diff --git a/documentation/docs/guides/enhanced-code-editing.md b/documentation/docs/guides/enhanced-code-editing.md
new file mode 100644
index 00000000..6c894f68
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+++ b/documentation/docs/guides/enhanced-code-editing.md
@@ -0,0 +1,80 @@
+---
+title: Enhanced Code Editing with AI Models
+sidebar_label: Enhanced Code Editing
+description: Use AI models to intelligently apply code changes
+---
+
+The [Developer extension](/docs/mcp/developer-mcp) supports using AI models for enhanced code editing through the `str_replace` command. When configured, it intelligently applies code changes using an AI model instead of simple string replacement.
+
+The use of models specializing in code editing can reduce the load on the main LLM providers while increasing accuracy, quality, and speed and lowering cost. This enhanced approach provides:
+
+- **Context-aware editing**: The AI understands code structure and can make more intelligent changes
+- **Better formatting**: Maintains consistent code style and formatting
+- **Error prevention**: Can catch and fix potential issues during the edit
+- **Flexible model support**: Works with any OpenAI-compatible API
+- **Clean implementation**: Uses proper control flow instead of exception handling for configuration checks
+
+## Configuration
+
+Set these [environment variables](/docs/guides/environment-variables#enhanced-code-editing) to enable AI-powered code editing:
+
+```bash
+export GOOSE_EDITOR_API_KEY="your-api-key-here"
+export GOOSE_EDITOR_HOST="https://api.openai.com/v1"
+export GOOSE_EDITOR_MODEL="gpt-4o"
+```
+
+**All three environment variables must be set and non-empty for the feature to activate.** 
+
+This optional feature is completely backwards compatible - if not configured, the extension works exactly as before with simple string replacement.
+
+### Supported Providers
+
+Any OpenAI-compatible API endpoint should work. Examples:
+
+**OpenAI:**
+```bash
+export GOOSE_EDITOR_API_KEY="sk-..."
+export GOOSE_EDITOR_HOST="https://api.openai.com/v1"
+export GOOSE_EDITOR_MODEL="gpt-4o"
+```
+
+**Anthropic (via OpenAI-compatible proxy):**
+```bash
+export GOOSE_EDITOR_API_KEY="sk-ant-..."
+export GOOSE_EDITOR_HOST="https://api.anthropic.com/v1"
+export GOOSE_EDITOR_MODEL="claude-3-5-sonnet-20241022"
+```
+
+**Morph:**
+```bash
+export GOOSE_EDITOR_API_KEY="sk-..."
+export GOOSE_EDITOR_HOST="https://api.morphllm.com/v1"
+export GOOSE_EDITOR_MODEL="morph-v0"
+```
+
+**Relace:**
+```bash
+export GOOSE_EDITOR_API_KEY="rlc-..."
+export GOOSE_EDITOR_HOST="https://instantapply.endpoint.relace.run/v1/apply"
+export GOOSE_EDITOR_MODEL="auto"
+```
+
+**Local/Custom endpoints:**
+```bash
+export GOOSE_EDITOR_API_KEY="your-key"
+export GOOSE_EDITOR_HOST="http://localhost:8000/v1"
+export GOOSE_EDITOR_MODEL="your-model"
+```
+
+## How It Works
+
+When the `str_replace` tool is used to edit code:
+
+1. **Configuration Check**: Goose checks if all three environment variables are properly set and non-empty.
+
+2. **With AI Enabled**: If configured, Goose sends the original code and your requested change to the configured AI model for processing.
+
+3. **Fallback**: If the AI API is not configured or the API call fails, it falls back to simple string replacement.
+
+4. **User Feedback**: The first time you use `str_replace` without AI configuration, you'll see a helpful message explaining how to enable the feature.
diff --git a/documentation/docs/guides/environment-variables.md b/documentation/docs/guides/environment-variables.md
index fbdfdf40..190cfaea 100644
--- a/documentation/docs/guides/environment-variables.md
+++ b/documentation/docs/guides/environment-variables.md
@@ -164,6 +164,38 @@ export GOOSE_MODE="auto"
 export GOOSE_CLI_MIN_PRIORITY=0.2  # Show only medium and high importance output
 export GOOSE_CLI_TOOL_PARAMS_MAX_LENGTH=100  # Show up to 100 characters for tool parameters in CLI output
 ```
+
+### Enhanced Code Editing
+
+These variables configure [AI-powered code editing](/docs/guides/enhanced-code-editing) for the Developer extension's `str_replace` tool. All three variables must be set and non-empty for the feature to activate.
+
+| Variable | Purpose | Values | Default |
+|----------|---------|---------|---------|
+| `GOOSE_EDITOR_API_KEY` | API key for the code editing model | API key string | None |
+| `GOOSE_EDITOR_HOST` | API endpoint for the code editing model | URL (e.g., "https://api.openai.com/v1") | None |
+| `GOOSE_EDITOR_MODEL` | Model to use for code editing | Model name (e.g., "gpt-4o", "claude-3-5-sonnet") | None |
+
+**Examples**
+
+This feature works with any OpenAI-compatible API endpoint, for example:
+
+```bash
+# OpenAI configuration
+export GOOSE_EDITOR_API_KEY="sk-..."
+export GOOSE_EDITOR_HOST="https://api.openai.com/v1"
+export GOOSE_EDITOR_MODEL="gpt-4o"
+
+# Anthropic configuration (via OpenAI-compatible proxy)
+export GOOSE_EDITOR_API_KEY="sk-ant-..."
+export GOOSE_EDITOR_HOST="https://api.anthropic.com/v1"
+export GOOSE_EDITOR_MODEL="claude-3-5-sonnet-20241022"
+
+# Local model configuration
+export GOOSE_EDITOR_API_KEY="your-key"
+export GOOSE_EDITOR_HOST="http://localhost:8000/v1"
+export GOOSE_EDITOR_MODEL="your-model"
+```
+
 ## Security Configuration
 
 These variables control security related features.