434,17 @@ export function getContinueChangeSkillTemplate(): SkillTemplate {
      \`\`\`bash
      openspec instructions <artifact-id> --change "<name>" --json
      \`\`\`
-   - Parse the JSON to get template, dependencies, and what it unlocks
-   - **Create the artifact file** using the template as a starting point:
+   - Parse the JSON. The key fields are:
+     - \`context\`: Project background (constraints for you - do NOT include in output)
+     - \`rules\`: Artifact-specific rules (constraints for you - do NOT include in output)
+     - \`template\`: The structure to use for your output file
+     - \`instruction\`: Schema-specific guidance
+     - \`outputPath\`: Where to write the artifact
+     - \`dependencies\`: Completed artifacts to read for context
+   - **Create the artifact file**:
      - Read any completed dependency files for context
-     - Fill in the template based on context and user's goals
+     - Use \`template\` as the structure - fill in its sections
+     - Apply \`context\` and \`rules\` as constraints when writing - but do NOT copy them into the file
      - Write to the output path specified in instructions
    - Show what was created and what's now unlocked
    - STOP after creating ONE artifact
@@ -489,7 +496,10 @@ For other schemas, follow the \`instruction\` field from the CLI output.
 - Never skip artifacts or create out of order
 - If context is unclear, ask the user before creating
 - Verify the artifact file exists after writing before marking progress
-- Use the schema's artifact sequence, don't assume specific artifact names`
+- Use the schema's artifact sequence, don't assume specific artifact names
+- **IMPORTANT**: \`context\` and \`rules\` are constraints for YOU, not content for the file
+  - Do NOT copy \`<context>\`, \`<rules>\`, \`<project_context>\` blocks into the artifact
+  - These guide what you write, but should never appear in the output`
   };
 }
 
@@ -699,12 +709,15 @@ export function getFfChangeSkillTemplate(): SkillTemplate {
         openspec instructions <artifact-id> --change "<name>" --json
         \`\`\`
       - The instructions JSON includes:
-        - \`template\`: The template content to use
+        - \`context\`: Project background (constraints for you - do NOT include in output)
+        - \`rules\`: Artifact-specific rules (constraints for you - do NOT include in output)
+        - \`template\`: The structure to use for your output file
         - \`instruction\`: Schema-specific guidance for this artifact type
         - \`outputPath\`: Where to write the artifact
         - \`dependencies\`: Completed artifacts to read for context
       - Read any completed dependency files for context
-      - Create the artifact file following the schema's \`instruction\`
+      - Create the artifact file using \`template\` as the structure
+      - Apply \`context\` and \`rules\` as constraints - but do NOT copy them into the file
       - Show brief progress: "✓ Created <artifact-id>"
 
    b. **Continue until all \`applyRequires\` artifacts are complete**
@@ -734,7 +747,10 @@ After completing all artifacts, summarize:
 - Follow the \`instruction\` field from \`openspec instructions\` for each artifact type
 - The schema defines what each artifact should contain - follow it
 - Read dependency artifacts for context before creating new ones
-- Use the \`template\` as a starting point, filling in based on context
+- Use \`template\` as the structure for your output file - fill in its sections
+- **IMPORTANT**: \`context\` and \`rules\` are constraints for YOU, not content for the file
+  - Do NOT copy \`<context>\`, \`<rules>\`, \`<project_context>\` blocks into the artifact
+  - These guide what you write, but should never appear in the output
 
 **Guardrails**
 - Create ALL artifacts needed for implementation (as defined by schema's \`apply.requires\`)
@@ -1206,10 +1222,17 @@ export function getOpsxContinueCommandTemplate(): CommandTemplate {
      \`\`\`bash
      openspec instructions <artifact-id> --change "<name>" --json
      \`\`\`
-   - Parse the JSON to get template, dependencies, and what it unlocks
-   - **Create the artifact file** using the template as a starting point:
+   - Parse the JSON. The key fields are:
+     - \`context\`: Project background (constraints for you - do NOT include in output)
+     - \`rules\`: Artifact-specific rules (constraints for you - do NOT include in output)
+     - \`template\`: The structure to use for your output file
+     - \`instruction\`: Schema-specific guidance
+     - \`outputPath\`: Where to write the artifact
+     - \`dependencies\`: Completed artifacts to read for context
+   - **Create the artifact file**:
      - Read any completed dependency files for context
-     - Fill in the template based on context and user's goals
+     - Use \`template\` as the structure - fill in its sections
+     - Apply \`context\` and \`rules\` as constraints when writing - but do NOT copy them into the file
      - Write to the output path specified in instructions
    - Show what was created and what's now unlocked
    - STOP after creating ONE artifact
@@ -1261,7 +1284,10 @@ For other schemas, follow the \`instruction\` field from the CLI output.
 - Never skip artifacts or create out of order
 - If context is unclear, ask the user before creating
 - Verify the artifact file exists after writing before marking progress
-- Use the schema's artifact sequence, don't assume specific artifact names`
+- Use the schema's artifact sequence, don't assume specific artifact names
+- **IMPORTANT**: \`context\` and \`rules\` are constraints for YOU, not content for the file
+  - Do NOT copy \`<context>\`, \`<rules>\`, \`<project_context>\` blocks into the artifact
+  - These guide what you write, but should never appear in the output`
   };
 }
 
