diff --git a/src/games/storywriter/assets/settings-modal.module.css b/src/games/storywriter/assets/settings-modal.module.css
index 952f2a4..babe6a1 100644
--- a/src/games/storywriter/assets/settings-modal.module.css
+++ b/src/games/storywriter/assets/settings-modal.module.css
@@ -111,7 +111,8 @@
 }
 
 .input,
-.select {
+.select,
+.textarea {
     width: 100%;
     padding: 8px;
     border-radius: 4px;
@@ -120,6 +121,13 @@
     color: var(--text);
 }
 
+.textarea {
+    resize: vertical;
+    font-family: inherit;
+    font-size: inherit;
+    line-height: 1.5;
+}
+
 .footer {
     padding: 16px 20px;
     border-top: 1px solid var(--border);
diff --git a/src/games/storywriter/components/banned-tokens-modal.tsx b/src/games/storywriter/components/banned-tokens-modal.tsx
deleted file mode 100644
index 763ba44..0000000
--- a/src/games/storywriter/components/banned-tokens-modal.tsx
+++ /dev/null
@@ -1,98 +0,0 @@
-import clsx from "clsx";
-
-import { useInputState } from "@common/hooks/useInputState";
-
-import { useAppState } from "../contexts/state";
-import styles from "../assets/settings-modal.module.css";
-import { X } from "lucide-preact";
-
-interface Props {
-    onClose: () => void;
-}
-
-export const BannedTokensModal = ({ onClose }: Props) => {
-    const { bannedTokens, dispatch } = useAppState();
-    const [inputValue, setInputValue] = useInputState();
-
-    const handleAdd = () => {
-        const trimmed = inputValue.trim();
-        if (trimmed && !bannedTokens.includes(trimmed)) {
-            dispatch({
-                type: "SET_BANNED_TOKENS",
-                tokens: [...bannedTokens, trimmed],
-            });
-            setInputValue("");
-        }
-    };
-
-    const handleRemove = (token: string) => {
-        dispatch({
-            type: "SET_BANNED_TOKENS",
-            tokens: bannedTokens.filter((t) => t !== token),
-        });
-    };
-
-    const handleKeyDown = (e: KeyboardEvent) => {
-        if (e.key === "Enter") {
-            handleAdd();
-        } else if (e.key === "Escape") {
-            onClose();
-        }
-    };
-
-    const sortedTokens = [...bannedTokens].sort((a, b) =>
-        a.trim().toLowerCase().localeCompare(b.trim().toLowerCase())
-    );
-
-    return (
-        <div class={styles.overlay} onClick={onClose}>
-            <div class={styles.modal} onClick={(e) => e.stopPropagation()}>
-                <div class={styles.header}>
-                    <h2 class={styles.title}>Banned Tokens</h2>
-                    <button class={styles.closeButton} onClick={onClose}>
-                        <X size={20} />
-                    </button>
-                </div>
-                <div class={styles.content}>
-                    <div class={styles.inputRow}>
-                        <input
-                            type="text"
-                            value={inputValue}
-                            onInput={setInputValue}
-                            onKeyDown={handleKeyDown}
-                            placeholder="Token to ban"
-                            class={styles.input}
-                            autoFocus
-                        />
-                        <button onClick={handleAdd} class={clsx(styles.button, styles.buttonPrimary)}>
-                            Add
-                        </button>
-                    </div>
-                    <div class={styles.divider} />
-                    <div class={styles.tokenList}>
-                        {sortedTokens.length === 0 ? (
-                            <p class={styles.emptyText}>No banned tokens</p>
-                        ) : (
-                            sortedTokens.map((token) => (
-                                <div key={token} class={styles.tokenItem}>
-                                    <span>{token}</span>
-                                    <button
-                                        onClick={() => handleRemove(token)}
-                                        class={styles.tokenRemoveButton}
-                                    >
-                                        <X size={12} />
-                                    </button>
-                                </div>
-                            ))
-                        )}
-                    </div>
-                </div>
-                <div class={styles.footer}>
-                    <button onClick={onClose} class={clsx(styles.button, styles.buttonSecondary)}>
-                        Done
-                    </button>
