feat: add rawOutput to tool call updates (#261 )

## Summary - Pass the raw tool result content as `rawOutput` in `tool_call_update` notifications - Allows ACP clients to access the unprocessed tool output alongside the formatted content - Adds tests using SDK types to document exact shapes for different tool result types ## Test plan - [x] `npm run build` passes - [x] `npm test` passes (86 tests) - [x] `npm run lint` passes - [x] `npm run format:check` passes 🤖 Generated with [Claude Code](https://claude.com/claude-code) --------- Co-authored-by: Claude <noreply@anthropic.com>
Prep 0.13.2 release (#266 )
2026-10-27 20:42:10 +00:00 · 2026-01-28 09:47:36 +01:00 · 2026-01-28 08:45:01 +00:00 · 2026-01-28 08:42:21 +00:00 · 2026-01-28 08:41:29 +00:00 · 2026-01-27 22:53:21 +01:00
20 changed files with 5055 additions and 2441 deletions
--- a/.github/workflows/publish.yml
+++ b/.github/workflows/publish.yml
@@ -4,7 +4,7 @@ on:
    tags:
      - "v*.*.*"
 jobs:
-  build:
+  publish-npm:
    runs-on: ubuntu-latest
    environment: release # Optional: for enhanced security
    permissions:
@@ -22,3 +22,13 @@ jobs:
      - run: npm ci
      - run: npm run build
      - run: npm publish
+  release:
+    runs-on: ubuntu-latest
+    needs: [publish-npm]
+    permissions:
+      contents: write
+    steps:
+      - uses: actions/checkout@08c6903cd8c0fde910a37f88322edcfb5dd907a8
+      - name: Create Release
+        id: create_release
+        uses: softprops/action-gh-release@6da8fa9354ddfdc4aeace5fc48d7f679b5214090
--- a/.gitignore
+++ b/.gitignore
@@ -1,2 +1,5 @@
 node_modules
 dist
+.DS_Store
+.claude/*.local.*
+CLAUDE.local.md
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,212 @@
 # Changelog

+## 0.13.2
+
+- Update to @anthropic-ai/claude-agent-sdk@0.2.22
+- Fix: return content from ACP write tool to help with issues with alternate providers.
+
+## 0.13.1
+
+- Update to @anthropic-ai/claude-agent-sdk@0.2.7
+- Add TypeScript declaration files for library users
+- Fixed error handling in custom ACP focused MCP tools
+
+## 0.13.0
+
+- Update to @anthropic-ai/claude-agent-sdk@0.2.6
+- Update to @agentclientprotocol/sdk@0.13.0
+
+## 0.12.6
+
+- Fix model selection
+
+## 0.12.5
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.70
+- Unstable implementation of resuming sessions
+
+## 0.12.4
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.67
+- Better respect permissions specified in settings files
+- Unstable implementation of forking
+
+## 0.12.3
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.65
+- Update to @agentclientprotocol/sdk@0.9.0
+- Allow agent to write plans and todos to its config directory
+- Fix experimental resume ids
+
+## 0.12.2
+
+- Fix duplicate tool use IDs error
+
+## 0.12.1
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.61
+- Update to @agentclientprotocol/sdk@0.8.0
+
+## 0.12.0
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.59
+  - Brings Opus to Claude Pro plans
+  - Support "Don't Ask" profile
+- Unify ACP + Claude Code session ids
+
+## 0.11.0
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.57
+- Removed dependency on @anthropic-ai/claude-code since this is no longer needed
+
+## 0.10.10
+
+- Update to @agentclientprotocol/sdk@0.7.0
+
+## 0.10.9
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.55
+- Allow defining a custom logger when used as a library
+- Allow specifying custom options when used as a library
+- Add `CLAUDECODE=1` to terminal invocations to match default Claude Code behavior
+
+## 0.10.8
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.51 (adds support for Opus 4.5)
+
+## 0.10.7
+
+- Fix read/edit tool error handling so upstream errors surface
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.50
+
+## 0.10.6
+
+- Disable experimental terminal auth support for now, as it was causing issues on Windows. Will revisit with a fix later.
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.46
+
+## 0.10.5
+
+- Better error messages at end of turn if there were any
+- Add experimental support for disabling built-in tools via \_meta flag
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.44
+
+## 0.10.4
+
+- Fix tool call titles not appearing during approval in some cases
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.42
+
+## 0.10.3
+
+- Fix for experimental terminal auth support
+
+## 0.10.2
+
+- Fix incorrect stop reason for tool call refusals
+
+## 0.10.1
+
+- Add additional structured metadata to tool calls
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.37
+
+## 0.10.0
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.30
+- Use `canUseTool` callback instead of launching an HTTP MCP server for permission checks.
+
+## 0.9.0
+
+- Support slash commands coming from MCP servers (Prompts)
+
+## 0.8.0
+
+- Revert changes to filename for cli entrypoint
+- Provide library entrypoint via lib.ts
+
+## 0.7.0
+
+- Allow importing from this package as a library in addition to running it as a CLI. Allows for easier integration into existing node applications.
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.27
+
+## 0.6.10
+
+- Provide `agentInfo` on initialization response.
+- Update to @agentclientprotocol/sdk@0.5.1
+- Fix crash when receiving a hook_response event
+- Fix for invalid locations when read call has no path
+
+## 0.6.9
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.26
+- Update to @agentclientprotocol/sdk@0.5.0
+
+## 0.6.8
+
+- Fix for duplicate tokens appearing in thread with streaming enabled
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.23
+- Update to @agentclientprotocol/sdk@0.4.9
+
+## 0.6.7
+
+- Fix for invalid plan input from the model introduced in latest agent-sdk
+
+## 0.6.6
+
+- Do not enable bypassPermissions mode if in root/sudo mode, because Claude Code will not start
+
+## 0.6.5
+
+- Fix for duplicated text content after streaming
+
+## 0.6.4
+
+- Support streaming partial messages!
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.21
+
+## 0.6.3
+
+- Fix issue where slash commands were loaded before initialization was complete.
+
+## 0.6.2
+
+- Fix bug where mode selection would sometimes fire before initialization was complete.
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.19
+
+## 0.6.1
+
+- Fix to allow bypassPermissions mode to be selected (it wasn't permitted previously)
+
+## 0.6.0
+
+- Provide a model selector. We use the "default" model by default, and the user can change it via the client.
+- Make sure writes require permissions when necessary: https://github.com/zed-industries/claude-code-acp/pull/92
+- Add support for appending or overriding the system prompt: https://github.com/zed-industries/claude-code-acp/pull/91
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.15
+- Update to @agentclientprotocol/sdk@0.4.8
+
+## 0.5.5
+
+- Migrate to @agentclientprotocol/sdk@0.4.5
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.13
+
+## 0.5.4
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.11
+- Enable setting CLAUDE_CODE_EXECUTABLE to override the executable used by the SDK https://github.com/zed-industries/claude-code-acp/pull/86
+
+## 0.5.3
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.8
+- Update to @zed-industries/agent-client-protocol@v0.4.5
+
+## 0.5.2
+
+- Add back @anthropic-ai/claude-code@2.0.1 as runtime dependency
+
+## 0.5.1
+
+- Update to @anthropic-ai/claude-agent-sdk@v0.1.1
+- Make improvements to ACP tools provided to the model
+
 ## 0.5.0

 - Migrate to @anthropic-ai/claude-agent-sdk@v0.1.0
--- a/README.md
+++ b/README.md
@@ -4,7 +4,7 @@

 Use [Claude Code](https://www.anthropic.com/claude-code) from [ACP-compatible](https://agentclientprotocol.com) clients such as [Zed](https://zed.dev)!

-This tool implements an ACP agent by using the official [Claude Code SDK](https://docs.anthropic.com/en/docs/claude-code/sdk/sdk-overview), supporting:
+This tool implements an ACP agent by using the official [Claude Agent SDK](https://platform.claude.com/docs/en/agent-sdk/overview), supporting:

 - Context @-mentions
 - Images
@@ -32,20 +32,14 @@ Read the docs on [External Agent](https://zed.dev/docs/ai/external-agents) suppo

 ### Other clients

- Emacs via [agent-shell.el](https://github.com/xenodium/agent-shell)
- [marimo notebook](https://github.com/marimo-team/marimo)
- Neovim
-  - via [CodeCompanion.nvim](https://codecompanion.olimorris.dev/configuration/adapters#setup-claude-code-via-acp)
-  - via [yetone/avante.nvim](https://github.com/yetone/avante.nvim)
-
-[Submit a PR](https://github.com/zed-industries/claude-code-acp/pulls) to add yours!
+Or try it with any of the other [ACP compatible clients](https://agentclientprotocol.com/overview/clients)!

 #### Installation

 Install the adapter from `npm`:

 ```bash
-npm install @zed-industries/claude-code-acp
+npm install -g @zed-industries/claude-code-acp
 ```

 You can then use `claude-code-acp` as a regular ACP agent:
--- a/docs/RELEASES.md
+++ b/docs/RELEASES.md
@@ -0,0 +1,24 @@
+## How to publish a new release
+
+1. Create a new branch prep-vX.X.X
+
+```sh
+git checkout -b prep-vX.X.X
+```
+
+2. Bump the version in package.json
+
+```sh
+npm version vX.X.X
+```
+
+3. Add a new entry in CHANGELOG.md
+4. Create a PR for `prev-vX.X.X` & merge it
+5. Create tag and push it
+
+```sh
+git tag vX.X.X
+git push origin vX.X.X
+```
+
+6. Paste CHANGELOG into release notes and publish the version on GitHub
--- a/package-lock.json
+++ b/package-lock.json
--- a/package.json
+++ b/package.json
@@ -3,15 +3,24 @@
  "publishConfig": {
    "access": "public"
  },
+  "version": "0.13.2",
+  "description": "An ACP-compatible coding agent powered by the Claude Code SDK (TypeScript)",
+  "main": "dist/lib.js",
+  "types": "dist/lib.d.ts",
  "bin": {
    "claude-code-acp": "./dist/index.js"
  },
-  "version": "0.5.0",
-  "description": "An ACP-compatible coding agent powered by the Claude Code SDK (TypeScript)",
-  "main": "dist/index.js",
  "type": "module",
+  "exports": {
+    ".": {
+      "types": "./dist/lib.d.ts",
+      "import": "./dist/lib.js"
+    },
+    "./*": "./*"
+  },
  "files": [
    "dist/",
+    "!dist/tests/",
    "README.md",
    "LICENSE",
    "package.json"
@@ -51,29 +60,23 @@
  "author": "Zed Industries",
  "license": "Apache-2.0",
  "dependencies": {
-    "@anthropic-ai/claude-agent-sdk": "0.1.0",
-    "@modelcontextprotocol/sdk": "1.18.2",
-    "@zed-industries/agent-client-protocol": "0.4.3",
-    "diff": "8.0.2",
-    "express": "5.1.0",
-    "minimist": "1.2.8",
-    "uuid": "13.0.0"
+    "@agentclientprotocol/sdk": "0.13.1",
+    "@anthropic-ai/claude-agent-sdk": "0.2.22",
+    "@modelcontextprotocol/sdk": "1.25.3",
+    "diff": "8.0.3",
+    "minimatch": "10.1.1"
  },
  "devDependencies": {
-    "@anthropic-ai/sdk": "^0.65.0",
-    "@types/express": "5.0.3",
-    "@types/minimist": "1.2.5",
-    "@types/node": "24.6.0",
-    "@types/uuid": "10.0.0",
-    "@typescript-eslint/eslint-plugin": "8.45.0",
-    "@typescript-eslint/parser": "8.45.0",
-    "@vitest/ui": "3.2.4",
-    "eslint": "9.36.0",
+    "@anthropic-ai/sdk": "0.71.2",
+    "@types/node": "25.0.10",
+    "@typescript-eslint/eslint-plugin": "8.54.0",
+    "@typescript-eslint/parser": "8.54.0",
+    "eslint": "9.39.2",
    "eslint-config-prettier": "10.1.8",
-    "globals": "16.4.0",
-    "prettier": "3.6.2",
+    "globals": "17.2.0",
+    "prettier": "3.8.1",
    "ts-node": "10.9.2",
-    "typescript": "5.9.2",
-    "vitest": "3.2.4"
+    "typescript": "5.9.3",
+    "vitest": "4.0.18"
  }
 }
--- a/src/acp-agent.ts
+++ b/src/acp-agent.ts
--- a/src/index.ts
+++ b/src/index.ts
@@ -19,7 +19,7 @@ process.on("unhandledRejection", (reason, promise) => {
  console.error("Unhandled Rejection at:", promise, "reason:", reason);
 });

-import { runAcp as runAcp } from "./acp-agent.js";
+import { runAcp } from "./acp-agent.js";
 runAcp();

