diff --git a/sdk/ai/azure-ai-agents/CHANGELOG.md b/sdk/ai/azure-ai-agents/CHANGELOG.md
index a21b302c6a4..4badf3fe96a 100644
--- a/sdk/ai/azure-ai-agents/CHANGELOG.md
+++ b/sdk/ai/azure-ai-agents/CHANGELOG.md
@@ -1,6 +1,15 @@
-
 # Release History
 
+## 1.2.0b3 (Unreleased)
+
+### Features Added
+
+### Breaking Changes
+
+### Bugs Fixed
+
+### Other Changes
+
 ## 1.2.0b2 (2025-08-12)
 
 ### Features Added
diff --git a/sdk/ai/azure-ai-agents/azure/ai/agents/_version.py b/sdk/ai/azure-ai-agents/azure/ai/agents/_version.py
index a8cca866f40..c04584b58b2 100644
--- a/sdk/ai/azure-ai-agents/azure/ai/agents/_version.py
+++ b/sdk/ai/azure-ai-agents/azure/ai/agents/_version.py
@@ -6,4 +6,4 @@
 # Changes may cause incorrect behavior and will be lost if the code is regenerated.
 # --------------------------------------------------------------------------
 
-VERSION = "1.2.0b2"
+VERSION = "1.2.0b3"