diff --git a/package-lock.json b/package-lock.json
index 6a9bac9316..901881d387 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -6156,7 +6156,7 @@
     },
     "src/filesystem": {
       "name": "@modelcontextprotocol/server-filesystem",
-      "version": "0.6.2",
+      "version": "0.6.3",
       "license": "MIT",
       "dependencies": {
         "@modelcontextprotocol/sdk": "^1.17.0",
diff --git a/src/filesystem/README.md b/src/filesystem/README.md
index 6a329004f7..8e65f76cfd 100644
--- a/src/filesystem/README.md
+++ b/src/filesystem/README.md
@@ -77,6 +77,7 @@ The server's directory access control follows this flow:
     - `head` (number, optional): First N lines
     - `tail` (number, optional): Last N lines
   - Always treats the file as UTF-8 text regardless of extension
+  - Cannot specify both `head` and `tail` simultaneously
 
 - **read_media_file**
   - Read an image or audio file
@@ -123,6 +124,23 @@ The server's directory access control follows this flow:
   - List directory contents with [FILE] or [DIR] prefixes
   - Input: `path` (string)
 
+- **list_directory_with_sizes**
+  - List directory contents with [FILE] or [DIR] prefixes, including file sizes
+  - Inputs:
+    - `path` (string): Directory path to list
+    - `sortBy` (string, optional): Sort entries by "name" or "size" (default: "name")
+  - Returns detailed listing with file sizes and summary statistics
+  - Shows total files, directories, and combined size
+
+- **directory_tree**
+  - Get a recursive tree view of files and directories as a JSON structure
+  - Input: `path` (string): Starting directory path
+  - Returns JSON structure with:
+    - `name`: File/directory name
+    - `type`: "file" or "directory"
+    - `children`: Array of child entries (for directories only)
+  - Output is formatted with 2-space indentation for readability
+
 - **move_file**
   - Move or rename files and directories
   - Inputs:
diff --git a/src/filesystem/__tests__/lib.test.ts b/src/filesystem/__tests__/lib.test.ts
new file mode 100644
index 0000000000..76d3679280
--- /dev/null
+++ b/src/filesystem/__tests__/lib.test.ts
@@ -0,0 +1,701 @@
+import { describe, it, expect, beforeEach, afterEach, jest } from '@jest/globals';
+import fs from 'fs/promises';
+import path from 'path';
+import os from 'os';
+import {
+  // Pure utility functions
+  formatSize,
+  normalizeLineEndings,
+  createUnifiedDiff,
+  // Security & validation functions
+  validatePath,
+  setAllowedDirectories,
+  // File operations
+  getFileStats,
+  readFileContent,
+  writeFileContent,
+  // Search & filtering functions
+  searchFilesWithValidation,
+  // File editing functions
+  applyFileEdits,
+  tailFile,
+  headFile
+} from '../lib.js';
+
+// Mock fs module
+jest.mock('fs/promises');
+const mockFs = fs as jest.Mocked<typeof fs>;
+
+describe('Lib Functions', () => {
+  beforeEach(() => {
+    jest.clearAllMocks();
+    // Set up allowed directories for tests
+    const allowedDirs = process.platform === 'win32' ? ['C:\\Users\\test', 'C:\\temp', 'C:\\allowed'] : ['/home/user', '/tmp', '/allowed'];
+    setAllowedDirectories(allowedDirs);
+  });
+
+  afterEach(() => {
+    jest.restoreAllMocks();
+    // Clear allowed directories after tests
+    setAllowedDirectories([]);
+  });
+
+  describe('Pure Utility Functions', () => {
+    describe('formatSize', () => {
+      it('formats bytes correctly', () => {
+        expect(formatSize(0)).toBe('0 B');
+        expect(formatSize(512)).toBe('512 B');
+        expect(formatSize(1024)).toBe('1.00 KB');
+        expect(formatSize(1536)).toBe('1.50 KB');
+        expect(formatSize(1048576)).toBe('1.00 MB');
+        expect(formatSize(1073741824)).toBe('1.00 GB');
+        expect(formatSize(1099511627776)).toBe('1.00 TB');
+      });
+
+      it('handles edge cases', () => {
+        expect(formatSize(1023)).toBe('1023 B');
+        expect(formatSize(1025)).toBe('1.00 KB');
+        expect(formatSize(1048575)).toBe('1024.00 KB');
+      });
+
+      it('handles very large numbers beyond TB', () => {
+        // The function only supports up to TB, so very large numbers will show as TB
+        expect(formatSize(1024 * 1024 * 1024 * 1024 * 1024)).toBe('1024.00 TB');
+        expect(formatSize(Number.MAX_SAFE_INTEGER)).toContain('TB');
+      });
+
+      it('handles negative numbers', () => {
+        // Negative numbers will result in NaN for the log calculation
+        expect(formatSize(-1024)).toContain('NaN');
+        expect(formatSize(-0)).toBe('0 B');
+      });
+
+      it('handles decimal numbers', () => {
+        expect(formatSize(1536.5)).toBe('1.50 KB');
+        expect(formatSize(1023.9)).toBe('1023.9 B');
+      });
+
+      it('handles very small positive numbers', () => {
+        expect(formatSize(1)).toBe('1 B');
+        expect(formatSize(0.5)).toBe('0.5 B');
+        expect(formatSize(0.1)).toBe('0.1 B');
+      });
+    });
+
+    describe('normalizeLineEndings', () => {
+      it('converts CRLF to LF', () => {
+        expect(normalizeLineEndings('line1\r\nline2\r\nline3')).toBe('line1\nline2\nline3');
+      });
+
+      it('leaves LF unchanged', () => {
+        expect(normalizeLineEndings('line1\nline2\nline3')).toBe('line1\nline2\nline3');
+      });
+
+      it('handles mixed line endings', () => {
+        expect(normalizeLineEndings('line1\r\nline2\nline3\r\n')).toBe('line1\nline2\nline3\n');
+      });
+
+      it('handles empty string', () => {
+        expect(normalizeLineEndings('')).toBe('');
+      });
+    });
+
+    describe('createUnifiedDiff', () => {
+      it('creates diff for simple changes', () => {
+        const original = 'line1\nline2\nline3';
+        const modified = 'line1\nmodified line2\nline3';
+        const diff = createUnifiedDiff(original, modified, 'test.txt');
+        
+        expect(diff).toContain('--- test.txt');
+        expect(diff).toContain('+++ test.txt');
+        expect(diff).toContain('-line2');
+        expect(diff).toContain('+modified line2');
+      });
+
+      it('handles CRLF normalization', () => {
+        const original = 'line1\r\nline2\r\n';
+        const modified = 'line1\nmodified line2\n';
+        const diff = createUnifiedDiff(original, modified);
+        
+        expect(diff).toContain('-line2');
+        expect(diff).toContain('+modified line2');
+      });
+
+      it('handles identical content', () => {
+        const content = 'line1\nline2\nline3';
+        const diff = createUnifiedDiff(content, content);
+        
+        // Should not contain any +/- lines for identical content (excluding header lines)
+        expect(diff.split('\n').filter((line: string) => line.startsWith('+++') || line.startsWith('---'))).toHaveLength(2);
+        expect(diff.split('\n').filter((line: string) => line.startsWith('+') && !line.startsWith('+++'))).toHaveLength(0);
+        expect(diff.split('\n').filter((line: string) => line.startsWith('-') && !line.startsWith('---'))).toHaveLength(0);
+      });
+
+      it('handles empty content', () => {
+        const diff = createUnifiedDiff('', '');
+        expect(diff).toContain('--- file');
+        expect(diff).toContain('+++ file');
+      });
+
+      it('handles default filename parameter', () => {
+        const diff = createUnifiedDiff('old', 'new');
+        expect(diff).toContain('--- file');
+        expect(diff).toContain('+++ file');
+      });
+
+      it('handles custom filename', () => {
+        const diff = createUnifiedDiff('old', 'new', 'custom.txt');
+        expect(diff).toContain('--- custom.txt');
+        expect(diff).toContain('+++ custom.txt');
+      });
+    });
+  });
+
+  describe('Security & Validation Functions', () => {
+    describe('validatePath', () => {
+      // Use Windows-compatible paths for testing
+      const allowedDirs = process.platform === 'win32' ? ['C:\\Users\\test', 'C:\\temp'] : ['/home/user', '/tmp'];
+
+      beforeEach(() => {
+        mockFs.realpath.mockImplementation(async (path: any) => path.toString());
+      });
+
+      it('validates allowed paths', async () => {
+        const testPath = process.platform === 'win32' ? 'C:\\Users\\test\\file.txt' : '/home/user/file.txt';
+        const result = await validatePath(testPath);
+        expect(result).toBe(testPath);
+      });
+
+      it('rejects disallowed paths', async () => {
+        const testPath = process.platform === 'win32' ? 'C:\\Windows\\System32\\file.txt' : '/etc/passwd';
+        await expect(validatePath(testPath))
+          .rejects.toThrow('Access denied - path outside allowed directories');
+      });
+
+      it('handles non-existent files by checking parent directory', async () => {
+        const newFilePath = process.platform === 'win32' ? 'C:\\Users\\test\\newfile.txt' : '/home/user/newfile.txt';
+        const parentPath = process.platform === 'win32' ? 'C:\\Users\\test' : '/home/user';
+        
+        // Create an error with the ENOENT code that the implementation checks for
+        const enoentError = new Error('ENOENT') as NodeJS.ErrnoException;
+        enoentError.code = 'ENOENT';
+        
+        mockFs.realpath
+          .mockRejectedValueOnce(enoentError)
+          .mockResolvedValueOnce(parentPath);
+        
+        const result = await validatePath(newFilePath);