 // Keep process alive
--- a/src/lib.ts
+++ b/src/lib.ts
@@ -0,0 +1,36 @@
+// Export the main agent class and utilities for library usage
+export {
+  ClaudeAcpAgent,
+  runAcp,
+  toAcpNotifications,
+  streamEventToAcpNotifications,
+  type ToolUpdateMeta,
+  type NewSessionMeta,
+} from "./acp-agent.js";
+export {
+  loadManagedSettings,
+  applyEnvironmentSettings,
+  nodeToWebReadable,
+  nodeToWebWritable,
+  Pushable,
+  unreachable,
+} from "./utils.js";
+export { createMcpServer } from "./mcp-server.js";
+export {
+  toolInfoFromToolUse,
+  planEntries,
+  toolUpdateFromToolResult,
+  createPreToolUseHook,
+  acpToolNames as toolNames,
+} from "./tools.js";
+export {
+  SettingsManager,
+  type ClaudeCodeSettings,
+  type PermissionSettings,
+  type PermissionDecision,
+  type PermissionCheckResult,
+  type SettingsManagerOptions,
+} from "./settings.js";
+
+// Export types
+export type { ClaudePlanEntry } from "./tools.js";
--- a/src/mcp-server.ts
+++ b/src/mcp-server.ts
--- a/src/settings.ts
+++ b/src/settings.ts
@@ -0,0 +1,522 @@
+import * as fs from "node:fs";
+import * as path from "node:path";
+import * as os from "node:os";
+import { minimatch } from "minimatch";
+import { ACP_TOOL_NAME_PREFIX, acpToolNames } from "./tools.js";
+import { CLAUDE_CONFIG_DIR } from "./acp-agent.js";
+
+/**
+ * Permission rule format examples:
+ * - "Read" - matches all Read tool calls
+ * - "Read(./.env)" - matches specific path
+ * - "Read(./.env.*)" - glob pattern
+ * - "Read(./secrets/**)" - recursive glob
+ * - "Bash(npm run lint)" - exact command prefix
+ * - "Bash(npm run:*)" - command prefix with wildcard
+ *
+ * Docs: https://code.claude.com/docs/en/iam#tool-specific-permission-rules
+ */
+
+export interface PermissionSettings {
+  allow?: string[];
+  deny?: string[];
+  ask?: string[];
+  additionalDirectories?: string[];
+  defaultMode?: string;
+}
+
+export interface ClaudeCodeSettings {
+  permissions?: PermissionSettings;
+  env?: Record<string, string>;
+}
+
+export type PermissionDecision = "allow" | "deny" | "ask";
+
+export interface PermissionCheckResult {
+  decision: PermissionDecision;
+  rule?: string;
+  source?: "allow" | "deny" | "ask";
+}
+
+interface ParsedRule {
+  toolName: string;
+  argument?: string;
+  isWildcard?: boolean;
+}
+
+/**
+ * Shell operators that can be used for command chaining/injection
+ * These should cause a prefix match to fail to prevent bypasses like:
+ * - "safe-cmd && malicious-cmd"
+ * - "safe-cmd; malicious-cmd"
+ * - "safe-cmd | malicious-cmd"
+ * - "safe-cmd || malicious-cmd"
+ * - "$(malicious-cmd)"
+ * - "`malicious-cmd`"
+ */
+const SHELL_OPERATORS = ["&&", "||", ";", "|", "$(", "`", "\n"];
+
+/**
+ * Checks if a string contains shell operators that could allow command chaining
+ */
+function containsShellOperator(str: string): boolean {
+  return SHELL_OPERATORS.some((op) => str.includes(op));
+}
+
+/*
+ * Tools that modify files. Per Claude Code docs:
+ * "Edit rules apply to all built-in tools that edit files."
+ * This means an Edit(...) rule should match Write, MultiEdit, etc.
+ */
+const FILE_EDITING_TOOLS = [acpToolNames.edit, acpToolNames.write];
+
+/**
+ * Tools that read files. Per Claude Code docs:
+ * "Claude will make a best-effort attempt to apply Read rules to all built-in tools
+ * that read files like Grep and Glob."
+ * This means a Read(...) rule should match Grep, Glob, etc.
+ */
+const FILE_READING_TOOLS = [acpToolNames.read];
+
+/**
+ * Functions to extract the relevant argument from tool input for permission matching
+ */
+const TOOL_ARG_ACCESSORS: Record<string, (input: unknown) => string | undefined> = {
+  mcp__acp__Read: (input) => (input as { file_path?: string })?.file_path,
+  mcp__acp__Edit: (input) => (input as { file_path?: string })?.file_path,
+  mcp__acp__Write: (input) => (input as { file_path?: string })?.file_path,
+  mcp__acp__Bash: (input) => (input as { command?: string })?.command,
+};
+
+/**
+ * Parses a permission rule string into its components
+ * Examples:
+ *   "Read" -> { toolName: "Read" }
+ *   "Read(./.env)" -> { toolName: "Read", argument: "./.env" }
+ *   "Bash(npm run:*)" -> { toolName: "Bash", argument: "npm run", isWildcard: true }
+ */
+function parseRule(rule: string): ParsedRule {
+  const match = rule.match(/^(\w+)(?:\((.+)\))?$/);
+  if (!match) {
+    return { toolName: rule };
+  }
+
+  const [, toolName, argument] = match;
+
+  if (argument && argument.endsWith(":*")) {
+    return {
+      toolName,
+      argument: argument.slice(0, -2),
+      isWildcard: true,
+    };
+  }
+
+  return { toolName, argument };
+}
+
+/**
+ * Normalizes a path for comparison:
+ * - Expands ~ to home directory
+ * - Resolves relative paths against cwd
+ * - Normalizes path separators
+ */
+function normalizePath(filePath: string, cwd: string): string {
+  if (filePath.startsWith("~/")) {
+    filePath = path.join(os.homedir(), filePath.slice(2));
+  } else if (filePath.startsWith("./")) {
+    filePath = path.join(cwd, filePath.slice(2));
+  } else if (!path.isAbsolute(filePath)) {
+    filePath = path.join(cwd, filePath);
+  }
+  return path.normalize(filePath);
+}
+
+/**
+ * Checks if a file path matches a glob pattern
+ */
+function matchesGlob(pattern: string, filePath: string, cwd: string): boolean {
+  const normalizedPattern = normalizePath(pattern, cwd);
+  const normalizedPath = normalizePath(filePath, cwd);
+
+  return minimatch(normalizedPath, normalizedPattern, {
+    dot: true,
+    matchBase: false,
+    nocase: process.platform === "win32",
+  });
+}
+
+/**
+ * Checks if a tool invocation matches a parsed permission rule
+ */
+function matchesRule(rule: ParsedRule, toolName: string, toolInput: unknown, cwd: string): boolean {
+  // Per Claude Code docs:
+  // - "Edit rules apply to all built-in tools that edit files."
+  // - "Claude will make a best-effort attempt to apply Read rules to all built-in tools
+  //    that read files like Grep, Glob, and LS."
+  const ruleAppliesToTool =
+    rule.toolName === "Bash" ||
+    (rule.toolName === "Edit" && FILE_EDITING_TOOLS.includes(toolName)) ||
+    (rule.toolName === "Read" && FILE_READING_TOOLS.includes(toolName));
+
+  if (!ruleAppliesToTool) {
+    return false;
+  }
+
+  if (!rule.argument) {
+    return true;
+  }
+
+  const argAccessor = TOOL_ARG_ACCESSORS[toolName];
+  if (!argAccessor) {
+    return true;
+  }
+
+  const actualArg = argAccessor(toolInput);
+  if (!actualArg) {
+    return false;
+  }
+
+  if (toolName === acpToolNames.bash) {
+    // Per Claude Code docs: https://code.claude.com/docs/en/iam#tool-specific-permission-rules
+    // - Bash(npm run build) matches the EXACT command "npm run build"
+    // - Bash(npm run test:*) matches commands STARTING WITH "npm run test"
+    // The :* suffix enables prefix matching, without it the match is exact
+    //
+    // Also from docs: "Claude Code is aware of shell operators (like &&) so a prefix match
+    // rule like Bash(safe-cmd:*) won't give it permission to run the command safe-cmd && other-cmd"
+    if (rule.isWildcard) {
+      if (!actualArg.startsWith(rule.argument)) {
+        return false;
+      }
+      // Check that the matched prefix isn't followed by shell operators that could
+      // allow command chaining/injection
+      const remainder = actualArg.slice(rule.argument.length);
+      if (containsShellOperator(remainder)) {
+        return false;
+      }
+      return true;
+    }
+    return actualArg === rule.argument;
+  }
+
+  // For file-based tools (Read, Edit, Write), use glob matching
+  return matchesGlob(rule.argument, actualArg, cwd);
+}
+
+/**
+ * Reads and parses a JSON settings file, returning an empty object if not found or invalid
+ */
+async function loadSettingsFile(filePath: string | null): Promise<ClaudeCodeSettings> {
+  if (!filePath) {
+    return {};
+  }
+
+  try {
+    const content = await fs.promises.readFile(filePath, "utf-8");
+    return JSON.parse(content) as ClaudeCodeSettings;
+  } catch {
+    return {};
+  }
+}
+
+/**
+ * Gets the enterprise settings path based on the current platform
+ */
+export function getManagedSettingsPath(): string {
+  switch (process.platform) {
+    case "darwin":
+      return "/Library/Application Support/ClaudeCode/managed-settings.json";
+    case "linux":
+      return "/etc/claude-code/managed-settings.json";
+    case "win32":
+      return "C:\\Program Files\\ClaudeCode\\managed-settings.json";
+    default:
+      return "/etc/claude-code/managed-settings.json";
+  }
+}
+
+export interface SettingsManagerOptions {
+  onChange?: () => void;
+  logger?: { log: (...args: any[]) => void; error: (...args: any[]) => void };
+}
+
+/**
+ * Manages Claude Code settings from multiple sources with proper precedence.
+ *
+ * Settings are loaded from (in order of increasing precedence):
+ * 1. User settings (~/.claude/settings.json)
+ * 2. Project settings (<cwd>/.claude/settings.json)
+ * 3. Local project settings (<cwd>/.claude/settings.local.json)
+ * 4. Enterprise managed settings (platform-specific path)
+ *
+ * The manager watches all settings files for changes and automatically reloads.
+ */
+export class SettingsManager {
+  private cwd: string;
+  private userSettings: ClaudeCodeSettings = {};
+  private projectSettings: ClaudeCodeSettings = {};
+  private localSettings: ClaudeCodeSettings = {};
+  private enterpriseSettings: ClaudeCodeSettings = {};
+  private mergedSettings: ClaudeCodeSettings = {};
+  private watchers: fs.FSWatcher[] = [];
+  private onChange?: () => void;
+  private logger: { log: (...args: any[]) => void; error: (...args: any[]) => void };
+  private initialized = false;
+  private debounceTimer: ReturnType<typeof setTimeout> | null = null;
+
+  constructor(cwd: string, options?: SettingsManagerOptions) {
+    this.cwd = cwd;
+    this.onChange = options?.onChange;
+    this.logger = options?.logger ?? console;
+  }
+
+  /**
+   * Initialize the settings manager by loading all settings and setting up file watchers
+   */
+  async initialize(): Promise<void> {
+    if (this.initialized) {
+      return;
+    }
+
+    await this.loadAllSettings();
+    this.setupWatchers();
+    this.initialized = true;
+  }
+
+  /**
+   * Returns the path to the user settings file
+   */
+  private getUserSettingsPath(): string {
+    return path.join(CLAUDE_CONFIG_DIR, "settings.json");
+  }
+
+  /**
+   * Returns the path to the project settings file
+   */
+  private getProjectSettingsPath(): string {
+    return path.join(this.cwd, ".claude", "settings.json");
+  }
+
+  /**
+   * Returns the path to the local project settings file
+   */
+  private getLocalSettingsPath(): string {
+    return path.join(this.cwd, ".claude", "settings.local.json");
+  }
+
+  /**
+   * Loads settings from all sources
+   */
+  private async loadAllSettings(): Promise<void> {
+    const [userSettings, projectSettings, localSettings, enterpriseSettings] = await Promise.all([
+      loadSettingsFile(this.getUserSettingsPath()),
+      loadSettingsFile(this.getProjectSettingsPath()),
+      loadSettingsFile(this.getLocalSettingsPath()),
+      loadSettingsFile(getManagedSettingsPath()),
+    ]);
+
+    this.userSettings = userSettings;
+    this.projectSettings = projectSettings;
+    this.localSettings = localSettings;
+    this.enterpriseSettings = enterpriseSettings;
+
+    this.mergeSettings();
+  }
+
+  /**
+   * Merges all settings sources with proper precedence.
+   * For permissions, rules from all sources are combined.
+   * Deny rules always take precedence during permission checks.
+   */
+  private mergeSettings(): void {
+    const allSettings = [
+      this.userSettings,
+      this.projectSettings,
+      this.localSettings,
+      this.enterpriseSettings,
+    ];
+
+    const merged: ClaudeCodeSettings = {
+      permissions: {
+        allow: [],
+        deny: [],
+        ask: [],
+      },
+    };
+
+    for (const settings of allSettings) {
+      if (settings.permissions) {
+        if (settings.permissions.allow) {
+          merged.permissions!.allow!.push(...settings.permissions.allow);
+        }
+        if (settings.permissions.deny) {
+          merged.permissions!.deny!.push(...settings.permissions.deny);
+        }
+        if (settings.permissions.ask) {
+          merged.permissions!.ask!.push(...settings.permissions.ask);
+        }
+        if (settings.permissions.additionalDirectories) {
+          merged.permissions!.additionalDirectories = [
+            ...(merged.permissions!.additionalDirectories || []),
+            ...settings.permissions.additionalDirectories,
+          ];
+        }
+        if (settings.permissions.defaultMode) {
+          merged.permissions!.defaultMode = settings.permissions.defaultMode;
+        }
+      }
+
+      if (settings.env) {
+        merged.env = { ...merged.env, ...settings.env };
+      }
+    }
+
+    this.mergedSettings = merged;
+  }
+
+  /**
+   * Sets up file watchers for all settings files
+   */
+  private setupWatchers(): void {
+    const paths = [
+      this.getUserSettingsPath(),
+      this.getProjectSettingsPath(),
+      this.getLocalSettingsPath(),
+      getManagedSettingsPath(),
+    ];
+
+    for (const filePath of paths) {
+      if (!filePath) continue;
+
+      try {
+        const dir = path.dirname(filePath);
+        const filename = path.basename(filePath);
+
+        if (fs.existsSync(dir)) {
+          const watcher = fs.watch(dir, (eventType, changedFilename) => {
+            if (changedFilename === filename) {
+              this.handleSettingsChange();
+            }
+          });
+
+          watcher.on("error", (error) => {
+            this.logger.error(`Settings watcher error for ${filePath}:`, error);
+          });
+
+          this.watchers.push(watcher);
+        }
+      } catch (error) {
+        this.logger.error(`Failed to set up watcher for ${filePath}:`, error);
+      }
+    }
+  }
+
+  /**
+   * Handles settings file changes with debouncing to avoid rapid reloads
+   */
+  private handleSettingsChange(): void {
+    if (this.debounceTimer) {
+      clearTimeout(this.debounceTimer);
+    }
+
+    this.debounceTimer = setTimeout(async () => {
+      this.debounceTimer = null;
+      try {
+        await this.loadAllSettings();
+        this.onChange?.();
+      } catch (error) {
+        this.logger.error("Failed to reload settings:", error);
+      }
+    }, 100);
+  }
+
+  /**
+   * Checks if a tool invocation is allowed based on the loaded settings.
+   *
+   * @param toolName - The tool name (can be ACP-prefixed like mcp__acp__Read or plain like Read)
+   * @param toolInput - The tool input object
+   * @returns The permission decision and matching rule info
+   */
+  checkPermission(toolName: string, toolInput: unknown): PermissionCheckResult {
+    if (!toolName.startsWith(ACP_TOOL_NAME_PREFIX)) {
+      return { decision: "ask" };
+    }
+
+    const permissions = this.mergedSettings.permissions;
+
+    if (!permissions) {
+      return { decision: "ask" };
+    }
+
+    // Check deny rules first (highest priority)
+    for (const rule of permissions.deny || []) {
+      const parsed = parseRule(rule);
+      if (matchesRule(parsed, toolName, toolInput, this.cwd)) {
+        return { decision: "deny", rule, source: "deny" };
+      }
+    }
+
+    // Check allow rules
+    for (const rule of permissions.allow || []) {
+      const parsed = parseRule(rule);
+      if (matchesRule(parsed, toolName, toolInput, this.cwd)) {
+        return { decision: "allow", rule, source: "allow" };
+      }
+    }
+
+    // Check ask rules
+    for (const rule of permissions.ask || []) {
+      const parsed = parseRule(rule);
+      if (matchesRule(parsed, toolName, toolInput, this.cwd)) {
+        return { decision: "ask", rule, source: "ask" };
+      }
+    }
+
+    // No matching rule - default to ask
+    return { decision: "ask" };
+  }
+
+  /**
+   * Returns the current merged settings
+   */
+  getSettings(): ClaudeCodeSettings {
+    return this.mergedSettings;
+  }
+
+  /**
+   * Returns the current working directory
+   */
+  getCwd(): string {
+    return this.cwd;
+  }
+
+  /**
+   * Updates the working directory and reloads project-specific settings
+   */
+  async setCwd(cwd: string): Promise<void> {
+    if (this.cwd === cwd) {
+      return;
+    }
+
+    this.dispose();
+    this.cwd = cwd;
+    this.initialized = false;
+    await this.initialize();
+  }
+
+  /**
+   * Disposes of file watchers and cleans up resources
+   */
+  dispose(): void {
+    if (this.debounceTimer) {
+      clearTimeout(this.debounceTimer);
+      this.debounceTimer = null;
+    }
+
+    for (const watcher of this.watchers) {
+      watcher.close();
+    }
+    this.watchers = [];
+    this.initialized = false;
+  }
+}
--- a/src/tests/.claude/commands/say-hello.md
+++ b/src/tests/.claude/commands/say-hello.md
@@ -1,6 +1,6 @@
 ---
 description: Say hello
-argument-hint: [name]
+argument-hint: name
 ---