-                </div>
-            </div>
-        </div>
-    );
-};
diff --git a/src/games/storywriter/components/connection-settings-modal.tsx b/src/games/storywriter/components/connection-settings-modal.tsx
new file mode 100644
index 0000000..5f23328
--- /dev/null
+++ b/src/games/storywriter/components/connection-settings-modal.tsx
@@ -0,0 +1,185 @@
+import { useMemo, useRef } from "preact/hooks";
+
+import { useQuery } from "@common/hooks/useAsyncState";
+import { useInputState } from "@common/hooks/useInputState";
+import { useUpdate } from "@common/hooks/useUpdate";
+
+import { useAppState } from "../contexts/state";
+import LLM from "../utils/llm";
+import styles from "../assets/settings-modal.module.css";
+import { X } from "lucide-preact";
+
+interface Props {
+    onClose: () => void;
+}
+
+export const ConnectionSettingsModal = ({ onClose }: Props) => {
+    const { connection, model, dispatch } = useAppState();
+    const [url, setUrl] = useInputState(connection?.url ?? "");
+    const [apiKey, setApiKey] = useInputState(connection?.apiKey ?? "");
+    const [selectedModel, setSelectedModel] = useInputState(model?.id ?? "");
+    const [update, triggerFetch] = useUpdate();
+
+    const urlRef = useRef(url);
+    const apiKeyRef = useRef(apiKey);
+
+    urlRef.current = url;
+    apiKeyRef.current = apiKey;
+
+    const connectionToFetch = useMemo<LLM.Connection | null>(() => {
+        const currentUrl = urlRef.current;
+        const currentApiKey = apiKeyRef.current;
+        if (!currentUrl || !currentApiKey) return null;
+        return { url: currentUrl, apiKey: currentApiKey };
+    }, [update]);
+
+    const fetchModels = useMemo(() => async (conn: LLM.Connection | null) => {
+        if (!conn) return [];
+        const r = await LLM.getModels(conn);
+        return r.data;
+    }, []);
+
+    const modelsData = useQuery(fetchModels, connectionToFetch);
+
+    const isLoadingModels = connectionToFetch != null && modelsData == undefined;
+    const groupedModels = useMemo(() => {
+        const sorted = (modelsData ?? []).sort((a, b) => {
+            const aWeight = Number(a.support_tools) * 2 + Number(a.support_thinking);
+            const bWeight = Number(b.support_tools) * 2 + Number(b.support_thinking);
+            if (aWeight !== bWeight) {
+                return bWeight - aWeight;
+            }
+
+            const aContext = a.max_context ?? 0;
+            const bContext = b.max_context ?? 0;
+            if (aContext !== bContext) {
+                return bContext - aContext;
+            }
+
+            return a.id.localeCompare(b.id);
+        });
+
+        // Group by context size
+        const groups = Map.groupBy(sorted, m => m.max_context ?? 0);
+
+        // Convert to array sorted by context size (bigger first)
+        return Array.from(groups.entries())
+            .sort((a, b) => b[0] - a[0])
+            .map(([context, models]) => ({ context, models }));
+    }, [modelsData]);
+
+    const handleBlur = () => {
+        if (url && apiKey) {
+            triggerFetch();
+        }
+    };
+
+    const handleKeyDown = (e: KeyboardEvent) => {
+        if (e.key === 'Enter' && url && apiKey) {
+            triggerFetch();
+        }
+    };
+
+    const handleConfirm = () => {
+        dispatch({
+            type: 'SET_CONNECTION',
+            connection: connectionToFetch,
+        });
+        const selectedModelInfo = modelsData?.find(m => m.id === selectedModel) ?? null;
+        dispatch({
+            type: 'SET_MODEL',
+            model: selectedModelInfo,
+        });
+        onClose();
+    };
+
+    const connectionToTest = url && apiKey ? { url, apiKey } : null;
+
+    return (
+        <div class={styles.overlay} onClick={onClose}>
+            <div class={styles.modal} onClick={(e) => e.stopPropagation()}>
+                <div class={styles.header}>
+                    <h2 class={styles.title}>Connection Settings</h2>
+                    <button class={styles.closeButton} onClick={onClose}>
+                        <X size={20} />
+                    </button>
+                </div>
+                <div class={styles.content}>
+                    <div class={styles.form} autocomplete="off">
+                        <div class={styles.formGroup}>
+                            <label class={styles.label}>
+                                API URL
+                            </label>
+                            <input
+                                type="text"
+                                value={url}
