diff --git a/app/frontend/components/Chat.tsx b/app/frontend/components/Chat.tsx
index dafca4a9..bf663ed2 100644
--- a/app/frontend/components/Chat.tsx
+++ b/app/frontend/components/Chat.tsx
@@ -1,5 +1,6 @@
 "use client";
 
+import { useCallback, useEffect, useState } from "react";
 import {
 	CopilotKit,
 	useCoAgent,
@@ -10,6 +11,7 @@ import { CopilotChat } from "@copilotkit/react-ui";
 import "@copilotkit/react-ui/styles.css";
 import CitationBlock from "./CitationBlock";
 import DbInfo from "./DbInfo";
+import SettingsPanel, { STORAGE_KEY } from "./SettingsPanel";
 
 // Must match AGUI_STATE_KEY from haiku.rag.agents.chat
 const AGUI_STATE_KEY = "haiku.rag.chat";
@@ -36,6 +38,7 @@ interface ChatSessionState {
 	session_id: string;
 	citations: Citation[];
 	qa_history: QAResponse[];
+	initial_context: string | null;
 }
 
 // AG-UI state is namespaced under AGUI_STATE_KEY
@@ -131,6 +134,24 @@ function FileIcon() {
 	);
 }
 
+function SettingsIcon() {
+	return (
+		<svg
+			width="18"
+			height="18"
+			viewBox="0 0 24 24"
+			fill="none"
+			stroke="currentColor"
+			strokeWidth="2"
+			strokeLinecap="round"
+			strokeLinejoin="round"
+		>
+			<path d="M12.22 2h-.44a2 2 0 0 0-2 2v.18a2 2 0 0 1-1 1.73l-.43.25a2 2 0 0 1-2 0l-.15-.08a2 2 0 0 0-2.73.73l-.22.38a2 2 0 0 0 .73 2.73l.15.1a2 2 0 0 1 1 1.72v.51a2 2 0 0 1-1 1.74l-.15.09a2 2 0 0 0-.73 2.73l.22.38a2 2 0 0 0 2.73.73l.15-.08a2 2 0 0 1 2 0l.43.25a2 2 0 0 1 1 1.73V20a2 2 0 0 0 2 2h.44a2 2 0 0 0 2-2v-.18a2 2 0 0 1 1-1.73l.43-.25a2 2 0 0 1 2 0l.15.08a2 2 0 0 0 2.73-.73l.22-.39a2 2 0 0 0-.73-2.73l-.15-.08a2 2 0 0 1-1-1.74v-.5a2 2 0 0 1 1-1.74l.15-.09a2 2 0 0 0 .73-2.73l-.22-.38a2 2 0 0 0-2.73-.73l-.15.08a2 2 0 0 1-2 0l-.43-.25a2 2 0 0 1-1-1.73V4a2 2 0 0 0-2-2z" />
+			<circle cx="12" cy="12" r="3" />
+		</svg>
+	);
+}
+
 function ToolCallIndicator({
 	toolName,
 	status,
@@ -336,7 +357,27 @@ function ToolCallIndicator({
 	);
 }
 