 Respond with "Hello $1" and nothing else.
--- a/src/tests/acp-agent.test.ts
+++ b/src/tests/acp-agent.test.ts
@@ -2,6 +2,7 @@ import { describe, it, expect, beforeAll, afterAll } from "vitest";
 import { spawn, spawnSync } from "child_process";
 import {
  Agent,
+  AgentSideConnection,
  AvailableCommand,
  Client,
  ClientSideConnection,
@@ -14,11 +15,12 @@ import {
  SessionNotification,
  WriteTextFileRequest,
  WriteTextFileResponse,
-} from "@zed-industries/agent-client-protocol";
+} from "@agentclientprotocol/sdk";
 import { nodeToWebWritable, nodeToWebReadable } from "../utils.js";
 import { markdownEscape, toolInfoFromToolUse, toolUpdateFromToolResult } from "../tools.js";
-import { toAcpNotifications } from "../acp-agent.js";
-import { SDKAssistantMessage } from "@anthropic-ai/claude-agent-sdk";
+import { toAcpNotifications, promptToClaude } from "../acp-agent.js";
+import { query, SDKAssistantMessage } from "@anthropic-ai/claude-agent-sdk";
+import { randomUUID } from "crypto";

 describe.skipIf(!process.env.RUN_INTEGRATION_TESTS)("ACP subprocess integration", () => {
  let child: ReturnType<typeof spawn>;
@@ -164,7 +166,7 @@ describe.skipIf(!process.env.RUN_INTEGRATION_TESTS)("ACP subprocess integration"
    expect(commands).toContainEqual({
      name: "say-hello",
      description: "Say hello (project)",
-      input: { hint: "[name]" },
+      input: { hint: "name" },
    });

    await connection.prompt({
@@ -249,7 +251,7 @@ describe("tool conversions", () => {
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "execute",
      title: "`rm README.md.rm`",
      content: [
@@ -274,7 +276,7 @@ describe("tool conversions", () => {
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "search",
      title: "Find `*/**.ts`",
      content: [],
@@ -295,7 +297,7 @@ describe("tool conversions", () => {
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "think",
      title: "Handle user's work request",
      content: [
@@ -320,7 +322,7 @@ describe("tool conversions", () => {
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "search",
      title: "List the `/Users/test/github/claude-code-acp` directory's contents",
      content: [],
@@ -338,7 +340,7 @@ describe("tool conversions", () => {
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "search",
      title: 'grep ".*"',
      content: [],
@@ -356,7 +358,7 @@ describe("tool conversions", () => {
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "edit",
      title: "Write /Users/test/project/example.txt",
      content: [
@@ -371,18 +373,18 @@ describe("tool conversions", () => {
    });
  });

-  it("should handle mcp__acp__write tool calls", () => {
+  it("should handle mcp__acp__Write tool calls", () => {
    const tool_use = {
      type: "tool_use",
      id: "toolu_01GHI789JKL456",
-      name: "mcp__acp__write",
+      name: "mcp__acp__Write",
      input: {
-        abs_path: "/Users/test/project/config.json",
+        file_path: "/Users/test/project/config.json",
        content: '{"version": "1.0.0"}',
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "edit",
      title: "Write /Users/test/project/config.json",
      content: [
@@ -407,7 +409,7 @@ describe("tool conversions", () => {
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "read",
      title: "Read File",
      content: [],
@@ -415,17 +417,17 @@ describe("tool conversions", () => {
    });
  });

-  it("should handle mcp__acp__read tool calls", () => {
+  it("should handle mcp__acp__Read tool calls", () => {
    const tool_use = {
      type: "tool_use",
      id: "toolu_01YZA789BCD123",
-      name: "mcp__acp__read",
+      name: "mcp__acp__Read",
      input: {
-        abs_path: "/Users/test/project/data.json",
+        file_path: "/Users/test/project/data.json",
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "read",
      title: "Read /Users/test/project/data.json",
      content: [],
@@ -433,18 +435,18 @@ describe("tool conversions", () => {
    });
  });

-  it("should handle mcp__acp__read with limit", () => {
+  it("should handle mcp__acp__Read with limit", () => {
    const tool_use = {
      type: "tool_use",
      id: "toolu_01EFG456HIJ789",
-      name: "mcp__acp__read",
+      name: "mcp__acp__Read",
      input: {
-        abs_path: "/Users/test/project/large.txt",
+        file_path: "/Users/test/project/large.txt",
        limit: 100,
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "read",
      title: "Read /Users/test/project/large.txt (1 - 100)",
      content: [],
@@ -452,19 +454,19 @@ describe("tool conversions", () => {
    });
  });

-  it("should handle mcp__acp__read with offset and limit", () => {
+  it("should handle mcp__acp__Read with offset and limit", () => {
    const tool_use = {
      type: "tool_use",
      id: "toolu_01KLM789NOP456",
-      name: "mcp__acp__read",
+      name: "mcp__acp__Read",
      input: {
-        abs_path: "/Users/test/project/large.txt",
+        file_path: "/Users/test/project/large.txt",
        offset: 50,
        limit: 100,
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "read",
      title: "Read /Users/test/project/large.txt (51 - 150)",
      content: [],
@@ -472,18 +474,18 @@ describe("tool conversions", () => {
    });
  });

-  it("should handle mcp__acp__read with only offset", () => {
+  it("should handle mcp__acp__Read with only offset", () => {
    const tool_use = {
      type: "tool_use",
      id: "toolu_01QRS123TUV789",
-      name: "mcp__acp__read",
+      name: "mcp__acp__Read",
      input: {
-        abs_path: "/Users/test/project/large.txt",
+        file_path: "/Users/test/project/large.txt",
        offset: 200,
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "read",
      title: "Read /Users/test/project/large.txt (from line 201)",
      content: [],
@@ -491,61 +493,17 @@ describe("tool conversions", () => {
    });
  });

-  it("should handle WebFetch tool calls", () => {
-    const tool_use = {
-      type: "tool_use",
-      id: "toolu_01LxEjDn8ci9SAc3qG7LbbXV",
-      name: "WebFetch",
-      input: {
-        url: "https://agentclientprotocol.com",
-        prompt:
-          "Please provide a comprehensive summary of the content on this page, including what the Agent Client Protocol is, its main features, documentation links, and any other relevant information.",
-      },
-    };
-
-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
-      kind: "fetch",
-      title: "Fetch https://agentclientprotocol.com",
-      content: [
-        {
-          content: {
-            text: "Please provide a comprehensive summary of the content on this page, including what the Agent Client Protocol is, its main features, documentation links, and any other relevant information.",
-            type: "text",
-          },
-          type: "content",
-        },
-      ],
-    });
-  });
-
-  it("should handle WebSearch tool calls", () => {
-    const tool_use = {
-      type: "tool_use",
-      id: "toolu_01NYMwiZFbdoQFxYxuQDFZXQ",
-      name: "WebSearch",
-      input: {
-        query: "agentclientprotocol.com",
-      },
-    };
-
-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
-      kind: "fetch",
-      title: '"agentclientprotocol.com"',
-      content: [],
-    });
-  });
-
  it("should handle KillBash entries", () => {
    const tool_use = {
      type: "tool_use",
      id: "toolu_01PhLms5fuvmdjy2bb6dfUKT",
-      name: "KillBash",
+      name: "KillShell",
      input: {
        shell_id: "bash_1",
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "execute",
      title: `Kill Process`,
      content: [],
@@ -562,7 +520,7 @@ describe("tool conversions", () => {
      },
    };

-    expect(toolInfoFromToolUse(tool_use, {})).toStrictEqual({
+    expect(toolInfoFromToolUse(tool_use)).toStrictEqual({
      kind: "execute",
      title: `Tail Logs`,
      content: [],
@@ -649,7 +607,16 @@ describe("tool conversions", () => {
      session_id: "d056596f-e328-41e9-badd-b07122ae5227",
      uuid: "b7c3330c-de8f-4bba-ac53-68c7f76ffeb5",
    };
-    expect(toAcpNotifications(received, "test", {}, {})).toStrictEqual([
+    expect(
+      toAcpNotifications(
+        received.message.content,
+        received.message.role,
+        "test",
+        {},
+        {} as AgentSideConnection,
+        console,
+      ),
+    ).toStrictEqual([
      {
        sessionId: "test",
        update: {
@@ -701,78 +668,13 @@ describe("tool conversions", () => {
    ]);
  });

-  it("should show full diff for multi edit tool", () => {
-    const toolUse = {
-      type: "tool_use",
-      id: "toolu_01DEF456",
-      name: "mcp__acp__multi-edit",
-      input: {
-        file_path: "/Users/test/project/config.json",
-        edits: [
-          {
-            old_string: 'version": 1',
-            new_string: 'version": 2',
-            replace_all: false,
-          },
-          {
-            old_string: 'enabled": false',
-            new_string: 'enabled": true',
-            replace_all: true,
-          },
-        ],
-      },
-    };
-    const fileCache: { [key: string]: string } = {
-      "/Users/test/project/config.json": JSON.stringify(
-        {
-          version: 1,
-          filler: "filler",
-          enabled: false,
-        },
-        null,
-        4,
-      ),
-    };
-
-    expect(toolInfoFromToolUse(toolUse, fileCache)).toEqual({
-      content: [
-        {
-          newText: `{
-    "version": 2,
-    "filler": "filler",
-    "enabled": true
-}`,
-          oldText: `{
-    "version": 1,
-    "filler": "filler",
-    "enabled": false
-}`,
-          path: "/Users/test/project/config.json",
-          type: "diff",
-        },
-      ],
-      kind: "edit",
-      locations: [
-        {
-          path: "/Users/test/project/config.json",
-          line: 1,
-        },
-        {
-          path: "/Users/test/project/config.json",
-          line: 3,
-        },
-      ],
-      title: "Edit /Users/test/project/config.json",
-    });
-  });
-
  it("should return empty update for successful edit result", () => {
    const toolUse = {
      type: "tool_use",
      id: "toolu_01MNO345",
-      name: "mcp__acp__edit",
+      name: "mcp__acp__Edit",
      input: {
-        abs_path: "/Users/test/project/test.txt",
+        file_path: "/Users/test/project/test.txt",
        old_string: "old",
        new_string: "new",
      },
@@ -800,9 +702,9 @@ describe("tool conversions", () => {
    const toolUse = {
      type: "tool_use",
      id: "toolu_01MNO345",
-      name: "mcp__acp__edit",
+      name: "mcp__acp__Edit",
      input: {
-        abs_path: "/Users/test/project/test.txt",
+        file_path: "/Users/test/project/test.txt",
        old_string: "old",
        new_string: "new",
      },
@@ -845,3 +747,123 @@ describe("escape markdown", () => {
    expect(escaped).toEqual("````\nfor example:\n```markdown\nHello *world*!\n```\n````");
  });
 });
+
+describe("prompt conversion", () => {
+  it("should not change built-in slash commands", () => {
+    const message = promptToClaude({
+      sessionId: "test",
+      prompt: [
+        {
+          type: "text",
+          text: "/compact args",
+        },
+      ],
+    });
+    expect(message.message.content).toEqual([
+      {
+        text: "/compact args",
+        type: "text",
+      },
+    ]);
+  });
+
+  it("should remove MCP prefix from MCP slash commands", () => {
+    const message = promptToClaude({
+      sessionId: "test",
+      prompt: [
+        {
+          type: "text",
+          text: "/mcp:server:name args",
+        },
+      ],
+    });
+    expect(message.message.content).toEqual([
+      {
+        text: "/server:name (MCP) args",
+        type: "text",
+      },
+    ]);
+  });
+});
+
+describe.skipIf(!process.env.RUN_INTEGRATION_TESTS)("SDK behavior", () => {
+  it("query has a 'default' model", async () => {
+    const q = query({ prompt: "hi" });
+    const models = await q.supportedModels();
+    const defaultModel = models.find((m) => m.value === "default");
+    expect(defaultModel).toBeDefined();
+  }, 10000);
+
+  it("custom session id", async () => {
+    const sessionId = randomUUID();
+    const q = query({
+      prompt: "hi",
+      options: {
+        systemPrompt: { type: "preset", preset: "claude_code" },
+        extraArgs: { "session-id": sessionId },
+        settingSources: ["user", "project", "local"],
+        includePartialMessages: true,
+      },
+    });
+
+    const { value } = await q.next();
+    expect(value).toMatchObject({ type: "system", subtype: "init", session_id: sessionId });
+  }, 10000);
+});
+
+describe("permission requests", () => {
+  it("should include title field in tool permission request structure", () => {
+    // Test various tool types to ensure title is correctly generated
+    const testCases = [
+      {
+        toolUse: {
+          type: "tool_use" as const,
+          id: "test-1",
+          name: "Write",
+          input: { file_path: "/test/file.txt", content: "test" },
+        },
+        expectedTitlePart: "/test/file.txt",
+      },
+      {
+        toolUse: {
+          type: "tool_use" as const,
+          id: "test-2",
+          name: "Bash",
+          input: { command: "ls -la", description: "List files" },
+        },
+        expectedTitlePart: "`ls -la`",
+      },
+      {
+        toolUse: {
+          type: "tool_use" as const,
+          id: "test-3",
+          name: "mcp__acp__Read",
+          input: { file_path: "/test/data.json" },
+        },
+        expectedTitlePart: "/test/data.json",
+      },
+    ];
+
+    for (const testCase of testCases) {
+      // Get the tool info that would be used in requestPermission
+      const toolInfo = toolInfoFromToolUse(testCase.toolUse);
+
+      // Verify toolInfo has a title
+      expect(toolInfo.title).toBeDefined();
+      expect(toolInfo.title).toContain(testCase.expectedTitlePart);
+
+      // Verify the structure that our fix creates for requestPermission
+      const requestStructure = {
+        toolCall: {
+          toolCallId: testCase.toolUse.id,
+          rawInput: testCase.toolUse.input,
+          title: toolInfo.title, // This is what commit 1785d86 adds
+        },
+      };
+
+      // Ensure the title field is present and populated
+      expect(requestStructure.toolCall.title).toBeDefined();
+      expect(requestStructure.toolCall.title).toContain(testCase.expectedTitlePart);
+    }
+  });
+});
--- a/src/tests/settings.test.ts
+++ b/src/tests/settings.test.ts
@@ -0,0 +1,617 @@
+import { describe, it, expect, beforeEach, afterEach } from "vitest";
+import { SettingsManager } from "../settings.js";
+import * as fs from "node:fs";
+import * as path from "node:path";
+import * as os from "node:os";
+
+describe("SettingsManager", () => {
+  let tempDir: string;
+  let settingsManager: SettingsManager;
+
+  beforeEach(async () => {
+    tempDir = await fs.promises.mkdtemp(path.join(os.tmpdir(), "settings-test-"));
+  });
+
+  afterEach(async () => {
+    settingsManager?.dispose();
+    await fs.promises.rm(tempDir, { recursive: true, force: true });
+  });
+
+  describe("permission checking", () => {
+    it("should return 'ask' when no settings exist", async () => {
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const result = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: "/some/file.txt",
+      });
+      expect(result.decision).toBe("ask");
+    });
+
+    it("should return 'ask' for non-ACP tools (permission checks only apply to mcp__acp__* tools)", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            deny: ["Read"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      // Non-ACP tools should always return 'ask' regardless of rules
+      const result = settingsManager.checkPermission("Read", { file_path: "/some/file.txt" });
+      expect(result.decision).toBe("ask");
+    });
+
+    it("should allow tool use when matching allow rule exists", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            allow: ["Read"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const result = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: "/some/file.txt",
+      });
+      expect(result.decision).toBe("allow");
+      expect(result.rule).toBe("Read");
+    });
+
+    it("should deny tool use when matching deny rule exists", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            deny: ["Read(./.env)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const result = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, ".env"),
+      });
+      expect(result.decision).toBe("deny");
+      expect(result.rule).toBe("Read(./.env)");
+    });
+
+    it("should prioritize deny rules over allow rules", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            allow: ["Read"],
+            deny: ["Read(./.env)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      // .env should be denied
+      const envResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, ".env"),
+      });
+      expect(envResult.decision).toBe("deny");
+
+      // other files should be allowed
+      const otherResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, "other.txt"),
+      });
+      expect(otherResult.decision).toBe("allow");
+    });
+
+    it("should handle ACP-prefixed tool names", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            allow: ["Read"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const result = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: "/some/file.txt",
+      });
+      expect(result.decision).toBe("allow");
+    });
+  });
+
+  describe("Bash permission rules", () => {
+    it("should match exact Bash commands without :* wildcard", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            // Per docs: Bash(npm run build) matches the EXACT command "npm run build"
+            allow: ["Bash(npm run lint)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      // Exact match should be allowed
+      const exactResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "npm run lint",
+      });
+      expect(exactResult.decision).toBe("allow");
+
+      // Command with extra arguments should NOT match (exact match only)
+      const withArgsResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "npm run lint --fix",
+      });
+      expect(withArgsResult.decision).toBe("ask");
+
+      // Similar command should NOT match (exact match only)
+      const similarResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "npm run linting",
+      });
+      expect(similarResult.decision).toBe("ask");
+
+      // Different command should not match
+      const differentResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "npm run test",
+      });
+      expect(differentResult.decision).toBe("ask");
+    });
+
+    it("should match Bash commands with :* wildcard suffix (prefix matching)", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            // The :* suffix is a convention to make prefix matching explicit
+            allow: ["Bash(npm run:*)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      // Any command starting with "npm run" should match (prefix matching with :*)
+      const lintResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "npm run lint",
+      });
+      expect(lintResult.decision).toBe("allow");
+
+      const testResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "npm run test",
+      });
+      expect(testResult.decision).toBe("allow");
+
+      // Commands with additional args also match
+      const withArgsResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "npm run test --watch",
+      });
+      expect(withArgsResult.decision).toBe("allow");
+
+      // Non-matching command
+      const installResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "npm install",
+      });
+      expect(installResult.decision).toBe("ask");
+    });
+
+    it("should not allow shell operators to bypass prefix matching", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            allow: ["Bash(safe-cmd:*)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      // Normal prefix match should work
+      const normalResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "safe-cmd --flag",
+      });
+      expect(normalResult.decision).toBe("allow");
+
+      // Shell operators should NOT be allowed (per docs: Claude Code is aware of shell operators)
+      const andResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "safe-cmd && malicious-cmd",
+      });
+      expect(andResult.decision).toBe("ask");
+
+      const orResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "safe-cmd || malicious-cmd",
+      });
+      expect(orResult.decision).toBe("ask");
+
+      const semicolonResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "safe-cmd; malicious-cmd",
+      });
+      expect(semicolonResult.decision).toBe("ask");
+
+      const pipeResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "safe-cmd | malicious-cmd",
+      });
+      expect(pipeResult.decision).toBe("ask");
+
+      const subshellResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "safe-cmd $(malicious-cmd)",
+      });
+      expect(subshellResult.decision).toBe("ask");
+
+      const backtickResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "safe-cmd `malicious-cmd`",
+      });
+      expect(backtickResult.decision).toBe("ask");
+
+      const newlineResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "safe-cmd\nmalicious-cmd",
+      });
+      expect(newlineResult.decision).toBe("ask");
+    });
+
+    it("should deny dangerous Bash commands", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            deny: ["Bash(curl:*)", "Bash(wget:*)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const curlResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "curl https://example.com",
+      });
+      expect(curlResult.decision).toBe("deny");
+
+      const wgetResult = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "wget https://example.com",
+      });
+      expect(wgetResult.decision).toBe("deny");
+
+      const lsResult = settingsManager.checkPermission("mcp__acp__Bash", { command: "ls -la" });
+      expect(lsResult.decision).toBe("ask");
+    });
+  });
+
+  describe("file path glob matching", () => {
+    it("should match exact file paths", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            deny: ["Read(./.env)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const envResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, ".env"),
+      });
+      expect(envResult.decision).toBe("deny");
+
+      const otherResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, ".envrc"),
+      });
+      expect(otherResult.decision).toBe("ask");
+    });
+
+    it("should match glob patterns with single wildcard", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            deny: ["Read(./.env.*)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const envLocalResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, ".env.local"),
+      });
+      expect(envLocalResult.decision).toBe("deny");
+
+      const envProdResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, ".env.production"),
+      });
+      expect(envProdResult.decision).toBe("deny");
+
+      // Plain .env should not match .env.*
+      const plainEnvResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, ".env"),
+      });
+      expect(plainEnvResult.decision).toBe("ask");
+    });
+
+    it("should match glob patterns with double wildcard (recursive)", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            deny: ["Read(./secrets/**)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const secretResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, "secrets", "api-key.txt"),
+      });
+      expect(secretResult.decision).toBe("deny");
+
+      const nestedSecretResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, "secrets", "deep", "nested", "key.txt"),
+      });
+      expect(nestedSecretResult.decision).toBe("deny");
+
+      const otherResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, "public", "file.txt"),
+      });
+      expect(otherResult.decision).toBe("ask");
+    });
+
+    it("should handle home directory expansion", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            allow: ["Read(~/.zshrc)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const zshrcResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(os.homedir(), ".zshrc"),
+      });
+      expect(zshrcResult.decision).toBe("allow");
+    });
+  });
+
+  describe("settings merging", () => {
+    it("should merge project and local settings", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+
+      // Project settings
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            allow: ["Read"],
+          },
+        }),
+      );
+
+      // Local settings
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.local.json"),
+        JSON.stringify({
+          permissions: {
+            deny: ["Read(./.env)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      // Read should be allowed in general
+      const readResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, "file.txt"),
+      });
+      expect(readResult.decision).toBe("allow");
+
+      // But .env should be denied (local settings take precedence)
+      const envResult = settingsManager.checkPermission("mcp__acp__Read", {
+        file_path: path.join(tempDir, ".env"),
+      });
+      expect(envResult.decision).toBe("deny");
+    });
+  });
+
+  describe("ask rules", () => {
+    it("should return 'ask' for matching ask rules", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            ask: ["Bash(git push:*)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const result = settingsManager.checkPermission("mcp__acp__Bash", {
+        command: "git push origin main",
+      });
+      expect(result.decision).toBe("ask");
+      expect(result.rule).toBe("Bash(git push:*)");
+    });
+  });
+
+  describe("Edit and Write tools", () => {
+    it("should handle Edit tool permissions", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            deny: ["Edit(./package-lock.json)"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const lockFileResult = settingsManager.checkPermission("mcp__acp__Edit", {
+        file_path: path.join(tempDir, "package-lock.json"),
+      });
+      expect(lockFileResult.decision).toBe("deny");
+
+      const otherResult = settingsManager.checkPermission("mcp__acp__Edit", {
+        file_path: path.join(tempDir, "package.json"),
+      });
+      expect(otherResult.decision).toBe("ask");
+    });
+
+    it("should handle mcp__acp__Edit and mcp__acp__Write tool names", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            allow: ["Edit", "Write"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const editResult = settingsManager.checkPermission("mcp__acp__Edit", {
+        file_path: "/some/file.ts",
+      });
+      expect(editResult.decision).toBe("allow");
+
+      const writeResult = settingsManager.checkPermission("mcp__acp__Write", {
+        file_path: "/some/file.ts",
+      });
+      expect(writeResult.decision).toBe("allow");
+    });
+  });
+
+  describe("getSettings", () => {
+    it("should return merged settings", async () => {
+      const claudeDir = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            allow: ["Read", "Bash(npm:*)"],
+            deny: ["Read(./.env)"],
+          },
+          env: {
+            FOO: "bar",
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      const settings = settingsManager.getSettings();
+      expect(settings.permissions?.allow).toContain("Read");
+      expect(settings.permissions?.allow).toContain("Bash(npm:*)");
+      expect(settings.permissions?.deny).toContain("Read(./.env)");
+      expect(settings.env?.FOO).toBe("bar");
+    });
+  });
+
+  describe("setCwd", () => {
+    it("should reload settings when cwd changes", async () => {
+      const claudeDir1 = path.join(tempDir, ".claude");
+      await fs.promises.mkdir(claudeDir1, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir1, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            allow: ["Read"],
+          },
+        }),
+      );
+
+      settingsManager = new SettingsManager(tempDir);
+      await settingsManager.initialize();
+
+      let result = settingsManager.checkPermission("mcp__acp__Read", { file_path: "/file.txt" });
+      expect(result.decision).toBe("allow");
+
+      // Create a new temp directory with different settings
+      const tempDir2 = await fs.promises.mkdtemp(path.join(os.tmpdir(), "settings-test-2-"));
+      const claudeDir2 = path.join(tempDir2, ".claude");
+      await fs.promises.mkdir(claudeDir2, { recursive: true });
+      await fs.promises.writeFile(
+        path.join(claudeDir2, "settings.json"),
+        JSON.stringify({
+          permissions: {
+            deny: ["Read"],
+          },
+        }),
+      );
+
+      await settingsManager.setCwd(tempDir2);
+
+      result = settingsManager.checkPermission("mcp__acp__Read", { file_path: "/file.txt" });
+      expect(result.decision).toBe("deny");
+
+      // Cleanup second temp dir
+      await fs.promises.rm(tempDir2, { recursive: true, force: true });
+    });
+  });
+});
--- a/src/tests/tools.test.ts
+++ b/src/tests/tools.test.ts
@@ -0,0 +1,318 @@
+import { describe, it, expect } from "vitest";
+import { AgentSideConnection } from "@agentclientprotocol/sdk";
+import { ToolResultBlockParam } from "@anthropic-ai/sdk/resources";
+import {
+  BetaMCPToolResultBlock,
+  BetaTextBlock,
+  BetaWebSearchResultBlock,
+  BetaWebSearchToolResultBlock,
+  BetaBashCodeExecutionToolResultBlock,
+  BetaBashCodeExecutionResultBlock,
+} from "@anthropic-ai/sdk/resources/beta.mjs";
+import { toAcpNotifications, ToolUseCache, Logger } from "../acp-agent.js";
+
+describe("rawOutput in tool call updates", () => {
+  const mockClient = {} as AgentSideConnection;
+  const mockLogger: Logger = { log: () => {}, error: () => {} };
+
+  it("should include rawOutput with string content for tool_result", () => {
+    const toolUseCache: ToolUseCache = {
+      toolu_123: {
+        type: "tool_use",
+        id: "toolu_123",
+        name: "Bash",
+        input: { command: "echo hello" },
+      },
+    };
+
+    const toolResult: ToolResultBlockParam = {
+      type: "tool_result",
+      tool_use_id: "toolu_123",
+      content: "hello\n",
+      is_error: false,
+    };
+
+    const notifications = toAcpNotifications(
+      [toolResult],
+      "assistant",
+      "test-session",
+      toolUseCache,
+      mockClient,
+      mockLogger,
+    );
+
+    expect(notifications).toHaveLength(1);
+    expect(notifications[0].update).toMatchObject({
+      sessionUpdate: "tool_call_update",
+      toolCallId: "toolu_123",
+      status: "completed",
+      rawOutput: "hello\n",
+    });
+  });
+
+  it("should include rawOutput with array content for tool_result", () => {
+    const toolUseCache: ToolUseCache = {
+      toolu_456: {
+        type: "tool_use",
+        id: "toolu_456",
+        name: "Read",
+        input: { file_path: "/test/file.txt" },
+      },
+    };
+
+    // ToolResultBlockParam content can be string or array of TextBlockParam
+    const toolResult: ToolResultBlockParam = {
+      type: "tool_result",
+      tool_use_id: "toolu_456",
+      content: [{ type: "text", text: "Line 1\nLine 2\nLine 3" }],
+      is_error: false,
+    };
+
+    const notifications = toAcpNotifications(
+      [toolResult],
+      "assistant",
+      "test-session",
+      toolUseCache,
+      mockClient,
+      mockLogger,
+    );
+
+    expect(notifications).toHaveLength(1);
+    expect(notifications[0].update).toMatchObject({
+      sessionUpdate: "tool_call_update",
+      toolCallId: "toolu_456",
+      status: "completed",
+      rawOutput: [{ type: "text", text: "Line 1\nLine 2\nLine 3" }],
+    });
+  });
+
+  it("should include rawOutput for mcp_tool_result with string content", () => {
+    const toolUseCache: ToolUseCache = {
+      toolu_789: {
+        type: "tool_use",
+        id: "toolu_789",
+        name: "mcp__server__tool",
+        input: { query: "test" },
+      },
+    };
+
+    // BetaMCPToolResultBlock content can be string or Array<BetaTextBlock>
+    const toolResult: BetaMCPToolResultBlock = {
+      type: "mcp_tool_result",
+      tool_use_id: "toolu_789",
+      content: '{"result": "success", "data": [1, 2, 3]}',
+      is_error: false,
+    };
+
+    const notifications = toAcpNotifications(
+      [toolResult],
+      "assistant",
+      "test-session",
+      toolUseCache,
+      mockClient,
+      mockLogger,
+    );
+
+    expect(notifications).toHaveLength(1);
+    expect(notifications[0].update).toMatchObject({
+      sessionUpdate: "tool_call_update",
+      toolCallId: "toolu_789",
+      status: "completed",
+      rawOutput: '{"result": "success", "data": [1, 2, 3]}',
+    });
+  });
+
+  it("should include rawOutput for mcp_tool_result with array content", () => {
+    const toolUseCache: ToolUseCache = {
+      toolu_abc: {
+        type: "tool_use",
+        id: "toolu_abc",
+        name: "mcp__server__search",
+        input: { term: "test" },
+      },
+    };
+
+    // BetaTextBlock requires citations field
+    const arrayContent: BetaTextBlock[] = [
+      { type: "text", text: "Result 1", citations: null },
+      { type: "text", text: "Result 2", citations: null },
+    ];
+
+    const toolResult: BetaMCPToolResultBlock = {
+      type: "mcp_tool_result",
+      tool_use_id: "toolu_abc",
+      content: arrayContent,
+      is_error: false,
+    };
+
+    const notifications = toAcpNotifications(
+      [toolResult],
+      "assistant",
+      "test-session",
+      toolUseCache,
+      mockClient,
+      mockLogger,
+    );
+
+    expect(notifications).toHaveLength(1);
+    expect(notifications[0].update).toMatchObject({
+      sessionUpdate: "tool_call_update",
+      toolCallId: "toolu_abc",
+      status: "completed",
+      rawOutput: arrayContent,
+    });
+  });
+
+  it("should include rawOutput for web_search_tool_result", () => {
+    const toolUseCache: ToolUseCache = {
+      toolu_web: {
+        type: "tool_use",
+        id: "toolu_web",
+        name: "WebSearch",
+        input: { query: "test search" },
+      },
+    };
+
+    // BetaWebSearchResultBlock from SDK
+    const searchResults: BetaWebSearchResultBlock[] = [
+      {
+        type: "web_search_result",
+        url: "https://example.com",
+        title: "Example",
+        encrypted_content: "encrypted content here",
+        page_age: "2 days ago",
+      },
+    ];
+
+    const toolResult: BetaWebSearchToolResultBlock = {
+      type: "web_search_tool_result",
+      tool_use_id: "toolu_web",
+      content: searchResults,
+    };
+
+    const notifications = toAcpNotifications(
+      [toolResult],
+      "assistant",
+      "test-session",
+      toolUseCache,
+      mockClient,
+      mockLogger,
+    );
+
+    expect(notifications).toHaveLength(1);
+    expect(notifications[0].update).toMatchObject({
+      sessionUpdate: "tool_call_update",
+      toolCallId: "toolu_web",
+      status: "completed",
+      rawOutput: searchResults,
+    });
+  });
+
+  it("should include rawOutput for bash_code_execution_tool_result", () => {
+    const toolUseCache: ToolUseCache = {
+      toolu_bash: {
+        type: "tool_use",
+        id: "toolu_bash",
+        name: "Bash",
+        input: { command: "ls -la" },
+      },
+    };
+
+    // BetaBashCodeExecutionResultBlock from SDK
+    const bashResult: BetaBashCodeExecutionResultBlock = {
+      type: "bash_code_execution_result",
+      stdout: "file1.txt\nfile2.txt",
+      stderr: "",
+      return_code: 0,
+      content: [],
+    };
+
+    const toolResult: BetaBashCodeExecutionToolResultBlock = {
+      type: "bash_code_execution_tool_result",
+      tool_use_id: "toolu_bash",
+      content: bashResult,
+    };
+
+    const notifications = toAcpNotifications(
+      [toolResult],
+      "assistant",
+      "test-session",
+      toolUseCache,
+      mockClient,
+      mockLogger,
+    );
+
+    expect(notifications).toHaveLength(1);
+    expect(notifications[0].update).toMatchObject({
+      sessionUpdate: "tool_call_update",
+      toolCallId: "toolu_bash",
+      status: "completed",
+      rawOutput: bashResult,
+    });
+  });
+
+  it("should set status to failed when is_error is true", () => {
+    const toolUseCache: ToolUseCache = {
+      toolu_err: {
+        type: "tool_use",
+        id: "toolu_err",
+        name: "Bash",
+        input: { command: "invalid_command" },
+      },
+    };
+
+    const toolResult: ToolResultBlockParam = {
+      type: "tool_result",
+      tool_use_id: "toolu_err",
+      content: "command not found: invalid_command",
+      is_error: true,
+    };
+
+    const notifications = toAcpNotifications(
+      [toolResult],
+      "assistant",
+      "test-session",
+      toolUseCache,
+      mockClient,
+      mockLogger,
+    );
+
+    expect(notifications).toHaveLength(1);
+    expect(notifications[0].update).toMatchObject({
+      sessionUpdate: "tool_call_update",
+      toolCallId: "toolu_err",
+      status: "failed",
+      rawOutput: "command not found: invalid_command",
+    });
+  });
+
+  it("should not emit tool_call_update for TodoWrite (emits plan instead)", () => {
+    const toolUseCache: ToolUseCache = {
+      toolu_todo: {
+        type: "tool_use",
+        id: "toolu_todo",
+        name: "TodoWrite",
+        input: { todos: [{ content: "Test task", status: "pending" }] },
+      },
+    };
+
+    const toolResult: ToolResultBlockParam = {
+      type: "tool_result",
+      tool_use_id: "toolu_todo",
+      content: "Todos updated successfully",
+      is_error: false,
+    };
+
+    const notifications = toAcpNotifications(
+      [toolResult],
+      "assistant",
+      "test-session",
+      toolUseCache,
+      mockClient,
+      mockLogger,
+    );
+
+    // TodoWrite should not emit tool_call_update - it emits plan updates instead
+    expect(notifications).toHaveLength(0);
+  });
+});
--- a/src/tests/typescript-declarations.test.ts
+++ b/src/tests/typescript-declarations.test.ts
@@ -0,0 +1,558 @@
+import { describe, it, expect, beforeAll, afterAll, beforeEach, afterEach } from "vitest";
+import * as fs from "node:fs";
+import * as path from "node:path";
+import * as os from "node:os";
+import { spawnSync } from "child_process";
+
+describe.skipIf(!process.env.RUN_INTEGRATION_TESTS)(
+  "TypeScript declaration files integration",
+  () => {
+    let tempDir: string;
+    let tarballPath: string;
+    const projectRoot = path.resolve(__dirname, "../..");
+
+    // Base configuration templates
+    const basePackageJson = {
+      name: "ts-declaration-test",
+      version: "1.0.0",
+      type: "module",
+      dependencies: {},
+      devDependencies: {
+        typescript: "5.9.3",
+        "@types/node": "25.0.3",
+      },
+    };
+
+    const baseTsConfig = {
+      compilerOptions: {
+        target: "ES2020",
+        module: "NodeNext",
+        moduleResolution: "NodeNext",
+        lib: ["ES2020"],
+        strict: true,
+        esModuleInterop: true,
+        skipLibCheck: true, // Skip checking dependency internals, focus on our types
+        noEmit: true,
+        declaration: false,
+      },
+      include: ["*.ts"],
+    };
+
+    // Build and pack the package once for all tests
+    beforeAll(async () => {
+      // Step 1: Clean dist folder to ensure fresh build
+      const distPath = path.join(projectRoot, "dist");
+      await fs.promises.rm(distPath, { recursive: true, force: true });
+      console.log("Cleaned dist folder");
+
+      console.log("Building package...");
+
+      // Step 2: Build the package
+      const buildResult = spawnSync("npm", ["run", "build"], {
+        cwd: projectRoot,
+        stdio: "pipe",
+        encoding: "utf-8",
+      });
+
+      if (buildResult.status !== 0) {
+        throw new Error(`Build failed: ${buildResult.stderr || buildResult.stdout}`);
