Agent Fine-tuning through Distillation for Domain-specific LLMs in Microdomains

Abstract: Agentic LLMs have become prominent for autonomously interacting with external environments and performing multi-step reasoning tasks. Most approaches leverage these capabilities via in-context learning with few-shot prompts, but this often results in lengthy inputs and higher computational costs. Agent fine-tuning offers an alternative by enabling LLMs to internalize procedural reasoning and domain-specific knowledge through training on relevant data and demonstration trajectories. While prior studies have focused on general domains, their effectiveness in specialized technical microdomains remains unclear. This paper explores agent fine-tuning for domain adaptation within Hitachi's JP1 middleware, a microdomain for specialized IT operations. We fine-tuned LLMs using JP1-specific datasets derived from domain manuals and distilled reasoning trajectories generated by LLMs themselves, enhancing decision making accuracy and search efficiency. During inference, we used an agentic prompt with retrieval-augmented generation and introduced a context-answer extractor to improve information relevance. On JP1 certification exam questions, our method achieved a 14% performance improvement over the base model, demonstrating the potential of agent fine-tuning for domain-specific reasoning in complex microdomains.