The July 2025 update of Microsoft’s popular code editor, Visual Studio Code 1.103, introduces major quality-of-life improvements ranging from automated server handling to enhanced Git and Copilot features. The release became publicly available on August 7 for Windows, macOS, and Linux users through visualstudio.com.
Smarter handling of MCP servers
A central highlight of this release is the new auto-start support for Model Context Protocol (MCP) servers. MCP is the standard interface that lets applications feed structured context into large language models. Previously, every time an MCP server was updated, developers had to manually refresh their tool list in the Chat View. With version 1.103, VS Code can now automatically launch MCP servers, eliminating that repetitive step.
The update also brings an experimental tool-grouping mode for environments where the number of available tools exceeds the 128-tool ceiling. Instead of forcing users to deselect some tools, VS Code now clusters them into groups that the AI model can activate dynamically. Microsoft confirmed that VS Code 1.103 fully aligns with the MCP specification 2025-06-18, including support for resource_links and structured outputs from tools.
Git worktrees built in
Another key enhancement is native Git worktree integration. Worktrees let developers work on several branches in parallel without constantly switching contexts. When a project with worktrees is opened, VS Code detects them automatically and shows them in the Source Control Repositories panel. From there, users can create, delete, and open worktrees either in the current window or in a new one directly via the Command Palette.
Copilot conversations with checkpoints
For GitHub Copilot users, this release introduces checkpointing in chat sessions. Developers can now roll back to earlier points in a conversation—an especially valuable feature if multiple file changes happened during the same chat. This ability to restore different states makes Copilot-assisted development more flexible and less risky.
Additional improvements
Beyond these flagship features, VS Code 1.103 delivers several smaller but notable updates:
GPT-5 and GPT-5 mini are rolling out across GitHub Copilot subscriptions, offering more accurate responses or lower-cost alternatives depending on developer needs.
A revamped Chat Provider API lets users decide which models appear in their picker.
Math rendering in chat is available in preview, activated via the chat.math.enabled setting.
The codebase tool now works with remote indexes for Azure DevOps repositories.
The test runner has been redesigned to display inline progress updates within chat.
Looking ahead
This release succeeds VS Code 1.102, which landed on July 9. Microsoft describes version 1.103 as a step forward in making developer workflows smoother, combining automation, better observability, and expanded model support.
Microsoft ships Visual Studio Code 1.103 with new automation and collaboration tools
The July 2025 update of Microsoft’s popular code editor, Visual Studio Code 1.103, introduces major quality-of-life improvements ranging from automated server handling to enhanced Git and Copilot features. The release became publicly available on August 7 for Windows, macOS, and Linux users through visualstudio.com.
Smarter handling of MCP servers
A central highlight of this release is the new auto-start support for Model Context Protocol (MCP) servers. MCP is the standard interface that lets applications feed structured context into large language models. Previously, every time an MCP server was updated, developers had to manually refresh their tool list in the Chat View. With version 1.103, VS Code can now automatically launch MCP servers, eliminating that repetitive step.
The update also brings an experimental tool-grouping mode for environments where the number of available tools exceeds the 128-tool ceiling. Instead of forcing users to deselect some tools, VS Code now clusters them into groups that the AI model can activate dynamically. Microsoft confirmed that VS Code 1.103 fully aligns with the MCP specification 2025-06-18, including support for resource_links and structured outputs from tools.
Git worktrees built in
Another key enhancement is native Git worktree integration. Worktrees let developers work on several branches in parallel without constantly switching contexts. When a project with worktrees is opened, VS Code detects them automatically and shows them in the Source Control Repositories panel. From there, users can create, delete, and open worktrees either in the current window or in a new one directly via the Command Palette.
Copilot conversations with checkpoints
For GitHub Copilot users, this release introduces checkpointing in chat sessions. Developers can now roll back to earlier points in a conversation—an especially valuable feature if multiple file changes happened during the same chat. This ability to restore different states makes Copilot-assisted development more flexible and less risky.
Additional improvements
Beyond these flagship features, VS Code 1.103 delivers several smaller but notable updates:
chat.math.enabledsetting.Looking ahead
This release succeeds VS Code 1.102, which landed on July 9. Microsoft describes version 1.103 as a step forward in making developer workflows smoother, combining automation, better observability, and expanded model support.
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