diff --git a/src/pipecat/adapters/schemas/tools_schema.py b/src/pipecat/adapters/schemas/tools_schema.py
index 298cef56d..c15b7cad1 100644
--- a/src/pipecat/adapters/schemas/tools_schema.py
+++ b/src/pipecat/adapters/schemas/tools_schema.py
@@ -10,6 +10,7 @@ This module provides schemas for managing both standardized function tools
 and custom adapter-specific tools in the Pipecat framework.
 """
 
+from dataclasses import dataclass, field
 from enum import Enum
 from typing import Any, Dict, List, Optional
 
@@ -17,6 +18,53 @@ from pipecat.adapters.schemas.direct_function import DirectFunction, DirectFunct
 from pipecat.adapters.schemas.function_schema import FunctionSchema
 
 
+@dataclass
+class ToolsSchemaDiff:
+    """Represents the differences between two ToolsSchema instances.
+
+    Parameters:
+        standard_tools_added: Names of newly added standard tools.
+        standard_tools_removed: Names of removed standard tools.
+        standard_tools_modified: True if any existing standard tool's definition changed.
+        custom_tools_changed: True if the custom_tools dictionary differs.
+    """
+
+    standard_tools_added: List[str] = field(default_factory=list)
+    standard_tools_removed: List[str] = field(default_factory=list)
+    standard_tools_modified: bool = False
+    custom_tools_changed: bool = False
+
+    def has_changes(self) -> bool:
+        """Check if there are any differences.
+
+        Returns:
+            True if any field indicates a change, False otherwise.
+        """
+        return bool(
+            self.standard_tools_added
+            or self.standard_tools_removed
+            or self.standard_tools_modified
+            or self.custom_tools_changed
+        )
+
+    def change_description(self) -> str:
+        """Generate a human-readable description of the differences.
+
+        Returns:
+            A string summarizing the changes.
+        """
+        changes = []
+        if self.standard_tools_added:
+            changes.append(f"Added standard tools: {', '.join(self.standard_tools_added)}")
+        if self.standard_tools_removed:
+            changes.append(f"Removed standard tools: {', '.join(self.standard_tools_removed)}")
+        if self.standard_tools_modified:
+            changes.append("Modified definitions of existing standard tools")
+        if self.custom_tools_changed:
+            changes.append("Custom tools changed")
+        return "; ".join(changes) if changes else "No changes"
+
+
 class AdapterType(Enum):
     """Supported adapter types for custom tools.
 
@@ -92,3 +140,44 @@ class ToolsSchema:
             value: Dictionary mapping adapter types to their custom tool definitions.
         """
         self._custom_tools = value
+
+    def diff(self, other: "ToolsSchema") -> ToolsSchemaDiff:
+        """Compare this ToolsSchema to another and return the differences.
+
+        Args:
+            other: The ToolsSchema to compare against (the "after" state).
+
+        Returns:
+            ToolsSchemaDiff containing the differences between self and other.
+        """
+        result = ToolsSchemaDiff()
+
+        # Build maps of tool name -> FunctionSchema for comparison
+        self_tools_by_name: Dict[str, FunctionSchema] = {
+            tool.name: tool for tool in self._standard_tools
+        }
+        other_tools_by_name: Dict[str, FunctionSchema] = {
+            tool.name: tool for tool in other._standard_tools
+        }
+
+        self_names = set(self_tools_by_name.keys())
+        other_names = set(other_tools_by_name.keys())
+
+        # Find added and removed tools
+        result.standard_tools_added = sorted(other_names - self_names)
+        result.standard_tools_removed = sorted(self_names - other_names)
+
+        # Check for modified tools (same name, different definition)
+        common_names = self_names & other_names
+        for name in common_names:
+            self_tool = self_tools_by_name[name]
+            other_tool = other_tools_by_name[name]
+            # Compare using to_default_dict() for full schema comparison
+            if self_tool.to_default_dict() != other_tool.to_default_dict():
+                result.standard_tools_modified = True
+                break
+
+        # Compare custom tools
+        result.custom_tools_changed = self._custom_tools != other._custom_tools
+
+        return result
diff --git a/src/pipecat/processors/aggregators/llm_context.py b/src/pipecat/processors/aggregators/llm_context.py
index 4b0e95aa7..f3070104d 100644
--- a/src/pipecat/processors/aggregators/llm_context.py
+++ b/src/pipecat/processors/aggregators/llm_context.py
@@ -18,8 +18,8 @@ import asyncio
 import base64
 import io
 import wave
-from dataclasses import dataclass
-from typing import TYPE_CHECKING, Any, List, Optional, TypeAlias, Union
+from dataclasses import dataclass, field
+from typing import TYPE_CHECKING, Any, Dict, List, Optional, TypeAlias, Union
 
 from loguru import logger
 from openai._types import NOT_GIVEN as OPEN_AI_NOT_GIVEN
@@ -30,7 +30,7 @@ from openai.types.chat import (
 )
 from PIL import Image
 
-from pipecat.adapters.schemas.tools_schema import AdapterType, ToolsSchema
+from pipecat.adapters.schemas.tools_schema import AdapterType, ToolsSchema, ToolsSchemaDiff
 from pipecat.frames.frames import AudioRawFrame
 
 if TYPE_CHECKING:
@@ -47,6 +47,58 @@ NOT_GIVEN = OPEN_AI_NOT_GIVEN
 NotGiven = OpenAINotGiven
 
