diff --git a/registry/coder/modules/zed/README.md b/registry/coder/modules/zed/README.md
index 9ebf82c2a..989df54d9 100644
--- a/registry/coder/modules/zed/README.md
+++ b/registry/coder/modules/zed/README.md
@@ -19,7 +19,7 @@ Zed is a high-performance, multiplayer code editor from the creators of Atom and
 module "zed" {
   count    = data.coder_workspace.me.start_count
   source   = "registry.coder.com/coder/zed/coder"
-  version  = "1.0.1"
+  version  = "1.1.0"
   agent_id = coder_agent.example.id
 }
 ```
@@ -32,7 +32,7 @@ module "zed" {
 module "zed" {
   count    = data.coder_workspace.me.start_count
   source   = "registry.coder.com/coder/zed/coder"
-  version  = "1.0.1"
+  version  = "1.1.0"
   agent_id = coder_agent.example.id
   folder   = "/home/coder/project"
 }
@@ -44,7 +44,7 @@ module "zed" {
 module "zed" {
   count        = data.coder_workspace.me.start_count
   source       = "registry.coder.com/coder/zed/coder"
-  version      = "1.0.1"
+  version      = "1.1.0"
   agent_id     = coder_agent.example.id
   display_name = "Zed Editor"
   order        = 1
@@ -57,8 +57,36 @@ module "zed" {
 module "zed" {
   count      = data.coder_workspace.me.start_count
   source     = "registry.coder.com/coder/zed/coder"
-  version    = "1.0.1"
+  version    = "1.1.0"
   agent_id   = coder_agent.example.id
   agent_name = coder_agent.example.name
 }
 ```
+
+### Configure Zed settings including MCP servers
+
+Zed stores settings at `~/.config/zed/settings.json` by default. If `XDG_CONFIG_HOME` is set on Linux, settings will be at `$XDG_CONFIG_HOME/zed/settings.json`.
+
+You can declaratively set/merge settings with the `settings` input. Provide a JSON string (e.g., via `jsonencode(...)`). For example, to configure MCP servers:
+
+```tf
+module "zed" {
+  count    = data.coder_workspace.me.start_count
+  source   = "registry.coder.com/coder/zed/coder"
+  version  = "1.1.0"
+  agent_id = coder_agent.example.id
+
+  settings = jsonencode({
+    context_servers = {
+      your-mcp-server = {
+        source  = "custom"
+        command = "some-command"
+        args    = ["arg-1", "arg-2"]
+        env     = {}
+      }
+    }
+  })
+}
+```
+
+See Zed’s settings files documentation: https://zed.dev/docs/configuring-zed#settings-files
diff --git a/registry/coder/modules/zed/main.tf b/registry/coder/modules/zed/main.tf
index 2f6376a44..94ec69a6a 100644
--- a/registry/coder/modules/zed/main.tf
+++ b/registry/coder/modules/zed/main.tf
@@ -50,7 +50,14 @@ variable "display_name" {
   default     = "Zed"
 }
 
+variable "settings" {
+  type        = string
+  description = "JSON encoded settings.json"
+  default     = ""
+}
+
 data "coder_workspace" "me" {}
+
 data "coder_workspace_owner" "me" {}
 
 locals {
@@ -60,6 +67,30 @@ locals {
   hostname       = var.agent_name != "" ? "${local.agent_name}.${local.workspace_name}.${local.owner_name}.coder" : "${local.workspace_name}.coder"
 }
 
+resource "coder_script" "zed_settings" {
+  agent_id     = var.agent_id
+  display_name = "Configure Zed settings"
+  icon         = "/icon/zed.svg"
+  run_on_start = true
+  script       = <<-EOT
+    set -eu
+    SETTINGS_JSON='${replace(var.settings, "\"", "\\\"")}'
+    if [ -z "$${SETTINGS_JSON}" ] || [ "$${SETTINGS_JSON}" = "{}" ]; then
+      exit 0
+    fi
+    CONFIG_HOME="$${XDG_CONFIG_HOME:-$HOME/.config}"
+    ZED_DIR="$${CONFIG_HOME}/zed"
+    mkdir -p "$${ZED_DIR}"
+    SETTINGS_FILE="$${ZED_DIR}/settings.json"
+    if command -v jq >/dev/null 2>&1 && [ -s "$${SETTINGS_FILE}" ]; then
+      tmpfile="$(mktemp)"
+      jq -s '.[0] * .[1]' "$${SETTINGS_FILE}" <(printf '%s\n' "$${SETTINGS_JSON}") > "$${tmpfile}" && mv "$${tmpfile}" "$${SETTINGS_FILE}"
+    else
+      printf '%s\n' "$${SETTINGS_JSON}" > "$${SETTINGS_FILE}"
+    fi
+  EOT
+}
+
 resource "coder_app" "zed" {
   agent_id     = var.agent_id
   display_name = var.display_name