diff --git a/.github/workflows/build.yml b/.github/workflows/build.yml
index 78b4137..e517187 100644
--- a/.github/workflows/build.yml
+++ b/.github/workflows/build.yml
@@ -15,71 +15,70 @@ jobs:
     runs-on: ubuntu-latest
 
     steps:
-    - name: Checkout
-      uses: actions/checkout@v4
+      - name: Checkout
+        uses: actions/checkout@v4
 
-    - name: Base Setup
-      uses: jupyterlab/maintainer-tools/.github/actions/base-setup@v1
+      - name: Base Setup
+        uses: jupyterlab/maintainer-tools/.github/actions/base-setup@v1
 
-    - name: Install dependencies
-      run: python -m pip install -U "jupyterlab>=4.0.0,<5"
+      - name: Install dependencies
+        run: python -m pip install -U "jupyterlab>=4.0.0,<5"
 
-    - name: Lint the extension
-      run: |
-        set -eux
-        jlpm
-        jlpm run lint:check
+      - name: Lint the extension
+        run: |
+          set -eux
+          jlpm
+          jlpm run lint:check
 
-    - name: Build the extension
-      run: |
-        set -eux
-        python -m pip install .[test]
+      - name: Build the extension
+        run: |
+          set -eux
+          python -m pip install .[test]
 
-        jupyter labextension list
-        jupyter labextension list 2>&1 | grep -ie "jupyterlab-cell-diff.*OK"
-        python -m jupyterlab.browser_check
+          jupyter labextension list
+          jupyter labextension list 2>&1 | grep -ie "jupyterlab-cell-diff.*OK"
+          python -m jupyterlab.browser_check
 
-    - name: Package the extension
-      run: |
-        set -eux
+      - name: Package the extension
+        run: |
+          set -eux
 
-        pip install build
-        python -m build
-        pip uninstall -y "jupyterlab_cell_diff" jupyterlab
+          pip install build
+          python -m build
+          pip uninstall -y "jupyterlab_cell_diff" jupyterlab
 
-    - name: Upload extension packages
-      uses: actions/upload-artifact@v4
-      with:
-        name: extension-artifacts
-        path: dist/jupyterlab_cell_diff*
-        if-no-files-found: error
+      - name: Upload extension packages
+        uses: actions/upload-artifact@v4
+        with:
+          name: extension-artifacts
+          path: dist/jupyterlab_cell_diff*
+          if-no-files-found: error
 
   test_isolated:
     needs: build
     runs-on: ubuntu-latest
 
     steps:
-    - name: Install Python
-      uses: actions/setup-python@v5
-      with:
-        python-version: '3.9'
-        architecture: 'x64'
-    - uses: actions/download-artifact@v4
-      with:
-        name: extension-artifacts
-    - name: Install and Test
-      run: |
-        set -eux
-        # Remove NodeJS, twice to take care of system and locally installed node versions.
-        sudo rm -rf $(which node)
-        sudo rm -rf $(which node)
-
-        pip install "jupyterlab>=4.0.0,<5" jupyterlab_cell_diff*.whl
-
-        jupyter labextension list
-        jupyter labextension list 2>&1 | grep -ie "jupyterlab-cell-diff.*OK"
-        python -m jupyterlab.browser_check --no-browser-test
-
+      - name: Install Python
+        uses: actions/setup-python@v5
+        with:
+          python-version: '3.9'
+          architecture: 'x64'
+      - uses: actions/download-artifact@v4
+        with:
+          name: extension-artifacts
+      - name: Install and Test
+        run: |
+          set -eux
+          # Remove NodeJS, twice to take care of system and locally installed node versions.
+          sudo rm -rf $(which node)
+          sudo rm -rf $(which node)
+
+          pip install "jupyterlab>=4.0.0,<5" jupyterlab_cell_diff*.whl
+
+          jupyter labextension list
+          jupyter labextension list 2>&1 | grep -ie "jupyterlab-cell-diff.*OK"
+          python -m jupyterlab.browser_check --no-browser-test
 
   check_links:
     name: Check Links
diff --git a/.github/workflows/check-release.yml b/.github/workflows/check-release.yml
index b13d506..fdfdf2b 100644
--- a/.github/workflows/check-release.yml
+++ b/.github/workflows/check-release.yml
@@ -1,9 +1,9 @@
 name: Check Release
 on:
   push:
-    branches: ["main"]
+    branches: ['main']
   pull_request:
-    branches: ["*"]
+    branches: ['*']
 
 concurrency:
   group: ${{ github.workflow }}-${{ github.event.pull_request.number || github.ref }}
@@ -23,7 +23,6 @@ jobs:
       - name: Check Release
         uses: jupyter-server/jupyter_releaser/.github/actions/check-release@v2
         with:
-
           token: ${{ secrets.GITHUB_TOKEN }}
 
       - name: Upload Distributions
diff --git a/.github/workflows/prep-release.yml b/.github/workflows/prep-release.yml
index 8eeaec8..5a63169 100644
--- a/.github/workflows/prep-release.yml
+++ b/.github/workflows/prep-release.yml
@@ -1,26 +1,26 @@
-name: "Step 1: Prep Release"
+name: 'Step 1: Prep Release'
 on:
   workflow_dispatch:
     inputs:
       version_spec:
-        description: "New Version Specifier"
-        default: "next"
+        description: 'New Version Specifier'
+        default: 'next'
         required: false
       branch:
-        description: "The branch to target"
+        description: 'The branch to target'
         required: false
       post_version_spec:
-        description: "Post Version Specifier"
+        description: 'Post Version Specifier'
         required: false
       # silent:
       #   description: "Set a placeholder in the changelog and don't publish the release."
       #   required: false
       #   type: boolean
       since:
-        description: "Use PRs with activity since this date or git reference"
+        description: 'Use PRs with activity since this date or git reference'
         required: false
       since_last_stable:
-        description: "Use PRs with activity since the last stable git tag"
+        description: 'Use PRs with activity since the last stable git tag'
         required: false
         type: boolean
 jobs:
@@ -45,6 +45,6 @@ jobs:
           since: ${{ github.event.inputs.since }}
           since_last_stable: ${{ github.event.inputs.since_last_stable }}
 
-      - name: "** Next Step **"
+      - name: '** Next Step **'
         run: |
           echo "Optional): Review Draft Release: ${{ steps.prep-release.outputs.release_url }}"
diff --git a/.github/workflows/publish-release.yml b/.github/workflows/publish-release.yml
index 3f3a8de..99edc0e 100644
--- a/.github/workflows/publish-release.yml
+++ b/.github/workflows/publish-release.yml
@@ -1,15 +1,15 @@
-name: "Step 2: Publish Release"
+name: 'Step 2: Publish Release'
 on:
   workflow_dispatch:
     inputs:
       branch:
-        description: "The target branch"
+        description: 'The target branch'
         required: false
       release_url:
-        description: "The URL of the draft GitHub release"
+        description: 'The URL of the draft GitHub release'
         required: false
       steps_to_skip:
-        description: "Comma separated list of steps to skip"
+        description: 'Comma separated list of steps to skip'
         required: false
 
 jobs:
@@ -47,13 +47,13 @@ jobs:
           token: ${{ steps.app-token.outputs.token }}
           release_url: ${{ steps.populate-release.outputs.release_url }}
 
-      - name: "** Next Step **"
+      - name: '** Next Step **'
         if: ${{ success() }}
         run: |
           echo "Verify the final release"
           echo ${{ steps.finalize-release.outputs.release_url }}
 
-      - name: "** Failure Message **"
+      - name: '** Failure Message **'
         if: ${{ failure() }}
         run: |
           echo "Failed to Publish the Draft Release Url:"
diff --git a/README.md b/README.md
index 1704e48..8232abc 100644
--- a/README.md
+++ b/README.md
@@ -32,25 +32,53 @@ jupyter labextension develop . --overwrite
 
 ### Commands
 
-The extension provides a command to show cell diffs:
+The extension provides commands to show diffs in multiple formats:
 
-- `jupyterlab-cell-diff:show-codemirror` - Show diff using `@codemirror/merge`
+- `jupyterlab-cell-diff:split-cell-diff` - Show cell diff using split view (side-by-side comparison)
+- `jupyterlab-cell-diff:unified-cell-diff` - Show cell diff using unified view
+- `jupyterlab-cell-diff:unified-file-diff` - Show file diff using unified view for regular Python files and other text files
 
 https://github.com/user-attachments/assets/0dacd7f0-5963-4ebe-81da-2958f0117071
 
 ### Programmatic Usage
 
+#### Split Cell Diff (Side-by-side View)
+
 ```typescript
-app.commands.execute('jupyterlab-cell-diff:show-codemirror', {
+app.commands.execute('jupyterlab-cell-diff:split-cell-diff', {
   cellId: 'cell-id',
   originalSource: 'print("Hello")',
-  newSource: 'print("Hello, World!")'
+  newSource: 'print("Hello, World!")',
+  showActionButtons: true,
+  openDiff: true
 });
 ```
 