+        expect(result).toBe(path.resolve(newFilePath));
+      });
+
+      it('rejects when parent directory does not exist', async () => {
+        const newFilePath = process.platform === 'win32' ? 'C:\\Users\\test\\nonexistent\\newfile.txt' : '/home/user/nonexistent/newfile.txt';
+        
+        // Create errors with the ENOENT code
+        const enoentError1 = new Error('ENOENT') as NodeJS.ErrnoException;
+        enoentError1.code = 'ENOENT';
+        const enoentError2 = new Error('ENOENT') as NodeJS.ErrnoException;
+        enoentError2.code = 'ENOENT';
+        
+        mockFs.realpath
+          .mockRejectedValueOnce(enoentError1)
+          .mockRejectedValueOnce(enoentError2);
+        
+        await expect(validatePath(newFilePath))
+          .rejects.toThrow('Parent directory does not exist');
+      });
+    });
+  });
+
+  describe('File Operations', () => {
+    describe('getFileStats', () => {
+      it('returns file statistics', async () => {
+        const mockStats = {
+          size: 1024,
+          birthtime: new Date('2023-01-01'),
+          mtime: new Date('2023-01-02'),
+          atime: new Date('2023-01-03'),
+          isDirectory: () => false,
+          isFile: () => true,
+          mode: 0o644
+        };
+        
+        mockFs.stat.mockResolvedValueOnce(mockStats as any);
+        
+        const result = await getFileStats('/test/file.txt');
+        
+        expect(result).toEqual({
+          size: 1024,
+          created: new Date('2023-01-01'),
+          modified: new Date('2023-01-02'),
+          accessed: new Date('2023-01-03'),
+          isDirectory: false,
+          isFile: true,
+          permissions: '644'
+        });
+      });
+
+      it('handles directory statistics', async () => {
+        const mockStats = {
+          size: 4096,
+          birthtime: new Date('2023-01-01'),
+          mtime: new Date('2023-01-02'),
+          atime: new Date('2023-01-03'),
+          isDirectory: () => true,
+          isFile: () => false,
+          mode: 0o755
+        };
+        
+        mockFs.stat.mockResolvedValueOnce(mockStats as any);
+        
+        const result = await getFileStats('/test/dir');
+        
+        expect(result.isDirectory).toBe(true);
+        expect(result.isFile).toBe(false);
+        expect(result.permissions).toBe('755');
+      });
+    });
+
+    describe('readFileContent', () => {
+      it('reads file with default encoding', async () => {
+        mockFs.readFile.mockResolvedValueOnce('file content');
+        
+        const result = await readFileContent('/test/file.txt');
+        
+        expect(result).toBe('file content');
+        expect(mockFs.readFile).toHaveBeenCalledWith('/test/file.txt', 'utf-8');
+      });
+
+      it('reads file with custom encoding', async () => {
+        mockFs.readFile.mockResolvedValueOnce('file content');
+        
+        const result = await readFileContent('/test/file.txt', 'ascii');
+        
+        expect(result).toBe('file content');
+        expect(mockFs.readFile).toHaveBeenCalledWith('/test/file.txt', 'ascii');
+      });
+    });
+
+    describe('writeFileContent', () => {
+      it('writes file content', async () => {
+        mockFs.writeFile.mockResolvedValueOnce(undefined);
+        
+        await writeFileContent('/test/file.txt', 'new content');
+        
+        expect(mockFs.writeFile).toHaveBeenCalledWith('/test/file.txt', 'new content', { encoding: "utf-8", flag: 'wx' });
+      });
+    });
+
+  });
+
+  describe('Search & Filtering Functions', () => {
+    describe('searchFilesWithValidation', () => {
+      beforeEach(() => {
+        mockFs.realpath.mockImplementation(async (path: any) => path.toString());
+      });
+
+
+      it('excludes files matching exclude patterns', async () => {
+        const mockEntries = [
+          { name: 'test.txt', isDirectory: () => false },
+          { name: 'test.log', isDirectory: () => false },
+          { name: 'node_modules', isDirectory: () => true }
+        ];
+        
+        mockFs.readdir.mockResolvedValueOnce(mockEntries as any);
+        
+        const testDir = process.platform === 'win32' ? 'C:\\allowed\\dir' : '/allowed/dir';
+        const allowedDirs = process.platform === 'win32' ? ['C:\\allowed'] : ['/allowed'];
+        
+        // Mock realpath to return the same path for validation to pass
+        mockFs.realpath.mockImplementation(async (inputPath: any) => {
+          const pathStr = inputPath.toString();
+          // Return the path as-is for validation
+          return pathStr;
+        });
+        
+        const result = await searchFilesWithValidation(
+          testDir,
+          'test',
+          allowedDirs,
+          { excludePatterns: ['*.log', 'node_modules'] }
+        );
+        
+        const expectedResult = process.platform === 'win32' ? 'C:\\allowed\\dir\\test.txt' : '/allowed/dir/test.txt';
+        expect(result).toEqual([expectedResult]);
+      });
+
+      it('handles validation errors during search', async () => {
+        const mockEntries = [
+          { name: 'test.txt', isDirectory: () => false },
+          { name: 'invalid_file.txt', isDirectory: () => false }
+        ];
+        
+        mockFs.readdir.mockResolvedValueOnce(mockEntries as any);
+        
+        // Mock validatePath to throw error for invalid_file.txt
+        mockFs.realpath.mockImplementation(async (path: any) => {
+          if (path.toString().includes('invalid_file.txt')) {
+            throw new Error('Access denied');
+          }
+          return path.toString();
+        });
+        
+        const testDir = process.platform === 'win32' ? 'C:\\allowed\\dir' : '/allowed/dir';
+        const allowedDirs = process.platform === 'win32' ? ['C:\\allowed'] : ['/allowed'];
+        
+        const result = await searchFilesWithValidation(
+          testDir,
+          'test',
+          allowedDirs,
+          {}
+        );
+        
+        // Should only return the valid file, skipping the invalid one
+        const expectedResult = process.platform === 'win32' ? 'C:\\allowed\\dir\\test.txt' : '/allowed/dir/test.txt';
+        expect(result).toEqual([expectedResult]);
+      });
+
+      it('handles complex exclude patterns with wildcards', async () => {
+        const mockEntries = [
+          { name: 'test.txt', isDirectory: () => false },
+          { name: 'test.backup', isDirectory: () => false },
+          { name: 'important_test.js', isDirectory: () => false }
+        ];
+        
+        mockFs.readdir.mockResolvedValueOnce(mockEntries as any);
+        
+        const testDir = process.platform === 'win32' ? 'C:\\allowed\\dir' : '/allowed/dir';
+        const allowedDirs = process.platform === 'win32' ? ['C:\\allowed'] : ['/allowed'];
+        
+        const result = await searchFilesWithValidation(
+          testDir,
+          'test',
+          allowedDirs,
+          { excludePatterns: ['*.backup'] }
+        );
+        
+        const expectedResults = process.platform === 'win32' ? [
+          'C:\\allowed\\dir\\test.txt',
+          'C:\\allowed\\dir\\important_test.js'
+        ] : [
+          '/allowed/dir/test.txt',
+          '/allowed/dir/important_test.js'
+        ];
+        expect(result).toEqual(expectedResults);
+      });
+    });
+  });
+
+  describe('File Editing Functions', () => {
+    describe('applyFileEdits', () => {
+      beforeEach(() => {
+        mockFs.readFile.mockResolvedValue('line1\nline2\nline3\n');
+        mockFs.writeFile.mockResolvedValue(undefined);
+      });
+
+      it('applies simple text replacement', async () => {
+        const edits = [
+          { oldText: 'line2', newText: 'modified line2' }
+        ];
+        
+        mockFs.rename.mockResolvedValueOnce(undefined);
+        
+        const result = await applyFileEdits('/test/file.txt', edits, false);
+        
+        expect(result).toContain('modified line2');
+        // Should write to temporary file then rename
+        expect(mockFs.writeFile).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.txt\.[a-f0-9]+\.tmp$/),
+          'line1\nmodified line2\nline3\n',
+          'utf-8'
+        );
+        expect(mockFs.rename).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.txt\.[a-f0-9]+\.tmp$/),
+          '/test/file.txt'
+        );
+      });
+
+      it('handles dry run mode', async () => {
+        const edits = [
+          { oldText: 'line2', newText: 'modified line2' }
+        ];
+        
+        const result = await applyFileEdits('/test/file.txt', edits, true);
+        
+        expect(result).toContain('modified line2');
+        expect(mockFs.writeFile).not.toHaveBeenCalled();
+      });
+
+      it('applies multiple edits sequentially', async () => {
+        const edits = [
+          { oldText: 'line1', newText: 'first line' },
+          { oldText: 'line3', newText: 'third line' }
+        ];
+        
+        mockFs.rename.mockResolvedValueOnce(undefined);
+        
+        await applyFileEdits('/test/file.txt', edits, false);
+        
+        expect(mockFs.writeFile).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.txt\.[a-f0-9]+\.tmp$/),
+          'first line\nline2\nthird line\n',
+          'utf-8'
+        );
+        expect(mockFs.rename).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.txt\.[a-f0-9]+\.tmp$/),
+          '/test/file.txt'
+        );
+      });
+
+      it('handles whitespace-flexible matching', async () => {
+        mockFs.readFile.mockResolvedValue('  line1\n    line2\n  line3\n');
+        
+        const edits = [
+          { oldText: 'line2', newText: 'modified line2' }
+        ];
+        
+        mockFs.rename.mockResolvedValueOnce(undefined);
+        
+        await applyFileEdits('/test/file.txt', edits, false);
+        
+        expect(mockFs.writeFile).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.txt\.[a-f0-9]+\.tmp$/),
+          '  line1\n    modified line2\n  line3\n',
+          'utf-8'
+        );
+        expect(mockFs.rename).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.txt\.[a-f0-9]+\.tmp$/),
+          '/test/file.txt'
+        );
+      });
+
+      it('throws error for non-matching edits', async () => {
+        const edits = [
+          { oldText: 'nonexistent line', newText: 'replacement' }
+        ];
+        
+        await expect(applyFileEdits('/test/file.txt', edits, false))
+          .rejects.toThrow('Could not find exact match for edit');
+      });
+
+      it('handles complex multi-line edits with indentation', async () => {
+        mockFs.readFile.mockResolvedValue('function test() {\n  console.log("hello");\n  return true;\n}');
+        
+        const edits = [
+          { 
+            oldText: '  console.log("hello");\n  return true;', 
+            newText: '  console.log("world");\n  console.log("test");\n  return false;' 
+          }
+        ];
+        
+        mockFs.rename.mockResolvedValueOnce(undefined);
+        
+        await applyFileEdits('/test/file.js', edits, false);
+        
+        expect(mockFs.writeFile).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.js\.[a-f0-9]+\.tmp$/),
+          'function test() {\n  console.log("world");\n  console.log("test");\n  return false;\n}',
+          'utf-8'
+        );
+        expect(mockFs.rename).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.js\.[a-f0-9]+\.tmp$/),
+          '/test/file.js'
+        );
+      });
+
+      it('handles edits with different indentation patterns', async () => {
+        mockFs.readFile.mockResolvedValue('    if (condition) {\n        doSomething();\n    }');
+        
+        const edits = [
+          { 
+            oldText: 'doSomething();', 
+            newText: 'doSomethingElse();\n        doAnotherThing();' 
+          }
+        ];
+        
+        mockFs.rename.mockResolvedValueOnce(undefined);
+        
+        await applyFileEdits('/test/file.js', edits, false);
+        
+        expect(mockFs.writeFile).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.js\.[a-f0-9]+\.tmp$/),
+          '    if (condition) {\n        doSomethingElse();\n        doAnotherThing();\n    }',
+          'utf-8'
+        );
+        expect(mockFs.rename).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.js\.[a-f0-9]+\.tmp$/),
+          '/test/file.js'
+        );
+      });
+
+      it('handles CRLF line endings in file content', async () => {
+        mockFs.readFile.mockResolvedValue('line1\r\nline2\r\nline3\r\n');
+        
+        const edits = [
+          { oldText: 'line2', newText: 'modified line2' }
+        ];
+        
+        mockFs.rename.mockResolvedValueOnce(undefined);
+        
+        await applyFileEdits('/test/file.txt', edits, false);
+        
+        expect(mockFs.writeFile).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.txt\.[a-f0-9]+\.tmp$/),
+          'line1\nmodified line2\nline3\n',
+          'utf-8'
+        );
+        expect(mockFs.rename).toHaveBeenCalledWith(
+          expect.stringMatching(/\/test\/file\.txt\.[a-f0-9]+\.tmp$/),
+          '/test/file.txt'
+        );
+      });
+    });
+
+    describe('tailFile', () => {
+      it('handles empty files', async () => {
+        mockFs.stat.mockResolvedValue({ size: 0 } as any);
+        
+        const result = await tailFile('/test/empty.txt', 5);
+        
+        expect(result).toBe('');
+        expect(mockFs.open).not.toHaveBeenCalled();
+      });
+
+      it('calls stat to check file size', async () => {
+        mockFs.stat.mockResolvedValue({ size: 100 } as any);
+        
+        // Mock file handle with proper typing
+        const mockFileHandle = {
+          read: jest.fn(),
+          close: jest.fn()
+        } as any;
+        
+        mockFileHandle.read.mockResolvedValue({ bytesRead: 0 });
+        mockFileHandle.close.mockResolvedValue(undefined);
+        
+        mockFs.open.mockResolvedValue(mockFileHandle);
+        
+        await tailFile('/test/file.txt', 2);
+        
+        expect(mockFs.stat).toHaveBeenCalledWith('/test/file.txt');
+        expect(mockFs.open).toHaveBeenCalledWith('/test/file.txt', 'r');
+      });
+
+      it('handles files with content and returns last lines', async () => {
+        mockFs.stat.mockResolvedValue({ size: 50 } as any);
+        
+        const mockFileHandle = {
+          read: jest.fn(),
+          close: jest.fn()
+        } as any;
+        
+        // Simulate reading file content in chunks
+        mockFileHandle.read
+          .mockResolvedValueOnce({ bytesRead: 20, buffer: Buffer.from('line3\nline4\nline5\n') })
+          .mockResolvedValueOnce({ bytesRead: 0 });
+        mockFileHandle.close.mockResolvedValue(undefined);
+        
+        mockFs.open.mockResolvedValue(mockFileHandle);
+        
+        const result = await tailFile('/test/file.txt', 2);
+        
+        expect(mockFileHandle.close).toHaveBeenCalled();
+      });
+
+      it('handles read errors gracefully', async () => {
+        mockFs.stat.mockResolvedValue({ size: 100 } as any);
+        
+        const mockFileHandle = {
+          read: jest.fn(),
+          close: jest.fn()
+        } as any;
+        
+        mockFileHandle.read.mockResolvedValue({ bytesRead: 0 });
+        mockFileHandle.close.mockResolvedValue(undefined);
+        
+        mockFs.open.mockResolvedValue(mockFileHandle);
+        
+        await tailFile('/test/file.txt', 5);
+        
+        expect(mockFileHandle.close).toHaveBeenCalled();
+      });
+    });
+
+    describe('headFile', () => {
+      it('opens file for reading', async () => {
+        // Mock file handle with proper typing
+        const mockFileHandle = {
+          read: jest.fn(),
+          close: jest.fn()
+        } as any;
+        
+        mockFileHandle.read.mockResolvedValue({ bytesRead: 0 });
+        mockFileHandle.close.mockResolvedValue(undefined);
+        
+        mockFs.open.mockResolvedValue(mockFileHandle);
+        
+        await headFile('/test/file.txt', 2);
+        
+        expect(mockFs.open).toHaveBeenCalledWith('/test/file.txt', 'r');
+      });
+
+      it('handles files with content and returns first lines', async () => {
+        const mockFileHandle = {
+          read: jest.fn(),
+          close: jest.fn()
+        } as any;
+        
+        // Simulate reading file content with newlines
+        mockFileHandle.read
+          .mockResolvedValueOnce({ bytesRead: 20, buffer: Buffer.from('line1\nline2\nline3\n') })
+          .mockResolvedValueOnce({ bytesRead: 0 });
+        mockFileHandle.close.mockResolvedValue(undefined);
+        
+        mockFs.open.mockResolvedValue(mockFileHandle);
+        
+        const result = await headFile('/test/file.txt', 2);
+        
+        expect(mockFileHandle.close).toHaveBeenCalled();
+      });
+
+      it('handles files with leftover content', async () => {
+        const mockFileHandle = {
+          read: jest.fn(),
+          close: jest.fn()
+        } as any;
+        
+        // Simulate reading file content without final newline
+        mockFileHandle.read
+          .mockResolvedValueOnce({ bytesRead: 15, buffer: Buffer.from('line1\nline2\nend') })
+          .mockResolvedValueOnce({ bytesRead: 0 });
+        mockFileHandle.close.mockResolvedValue(undefined);
+        
+        mockFs.open.mockResolvedValue(mockFileHandle);
+        
+        const result = await headFile('/test/file.txt', 5);
+        
+        expect(mockFileHandle.close).toHaveBeenCalled();
+      });
+
+      it('handles reaching requested line count', async () => {
+        const mockFileHandle = {
+          read: jest.fn(),
+          close: jest.fn()
+        } as any;
+        
+        // Simulate reading exactly the requested number of lines
+        mockFileHandle.read
+          .mockResolvedValueOnce({ bytesRead: 12, buffer: Buffer.from('line1\nline2\n') })
+          .mockResolvedValueOnce({ bytesRead: 0 });
+        mockFileHandle.close.mockResolvedValue(undefined);
+        
+        mockFs.open.mockResolvedValue(mockFileHandle);
+        
+        const result = await headFile('/test/file.txt', 2);
+        
+        expect(mockFileHandle.close).toHaveBeenCalled();
+      });
+    });
+  });
+});
diff --git a/src/filesystem/__tests__/path-utils.test.ts b/src/filesystem/__tests__/path-utils.test.ts
index 00df4e0407..8768de20cf 100644
--- a/src/filesystem/__tests__/path-utils.test.ts
+++ b/src/filesystem/__tests__/path-utils.test.ts
@@ -162,6 +162,12 @@ describe('Path Utilities', () => {
       expect(result).not.toContain('~');
     });
 