+      }
+
+      console.log("Packing package...");
+
+      // Step 3: Pack to create tarball
+      const packResult = spawnSync("npm", ["pack", "--pack-destination", os.tmpdir()], {
+        cwd: projectRoot,
+        stdio: "pipe",
+        encoding: "utf-8",
+      });
+
+      if (packResult.status !== 0) {
+        throw new Error(`Pack failed: ${packResult.stderr || packResult.stdout}`);
+      }
+
+      // Get the tarball filename from stdout (npm pack outputs the filename)
+      const tarballName = packResult.stdout.trim().split("\n").pop();
+      if (!tarballName) {
+        throw new Error("Failed to get tarball name from npm pack output");
+      }
+      tarballPath = path.join(os.tmpdir(), tarballName);
+
+      console.log(`Tarball created at: ${tarballPath}`);
+    }, 60000); // 60 second timeout for build
+
+    // Clean up the tarball after all tests
+    afterAll(async () => {
+      if (tarballPath && fs.existsSync(tarballPath)) {
+        await fs.promises.unlink(tarballPath);
+        console.log("Cleaned up tarball");
+      }
+    });
+
+    // Create fresh temp directory for each test
+    beforeEach(async () => {
+      tempDir = await fs.promises.mkdtemp(path.join(os.tmpdir(), "ts-declaration-test-"));
+    });
+
+    // Clean up temp directory after each test
+    afterEach(async () => {
+      if (tempDir) {
+        await fs.promises.rm(tempDir, { recursive: true, force: true });
+      }
+    });
+
+    // Helper function to set up a test TypeScript project
+    async function setupTestProject(
+      packageJson: object = basePackageJson,
+      tsconfig: object = baseTsConfig,
+    ): Promise<void> {
+      // Write package.json
+      await fs.promises.writeFile(
+        path.join(tempDir, "package.json"),
+        JSON.stringify(packageJson, null, 2),
+      );
+
+      // Write tsconfig.json
+      await fs.promises.writeFile(
+        path.join(tempDir, "tsconfig.json"),
+        JSON.stringify(tsconfig, null, 2),
+      );
+
+      // Install all dependencies (TypeScript, @types/node, and the tarball)
+      console.log(`Installing dependencies in ${tempDir}...`);
+      const installResult = spawnSync("npm", ["install", tarballPath], {
+        cwd: tempDir,
+        stdio: "pipe",
+        encoding: "utf-8",
+        timeout: 60000, // 60 second timeout
+      });
+
+      if (installResult.status !== 0) {
+        throw new Error(`npm install failed: ${installResult.stderr || installResult.stdout}`);
+      }
+    }
+
+    // Helper function to run TypeScript type checking
+    function runTypeCheck(srcDir: string = tempDir): {
+      success: boolean;
+      output: string;
+    } {
+      const result = spawnSync("npx", ["tsc", "--noEmit"], {
+        cwd: srcDir,
+        stdio: "pipe",
+        encoding: "utf-8",
+        timeout: 30000, // 30 second timeout
+      });
+
+      return {
+        success: result.status === 0,
+        output: result.stdout + result.stderr,
+      };
+    }
+
+    // Helper function to write a test TypeScript file
+    async function writeTestFile(filename: string, content: string): Promise<void> {
+      await fs.promises.writeFile(path.join(tempDir, filename), content);
+    }
+
+    // Test 1: Main exports import verification
+    it("should successfully type-check main exports", async () => {
+      await setupTestProject();
+
+      await writeTestFile(
+        "test-main-exports.ts",
+        `
+import {
+  ClaudeAcpAgent,
+  runAcp,
+  toAcpNotifications,
+  streamEventToAcpNotifications,
+  SettingsManager,
+  createMcpServer,
+  loadManagedSettings,
+  applyEnvironmentSettings,
+  nodeToWebReadable,
+  nodeToWebWritable,
+  Pushable,
+  unreachable,
+  toolInfoFromToolUse,
+  planEntries,
+  toolUpdateFromToolResult,
+  createPreToolUseHook,
+  toolNames,
+} from "@zed-industries/claude-code-acp";
+
+// Type-only imports
+import type {
+  ToolUpdateMeta,
+  NewSessionMeta,
+  ClaudeCodeSettings,
+  PermissionSettings,
+  PermissionDecision,
+  PermissionCheckResult,
+  SettingsManagerOptions,
+  ClaudePlanEntry,
+} from "@zed-industries/claude-code-acp";
+
+// Verify exports exist and have expected types
+const _runAcp: typeof runAcp = runAcp;
+const _createMcpServer: typeof createMcpServer = createMcpServer;
+const _toolNames: typeof toolNames = toolNames;
+`,
+      );
+
+      const result = runTypeCheck();
+      if (!result.success) {
+        console.error("TypeScript errors:", result.output);
+      }
+      expect(result.success).toBe(true);
+    }, 120000);
+
+    // Test 2: Deep imports verification (backwards compatibility)
+    it("should successfully type-check deep imports", async () => {
+      await setupTestProject();
+
+      await writeTestFile(
+        "test-deep-imports.ts",
+        `
+// Deep import from dist/tools.js
+import {
+  acpToolNames,
+  EDIT_TOOL_NAMES,
+  ACP_TOOL_NAME_PREFIX,
+  toolInfoFromToolUse,
+  planEntries,
+} from "@zed-industries/claude-code-acp/dist/tools.js";
+
+// Deep import from dist/settings.js
+import {
+  SettingsManager,
+  getManagedSettingsPath,
+} from "@zed-industries/claude-code-acp/dist/settings.js";
+
+// Deep import from dist/utils.js
+import {
+  Pushable,
+  nodeToWebReadable,
+  nodeToWebWritable,
+  loadManagedSettings,
+} from "@zed-industries/claude-code-acp/dist/utils.js";
+
+// Verify types work
+const prefix: string = ACP_TOOL_NAME_PREFIX;
+const editTools: readonly string[] = EDIT_TOOL_NAMES;
+`,
+      );
+
+      const result = runTypeCheck();
+      if (!result.success) {
+        console.error("TypeScript errors:", result.output);
+      }
+      expect(result.success).toBe(true);
+    }, 120000);
+
+    // Test 3: SettingsManager type shape verification
+    it("should verify SettingsManager has correct type shape", async () => {
+      await setupTestProject();
+
+      await writeTestFile(
+        "test-settings-manager.ts",
+        `
+import {
+  SettingsManager,
+  ClaudeCodeSettings,
+  PermissionCheckResult,
+  SettingsManagerOptions
+} from "@zed-industries/claude-code-acp";
+
+// Test constructor signature
+const options: SettingsManagerOptions = {
+  onChange: () => {},
+  logger: { log: console.log, error: console.error },
+};
+declare const cwd: string;
+const manager = new SettingsManager(cwd, options);
+
+// Test method signatures
+async function testMethods() {
+  // initialize returns Promise<void>
+  await manager.initialize();
+
+  // checkPermission returns PermissionCheckResult
+  const result: PermissionCheckResult = manager.checkPermission(
+    "mcp__acp__Read",
+    { file_path: "/some/path" }
+  );
+
+  // Verify decision type
+  const decision: "allow" | "deny" | "ask" = result.decision;
+  const rule: string | undefined = result.rule;
+  const source: "allow" | "deny" | "ask" | undefined = result.source;
+
+  // getSettings returns ClaudeCodeSettings
+  const settings: ClaudeCodeSettings = manager.getSettings();
+
+  // getCwd returns string
+  const currentCwd: string = manager.getCwd();
+
+  // setCwd returns Promise<void>
+  await manager.setCwd("/new/path");
+
+  // dispose returns void
+  manager.dispose();
+}
+`,
+      );
+
+      const result = runTypeCheck();
+      if (!result.success) {
+        console.error("TypeScript errors:", result.output);
+      }
+      expect(result.success).toBe(true);
+    }, 120000);
+
+    // Test 4: ClaudeAcpAgent instantiation and type verification
+    it("should verify ClaudeAcpAgent has correct type shape", async () => {
+      await setupTestProject();
+
+      await writeTestFile(
+        "test-claude-acp-agent.ts",
+        `
+import { ClaudeAcpAgent } from "@zed-industries/claude-code-acp";
+import type { AgentSideConnection } from "@agentclientprotocol/sdk";
+
+// ClaudeAcpAgent should be a class that can be instantiated
+declare const mockConnection: AgentSideConnection;
+declare const mockLogger: { log: (...args: any[]) => void; error: (...args: any[]) => void };
+
+// Test constructor - accepts AgentSideConnection and optional logger
+const agent = new ClaudeAcpAgent(mockConnection, mockLogger);
+
+// Verify it has sessions property
+const sessions: Record<string, any> = agent.sessions;
+
+// Verify it has client property
+const client: AgentSideConnection = agent.client;
+
+// Verify it has logger property
+const logger = agent.logger;
+`,
+      );
+
+      const result = runTypeCheck();
+      if (!result.success) {
+        console.error("TypeScript errors:", result.output);
+      }
+      expect(result.success).toBe(true);
+    }, 120000);
+
+    // Test 5: Type-only exports work correctly
+    it("should verify type-only exports are usable", async () => {
+      await setupTestProject();
+
+      await writeTestFile(
+        "test-type-exports.ts",
+        `
+import type {
+  ClaudeCodeSettings,
+  PermissionSettings,
+  PermissionDecision,
+  PermissionCheckResult,
+  SettingsManagerOptions,
+  ClaudePlanEntry,
+  ToolUpdateMeta,
+  NewSessionMeta,
+} from "@zed-industries/claude-code-acp";
+
+// Test ClaudeCodeSettings shape
+const settings: ClaudeCodeSettings = {
+  permissions: {
+    allow: ["Read"],
+    deny: ["Read(./.env)"],
+    ask: ["Bash"],
+    additionalDirectories: ["/extra"],
+    defaultMode: "default",
+  },
+  env: {
+    API_KEY: "secret",
+  },
+};
+
+// Test PermissionSettings shape
+const perms: PermissionSettings = {
+  allow: ["Read"],
+  deny: ["Write"],
+};
+
+// Test PermissionDecision
+const decisions: PermissionDecision[] = ["allow", "deny", "ask"];
+
+// Test ClaudePlanEntry shape
+const planEntry: ClaudePlanEntry = {
+  content: "Do something",
+  status: "pending",
+  activeForm: "Doing something",
+};
+
+// Test valid status values
+const validStatuses: ClaudePlanEntry["status"][] = [
+  "pending",
+  "in_progress",
+  "completed",
+];
+
+// Test ToolUpdateMeta shape
+const toolMeta: ToolUpdateMeta = {
+  claudeCode: {
+    toolName: "Read",
+    toolResponse: { success: true },
+  },
+};
+
+// Test NewSessionMeta shape
+const sessionMeta: NewSessionMeta = {
+  claudeCode: {
+    options: {},
+  },
+};
+`,
+      );
+
+      const result = runTypeCheck();
+      if (!result.success) {
+        console.error("TypeScript errors:", result.output);
+      }
+      expect(result.success).toBe(true);
+    }, 120000);
+
+    // Test 6: Function signatures verification
+    it("should verify function signatures are correct", async () => {
+      await setupTestProject();
+
+      await writeTestFile(
+        "test-function-signatures.ts",
+        `
+import {
+  runAcp,
+  createMcpServer,
+  toolInfoFromToolUse,
+  planEntries,
+  createPreToolUseHook,
+  loadManagedSettings,
+  applyEnvironmentSettings,
+  SettingsManager,
+} from "@zed-industries/claude-code-acp";
+
+import type { ClaudeCodeSettings } from "@zed-industries/claude-code-acp";
+
+// runAcp should be a function with no parameters that returns void
+const runAcpType: () => void = runAcp;
+
+// toolInfoFromToolUse should accept any and return object with title and kind
+const info = toolInfoFromToolUse({ name: "Read", input: {} });
+const title: string = info.title;
+const kind: string = info.kind;
+
+// planEntries should accept todos array and return array
+const entries = planEntries({
+  todos: [
+    { content: "test", status: "pending", activeForm: "testing" }
+  ]
+});
+// entries should be an array
+const entriesArray: any[] = entries;
+
+// createPreToolUseHook should accept SettingsManager and optional logger
+declare const settingsManager: SettingsManager;
+const hook = createPreToolUseHook(settingsManager, console);
+
+// loadManagedSettings should return ClaudeCodeSettings | null
+const managedSettings: ClaudeCodeSettings | null = loadManagedSettings();
+
+// applyEnvironmentSettings should accept ClaudeCodeSettings and return void
+const applyResult: void = applyEnvironmentSettings({ permissions: {} });
+`,
+      );
+
+      const result = runTypeCheck();
+      if (!result.success) {
+        console.error("TypeScript errors:", result.output);
+      }
+      expect(result.success).toBe(true);
+    }, 120000);
+
+    // Test 7: Pushable generic class verification
+    it("should verify Pushable class works correctly", async () => {
+      await setupTestProject();
+
+      await writeTestFile(
+        "test-pushable.ts",
+        `
+import { Pushable } from "@zed-industries/claude-code-acp";
+
+// Pushable should be a generic class
+const pushable = new Pushable<string>();
+
+// Should have push method
+pushable.push("test");
+
+// Should have end method
+pushable.end();
+
+// Should implement AsyncIterable
+async function consume() {
+  for await (const item of pushable) {
+    const str: string = item;
+  }
+}
+
+// Generic type parameter should work
+const numPushable = new Pushable<number>();
+numPushable.push(42);
+
+interface MyType { id: number; name: string; }
+const customPushable = new Pushable<MyType>();
+customPushable.push({ id: 1, name: "test" });
+`,
+      );
+
+      const result = runTypeCheck();
+      if (!result.success) {
+        console.error("TypeScript errors:", result.output);
+      }
+      expect(result.success).toBe(true);
+    }, 120000);
+
+    // Test 8: Verify incorrect types fail
+    it("should fail type-check with incorrect types", async () => {
+      await setupTestProject();
+
+      await writeTestFile(
+        "test-invalid-types.ts",
+        `
+import { SettingsManager, ClaudeCodeSettings } from "@zed-industries/claude-code-acp";
+
+// This should fail - SettingsManager constructor requires string cwd
+// @ts-expect-error - Testing that wrong argument type fails
+const badManager = new SettingsManager(123);
+
+// This should fail - ClaudeCodeSettings permissions must be an object
+const badSettings: ClaudeCodeSettings = {
+  // @ts-expect-error - Testing that wrong type fails
+  permissions: "not-an-object",
+};
+`,
+      );
+
+      // This test should PASS because we expect tsc to catch these errors
+      // with @ts-expect-error directives
+      const result = runTypeCheck();
+      if (!result.success) {
+        // If it fails, it means @ts-expect-error didn't catch the error
+        // which could mean the types are too permissive
+        console.error("TypeScript errors (expected @ts-expect-error to catch):", result.output);
+      }
+      expect(result.success).toBe(true);
+    }, 120000);
+  },
+);
--- a/src/tools.ts
+++ b/src/tools.ts
@@ -1,11 +1,41 @@
+import { PlanEntry, ToolCallContent, ToolCallLocation, ToolKind } from "@agentclientprotocol/sdk";
+import { SYSTEM_REMINDER } from "./mcp-server.js";
+import * as diff from "diff";
+import { ToolResultBlockParam, WebSearchToolResultBlockParam } from "@anthropic-ai/sdk/resources";
+
+const acpUnqualifiedToolNames = {
+  read: "Read",
+  edit: "Edit",
+  write: "Write",
+  bash: "Bash",
+  killShell: "KillShell",
+  bashOutput: "BashOutput",
+};
+
+export const ACP_TOOL_NAME_PREFIX = "mcp__acp__";
+export const acpToolNames = {
+  read: ACP_TOOL_NAME_PREFIX + acpUnqualifiedToolNames.read,
+  edit: ACP_TOOL_NAME_PREFIX + acpUnqualifiedToolNames.edit,
+  write: ACP_TOOL_NAME_PREFIX + acpUnqualifiedToolNames.write,
+  bash: ACP_TOOL_NAME_PREFIX + acpUnqualifiedToolNames.bash,
+  killShell: ACP_TOOL_NAME_PREFIX + acpUnqualifiedToolNames.killShell,
+  bashOutput: ACP_TOOL_NAME_PREFIX + acpUnqualifiedToolNames.bashOutput,
+};
+
+export const EDIT_TOOL_NAMES = [acpToolNames.edit, acpToolNames.write];
+
 import {
-  PlanEntry,
-  ToolCallContent,
-  ToolCallLocation,
-  ToolKind,
-} from "@zed-industries/agent-client-protocol";
-import { replaceAndCalculateLocation, SYSTEM_REMINDER, toolNames } from "./mcp-server.js";
-import { ToolResultBlockParam } from "@anthropic-ai/sdk/resources";
+  BetaBashCodeExecutionToolResultBlockParam,
+  BetaCodeExecutionToolResultBlockParam,
+  BetaRequestMCPToolResultBlockParam,
+  BetaTextEditorCodeExecutionToolResultBlockParam,
+  BetaToolSearchToolResultBlockParam,
+  BetaWebFetchToolResultBlockParam,
+  BetaWebSearchToolResultBlockParam,
+} from "@anthropic-ai/sdk/resources/beta.mjs";
+import { HookCallback } from "@anthropic-ai/claude-agent-sdk";
+import { Logger } from "./acp-agent.js";
+import { SettingsManager } from "./settings.js";

 interface ToolInfo {
  title: string;
@@ -20,10 +50,7 @@ interface ToolUpdate {
  locations?: ToolCallLocation[];
 }

-export function toolInfoFromToolUse(
-  toolUse: any,
-  cachedFileContent: { [key: string]: string },
-): ToolInfo {
+export function toolInfoFromToolUse(toolUse: any): ToolInfo {
  const name = toolUse.name;
  const input = toolUse.input;

@@ -68,7 +95,7 @@ export function toolInfoFromToolUse(
      };

    case "Bash":
-    case toolNames.bash:
+    case acpToolNames.bash:
      return {
        title: input?.command ? "`" + input.command.replaceAll("`", "\\`") + "`" : "Terminal",
        kind: "execute",
@@ -84,22 +111,22 @@ export function toolInfoFromToolUse(
      };

    case "BashOutput":
-    case toolNames.bashOutput:
+    case acpToolNames.bashOutput:
      return {
        title: "Tail Logs",
        kind: "execute",
        content: [],
      };

-    case "KillBash":
-    case toolNames.killBash:
+    case "KillShell":
+    case acpToolNames.killShell:
      return {
        title: "Kill Process",
        kind: "execute",
        content: [],
      };

-    case toolNames.read: {
+    case acpToolNames.read: {
      let limit = "";
      if (input.limit) {
        limit =
@@ -108,14 +135,16 @@ export function toolInfoFromToolUse(
        limit = " (from line " + (input.offset + 1) + ")";
      }
      return {
-        title: "Read " + (input.abs_path ?? "File") + limit,
+        title: "Read " + (input.file_path ?? "File") + limit,
        kind: "read",
-        locations: [
-          {
-            path: input.abs_path,
-            line: input.offset ?? 0,
-          },
-        ],
+        locations: input.file_path
+          ? [
+              {
+                path: input.file_path,
+                line: input.offset ?? 0,
+              },
+            ]
+          : [],
        content: [],
      };
    }
@@ -125,7 +154,14 @@ export function toolInfoFromToolUse(
        title: "Read File",
        kind: "read",
        content: [],
-        locations: [{ path: input.file_path, line: input.offset ?? 0 }],
+        locations: input.file_path
+          ? [
+              {
+                path: input.file_path,
+                line: input.offset ?? 0,
+              },
+            ]
+          : [],
      };

    case "LS":
@@ -136,30 +172,10 @@ export function toolInfoFromToolUse(
        locations: [],
      };

-    case toolNames.edit:
+    case acpToolNames.edit:
    case "Edit": {
-      const path = input?.abs_path ?? input?.file_path;
-      let oldText = input.old_string ?? null;
-      let newText = input.new_string ?? "";
-      let affectedLines: number[] = [];
+      const path = input?.file_path ?? input?.file_path;

-      if (path && oldText) {
-        try {
-          const oldContent = cachedFileContent[path] || "";
-          const newContent = replaceAndCalculateLocation(oldContent, [
-            {
-              oldText,
-              newText,
-              replaceAll: false,
-            },
-          ]);
-          oldText = oldContent;
-          newText = newContent.newContent;
-          affectedLines = newContent.lineNumbers;
-        } catch (e) {
-          console.error(e);
-        }
-      }
      return {
        title: path ? `Edit \`${path}\`` : "Edit",
        kind: "edit",
@@ -169,79 +185,22 @@ export function toolInfoFromToolUse(
                {
                  type: "diff",
                  path,
-                  oldText,
-                  newText,
+                  oldText: input.old_string ?? null,
+                  newText: input.new_string ?? "",
                },
              ]
            : [],
-        locations: path
-          ? affectedLines.length > 0
-            ? affectedLines.map((line) => ({ line, path }))
-            : [{ path }]
-          : [],
+        locations: path ? [{ path }] : undefined,
      };
    }

-    case toolNames.multiEdit:
-    case "MultiEdit": {
-      const multiInput = input as {
-        file_path: string;
-        edits: {
-          old_string: string;
-          new_string: string;
-          replace_all?: boolean;
-        }[];
-      };
-      let oldTextMulti = multiInput.edits.map((edit: any) => edit.old_string).join("\n");
-      let newTextMulti = multiInput.edits.map((edit: any) => edit.new_string).join("\n");
-      let affectedLines: number[] = [];
-      try {
-        if (multiInput.edits && multiInput.file_path) {
-          const oldContent =
-            cachedFileContent[multiInput.file_path] ||
-            multiInput.edits.map((edit: any) => edit.oldText).join("\n");
-          const newContent = replaceAndCalculateLocation(
-            oldContent,
-            multiInput.edits.map((edit) => ({
-              oldText: edit.old_string,
-              newText: edit.new_string,
-              replaceAll: edit.replace_all,
-            })),
-          );
-          oldTextMulti = oldContent;
-          newTextMulti = newContent.newContent;
-          affectedLines = newContent.lineNumbers;
-        }
-      } catch (e) {
-        console.error(e);
-      }
-      // Display it as a normal edit, because end users don't care about
-      // the distinction between edits and multi-edits.
-      return {
-        title: input?.file_path ? `Edit ${input.file_path}` : "Edit",
-        kind: "edit",
-        content: [
-          {
-            type: "diff" as const,
-            path: input.file_path,
-            oldText: oldTextMulti,
-            newText: newTextMulti,
-          },
-        ],
-        locations: input?.file_path
-          ? affectedLines.length > 0
-            ? affectedLines.map((line) => ({ line, path: input.file_path }))
-            : [{ path: input.file_path }]
-          : [],
-      };
-    }
-    case toolNames.write: {
+    case acpToolNames.write: {
      let content: ToolCallContent[] = [];
-      if (input && input.abs_path) {
+      if (input && input.file_path) {
        content = [
          {
            type: "diff",
-            path: input.abs_path,
+            path: input.file_path,
            oldText: null,
            newText: input.content,
          },
@@ -255,10 +214,10 @@ export function toolInfoFromToolUse(
        ];
      }
      return {
-        title: input?.abs_path ? `Write ${input.abs_path}` : "Write",
+        title: input?.file_path ? `Write ${input.file_path}` : "Write",
        kind: "edit",
        content,
-        locations: input?.abs_path ? [{ path: input.abs_path }] : [],
+        locations: input?.file_path ? [{ path: input.file_path }] : [],
      };
    }

@@ -346,7 +305,9 @@ export function toolInfoFromToolUse(
        label += " -P";
      }

-      label += ` "${input.pattern}"`;
+      if (input.pattern) {
+        label += ` "${input.pattern}"`;
+      }

      if (input.path) {
        label += ` ${input.path}`;
@@ -394,7 +355,7 @@ export function toolInfoFromToolUse(

    case "TodoWrite":
      return {
-        title: input?.todos
+        title: Array.isArray(input?.todos)
          ? `Update TODOs: ${input.todos.map((todo: any) => todo.content).join(", ")}`
          : "Update TODOs",
        kind: "think",
@@ -443,12 +404,31 @@ export function toolInfoFromToolUse(
 }

 export function toolUpdateFromToolResult(
-  toolResult: ToolResultBlockParam,
+  toolResult:
+    | ToolResultBlockParam
+    | BetaWebSearchToolResultBlockParam
+    | BetaWebFetchToolResultBlockParam
+    | WebSearchToolResultBlockParam
+    | BetaCodeExecutionToolResultBlockParam
+    | BetaBashCodeExecutionToolResultBlockParam
+    | BetaTextEditorCodeExecutionToolResultBlockParam
+    | BetaRequestMCPToolResultBlockParam
+    | BetaToolSearchToolResultBlockParam,
  toolUse: any | undefined,
 ): ToolUpdate {
+  if (
+    "is_error" in toolResult &&
+    toolResult.is_error &&
+    toolResult.content &&
+    toolResult.content.length > 0
+  ) {
+    // Only return errors
+    return toAcpContentUpdate(toolResult.content, true);
+  }
+
  switch (toolUse?.name) {
    case "Read":
-    case toolNames.read:
+    case acpToolNames.read:
      if (Array.isArray(toolResult.content) && toolResult.content.length > 0) {
        return {
          content: toolResult.content.map((content: any) => ({
@@ -477,19 +457,60 @@ export function toolUpdateFromToolResult(
      }
      return {};

-    case toolNames.bash:
+    case acpToolNames.edit: {
+      const content: ToolCallContent[] = [];
+      const locations: ToolCallLocation[] = [];
+
+      if (
+        Array.isArray(toolResult.content) &&
+        toolResult.content.length > 0 &&
+        "text" in toolResult.content[0] &&
+        typeof toolResult.content[0].text === "string"
+      ) {
+        const patches = diff.parsePatch(toolResult.content[0].text);
+        console.error(JSON.stringify(patches));
+        for (const { oldFileName, newFileName, hunks } of patches) {
+          for (const { lines, newStart } of hunks) {
+            const oldText = [];
+            const newText = [];
+            for (const line of lines) {
+              if (line.startsWith("-")) {
+                oldText.push(line.slice(1));
+              } else if (line.startsWith("+")) {
+                newText.push(line.slice(1));
+              } else {
+                oldText.push(line.slice(1));
+                newText.push(line.slice(1));
+              }
+            }
+            if (oldText.length > 0 || newText.length > 0) {
+              locations.push({ path: newFileName || oldFileName, line: newStart });
+              content.push({
+                type: "diff",
+                path: newFileName || oldFileName,
+                oldText: oldText.join("\n") || null,
+                newText: newText.join("\n"),
+              });
+            }
+          }
+        }
+      }
+
+      const result: ToolUpdate = {};
+      if (content.length > 0) {
+        result.content = content;
+      }
+      if (locations.length > 0) {
+        result.locations = locations;
+      }
+      return result;
+    }
+
+    case acpToolNames.bash:
    case "edit":
    case "Edit":
-    case toolNames.edit:
-    case toolNames.multiEdit:
-    case "multi-edit":
-    case "MultiEdit":
-    case toolNames.write:
+    case acpToolNames.write:
    case "Write": {
-      if (toolResult.is_error && toolResult.content && toolResult.content.length > 0) {
-        // Only return errors
-        return toAcpContentUpdate(toolResult.content, true);
-      }
      return {};
    }

@@ -512,7 +533,10 @@ export function toolUpdateFromToolResult(
    case "WebSearch":
    case "Other":
    default: {
-      return toAcpContentUpdate(toolResult.content, toolResult.is_error);
+      return toAcpContentUpdate(
+        toolResult.content,
+        "is_error" in toolResult ? toolResult.is_error : false,
+      );
    }
  }
 }
@@ -573,3 +597,100 @@ export function markdownEscape(text: string): string {
  }
  return escape + "\n" + text + (text.endsWith("\n") ? "" : "\n") + escape;
 }
+
+/* A global variable to store callbacks that should be executed when receiving hooks from Claude Code */
+const toolUseCallbacks: {
+  [toolUseId: string]: {
+    onPostToolUseHook?: (
+      toolUseID: string,
+      toolInput: unknown,
+      toolResponse: unknown,
+    ) => Promise<void>;
+  };
+} = {};
+
+/* Setup callbacks that will be called when receiving hooks from Claude Code */
+export const registerHookCallback = (
+  toolUseID: string,
+  {
+    onPostToolUseHook,
+  }: {
+    onPostToolUseHook?: (
+      toolUseID: string,
+      toolInput: unknown,
+      toolResponse: unknown,
+    ) => Promise<void>;
+  },
+) => {
+  toolUseCallbacks[toolUseID] = {
+    onPostToolUseHook,
+  };
+};
+
+/* A callback for Claude Code that is called when receiving a PostToolUse hook */
+export const createPostToolUseHook =
+  (logger: Logger = console): HookCallback =>
+  async (input: any, toolUseID: string | undefined): Promise<{ continue: boolean }> => {
+    if (input.hook_event_name === "PostToolUse" && toolUseID) {
+      const onPostToolUseHook = toolUseCallbacks[toolUseID]?.onPostToolUseHook;
+      if (onPostToolUseHook) {
+        await onPostToolUseHook(toolUseID, input.tool_input, input.tool_response);
+        delete toolUseCallbacks[toolUseID]; // Cleanup after execution
+      } else {
+        logger.error(`No onPostToolUseHook found for tool use ID: ${toolUseID}`);
+        delete toolUseCallbacks[toolUseID];
+      }
+    }
+    return { continue: true };
+  };
+
+/**
+ * Creates a PreToolUse hook that checks permissions using the SettingsManager.
+ * This runs before the SDK's built-in permission rules, allowing us to enforce
+ * our own permission settings for ACP-prefixed tools.
+ */
+export const createPreToolUseHook =
+  (settingsManager: SettingsManager, logger: Logger = console): HookCallback =>
+  async (input: any, _toolUseID: string | undefined) => {
+    if (input.hook_event_name !== "PreToolUse") {
+      return { continue: true };
+    }
+
+    const toolName = input.tool_name;
+    const toolInput = input.tool_input;
+
+    const permissionCheck = settingsManager.checkPermission(toolName, toolInput);
+
+    if (permissionCheck.decision !== "ask") {
+      logger.log(
+        `[PreToolUseHook] Tool: ${toolName}, Decision: ${permissionCheck.decision}, Rule: ${permissionCheck.rule}`,
+      );
+    }
+
+    switch (permissionCheck.decision) {
+      case "allow":
+        return {
+          continue: true,
+          hookSpecificOutput: {
+            hookEventName: "PreToolUse" as const,
+            permissionDecision: "allow" as const,
+            permissionDecisionReason: `Allowed by settings rule: ${permissionCheck.rule}`,
+          },
+        };
+
+      case "deny":
+        return {
+          continue: true,
+          hookSpecificOutput: {
+            hookEventName: "PreToolUse" as const,
+            permissionDecision: "deny" as const,
+            permissionDecisionReason: `Denied by settings rule: ${permissionCheck.rule}`,
+          },
+        };
+
+      case "ask":
+      default:
+        // Let the normal permission flow continue
+        return { continue: true };
+    }
+  };
--- a/src/utils.ts
+++ b/src/utils.ts
@@ -3,7 +3,8 @@
 import { Readable, Writable } from "node:stream";
 import { WritableStream, ReadableStream } from "node:stream/web";
 import { readFileSync } from "node:fs";
-import { platform } from "node:os";
+import { Logger } from "./acp-agent.js";
+import { ClaudeCodeSettings, getManagedSettingsPath } from "./settings.js";

 // Useful for bridging push-based and async-iterator-based code.
 export class Pushable<T> implements AsyncIterable<T> {
@@ -75,47 +76,29 @@ export function nodeToWebReadable(nodeStream: Readable): ReadableStream<Uint8Arr
  });
 }

-export function unreachable(value: never): never {
-  throw new Error(`Unexpected case: ${value}`);
+export function unreachable(value: never, logger: Logger = console) {
+  let valueAsString;
+  try {
+    valueAsString = JSON.stringify(value);
+  } catch {
+    valueAsString = value;
+  }
+  logger.error(`Unexpected case: ${valueAsString}`);
 }

 export function sleep(time: number): Promise<void> {
  return new Promise((resolve) => setTimeout(resolve, time));
 }

-interface ManagedSettings {
-  permissions?: {
-    allow?: string[];
-    deny?: string[];
-  };
-  env?: Record<string, string>;
-}
-
-// Following the rules in https://docs.anthropic.com/en/docs/claude-code/settings#settings-files
-// This can be removed once the SDK supports it natively.
-function getManagedSettingsPath(): string {
-  const os = platform();
-  switch (os) {
-    case "darwin":
-      return "/Library/Application Support/ClaudeCode/managed-settings.json";
-    case "linux": // including WSL
-      return "/etc/claude-code/managed-settings.json";
-    case "win32":
-      return "C:\\ProgramData\\ClaudeCode\\managed-settings.json";
-    default:
-      return "/etc/claude-code/managed-settings.json";
-  }
-}
-
-export function loadManagedSettings(): ManagedSettings | null {
+export function loadManagedSettings(): ClaudeCodeSettings | null {
  try {
-    return JSON.parse(readFileSync(getManagedSettingsPath(), "utf8")) as ManagedSettings;
+    return JSON.parse(readFileSync(getManagedSettingsPath(), "utf8")) as ClaudeCodeSettings;
  } catch {
    return null;
  }
 }

-export function applyEnvironmentSettings(settings: ManagedSettings): void {
+export function applyEnvironmentSettings(settings: ClaudeCodeSettings): void {
  if (settings.env) {
    for (const [key, value] of Object.entries(settings.env)) {
      process.env[key] = value;
--- a/tsconfig.json
+++ b/tsconfig.json
@@ -9,7 +9,9 @@
    "forceConsistentCasingInFileNames": true,
    "skipLibCheck": true,
    "outDir": "dist",
-    "rootDir": "src"
+    "rootDir": "src",
+    "declaration": true,
+    "declarationMap": true
  },
  "include": ["src/**/*.ts"],
  "exclude": ["node_modules", "dist"]