Visual Studio Code 1.105 adds AI merge help, MCP marketplace, and macOS sign-in

The September 2025 update of Visual Studio Code version 1.105 introduces major improvements to chat, MCP integration, AI-assisted coding, authentication, and accessibility. AI can now resolve Git merge conflicts directly in the editor, proposing solutions that users can adjust as needed. Two new AI models, OpenAI’s GPT-5-Codex and Anthropic’s Claude Sonnet 4.5, are available for chat-based coding, with an experimental chain of thought feature showing the model’s reasoning step by step.

The new MCP marketplace (preview) lets users browse and install Multi-Component Protocol (MCP) servers from the Extensions view or by using the @mcp filter. MCP servers now start automatically when a chat session begins, removing activation prompts and improving performance.

Other updates include native macOS authentication via Microsoft’s MSAL library with GitHub PKCE support, accessibility enhancements such as verbose chat updates and improved screen reader integration, and support for nested AGENTS.md files to define agent behavior per subfolder. Chat sessions are now easier to manage, allowing users to review past conversations, undo or keep edits during agent loops, and receive OS notifications for completed tasks or agent actions.