-#### Command Arguments
+#### Unified Cell Diff
+
+```typescript
+app.commands.execute('jupyterlab-cell-diff:unified-cell-diff', {
+  cellId: 'cell-id',
+  originalSource: 'print("Hello")',
+  newSource: 'print("Hello, World!")',
+  showActionButtons: true
+});
+```
 
-The `jupyterlab-cell-diff:show-codemirror` command accepts the following arguments:
+#### Unified File Diff
+
+```typescript
+app.commands.execute('jupyterlab-cell-diff:unified-file-diff', {
+  filePath: '/path/to/file.py',
+  originalSource: 'print("Hello")',
+  newSource: 'print("Hello, World!")',
+  showActionButtons: true
+});
+```
+
+### Command Arguments
+
+#### `jupyterlab-cell-diff:split-cell-diff` (Split View)
 
 | Argument            | Type      | Required | Description                                                                          |
 | ------------------- | --------- | -------- | ------------------------------------------------------------------------------------ |
@@ -61,6 +89,35 @@ The `jupyterlab-cell-diff:show-codemirror` command accepts the following argumen
 | `notebookPath`      | `string`  | No       | Path to the notebook containing the cell. If not provided, uses the current notebook |
 | `openDiff`          | `boolean` | No       | Whether to open the diff widget automatically (default: `true`)                      |
 
+#### `jupyterlab-cell-diff:unified-cell-diff` (Unified View)
+
+| Argument            | Type      | Required | Description                                                                          |
+| ------------------- | --------- | -------- | ------------------------------------------------------------------------------------ |
+| `cellId`            | `string`  | No       | ID of the cell to show diff for. If not provided, uses the active cell               |
+| `originalSource`    | `string`  | Yes      | Original source code to compare against                                              |
+| `newSource`         | `string`  | Yes      | New source code to compare with                                                      |
+| `showActionButtons` | `boolean` | No       | Whether to show action buttons for chunk acceptance (default: `true`)                |
+| `notebookPath`      | `string`  | No       | Path to the notebook containing the cell. If not provided, uses the current notebook |
+
+#### `jupyterlab-cell-diff:unified-file-diff` (File Diff)
+
+| Argument            | Type      | Required | Description                                                           |
+| ------------------- | --------- | -------- | --------------------------------------------------------------------- |
+| `filePath`          | `string`  | No       | Path to the file to diff. Defaults to current file in editor.         |
+| `originalSource`    | `string`  | Yes      | Original source code to compare against                               |
+| `newSource`         | `string`  | Yes      | New source code to compare with                                       |
+| `showActionButtons` | `boolean` | No       | Whether to show action buttons for chunk acceptance (default: `true`) |
+
+## Architecture
+
+### Diff Strategies
+
+The extension provides two diff viewing strategies:
+
+- **Split diff** (`split-cell-diff`): Uses CodeMirror's two-pane view. Displays original and modified code side-by-side in separate panels with diff highlighting.
+
+- **Unified diff** (`unified-cell-diff`/`unified-file-diff`): Uses CodeMirror's `unifiedMergeView`. Displays changes in a single unified view with added/removed lines clearly marked. Can be used for both cell diffs and regular file diffs.
+
 ## Uninstall
 
 To remove the extension, execute:
diff --git a/package.json b/package.json
index 29156b9..f25c529 100644
--- a/package.json
+++ b/package.json
@@ -57,13 +57,15 @@
     },
     "dependencies": {
         "@codemirror/lang-python": "^6.2.1",
-        "@codemirror/merge": "^6.10.2",
+        "@codemirror/merge": "^6.11.0",
         "@codemirror/view": "^6.38.2",
+        "@jupyter/ydoc": "^3.1.0",
         "@jupyterlab/application": "^4.0.0",
         "@jupyterlab/cells": "^4.0.0",
         "@jupyterlab/codeeditor": "^4.0.0",
         "@jupyterlab/codemirror": "^4.4.7",
         "@jupyterlab/coreutils": "^6.0.0",
+        "@jupyterlab/fileeditor": "^4.0.0",
         "@jupyterlab/notebook": "^4.0.0",
         "@jupyterlab/services": "^7.0.0",
         "@jupyterlab/translation": "^4.0.0",
diff --git a/src/diff/base-unified-diff.ts b/src/diff/base-unified-diff.ts
new file mode 100644
index 0000000..aaff741
--- /dev/null
+++ b/src/diff/base-unified-diff.ts
@@ -0,0 +1,180 @@
+import { CodeMirrorEditor } from '@jupyterlab/codemirror';
+import { EditorView } from '@codemirror/view';
+import { Compartment } from '@codemirror/state';
+import { TranslationBundle } from '@jupyterlab/translation';
+import { ToolbarButton } from '@jupyterlab/ui-components';
+import { applyDiff } from './utils';
+import type { ISharedText } from '@jupyter/ydoc';
+
+/**
+ * Base options for unified diff managers
+ */
+export interface IBaseUnifiedDiffOptions {
+  /**
+   * The code editor widget
+   */
+  editor: CodeMirrorEditor;
+
+  /**
+   * The original source code
+   */
+  originalSource: string;
+
+  /**
+   * The new/modified source code
+   */
+  newSource: string;
+
+  /**
+   * The translation bundle
+   */
+  trans: TranslationBundle;
+
+  /**
+   * Whether to show accept/reject buttons
+   */
+  showActionButtons?: boolean;
+}
+
+/**
+ * Base class for unified diff managers
+ */
+export abstract class BaseUnifiedDiffManager {
+  /**
+   * Construct a new BaseUnifiedDiffManager
+   */
+  constructor(options: IBaseUnifiedDiffOptions) {
+    this.editor = options.editor;
+    this._originalSource = options.originalSource;
+    this._newSource = options.newSource;
+    this.trans = options.trans;
+    this.showActionButtons = options.showActionButtons ?? true;
+    this._isInitialized = false;
+    this._isDisposed = false;
+    this._diffCompartment = new Compartment();
+  }
+
+  /**
+   * Whether the manager is disposed
+   */
+  get isDisposed(): boolean {
+    return this._isDisposed;
+  }
+
+  /**
+   * Dispose of the manager and clean up resources
+   */
+  dispose(): void {
+    if (this._isDisposed) {
+      return;
+    }
+    this._isDisposed = true;
+    this._deactivate();
+  }
+
+  /**
+   * Get the shared model for source manipulation
+   * Subclasses must implement this to return the appropriate shared model
+   */
+  protected abstract getSharedModel(): ISharedText;
+
+  /**
+   * Add toolbar buttons to the appropriate location
+   * Subclasses must implement this to add buttons to their specific UI location
+   */
+  protected abstract addToolbarButtons(): void;
+
+  /**
+   * Remove toolbar buttons from the appropriate location
+   * Subclasses must implement this to remove buttons from their specific UI location
+   */
+  protected abstract removeToolbarButtons(): void;
+
+  /**
+   * Activate the diff view
+   */
+  protected activate(): void {
+    this._applyDiff();
+    this.addToolbarButtons();
+  }
+
+  /**
+   * Deactivate the diff view
+   */
+  private _deactivate(): void {
+    this.removeToolbarButtons();
+    this._cleanupEditor();
+  }
+
+  /**
+   * Clean up the editor by removing the diff view
+   */
+  private _cleanupEditor(): void {
+    const editorView = this._getEditorView();
+    if (!editorView) {
+      return;
+    }
+
+    editorView.dispatch({
+      effects: [this._diffCompartment.reconfigure([])]
+    });
+  }
+
+  /**
+   * Accept all changes
+   */
+  protected acceptAll(): void {
+    // simply accept the current state
+    this._deactivate();
+  }
+
+  /**
+   * Reject all changes
+   */
+  protected rejectAll(): void {
+    const sharedModel = this.getSharedModel();
+    sharedModel.setSource(this._originalSource);
+    this._deactivate();
+  }
+
+  /**
+   * Apply the diff to the editor
+   */
+  private _applyDiff(): void {
+    const editorView = this._getEditorView();
+    if (!editorView) {
+      console.warn('No editor view found for diff');
+      return;
+    }
+
+    applyDiff({
+      editorView,
+      compartment: this._diffCompartment,
+      originalSource: this._originalSource,
+      newSource: this._newSource,
+      isInitialized: this._isInitialized,
+      sharedModel: this.getSharedModel(),
+      onChunkChange: () => this._deactivate()
+    });
+
+    this._isInitialized = true;
+  }
+
+  /**
+   * Get the CodeMirror EditorView from the JupyterLab CodeMirrorEditor
+   */
+  private _getEditorView(): EditorView | null {
+    return this.editor?.editor || null;
+  }
+
+  protected editor: CodeMirrorEditor;
+  protected trans: TranslationBundle;
+  protected showActionButtons: boolean;
+  protected acceptAllButton: ToolbarButton | null = null;
+  protected rejectAllButton: ToolbarButton | null = null;
+  private _originalSource: string;
+  private _newSource: string;
+  private _isInitialized: boolean;
+  private _isDisposed: boolean;
+  private _diffCompartment: Compartment;
+}
diff --git a/src/diff/codemirror.ts b/src/diff/cell.ts
similarity index 70%
rename from src/diff/codemirror.ts
rename to src/diff/cell.ts
index 18231e1..4265a9b 100644
--- a/src/diff/codemirror.ts
+++ b/src/diff/cell.ts
@@ -8,17 +8,17 @@ import { basicSetup } from 'codemirror';
 import { IDiffWidgetOptions, BaseDiffWidget } from '../widget';
 