+    it('expands bare ~ to home directory', () => {
+      const result = expandHome('~');
+      expect(result).not.toContain('~');
+      expect(result.length).toBeGreaterThan(0);
+    });
+
     it('leaves other paths unchanged', () => {
       expect(expandHome('C:/test')).toBe('C:/test');
     });
diff --git a/src/filesystem/__tests__/path-validation.test.ts b/src/filesystem/__tests__/path-validation.test.ts
index 38a7257334..06c65398ef 100644
--- a/src/filesystem/__tests__/path-validation.test.ts
+++ b/src/filesystem/__tests__/path-validation.test.ts
@@ -4,6 +4,49 @@ import * as fs from 'fs/promises';
 import * as os from 'os';
 import { isPathWithinAllowedDirectories } from '../path-validation.js';
 
+/**
+ * Check if the current environment supports symlink creation
+ */
+async function checkSymlinkSupport(): Promise<boolean> {
+  const testDir = await fs.mkdtemp(path.join(os.tmpdir(), 'symlink-test-'));
+  try {
+    const targetFile = path.join(testDir, 'target.txt');
+    const linkFile = path.join(testDir, 'link.txt');
+    
+    await fs.writeFile(targetFile, 'test');
+    await fs.symlink(targetFile, linkFile);
+    
+    // If we get here, symlinks are supported
+    return true;
+  } catch (error) {
+    // EPERM indicates no symlink permissions
+    if ((error as NodeJS.ErrnoException).code === 'EPERM') {
+      return false;
+    }
+    // Other errors might indicate a real problem
+    throw error;
+  } finally {
+    await fs.rm(testDir, { recursive: true, force: true });
+  }
+}
+
+// Global variable to store symlink support status
+let symlinkSupported: boolean | null = null;
+
+/**
+ * Get cached symlink support status, checking once per test run
+ */
+async function getSymlinkSupport(): Promise<boolean> {
+  if (symlinkSupported === null) {
+    symlinkSupported = await checkSymlinkSupport();
+    if (!symlinkSupported) {
+      console.log('\n⚠️  Symlink tests will be skipped - symlink creation not supported in this environment');
+      console.log('   On Windows, enable Developer Mode or run as Administrator to enable symlink tests');
+    }
+  }
+  return symlinkSupported;
+}
+
 describe('Path Validation', () => {
   it('allows exact directory match', () => {
     const allowed = ['/home/user/project'];
@@ -587,6 +630,12 @@ describe('Path Validation', () => {
     });
 
     it('demonstrates symlink race condition allows writing outside allowed directories', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping symlink race condition test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
 
       await expect(fs.access(testPath)).rejects.toThrow();
@@ -603,6 +652,12 @@ describe('Path Validation', () => {
     });
 
     it('shows timing differences between validation approaches', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping timing validation test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
 
       const validation1 = isPathWithinAllowedDirectories(testPath, allowed);
@@ -618,6 +673,12 @@ describe('Path Validation', () => {
     });
 
     it('validates directory creation timing', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping directory creation timing test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
       const testDir = path.join(allowedDir, 'newdir');
 
@@ -632,6 +693,12 @@ describe('Path Validation', () => {
     });
 
     it('demonstrates exclusive file creation behavior', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping exclusive file creation test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
 
       await fs.symlink(targetFile, testPath);
@@ -644,6 +711,12 @@ describe('Path Validation', () => {
     });
 
     it('should use resolved parent paths for non-existent files', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping resolved parent paths test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
 
       const symlinkDir = path.join(allowedDir, 'link');
@@ -662,6 +735,12 @@ describe('Path Validation', () => {
     });
 
     it('demonstrates parent directory symlink traversal', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping parent directory symlink traversal test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
       const deepPath = path.join(allowedDir, 'sub1', 'sub2', 'file.txt');
 
@@ -682,6 +761,12 @@ describe('Path Validation', () => {
     });
 
     it('should prevent race condition between validatePath and file operation', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping race condition prevention test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
       const racePath = path.join(allowedDir, 'race-file.txt');
       const targetFile = path.join(forbiddenDir, 'target.txt');
@@ -730,6 +815,12 @@ describe('Path Validation', () => {
     });
 
     it('should handle symlinks that point within allowed directories', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping symlinks within allowed directories test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
       const targetFile = path.join(allowedDir, 'target.txt');
       const symlinkPath = path.join(allowedDir, 'symlink.txt');
@@ -756,6 +847,12 @@ describe('Path Validation', () => {
     });
 
     it('should prevent overwriting files through symlinks pointing outside allowed directories', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping symlink overwrite prevention test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
       const legitFile = path.join(allowedDir, 'existing.txt');
       const targetFile = path.join(forbiddenDir, 'target.txt');
@@ -786,6 +883,12 @@ describe('Path Validation', () => {
     });
 
     it('demonstrates race condition in read operations', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping race condition in read operations test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
       const legitFile = path.join(allowedDir, 'readable.txt');
       const secretFile = path.join(forbiddenDir, 'secret.txt');
@@ -812,6 +915,12 @@ describe('Path Validation', () => {
     });
 
     it('verifies rename does not follow symlinks', async () => {
+      const symlinkSupported = await getSymlinkSupport();
+      if (!symlinkSupported) {
+        console.log('   ⏭️  Skipping rename symlink test - symlinks not supported');
+        return;
+      }
+
       const allowed = [allowedDir];
       const tempFile = path.join(allowedDir, 'temp.txt');
       const targetSymlink = path.join(allowedDir, 'target-symlink.txt');
diff --git a/src/filesystem/index.ts b/src/filesystem/index.ts
index 6723f43600..21d823b11a 100644
--- a/src/filesystem/index.ts
+++ b/src/filesystem/index.ts
@@ -12,14 +12,23 @@ import {
 import fs from "fs/promises";
 import { createReadStream } from "fs";
 import path from "path";
-import os from 'os';
-import { randomBytes } from 'crypto';
 import { z } from "zod";
 import { zodToJsonSchema } from "zod-to-json-schema";
-import { diffLines, createTwoFilesPatch } from 'diff';
-import { minimatch } from 'minimatch';
-import { isPathWithinAllowedDirectories } from './path-validation.js';
+import { normalizePath, expandHome } from './path-utils.js';
 import { getValidRootDirectories } from './roots-utils.js';
+import {
+  // Function imports
+  formatSize,
+  validatePath,
+  getFileStats,
+  readFileContent,
+  writeFileContent,
+  searchFilesWithValidation,
+  applyFileEdits,
+  tailFile,
+  headFile,
+  setAllowedDirectories,
+} from './lib.js';
 