@@ -1474,12 +1500,15 @@ export function getOpsxFfCommandTemplate(): CommandTemplate {
         openspec instructions <artifact-id> --change "<name>" --json
         \`\`\`
       - The instructions JSON includes:
-        - \`template\`: The template content to use
+        - \`context\`: Project background (constraints for you - do NOT include in output)
+        - \`rules\`: Artifact-specific rules (constraints for you - do NOT include in output)
+        - \`template\`: The structure to use for your output file
         - \`instruction\`: Schema-specific guidance for this artifact type
         - \`outputPath\`: Where to write the artifact
         - \`dependencies\`: Completed artifacts to read for context
       - Read any completed dependency files for context
-      - Create the artifact file following the schema's \`instruction\`
+      - Create the artifact file using \`template\` as the structure
+      - Apply \`context\` and \`rules\` as constraints - but do NOT copy them into the file
       - Show brief progress: "✓ Created <artifact-id>"
 
    b. **Continue until all \`applyRequires\` artifacts are complete**
diff --git a/test/core/artifact-graph/instruction-loader.test.ts b/test/core/artifact-graph/instruction-loader.test.ts
index 0b231e3c64..bc9a67cc37 100644
--- a/test/core/artifact-graph/instruction-loader.test.ts
+++ b/test/core/artifact-graph/instruction-loader.test.ts
@@ -198,7 +198,7 @@ describe('instruction-loader', () => {
     });
 
     describe('project config integration', () => {
-      it('should inject context for all artifacts', () => {
+      it('should return context as separate field for all artifacts', () => {
         // Create project config
         const configDir = path.join(tempDir, 'openspec');
         fs.mkdirSync(configDir, { recursive: true });
@@ -214,19 +214,19 @@ context: |
         const context = loadChangeContext(tempDir, 'my-change');
         const instructions = generateInstructions(context, 'proposal', tempDir);
 
-        expect(instructions.template).toContain('<context>');
-        expect(instructions.template).toContain('Tech stack: TypeScript, React');
-        expect(instructions.template).toContain('API style: RESTful');
-        expect(instructions.template).toContain('</context>');
+        // Context should be in separate field, not in template
+        expect(instructions.context).toContain('Tech stack: TypeScript, React');
+        expect(instructions.context).toContain('API style: RESTful');
+        expect(instructions.template).not.toContain('Tech stack');
+        expect(instructions.template).toContain('## Why'); // Actual template content
       });
 
-      it('should not inject context when config is absent', () => {
+      it('should return undefined context when config is absent', () => {
         const context = loadChangeContext(tempDir, 'my-change');
         const instructions = generateInstructions(context, 'proposal', tempDir);
 
-        expect(instructions.template).not.toContain('<context>');
-        // Template field should not include <template> wrapper (CLI handles that)
-        expect(instructions.template).not.toContain('<template>');
+        expect(instructions.context).toBeUndefined();
+        expect(instructions.rules).toBeUndefined();
         expect(instructions.template).toContain('## Why'); // Actual template content
       });
 
@@ -247,7 +247,7 @@ context: |
         const context = loadChangeContext(tempDir, 'my-change');
         const instructions = generateInstructions(context, 'proposal', tempDir);
 
-        expect(instructions.template).toContain('Line 1\nLine 2\nLine 3');
+        expect(instructions.context).toContain('Line 1\nLine 2\nLine 3');
       });
 
       it('should preserve special characters in context', () => {
@@ -265,10 +265,10 @@ context: |
         const context = loadChangeContext(tempDir, 'my-change');
         const instructions = generateInstructions(context, 'proposal', tempDir);
 
-        expect(instructions.template).toContain('Special: < > & " \' @ # $ % [ ] { }');
+        expect(instructions.context).toContain('Special: < > & " \' @ # $ % [ ] { }');
       });
 
-      it('should inject rules only for matching artifact', () => {
+      it('should return rules only for matching artifact', () => {
         // Create project config with rules
         const configDir = path.join(tempDir, 'openspec');
         fs.mkdirSync(configDir, { recursive: true });
@@ -288,21 +288,16 @@ rules:
 
         // Check proposal artifact has its rules
         const proposalInstructions = generateInstructions(context, 'proposal', tempDir);
-        expect(proposalInstructions.template).toContain('<rules>');
-        expect(proposalInstructions.template).toContain('- Include rollback plan');
-        expect(proposalInstructions.template).toContain('- Identify affected teams');
-        expect(proposalInstructions.template).not.toContain('Given/When/Then');
-        expect(proposalInstructions.template).toContain('</rules>');
+        expect(proposalInstructions.rules).toEqual(['Include rollback plan', 'Identify affected teams']);
+        expect(proposalInstructions.template).not.toContain('rollback plan');
 
