diff --git a/plugin/skills/azure-prepare/SKILL.md b/plugin/skills/azure-prepare/SKILL.md
index c30ea173..559ceaf3 100644
--- a/plugin/skills/azure-prepare/SKILL.md
+++ b/plugin/skills/azure-prepare/SKILL.md
@@ -33,6 +33,7 @@ Activate this skill when user wants to:
 5. **Validate before deploy** — Invoke azure-validate before azure-deploy
 6. **Confirm Azure context** — Use `ask_user` for subscription and location per [Azure Context](references/azure-context.md)
 7. ⛔ **Destructive actions require `ask_user`** — [Global Rules](references/global-rules.md)
+8. ⛔ **NEVER delete user project directories** — When adding features to an existing project, MODIFY existing files. Templates and `azd init` are for NEW projects only. NEVER run `rm -rf` on user workspace directories.
 
 ---
 
diff --git a/plugin/skills/azure-prepare/references/global-rules.md b/plugin/skills/azure-prepare/references/global-rules.md
index 9cb6c200..3b070b28 100644
--- a/plugin/skills/azure-prepare/references/global-rules.md
+++ b/plugin/skills/azure-prepare/references/global-rules.md
@@ -30,6 +30,8 @@ ask_user(
 - Do NOT assume user wants to delete/overwrite
 - Do NOT proceed based on "the user asked to deploy" (deploy ≠ delete old)
 - Do NOT batch destructive actions without individual confirmation
+- ⛔ Do NOT delete user project directories (`rm -rf <project>`) even when adding features, converting, or migrating — use MODIFY mode to edit existing files instead
+- ⛔ `azd init` and template commands are for NEW projects only — NEVER run on an existing workspace without explicit user confirmation
 
 ---
 
diff --git a/plugin/skills/azure-prepare/references/services/functions/templates/mcp.md b/plugin/skills/azure-prepare/references/services/functions/templates/mcp.md
index 669f2d6b..5e3036d0 100644
--- a/plugin/skills/azure-prepare/references/services/functions/templates/mcp.md
+++ b/plugin/skills/azure-prepare/references/services/functions/templates/mcp.md
@@ -4,7 +4,19 @@ Templates for hosting MCP (Model Context Protocol) servers on Azure Functions.
 
 **Indicators**: `mcp_tool_trigger`, `MCPTrigger`, `@app.mcp_tool`, project name contains "mcp"
 
-## Standard MCP Templates
+> ⚠️ **Warning: Templates are for NEW projects only.**
+> If the user has an existing Azure Functions project, do NOT use `azd init` — this will overwrite their workspace.
+> For existing projects, use the **recipe approach** instead: [recipes/mcp/](recipes/mcp/README.md).
+> ⛔ **NEVER run `rm -rf` or delete the user's project directory.** Destructive actions require `ask_user` confirmation — see [global-rules.md](../../../global-rules.md).
+
+## When to Use Templates vs. Recipes
+
+| Scenario | Action |
+|----------|--------|
+| **New project** — no existing code | Use `azd init -t` template below |
+| **Existing project** — add MCP support | Use [recipes/mcp/](recipes/mcp/README.md) — modify existing files, do NOT reinitialize |
+
+## Standard MCP Templates (NEW projects only)
 
 | Language | Template |
 |----------|----------|
@@ -13,13 +25,13 @@ Templates for hosting MCP (Model Context Protocol) servers on Azure Functions.
 | C# (.NET) | `azd init -t remote-mcp-functions-dotnet` |
 | Java | `azd init -t remote-mcp-functions-java` |
 
-## MCP + API Management (OAuth)
+## MCP + API Management (OAuth) (NEW projects only)
 
 | Language | Template |
 |----------|----------|
 | Python | `azd init -t remote-mcp-apim-functions-python` |
 
-## Self-Hosted MCP SDK
+## Self-Hosted MCP SDK (NEW projects only)
 
 | Language | Template |
 |----------|----------|
diff --git a/plugin/skills/azure-prepare/references/services/functions/templates/recipes/blob-eventgrid/README.md b/plugin/skills/azure-prepare/references/services/functions/templates/recipes/blob-eventgrid/README.md
index f28d3353..61e5dde8 100644
--- a/plugin/skills/azure-prepare/references/services/functions/templates/recipes/blob-eventgrid/README.md
+++ b/plugin/skills/azure-prepare/references/services/functions/templates/recipes/blob-eventgrid/README.md
@@ -15,7 +15,9 @@ This recipe creates functions that respond to blob creation/deletion events via
 | **Auth** | Managed Identity (UAMI) |
 | **IaC** | ✅ Full template available |
 
-## AZD Templates (Recommended)
+## AZD Templates (NEW projects only)
+
+> ⚠️ **Warning:** Use these templates only for **new projects**. If the user has an existing Azure Functions project, use the **Composition Steps** below to modify existing files instead.
 
 Use these templates directly instead of composing from HTTP base:
 
diff --git a/plugin/skills/azure-prepare/references/services/functions/templates/recipes/sql/README.md b/plugin/skills/azure-prepare/references/services/functions/templates/recipes/sql/README.md
index f24f3ab3..d1318b3b 100644
--- a/plugin/skills/azure-prepare/references/services/functions/templates/recipes/sql/README.md
+++ b/plugin/skills/azure-prepare/references/services/functions/templates/recipes/sql/README.md
@@ -15,7 +15,9 @@ This recipe creates functions that respond to row changes in Azure SQL Database
 | **Auth** | Entra ID (Managed Identity) |
 | **IaC** | ✅ Full template available |
 
-## AZD Templates (Recommended)
+## AZD Templates (NEW projects only)
+
+> ⚠️ **Warning:** Use these templates only for **new projects**. If the user has an existing Azure Functions project, use the **Composition Steps** below to modify existing files instead.
 
 Use these templates directly instead of composing from HTTP base: