Model Context Protocol (MCP) servers are now supported in agent mode. MCP provides a standard method for AI to interact with external tools, applications, and data sources. When users input a chat prompt using agent mode in VS Code, the model can invoke tools to perform tasks such as accessing databases, file operations, or retrieving web data. This integration enables more dynamic, context-aware coding assistance, according to Microsoft.
For AI-powered code editing, Next Edit Suggestions now is generally available. Improvements include making suggestions more compact, less interfering with surrounding code, and easier to read at a glance. In addition, updates to the gutter indicator have been made to ensure suggestions are more easily noticeable. Other Copilot-related improvements include muting diagnostics events outside the editor when rewriting a file with AI edits, and saving files explicitly when the user decides to keep AI edits. Syntax highlighting for inline suggestions now is enabled by default.
VS Code 1.99 follows last month’s VS Code 1.98, which also brought enhancements for GitHub Copilot. Also in Visual Studio Code 1.99:
