Visual Studio Code update auto-starts MCP servers

The newly released Visual Studio Code 1.103, also known as the July 2025 version of Microsoft’s Visual Studio Code editor, adds the ability to configure auto-start behavior for Model Context Protocol (MCP) servers.

Announced August 7, VS Code 1.103 can be downloaded for Windows, Linux, and Mac from visualstudio.com.

For MCP, a standard protocol that allows applications to provide context to large language models, the newly added support for auto-starting MCP servers means VS Code users no longer have to manually re-start MCP servers after updates. Previously, when an MCP server configuration was added or updated, VS Code would show a blue “refresh” icon in the Chat View, enabling a manual refresh of the list of tools. Also in the MCP vein, Microsoft has enabled an experimental tool-calling mode in VS Code for when the number of tools exceeds the maximum limit of 128 tools. Tools are automatically grouped and the model is given the ability to activate and call groups of tools. Previously, users could reach this limit by installing MCP servers with many tools, requiring deselection of some tools in order to proceed. VS Code 1.103 fully supports the MCP specification version 2025-06-18, with support for resource_links and structured output in tool results.

VS Code 1.103 also adds support for Git worktrees, which enable checking out of multiple branches at once. Worktrees make it easy to test changes or work in parallel without switching contexts, Microsoft said. When opening a folder or workspace that has a Git repository, VS Code 1.103 detects worktrees and displays them in the source control repositories view. Users can view, create, delete, and open worktrees in a new or current window via commands from the Command Palette or Source Control Repositories view.

For Copilot chats, meanwhile, VS Code 1.103 introduces checkpoints that allow users to restore different states of chat conversations. The ability to revert edits and go back to certain points in a Copilot chat conversation can be particularly useful if multiple files were changed in the session, Microsoft noted.

The VS Code 1.103 release follows VS Code 1.102, which was released July 9. Other features in VS Code 1.103 include the following:

GPT-5, OpenAI’s newest and most capable model, is being rolled out to all paid GitHub Copilot plans. GPT-5 mini, a faster and more cost-efficient variant of GPT-5, is becoming available in all GitHub Copilot plans.

The chat provider API has been revamped. Users now can select which models appear in their model picker.

Initial support for rendering mathematical equations in chat responses is available in a preview. Math rendering can be enabled using the chat.math.enabled setting.

The codebase tool now supports remote indexes for workspaces linked to Azure Devops repos.

The test runner has been reworked to show progress inline within chat.