diff --git a/packages/bolt/app/components/chat/BaseChat.tsx b/packages/bolt/app/components/chat/BaseChat.tsx
index 2177aa7..9bad347 100644
--- a/packages/bolt/app/components/chat/BaseChat.tsx
+++ b/packages/bolt/app/components/chat/BaseChat.tsx
@@ -167,7 +167,7 @@ export const BaseChat = React.forwardRef<HTMLDivElement, BaseChatProps>(
               </div>
             </div>
           </div>
-          <ClientOnly>{() => <Workbench chatStarted={chatStarted} />}</ClientOnly>
+          <ClientOnly>{() => <Workbench chatStarted={chatStarted} isStreaming={isStreaming} />}</ClientOnly>
         </div>
       </div>
     );
diff --git a/packages/bolt/app/components/editor/codemirror/CodeMirrorEditor.tsx b/packages/bolt/app/components/editor/codemirror/CodeMirrorEditor.tsx
index 6e61306..d94689a 100644
--- a/packages/bolt/app/components/editor/codemirror/CodeMirrorEditor.tsx
+++ b/packages/bolt/app/components/editor/codemirror/CodeMirrorEditor.tsx
@@ -13,11 +13,11 @@ import {
   lineNumbers,
   scrollPastEnd,
 } from '@codemirror/view';
-import { useEffect, useRef, useState, type MutableRefObject } from 'react';
+import { memo, useEffect, useRef, useState, type MutableRefObject } from 'react';
 import type { Theme } from '../../../types/theme';
 import { classNames } from '../../../utils/classNames';
 import { debounce } from '../../../utils/debounce';
-import { createScopedLogger } from '../../../utils/logger';
+import { createScopedLogger, renderLogger } from '../../../utils/logger';
 import { BinaryContent } from './BinaryContent';
 import { getTheme, reconfigureTheme } from './cm-theme';
 import { indentKeyBinding } from './indent';
@@ -27,7 +27,8 @@ const logger = createScopedLogger('CodeMirrorEditor');
 
 export interface EditorDocument {
   value: string | Uint8Array;
-  loading: boolean;
+  previousValue?: string | Uint8Array;
+  commitPending: boolean;
   filePath: string;
   scroll?: ScrollPosition;
 }
@@ -58,6 +59,7 @@ interface Props {
   theme: Theme;
   id?: unknown;
   doc?: EditorDocument;
+  editable?: boolean;
   debounceChange?: number;
   debounceScroll?: number;
   autoFocusOnDocumentChange?: boolean;
@@ -69,138 +71,154 @@ interface Props {
 
 type EditorStates = Map<string, EditorState>;
 
-export function CodeMirrorEditor({
-  id,
-  doc,
-  debounceScroll = 100,
-  debounceChange = 150,
-  autoFocusOnDocumentChange = false,
-  onScroll,
-  onChange,
-  theme,
-  settings,
-  className = '',
-}: Props) {
-  const [language] = useState(new Compartment());
-  const [readOnly] = useState(new Compartment());
+export const CodeMirrorEditor = memo(
+  ({
+    id,
+    doc,
+    debounceScroll = 100,
+    debounceChange = 150,
+    autoFocusOnDocumentChange = false,
+    editable = true,
+    onScroll,
+    onChange,
+    theme,
+    settings,
+    className = '',
+  }: Props) => {
+    renderLogger.debug('CodeMirrorEditor');
 
-  const containerRef = useRef<HTMLDivElement | null>(null);
-  const viewRef = useRef<EditorView>();
-  const themeRef = useRef<Theme>();
-  const docRef = useRef<EditorDocument>();
-  const editorStatesRef = useRef<EditorStates>();
-  const onScrollRef = useRef(onScroll);
-  const onChangeRef = useRef(onChange);
+    const [languageCompartment] = useState(new Compartment());
+    const [readOnlyCompartment] = useState(new Compartment());
+    const [editableCompartment] = useState(new Compartment());
 
-  const isBinaryFile = doc?.value instanceof Uint8Array;
+    const containerRef = useRef<HTMLDivElement | null>(null);
+    const viewRef = useRef<EditorView>();
+    const themeRef = useRef<Theme>();
+    const docRef = useRef<EditorDocument>();
+    const editorStatesRef = useRef<EditorStates>();
+    const onScrollRef = useRef(onScroll);
+    const onChangeRef = useRef(onChange);
 
-  onScrollRef.current = onScroll;
-  onChangeRef.current = onChange;
+    const isBinaryFile = doc?.value instanceof Uint8Array;
 
-  docRef.current = doc;
-  themeRef.current = theme;
+    onScrollRef.current = onScroll;
+    onChangeRef.current = onChange;
 
-  useEffect(() => {
-    const onUpdate = debounce((update: EditorUpdate) => {
-      onChangeRef.current?.(update);
-    }, debounceChange);
+    docRef.current = doc;
+    themeRef.current = theme;
 
-    const view = new EditorView({
-      parent: containerRef.current!,
-      dispatchTransactions(transactions) {
-        const previousSelection = view.state.selection;
+    useEffect(() => {
+      const onUpdate = debounce((update: EditorUpdate) => {
+        onChangeRef.current?.(update);
+      }, debounceChange);
 
-        view.update(transactions);
+      const view = new EditorView({
+        parent: containerRef.current!,
+        dispatchTransactions(transactions) {
+          const previousSelection = view.state.selection;
 