 /**
- * A Lumino widget that contains a CodeMirror diff view
+ * A Lumino widget that contains a CodeMirror split view (side-by-side comparison)
  */
-class CodeMirrorDiffWidget extends BaseDiffWidget {
+class CodeMirrorSplitDiffWidget extends BaseDiffWidget {
   /**
-   * Construct a new CodeMirrorDiffWidget.
+   * Construct a new CodeMirrorSplitDiffWidget.
    */
   constructor(options: IDiffWidgetOptions) {
     super(options);
     this._originalCode = options.originalSource;
     this._modifiedCode = options.newSource;
-    this.addClass('jp-DiffView');
+    this.addClass('jp-SplitDiffView');
   }
 
   /**
@@ -26,26 +26,26 @@ class CodeMirrorDiffWidget extends BaseDiffWidget {
    */
   protected onAfterAttach(msg: Message): void {
     super.onAfterAttach(msg);
-    this._createMergeView();
+    this._createSplitView();
   }
 
   /**
    * Handle before-detach messages for the widget.
    */
   protected onBeforeDetach(msg: Message): void {
-    this._destroyMergeView();
+    this._destroySplitView();
     super.onBeforeDetach(msg);
   }
 
   /**
-   * Create the merge view with CodeMirror diff functionality.
+   * Create the split view with CodeMirror diff functionality.
    */
-  private _createMergeView(): void {
-    if (this._mergeView) {
+  private _createSplitView(): void {
+    if (this._splitView) {
       return;
     }
 
-    this._mergeView = new MergeView({
+    this._splitView = new MergeView({
       a: {
         doc: this._originalCode,
         extensions: [
@@ -69,21 +69,21 @@ class CodeMirrorDiffWidget extends BaseDiffWidget {
   }
 
   /**
-   * Destroy the merge view and clean up resources.
+   * Destroy the split view and clean up resources.
    */
-  private _destroyMergeView(): void {
-    if (this._mergeView) {
-      this._mergeView.destroy();
-      this._mergeView = null;
+  private _destroySplitView(): void {
+    if (this._splitView) {
+      this._splitView.destroy();
+      this._splitView = null;
     }
   }
 
   private _originalCode: string;
   private _modifiedCode: string;
-  private _mergeView: MergeView | null = null;
+  private _splitView: MergeView | null = null;
 }
 
-export async function createCodeMirrorDiffWidget(
+export async function createCodeMirrorSplitDiffWidget(
   options: IDiffWidgetOptions
 ): Promise<Widget> {
   const {
@@ -96,7 +96,7 @@ export async function createCodeMirrorDiffWidget(
     openDiff = true
   } = options;
 