+                                onInput={setUrl}
+                                onBlur={handleBlur}
+                                onKeyDown={handleKeyDown}
+                                placeholder="http://localhost:1234"
+                                class={styles.input}
+                                autocomplete="off"
+                                name="api-url-random"
+                            />
+                        </div>
+                        <div class={styles.formGroup}>
+                            <label class={styles.label}>
+                                API Key
+                            </label>
+                            <input
+                                type="password"
+                                value={apiKey}
+                                onInput={setApiKey}
+                                onBlur={handleBlur}
+                                onKeyDown={handleKeyDown}
+                                placeholder="your-api-key"
+                                class={styles.input}
+                                autocomplete="new-password"
+                                name="api-key-random"
+                            />
+                        </div>
+                        <div class={styles.formGroup}>
+                            <label class={styles.label}>
+                                Model
+                            </label>
+                            {connectionToTest ? (
+                                isLoadingModels ? (
+                                    <p>Loading models...</p>
+                                ) : groupedModels.length > 0 ? (
+                                    <select
+                                        value={selectedModel}
+                                        onChange={setSelectedModel}
+                                        class={styles.select}
+                                    >
+                                        <option value="">Select a model</option>
+                                        {groupedModels.map(({ context, models }) => (
+                                            <optgroup key={context} label={`${context} context`}>
+                                                {models.map(m => (
+                                                    <option key={m.id} value={m.id}>
+                                                        {m.support_tools ? '🔨' : ''}{m.support_thinking ? '🧠' : ''}{m.id} {m.max_length ? `(len: ${m.max_length})` : ''}
+                                                    </option>
+                                                ))}
+                                            </optgroup>
+                                        ))}
+                                    </select>
+                                ) : (
+                                    <p>No models available</p>
+                                )
+                            ) : (
+                                <p>Enter connection details to load models</p>
+                            )}
+                        </div>
+                    </div>
+                </div>
+                <div class={styles.footer}>
+                    <button onClick={onClose} class={`${styles.button} ${styles.buttonSecondary}`}>
+                        Cancel
+                    </button>
+                    <button onClick={handleConfirm} class={`${styles.button} ${styles.buttonPrimary}`}>
+                        Confirm
+                    </button>
+                </div>
+            </div>
+        </div>
+    );
+};
diff --git a/src/games/storywriter/components/menu-sidebar.tsx b/src/games/storywriter/components/menu-sidebar.tsx
index 63d7370..1e43545 100644
--- a/src/games/storywriter/components/menu-sidebar.tsx
+++ b/src/games/storywriter/components/menu-sidebar.tsx
@@ -1,13 +1,13 @@
 import clsx from "clsx";
 import { Sidebar } from "./sidebar";
+import { ConnectionSettingsModal } from "./connection-settings-modal";
 import { SettingsModal } from "./settings-modal";
-import { BannedTokensModal } from "./banned-tokens-modal";
 import { useAppState } from "../contexts/state";
 import { useBool } from "@common/hooks/useBool";
 import type { Story } from "../contexts/state";
 import styles from '../assets/menu-sidebar.module.css';
 import { useState } from "preact/hooks";
-import { Pencil, X, Plus, Settings, Ban } from "lucide-preact";
+import { Pencil, X, Plus, Plug, Settings } from "lucide-preact";
 