-        const newSelection = view.state.selection;
+          view.update(transactions);
 
-        const selectionChanged =
-          newSelection !== previousSelection &&
-          (newSelection === undefined || previousSelection === undefined || !newSelection.eq(previousSelection));
+          const newSelection = view.state.selection;
 
-        if (
-          docRef.current &&
-          !docRef.current.loading &&
-          (transactions.some((transaction) => transaction.docChanged) || selectionChanged)
-        ) {
-          onUpdate({
-            selection: view.state.selection,
-            content: view.state.doc.toString(),
-          });
+          const selectionChanged =
+            newSelection !== previousSelection &&
+            (newSelection === undefined || previousSelection === undefined || !newSelection.eq(previousSelection));
 
-          editorStatesRef.current!.set(docRef.current.filePath, view.state);
-        }
-      },
-    });
+          if (docRef.current && (transactions.some((transaction) => transaction.docChanged) || selectionChanged)) {
+            onUpdate({
+              selection: view.state.selection,
+              content: view.state.doc.toString(),
+            });
 
-    viewRef.current = view;
+            editorStatesRef.current!.set(docRef.current.filePath, view.state);
+          }
+        },
+      });
 
-    return () => {
-      viewRef.current?.destroy();
-      viewRef.current = undefined;
-    };
-  }, []);
+      viewRef.current = view;
 
-  useEffect(() => {
-    if (!viewRef.current) {
-      return;
-    }
+      return () => {
+        viewRef.current?.destroy();
+        viewRef.current = undefined;
+      };
+    }, []);
 
-    viewRef.current.dispatch({
-      effects: [reconfigureTheme(theme)],
-    });
-  }, [theme]);
+    useEffect(() => {
+      if (!viewRef.current) {
+        return;
+      }
 
-  useEffect(() => {
-    editorStatesRef.current = new Map<string, EditorState>();
-  }, [id]);
+      viewRef.current.dispatch({
+        effects: [reconfigureTheme(theme)],
+      });
+    }, [theme]);
 
-  useEffect(() => {
-    const editorStates = editorStatesRef.current!;
-    const view = viewRef.current!;
-    const theme = themeRef.current!;
+    useEffect(() => {
+      editorStatesRef.current = new Map<string, EditorState>();
+    }, [id]);
 
-    if (!doc) {
-      const state = newEditorState('', theme, settings, onScrollRef, debounceScroll, [language.of([])]);
+    useEffect(() => {
+      const editorStates = editorStatesRef.current!;
+      const view = viewRef.current!;
+      const theme = themeRef.current!;
+
+      if (!doc) {
+        const state = newEditorState('', theme, settings, onScrollRef, debounceScroll, [
+          languageCompartment.of([]),
+          readOnlyCompartment.of([]),
+          editableCompartment.of([]),
+        ]);
+
+        view.setState(state);
+
+        setNoDocument(view);
+
+        return;
+      }
+
+      if (doc.value instanceof Uint8Array) {
+        return;
+      }
+
+      if (doc.filePath === '') {
+        logger.warn('File path should not be empty');
+      }
+
+      let state = editorStates.get(doc.filePath);
+
+      if (!state) {
+        state = newEditorState(doc.value, theme, settings, onScrollRef, debounceScroll, [
+          languageCompartment.of([]),
+          readOnlyCompartment.of([EditorState.readOnly.of(!editable)]),
+          editableCompartment.of([EditorView.editable.of(editable)]),
+        ]);
+
+        editorStates.set(doc.filePath, state);
+      }
 
       view.setState(state);
 
-      setNoDocument(view);
+      setEditorDocument(
+        view,
+        theme,
+        editable,
+        languageCompartment,
+        readOnlyCompartment,
+        editableCompartment,
+        autoFocusOnDocumentChange,
+        doc as TextEditorDocument,
+      );
+    }, [doc?.value, editable, doc?.filePath, autoFocusOnDocumentChange]);
 
-      return;
-    }
-
-    if (doc.value instanceof Uint8Array) {
-      return;
-    }
-
-    if (doc.filePath === '') {
-      logger.warn('File path should not be empty');
-    }
-
-    let state = editorStates.get(doc.filePath);
-
-    if (!state) {
-      state = newEditorState(doc.value, theme, settings, onScrollRef, debounceScroll, [
-        language.of([]),
-        readOnly.of([EditorState.readOnly.of(doc.loading)]),
-      ]);
-
-      editorStates.set(doc.filePath, state);
-    }
-
-    view.setState(state);
-
-    setEditorDocument(view, theme, language, readOnly, autoFocusOnDocumentChange, doc as TextEditorDocument);
-  }, [doc?.value, doc?.filePath, doc?.loading, autoFocusOnDocumentChange]);
-
-  return (
-    <div className={classNames('relative h-full', className)}>
-      {isBinaryFile && <BinaryContent />}
-      <div className="h-full overflow-hidden" ref={containerRef} />
-    </div>
-  );
-}
+    return (
+      <div className={classNames('relative h-full', className)}>
+        {isBinaryFile && <BinaryContent />}
+        <div className="h-full overflow-hidden" ref={containerRef} />
+      </div>
+    );
+  },
+);
 
 export default CodeMirrorEditor;
 
