diff --git a/packages/backend/src/index.ts b/packages/backend/src/index.ts
index 22c15c1..aa7a015 100644
--- a/packages/backend/src/index.ts
+++ b/packages/backend/src/index.ts
@@ -11,6 +11,7 @@ import editorRouter from "./routes/editor.js";
 import terminalRouter from "./routes/terminal.js";
 import buildRouter from "./routes/build.js";
 import serverRouter from "./routes/server.js";
+import toolsetRouter from "./routes/toolset.js";
 import { attachWebSocket, createTerminalSession } from "./services/terminal.service.js";
 import { attachLspWebSocket } from "./services/lsp.service.js";
 
@@ -37,6 +38,7 @@ app.use("/api/editor", editorRouter);
 app.use("/api/terminal", terminalRouter);
 app.use("/api/build", buildRouter);
 app.use("/api/server", serverRouter);
+app.use("/api/toolset", toolsetRouter);
 
 const frontendDist = path.resolve(__dirname, "../../frontend/dist");
 app.use(express.static(frontendDist));
diff --git a/packages/backend/src/routes/toolset.ts b/packages/backend/src/routes/toolset.ts
new file mode 100644
index 0000000..af20275
--- /dev/null
+++ b/packages/backend/src/routes/toolset.ts
@@ -0,0 +1,78 @@
+import { Router } from "express";
+import {
+  startToolsetWatcher,
+  stopToolsetWatcher,
+  isWatcherActive,
+  getPendingChanges,
+  getChange,
+  applyChange,
+  applyAllChanges,
+  discardChange,
+  discardAllChanges,
+} from "../services/toolset.service.js";
+
+const router = Router();
+
+router.get("/status", (_req, res) => {
+  res.json({
+    active: isWatcherActive(),
+    pendingCount: getPendingChanges().length,
+  });
+});
+
+router.post("/start", (_req, res) => {
+  startToolsetWatcher();
+  res.json({ ok: true });
+});
+
+router.post("/stop", (_req, res) => {
+  stopToolsetWatcher();
+  res.json({ ok: true });
+});
+
+router.get("/changes", (_req, res) => {
+  const changes = getPendingChanges().map((c) => ({
+    filename: c.filename,
+    gffType: c.gffType,
+    repoPath: c.repoPath,
+    timestamp: c.timestamp,
+  }));
+  res.json(changes);
+});
+
+router.get("/changes/:filename", (req, res) => {
+  const change = getChange(req.params.filename);
+  if (!change) return res.status(404).json({ error: "change not found" });
+  res.json(change);
+});
+
+router.post("/apply", async (req, res) => {
+  const { files } = req.body;
+  if (!files || !Array.isArray(files))
+    return res.status(400).json({ error: "files array required" });
+  const results = [];
+  for (const f of files) {
+    results.push({ file: f, applied: await applyChange(f) });
+  }
+  res.json(results);
+});
+
+router.post("/apply-all", async (_req, res) => {
+  const applied = await applyAllChanges();
+  res.json({ applied });
+});
+
+router.post("/discard", (req, res) => {
+  const { files } = req.body;
+  if (!files || !Array.isArray(files))
+    return res.status(400).json({ error: "files array required" });
+  for (const f of files) discardChange(f);
+  res.json({ ok: true });
+});
+
+router.post("/discard-all", (_req, res) => {
+  discardAllChanges();
+  res.json({ ok: true });
+});
+
+export default router;
diff --git a/packages/backend/src/services/toolset.service.ts b/packages/backend/src/services/toolset.service.ts
new file mode 100644
index 0000000..7a9063a
--- /dev/null
+++ b/packages/backend/src/services/toolset.service.ts
@@ -0,0 +1,168 @@
+import chokidar from "chokidar";
+import { exec } from "child_process";
+import { promisify } from "util";
+import fs from "fs/promises";
+import path from "path";
+import { broadcast } from "./ws.service.js";
+import { getWorkspacePath } from "./workspace.service.js";
+
+const execAsync = promisify(exec);
+
+const NWN_HOME = process.env.NWN_HOME_PATH || "/nwn-home";
+const TEMP0_PATH = path.join(NWN_HOME, "modules", "temp0");
+
+interface ToolsetChange {
+  filename: string;
+  gffType: string;
+  repoPath: string | null;
+  timestamp: number;
+  jsonContent?: string;
+}
+
+const pendingChanges = new Map<string, ToolsetChange>();