 // ─── Story Item ───────────────────────────────────────────────────────────────
 
@@ -82,8 +82,8 @@ const StoryItem = ({ story, active, onSelect, onRename, onDelete }: StoryItemPro
 
 export const MenuSidebar = () => {
     const { stories, currentStory, dispatch } = useAppState();
+    const isConnectionSettingsOpen = useBool(false);
     const isSettingsOpen = useBool(false);
-    const isBannedTokensOpen = useBool(false);
 
     const handleCreate = () => {
         dispatch({ type: 'CREATE_STORY', title: 'New Story' });
@@ -124,20 +124,20 @@ export const MenuSidebar = () => {
                     ))}
                 </div>
                 <div class={styles.bottomButtons}>
-                    <button class={styles.settingsButton} onClick={isBannedTokensOpen.toggle}>
-                        <Ban size={16} /> Banned Tokens
-                    </button>
                     <button class={styles.settingsButton} onClick={isSettingsOpen.toggle}>
                         <Settings size={16} /> Settings
                     </button>
+                    <button class={styles.settingsButton} onClick={isConnectionSettingsOpen.toggle}>
+                        <Plug size={16} /> Connection Settings
+                    </button>
                 </div>
             </div>
-            {isBannedTokensOpen.value && (
-                <BannedTokensModal onClose={isBannedTokensOpen.toggle} />
-            )}
             {isSettingsOpen.value && (
                 <SettingsModal onClose={isSettingsOpen.toggle} />
             )}
+            {isConnectionSettingsOpen.value && (
+                <ConnectionSettingsModal onClose={isConnectionSettingsOpen.toggle} />
+            )}
         </Sidebar>
     );
 };
diff --git a/src/games/storywriter/components/settings-modal.tsx b/src/games/storywriter/components/settings-modal.tsx
index c27e484..2912141 100644
--- a/src/games/storywriter/components/settings-modal.tsx
+++ b/src/games/storywriter/components/settings-modal.tsx
@@ -1,99 +1,61 @@
-import { useMemo, useRef } from "preact/hooks";
+import clsx from "clsx";
+import { useMemo, useState } from "preact/hooks";
 
-import { useQuery } from "@common/hooks/useAsyncState";
 import { useInputState } from "@common/hooks/useInputState";
-import { useUpdate } from "@common/hooks/useUpdate";
 
 import { useAppState } from "../contexts/state";
-import LLM from "../utils/llm";
 import styles from "../assets/settings-modal.module.css";
 import { X } from "lucide-preact";
+import { useInputCallback } from "@common/hooks/useInputCallback";
 
 interface Props {
     onClose: () => void;
 }
 
+type Tab = "banned-tokens" | "system-instruction";
+
 export const SettingsModal = ({ onClose }: Props) => {
-    const { connection, model, dispatch } = useAppState();
-    const [url, setUrl] = useInputState(connection?.url ?? "");
-    const [apiKey, setApiKey] = useInputState(connection?.apiKey ?? "");
-    const [selectedModel, setSelectedModel] = useInputState(model?.id ?? "");
-    const [update, triggerFetch] = useUpdate();
+    const { bannedTokens, systemInstruction, dispatch } = useAppState();
+    const [inputValue, setInputValue] = useInputState();
+    const [activeTab, setActiveTab] = useState<Tab>("banned-tokens");
 
-    const urlRef = useRef(url);
-    const apiKeyRef = useRef(apiKey);
-
-    urlRef.current = url;
-    apiKeyRef.current = apiKey;
-
-    const connectionToFetch = useMemo<LLM.Connection | null>(() => {
-        const currentUrl = urlRef.current;
-        const currentApiKey = apiKeyRef.current;
-        if (!currentUrl || !currentApiKey) return null;
-        return { url: currentUrl, apiKey: currentApiKey };
-    }, [update]);
-
-    const fetchModels = useMemo(() => async (conn: LLM.Connection | null) => {
-        if (!conn) return [];
-        const r = await LLM.getModels(conn);
-        return r.data;
+    // Save system instruction on every change
+    const setInstructionValue = useInputCallback((instructionValue) => {
+        dispatch({
+            type: "SET_SYSTEM_INSTRUCTION",
+            systemInstruction: instructionValue,
+        });
     }, []);
 
