Visual Studio Code 1.105, Microsoft’s latest update for its widely used editor, brings a host of AI-powered enhancements designed to streamline coding workflows. Key among these is the new AI-assisted merge conflict resolution, allowing developers to handle git conflicts more efficiently. By opening a file with merge conflict markers, users can trigger an AI agent directly from the lower right-hand corner of the editor. The agent uses the merge base and branch-specific changes to propose conflict resolutions, simplifying what was once a tedious manual process.
This release also introduces the ability to resume recent Copilot Chat sessions, ensuring that conversations with AI coding assistants can continue seamlessly without losing context. Developers can now pick up where they left off, whether they were discussing code structure, debugging issues, or planning feature implementations. The feature is aimed at improving productivity and maintaining workflow continuity during development sessions.
Another major enhancement in VS Code 1.105 is the integration of a built-in Model Context Protocol (MCP) marketplace. Through this marketplace, users can browse, install, and manage MCP servers directly from the Extensions view. The marketplace, powered by the GitHub MCP Registry, provides a unified interface for discovering and leveraging AI models and servers, making it easier for developers to extend the capabilities of VS Code without leaving the editor.
The update also addresses tool naming conflicts in AI prompts and chat modes. Tool names are now fully qualified by their source MCP server, extension, or tool set, reducing confusion between similarly named tools. Developers can continue using previous naming conventions, but a new code action helps migrate to the qualified names, ensuring smoother interoperability between built-in features and third-party extensions. VS Code 1.105 builds on the AI improvements introduced in VS Code 1.104, enhancing both the security and functionality of AI-driven development workflows.