 // Command line argument parsing
 const args = process.argv.slice(2);
@@ -31,25 +40,14 @@ if (args.length === 0) {
   console.error("At least one directory must be provided by EITHER method for the server to operate.");
 }
 
-// Normalize all paths consistently
-function normalizePath(p: string): string {
-  return path.normalize(p);
-}
-
-function expandHome(filepath: string): string {
-  if (filepath.startsWith('~/') || filepath === '~') {
-    return path.join(os.homedir(), filepath.slice(1));
-  }
-  return filepath;
-}
-
 // Store allowed directories in normalized and resolved form
 let allowedDirectories = await Promise.all(
   args.map(async (dir) => {
     const expanded = expandHome(dir);
     const absolute = path.resolve(expanded);
     try {
-      // Resolve symlinks in allowed directories during startup
+      // Security: Resolve symlinks in allowed directories during startup
+      // This ensures we know the real paths and can validate against them later
       const resolved = await fs.realpath(absolute);
       return normalizePath(resolved);
     } catch (error) {
@@ -61,9 +59,9 @@ let allowedDirectories = await Promise.all(
 );
 
 // Validate that all directories exist and are accessible
-await Promise.all(args.map(async (dir) => {
+await Promise.all(allowedDirectories.map(async (dir) => {
   try {
-    const stats = await fs.stat(expandHome(dir));
+    const stats = await fs.stat(dir);
     if (!stats.isDirectory()) {
       console.error(`Error: ${dir} is not a directory`);
       process.exit(1);
@@ -74,47 +72,8 @@ await Promise.all(args.map(async (dir) => {
   }
 }));
 
-// Security utilities
-async function validatePath(requestedPath: string): Promise<string> {
-  const expandedPath = expandHome(requestedPath);
-  const absolute = path.isAbsolute(expandedPath)
-    ? path.resolve(expandedPath)
-    : path.resolve(process.cwd(), expandedPath);
-
-  const normalizedRequested = normalizePath(absolute);
-
-  // Check if path is within allowed directories
-  const isAllowed = isPathWithinAllowedDirectories(normalizedRequested, allowedDirectories);
-  if (!isAllowed) {
-    throw new Error(`Access denied - path outside allowed directories: ${absolute} not in ${allowedDirectories.join(', ')}`);
-  }
-
-  // Handle symlinks by checking their real path
-  try {
-    const realPath = await fs.realpath(absolute);
-    const normalizedReal = normalizePath(realPath);
-    if (!isPathWithinAllowedDirectories(normalizedReal, allowedDirectories)) {
-      throw new Error(`Access denied - symlink target outside allowed directories: ${realPath} not in ${allowedDirectories.join(', ')}`);
-    }
-    return realPath;
-  } catch (error) {
-    // For new files that don't exist yet, verify parent directory
-    if ((error as NodeJS.ErrnoException).code === 'ENOENT') {
-      const parentDir = path.dirname(absolute);
-      try {
-        const realParentPath = await fs.realpath(parentDir);
-        const normalizedParent = normalizePath(realParentPath);
-        if (!isPathWithinAllowedDirectories(normalizedParent, allowedDirectories)) {
-          throw new Error(`Access denied - parent directory outside allowed directories: ${realParentPath} not in ${allowedDirectories.join(', ')}`);
-        }
-        return absolute;
-      } catch {
-        throw new Error(`Parent directory does not exist: ${parentDir}`);
-      }
-    }
-    throw error;
-  }
-}
+// Initialize the global allowedDirectories in lib.ts
+setAllowedDirectories(allowedDirectories);
 
 // Schema definitions
 const ReadTextFileArgsSchema = z.object({
@@ -182,16 +141,6 @@ const GetFileInfoArgsSchema = z.object({
 const ToolInputSchema = ToolSchema.shape.inputSchema;
 type ToolInput = z.infer<typeof ToolInputSchema>;
 
-interface FileInfo {
-  size: number;
-  created: Date;
-  modified: Date;
-  accessed: Date;
-  isDirectory: boolean;
-  isFile: boolean;
-  permissions: string;
-}
-
 // Server setup
 const server = new Server(
   {
@@ -205,277 +154,6 @@ const server = new Server(
   },
 );
 