-    const modelsData = useQuery(fetchModels, connectionToFetch);
-
-    const isLoadingModels = connectionToFetch != null && modelsData == undefined;
-    const groupedModels = useMemo(() => {
-        const sorted = (modelsData ?? []).sort((a, b) => {
-            const aWeight = Number(a.support_tools) * 2 + Number(a.support_thinking);
-            const bWeight = Number(b.support_tools) * 2 + Number(b.support_thinking);
-            if (aWeight !== bWeight) {
-                return bWeight - aWeight;
-            }
-
-            const aContext = a.max_context ?? 0;
-            const bContext = b.max_context ?? 0;
-            if (aContext !== bContext) {
-                return bContext - aContext;
-            }
-
-            return a.id.localeCompare(b.id);
-        });
-
-        // Group by context size
-        const groups = Map.groupBy(sorted, m => m.max_context ?? 0);
-
-        // Convert to array sorted by context size (bigger first)
-        return Array.from(groups.entries())
-            .sort((a, b) => b[0] - a[0])
-            .map(([context, models]) => ({ context, models }));
-    }, [modelsData]);
-
-    const handleBlur = () => {
-        if (url && apiKey) {
-            triggerFetch();
+    const handleAdd = () => {
+        const trimmed = inputValue.trim();
+        if (trimmed && !bannedTokens.includes(trimmed)) {
+            dispatch({
+                type: "SET_BANNED_TOKENS",
+                tokens: [...bannedTokens, trimmed],
+            });
+            setInputValue("");
         }
     };
 
+    const handleRemove = (token: string) => {
+        dispatch({
+            type: "SET_BANNED_TOKENS",
+            tokens: bannedTokens.filter((t) => t !== token),
+        });
+    };
+
     const handleKeyDown = (e: KeyboardEvent) => {
-        if (e.key === 'Enter' && url && apiKey) {
-            triggerFetch();
+        if (e.key === "Enter") {
+            handleAdd();
+        } else if (e.key === "Escape") {
+            onClose();
         }
     };
 
-    const handleConfirm = () => {
-        dispatch({
-            type: 'SET_CONNECTION',
-            connection: connectionToFetch,
-        });
-        const selectedModelInfo = modelsData?.find(m => m.id === selectedModel) ?? null;
-        dispatch({
-            type: 'SET_MODEL',
-            model: selectedModelInfo,
-        });
-        onClose();
-    };
-
-    const connectionToTest = url && apiKey ? { url, apiKey } : null;
+    const sortedTokens = [...bannedTokens].sort((a, b) =>
+        a.trim().toLowerCase().localeCompare(b.trim().toLowerCase())
+    );
 