-  const diffWidget = new CodeMirrorDiffWidget({
+  const diffWidget = new CodeMirrorSplitDiffWidget({
     originalSource,
     newSource,
     cell,
diff --git a/src/diff/unified-cell.ts b/src/diff/unified-cell.ts
new file mode 100644
index 0000000..b30453e
--- /dev/null
+++ b/src/diff/unified-cell.ts
@@ -0,0 +1,120 @@
+import { ICellModel } from '@jupyterlab/cells';
+import { checkIcon, ToolbarButton, undoIcon } from '@jupyterlab/ui-components';
+import { ICellFooterTracker } from 'jupyterlab-cell-input-footer';
+import {
+  BaseUnifiedDiffManager,
+  IBaseUnifiedDiffOptions
+} from './base-unified-diff';
+import type { ISharedText } from '@jupyter/ydoc';
+
+/**
+ * Options for creating a unified diff view for a cell
+ */
+export interface IUnifiedCellDiffOptions extends IBaseUnifiedDiffOptions {
+  /**
+   * The cell to show the diff for
+   */
+  cell: ICellModel;
+
+  /**
+   * The cell footer tracker
+   */
+  cellFooterTracker?: ICellFooterTracker;
+}
+
+/**
+ * Manages unified diff view directly in cell editors
+ */
+export class UnifiedCellDiffManager extends BaseUnifiedDiffManager {
+  /**
+   * Construct a new UnifiedCellDiffManager
+   */
+  constructor(options: IUnifiedCellDiffOptions) {
+    super(options);
+    this._cell = options.cell;
+    this._cellFooterTracker = options.cellFooterTracker;
+    this.activate();
+  }
+
+  /**
+   * Get the shared model for source manipulation
+   */
+  protected getSharedModel(): ISharedText {
+    return this._cell.sharedModel;
+  }
+
+  /**
+   * Add toolbar buttons to the cell footer
+   */
+  protected addToolbarButtons(): void {
+    if (!this._cellFooterTracker || !this._cell) {
+      return;
+    }
+
+    const cellId = this._cell.id;
+    const footer = this._cellFooterTracker.getFooter(cellId);
+    if (!footer) {
+      return;
+    }
+
+    this.acceptAllButton = new ToolbarButton({
+      icon: checkIcon,
+      label: this.trans.__('Accept All'),
+      tooltip: this.trans.__('Accept all chunks'),
+      enabled: true,
+      className: 'jp-UnifiedDiff-acceptAll',
+      onClick: () => this.acceptAll()
+    });
+
+    this.rejectAllButton = new ToolbarButton({
+      icon: undoIcon,
+      label: this.trans.__('Reject All'),
+      tooltip: this.trans.__('Reject all chunks'),
+      enabled: true,
+      className: 'jp-UnifiedDiff-rejectAll',
+      onClick: () => this.rejectAll()
+    });
+
+    if (this.showActionButtons) {
+      footer.addToolbarItemOnRight('reject-all', this.rejectAllButton);
+      footer.addToolbarItemOnRight('accept-all', this.acceptAllButton);
+    }
+
+    this._cellFooterTracker.showFooter(cellId);
+  }
+
+  /**
+   * Remove toolbar buttons from the cell footer
+   */
+  protected removeToolbarButtons(): void {
+    if (!this._cellFooterTracker || !this._cell) {
+      return;
+    }
+
+    const cellId = this._cell.id;
+    const footer = this._cellFooterTracker.getFooter(cellId);
+    if (!footer) {
+      return;
+    }
+
+    if (this.showActionButtons) {
+      footer.removeToolbarItem('accept-all');
+      footer.removeToolbarItem('reject-all');
+    }
+
+    // Hide the footer if no other items remain
+    this._cellFooterTracker.hideFooter(cellId);
+  }
+
+  private _cell: ICellModel;
+  private _cellFooterTracker?: ICellFooterTracker;
+}
+
+/**
+ * Create a unified diff view for a cell
+ */
+export async function createUnifiedCellDiffView(
+  options: IUnifiedCellDiffOptions
+): Promise<UnifiedCellDiffManager> {
+  return new UnifiedCellDiffManager(options);
+}
diff --git a/src/diff/unified-file.ts b/src/diff/unified-file.ts
new file mode 100644
index 0000000..4677465
--- /dev/null
+++ b/src/diff/unified-file.ts
@@ -0,0 +1,141 @@
+import { IDocumentWidget } from '@jupyterlab/docregistry';
+import { FileEditor } from '@jupyterlab/fileeditor';
+import {
+  checkIcon,
+  Toolbar,
+  ToolbarButton,
+  undoIcon
+} from '@jupyterlab/ui-components';
+import { Widget } from '@lumino/widgets';
+import {
+  BaseUnifiedDiffManager,
+  IBaseUnifiedDiffOptions
+} from './base-unified-diff';
+import type { ISharedText } from '@jupyter/ydoc';
+
+/**
+ * Options for applying a unified diff to a file editor
+ */
+export interface IUnifiedFileDiffOptions extends IBaseUnifiedDiffOptions {
+  /**
+   * The file editor widget (IDocumentWidget containing the editor)
+   */
+  fileEditorWidget?: IDocumentWidget<FileEditor>;
+}
+
+/**
+ * Manages unified file diffs in the editor using CodeMirror compartments
+ */
+export class UnifiedFileDiffManager extends BaseUnifiedDiffManager {
+  /**
+   * Construct a new UnifiedFileDiffManager
+   */
+  constructor(options: IUnifiedFileDiffOptions) {
+    super(options);
+    this._fileEditorWidget = options.fileEditorWidget;
+    this.activate();
+  }
+
+  /**
+   * Get the shared model for source manipulation
+   */
+  protected getSharedModel(): ISharedText {
+    return this.editor.model.sharedModel;
+  }
+
+  /**
+   * Add toolbar buttons to the file editor toolbar
+   */
+  protected addToolbarButtons(): void {
+    if (!this._fileEditorWidget || !this.showActionButtons) {
+      return;
+    }
+
+    const toolbar = this._fileEditorWidget.toolbar;
+    if (!toolbar) {
+      return;
+    }
+
+    // Show the toolbar
+    toolbar.node.hidden = false;
+
+    // Create a spacer to push buttons to the right
+    this._spacer = Toolbar.createSpacerItem();
+
+    // Accept all button
+    this.acceptAllButton = new ToolbarButton({
+      icon: checkIcon,
+      label: this.trans.__('Accept All'),
+      tooltip: this.trans.__('Accept all chunks'),
+      enabled: true,
+      className: 'jp-UnifiedFileDiff-acceptAll',
+      onClick: () => this.acceptAll()
+    });
+
+    // Reject all button
+    this.rejectAllButton = new ToolbarButton({
+      icon: undoIcon,
+      label: this.trans.__('Reject All'),
+      tooltip: this.trans.__('Reject all chunks'),
+      enabled: true,
+      className: 'jp-UnifiedFileDiff-rejectAll',
+      onClick: () => this.rejectAll()
+    });
+
+    toolbar.addItem('diff-spacer', this._spacer);
+    toolbar.addItem('reject-all-diff', this.rejectAllButton);
+    toolbar.addItem('accept-all-diff', this.acceptAllButton);
+  }
+
+  /**
+   * Remove toolbar buttons from the file editor toolbar
+   */
+  protected removeToolbarButtons(): void {
+    if (!this._fileEditorWidget) {
+      return;
+    }
+
+    const toolbar = this._fileEditorWidget.toolbar;
+    if (!toolbar) {
+      return;
+    }
+
+    // Remove and dispose items only if they were added
+    if (this.showActionButtons) {
+      // Dispose of the spacer
+      if (this._spacer) {
+        this._spacer.dispose();
+        this._spacer = null;
+      }
+
+      // Dispose of the buttons
+      if (this.acceptAllButton) {
+        this.acceptAllButton.dispose();
+        this.acceptAllButton = null;
+      }
+      if (this.rejectAllButton) {
+        this.rejectAllButton.dispose();
+        this.rejectAllButton = null;
+      }
+    }
+
+    // Check if there are any remaining items in the toolbar
+    // If not, hide the toolbar
+    const remainingItems = Array.from(toolbar.names());
+    if (remainingItems.length === 0) {
+      toolbar.node.hidden = true;
+    }
+  }
+
+  private _fileEditorWidget?: IDocumentWidget<FileEditor>;
+  private _spacer: Widget | null = null;
+}
+
+/**
+ * Create a unified diff view for a file editor
+ */
+export async function createUnifiedFileDiff(
+  options: IUnifiedFileDiffOptions
+): Promise<UnifiedFileDiffManager> {
+  return new UnifiedFileDiffManager(options);
+}
diff --git a/src/diff/utils.ts b/src/diff/utils.ts
new file mode 100644
index 0000000..61216f3
--- /dev/null
+++ b/src/diff/utils.ts
@@ -0,0 +1,146 @@
+import { EditorView } from '@codemirror/view';
+import { Extension, Compartment, StateEffect } from '@codemirror/state';
+import { unifiedMergeView, getChunks } from '@codemirror/merge';
+import { checkIcon, undoIcon } from '@jupyterlab/ui-components';
+import { ISharedText } from '@jupyter/ydoc';
+
+/**
+ * Render a custom merge button with JupyterLab icons
+ */
+export function renderMergeButton(
+  type: 'accept' | 'reject',
+  action: (e: MouseEvent) => void
+): HTMLElement {
+  const button = document.createElement('button');
+  button.className = `jp-merge-${type}-button`;
+  button.onclick = (e: MouseEvent) => {
+    e.preventDefault();
+    action(e);
+  };
+
+  const icon = type === 'accept' ? checkIcon : undoIcon;
+  const iconElement = icon.element({
+    tag: 'span',
+    elementSize: 'small'
+  });
+
+  button.appendChild(iconElement);
+  return button;
+}
+
+/**
+ * Create a merge extension with the given options
+ *
+ * @param originalSource The original source to compare against
+ * @param options Additional options for the merge view
+ */
+export function createMergeExtension(
+  originalSource: string,
+  options?: Record<string, any>
+): Extension {
+  return unifiedMergeView({
+    original: originalSource,
+    ...options,
+    // TODO: make configurable
+    // allowInlineDiffs: true,
+    mergeControls: (
+      type: 'accept' | 'reject',
+      action: (e: MouseEvent) => void
+    ) => {
+      return renderMergeButton(type, action);
+    }
+  });
+}
+
+/**
+ * Check if all chunks have been resolved
+ */
+export function hasRemainingChunks(editorView: EditorView): boolean {
+  const chunksInfo = getChunks(editorView.state);
+  return !!(chunksInfo && chunksInfo.chunks.length > 0);
+}
+
+/**
+ * Options for applying a diff to an editor
+ */
+export interface IApplyDiffOptions {
+  /**
+   * The CodeMirror editor view
+   */
+  editorView: EditorView;
+
+  /**
+   * The compartment for the diff extensions
+   */
+  compartment: Compartment;
+
+  /**
+   * The original source to compare against
+   */
+  originalSource: string;
+
+  /**
+   * The new source to show
+   */
+  newSource: string;
+
+  /**
+   * Whether the diff has been initialized before
+   */
+  isInitialized: boolean;
+
+  /**
+   * The shared text model
+   */
+  sharedModel: ISharedText;
+
+  /**
+   * Optional callback when chunks are resolved
+   */
+  onChunkChange?: () => void;
+}
+
+/**
+ * Apply a diff to an editor with automatic chunk cleanup
+ */
+export function applyDiff(options: IApplyDiffOptions): void {
+  const {
+    editorView,
+    compartment,
+    originalSource,
+    newSource,
+    isInitialized,
+    sharedModel,
+    onChunkChange
+  } = options;
+
+  const mergeExtension = createMergeExtension(originalSource);
+
+  // Create an update listener to track chunk resolution
+  const updateListener = EditorView.updateListener.of(update => {
+    if (update.transactions.length > 0) {
+      if (onChunkChange && !hasRemainingChunks(editorView)) {
+        onChunkChange();
+      }
+    }
+  });
+
+  // Bundle both the merge extension and update listener in the compartment
+  // This ensures they're managed together and properly cleaned up
+  const bundledExtensions = [mergeExtension, updateListener];
+  const effects: StateEffect<any>[] = [];
+
+  if (!isInitialized) {
+    // First time: add compartment with bundled extensions
+    effects.push(
+      StateEffect.appendConfig.of(compartment.of(bundledExtensions))
+    );
+  } else {
+    // Subsequent times: reconfigure compartment with new bundled extensions
+    // This replaces the old extensions (including the old listener) cleanly
+    effects.push(compartment.reconfigure(bundledExtensions));
+  }
+
+  sharedModel.setSource(newSource);
+  editorView.dispatch({ effects });
+}
diff --git a/src/plugin.ts b/src/plugin.ts
index ed48514..3998f2d 100644
--- a/src/plugin.ts
+++ b/src/plugin.ts
@@ -5,10 +5,20 @@ import {
 import { ICellModel } from '@jupyterlab/cells';
 import { INotebookTracker, NotebookPanel } from '@jupyterlab/notebook';
 import { ITranslator, nullTranslator } from '@jupyterlab/translation';
+import { IEditorTracker } from '@jupyterlab/fileeditor';
 import { ICellFooterTracker } from 'jupyterlab-cell-input-footer';
 
 import { IDiffWidgetOptions } from './widget';
-import { createCodeMirrorDiffWidget } from './diff/codemirror';
+import { createCodeMirrorSplitDiffWidget } from './diff/cell';
+import {
+  createUnifiedCellDiffView,
+  UnifiedCellDiffManager
+} from './diff/unified-cell';
+import {
+  createUnifiedFileDiff,
+  UnifiedFileDiffManager
+} from './diff/unified-file';
+import { CodeMirrorEditor } from '@jupyterlab/codemirror';
 
 /**
  * The translation namespace for the plugin.
@@ -54,11 +64,11 @@ export function findCell(
 }
 
 /**
- * CodeMirror diff plugin
+ * Split cell diff plugin - shows side-by-side comparison
  */
-const codeMirrorPlugin: JupyterFrontEndPlugin<void> = {
-  id: 'jupyterlab-cell-diff:codemirror-plugin',
-  description: 'Expose a command to show cell diffs using CodeMirror',
+const splitCellDiffPlugin: JupyterFrontEndPlugin<void> = {
+  id: 'jupyterlab-cell-diff:split-cell-diff-plugin',
+  description: 'Show cell diff using side-by-side split view',
   requires: [ICellFooterTracker, INotebookTracker],
   optional: [ITranslator],
   autoStart: true,
@@ -71,8 +81,8 @@ const codeMirrorPlugin: JupyterFrontEndPlugin<void> = {
     const { commands } = app;
     const trans = (translator ?? nullTranslator).load(TRANSLATION_NAMESPACE);
 
-    commands.addCommand('jupyterlab-cell-diff:show-codemirror', {
-      label: trans.__('Show Cell Diff (CodeMirror)'),
+    commands.addCommand('jupyterlab-cell-diff:split-cell-diff', {
+      label: trans.__('Show Cell Diff (Split View)'),
       describedBy: {
         args: {
           type: 'object',
@@ -147,24 +157,258 @@ const codeMirrorPlugin: JupyterFrontEndPlugin<void> = {
           return;
         }
 