-// Tool implementations
-async function getFileStats(filePath: string): Promise<FileInfo> {
-  const stats = await fs.stat(filePath);
-  return {
-    size: stats.size,
-    created: stats.birthtime,
-    modified: stats.mtime,
-    accessed: stats.atime,
-    isDirectory: stats.isDirectory(),
-    isFile: stats.isFile(),
-    permissions: stats.mode.toString(8).slice(-3),
-  };
-}
-
-async function searchFiles(
-  rootPath: string,
-  pattern: string,
-  excludePatterns: string[] = []
-): Promise<string[]> {
-  const results: string[] = [];
-
-  async function search(currentPath: string) {
-    const entries = await fs.readdir(currentPath, { withFileTypes: true });
-
-    for (const entry of entries) {
-      const fullPath = path.join(currentPath, entry.name);
-
-      try {
-        // Validate each path before processing
-        await validatePath(fullPath);
-
-        // Check if path matches any exclude pattern
-        const relativePath = path.relative(rootPath, fullPath);
-        const shouldExclude = excludePatterns.some(pattern => {
-          const globPattern = pattern.includes('*') ? pattern : `**/${pattern}/**`;
-          return minimatch(relativePath, globPattern, { dot: true });
-        });
-
-        if (shouldExclude) {
-          continue;
-        }
-
-        if (entry.name.toLowerCase().includes(pattern.toLowerCase())) {
-          results.push(fullPath);
-        }
-
-        if (entry.isDirectory()) {
-          await search(fullPath);
-        }
-      } catch (error) {
-        // Skip invalid paths during search
-        continue;
-      }
-    }
-  }
-
-  await search(rootPath);
-  return results;
-}
-
-// file editing and diffing utilities
-function normalizeLineEndings(text: string): string {
-  return text.replace(/\r\n/g, '\n');
-}
-
-function createUnifiedDiff(originalContent: string, newContent: string, filepath: string = 'file'): string {
-  // Ensure consistent line endings for diff
-  const normalizedOriginal = normalizeLineEndings(originalContent);
-  const normalizedNew = normalizeLineEndings(newContent);
-
-  return createTwoFilesPatch(
-    filepath,
-    filepath,
-    normalizedOriginal,
-    normalizedNew,
-    'original',
-    'modified'
-  );
-}
-
-async function applyFileEdits(
-  filePath: string,
-  edits: Array<{oldText: string, newText: string}>,
-  dryRun = false
-): Promise<string> {
-  // Read file content and normalize line endings
-  const content = normalizeLineEndings(await fs.readFile(filePath, 'utf-8'));
-
-  // Apply edits sequentially
-  let modifiedContent = content;
-  for (const edit of edits) {
-    const normalizedOld = normalizeLineEndings(edit.oldText);
-    const normalizedNew = normalizeLineEndings(edit.newText);
-
-    // If exact match exists, use it
-    if (modifiedContent.includes(normalizedOld)) {
-      modifiedContent = modifiedContent.replace(normalizedOld, normalizedNew);
-      continue;
-    }
-
-    // Otherwise, try line-by-line matching with flexibility for whitespace
-    const oldLines = normalizedOld.split('\n');
-    const contentLines = modifiedContent.split('\n');
-    let matchFound = false;
-
-    for (let i = 0; i <= contentLines.length - oldLines.length; i++) {
-      const potentialMatch = contentLines.slice(i, i + oldLines.length);
-
-      // Compare lines with normalized whitespace
-      const isMatch = oldLines.every((oldLine, j) => {
-        const contentLine = potentialMatch[j];
-        return oldLine.trim() === contentLine.trim();
-      });
-
-      if (isMatch) {
-        // Preserve original indentation of first line
-        const originalIndent = contentLines[i].match(/^\s*/)?.[0] || '';
-        const newLines = normalizedNew.split('\n').map((line, j) => {
-          if (j === 0) return originalIndent + line.trimStart();
-          // For subsequent lines, try to preserve relative indentation
-          const oldIndent = oldLines[j]?.match(/^\s*/)?.[0] || '';
-          const newIndent = line.match(/^\s*/)?.[0] || '';
-          if (oldIndent && newIndent) {
-            const relativeIndent = newIndent.length - oldIndent.length;
-            return originalIndent + ' '.repeat(Math.max(0, relativeIndent)) + line.trimStart();
-          }
-          return line;
-        });
-
-        contentLines.splice(i, oldLines.length, ...newLines);
-        modifiedContent = contentLines.join('\n');
-        matchFound = true;
-        break;
-      }
-    }
-
-    if (!matchFound) {
-      throw new Error(`Could not find exact match for edit:\n${edit.oldText}`);
-    }
-  }
-
-  // Create unified diff
-  const diff = createUnifiedDiff(content, modifiedContent, filePath);
-
-  // Format diff with appropriate number of backticks
-  let numBackticks = 3;
-  while (diff.includes('`'.repeat(numBackticks))) {
-    numBackticks++;
-  }
-  const formattedDiff = `${'`'.repeat(numBackticks)}diff\n${diff}${'`'.repeat(numBackticks)}\n\n`;
-
-  if (!dryRun) {
-    // Security: Use atomic rename to prevent race conditions where symlinks
-    // could be created between validation and write. Rename operations
-    // replace the target file atomically and don't follow symlinks.
-    const tempPath = `${filePath}.${randomBytes(16).toString('hex')}.tmp`;
-    try {
-      await fs.writeFile(tempPath, modifiedContent, 'utf-8');
-      await fs.rename(tempPath, filePath);
-    } catch (error) {
-      try {
-        await fs.unlink(tempPath);
-      } catch {}
-      throw error;
-    }
-  }
-
-  return formattedDiff;
-}
-
-// Helper functions
-function formatSize(bytes: number): string {
-  const units = ['B', 'KB', 'MB', 'GB', 'TB'];
-  if (bytes === 0) return '0 B';
-
-  const i = Math.floor(Math.log(bytes) / Math.log(1024));
-  if (i === 0) return `${bytes} ${units[i]}`;
-
-  return `${(bytes / Math.pow(1024, i)).toFixed(2)} ${units[i]}`;
-}
-
-// Memory-efficient implementation to get the last N lines of a file
-async function tailFile(filePath: string, numLines: number): Promise<string> {
-  const CHUNK_SIZE = 1024; // Read 1KB at a time
-  const stats = await fs.stat(filePath);
-  const fileSize = stats.size;
-
-  if (fileSize === 0) return '';
-
-  // Open file for reading
-  const fileHandle = await fs.open(filePath, 'r');
-  try {
-    const lines: string[] = [];
-    let position = fileSize;
-    let chunk = Buffer.alloc(CHUNK_SIZE);
-    let linesFound = 0;
-    let remainingText = '';
-
-    // Read chunks from the end of the file until we have enough lines
-    while (position > 0 && linesFound < numLines) {
-      const size = Math.min(CHUNK_SIZE, position);
-      position -= size;
-
-      const { bytesRead } = await fileHandle.read(chunk, 0, size, position);
-      if (!bytesRead) break;
-
-      // Get the chunk as a string and prepend any remaining text from previous iteration
-      const readData = chunk.slice(0, bytesRead).toString('utf-8');
-      const chunkText = readData + remainingText;
-
-      // Split by newlines and count
-      const chunkLines = normalizeLineEndings(chunkText).split('\n');
-
-      // If this isn't the end of the file, the first line is likely incomplete
-      // Save it to prepend to the next chunk
-      if (position > 0) {
-        remainingText = chunkLines[0];
-        chunkLines.shift(); // Remove the first (incomplete) line
-      }
-
-      // Add lines to our result (up to the number we need)
-      for (let i = chunkLines.length - 1; i >= 0 && linesFound < numLines; i--) {
-        lines.unshift(chunkLines[i]);
-        linesFound++;
-      }
-    }
-
-    return lines.join('\n');
-  } finally {
-    await fileHandle.close();
-  }
-}
-
-// New function to get the first N lines of a file
-async function headFile(filePath: string, numLines: number): Promise<string> {
-  const fileHandle = await fs.open(filePath, 'r');
-  try {
-    const lines: string[] = [];
-    let buffer = '';
-    let bytesRead = 0;
-    const chunk = Buffer.alloc(1024); // 1KB buffer
-
-    // Read chunks and count lines until we have enough or reach EOF
-    while (lines.length < numLines) {
-      const result = await fileHandle.read(chunk, 0, chunk.length, bytesRead);
-      if (result.bytesRead === 0) break; // End of file
-      bytesRead += result.bytesRead;
-      buffer += chunk.slice(0, result.bytesRead).toString('utf-8');
-
-      const newLineIndex = buffer.lastIndexOf('\n');
-      if (newLineIndex !== -1) {
-        const completeLines = buffer.slice(0, newLineIndex).split('\n');
-        buffer = buffer.slice(newLineIndex + 1);
-        for (const line of completeLines) {
-          lines.push(line);
-          if (lines.length >= numLines) break;
-        }
-      }
-    }
-
-    // If there is leftover content and we still need lines, add it
-    if (buffer.length > 0 && lines.length < numLines) {
-      lines.push(buffer);
-    }
-
-    return lines.join('\n');
-  } finally {
-    await fileHandle.close();
-  }
-}
-
 // Reads a file as a stream of buffers, concatenates them, and then encodes
 // the result to a Base64 string. This is a memory-efficient way to handle
 // binary data from a stream before the final encoding.
@@ -660,8 +338,7 @@ server.setRequestHandler(CallToolRequestSchema, async (request) => {
             content: [{ type: "text", text: headContent }],
           };
         }
-
-        const content = await fs.readFile(validPath, "utf-8");
+        const content = await readFileContent(validPath);
         return {
           content: [{ type: "text", text: content }],
         };
@@ -708,7 +385,7 @@ server.setRequestHandler(CallToolRequestSchema, async (request) => {
           parsed.data.paths.map(async (filePath: string) => {
             try {
               const validPath = await validatePath(filePath);
-              const content = await fs.readFile(validPath, "utf-8");
+              const content = await readFileContent(validPath);
               return `${filePath}:\n${content}\n`;
             } catch (error) {
               const errorMessage = error instanceof Error ? error.message : String(error);
@@ -727,31 +404,7 @@ server.setRequestHandler(CallToolRequestSchema, async (request) => {
           throw new Error(`Invalid arguments for write_file: ${parsed.error}`);
         }
         const validPath = await validatePath(parsed.data.path);
-
-        try {
-          // Security: 'wx' flag ensures exclusive creation - fails if file/symlink exists,
-          // preventing writes through pre-existing symlinks
-          await fs.writeFile(validPath, parsed.data.content, { encoding: "utf-8", flag: 'wx' });
-        } catch (error) {
-          if ((error as NodeJS.ErrnoException).code === 'EEXIST') {
-            // Security: Use atomic rename to prevent race conditions where symlinks
-            // could be created between validation and write. Rename operations
-            // replace the target file atomically and don't follow symlinks.
-            const tempPath = `${validPath}.${randomBytes(16).toString('hex')}.tmp`;
-            try {
-              await fs.writeFile(tempPath, parsed.data.content, 'utf-8');
-              await fs.rename(tempPath, validPath);
-            } catch (renameError) {
-              try {
-                await fs.unlink(tempPath);
-              } catch {}
-              throw renameError;
-            }
-          } else {
-            throw error;
-          }
-        }
-
+        await writeFileContent(validPath, parsed.data.content);
         return {
           content: [{ type: "text", text: `Successfully wrote to ${parsed.data.path}` }],
         };
@@ -868,43 +521,43 @@ server.setRequestHandler(CallToolRequestSchema, async (request) => {
           throw new Error(`Invalid arguments for directory_tree: ${parsed.error}`);
         }
 
-            interface TreeEntry {
-                name: string;
-                type: 'file' | 'directory';
-                children?: TreeEntry[];
-            }
-
-            async function buildTree(currentPath: string): Promise<TreeEntry[]> {
-                const validPath = await validatePath(currentPath);
-                const entries = await fs.readdir(validPath, {withFileTypes: true});
-                const result: TreeEntry[] = [];
+        interface TreeEntry {
+            name: string;
+            type: 'file' | 'directory';
+            children?: TreeEntry[];
+        }
 
-                for (const entry of entries) {
-                    const entryData: TreeEntry = {
-                        name: entry.name,
-                        type: entry.isDirectory() ? 'directory' : 'file'
-                    };
+        async function buildTree(currentPath: string): Promise<TreeEntry[]> {
+            const validPath = await validatePath(currentPath);
+            const entries = await fs.readdir(validPath, {withFileTypes: true});
+            const result: TreeEntry[] = [];
 
-                    if (entry.isDirectory()) {
-                        const subPath = path.join(currentPath, entry.name);
-                        entryData.children = await buildTree(subPath);
-                    }
+            for (const entry of entries) {
+                const entryData: TreeEntry = {
+                    name: entry.name,
+                    type: entry.isDirectory() ? 'directory' : 'file'
+                };
 
-                    result.push(entryData);
+                if (entry.isDirectory()) {
+                    const subPath = path.join(currentPath, entry.name);
+                    entryData.children = await buildTree(subPath);
                 }
 