@@ -280,8 +298,10 @@ function setNoDocument(view: EditorView) {
 function setEditorDocument(
   view: EditorView,
   theme: Theme,
-  language: Compartment,
-  readOnly: Compartment,
+  editable: boolean,
+  languageCompartment: Compartment,
+  readOnlyCompartment: Compartment,
+  editableCompartment: Compartment,
   autoFocus: boolean,
   doc: TextEditorDocument,
 ) {
@@ -297,7 +317,10 @@ function setEditorDocument(
   }
 
   view.dispatch({
-    effects: [readOnly.reconfigure([EditorState.readOnly.of(doc.loading)])],
+    effects: [
+      readOnlyCompartment.reconfigure([EditorState.readOnly.of(!editable)]),
+      editableCompartment.reconfigure([EditorView.editable.of(editable)]),
+    ],
   });
 
   getLanguage(doc.filePath).then((languageSupport) => {
@@ -306,7 +329,7 @@ function setEditorDocument(
     }
 
     view.dispatch({
-      effects: [language.reconfigure([languageSupport]), reconfigureTheme(theme)],
+      effects: [languageCompartment.reconfigure([languageSupport]), reconfigureTheme(theme)],
     });
 
     requestAnimationFrame(() => {
diff --git a/packages/bolt/app/components/editor/codemirror/cm-theme.ts b/packages/bolt/app/components/editor/codemirror/cm-theme.ts
index dd3c027..ddf1a5b 100644
--- a/packages/bolt/app/components/editor/codemirror/cm-theme.ts
+++ b/packages/bolt/app/components/editor/codemirror/cm-theme.ts
@@ -65,7 +65,7 @@ function getEditorTheme(settings: EditorSettings) {
       '&.cm-lineNumbers': {
         fontFamily: 'Roboto Mono, monospace',
         fontSize: '13px',
-        minWidth: '28px',
+        minWidth: '40px',
       },
       '& .cm-activeLineGutter': {
         background: 'transparent',
diff --git a/packages/bolt/app/components/workbench/EditorPanel.tsx b/packages/bolt/app/components/workbench/EditorPanel.tsx
index 46fb382..4c21ea8 100644
--- a/packages/bolt/app/components/workbench/EditorPanel.tsx
+++ b/packages/bolt/app/components/workbench/EditorPanel.tsx
@@ -1,21 +1,52 @@
 import { useStore } from '@nanostores/react';
+import { memo } from 'react';
 import { Panel, PanelGroup, PanelResizeHandle } from 'react-resizable-panels';
+import type { FileMap } from '../../lib/stores/files';
 import { themeStore } from '../../lib/stores/theme';
-import CodeMirrorEditor from '../editor/codemirror/CodeMirrorEditor';
+import { renderLogger } from '../../utils/logger';
+import { isMobile } from '../../utils/mobile';
+import {
+  CodeMirrorEditor,
+  type EditorDocument,
+  type OnChangeCallback as OnEditorChange,
+  type OnScrollCallback as OnEditorScroll,
+} from '../editor/codemirror/CodeMirrorEditor';
 import { FileTreePanel } from './FileTreePanel';
 
