diff --git a/packages/jupyter-ai/src/commands.ts b/packages/jupyter-ai/src/commands.ts
index 7c9418de6..5ab39273a 100644
--- a/packages/jupyter-ai/src/commands.ts
+++ b/packages/jupyter-ai/src/commands.ts
@@ -13,7 +13,7 @@ import { AiService } from './handler';
 import { OpenTaskDialog } from './components/open-task-dialog';
 import { ClosableDialog } from './widgets/closable-dialog';
 import { InsertionContext, insertOutput } from './inserter';
-import { getTextSelection, getEditor } from './utils';
+import { getTextSelection, getEditor, getCellIndex } from './utils';
 
 /**
  * Creates a placeholder markdown cell either above/below the currently active
@@ -53,7 +53,7 @@ function insertPlaceholderCell(
  * Replaces a cell with a markdown cell containing a string.
  */
 function replaceWithMarkdown(notebook: Notebook, cellId: string, body: string) {
-  const cellIdx = findIndex(notebook, cellId);
+  const cellIdx = getCellIndex(notebook, cellId);
   if (cellIdx === -1) {
     return;
   }
@@ -64,15 +64,8 @@ function replaceWithMarkdown(notebook: Notebook, cellId: string, body: string) {
   NotebookActions.run(notebook);
 }
 
-function findIndex(notebook: Notebook, id: string): number {
-  const idx = notebook.model?.sharedModel.cells.findIndex(
-    cell => cell.getId() === id
-  );
-  return idx === undefined ? -1 : idx;
-}
-
 function deleteCell(notebook: Notebook, id: string): void {
-  const idx = findIndex(notebook, id);
+  const idx = getCellIndex(notebook, id);
   if (idx !== -1) {
     notebook.model?.sharedModel.deleteCell(idx);
   }
diff --git a/packages/jupyter-ai/src/components/chat.tsx b/packages/jupyter-ai/src/components/chat.tsx
index ac0103d22..431dc84d8 100644
--- a/packages/jupyter-ai/src/components/chat.tsx
+++ b/packages/jupyter-ai/src/components/chat.tsx
@@ -102,8 +102,13 @@ function ChatBody(): JSX.Element {
       setLoading(false);
     }
 
-    if (replaceSelection) {
-      replaceSelectionFn(response.output);
+    if (replaceSelection && selection) {
+      const { cellId, ...selectionProps } = selection;
+      replaceSelectionFn({
+        ...selectionProps,
+        ...(cellId && { cellId }),
+        text: response.output
+      });
     }
     setMessageGroups(messageGroups => [
       ...messageGroups,
@@ -147,7 +152,7 @@ function ChatBody(): JSX.Element {
         value={input}
         onChange={setInput}
         onSend={onSend}
-        hasSelection={!!selection}
+        hasSelection={!!selection?.text}
         includeSelection={includeSelection}
         toggleIncludeSelection={() =>
           setIncludeSelection(includeSelection => !includeSelection)
diff --git a/packages/jupyter-ai/src/contexts/selection-context.tsx b/packages/jupyter-ai/src/contexts/selection-context.tsx
index 7258d98bb..3c7a78fca 100644
--- a/packages/jupyter-ai/src/contexts/selection-context.tsx
+++ b/packages/jupyter-ai/src/contexts/selection-context.tsx
@@ -1,10 +1,10 @@
 import React, { useCallback, useContext, useEffect, useState } from 'react';
-import { SelectionWatcher } from '../selection-watcher';
+import { Selection, SelectionWatcher } from '../selection-watcher';
 
 const SelectionContext = React.createContext<
-  [string, (value: string) => unknown]
+  [Selection | null, (value: Selection) => unknown]
 >([
-  '',
+  null,
   () => {
     /* noop */
   }
@@ -23,7 +23,7 @@ export function SelectionContextProvider({
   selectionWatcher,
   children
 }: SelectionContextProviderProps) {
-  const [selection, setSelection] = useState('');
+  const [selection, setSelection] = useState<Selection | null>(null);
 
   /**
    * Effect: subscribe to SelectionWatcher
@@ -35,7 +35,7 @@ export function SelectionContextProvider({
   }, []);
 
   const replaceSelection = useCallback(
-    (value: string) => {
+    (value: Selection) => {
       selectionWatcher.replaceSelection(value);
     },
     [selectionWatcher]
diff --git a/packages/jupyter-ai/src/selection-watcher.ts b/packages/jupyter-ai/src/selection-watcher.ts
index 40e2bbbe8..f0e61cf0d 100644
--- a/packages/jupyter-ai/src/selection-watcher.ts
+++ b/packages/jupyter-ai/src/selection-watcher.ts
@@ -1,9 +1,95 @@
 import { JupyterFrontEnd, LabShell } from '@jupyterlab/application';
 import { DocumentWidget } from '@jupyterlab/docregistry';
+import { CodeEditor } from '@jupyterlab/codeeditor';
+import { CodeMirrorEditor } from '@jupyterlab/codemirror';
+import { FileEditor } from '@jupyterlab/fileeditor';
+import { Notebook } from '@jupyterlab/notebook';
+
+import { find } from '@lumino/algorithm';
 import { Widget } from '@lumino/widgets';
 import { Signal } from '@lumino/signaling';
 