-        try {
-          const options: IDiffWidgetOptions = {
-            cell,
-            cellFooterTracker,
-            originalSource,
-            newSource,
-            showActionButtons,
-            openDiff,
-            trans
-          };
+        const options: IDiffWidgetOptions = {
+          cell,
+          cellFooterTracker,
+          originalSource,
+          newSource,
+          showActionButtons,
+          openDiff,
+          trans
+        };
+
+        await createCodeMirrorSplitDiffWidget(options);
+      }
+    });
+  }
+};
+
+/**
+ * Unified cell diff plugin
+ */
+const unifiedCellDiffPlugin: JupyterFrontEndPlugin<void> = {
+  id: 'jupyterlab-cell-diff:unified-cell-diff-plugin',
+  description: 'Show cell diff using unified view',
+  requires: [ICellFooterTracker, INotebookTracker],
+  optional: [ITranslator],
+  autoStart: true,
+  activate: async (
+    app: JupyterFrontEnd,
+    cellFooterTracker: ICellFooterTracker,
+    notebookTracker: INotebookTracker,
+    translator: ITranslator | null
+  ) => {
+    const { commands } = app;
+    const trans = (translator ?? nullTranslator).load(TRANSLATION_NAMESPACE);
+
+    // Track active unified diff managers to avoid creating duplicates
+    const cellDiffManagers = new Map<string, UnifiedCellDiffManager>();
+
+    commands.addCommand('jupyterlab-cell-diff:unified-cell-diff', {
+      label: trans.__('Show Cell Diff (Unified)'),
+      describedBy: {
+        args: {
+          type: 'object',
+          properties: {
+            cellId: {
+              type: 'string',
+              description: trans.__('ID of the cell to show diff for')
+            },
+            originalSource: {
+              type: 'string',
+              description: trans.__('Original source code to compare against')
+            },
+            newSource: {
+              type: 'string',
+              description: trans.__('New source code to compare with')
+            },
+            showActionButtons: {
+              type: 'boolean',
+              description: trans.__(
+                'Whether to show action buttons for chunk acceptance'
+              )
+            },
+            notebookPath: {
+              type: 'string',
+              description: trans.__('Path to the notebook containing the cell')
+            }
+          },
+          required: ['originalSource', 'newSource']
+        }
+      },
+      execute: async (args: any = {}) => {
+        const {
+          cellId,
+          originalSource,
+          newSource,
+          showActionButtons = true,
+          notebookPath
+        } = args;
+
+        if (!originalSource || !newSource) {
+          console.error(
+            trans.__('Missing required arguments: originalSource and newSource')
+          );
+          return;
+        }
 
-          await createCodeMirrorDiffWidget(options);
-        } catch (error) {
-          console.error(trans.__('Failed to create diff widget: %1'), error);
+        const currentNotebook = findNotebook(notebookTracker, notebookPath);
+        if (!currentNotebook) {
+          return;
         }
+
+        const cell = findCell(currentNotebook, cellId);
+        if (!cell) {
+          console.error(
+            trans.__(
+              'Missing required arguments: cellId (or no active cell found)'
+            )
+          );
+          return;
+        }
+
+        // Get the cell widget that corresponds to the found cell
+        const cellWidget = currentNotebook.content.widgets.find(
+          widget => widget.model.id === cell.id
+        );
+        if (!cellWidget || !cellWidget.editor) {
+          console.error(trans.__('No editor found for cell %1', cell.id));
+          return;
+        }
+
+        // Dispose any existing manager for this cell
+        const existingManager = cellDiffManagers.get(cell.id);
+        if (existingManager && !existingManager.isDisposed) {
+          existingManager.dispose();
+        }
+
+        // Create a new manager
+        const manager = await createUnifiedCellDiffView({
+          cell,
+          editor: cellWidget.editor as CodeMirrorEditor,
+          cellFooterTracker,
+          originalSource,
+          newSource,
+          showActionButtons,
+          trans
+        });
+        cellDiffManagers.set(cell.id, manager);
+      }
+    });
+  }
+};
+
+/**
+ * Unified file diff plugin
+ */
+const unifiedFileDiffPlugin: JupyterFrontEndPlugin<void> = {
+  id: 'jupyterlab-cell-diff:unified-file-diff-plugin',
+  description: 'Show file diff using unified view',
+  requires: [IEditorTracker],
+  optional: [ITranslator],
+  autoStart: true,
+  activate: async (
+    app: JupyterFrontEnd,
+    editorTracker: IEditorTracker,
+    translator: ITranslator | null
+  ) => {
+    const { commands } = app;
+    const trans = (translator ?? nullTranslator).load(TRANSLATION_NAMESPACE);
+
+    // Track active unified diff managers to avoid creating duplicates
+    const fileDiffManagers = new Map<string, UnifiedFileDiffManager>();
+
+    commands.addCommand('jupyterlab-cell-diff:unified-file-diff', {
+      label: trans.__('Diff File (Unified)'),
+      describedBy: {
+        args: {
+          type: 'object',
+          properties: {
+            filePath: {
+              type: 'string',
+              description: trans.__(
+                'Path to the file to diff. Defaults to current file in editor.'
+              )
+            },
+            originalSource: {
+              type: 'string',
+              description: trans.__('Original source code to compare against')
+            },
+            newSource: {
+              type: 'string',
+              description: trans.__('New source code to compare with')
+            },
+            showActionButtons: {
+              type: 'boolean',
+              description: trans.__(
+                'Whether to show action buttons for chunk acceptance. Defaults to true.'
+              )
+            }
+          },
+          required: ['originalSource', 'newSource']
+        }
+      },
+      execute: async (args: any = {}) => {
+        const {
+          filePath,
+          originalSource,
+          newSource,
+          showActionButtons = true
+        } = args;
+
+        if (!originalSource || !newSource) {
+          console.error(
+            trans.__('Missing required arguments: originalSource and newSource')
+          );
+          return;
+        }
+
+        // Try to find the file editor widget by its filepath using IEditorTracker
+        let fileEditorWidget = editorTracker.currentWidget;
+        if (filePath) {
+          // Search through all open file editors in the tracker
+          const fileEditors = editorTracker.find(widget => {
+            return widget.context?.path === filePath;
+          });
+          if (fileEditors) {
+            fileEditorWidget = fileEditors;
+          }
+        }
+
+        // If no specific file editor found, try to get the current widget from the tracker
+        if (!fileEditorWidget) {
+          fileEditorWidget = editorTracker.currentWidget;
+        }
+
+        if (!fileEditorWidget) {
+          console.error(trans.__('No editor found for the file'));
+          return;
+        }
+
+        // Try to get the editor from the file editor widget
+        const editor = fileEditorWidget.content.editor as CodeMirrorEditor;
+        if (!editor) {
+          console.error(trans.__('No code editor found in the file widget'));
+          return;
+        }
+
+        // Use the file path as the key, or a default key if not available
+        const managerKey =
+          filePath || fileEditorWidget.context?.path || 'default';
+
+        // Dispose any existing manager for this file
+        const existingManager = fileDiffManagers.get(managerKey);
+        if (existingManager && !existingManager.isDisposed) {
+          existingManager.dispose();
+        }
+
+        // Create a new manager
+        const manager = await createUnifiedFileDiff({
+          editor,
+          fileEditorWidget,
+          originalSource,
+          newSource,
+          showActionButtons,
+          trans
+        });
+        fileDiffManagers.set(managerKey, manager);
       }
     });
   }
 };
 
-export default [codeMirrorPlugin];
+export default [
+  splitCellDiffPlugin,
+  unifiedCellDiffPlugin,
+  unifiedFileDiffPlugin
+];
diff --git a/src/widget.ts b/src/widget.ts
index 176b1c6..0e927d5 100644
--- a/src/widget.ts
+++ b/src/widget.ts
@@ -3,6 +3,7 @@ import { TranslationBundle } from '@jupyterlab/translation';
 import { checkIcon, ToolbarButton, undoIcon } from '@jupyterlab/ui-components';
 import { Widget } from '@lumino/widgets';
 import { ICellFooterTracker } from 'jupyterlab-cell-input-footer';
+import { CellFooterWidget } from 'jupyterlab-cell-input-footer/lib/widget';
 
 /**
  * Options for creating a diff widget
@@ -128,7 +129,7 @@ export abstract class BaseDiffWidget extends Widget {
   /**
    * Create accept, reject, and toggle buttons for the footer toolbar.
    */
-  private _createButtons(footer: any): void {
+  private _createButtons(footer: CellFooterWidget): void {
     this._toggleButton = new ToolbarButton({
       label: this._trans.__('Compare changes'),
       tooltip: this._trans.__('Compare changes'),
@@ -187,12 +188,12 @@ export abstract class BaseDiffWidget extends Widget {
     }
   }
 