-export function EditorPanel() {
-  const theme = useStore(themeStore);
-
-  return (
-    <PanelGroup direction="horizontal">
-      <Panel defaultSize={30} minSize={20} collapsible={false}>
-        <FileTreePanel />
-      </Panel>
-      <PanelResizeHandle />
-      <Panel defaultSize={70} minSize={20}>
-        <CodeMirrorEditor theme={theme} settings={{ tabSize: 2 }} />
-      </Panel>
-    </PanelGroup>
-  );
+interface EditorPanelProps {
+  files?: FileMap;
+  editorDocument?: EditorDocument;
+  selectedFile?: string | undefined;
+  isStreaming?: boolean;
+  onEditorChange?: OnEditorChange;
+  onEditorScroll?: OnEditorScroll;
+  onFileSelect?: (value?: string) => void;
 }
+
+export const EditorPanel = memo(
+  ({ files, editorDocument, selectedFile, onFileSelect, onEditorChange, onEditorScroll }: EditorPanelProps) => {
+    renderLogger.trace('EditorPanel');
+
+    const theme = useStore(themeStore);
+
+    return (
+      <PanelGroup direction="horizontal">
+        <Panel defaultSize={25} minSize={10} collapsible={true}>
+          <FileTreePanel files={files} selectedFile={selectedFile} onFileSelect={onFileSelect} />
+        </Panel>
+        <PanelResizeHandle />
+        <Panel defaultSize={75} minSize={20}>
+          <CodeMirrorEditor
+            theme={theme}
+            editable={true}
+            settings={{ tabSize: 2 }}
+            doc={editorDocument}
+            autoFocusOnDocumentChange={!isMobile()}
+            onScroll={onEditorScroll}
+            onChange={onEditorChange}
+          />
+        </Panel>
+      </PanelGroup>
+    );
+  },
+);
diff --git a/packages/bolt/app/components/workbench/FileTree.tsx b/packages/bolt/app/components/workbench/FileTree.tsx
index 33311b3..d69d483 100644
--- a/packages/bolt/app/components/workbench/FileTree.tsx
+++ b/packages/bolt/app/components/workbench/FileTree.tsx
@@ -1,3 +1,281 @@
-export function FileTree() {
-  return <div>File Tree</div>;
+import { memo, useEffect, useMemo, useState, type ReactNode } from 'react';
+import type { FileMap } from '../../lib/stores/files';
+import { classNames } from '../../utils/classNames';
+import { renderLogger } from '../../utils/logger';
+
+const NODE_PADDING_LEFT = 12;
+const DEFAULT_HIDDEN_FILES = [/\/node_modules\//];
+
+interface Props {
+  files?: FileMap;
+  selectedFile?: string;
+  onFileSelect?: (filePath: string) => void;
+  rootFolder?: string;
+  hiddenFiles?: Array<string | RegExp>;
+  className?: string;
+}
+
+export const FileTree = memo(
+  ({ files = {}, onFileSelect, selectedFile, rootFolder, hiddenFiles, className }: Props) => {
+    renderLogger.trace('FileTree');
+
+    const computedHiddenFiles = useMemo(() => [...DEFAULT_HIDDEN_FILES, ...(hiddenFiles ?? [])], [hiddenFiles]);
+
+    const fileList = useMemo(
+      () => buildFileList(files, rootFolder, computedHiddenFiles),
+      [files, rootFolder, computedHiddenFiles],
+    );
+
+    const [collapsedFolders, setCollapsedFolders] = useState(() => new Set<string>());
+
+    useEffect(() => {
+      setCollapsedFolders((prevCollapsed) => {
+        const newCollapsed = new Set<string>();
+
+        for (const folder of fileList) {
+          if (folder.kind === 'folder' && prevCollapsed.has(folder.fullPath)) {
+            newCollapsed.add(folder.fullPath);
+          }
+        }
+
+        return newCollapsed;
+      });
+    }, [fileList]);
+
+    const filteredFileList = useMemo(() => {
+      const list = [];
+
+      let lastDepth = Number.MAX_SAFE_INTEGER;
+
+      for (const fileOrFolder of fileList) {
+        const depth = fileOrFolder.depth;
+
+        // if the depth is equal we reached the end of the collaped group
+        if (lastDepth === depth) {
+          lastDepth = Number.MAX_SAFE_INTEGER;
+        }
+
+        // ignore collapsed folders
+        if (collapsedFolders.has(fileOrFolder.fullPath)) {
+          lastDepth = Math.min(lastDepth, depth);
+        }
+
+        // ignore files and folders below the last collapsed folder
+        if (lastDepth < depth) {
+          continue;
+        }
+
+        list.push(fileOrFolder);
+      }
+
+      return list;
+    }, [fileList, collapsedFolders]);
+
+    const toggleCollapseState = (fullPath: string) => {
+      setCollapsedFolders((prevSet) => {
+        const newSet = new Set(prevSet);
+
+        if (newSet.has(fullPath)) {
+          newSet.delete(fullPath);
+        } else {
+          newSet.add(fullPath);
+        }
+
+        return newSet;
+      });
+    };
+
+    return (
+      <div className={className}>
+        {filteredFileList.map((fileOrFolder) => {
+          switch (fileOrFolder.kind) {
+            case 'file': {
+              return (
+                <File
+                  key={fileOrFolder.id}
+                  selected={selectedFile === fileOrFolder.fullPath}
+                  file={fileOrFolder}
+                  onClick={() => {
+                    onFileSelect?.(fileOrFolder.fullPath);
+                  }}
+                />
+              );
+            }
+            case 'folder': {
+              return (
+                <Folder
+                  key={fileOrFolder.id}
+                  folder={fileOrFolder}
+                  collapsed={collapsedFolders.has(fileOrFolder.fullPath)}
+                  onClick={() => {
+                    toggleCollapseState(fileOrFolder.fullPath);
+                  }}
+                />
+              );
+            }
+            default: {
+              return undefined;
+            }
+          }
+        })}
+      </div>
+    );
+  },
+);
+
+export default FileTree;
+
+interface FolderProps {
+  folder: FolderNode;
+  collapsed: boolean;
+  onClick: () => void;
+}
+
+function Folder({ folder: { depth, name }, collapsed, onClick }: FolderProps) {
+  return (
+    <NodeButton
+      className="group bg-white hover:bg-gray-100 text-md"
+      depth={depth}
+      iconClasses={classNames({
+        'i-ph:caret-right scale-98': collapsed,
+        'i-ph:caret-down scale-98': !collapsed,
+      })}
+      onClick={onClick}
+    >
+      {name}
+    </NodeButton>
+  );
+}
+
+interface FileProps {
+  file: FileNode;
+  selected: boolean;
+  onClick: () => void;
+}
+
+function File({ file: { depth, name }, onClick, selected }: FileProps) {
+  return (
+    <NodeButton
+      className={classNames('group', {
+        'bg-white hover:bg-gray-50': !selected,
+        'bg-gray-100': selected,
+      })}
+      depth={depth}
+      iconClasses={classNames('i-ph:file-duotone scale-98', {
+        'text-gray-600': !selected,
+      })}
+      onClick={onClick}
+    >
+      {name}
+    </NodeButton>
+  );
+}
+
+interface ButtonProps {
+  depth: number;
+  iconClasses: string;
+  children: ReactNode;
+  className?: string;
+  onClick?: () => void;
+}
+
+function NodeButton({ depth, iconClasses, onClick, className, children }: ButtonProps) {
+  return (
+    <button
+      className={`flex items-center gap-1.5 w-full pr-2 border-2 border-transparent text-faded ${className ?? ''}`}
+      style={{ paddingLeft: `${12 + depth * NODE_PADDING_LEFT}px` }}
+      onClick={() => onClick?.()}
+    >
+      <div className={classNames('scale-120 shrink-0', iconClasses)}></div>
+      <span className="whitespace-nowrap">{children}</span>
+    </button>
+  );
+}
+
+type Node = FileNode | FolderNode;
+
+interface BaseNode {
+  id: number;
+  depth: number;
+  name: string;
+  fullPath: string;
+}
+
+interface FileNode extends BaseNode {
+  kind: 'file';
+}
+
+interface FolderNode extends BaseNode {
+  kind: 'folder';
+}
+
+function buildFileList(files: FileMap, rootFolder = '/', hiddenFiles: Array<string | RegExp>): Node[] {
+  const folderPaths = new Set<string>();
+  const fileList: Node[] = [];
+
+  let defaultDepth = 0;
+
+  if (rootFolder === '/') {
+    defaultDepth = 1;
+    fileList.push({ kind: 'folder', name: '/', depth: 0, id: 0, fullPath: '/' });
+  }
+
+  for (const [filePath, dirent] of Object.entries(files)) {
+    const segments = filePath.split('/').filter((segment) => segment);
+    const fileName = segments.at(-1);
+
+    if (!fileName || isHiddenFile(filePath, fileName, hiddenFiles)) {
+      continue;
+    }
+
+    let currentPath = '';
+
+    let i = 0;
+    let depth = 0;
+
+    while (i < segments.length) {
+      const name = segments[i];
+      const fullPath = (currentPath += `/${name}`);
+
+      if (!fullPath.startsWith(rootFolder)) {
+        i++;
+        continue;
+      }
+
+      if (i === segments.length - 1 && dirent?.type === 'file') {
+        fileList.push({
+          kind: 'file',
+          id: fileList.length,
+          name,
+          fullPath,
+          depth: depth + defaultDepth,
+        });
+      } else if (!folderPaths.has(fullPath)) {
+        folderPaths.add(fullPath);
+
+        fileList.push({
+          kind: 'folder',
+          id: fileList.length,
+          name,
+          fullPath,
+          depth: depth + defaultDepth,
+        });
+      }
+
+      i++;
+      depth++;
+    }
+  }
+
+  return fileList;
+}
+
+function isHiddenFile(filePath: string, fileName: string, hiddenFiles: Array<string | RegExp>) {
+  return hiddenFiles.some((pathOrRegex) => {
+    if (typeof pathOrRegex === 'string') {
+      return fileName === pathOrRegex;
+    }
+
+    return pathOrRegex.test(filePath);
+  });
 }
diff --git a/packages/bolt/app/components/workbench/FileTreePanel.tsx b/packages/bolt/app/components/workbench/FileTreePanel.tsx
index d79c15b..0a3bce7 100644
--- a/packages/bolt/app/components/workbench/FileTreePanel.tsx
+++ b/packages/bolt/app/components/workbench/FileTreePanel.tsx
@@ -1,9 +1,21 @@
+import { memo } from 'react';
+import type { FileMap } from '../../lib/stores/files';
+import { WORK_DIR } from '../../utils/constants';
+import { renderLogger } from '../../utils/logger';
 import { FileTree } from './FileTree';
 