+let watcher: ReturnType<typeof chokidar.watch> | null = null;
+const debounceTimers = new Map<string, NodeJS.Timeout>();
+
+const GFF_EXTENSIONS = new Set([
+  "are", "git", "utc", "uti", "utp", "dlg",
+  "utm", "ute", "utt", "utw", "uts", "utd",
+  "ifo", "itp",
+]);
+
+export function startToolsetWatcher(): void {
+  if (watcher) return;
+
+  watcher = chokidar.watch(TEMP0_PATH, {
+    persistent: true,
+    ignoreInitial: true,
+    usePolling: true,
+    interval: 1000,
+    depth: 0,
+  });
+
+  watcher.on("change", (filePath) => handleFileChange(filePath));
+  watcher.on("add", (filePath) => handleFileChange(filePath));
+
+  broadcast("toolset", "watcher:started", { path: TEMP0_PATH });
+}
+
+function handleFileChange(filePath: string): void {
+  const filename = path.basename(filePath);
+  const ext = filename.split(".").pop()?.toLowerCase();
+  if (!ext || !GFF_EXTENSIONS.has(ext)) return;
+
+  const existing = debounceTimers.get(filename);
+  if (existing) clearTimeout(existing);
+
+  debounceTimers.set(
+    filename,
+    setTimeout(async () => {
+      debounceTimers.delete(filename);
+      await processChange(filePath, filename, ext);
+    }, 500),
+  );
+}
+
+async function processChange(
+  filePath: string,
+  filename: string,
+  gffType: string,
+): Promise<void> {
+  try {
+    const tmpJson = `/tmp/forge-toolset-${filename}.json`;
+    await execAsync(`nwn_gff -i "${filePath}" -o "${tmpJson}"`);
+    const jsonContent = await fs.readFile(tmpJson, "utf-8");
+    await fs.unlink(tmpJson).catch(() => {});
+
+    const repoPath = mapToRepoPath(filename, gffType);
+
+    const change: ToolsetChange = {
+      filename,
+      gffType,
+      repoPath,
+      timestamp: Date.now(),
+      jsonContent,
+    };
+
+    pendingChanges.set(filename, change);
+    broadcast("toolset", "change", {
+      filename,
+      gffType,
+      repoPath,
+      timestamp: change.timestamp,
+    });
+  } catch (err: any) {
+    broadcast("toolset", "error", { filename, error: err.message });
+  }
+}
+
+function mapToRepoPath(filename: string, gffType: string): string | null {
+  // nasher conventions: areas -> areas/core/, everything else -> core/$ext/
+  const baseName = filename.replace(`.${gffType}`, "");
+
+  if (gffType === "are" || gffType === "git") {
+    return `areas/core/${baseName}.${gffType}.json`;
+  }
+  return `core/${gffType}/${baseName}.${gffType}.json`;
+}
+
+export function getPendingChanges(): ToolsetChange[] {
+  return Array.from(pendingChanges.values());
+}
+
+export function getChange(filename: string): ToolsetChange | undefined {
+  return pendingChanges.get(filename);
+}
+
+export async function applyChange(filename: string): Promise<boolean> {
+  const change = pendingChanges.get(filename);
+  if (!change || !change.repoPath || !change.jsonContent) return false;
+
+  const repoFilePath = path.join(
+    getWorkspacePath(),
+    "repos",
+    "nwn-module",
+    change.repoPath,
+  );
+  await fs.mkdir(path.dirname(repoFilePath), { recursive: true });
+  await fs.writeFile(repoFilePath, change.jsonContent, "utf-8");
+
+  pendingChanges.delete(filename);
+  broadcast("toolset", "applied", {
+    filename,
+    repoPath: change.repoPath,
+  });
+  return true;
+}
+
+export async function applyAllChanges(): Promise<string[]> {
+  const applied: string[] = [];
+  for (const [filename] of pendingChanges) {
+    if (await applyChange(filename)) {
+      applied.push(filename);
+    }
+  }
+  return applied;
+}
+
+export function discardChange(filename: string): void {
+  pendingChanges.delete(filename);
+  broadcast("toolset", "discarded", { filename });
+}
+
+export function discardAllChanges(): void {
+  pendingChanges.clear();
+  broadcast("toolset", "discarded-all", {});
+}
+
+export function stopToolsetWatcher(): void {
+  if (watcher) {
+    watcher.close();
+    watcher = null;
+    broadcast("toolset", "watcher:stopped", {});
+  }
+}
+
+export function isWatcherActive(): boolean {
+  return watcher !== null;
+}