diff --git a/Package.swift b/Package.swift
index 95ba74f46..db96a810b 100644
--- a/Package.swift
+++ b/Package.swift
@@ -508,6 +508,7 @@ var targets: [Target] = [
         "SwiftBasicFormat",
         "SwiftDiagnostics",
         "SwiftIDEUtils",
+        "SwiftLexicalLookup",
         "SwiftOperators",
         "SwiftParser",
         "SwiftParserDiagnostics",
diff --git a/Sources/SwiftLanguageService/CodeActions/InlineTempVariable.swift b/Sources/SwiftLanguageService/CodeActions/InlineTempVariable.swift
new file mode 100644
index 000000000..391bbc9f5
--- /dev/null
+++ b/Sources/SwiftLanguageService/CodeActions/InlineTempVariable.swift
@@ -0,0 +1,247 @@
+//===----------------------------------------------------------------------===//
+//
+// This source file is part of the Swift.org open source project
+//
+// Copyright (c) 2014 - 2026 Apple Inc. and the Swift project authors
+// Licensed under Apache License v2.0 with Runtime Library Exception
+//
+// See https://swift.org/LICENSE.txt for license information
+// See https://swift.org/CONTRIBUTORS.txt for the list of Swift project authors
+//
+//===----------------------------------------------------------------------===//
+
+@_spi(SourceKitLSP) import LanguageServerProtocol
+import SourceKitLSP
+import SwiftExtensions
+import SwiftLexicalLookup
+import SwiftSyntax
+
+/// Inline temp variable: replace a temporary `let` binding with its value at all usage sites,
+/// then remove the declaration.
+///
+/// ## Before
+/// ```swift
+/// func example() {
+///     let basePrice = item.price
+///     let total = basePrice * quantity
+/// }
+/// ```
+///
+/// ## After
+/// ```swift
+/// func example() {
+///     let total = item.price * quantity
+/// }
+/// ```
+///
+/// When the inlined value is an expression that may need parentheses for precedence (e.g. `1 + 2`
+/// inlined into `basePrice * 3`), parentheses are added: `(1 + 2) * 3`.
+@_spi(Testing) public struct InlineTempVariable: SyntaxCodeActionProvider {
+  static func codeActions(in scope: SyntaxCodeActionScope) -> [CodeAction] {
+    guard let (variableDecl, name, initializer, codeBlock, declItem, declarationPattern) = findInlineableBinding(in: scope) else {
+      return []
+    }
+
+    let references = collectReferences(to: name, declaredBy: declarationPattern, after: variableDecl.endPosition, in: codeBlock)
+    guard !references.isEmpty else {
+      return []
+    }
+
+    let snapshot = scope.snapshot
+    var textEdits: [TextEdit] = []
+
+    // Replace each reference with the initializer value, adding parentheses when needed for precedence.
+    // Preserve the original trailing trivia (eg. spaces before the following operator) so surrounding
+    // spacing stays unchanged.
+    for ref in references {
+      let token = ref.baseName
+      let replacementCore = replacementTextForInlining(
+        initializer: initializer,
+        at: ref,
+        in: codeBlock
+      )
+      let replacementText = replacementCore + token.trailingTrivia.description
+      textEdits.append(
+        TextEdit(
+          range: snapshot.range(of: token),
+          newText: replacementText
+        )
+      )
+    }
+
+    // Remove the declaration (the entire code block item so we remove the newline too).
+    textEdits.append(TextEdit(
+      range: snapshot.range(of: declItem),
+      newText: ""
+    ))
+
+    // Apply edits from end to start so earlier edits don't invalidate positions.
+    textEdits.sort { $0.range.lowerBound > $1.range.lowerBound }
+
+    return [
+      CodeAction(
+        title: "Inline variable",
+        kind: .refactorInline,
+        edit: WorkspaceEdit(changes: [snapshot.uri: textEdits])
+      )
+    ]
+  }
+
+  /// Finds a `let name = expr` binding that can be inlined, and its enclosing code block and item.