-export function FileTreePanel() {
+interface FileTreePanelProps {
+  files?: FileMap;
+  selectedFile?: string;
+  onFileSelect?: (value?: string) => void;
+}
+
+export const FileTreePanel = memo(({ files, selectedFile, onFileSelect }: FileTreePanelProps) => {
+  renderLogger.trace('FileTreePanel');
+
   return (
-    <div className="border-r h-full p-4">
-      <FileTree />
+    <div className="border-r h-full">
+      <FileTree files={files} rootFolder={WORK_DIR} selectedFile={selectedFile} onFileSelect={onFileSelect} />
     </div>
   );
-}
+});
diff --git a/packages/bolt/app/components/workbench/Workbench.client.tsx b/packages/bolt/app/components/workbench/Workbench.client.tsx
index fd4e694..d299c44 100644
--- a/packages/bolt/app/components/workbench/Workbench.client.tsx
+++ b/packages/bolt/app/components/workbench/Workbench.client.tsx
@@ -1,14 +1,21 @@
 import { useStore } from '@nanostores/react';
 import { AnimatePresence, motion, type Variants } from 'framer-motion';
+import { memo, useCallback, useEffect } from 'react';
 import { Panel, PanelGroup, PanelResizeHandle } from 'react-resizable-panels';
 import { workbenchStore } from '../../lib/stores/workbench';
 import { cubicEasingFn } from '../../utils/easings';
+import { renderLogger } from '../../utils/logger';
+import type {
+  OnChangeCallback as OnEditorChange,
+  OnScrollCallback as OnEditorScroll,
+} from '../editor/codemirror/CodeMirrorEditor';
 import { IconButton } from '../ui/IconButton';
 import { EditorPanel } from './EditorPanel';
 import { Preview } from './Preview';
 
 interface WorkspaceProps {
   chatStarted?: boolean;
+  isStreaming?: boolean;
 }
 
 const workbenchVariants = {
@@ -28,8 +35,30 @@ const workbenchVariants = {
   },
 } satisfies Variants;
 