-function ChatContent() {
+function ChatContentInner({
+	initialContext,
+	setInitialContext,
+}: {
+	initialContext: string;
+	setInitialContext: (value: string) => void;
+}) {
+	const [settingsOpen, setSettingsOpen] = useState(false);
+
+	const handleSaveContext = useCallback(
+		(value: string) => {
+			setInitialContext(value);
+			if (value) {
+				localStorage.setItem(STORAGE_KEY, value);
+			} else {
+				localStorage.removeItem(STORAGE_KEY);
+			}
+		},
+		[setInitialContext],
+	);
+
 	useCoAgent<AgentState>({
 		name: "chat_agent",
 		initialState: {
@@ -344,6 +385,7 @@ function ChatContent() {
 				session_id: "",
 				citations: [],
 				qa_history: [],
+				initial_context: initialContext || null,
 			},
 		},
 	});
@@ -425,6 +467,40 @@ function ChatContent() {
 					display: flex;
 					flex-direction: column;
 				}
+				.chat-header {
+					display: flex;
+					justify-content: flex-end;
+					padding: 0.5rem 0.75rem;
+					border-bottom: 1px solid #e2e8f0;
+					background: #f8fafc;
+				}
+				.settings-btn {
+					display: flex;
+					align-items: center;
+					gap: 0.375rem;
+					padding: 0.375rem 0.625rem;
+					background: white;
+					border: 1px solid #e2e8f0;
+					border-radius: 6px;
+					cursor: pointer;
+					color: #64748b;
+					font-size: 0.8125rem;
+					transition: all 0.15s;
+				}
+				.settings-btn:hover {
+					background: #f1f5f9;
+					border-color: #cbd5e1;
+					color: #475569;
+				}
+				.settings-btn.has-context {
+					background: #eff6ff;
+					border-color: #bfdbfe;
+					color: #2563eb;
+				}
+				.settings-btn.has-context:hover {
+					background: #dbeafe;
+					border-color: #93c5fd;
+				}
 				.chat-content {
 					flex: 1;
 					min-height: 0;
@@ -438,6 +514,17 @@ function ChatContent() {
 			`}</style>
 			<div className="chat-wrapper">
 				<div className="chat-container">
+					<div className="chat-header">
+						<button
+							type="button"
+							className={`settings-btn ${initialContext ? "has-context" : ""}`}
+							onClick={() => setSettingsOpen(true)}
+							title={initialContext ? "Background context is set" : "Set background context"}
+						>
+							<SettingsIcon />
+							Context
+						</button>
+					</div>
 					<div className="chat-content">
 						<CopilotChat
 							labels={{
@@ -450,10 +537,36 @@ function ChatContent() {
 					<DbInfo />
 				</div>
 			</div>
+			<SettingsPanel
+				isOpen={settingsOpen}
+				onClose={() => setSettingsOpen(false)}
+				onSave={handleSaveContext}
+				currentValue={initialContext}
+			/>
 		</>
 	);
 }
 