+  private static func findInlineableBinding(in scope: SyntaxCodeActionScope)
+    -> (VariableDeclSyntax, name: String, initializer: ExprSyntax, CodeBlockSyntax, CodeBlockItemSyntax, IdentifierPatternSyntax)? {
+    guard let node = scope.innermostNodeContainingRange else {
+      return nil
+    }
+
+    let variableDecl = node.findParentOfSelf(
+      ofType: VariableDeclSyntax.self,
+      stoppingIf: { $0.is(CodeBlockSyntax.self) || $0.is(MemberBlockSyntax.self) }
+    )
+    guard let variableDecl, variableDecl.bindingSpecifier.tokenKind == .keyword(.let) else {
+      return nil
+    }
+
+    guard let binding = variableDecl.bindings.only,
+      let pattern = binding.pattern.as(IdentifierPatternSyntax.self),
+      let initializer = binding.initializer?.value
+    else {
+      return nil
+    }
+
+    let name = pattern.identifier.text
+    guard !name.isEmpty else {
+      return nil
+    }
+
+    guard let codeBlockItem = variableDecl.parent?.as(CodeBlockItemSyntax.self),
+      let codeBlockItemList = codeBlockItem.parent?.as(CodeBlockItemListSyntax.self),
+      let codeBlock = codeBlockItemList.parent?.as(CodeBlockSyntax.self)
+    else {
+      return nil
+    }
+
+    return (variableDecl, name, initializer, codeBlock, codeBlockItem, pattern)
+  }
+
+  /// Collects all `DeclReferenceExprSyntax` in `block` that refer to the given declaration (by lexical lookup)
+  /// and occur after `afterPosition`. Uses SwiftLexicalLookup so shadowing and name lookup rules are respected.
+  private static func collectReferences(
+    to name: String,
+    declaredBy declarationPattern: IdentifierPatternSyntax,
+    after afterPosition: AbsolutePosition,
+    in block: CodeBlockSyntax
+  ) -> [DeclReferenceExprSyntax] {
+    let candidates = DeclReferenceCollector(name: name, afterPosition: afterPosition).collect(in: block)
+    let declId = declarationPattern.id
+    let config = LookupConfig(finishInSequentialScope: true)
+    return candidates.filter { ref in
+      guard let identifier = Identifier(ref.baseName) else { return false }
+      let results = ref.lookup(identifier, with: config)
+      return results.first?.names.contains(where: { $0.syntax.id == declId }) ?? false
+    }
+  }
+
+  /// Returns the text to use when inlining `initializer` at the given reference site.
+  /// Adds parentheses when needed to preserve precedence (e.g. `1 + 2` inlined into `x * 3` → `(1 + 2) * 3`).
+  private static func replacementTextForInlining(
+    initializer: ExprSyntax,
+    at reference: DeclReferenceExprSyntax,
+    in codeBlock: CodeBlockSyntax
+  ) -> String {
+    let needsParens = initializerNeedsParenthesesAtUseSite(initializer, reference: reference)
+    if needsParens {
+      return "(\(initializer.trimmed))"
+    }
+    return initializer.trimmed.description
+  }
+
+  /// Returns true if the initializer expression should be wrapped in parentheses when inlined at the reference.
+  /// This preserves correctness when the initializer contains operators with lower precedence than the context
+  /// (e.g. inlining `1 + 2` into `basePrice * 3` must yield `(1 + 2) * 3`).
+  private static func initializerNeedsParenthesesAtUseSite(
+    _ initializer: ExprSyntax,
+    reference: DeclReferenceExprSyntax
+  ) -> Bool {
+    // Simple expressions (literals, single identifiers, member access) don't need parens.
+    if !initializer.isCompositeForInlining {
+      return false
+    }
+
+    // Walk up the ancestor chain: the reference may be nested (e.g. inside LabeledExprSyntax in a tuple),
+    // so we need to find if we're used as an operand in a binary/sequence expression.
+    var node: Syntax? = Syntax(reference)
+    while let n = node {
+      if n.is(CodeBlockItemSyntax.self) || n.is(CodeBlockSyntax.self) || n.is(MemberBlockItemSyntax.self) {
+        break
+      }
+      if n.is(InfixOperatorExprSyntax.self) || n.is(SequenceExprSyntax.self) {
+        return true
+      }
+      if n.is(TernaryExprSyntax.self) || n.is(FunctionCallExprSyntax.self) || n.is(SubscriptCallExprSyntax.self) {
+        return true
+      }
+      if n.is(AwaitExprSyntax.self) || n.is(TryExprSyntax.self) {
+        return true
+      }
+      node = n.parent
+    }
+
+    return false
+  }
+}
+
+// MARK: - DeclReferenceCollector
+
+/// Collects DeclReferenceExprSyntax nodes that match the name and occur after the given position.