-export function Workbench({ chatStarted }: WorkspaceProps) {
+export const Workbench = memo(({ chatStarted, isStreaming }: WorkspaceProps) => {
+  renderLogger.trace('Workbench');
+
   const showWorkbench = useStore(workbenchStore.showWorkbench);
+  const selectedFile = useStore(workbenchStore.selectedFile);
+  const currentDocument = useStore(workbenchStore.currentDocument);
+
+  const files = useStore(workbenchStore.files);
+
+  useEffect(() => {
+    workbenchStore.setDocuments(files);
+  }, [files]);
+
+  const onEditorChange = useCallback<OnEditorChange>((update) => {
+    workbenchStore.setCurrentDocumentContent(update.content);
+  }, []);
+
+  const onEditorScroll = useCallback<OnEditorScroll>((position) => {
+    workbenchStore.setCurrentDocumentScrollPosition(position);
+  }, []);
+
+  const onFileSelect = useCallback((filePath: string | undefined) => {
+    workbenchStore.setSelectedFile(filePath);
+  }, []);
 
   return (
     chatStarted && (
@@ -51,7 +80,15 @@ export function Workbench({ chatStarted }: WorkspaceProps) {
                 <div className="flex-1 overflow-hidden">
                   <PanelGroup direction="vertical">
                     <Panel defaultSize={50} minSize={20}>
-                      <EditorPanel />
+                      <EditorPanel
+                        editorDocument={currentDocument}
+                        isStreaming={isStreaming}
+                        selectedFile={selectedFile}
+                        files={files}
+                        onFileSelect={onFileSelect}
+                        onEditorScroll={onEditorScroll}
+                        onEditorChange={onEditorChange}
+                      />
                     </Panel>
                     <PanelResizeHandle />
                     <Panel defaultSize={50} minSize={20}>
@@ -66,4 +103,4 @@ export function Workbench({ chatStarted }: WorkspaceProps) {
       </AnimatePresence>
     )
   );
-}
+});
diff --git a/packages/bolt/app/lib/.server/llm/prompts.ts b/packages/bolt/app/lib/.server/llm/prompts.ts
index bbe6afe..f811376 100644
--- a/packages/bolt/app/lib/.server/llm/prompts.ts
+++ b/packages/bolt/app/lib/.server/llm/prompts.ts
@@ -1,4 +1,6 @@
-export const getSystemPrompt = (cwd: string = '/home/project') => `
+import { WORK_DIR } from '../../../utils/constants';
+
+export const getSystemPrompt = (cwd: string = WORK_DIR) => `
 You are Bolt, an expert AI assistant and exceptional senior software developer with vast knowledge across multiple programming languages, frameworks, and best practices.
 
 <system_constraints>
diff --git a/packages/bolt/app/lib/hooks/useMessageParser.ts b/packages/bolt/app/lib/hooks/useMessageParser.ts
index cef1601..9aad5c3 100644
--- a/packages/bolt/app/lib/hooks/useMessageParser.ts
+++ b/packages/bolt/app/lib/hooks/useMessageParser.ts
@@ -20,7 +20,7 @@ const messageParser = new StreamingMessageParser({
       workbenchStore.updateArtifact(data, { closed: true });
     },
     onActionOpen: (data) => {
-      logger.debug('onActionOpen', data.action);
+      logger.trace('onActionOpen', data.action);
 
       // we only add shell actions when when the close tag got parsed because only then we have the content
       if (data.action.type !== 'shell') {
@@ -28,7 +28,7 @@ const messageParser = new StreamingMessageParser({
       }
     },
     onActionClose: (data) => {
-      logger.debug('onActionClose', data.action);
+      logger.trace('onActionClose', data.action);
 
