diff --git a/README.md b/README.md
index cb87f26..98d8daa 100644
--- a/README.md
+++ b/README.md
@@ -83,6 +83,14 @@ bun install
 bun link          # optional global arrowcode / ac
 ```
 
+### Update
+
+To update ArrowCode while preserving any local modifications you have made:
+
+```bash
+./update.sh
+```
+
 ### Setup API key
 
 ```bash
diff --git a/update.sh b/update.sh
new file mode 100755
index 0000000..ea0a351
--- /dev/null
+++ b/update.sh
@@ -0,0 +1,48 @@
+#!/usr/bin/env bash
+set -euo pipefail
+
+# ArrowCode local updater script
+# Updates the ArrowCode repository to the latest code on the current branch while preserving local changes
+
+RED=$'\033[0;31m'
+GRN=$'\033[0;32m'
+CYN=$'\033[0;36m'
+RST=$'\033[0m'
+
+log()  { printf '%s==>%s %s\n' "$CYN" "$RST" "$*"; }
+ok()   { printf '%s[ok]%s %s\n' "$GRN" "$RST" "$*"; }
+err()  { printf '%s[err]%s %s\n' "$RED" "$RST" "$*" >&2; }
+
+# Find ArrowCode base directory
+DIR="$(cd "$(dirname "${BASH_SOURCE[0]}")" && pwd)"
+cd "$DIR"
+
+log "Updating ArrowCode at $DIR..."
+
+# Keep local changes with git stash if there are any
+HAS_CHANGES=0
+if ! git diff --quiet || ! git diff --cached --quiet; then
+  HAS_CHANGES=1
+  log "Saving local changes with git stash..."
+  git stash -u
+fi
+
+# Fetch and rebase / merge latest from branch
+BRANCH=$(git rev-parse --abbrev-ref HEAD)
+log "Fetching latest commits from remote on branch: $BRANCH"
+git fetch origin "$BRANCH"
+
+log "Pulling latest changes..."
+git pull --rebase origin "$BRANCH"
+
+# Restore local changes if stashed
+if [ "$HAS_CHANGES" -eq 1 ]; then
+  log "Restoring local changes..."
+  git stash pop
+fi
+
+# Re-install dependencies with bun
+log "Running bun install to ensure package sync..."
+bun install
+
+ok "ArrowCode successfully updated!"