+/// Used only to gather candidates; resolution to the specific declaration is done via SwiftLexicalLookup.
+private final class DeclReferenceCollector: SyntaxVisitor {
+  private let name: String
+  private let afterPosition: AbsolutePosition
+  private(set) var references: [DeclReferenceExprSyntax] = []
+
+  init(name: String, afterPosition: AbsolutePosition) {
+    self.name = name
+    self.afterPosition = afterPosition
+    super.init(viewMode: .sourceAccurate)
+  }
+
+  func collect(in block: CodeBlockSyntax) -> [DeclReferenceExprSyntax] {
+    walk(block)
+    return references
+  }
+
+  override func visit(_ node: DeclReferenceExprSyntax) -> SyntaxVisitorContinueKind {
+    if node.baseName.text == name, node.position >= afterPosition {
+      references.append(node)
+    }
+    return .visitChildren
+  }
+}
+
+// MARK: - Helpers
+
+private extension ExprSyntax {
+  /// Whether this expression is "composite" for the purpose of inlining: if inlined into another
+  /// expression, it may need parentheses to preserve meaning (e.g. `1 + 2` in `x * 3`).
+  var isCompositeForInlining: Bool {
+    switch self.kind {
+    case .arrayExpr, .booleanLiteralExpr, .closureExpr, .declReferenceExpr, .dictionaryExpr,
+      .floatLiteralExpr, .forceUnwrapExpr, .functionCallExpr, .integerLiteralExpr, .memberAccessExpr,
+      .nilLiteralExpr, .optionalChainingExpr, .postfixOperatorExpr, .stringLiteralExpr, .superExpr,
+      .subscriptCallExpr:
+      return false
+    case .tupleExpr:
+      if let single = self.as(TupleExprSyntax.self)?.elements.only, single.label == nil {
+        return single.expression.isCompositeForInlining
+      }
+      return true
+    default:
+      return true
+    }
+  }
+
+  var trimmed: ExprSyntax {
+    self.with(\.leadingTrivia, []).with(\.trailingTrivia, [])
+  }
+}
diff --git a/Sources/SwiftLanguageService/CodeActions/SyntaxCodeActions.swift b/Sources/SwiftLanguageService/CodeActions/SyntaxCodeActions.swift
index 8330dc826..207afd282 100644
--- a/Sources/SwiftLanguageService/CodeActions/SyntaxCodeActions.swift
+++ b/Sources/SwiftLanguageService/CodeActions/SyntaxCodeActions.swift
@@ -19,6 +19,7 @@ let allSyntaxCodeActions: [any SyntaxCodeActionProvider.Type] = {
     AddDocumentation.self,
     AddSeparatorsToIntegerLiteral.self,
     ApplyDeMorganLaw.self,
+    InlineTempVariable.self,
     ConvertComputedPropertyToZeroParameterFunction.self,
     ConvertIfLetToGuard.self,
     ConvertIntegerLiteral.self,
diff --git a/Tests/SourceKitLSPTests/InlineTempVariableTests.swift b/Tests/SourceKitLSPTests/InlineTempVariableTests.swift
new file mode 100644
index 000000000..e7823a738
--- /dev/null
+++ b/Tests/SourceKitLSPTests/InlineTempVariableTests.swift
@@ -0,0 +1,151 @@
+//===----------------------------------------------------------------------===//
+//
+// This source file is part of the Swift.org open source project
+//
+// Copyright (c) 2014 - 2026 Apple Inc. and the Swift project authors
+// Licensed under Apache License v2.0 with Runtime Library Exception
+//
+// See https://swift.org/LICENSE.txt for license information
+// See https://swift.org/CONTRIBUTORS.txt for the list of Swift project authors
+//
+//===----------------------------------------------------------------------===//
+
+import LanguageServerProtocol
+import SKTestSupport
+import SKUtilities
+import SourceKitLSP
+import XCTest
+
+private typealias CodeActionCapabilities = TextDocumentClientCapabilities.CodeAction
+private typealias CodeActionLiteralSupport = CodeActionCapabilities.CodeActionLiteralSupport
+private typealias CodeActionKindCapabilities = CodeActionLiteralSupport.CodeActionKindValueSet
+
+private let clientCapabilitiesWithCodeActionSupport: ClientCapabilities = {
+  var documentCapabilities = TextDocumentClientCapabilities()