-                return result;
+                result.push(entryData);
             }
 
-            const treeData = await buildTree(parsed.data.path);
-            return {
-                content: [{
-                    type: "text",
-                    text: JSON.stringify(treeData, null, 2)
-                }],
-            };
+            return result;
         }
 
+        const treeData = await buildTree(parsed.data.path);
+        return {
+            content: [{
+                type: "text",
+                text: JSON.stringify(treeData, null, 2)
+            }],
+        };
+      }
+
       case "move_file": {
         const parsed = MoveFileArgsSchema.safeParse(args);
         if (!parsed.success) {
@@ -924,7 +577,7 @@ server.setRequestHandler(CallToolRequestSchema, async (request) => {
           throw new Error(`Invalid arguments for search_files: ${parsed.error}`);
         }
         const validPath = await validatePath(parsed.data.path);
-        const results = await searchFiles(validPath, parsed.data.pattern, parsed.data.excludePatterns);
+        const results = await searchFilesWithValidation(validPath, parsed.data.pattern, allowedDirectories, { excludePatterns: parsed.data.excludePatterns });
         return {
           content: [{ type: "text", text: results.length > 0 ? results.join("\n") : "No matches found" }],
         };
@@ -970,6 +623,7 @@ async function updateAllowedDirectoriesFromRoots(requestedRoots: Root[]) {
   const validatedRootDirs = await getValidRootDirectories(requestedRoots);
   if (validatedRootDirs.length > 0) {
     allowedDirectories = [...validatedRootDirs];
+    setAllowedDirectories(allowedDirectories); // Update the global state in lib.ts
     console.error(`Updated allowed directories from MCP roots: ${validatedRootDirs.length} valid directories`);
   } else {
     console.error("No valid root directories provided by client");
diff --git a/src/filesystem/lib.ts b/src/filesystem/lib.ts
new file mode 100644
index 0000000000..40cb316e53
--- /dev/null
+++ b/src/filesystem/lib.ts
@@ -0,0 +1,392 @@
+import fs from "fs/promises";
+import path from "path";
+import os from 'os';
+import { randomBytes } from 'crypto';
+import { diffLines, createTwoFilesPatch } from 'diff';
+import { minimatch } from 'minimatch';
+import { normalizePath, expandHome } from './path-utils.js';
+import { isPathWithinAllowedDirectories } from './path-validation.js';
+
+// Global allowed directories - set by the main module
+let allowedDirectories: string[] = [];
+
+// Function to set allowed directories from the main module
+export function setAllowedDirectories(directories: string[]): void {
+  allowedDirectories = [...directories];
+}
+
+// Function to get current allowed directories
+export function getAllowedDirectories(): string[] {
+  return [...allowedDirectories];
+}
+
+// Type definitions
+interface FileInfo {
+  size: number;
+  created: Date;
+  modified: Date;
+  accessed: Date;
+  isDirectory: boolean;
+  isFile: boolean;
+  permissions: string;
+}
+
+export interface SearchOptions {
+  excludePatterns?: string[];
+}
+
+export interface SearchResult {
+  path: string;
+  isDirectory: boolean;
+}
+
+// Pure Utility Functions
+export function formatSize(bytes: number): string {
+  const units = ['B', 'KB', 'MB', 'GB', 'TB'];
+  if (bytes === 0) return '0 B';
+  
+  const i = Math.floor(Math.log(bytes) / Math.log(1024));
+  
+  if (i < 0 || i === 0) return `${bytes} ${units[0]}`;
+  
+  const unitIndex = Math.min(i, units.length - 1);
+  return `${(bytes / Math.pow(1024, unitIndex)).toFixed(2)} ${units[unitIndex]}`;
+}
+
+export function normalizeLineEndings(text: string): string {
+  return text.replace(/\r\n/g, '\n');
+}
+
+export function createUnifiedDiff(originalContent: string, newContent: string, filepath: string = 'file'): string {
+  // Ensure consistent line endings for diff
+  const normalizedOriginal = normalizeLineEndings(originalContent);
+  const normalizedNew = normalizeLineEndings(newContent);
+
+  return createTwoFilesPatch(
+    filepath,
+    filepath,
+    normalizedOriginal,
+    normalizedNew,
+    'original',
+    'modified'
+  );
+}
+
+// Security & Validation Functions
+export async function validatePath(requestedPath: string): Promise<string> {
+  const expandedPath = expandHome(requestedPath);
+  const absolute = path.isAbsolute(expandedPath)
+    ? path.resolve(expandedPath)
+    : path.resolve(process.cwd(), expandedPath);
+
+  const normalizedRequested = normalizePath(absolute);
+
+  // Security: Check if path is within allowed directories before any file operations
+  const isAllowed = isPathWithinAllowedDirectories(normalizedRequested, allowedDirectories);
+  if (!isAllowed) {
+    throw new Error(`Access denied - path outside allowed directories: ${absolute} not in ${allowedDirectories.join(', ')}`);
+  }
+
+  // Security: Handle symlinks by checking their real path to prevent symlink attacks
+  // This prevents attackers from creating symlinks that point outside allowed directories
+  try {
+    const realPath = await fs.realpath(absolute);
+    const normalizedReal = normalizePath(realPath);
+    if (!isPathWithinAllowedDirectories(normalizedReal, allowedDirectories)) {
+      throw new Error(`Access denied - symlink target outside allowed directories: ${realPath} not in ${allowedDirectories.join(', ')}`);
+    }
+    return realPath;
+  } catch (error) {
+    // Security: For new files that don't exist yet, verify parent directory
+    // This ensures we can't create files in unauthorized locations
+    if ((error as NodeJS.ErrnoException).code === 'ENOENT') {
+      const parentDir = path.dirname(absolute);
+      try {
+        const realParentPath = await fs.realpath(parentDir);
+        const normalizedParent = normalizePath(realParentPath);
+        if (!isPathWithinAllowedDirectories(normalizedParent, allowedDirectories)) {
+          throw new Error(`Access denied - parent directory outside allowed directories: ${realParentPath} not in ${allowedDirectories.join(', ')}`);
+        }
+        return absolute;
+      } catch {
+        throw new Error(`Parent directory does not exist: ${parentDir}`);
+      }
+    }
+    throw error;
+  }
+}
+
+
+// File Operations
+export async function getFileStats(filePath: string): Promise<FileInfo> {
+  const stats = await fs.stat(filePath);
+  return {
+    size: stats.size,
+    created: stats.birthtime,
+    modified: stats.mtime,
+    accessed: stats.atime,
+    isDirectory: stats.isDirectory(),
+    isFile: stats.isFile(),
+    permissions: stats.mode.toString(8).slice(-3),
+  };
+}
+
+export async function readFileContent(filePath: string, encoding: string = 'utf-8'): Promise<string> {
+  return await fs.readFile(filePath, encoding as BufferEncoding);
+}
+
+export async function writeFileContent(filePath: string, content: string): Promise<void> {
+  try {
+    // Security: 'wx' flag ensures exclusive creation - fails if file/symlink exists,
+    // preventing writes through pre-existing symlinks
+    await fs.writeFile(filePath, content, { encoding: "utf-8", flag: 'wx' });
+  } catch (error) {
+    if ((error as NodeJS.ErrnoException).code === 'EEXIST') {
+      // Security: Use atomic rename to prevent race conditions where symlinks
+      // could be created between validation and write. Rename operations
+      // replace the target file atomically and don't follow symlinks.
+      const tempPath = `${filePath}.${randomBytes(16).toString('hex')}.tmp`;
+      try {
+        await fs.writeFile(tempPath, content, 'utf-8');
+        await fs.rename(tempPath, filePath);
+      } catch (renameError) {
+        try {
+          await fs.unlink(tempPath);
+        } catch {}
+        throw renameError;
+      }
+    } else {
+      throw error;
+    }
+  }
+}
+
+
+// File Editing Functions
+interface FileEdit {
+  oldText: string;
+  newText: string;
+}
+
+export async function applyFileEdits(
+  filePath: string,
+  edits: FileEdit[],
+  dryRun: boolean = false
+): Promise<string> {
+  // Read file content and normalize line endings
+  const content = normalizeLineEndings(await fs.readFile(filePath, 'utf-8'));
+
+  // Apply edits sequentially
+  let modifiedContent = content;
+  for (const edit of edits) {
+    const normalizedOld = normalizeLineEndings(edit.oldText);
+    const normalizedNew = normalizeLineEndings(edit.newText);
+
+    // If exact match exists, use it
+    if (modifiedContent.includes(normalizedOld)) {