-  protected _cell: ICellModel;
-  protected _cellFooterTracker: ICellFooterTracker;
-  protected _originalSource: string;
-  protected _newSource: string;
-  protected _showActionButtons: boolean;
-  protected _openDiff: boolean;
-  protected _toggleButton: ToolbarButton | null = null;
+  private _cell: ICellModel;
+  private _cellFooterTracker: ICellFooterTracker;
+  private _originalSource: string;
+  private _newSource: string;
+  private _showActionButtons: boolean;
+  private _openDiff: boolean;
+  private _toggleButton: ToolbarButton | null = null;
   private _trans: TranslationBundle;
 }
diff --git a/style/base.css b/style/base.css
index 1ef8594..82fd63e 100644
--- a/style/base.css
+++ b/style/base.css
@@ -4,32 +4,76 @@
     https://jupyterlab.readthedocs.io/en/stable/developer/css.html
 */
 
-/* CodeMirror merge view styling */
-.jp-cellfooter .cm-merge-2pane {
-  display: grid;
-  padding: 0;
+/* Unified merge view styling */
+.cm-unified {
+  background-color: var(--jp-layout-color0);
+  color: var(--jp-ui-font-color1);
+}
 
-  /* editor | gap | editor */
-  grid-template-columns: 49% 2% 49%;
-  grid-auto-rows: minmax(18px, auto);
+/* Removed lines in unified diff */
+.cm-deletedLine {
+  background-color: rgb(255 0 0 / 10%);
 }
 
-/* Diff widget styling */
-.jp-DiffView {
-  background-color: var(--jp-layout-color0);
+.cm-deletedChunk {
+  background-color: rgb(255 0 0 / 15%);
+}
+
+/* Added lines in unified diff */
+.cm-addedLine {
+  background-color: rgb(0 128 0 / 10%);
+}
+
+.cm-addedChunk {
+  background-color: rgb(0 128 0 / 15%);
 }
 
-.jp-DiffView .cm-merge-2pane {
-  min-height: 100px;
-  max-height: 400px;
-  overflow: auto;
+/* Unchanged lines */
+.cm-unchangedLine {
+  background-color: transparent;
 }
 
-.jp-DiffView .cm-activeLineGutter {
+/* Conflict markers */
+.cm-conflictMarker {
   background-color: var(--jp-layout-color3);
-  color: var(--jp-ui-font-color1);
+  color: var(--jp-error-color0);
 }
 
-.jp-DiffView .cm-lineNumbers .cm-gutterElement {
-  color: var(--jp-ui-font-color2);
+/* Custom merge control styling with JupyterLab icons */
+.cm-chunkButtons {
+  display: flex;
+  flex-direction: row-reverse;
+  gap: 2px;
+  padding: 0;
+  line-height: 1;
+}
+
+/* Style our custom JupyterLab icon buttons to match CodeMirror line height */
+.jp-merge-accept-button,
+.jp-merge-reject-button {
+  cursor: pointer;
+  padding: 1px;
+  border-radius: 2px;
+  background-color: transparent;
+  border: 1px solid transparent;
+  display: inline-flex;
+  align-items: center;
+  justify-content: center;
+  transition: background-color 0.1s;
+  height: 1.4em;
+  width: auto;
+  vertical-align: middle;
+}
+
+/* Make the icon smaller to fit the line height */
+.jp-merge-accept-button svg,
+.jp-merge-reject-button svg {
+  width: 14px;
+  height: 14px;
+}
+
+.jp-merge-accept-button:hover,
+.jp-merge-reject-button:hover {
+  background-color: var(--jp-layout-color3);
+  border-color: var(--jp-border-color1);
 }
diff --git a/ui-tests/tests/split-cell-diff.spec.ts b/ui-tests/tests/split-cell-diff.spec.ts
index c69ed8d..cc49678 100644
--- a/ui-tests/tests/split-cell-diff.spec.ts
+++ b/ui-tests/tests/split-cell-diff.spec.ts
@@ -4,7 +4,7 @@ import { NotebookPanel } from '@jupyterlab/notebook';
 /**
  * The command to open the cell split diff view.
  */
-const SPLIT_CELL_DIFF_COMMAND = 'jupyterlab-cell-diff:show-codemirror';
+const SPLIT_CELL_DIFF_COMMAND = 'jupyterlab-cell-diff:split-cell-diff';
 
 /**
  * Setup a notebook cell with diff view.
diff --git a/ui-tests/tests/unified-cell-diff.spec.ts b/ui-tests/tests/unified-cell-diff.spec.ts
new file mode 100644
index 0000000..3fd9289
--- /dev/null
+++ b/ui-tests/tests/unified-cell-diff.spec.ts
@@ -0,0 +1,96 @@
+import { expect, IJupyterLabPageFixture, test } from '@jupyterlab/galata';
+import { NotebookPanel } from '@jupyterlab/notebook';
+
+/**
+ * The command to open the cell unified diff view.
+ */
+const UNIFIED_CELL_DIFF_COMMAND = 'jupyterlab-cell-diff:unified-cell-diff';
+
+/**
+ * Setup a notebook cell with unified diff view.
+ */
+async function setupCellWithUnifiedDiff(
+  page: IJupyterLabPageFixture,
+  originalSource: string,
+  newSource: string
+) {
+  await page.notebook.createNew();
+  await page.notebook.setCell(0, 'code', originalSource);
+
+  await page.evaluate(
+    async ({ originalSource, newSource, command }) => {
+      await window.jupyterapp.commands.execute(command, {
+        originalSource,
+        newSource,
+        showActionButtons: true
+      });
+    },
+    { originalSource, newSource, command: UNIFIED_CELL_DIFF_COMMAND }
+  );
+}
+
+/**
+ * Get the content of the first cell in the active notebook.
+ *
+ * TODO: use getCellTextInput from galata?
+ * See https://github.com/jupyterlab/jupyterlab/blob/1abbdf39fb204e47941e8d8021d85366a0ecece9/galata/src/helpers/notebook.ts#L677-L707
+ */
+async function getCellContent(page: IJupyterLabPageFixture): Promise<string> {
+  return await page.evaluate(() => {
+    const nbPanel = window.jupyterapp.shell.currentWidget as NotebookPanel;
+    return nbPanel.content.widgets[0].model.sharedModel.getSource();
+  });
+}
+
+test.describe('Unified Cell Diff Extension', () => {
+  test.beforeEach(async ({ page }) => {
+    await page.sidebar.close();
+  });
+
+  test('should show unified diff with action buttons', async ({ page }) => {
+    const originalSource = 'print("Hello, World!")';
+    const newSource = 'print("Hello, JupyterLab!")\nprint("Testing diffs")';
+
+    await setupCellWithUnifiedDiff(page, originalSource, newSource);
+
+    const acceptButton = page.getByRole('button', { name: 'Accept All' });
+    await expect(acceptButton).toBeVisible();
+
+    const rejectButton = page.getByRole('button', { name: 'Reject All' });
+    await expect(rejectButton).toBeVisible();
+  });
+
+  test('should accept all changes when the accept button is clicked', async ({
+    page
+  }) => {
+    const originalSource = 'x = 1';
+    const newSource = 'x = 2';
+
+    await setupCellWithUnifiedDiff(page, originalSource, newSource);
+
+    const acceptButton = page.getByText('Accept All');
+    await acceptButton.click();
+
+    await expect(acceptButton).not.toBeVisible();
+
+    const cellContent = await getCellContent(page);
+    expect(cellContent).toBe(newSource);
+  });
+
+  test('should reject all changes when the reject button is clicked', async ({
+    page
+  }) => {
+    const originalSource = 'y = 10';
+    const newSource = 'y = 20';
+
+    await setupCellWithUnifiedDiff(page, originalSource, newSource);
+
+    const rejectButton = page.getByText('Reject All');
+    await rejectButton.click();
+
+    await expect(rejectButton).not.toBeVisible();
+
+    const cellContent = await getCellContent(page);
+    expect(cellContent).toBe(originalSource);
+  });
+});
diff --git a/ui-tests/tests/unified-file-diff.spec.ts b/ui-tests/tests/unified-file-diff.spec.ts
new file mode 100644
index 0000000..0639e7e
--- /dev/null
+++ b/ui-tests/tests/unified-file-diff.spec.ts
@@ -0,0 +1,98 @@
+import { expect, IJupyterLabPageFixture, test } from '@jupyterlab/galata';
+
+/**
+ * The command to open the file unified diff view.
+ */
+const UNIFIED_FILE_DIFF_COMMAND = 'jupyterlab-cell-diff:unified-file-diff';
+
+/**
+ * Default name for new Python files.
+ */
+const DEFAULT_NAME = 'untitled.py';
+
+/**
+ * Setup a file editor with unified diff view.
+ */
+async function setupFileWithUnifiedDiff(
+  page: IJupyterLabPageFixture,
+  originalSource: string,
+  newSource: string
+) {
+  await page.evaluate(
+    async ({ originalSource, newSource, command }) => {
+      await window.jupyterapp.commands.execute(command, {
+        originalSource,
+        newSource,
+        showActionButtons: true
+      });
+    },
+    { originalSource, newSource, command: UNIFIED_FILE_DIFF_COMMAND }
+  );
+}
+
+/**
+ * Get the content of the current file in the editor.
+ *
+ * TODO: follow the same approach as in JupyterLab, with getEditorText?
+ * See https://github.com/jupyterlab/jupyterlab/blob/1abbdf39fb204e47941e8d8021d85366a0ecece9/galata/test/jupyterlab/file-edit.test.ts#L73-L85
+ */
+async function getFileContent(page: IJupyterLabPageFixture): Promise<string> {
+  return await page.evaluate(() => {
+    const widget = window.jupyterapp.shell.currentWidget;
+    if (widget && 'content' in widget) {
+      const editor = (widget as any).content.editor;
+      return editor.model.sharedModel.getSource();
+    }
+    return '';
+  });
+}
+
+test.describe('Unified File Diff Extension', () => {
+  test.beforeEach(async ({ page }) => {
+    await page.menu.clickMenuItem('File>New>Python File');
+    await page.sidebar.close();
+  });
+
+  test('should show unified diff with action buttons', async ({ page }) => {
+    const originalSource = 'print("Hello, World!")';
+    const newSource = 'print("Hello, JupyterLab!")\nprint("Testing diffs")';
+
+    await setupFileWithUnifiedDiff(page, originalSource, newSource);
+
+    const acceptButton = page.getByRole('button', { name: 'Accept All' });
+    await expect(acceptButton).toBeVisible();
+
+    const rejectButton = page.getByRole('button', { name: 'Reject All' });
+    await expect(rejectButton).toBeVisible();
+  });
+
+  test('should accept all changes when accept button is clicked', async ({
+    page
+  }) => {
+    const originalSource = 'x = 1';
+    const newSource = 'x = 2';
+
+    await setupFileWithUnifiedDiff(page, originalSource, newSource);
+
+    const acceptButton = page.getByText('Accept All');
+    await acceptButton.click();
+
+    const fileContent = await getFileContent(page);
+    expect(fileContent).toBe(newSource);
+  });
+
+  test('should reject all changes when reject button is clicked', async ({
+    page
+  }) => {
+    const originalSource = 'y = 10';
+    const newSource = 'y = 20';
+
+    await setupFileWithUnifiedDiff(page, originalSource, newSource);
+
+    const rejectButton = page.getByText('Reject All');
+    await rejectButton.click();
+
+    const fileContent = await getFileContent(page);
+    expect(fileContent).toBe(originalSource);
+  });
+});
diff --git a/yarn.lock b/yarn.lock
index cc47d8e..e662989 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -247,16 +247,16 @@ __metadata:
   languageName: node
   linkType: hard
 