     return (
         <div class={styles.overlay} onClick={onClose}>
@@ -104,79 +66,76 @@ export const SettingsModal = ({ onClose }: Props) => {
                         <X size={20} />
                     </button>
                 </div>
+                <div class={styles.tabs}>
+                    <button
+                        class={clsx(styles.tab, activeTab === "banned-tokens" && styles.active)}
+                        onClick={() => setActiveTab("banned-tokens")}
+                    >
+                        Banned Tokens
+                    </button>
+                    <button
+                        class={clsx(styles.tab, activeTab === "system-instruction" && styles.active)}
+                        onClick={() => setActiveTab("system-instruction")}
+                    >
+                        System Instruction
+                    </button>
+                </div>
                 <div class={styles.content}>
-                    <div class={styles.form} autocomplete="off">
-                        <div class={styles.formGroup}>
-                            <label class={styles.label}>
-                                API URL
-                            </label>
-                            <input
-                                type="text"
-                                value={url}
-                                onInput={setUrl}
-                                onBlur={handleBlur}
-                                onKeyDown={handleKeyDown}
-                                placeholder="http://localhost:1234"
-                                class={styles.input}
-                                autocomplete="off"
-                                name="api-url-random"
-                            />
-                        </div>
-                        <div class={styles.formGroup}>
-                            <label class={styles.label}>
-                                API Key
-                            </label>
-                            <input
-                                type="password"
-                                value={apiKey}
-                                onInput={setApiKey}
-                                onBlur={handleBlur}
-                                onKeyDown={handleKeyDown}
-                                placeholder="your-api-key"
-                                class={styles.input}
-                                autocomplete="new-password"
-                                name="api-key-random"
-                            />
-                        </div>
-                        <div class={styles.formGroup}>
-                            <label class={styles.label}>
-                                Model
-                            </label>
-                            {connectionToTest ? (
-                                isLoadingModels ? (
-                                    <p>Loading models...</p>
-                                ) : groupedModels.length > 0 ? (
-                                    <select
-                                        value={selectedModel}
-                                        onChange={setSelectedModel}
-                                        class={styles.select}
-                                    >
-                                        <option value="">Select a model</option>
-                                        {groupedModels.map(({ context, models }) => (
-                                            <optgroup key={context} label={`${context} context`}>
-                                                {models.map(m => (
-                                                    <option key={m.id} value={m.id}>
-                                                        {m.support_tools ? '🔨' : ''}{m.support_thinking ? '🧠' : ''}{m.id} {m.max_length ? `(len: ${m.max_length})` : ''}
-                                                    </option>
-                                                ))}
-                                            </optgroup>
-                                        ))}
-                                    </select>
+                    {activeTab === "banned-tokens" ? (
+                        <>
+                            <div class={styles.inputRow}>
+                                <input
+                                    type="text"
+                                    value={inputValue}
+                                    onInput={setInputValue}
+                                    onKeyDown={handleKeyDown}
+                                    placeholder="Token to ban"
+                                    class={styles.input}
+                                    autoFocus
+                                />
+                                <button onClick={handleAdd} class={clsx(styles.button, styles.buttonPrimary)}>
+                                    Add
+                                </button>
+                            </div>
+                            <div class={styles.divider} />
+                            <div class={styles.tokenList}>
+                                {sortedTokens.length === 0 ? (
+                                    <p class={styles.emptyText}>No banned tokens</p>
                                 ) : (
-                                    <p>No models available</p>
-                                )
-                            ) : (
-                                <p>Enter connection details to load models</p>
-                            )}
+                                    sortedTokens.map((token) => (
+                                        <div key={token} class={styles.tokenItem}>
+                                            <span>{token}</span>
+                                            <button
+                                                onClick={() => handleRemove(token)}
+                                                class={styles.tokenRemoveButton}
+                                            >
+                                                <X size={12} />
+                                            </button>
+                                        </div>
+                                    ))
+                                )}
+                            </div>
+                        </>
+                    ) : (
+                        <div class={styles.form}>
+                            <div class={styles.formGroup}>
+                                <label class={styles.label}>
+                                    System Instruction
+                                </label>
+                                <textarea
+                                    value={systemInstruction}
+                                    onInput={setInstructionValue}
+                                    placeholder="Enter system instruction for the AI assistant..."
+                                    class={clsx(styles.input, styles.textarea)}
+                                    rows={10}
+                                />
+                            </div>
                         </div>
-                    </div>
+                    )}
                 </div>
                 <div class={styles.footer}>
-                    <button onClick={onClose} class={`${styles.button} ${styles.buttonSecondary}`}>
-                        Cancel
-                    </button>
-                    <button onClick={handleConfirm} class={`${styles.button} ${styles.buttonPrimary}`}>
-                        Confirm
+                    <button onClick={onClose} class={clsx(styles.button, styles.buttonSecondary)}>
+                        Done
                     </button>
                 </div>
             </div>
diff --git a/src/games/storywriter/utils/prompt.ts b/src/games/storywriter/utils/prompt.ts
index c23fa9d..613d091 100644
--- a/src/games/storywriter/utils/prompt.ts
+++ b/src/games/storywriter/utils/prompt.ts
@@ -67,6 +67,10 @@ namespace Prompt {
 
         parts.push(`# ${currentStory.title}`);
 
+        if (currentStory.lore) {
+            parts.push('## Lore\n' + currentStory.lore);
+        }
+
         const charactersSection = formatCharactersMarkdown(state);
         if (charactersSection) {
             parts.push(charactersSection);