+  var codeActionCapabilities = CodeActionCapabilities()
+  codeActionCapabilities.codeActionLiteralSupport = .init(
+    codeActionKind: .init(valueSet: [.refactorInline])
+  )
+  documentCapabilities.codeAction = codeActionCapabilities
+  documentCapabilities.completion = .init(completionItem: .init(snippetSupport: true))
+  return ClientCapabilities(workspace: nil, textDocument: documentCapabilities)
+}()
+
+final class InlineTempVariableTests: SourceKitLSPTestCase {
+  private func validateCodeAction(
+    input: String,
+    expectedOutput: String?,
+    title: String = "Inline variable",
+    file: StaticString = #filePath,
+    line: UInt = #line
+  ) async throws {
+    let testClient = try await TestSourceKitLSPClient(capabilities: clientCapabilitiesWithCodeActionSupport)
+    let uri = DocumentURI(for: .swift)
+    let positions = testClient.openDocument(input, uri: uri)
+
+    let range: Range<Position>
+    if input.contains("1️⃣") && input.contains("2️⃣") {
+      range = positions["1️⃣"]..<positions["2️⃣"]
+    } else if input.contains("1️⃣") {
+      let pos = positions["1️⃣"]
+      range = pos..<pos
+    } else {
+      XCTFail("Missing marker 1️⃣ in input", file: file, line: line)
+      return
+    }
+
+    let request = CodeActionRequest(
+      range: range,
+      context: .init(),
+      textDocument: TextDocumentIdentifier(uri)
+    )
+    let result = try await testClient.send(request)
+
+    guard case .codeActions(let codeActions) = result else {
+      XCTFail("Expected code actions response", file: file, line: line)
+      return
+    }
+
+    let action = codeActions.first(where: { $0.title == title })
+    if let expectedOutput {
+      guard let action else {
+        let available = codeActions.map(\.title)
+        XCTFail("Action '\(title)' not found. Available: \(available)", file: file, line: line)
+        return
+      }
+
+      guard let edit = action.edit else {
+        XCTFail("Action '\(title)' has no edit", file: file, line: line)
+        return
+      }
+
+      let changes = edit.changes?[uri] ?? []
+      let cleanInput = extractMarkers(input).textWithoutMarkers
+      let resultingText = apply(edits: changes, to: cleanInput)
+      XCTAssertEqual(resultingText, expectedOutput, file: file, line: line)
+    } else {
+      XCTAssertNil(action, "Expected action '\(title)' to be not offered", file: file, line: line)
+    }
+  }
+
+  func testInlineTempVariableSimple() async throws {
+    try await validateCodeAction(
+      input: """
+        func example() {
+            let 1️⃣basePrice = item.price
+            let total = basePrice * quantity
+        }
+        """,
+      expectedOutput: """
+        func example() {
+            let total = item.price * quantity
+        }
+        """
+    )
+  }
+
+  func testInlineTempVariableWithParenthesesForPrecedence() async throws {
+    try await validateCodeAction(
+      input: """
+        func example() {
+            let 1️⃣basePrice = 1 + 2
+            let total = basePrice * 3
+        }
+        """,
+      expectedOutput: """
+        func example() {
+            let total = (1 + 2) * 3
+        }
+        """
+    )
+  }
+
+  func testInlineTempVariableMultipleUsages() async throws {
+    try await validateCodeAction(
+      input: """
+        func example() {
+            let 1️⃣x = foo()
+            let a = x + 1
+            let b = x * 2
+        }
+        """,
+      expectedOutput: """
+        func example() {
+            let a = foo() + 1
+            let b = foo() * 2
+        }
+        """
+    )
+  }
+
+  func testInlineTempVariableNotShownWhenNoUsages() async throws {
+    try await validateCodeAction(
+      input: """
+        func example() {
+            let 1️⃣basePrice = item.price
+        }
+        """,
+      expectedOutput: nil
+    )
+  }
+}