+function ChatContent() {
+	const [initialContext, setInitialContext] = useState<string | null>(null);
+
+	useEffect(() => {
+		const stored = localStorage.getItem(STORAGE_KEY);
+		setInitialContext(stored || "");
+	}, []);
+
+	if (initialContext === null) {
+		return null;
+	}
+
+	return (
+		<ChatContentInner
+			initialContext={initialContext}
+			setInitialContext={setInitialContext}
+		/>
+	);
+}
+
 export default function Chat() {
 	return (
 		<CopilotKit runtimeUrl="/api/copilotkit" agent="chat_agent">
diff --git a/app/frontend/components/SettingsPanel.tsx b/app/frontend/components/SettingsPanel.tsx
new file mode 100644
index 00000000..76638e7b
--- /dev/null
+++ b/app/frontend/components/SettingsPanel.tsx
@@ -0,0 +1,188 @@
+"use client";
+
+import { useCallback, useEffect, useState } from "react";
+
+const STORAGE_KEY = "haiku.rag.settings.initial_context";
+
+interface SettingsPanelProps {
+	isOpen: boolean;
+	onClose: () => void;
+	onSave: (initialContext: string) => void;
+	currentValue: string;
+}
+
+export default function SettingsPanel({
+	isOpen,
+	onClose,
+	onSave,
+	currentValue,
+}: SettingsPanelProps) {
+	const [value, setValue] = useState(currentValue);
+
+	useEffect(() => {
+		if (isOpen) {
+			setValue(currentValue);
+		}
+	}, [isOpen, currentValue]);
+
+	const handleSave = useCallback(() => {
+		onSave(value);
+		onClose();
+	}, [value, onSave, onClose]);
+
+	const handleKeyDown = useCallback(
+		(e: React.KeyboardEvent) => {
+			if (e.key === "Escape") {
+				onClose();
+			}
+		},
+		[onClose],
+	);
+
+	if (!isOpen) {
+		return null;
+	}
+
+	return (
+		<>
+			<style>{`
+				.settings-modal-overlay {
+					position: fixed;
+					top: 0;
+					left: 0;
+					right: 0;
+					bottom: 0;
+					background: rgba(0, 0, 0, 0.5);
+					display: flex;
+					align-items: center;
+					justify-content: center;
+					z-index: 1000;
+				}
+				.settings-modal {
+					background: white;
+					border-radius: 12px;
+					padding: 1.5rem;
+					width: 90%;
+					max-width: 600px;
+					max-height: 80vh;
+					overflow: auto;
+					position: relative;
+					box-shadow: 0 20px 25px -5px rgba(0, 0, 0, 0.1), 0 10px 10px -5px rgba(0, 0, 0, 0.04);
+				}
+				.settings-modal-title {
+					margin: 0 0 0.5rem 0;
+					font-size: 1.25rem;
+					font-weight: 600;
+					color: #1e293b;
+				}
+				.settings-modal-description {
+					margin: 0 0 1rem 0;
+					font-size: 0.875rem;
+					color: #64748b;
+					line-height: 1.5;
+				}
+				.settings-textarea {
+					width: 100%;
+					min-height: 150px;
+					padding: 0.75rem;
+					border: 1px solid #e2e8f0;
+					border-radius: 8px;
+					font-size: 0.875rem;
+					font-family: inherit;
+					resize: vertical;
+					color: #334155;
+					line-height: 1.5;
+				}
+				.settings-textarea:focus {
+					outline: none;
+					border-color: #3b82f6;
+					box-shadow: 0 0 0 3px rgba(59, 130, 246, 0.1);
+				}
+				.settings-textarea::placeholder {
+					color: #94a3b8;
+				}
+				.settings-modal-actions {
+					display: flex;
+					justify-content: flex-end;
+					gap: 0.75rem;
+					margin-top: 1.25rem;
+				}
+				.settings-btn {
+					padding: 0.5rem 1rem;
+					font-size: 0.875rem;
+					font-weight: 500;
+					border-radius: 6px;
+					cursor: pointer;
+					transition: all 0.15s;
+				}
+				.settings-btn-cancel {
+					background: white;
+					color: #475569;
+					border: 1px solid #e2e8f0;
+				}
+				.settings-btn-cancel:hover {
+					background: #f8fafc;
+					border-color: #cbd5e1;
+				}
+				.settings-btn-save {
+					background: #3b82f6;
+					color: white;
+					border: none;
+				}
+				.settings-btn-save:hover {
+					background: #2563eb;
+				}
+			`}</style>
+			{/* biome-ignore lint/a11y/useKeyWithClickEvents: handled via onKeyDown on overlay */}
+			<div
+				className="settings-modal-overlay"
+				onClick={onClose}
+				onKeyDown={handleKeyDown}
+				role="dialog"
+				aria-modal="true"
+				aria-labelledby="settings-title"
+			>
+				{/* biome-ignore lint/a11y/noStaticElementInteractions: modal content wrapper */}
+				<div
+					className="settings-modal"
+					onClick={(e) => e.stopPropagation()}
+					onKeyDown={(e) => e.stopPropagation()}
+				>
+					<h2 id="settings-title" className="settings-modal-title">
+						Background Context
+					</h2>
+					<p className="settings-modal-description">
+						Provide background information that will be used throughout your
+						conversation. This helps the assistant understand domain-specific
+						context, terminology, or any relevant details about your questions.
+					</p>
+					<textarea
+						className="settings-textarea"
+						value={value}
+						onChange={(e) => setValue(e.target.value)}
+						placeholder="e.g., Focus on Python programming concepts and best practices..."
+						autoFocus
+					/>
+					<div className="settings-modal-actions">
+						<button
+							type="button"
+							className="settings-btn settings-btn-cancel"
+							onClick={onClose}
+						>
+							Cancel
+						</button>
+						<button
+							type="button"
+							className="settings-btn settings-btn-save"
+							onClick={handleSave}
+						>
+							Save
+						</button>
+					</div>
+				</div>
+			</div>
+		</>
+	);
+}
+
+export { STORAGE_KEY };