-import { getEditor, getTextSelection } from './utils';
+import { getCellIndex } from './utils';
+
+/**
+ * Gets the editor instance used by a document widget. Returns `null` if unable.
+ */
+function getEditor(widget: Widget | null) {
+  if (!(widget instanceof DocumentWidget)) {
+    return null;
+  }
+
+  let editor: CodeEditor.IEditor | undefined;
+  const { content } = widget;
+
+  if (content instanceof FileEditor) {
+    editor = content.editor;
+  } else if (content instanceof Notebook) {
+    editor = content.activeCell?.editor;
+  }
+
+  if (!(editor instanceof CodeMirrorEditor)) {
+    return undefined;
+  }
+
+  return editor;
+}
+
+/**
+ * Gets a Selection object from a document widget. Returns `null` if unable.
+ */
+function getTextSelection(widget: Widget | null): Selection | null {
+  const editor = getEditor(widget);
+  // widget type check is redundant but hints the type to TypeScript
+  if (!editor || !(widget instanceof DocumentWidget)) {
+    return null;
+  }
+
+  let cellId: string | undefined = undefined;
+  if (widget.content instanceof Notebook) {
+    cellId = widget.content.activeCell?.model.id;
+  }
+
+  let { start, end, ...selectionObj } = editor.getSelection();
+  const startOffset = editor.getOffsetAt(start);
+  const endOffset = editor.getOffsetAt(end);
+  const text = editor.model.sharedModel
+    .getSource()
+    .substring(startOffset, endOffset);
+
+  // ensure start <= end
+  // required for editor.model.sharedModel.updateSource()
+  if (startOffset > endOffset) {
+    [start, end] = [end, start];
+  }
+
+  return {
+    ...selectionObj,
+    start,
+    end,
+    text,
+    widgetId: widget.id,
+    ...(cellId && {
+      cellId
+    })
+  };
+}
+
+export type Selection = CodeEditor.ITextSelection & {
+  /**
+   * The text within the selection as a string.
+   */
+  text: string;
+  /**
+   * The ID of the document widget in which the selection was made.
+   */
+  widgetId: string;
+  /**
+   * The ID of the cell in which the selection was made, if the original widget
+   * was a notebook.
+   */
+  cellId?: string;
+};
 
 export class SelectionWatcher {
   constructor(shell: JupyterFrontEnd.IShell) {
@@ -11,9 +97,11 @@ export class SelectionWatcher {
       throw 'Shell is not an instance of LabShell. Jupyter AI does not currently support custom shells.';
     }
 
-    shell.currentChanged.connect((sender, args) => {
+    this._shell = shell;
+    this._shell.currentChanged.connect((sender, args) => {
       this._mainAreaWidget = args.newValue;
     });
+
     setInterval(this._poll.bind(this), 200);
   }
 
@@ -21,24 +109,51 @@ export class SelectionWatcher {
     return this._selectionChanged;
   }
 
-  replaceSelection(value: string) {
-    if (!(this._mainAreaWidget instanceof DocumentWidget)) {
+  replaceSelection(selection: Selection) {
+    // unfortunately shell.currentWidget doesn't update synchronously after
+    // shell.activateById(), which is why we have to get a reference to the
+    // widget manually.
+    const widget = find(
+      this._shell.widgets(),
+      widget => widget.id === selection.widgetId
+    );
+    if (!(widget instanceof DocumentWidget)) {
       return;
     }
 
-    const editor = getEditor(this._mainAreaWidget.content);
-    editor?.replaceSelection?.(value);
-  }
+    // activate the widget if not already active
+    this._shell.activateById(selection.widgetId);
 
-  protected _poll() {
-    if (!(this._mainAreaWidget instanceof DocumentWidget)) {
+    // activate notebook cell if specified
+    if (widget.content instanceof Notebook && selection.cellId) {
+      const cellIndex = getCellIndex(widget.content, selection.cellId);
+      if (cellIndex !== -1) {
+        widget.content.activeCellIndex = cellIndex;
+      }
+    }
+
+    // get editor instance
+    const editor = getEditor(widget);
+    if (!editor) {
       return;
     }
 
+    editor.model.sharedModel.updateSource(
+      editor.getOffsetAt(selection.start),
+      editor.getOffsetAt(selection.end),
+      selection.text
+    );
+    const newPosition = editor.getPositionAt(
+      editor.getOffsetAt(selection.start) + selection.text.length
+    );
+    editor.setSelection({ start: newPosition, end: newPosition });
+  }
+
+  protected _poll() {
     const prevSelection = this._selection;
-    const currSelection = getTextSelection(this._mainAreaWidget.content);
+    const currSelection = getTextSelection(this._mainAreaWidget);
 
-    if (prevSelection === currSelection) {
+    if (prevSelection?.text === currSelection?.text) {
       return;
     }
 
@@ -46,7 +161,8 @@ export class SelectionWatcher {
     this._selectionChanged.emit(currSelection);
   }
 
+  protected _shell: LabShell;
   protected _mainAreaWidget: Widget | null = null;
-  protected _selection = '';
-  protected _selectionChanged = new Signal<this, string>(this);
+  protected _selection: Selection | null = null;
+  protected _selectionChanged = new Signal<this, Selection | null>(this);
 }
diff --git a/packages/jupyter-ai/src/utils.ts b/packages/jupyter-ai/src/utils.ts
index 0df6b3070..070c5d403 100644
--- a/packages/jupyter-ai/src/utils.ts
+++ b/packages/jupyter-ai/src/utils.ts
@@ -36,3 +36,13 @@ export function getEditor(widget: Widget): CodeEditor.IEditor | undefined {
 
   return editor;
 }
+
+/**
+ * Gets the index of the cell associated with `cellId`.
+ */
+export function getCellIndex(notebook: Notebook, cellId: string): number {
+  const idx = notebook.model?.sharedModel.cells.findIndex(
+    cell => cell.getId() === cellId
+  );
+  return idx === undefined ? -1 : idx;
+}