diff --git a/packages/agent/src/tools/io/textEditor.test.ts b/packages/agent/src/tools/io/textEditor.test.ts
index 4b7f974..0ebe83d 100644
--- a/packages/agent/src/tools/io/textEditor.test.ts
+++ b/packages/agent/src/tools/io/textEditor.test.ts
@@ -303,4 +303,94 @@ describe('textEditor', () => {
       );
     }).rejects.toThrow(/Found 2 occurrences/);
   });
+
+  it('should overwrite an existing file with create command', async () => {
+    const initialContent = 'Initial content';
+    const newContent = 'New content that overwrites the file';
+    const testPath = join(testDir, `${randomUUID()}.txt`);
+
+    // Create initial file
+    await textEditorTool.execute(
+      {
+        command: 'create',
+        path: testPath,
+        file_text: initialContent,
+        description: 'test',
+      },
+      toolContext,
+    );
+
+    // Verify initial content
+    let content = await readFile(testPath, 'utf8');
+    expect(content).toBe(initialContent);
+
+    // Overwrite the file using create command
+    const result = await textEditorTool.execute(
+      {
+        command: 'create',
+        path: testPath,
+        file_text: newContent,
+        description: 'test',
+      },
+      toolContext,
+    );
+
+    // Verify return value
+    expect(result.success).toBe(true);
+    expect(result.message).toContain('File overwritten');
+
+    // Verify content has been updated
+    content = await readFile(testPath, 'utf8');
+    expect(content).toBe(newContent);
+  });
+
+  it('should be able to undo file overwrite', async () => {
+    const initialContent = 'Initial content that will be restored';
+    const overwrittenContent = 'This content will be undone';
+    const testPath = join(testDir, `${randomUUID()}.txt`);
+
+    // Create initial file
+    await textEditorTool.execute(
+      {
+        command: 'create',
+        path: testPath,
+        file_text: initialContent,
+        description: 'test',
+      },
+      toolContext,
+    );
+
+    // Overwrite the file
+    await textEditorTool.execute(
+      {
+        command: 'create',
+        path: testPath,
+        file_text: overwrittenContent,
+        description: 'test',
+      },
+      toolContext,
+    );
+
+    // Verify overwritten content
+    let content = await readFile(testPath, 'utf8');
+    expect(content).toBe(overwrittenContent);
+
+    // Undo the overwrite
+    const result = await textEditorTool.execute(
+      {
+        command: 'undo_edit',
+        path: testPath,
+        description: 'test',
+      },
+      toolContext,
+    );
+
+    // Verify return value
+    expect(result.success).toBe(true);
+    expect(result.message).toContain('Successfully reverted');
+
+    // Verify content is back to initial
+    content = await readFile(testPath, 'utf8');
+    expect(content).toBe(initialContent);
+  });
 });
diff --git a/packages/agent/src/tools/io/textEditor.ts b/packages/agent/src/tools/io/textEditor.ts
index ce31909..1147468 100644
--- a/packages/agent/src/tools/io/textEditor.ts
+++ b/packages/agent/src/tools/io/textEditor.ts
@@ -160,13 +160,6 @@ export const textEditorTool: Tool<Parameters, ReturnType> = {
       }
 
       case 'create': {
-        // Check if file already exists
-        if (fsSync.existsSync(absolutePath)) {
-          throw new Error(
-            `File already exists: ${filePath}. Use str_replace to modify it.`,
-          );
-        }
-
         if (!file_text) {
           throw new Error('file_text parameter is required for create command');
         }
@@ -174,15 +167,29 @@ export const textEditorTool: Tool<Parameters, ReturnType> = {
         // Create parent directories if they don't exist
         await fs.mkdir(path.dirname(absolutePath), { recursive: true });
 
-        // Create the file
-        await fs.writeFile(absolutePath, file_text, 'utf8');
+        // Check if file already exists
+        const fileExists = fsSync.existsSync(absolutePath);
 
-        // Store initial state for undo
-        fileStateHistory[absolutePath] = [file_text];
+        if (fileExists) {
+          // Save current state for undo if file exists
+          const currentContent = await fs.readFile(absolutePath, 'utf8');
+          if (!fileStateHistory[absolutePath]) {
+            fileStateHistory[absolutePath] = [];
+          }
+          fileStateHistory[absolutePath].push(currentContent);
+        } else {
+          // Initialize history for new files
+          fileStateHistory[absolutePath] = [];
+        }
+
+        // Create or overwrite the file
+        await fs.writeFile(absolutePath, file_text, 'utf8');
 
         return {
           success: true,
-          message: `File created: ${filePath}`,
+          message: fileExists
+            ? `File overwritten: ${filePath}`
+            : `File created: ${filePath}`,
         };
       }