         // Check specs artifact has its rules
         const specsInstructions = generateInstructions(context, 'specs', tempDir);
-        expect(specsInstructions.template).toContain('<rules>');
-        expect(specsInstructions.template).toContain('- Use Given/When/Then format');
-        expect(specsInstructions.template).not.toContain('rollback plan');
-        expect(specsInstructions.template).toContain('</rules>');
+        expect(specsInstructions.rules).toEqual(['Use Given/When/Then format']);
+        expect(specsInstructions.template).not.toContain('Given/When/Then');
       });
 
-      it('should not inject rules for non-matching artifact', () => {
+      it('should return undefined rules for non-matching artifact', () => {
         // Create project config with rules only for proposal
         const configDir = path.join(tempDir, 'openspec');
         fs.mkdirSync(configDir, { recursive: true });
@@ -317,12 +312,12 @@ rules:
 
         const context = loadChangeContext(tempDir, 'my-change');
 
-        // Check design artifact (no rules configured) has no rules section
+        // Check design artifact (no rules configured) has undefined rules
         const designInstructions = generateInstructions(context, 'design', tempDir);
-        expect(designInstructions.template).not.toContain('<rules>');
+        expect(designInstructions.rules).toBeUndefined();
       });
 
-      it('should not inject rules when empty array', () => {
+      it('should return undefined rules when empty array', () => {
         // Create project config with empty rules array
         const configDir = path.join(tempDir, 'openspec');
         fs.mkdirSync(configDir, { recursive: true });
@@ -338,11 +333,11 @@ rules:
         const context = loadChangeContext(tempDir, 'my-change');
         const instructions = generateInstructions(context, 'proposal', tempDir);
 
-        expect(instructions.template).toContain('<context>');
-        expect(instructions.template).not.toContain('<rules>');
+        expect(instructions.context).toBe('Some context');
+        expect(instructions.rules).toBeUndefined();
       });
 
-      it('should maintain correct order: context -> rules -> template', () => {
+      it('should keep context, rules, and template as separate fields', () => {
         // Create project config with both context and rules
         const configDir = path.join(tempDir, 'openspec');
         fs.mkdirSync(configDir, { recursive: true });
@@ -359,17 +354,13 @@ rules:
         const context = loadChangeContext(tempDir, 'my-change');
         const instructions = generateInstructions(context, 'proposal', tempDir);
 
-        const contextIdx = instructions.template.indexOf('<context>');
-        const rulesIdx = instructions.template.indexOf('<rules>');
-        const templateContentIdx = instructions.template.indexOf('## Why');
-
-        expect(contextIdx).toBeGreaterThan(-1);
-        expect(rulesIdx).toBeGreaterThan(-1);
-        expect(templateContentIdx).toBeGreaterThan(-1);
-        expect(contextIdx).toBeLessThan(rulesIdx);
-        expect(rulesIdx).toBeLessThan(templateContentIdx);
-        // Template field should not include <template> wrapper (CLI handles that)
-        expect(instructions.template).not.toContain('<template>');
+        // All three should be separate
+        expect(instructions.context).toBe('Project context here');
+        expect(instructions.rules).toEqual(['Rule 1']);
+        expect(instructions.template).toContain('## Why');
+        // Template should not contain context or rules
+        expect(instructions.template).not.toContain('Project context here');
+        expect(instructions.template).not.toContain('Rule 1');
       });
 
       it('should handle context without rules', () => {
@@ -386,11 +377,9 @@ context: Project context only
         const context = loadChangeContext(tempDir, 'my-change');
         const instructions = generateInstructions(context, 'proposal', tempDir);
 
-        expect(instructions.template).toContain('<context>');
-        expect(instructions.template).not.toContain('<rules>');
-        // Template field should not include <template> wrapper (CLI handles that)
-        expect(instructions.template).not.toContain('<template>');
-        expect(instructions.template).toContain('## Why'); // Actual template content
+        expect(instructions.context).toBe('Project context only');
+        expect(instructions.rules).toBeUndefined();
+        expect(instructions.template).toContain('## Why');
       });
 
       it('should handle rules without context', () => {
@@ -409,21 +398,18 @@ rules:
         const context = loadChangeContext(tempDir, 'my-change');
         const instructions = generateInstructions(context, 'proposal', tempDir);
 
-        expect(instructions.template).not.toContain('<context>');
-        expect(instructions.template).toContain('<rules>');
-        // Template field should not include <template> wrapper (CLI handles that)
-        expect(instructions.template).not.toContain('<template>');
-        expect(instructions.template).toContain('## Why'); // Actual template content
+        expect(instructions.context).toBeUndefined();
+        expect(instructions.rules).toEqual(['Rule only']);
+        expect(instructions.template).toContain('## Why');
       });
 
       it('should work without project root parameter', () => {
         const context = loadChangeContext(tempDir, 'my-change');
         const instructions = generateInstructions(context, 'proposal'); // No projectRoot
 
-        expect(instructions.template).not.toContain('<context>');
-        // Template field should not include <template> wrapper (CLI handles that)
-        expect(instructions.template).not.toContain('<template>');
-        expect(instructions.template).toContain('## Why'); // Actual template content
+        expect(instructions.context).toBeUndefined();
+        expect(instructions.rules).toBeUndefined();
+        expect(instructions.template).toContain('## Why');
       });
     });