VS Code 1.105: AI Merge Help, MCP Marketplace & macOS Authentication

VS Code 1.105 introduces AI merge conflict resolution, MCP marketplace, and macOS authentication, enhancing developer tools with new AI models and features for improved coding efficiency.

Visual Studio Code 1.105 interface showing AI merge conflict resolution and MCP marketplace features

Tech News2 min read

Introduction

Microsoft's September 2025 Visual Studio Code 1.105 release brings transformative AI-powered development features. This update enhances Git workflows with intelligent merge conflict resolution while expanding the ecosystem through MCP server integration and improved macOS authentication.

AI-Powered Development Enhancements

VS Code now integrates AI directly into Git merge workflows, automatically proposing conflict resolutions that developers can modify before committing. The update adds OpenAI's GPT-5-Codex and Anthropic's Claude Sonnet 4.5 models for chat-based coding assistance. An experimental chain of thought feature reveals the AI's reasoning process step by step, providing transparency in code generation and debugging tasks.

MCP Marketplace Integration

The new Multi-Component Protocol marketplace (in preview) simplifies discovering and installing MCP servers. Developers can browse available servers through the Extensions view using the @mcp filter or search functionality. MCP servers now launch automatically when chat sessions begin, eliminating manual activation prompts and improving response times for AI-assisted programming tasks.

Authentication and Accessibility

macOS users benefit from native authentication via Microsoft's MSAL library with GitHub PKCE support, streamlining the sign-in process. Accessibility improvements include verbose chat updates and enhanced screen reader compatibility. Nested AGENTS.md files now define agent behavior per subfolder, while improved chat session management allows reviewing past conversations and receiving OS notifications for completed agent actions.

Pros and Cons

Advantages

AI-powered Git merge conflict resolution saves time
Expanded model support with GPT-5-Codex and Claude 4.5
MCP marketplace simplifies server discovery and installation
Automatic MCP server startup improves performance
Native macOS authentication enhances security
Accessibility improvements benefit all users
Chain of thought provides AI reasoning transparency

Disadvantages

MCP marketplace remains in preview stage
AI features require stable internet connection
Some advanced features may have learning curve
Potential performance impact on older hardware

Conclusion

Visual Studio Code 1.105 represents a significant step forward in AI-assisted development, particularly for version control workflows and ecosystem integration. The combination of intelligent merge conflict resolution, expanded MCP server availability, and improved authentication creates a more streamlined development experience. These enhancements position VS Code as a leading choice among modern IDEs and text editors for developers seeking AI-powered productivity tools.

Frequently Asked Questions

What AI models are new in VS Code 1.105?

VS Code 1.105 adds OpenAI's GPT-5-Codex and Anthropic's Claude Sonnet 4.5 models for chat-based coding assistance, expanding AI capabilities beyond previous versions.

How does AI merge conflict resolution work?

The AI analyzes Git merge conflicts and automatically proposes resolution solutions that developers can review, modify, and accept directly within the editor interface.

What is the MCP marketplace in VS Code?

The MCP marketplace is a preview feature that simplifies discovering and installing Multi-Component Protocol servers for AI-assisted programming, accessible via the Extensions view in VS Code.

How does macOS authentication improve in VS Code 1.105?

macOS authentication is enhanced with native support via Microsoft's MSAL library and GitHub PKCE, making the sign-in process smoother and more secure for developers.

What accessibility features are enhanced in this update?

Accessibility improvements include verbose chat updates, better screen reader compatibility, and enhanced chat session management for reviewing past conversations and notifications.