-"@codemirror/merge@npm:^6.10.2":
-  version: 6.10.2
-  resolution: "@codemirror/merge@npm:6.10.2"
+"@codemirror/merge@npm:^6.11.0":
+  version: 6.11.0
+  resolution: "@codemirror/merge@npm:6.11.0"
   dependencies:
     "@codemirror/language": ^6.0.0
     "@codemirror/state": ^6.0.0
     "@codemirror/view": ^6.17.0
     "@lezer/highlight": ^1.0.0
     style-mod: ^4.1.0
-  checksum: 7083a3d1c61e57c038dc77ec645cd4d189bf4c636abeb351b93df7b9fcce26462f93b28f89d52cdcd3bc39d5e6610113896c67ae97e2d06615f35ff1aaf0eae9
+  checksum: b095c03cf7a7dc00f9d2d938f521ae23d714abd601a9cfba31bf4b039cab7c097f61ee71629763b0dd0b75d3a65d0fd12b84e5898fb3eae6d75217fbedcf9af8
   languageName: node
   linkType: hard
 
@@ -538,19 +538,19 @@ __metadata:
   languageName: node
   linkType: hard
 
-"@jupyterlab/apputils@npm:^4.4.3, @jupyterlab/apputils@npm:^4.5.7":
-  version: 4.5.7
-  resolution: "@jupyterlab/apputils@npm:4.5.7"
+"@jupyterlab/apputils@npm:^4.4.3, @jupyterlab/apputils@npm:^4.5.9":
+  version: 4.5.9
+  resolution: "@jupyterlab/apputils@npm:4.5.9"
   dependencies:
-    "@jupyterlab/coreutils": ^6.4.7
-    "@jupyterlab/observables": ^5.4.7
-    "@jupyterlab/rendermime-interfaces": ^3.12.7
-    "@jupyterlab/services": ^7.4.7
-    "@jupyterlab/settingregistry": ^4.4.7
-    "@jupyterlab/statedb": ^4.4.7
-    "@jupyterlab/statusbar": ^4.4.7
-    "@jupyterlab/translation": ^4.4.7
-    "@jupyterlab/ui-components": ^4.4.7
+    "@jupyterlab/coreutils": ^6.4.9
+    "@jupyterlab/observables": ^5.4.9
+    "@jupyterlab/rendermime-interfaces": ^3.12.9
+    "@jupyterlab/services": ^7.4.9
+    "@jupyterlab/settingregistry": ^4.4.9
+    "@jupyterlab/statedb": ^4.4.9
+    "@jupyterlab/statusbar": ^4.4.9
+    "@jupyterlab/translation": ^4.4.9
+    "@jupyterlab/ui-components": ^4.4.9
     "@lumino/algorithm": ^2.0.3
     "@lumino/commands": ^2.3.2
     "@lumino/coreutils": ^2.2.1
@@ -563,7 +563,7 @@ __metadata:
     "@types/react": ^18.0.26
     react: ^18.2.0
     sanitize-html: ~2.12.1
-  checksum: d74320e64f195062f83183a9361e01b4b6dbb545824fe8efe0b31c56943373cdaf7e932ce9a54a6a2bd70cb0e0f3ef754c402b330f86219c067d85be67cc5004
+  checksum: 19c75e607ca9c5422cb0128d8c4c279d7c75d3d9681c9d45112e0291323279034550f19754a203ed0c09c3dc51b3eb16ee2c0c29be1777dddcf499ef4e6d4b5f
   languageName: node
   linkType: hard
 
@@ -658,19 +658,19 @@ __metadata:
   languageName: node
   linkType: hard
 
-"@jupyterlab/codeeditor@npm:^4.0.0, @jupyterlab/codeeditor@npm:^4.3.3, @jupyterlab/codeeditor@npm:^4.4.7":
-  version: 4.4.7
-  resolution: "@jupyterlab/codeeditor@npm:4.4.7"
+"@jupyterlab/codeeditor@npm:^4.0.0, @jupyterlab/codeeditor@npm:^4.3.3, @jupyterlab/codeeditor@npm:^4.4.9":
+  version: 4.4.9
+  resolution: "@jupyterlab/codeeditor@npm:4.4.9"
   dependencies:
     "@codemirror/state": ^6.5.2
     "@jupyter/ydoc": ^3.1.0
-    "@jupyterlab/apputils": ^4.5.7
-    "@jupyterlab/coreutils": ^6.4.7
-    "@jupyterlab/nbformat": ^4.4.7
-    "@jupyterlab/observables": ^5.4.7
-    "@jupyterlab/statusbar": ^4.4.7
-    "@jupyterlab/translation": ^4.4.7
-    "@jupyterlab/ui-components": ^4.4.7
+    "@jupyterlab/apputils": ^4.5.9
+    "@jupyterlab/coreutils": ^6.4.9
+    "@jupyterlab/nbformat": ^4.4.9
+    "@jupyterlab/observables": ^5.4.9
+    "@jupyterlab/statusbar": ^4.4.9
+    "@jupyterlab/translation": ^4.4.9
+    "@jupyterlab/ui-components": ^4.4.9
     "@lumino/coreutils": ^2.2.1
     "@lumino/disposable": ^2.1.4
     "@lumino/dragdrop": ^2.1.6
@@ -678,13 +678,13 @@ __metadata:
     "@lumino/signaling": ^2.1.4
     "@lumino/widgets": ^2.7.1
     react: ^18.2.0
-  checksum: 19b8dda6990afed5fe49e9bb79bf99ff2170019bba97870ae6c58fd82f1add7f851dde6b47f37b8e9f79285f1586c0cffd0e45c262be19d5e652e42012c10604
+  checksum: 1e1e374a3fadf12c30b6239b20d19c00e704403c5ac1dc70f9a168f460bf67610525b4f3c4da606ada17eff5940fe28cf022415d6bd3aa1714751e00a0eddfe4
   languageName: node
   linkType: hard
 