+      modifiedContent = modifiedContent.replace(normalizedOld, normalizedNew);
+      continue;
+    }
+
+    // Otherwise, try line-by-line matching with flexibility for whitespace
+    const oldLines = normalizedOld.split('\n');
+    const contentLines = modifiedContent.split('\n');
+    let matchFound = false;
+
+    for (let i = 0; i <= contentLines.length - oldLines.length; i++) {
+      const potentialMatch = contentLines.slice(i, i + oldLines.length);
+
+      // Compare lines with normalized whitespace
+      const isMatch = oldLines.every((oldLine, j) => {
+        const contentLine = potentialMatch[j];
+        return oldLine.trim() === contentLine.trim();
+      });
+
+      if (isMatch) {
+        // Preserve original indentation of first line
+        const originalIndent = contentLines[i].match(/^\s*/)?.[0] || '';
+        const newLines = normalizedNew.split('\n').map((line, j) => {
+          if (j === 0) return originalIndent + line.trimStart();
+          // For subsequent lines, try to preserve relative indentation
+          const oldIndent = oldLines[j]?.match(/^\s*/)?.[0] || '';
+          const newIndent = line.match(/^\s*/)?.[0] || '';
+          if (oldIndent && newIndent) {
+            const relativeIndent = newIndent.length - oldIndent.length;
+            return originalIndent + ' '.repeat(Math.max(0, relativeIndent)) + line.trimStart();
+          }
+          return line;
+        });
+
+        contentLines.splice(i, oldLines.length, ...newLines);
+        modifiedContent = contentLines.join('\n');
+        matchFound = true;
+        break;
+      }
+    }
+
+    if (!matchFound) {
+      throw new Error(`Could not find exact match for edit:\n${edit.oldText}`);
+    }
+  }
+
+  // Create unified diff
+  const diff = createUnifiedDiff(content, modifiedContent, filePath);
+
+  // Format diff with appropriate number of backticks
+  let numBackticks = 3;
+  while (diff.includes('`'.repeat(numBackticks))) {
+    numBackticks++;
+  }
+  const formattedDiff = `${'`'.repeat(numBackticks)}diff\n${diff}${'`'.repeat(numBackticks)}\n\n`;
+
+  if (!dryRun) {
+    // Security: Use atomic rename to prevent race conditions where symlinks
+    // could be created between validation and write. Rename operations
+    // replace the target file atomically and don't follow symlinks.
+    const tempPath = `${filePath}.${randomBytes(16).toString('hex')}.tmp`;
+    try {
+      await fs.writeFile(tempPath, modifiedContent, 'utf-8');
+      await fs.rename(tempPath, filePath);
+    } catch (error) {
+      try {
+        await fs.unlink(tempPath);
+      } catch {}
+      throw error;
+    }
+  }
+
+  return formattedDiff;
+}
+
+// Memory-efficient implementation to get the last N lines of a file
+export async function tailFile(filePath: string, numLines: number): Promise<string> {
+  const CHUNK_SIZE = 1024; // Read 1KB at a time
+  const stats = await fs.stat(filePath);
+  const fileSize = stats.size;
+  
+  if (fileSize === 0) return '';
+  
+  // Open file for reading
+  const fileHandle = await fs.open(filePath, 'r');
+  try {
+    const lines: string[] = [];
+    let position = fileSize;
+    let chunk = Buffer.alloc(CHUNK_SIZE);
+    let linesFound = 0;
+    let remainingText = '';
+    
+    // Read chunks from the end of the file until we have enough lines
+    while (position > 0 && linesFound < numLines) {
+      const size = Math.min(CHUNK_SIZE, position);
+      position -= size;
+      
+      const { bytesRead } = await fileHandle.read(chunk, 0, size, position);
+      if (!bytesRead) break;
+      
+      // Get the chunk as a string and prepend any remaining text from previous iteration
+      const readData = chunk.slice(0, bytesRead).toString('utf-8');
+      const chunkText = readData + remainingText;
+      
+      // Split by newlines and count
+      const chunkLines = normalizeLineEndings(chunkText).split('\n');
+      
+      // If this isn't the end of the file, the first line is likely incomplete
+      // Save it to prepend to the next chunk
+      if (position > 0) {
+        remainingText = chunkLines[0];
+        chunkLines.shift(); // Remove the first (incomplete) line
+      }
+      
+      // Add lines to our result (up to the number we need)
+      for (let i = chunkLines.length - 1; i >= 0 && linesFound < numLines; i--) {
+        lines.unshift(chunkLines[i]);
+        linesFound++;
+      }
+    }
+    
+    return lines.join('\n');
+  } finally {
+    await fileHandle.close();
+  }
+}
+
+// New function to get the first N lines of a file
+export async function headFile(filePath: string, numLines: number): Promise<string> {
+  const fileHandle = await fs.open(filePath, 'r');
+  try {
+    const lines: string[] = [];
+    let buffer = '';
+    let bytesRead = 0;
+    const chunk = Buffer.alloc(1024); // 1KB buffer
+    
+    // Read chunks and count lines until we have enough or reach EOF
+    while (lines.length < numLines) {
+      const result = await fileHandle.read(chunk, 0, chunk.length, bytesRead);
+      if (result.bytesRead === 0) break; // End of file
+      bytesRead += result.bytesRead;
+      buffer += chunk.slice(0, result.bytesRead).toString('utf-8');
+      
+      const newLineIndex = buffer.lastIndexOf('\n');
+      if (newLineIndex !== -1) {
+        const completeLines = buffer.slice(0, newLineIndex).split('\n');
+        buffer = buffer.slice(newLineIndex + 1);
+        for (const line of completeLines) {
+          lines.push(line);
+          if (lines.length >= numLines) break;
+        }
+      }
+    }
+    
+    // If there is leftover content and we still need lines, add it
+    if (buffer.length > 0 && lines.length < numLines) {
+      lines.push(buffer);
+    }
+    
+    return lines.join('\n');
+  } finally {
+    await fileHandle.close();
+  }
+}
+
+export async function searchFilesWithValidation(
+  rootPath: string,
+  pattern: string,
+  allowedDirectories: string[],
+  options: SearchOptions = {}
+): Promise<string[]> {
+  const { excludePatterns = [] } = options;
+  const results: string[] = [];
+
+  async function search(currentPath: string) {
+    const entries = await fs.readdir(currentPath, { withFileTypes: true });
+
+    for (const entry of entries) {
+      const fullPath = path.join(currentPath, entry.name);
+
+      try {
+        await validatePath(fullPath);
+
+        const relativePath = path.relative(rootPath, fullPath);
+        const shouldExclude = excludePatterns.some(excludePattern => {
+          const globPattern = excludePattern.includes('*') ? excludePattern : `**/${excludePattern}/**`;
+          return minimatch(relativePath, globPattern, { dot: true });
+        });
+
+        if (shouldExclude) continue;
+
+        if (entry.name.toLowerCase().includes(pattern.toLowerCase())) {
+          results.push(fullPath);
+        }
+
+        if (entry.isDirectory()) {
+          await search(fullPath);
+        }
+      } catch {
+        continue;
+      }
+    }
+  }
+
+  await search(rootPath);
+  return results;
+}
diff --git a/src/filesystem/package.json b/src/filesystem/package.json
index 4d3ac3205a..faeefa5458 100644
--- a/src/filesystem/package.json
+++ b/src/filesystem/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@modelcontextprotocol/server-filesystem",
-  "version": "0.6.2",
+  "version": "0.6.3",
   "description": "MCP server for filesystem access",
   "license": "MIT",
   "author": "Anthropic, PBC (https://anthropic.com)",
diff --git a/src/filesystem/path-validation.ts b/src/filesystem/path-validation.ts
index ee0c97d79c..972e9c49d0 100644
--- a/src/filesystem/path-validation.ts
+++ b/src/filesystem/path-validation.ts
@@ -68,10 +68,19 @@ export function isPathWithinAllowedDirectories(absolutePath: string, allowedDire
     }
     
     // Special case for root directory to avoid double slash
+    // On Windows, we need to check if both paths are on the same drive
     if (normalizedDir === path.sep) {
       return normalizedPath.startsWith(path.sep);
     }
     
+    // On Windows, also check for drive root (e.g., "C:\")
+    if (path.sep === '\\' && normalizedDir.match(/^[A-Za-z]:\\?$/)) {
+      // Ensure both paths are on the same drive
+      const dirDrive = normalizedDir.charAt(0).toLowerCase();
+      const pathDrive = normalizedPath.charAt(0).toLowerCase();
+      return pathDrive === dirDrive && normalizedPath.startsWith(normalizedDir.replace(/\\?$/, '\\'));
+    }
+    
     return normalizedPath.startsWith(normalizedDir + path.sep);
   });
-}
\ No newline at end of file
+}