       if (data.action.type === 'shell') {
         workbenchStore.addAction(data);
diff --git a/packages/bolt/app/lib/stores/editor.ts b/packages/bolt/app/lib/stores/editor.ts
new file mode 100644
index 0000000..11b6f88
--- /dev/null
+++ b/packages/bolt/app/lib/stores/editor.ts
@@ -0,0 +1,96 @@
+import type { WebContainer } from '@webcontainer/api';
+import { atom, computed, map } from 'nanostores';
+import type { EditorDocument, ScrollPosition } from '../../components/editor/codemirror/CodeMirrorEditor';
+import type { FileMap } from './files';
+
+export type EditorDocuments = Record<string, EditorDocument>;
+
+export class EditorStore {
+  #webcontainer: Promise<WebContainer>;
+
+  selectedFile = atom<string | undefined>();
+  documents = map<EditorDocuments>({});
+
+  currentDocument = computed([this.documents, this.selectedFile], (documents, selectedFile) => {
+    if (!selectedFile) {
+      return undefined;
+    }
+
+    return documents[selectedFile];
+  });
+
+  constructor(webcontainerPromise: Promise<WebContainer>) {
+    this.#webcontainer = webcontainerPromise;
+  }
+
+  commitFileContent(_filePath: string) {
+    // TODO
+  }
+
+  setDocuments(files: FileMap) {
+    const previousDocuments = this.documents.value;
+
+    this.documents.set(
+      Object.fromEntries<EditorDocument>(
+        Object.entries(files)
+          .map(([filePath, dirent]) => {
+            if (dirent === undefined || dirent.type === 'folder') {
+              return undefined;
+            }
+
+            return [
+              filePath,
+              {
+                value: dirent.content,
+                commitPending: false,
+                filePath,
+                scroll: previousDocuments?.[filePath]?.scroll,
+              },
+            ] as [string, EditorDocument];
+          })
+          .filter(Boolean) as Array<[string, EditorDocument]>,
+      ),
+    );
+  }
+
+  setSelectedFile(filePath: string | undefined) {
+    this.selectedFile.set(filePath);
+  }
+
+  updateScrollPosition(filePath: string, position: ScrollPosition) {
+    const documents = this.documents.get();
+    const documentState = documents[filePath];
+
+    if (!documentState) {
+      return;
+    }
+
+    this.documents.setKey(filePath, {
+      ...documentState,
+      scroll: position,
+    });
+  }
+
+  updateFile(filePath: string, content: string): boolean {
+    const documents = this.documents.get();
+    const documentState = documents[filePath];
+
+    if (!documentState) {
+      return false;
+    }
+
+    const currentContent = documentState.value;
+    const contentChanged = currentContent !== content;
+
+    if (contentChanged) {
+      this.documents.setKey(filePath, {
+        ...documentState,
+        previousValue: !documentState.commitPending ? currentContent : documentState.previousValue,
+        commitPending: documentState.previousValue ? documentState.previousValue !== content : true,
+        value: content,
+      });
+    }
+
+    return contentChanged;
+  }
+}
diff --git a/packages/bolt/app/lib/stores/files.ts b/packages/bolt/app/lib/stores/files.ts
new file mode 100644
index 0000000..715a312
--- /dev/null
+++ b/packages/bolt/app/lib/stores/files.ts
@@ -0,0 +1,94 @@
+import type { PathWatcherEvent, WebContainer } from '@webcontainer/api';
+import { map } from 'nanostores';
+import { bufferWatchEvents } from '../../utils/buffer';
+import { WORK_DIR } from '../../utils/constants';
+
+const textDecoder = new TextDecoder('utf8', { fatal: true });
+
+interface File {
+  type: 'file';
+  content: string;
+}
+
+interface Folder {
+  type: 'folder';
+}
+
+type Dirent = File | Folder;
+
+export type FileMap = Record<string, Dirent | undefined>;
+
+export class FilesStore {
+  #webcontainer: Promise<WebContainer>;
+
+  files = map<FileMap>({});
+
+  constructor(webcontainerPromise: Promise<WebContainer>) {
+    this.#webcontainer = webcontainerPromise;
+
+    this.#init();
+  }
+
+  async #init() {
+    const webcontainer = await this.#webcontainer;
+
+    webcontainer.watchPaths(
+      { include: [`${WORK_DIR}/**`], exclude: ['**/node_modules', '.git'], includeContent: true },
+      bufferWatchEvents(100, this.#processEventBuffer.bind(this)),
+    );
+  }
+
+  #processEventBuffer(events: Array<[events: PathWatcherEvent[]]>) {
+    const watchEvents = events.flat(2);
+
+    for (const { type, path, buffer } of watchEvents) {
+      // remove any trailing slashes
+      const sanitizedPath = path.replace(/\/+$/g, '');
+
+      switch (type) {
+        case 'add_dir': {
+          // we intentionally add a trailing slash so we can distinguish files from folders in the file tree
+          this.files.setKey(sanitizedPath, { type: 'folder' });
+          break;
+        }
+        case 'remove_dir': {
+          this.files.setKey(sanitizedPath, undefined);
+
+          for (const [direntPath] of Object.entries(this.files)) {
+            if (direntPath.startsWith(sanitizedPath)) {
+              this.files.setKey(direntPath, undefined);
+            }
+          }
+
+          break;
+        }
+        case 'add_file':
+        case 'change': {
+          this.files.setKey(sanitizedPath, { type: 'file', content: this.#decodeFileContent(buffer) });
+          break;
+        }
+        case 'remove_file': {
+          this.files.setKey(sanitizedPath, undefined);
+          break;
+        }
+        case 'update_directory': {
+          // we don't care about these events
+          break;
+        }
+      }
+    }
+  }
+
+  #decodeFileContent(buffer?: Uint8Array) {
+    if (!buffer || buffer.byteLength === 0) {
+      return '';
+    }
+
+    try {
+      return textDecoder.decode(buffer);
+    } catch (error) {
+      console.log(error);
+      return '';
+    }
+  }
+}
diff --git a/packages/bolt/app/lib/stores/workbench.ts b/packages/bolt/app/lib/stores/workbench.ts
index 3b457f8..4a86539 100644
--- a/packages/bolt/app/lib/stores/workbench.ts
+++ b/packages/bolt/app/lib/stores/workbench.ts
@@ -1,10 +1,13 @@
-import { atom, map, type MapStore, type WritableAtom } from 'nanostores';
+import { atom, map, type MapStore, type ReadableAtom, type WritableAtom } from 'nanostores';
+import type { EditorDocument, ScrollPosition } from '../../components/editor/codemirror/CodeMirrorEditor';
 import type { BoltAction } from '../../types/actions';
 import { unreachable } from '../../utils/unreachable';
 import { ActionRunner } from '../runtime/action-runner';
 import type { ActionCallbackData, ArtifactCallbackData } from '../runtime/message-parser';
 import { webcontainer } from '../webcontainer';
 import { chatStore } from './chat';
+import { EditorStore } from './editor';
+import { FilesStore, type FileMap } from './files';
 import { PreviewsStore } from './previews';
 
 const MIN_SPINNER_TIME = 200;
@@ -41,6 +44,8 @@ type Artifacts = MapStore<Record<string, ArtifactState>>;
 export class WorkbenchStore {
   #actionRunner = new ActionRunner(webcontainer);
   #previewsStore = new PreviewsStore(webcontainer);
+  #filesStore = new FilesStore(webcontainer);
+  #editorStore = new EditorStore(webcontainer);
 
   artifacts: Artifacts = import.meta.hot?.data.artifacts ?? map({});
 
