diff --git a/src/smarttools/ui_urwid.py b/src/smarttools/ui_urwid.py
index 8138628..5a99219 100644
--- a/src/smarttools/ui_urwid.py
+++ b/src/smarttools/ui_urwid.py
@@ -341,6 +341,88 @@ class TabPassEdit(urwid.Edit):
         return super().keypress(size, key)
 
 
+class UndoableEdit(urwid.Edit):
+    """A multiline Edit with undo/redo support.
+
+    Features:
+    - Undo with Ctrl+Z (up to 50 states)
+    - Redo with Ctrl+Y or Ctrl+Shift+Z
+    - Tab passes through for focus cycling
+    """
+
+    MAX_UNDO = 50  # Maximum undo history size
+
+    def __init__(self, *args, **kwargs):
+        super().__init__(*args, **kwargs)
+        self._undo_stack = []  # List of (text, cursor_pos) tuples
+        self._redo_stack = []
+        self._last_saved_text = self.edit_text  # Track for change detection
+
+    def keypress(self, size, key):
+        if key in ('tab', 'shift tab'):
+            return key
+
+        # Save state before any editing operation (for undo)
+        current_text = self.edit_text
+        if current_text != self._last_saved_text:
+            self._save_undo_state(self._last_saved_text, self.edit_pos)
+            self._last_saved_text = current_text
+
+        # Handle undo (Ctrl+Z)
+        if key == 'ctrl z':
+            self._undo()
+            return None
+
+        # Handle redo (Ctrl+Y or Ctrl+Shift+Z)
+        if key in ('ctrl y', 'ctrl shift z'):
+            self._redo()
+            return None
+
+        result = super().keypress(size, key)
+
+        # After edit, check if text changed and save for potential undo
+        new_text = self.edit_text
+        if new_text != self._last_saved_text:
+            self._redo_stack.clear()  # Clear redo on new edit
+            self._last_saved_text = new_text
+
+        return result
+
+    def _save_undo_state(self, text, pos):
+        """Save current state to undo stack."""
+        if len(self._undo_stack) >= self.MAX_UNDO:
+            self._undo_stack.pop(0)
+        self._undo_stack.append((text, pos))
+
+    def _undo(self):
+        """Restore previous state from undo stack."""
+        if not self._undo_stack:
+            return
+
+        # Save current state to redo stack
+        self._redo_stack.append((self.edit_text, self.edit_pos))
+
+        # Restore previous state
+        text, pos = self._undo_stack.pop()
+        self.set_edit_text(text)
+        self.set_edit_pos(min(pos, len(text)))
+        self._last_saved_text = text
+
+    def _redo(self):
+        """Restore state from redo stack."""
+        if not self._redo_stack:
+            return
+
+        # Save current state to undo stack
+        self._undo_stack.append((self.edit_text, self.edit_pos))
+
+        # Restore redo state
+        text, pos = self._redo_stack.pop()
+        self.set_edit_text(text)
+        self.set_edit_pos(min(pos, len(text)))
+        self._last_saved_text = text
+
+
 class DOSScrollBar(urwid.WidgetWrap):
     """A DOS-style scrollbar with arrow buttons at top and bottom.
 
@@ -1506,7 +1588,54 @@ class SmartToolsUI:
         def on_cancel(_):
             self.close_overlay()
 
+        def on_external_edit(_):
+            """Open prompt in external editor ($EDITOR)."""
+            import os
+            import subprocess
+            import tempfile
+
+            current_prompt = prompt_edit.edit_text
+
+            # Stop the urwid loop temporarily
+            if self.loop:
+                self.loop.stop()
+
+            try:
+                # Create temp file with current prompt
+                with tempfile.NamedTemporaryFile(mode='w', suffix='.txt', delete=False) as f:
+                    f.write(current_prompt)
+                    temp_path = f.name
+
+                # Get editor from environment
+                editor = os.environ.get('EDITOR', os.environ.get('VISUAL', 'nano'))
+
+                # Run editor
+                subprocess.run([editor, temp_path], check=True)
+
+                # Read back the edited prompt
+                with open(temp_path, 'r') as f:
+                    new_prompt = f.read()
+
+                # Update the prompt editor
+                prompt_edit.set_edit_text(new_prompt)
+                status_text.set_text(('success', f"Prompt updated from {editor}"))
+
+                # Clean up temp file
+                os.unlink(temp_path)
+
+            except subprocess.CalledProcessError:
+                status_text.set_text(('error', "Editor exited with error"))
+            except FileNotFoundError:
+                status_text.set_text(('error', f"Editor '{editor}' not found"))
+            except Exception as e:
+                status_text.set_text(('error', f"Edit error: {e}"))
+            finally:
+                # Restart the urwid loop
+                if self.loop:
+                    self.loop.start()
+
         load_btn = Button3DCompact("Load", on_load)
+        edit_btn = Button3DCompact("$EDITOR", on_external_edit)
 
         # Prompt editor in a box - use ListBox for proper focus handling and scrolling
         # Wrap in DOSScrollBar for DOS-style scrollbar with arrow buttons
@@ -1533,6 +1662,8 @@ class SmartToolsUI:
                 ('weight', 1, urwid.AttrMap(file_edit, 'edit', 'edit_focus')),
                 ('pack', urwid.Text(" ")),
                 ('pack', load_btn),
+                ('pack', urwid.Text(" ")),
+                ('pack', edit_btn),
             ])),
             ('pack', status_text),
             ('weight', 1, prompt_box),
@@ -1542,7 +1673,7 @@ class SmartToolsUI:
 
         title = "Edit Prompt Step" if existing else "Add Prompt Step"
         dialog = Dialog(title, body, [("OK", on_ok), ("Cancel", on_cancel)])
-        self.show_overlay(dialog, width=70, height=22)
+        self.show_overlay(dialog, width=75, height=22)
 
     def _add_code_dialog(self, existing=None, idx=-1):
         """Add/edit code step with multiline editor, file support, and AI auto-adjust."""
@@ -1554,9 +1685,9 @@ class SmartToolsUI:
         default_file = existing.code_file if existing and existing.code_file else f"{default_output_var}.py"
         file_edit = urwid.Edit(('label', "File: "), default_file)
 
-        # Multiline code editor - use TabPassEdit so Tab passes through for navigation
+        # Multiline code editor with undo/redo (Ctrl+Z / Ctrl+Y)
         default_code = existing.code if existing else f"{default_output_var} = input.upper()"
-        code_edit = TabPassEdit(
+        code_edit = UndoableEdit(
             edit_text=default_code,
             multiline=True
         )