-"@jupyterlab/codemirror@npm:^4.3.3, @jupyterlab/codemirror@npm:^4.4.7":
-  version: 4.4.7
-  resolution: "@jupyterlab/codemirror@npm:4.4.7"
+"@jupyterlab/codemirror@npm:^4.3.3, @jupyterlab/codemirror@npm:^4.4.7, @jupyterlab/codemirror@npm:^4.4.9":
+  version: 4.4.9
+  resolution: "@jupyterlab/codemirror@npm:4.4.9"
   dependencies:
     "@codemirror/autocomplete": ^6.18.6
     "@codemirror/commands": ^6.8.1
@@ -707,11 +707,11 @@ __metadata:
     "@codemirror/state": ^6.5.2
     "@codemirror/view": ^6.38.1
     "@jupyter/ydoc": ^3.1.0
-    "@jupyterlab/codeeditor": ^4.4.7
-    "@jupyterlab/coreutils": ^6.4.7
-    "@jupyterlab/documentsearch": ^4.4.7
-    "@jupyterlab/nbformat": ^4.4.7
-    "@jupyterlab/translation": ^4.4.7
+    "@jupyterlab/codeeditor": ^4.4.9
+    "@jupyterlab/coreutils": ^6.4.9
+    "@jupyterlab/documentsearch": ^4.4.9
+    "@jupyterlab/nbformat": ^4.4.9
+    "@jupyterlab/translation": ^4.4.9
     "@lezer/common": ^1.2.1
     "@lezer/generator": ^1.7.0
     "@lezer/highlight": ^1.2.0
@@ -720,13 +720,13 @@ __metadata:
     "@lumino/disposable": ^2.1.4
     "@lumino/signaling": ^2.1.4
     yjs: ^13.5.40
-  checksum: b70a3cfe247d0f39e280e1ebebe73f6038ba37dfcca42bd0963ec613a6682fe402d7b6d2f837cf97de14f499b8bbe91dc609a3c3c7a4947b0b451f99541cb478
+  checksum: 68cc6f265c990e33b2fd4122ca28cc7fc5b039d8a829a7513415ac7245ce9a9ff0183515e48b1bac0085507bddfd5666e45ae8fbfef6de90347a421d4341e4a4
   languageName: node
   linkType: hard
 
-"@jupyterlab/coreutils@npm:^6.0.0, @jupyterlab/coreutils@npm:^6.3.3, @jupyterlab/coreutils@npm:^6.4.7":
-  version: 6.4.7
-  resolution: "@jupyterlab/coreutils@npm:6.4.7"
+"@jupyterlab/coreutils@npm:^6.0.0, @jupyterlab/coreutils@npm:^6.3.3, @jupyterlab/coreutils@npm:^6.4.9":
+  version: 6.4.9
+  resolution: "@jupyterlab/coreutils@npm:6.4.9"
   dependencies:
     "@lumino/coreutils": ^2.2.1
     "@lumino/disposable": ^2.1.4
@@ -734,7 +734,7 @@ __metadata:
     minimist: ~1.2.0
     path-browserify: ^1.0.0
     url-parse: ~1.5.4
-  checksum: b346c479f139c641f947634c6dce697af0b30008c725e93fc3841120ebfb6873594fc753d8a9ee8b1723c4a8a3a0844583e7c7e7e9f2058f9113872ce17a8fa7
+  checksum: 50c92dca8750c3a6bbe16c3a8af150db786636f15b0a0eba1e1f5ed2c0ae8ce06884cc7a580991c9d5f141000616c0fc5aa537e70974b0e19ad981a5cf21886b
   languageName: node
   linkType: hard
 
@@ -763,39 +763,39 @@ __metadata:
   languageName: node
   linkType: hard
 
-"@jupyterlab/docregistry@npm:^4.3.3":
-  version: 4.3.3
-  resolution: "@jupyterlab/docregistry@npm:4.3.3"
+"@jupyterlab/docregistry@npm:^4.3.3, @jupyterlab/docregistry@npm:^4.4.9":
+  version: 4.4.9
+  resolution: "@jupyterlab/docregistry@npm:4.4.9"
   dependencies:
-    "@jupyter/ydoc": ^3.0.0
-    "@jupyterlab/apputils": ^4.4.3
-    "@jupyterlab/codeeditor": ^4.3.3
-    "@jupyterlab/coreutils": ^6.3.3
-    "@jupyterlab/observables": ^5.3.3
-    "@jupyterlab/rendermime": ^4.3.3
-    "@jupyterlab/rendermime-interfaces": ^3.11.3
-    "@jupyterlab/services": ^7.3.3
-    "@jupyterlab/translation": ^4.3.3
-    "@jupyterlab/ui-components": ^4.3.3
-    "@lumino/algorithm": ^2.0.2
-    "@lumino/coreutils": ^2.2.0
-    "@lumino/disposable": ^2.1.3
-    "@lumino/messaging": ^2.0.2
-    "@lumino/properties": ^2.0.2
-    "@lumino/signaling": ^2.1.3
-    "@lumino/widgets": ^2.5.0
+    "@jupyter/ydoc": ^3.1.0
+    "@jupyterlab/apputils": ^4.5.9
+    "@jupyterlab/codeeditor": ^4.4.9
+    "@jupyterlab/coreutils": ^6.4.9
+    "@jupyterlab/observables": ^5.4.9
+    "@jupyterlab/rendermime": ^4.4.9
+    "@jupyterlab/rendermime-interfaces": ^3.12.9
+    "@jupyterlab/services": ^7.4.9
+    "@jupyterlab/translation": ^4.4.9
+    "@jupyterlab/ui-components": ^4.4.9
+    "@lumino/algorithm": ^2.0.3
+    "@lumino/coreutils": ^2.2.1
+    "@lumino/disposable": ^2.1.4
+    "@lumino/messaging": ^2.0.3
+    "@lumino/properties": ^2.0.3
+    "@lumino/signaling": ^2.1.4
+    "@lumino/widgets": ^2.7.1
     react: ^18.2.0
-  checksum: 14b44c8ae0c1a5059da6786396f47dfc79160e2489db509c3d37a58e1aaf8b2648dfac44eafac3dfaaabcb114f6985f52c0085b663718d5cac4901492e138d14
+  checksum: d02e1f530166b50232dca590185bc9d19b75944624dc59e3abf4cfdfba3f8bc4de7f37283301f98721ebaacb93c7b3e017357de9f4d586ef475a42c13c3d2762
   languageName: node
   linkType: hard
 
-"@jupyterlab/documentsearch@npm:^4.3.3, @jupyterlab/documentsearch@npm:^4.4.7":
-  version: 4.4.7
-  resolution: "@jupyterlab/documentsearch@npm:4.4.7"
+"@jupyterlab/documentsearch@npm:^4.3.3, @jupyterlab/documentsearch@npm:^4.4.9":
+  version: 4.4.9
+  resolution: "@jupyterlab/documentsearch@npm:4.4.9"
   dependencies:
-    "@jupyterlab/apputils": ^4.5.7
-    "@jupyterlab/translation": ^4.4.7
-    "@jupyterlab/ui-components": ^4.4.7
+    "@jupyterlab/apputils": ^4.5.9
+    "@jupyterlab/translation": ^4.4.9
+    "@jupyterlab/ui-components": ^4.4.9
     "@lumino/commands": ^2.3.2
     "@lumino/coreutils": ^2.2.1
     "@lumino/disposable": ^2.1.4
@@ -804,7 +804,7 @@ __metadata:
     "@lumino/signaling": ^2.1.4
     "@lumino/widgets": ^2.7.1
     react: ^18.2.0
-  checksum: 665940f320edf537ff146848a7677017d338ba258b039cbc340961be5791ad3cc516a38ad48420cade7fde10fa406148d78006620fc5ab32bacc30fa1ee206e5
+  checksum: a2a8e5016300cd3c88dbd931a148a5394d0f20ab638b26dd43eb131a72b14d820fe2f955dc9f7afd01383ce0d8b4cb8cd1e1642e298c9f8044b7e2e54124b937
   languageName: node
   linkType: hard
 
@@ -836,35 +836,61 @@ __metadata:
   languageName: node
   linkType: hard
 
-"@jupyterlab/lsp@npm:^4.3.3":
-  version: 4.3.3
-  resolution: "@jupyterlab/lsp@npm:4.3.3"
+"@jupyterlab/fileeditor@npm:^4.0.0":
+  version: 4.4.9
+  resolution: "@jupyterlab/fileeditor@npm:4.4.9"
   dependencies:
-    "@jupyterlab/apputils": ^4.4.3
-    "@jupyterlab/codeeditor": ^4.3.3
-    "@jupyterlab/codemirror": ^4.3.3
-    "@jupyterlab/coreutils": ^6.3.3
-    "@jupyterlab/docregistry": ^4.3.3
-    "@jupyterlab/services": ^7.3.3
-    "@jupyterlab/translation": ^4.3.3
-    "@lumino/coreutils": ^2.2.0
-    "@lumino/disposable": ^2.1.3
-    "@lumino/signaling": ^2.1.3
-    "@lumino/widgets": ^2.5.0
+    "@jupyter/ydoc": ^3.1.0
+    "@jupyterlab/apputils": ^4.5.9
+    "@jupyterlab/codeeditor": ^4.4.9
+    "@jupyterlab/codemirror": ^4.4.9
+    "@jupyterlab/coreutils": ^6.4.9
+    "@jupyterlab/docregistry": ^4.4.9
+    "@jupyterlab/documentsearch": ^4.4.9
+    "@jupyterlab/lsp": ^4.4.9
+    "@jupyterlab/statusbar": ^4.4.9
+    "@jupyterlab/toc": ^6.4.9
+    "@jupyterlab/translation": ^4.4.9
+    "@jupyterlab/ui-components": ^4.4.9
+    "@lumino/commands": ^2.3.2
+    "@lumino/coreutils": ^2.2.1
+    "@lumino/messaging": ^2.0.3
+    "@lumino/widgets": ^2.7.1
+    react: ^18.2.0
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