@@ -50,10 +55,52 @@ export class WorkbenchStore {
     return this.#previewsStore.previews;
   }
 
+  get files() {
+    return this.#filesStore.files;
+  }
+
+  get currentDocument(): ReadableAtom<EditorDocument | undefined> {
+    return this.#editorStore.currentDocument;
+  }
+
+  get selectedFile(): ReadableAtom<string | undefined> {
+    return this.#editorStore.selectedFile;
+  }
+
+  setDocuments(files: FileMap) {
+    this.#editorStore.setDocuments(files);
+  }
+
   setShowWorkbench(show: boolean) {
     this.showWorkbench.set(show);
   }
 
+  setCurrentDocumentContent(newContent: string) {
+    const filePath = this.currentDocument.get()?.filePath;
+
+    if (!filePath) {
+      return;
+    }
+
+    this.#editorStore.updateFile(filePath, newContent);
+  }
+
+  setCurrentDocumentScrollPosition(position: ScrollPosition) {
+    const editorDocument = this.currentDocument.get();
+
+    if (!editorDocument) {
+      return;
+    }
+
+    const { filePath } = editorDocument;
+
+    this.#editorStore.updateScrollPosition(filePath, position);
+  }
+
+  setSelectedFile(filePath: string | undefined) {
+    this.#editorStore.setSelectedFile(filePath);
+  }
+
   abortAllActions() {
     for (const [, artifact] of Object.entries(this.artifacts.get())) {
       for (const [, action] of Object.entries(artifact.actions.get())) {
diff --git a/packages/bolt/app/lib/webcontainer/index.ts b/packages/bolt/app/lib/webcontainer/index.ts
index 8cb4506..2926759 100644
--- a/packages/bolt/app/lib/webcontainer/index.ts
+++ b/packages/bolt/app/lib/webcontainer/index.ts
@@ -1,4 +1,5 @@
 import { WebContainer } from '@webcontainer/api';
+import { WORK_DIR_NAME } from '../../utils/constants';
 
 interface WebContainerContext {
   loaded: boolean;
@@ -20,7 +21,7 @@ if (!import.meta.env.SSR) {
   webcontainer =
     import.meta.hot?.data.webcontainer ??
     Promise.resolve()
-      .then(() => WebContainer.boot({ workdirName: 'project' }))
+      .then(() => WebContainer.boot({ workdirName: WORK_DIR_NAME }))
       .then((webcontainer) => {
         webcontainerContext.loaded = true;
         return webcontainer;
diff --git a/packages/bolt/app/utils/buffer.ts b/packages/bolt/app/utils/buffer.ts
new file mode 100644
index 0000000..e191f60
--- /dev/null
+++ b/packages/bolt/app/utils/buffer.ts
@@ -0,0 +1,29 @@
+export function bufferWatchEvents<T extends unknown[]>(timeInMs: number, cb: (events: T[]) => unknown) {
+  let timeoutId: number | undefined;
+  let events: T[] = [];
+
+  // keep track of the processing of the previous batch so we can wait for it
+  let processing: Promise<unknown> = Promise.resolve();
+
+  const scheduleBufferTick = () => {
+    timeoutId = self.setTimeout(async () => {
+      // we wait until the previous batch is entirely processed so events are processed in order
+      await processing;
+
+      if (events.length > 0) {
+        processing = Promise.resolve(cb(events));
+      }
+
+      timeoutId = undefined;
+      events = [];
+    }, timeInMs);
+  };
+
+  return (...args: T) => {
+    events.push(args);
+
+    if (!timeoutId) {
+      scheduleBufferTick();
+    }
+  };
+}
diff --git a/packages/bolt/app/utils/constants.ts b/packages/bolt/app/utils/constants.ts
new file mode 100644
index 0000000..f4a3136
--- /dev/null
+++ b/packages/bolt/app/utils/constants.ts
@@ -0,0 +1,2 @@
+export const WORK_DIR_NAME = 'project';
+export const WORK_DIR = `/home/${WORK_DIR_NAME}`;
diff --git a/packages/bolt/app/utils/logger.ts b/packages/bolt/app/utils/logger.ts
index fcfeeb5..b7890aa 100644
--- a/packages/bolt/app/utils/logger.ts
+++ b/packages/bolt/app/utils/logger.ts
@@ -85,3 +85,5 @@ function getColorForLevel(level: DebugLevel): string {
     }
   }
 }
+
+export const renderLogger = createScopedLogger('Render');
diff --git a/packages/bolt/app/utils/mobile.ts b/packages/bolt/app/utils/mobile.ts
new file mode 100644
index 0000000..ca8cb58
--- /dev/null
+++ b/packages/bolt/app/utils/mobile.ts
@@ -0,0 +1,4 @@
+export function isMobile() {
+  // we use sm: as the breakpoint for mobile. It's currently set to 640px
+  return globalThis.innerWidth < 640;
+}