 
+@dataclass
+class LLMContextDiff:
+    """Represents the differences between two LLMContext instances.
+
+    Parameters:
+        messages_appended: New messages appended at the end. Empty if history_edited is True.
+        history_edited: True if earlier messages were changed, inserted, or removed.
+        tool_calls_resolved: List of tool_call_ids that changed from "IN_PROGRESS" to a result.
+        tools_diff: Differences in tools configuration, or None if unchanged or both NOT_GIVEN.
+        tool_choice_changed: True if the tool_choice setting differs.
+    """
+
+    messages_appended: List["LLMContextMessage"] = field(default_factory=list)
+    history_edited: bool = False
+    tool_calls_resolved: List[str] = field(default_factory=list)
+    tools_diff: ToolsSchemaDiff = field(default_factory=ToolsSchemaDiff)
+    tool_choice_changed: bool = False
+
+    def has_changes(self) -> bool:
+        """Check if there are any differences.
+
+        Returns:
+            True if any field indicates a change, False otherwise.
+        """
+        return bool(
+            self.messages_appended
+            or self.history_edited
+            or self.tool_calls_resolved
+            or self.tools_diff.has_changes()
+            or self.tool_choice_changed
+        )
+
+    def change_description(self) -> str:
+        """Get a human-readable description of the changes.
+
+        Returns:
+            A string summarizing the changes.
+        """
+        changes = []
+        if self.history_edited:
+            changes.append("history edited")
+        if self.messages_appended:
+            changes.append(f"{len(self.messages_appended)} messages appended")
+        if self.tool_calls_resolved:
+            changes.append(f"{len(self.tool_calls_resolved)} tool calls resolved")
+        if self.tools_diff.has_changes():
+            changes.append(f"tools changed: ({self.tools_diff.change_description()})")
+        if self.tool_choice_changed:
+            changes.append("tool choice changed")
+        return ", ".join(changes) if changes else "no changes"
+
+
 @dataclass
 class LLMSpecificMessage:
     """A container for a context message that is specific to a particular LLM service.
@@ -410,3 +462,138 @@ class LLMContext:
             raise TypeError(
                 f"In LLMContext, tools must be a ToolsSchema object or NOT_GIVEN. Got type: {type(tools)}",
             )
+
+    def diff(self, other: "LLMContext") -> LLMContextDiff:
+        """Compare this context to another and return the differences.
+
+        Compares self (the "before" state) to other (the "after" state) and
+        identifies what has changed.
+
+        Args:
+            other: The LLMContext to compare against (the "after" state).
+
+        Returns:
+            ContextDiff containing the differences between self and other.
+        """
+        result = LLMContextDiff()
+
+        # Compare messages
+        self_messages = self._messages
+        other_messages = other._messages
+        self_len = len(self_messages)
+        other_len = len(other_messages)
+
+        # Check if history was edited (messages removed, modified, or inserted in the middle)
+        if other_len < self_len:
+            # Messages were removed
+            result.history_edited = True
+        else:
+            # Check if the prefix matches (first self_len messages should be identical)
+            for i in range(self_len):
+                if not self._messages_equal(self_messages[i], other_messages[i]):
+                    result.history_edited = True
+                    break
+
+        # If history wasn't edited, capture appended messages
+        if not result.history_edited and other_len > self_len:
+            result.messages_appended = other_messages[self_len:]
+
+        # Find resolved tool calls (IN_PROGRESS -> something else)
+        result.tool_calls_resolved = self._find_resolved_tool_calls(other)
+
+        # Compare tools
+        result.tools_diff = self._compute_tools_diff(other)
+
+        # Compare tool_choice
+        # print("[pk] comparing tool choices: ", self._tool_choice, other._tool_choice, type(self._tool_choice), type(other._tool_choice), self._tool_choice == other._tool_choice, self._tool_choice != other._tool_choice)
+        # (For some reason if they're both NOT_GIVEN, equality check returns False?)
+        if not self._tool_choice and not other._tool_choice:
+            result.tool_choice_changed = False
+        else:
+            result.tool_choice_changed = self._tool_choice != other._tool_choice
+
+        return result
+
+    def _messages_equal(self, msg1: LLMContextMessage, msg2: LLMContextMessage) -> bool:
+        """Compare two messages for equality.
+
+        Args:
+            msg1: First message to compare.
+            msg2: Second message to compare.
+
+        Returns:
+            True if the messages are equal, False otherwise.
+        """
+        # Handle LLMSpecificMessage
+        if isinstance(msg1, LLMSpecificMessage) and isinstance(msg2, LLMSpecificMessage):
+            return msg1.llm == msg2.llm and msg1.message == msg2.message
+        elif isinstance(msg1, LLMSpecificMessage) or isinstance(msg2, LLMSpecificMessage):
+            return False
+
+        # Both are standard messages (dicts)
+        return msg1 == msg2
+
+    def _find_resolved_tool_calls(self, other: "LLMContext") -> List[str]:
+        """Find tool calls that changed from IN_PROGRESS to a resolved state.
+
+        Args:
+            other: The context to compare against (the "after" state).
+
+        Returns:
+            List of tool_call_ids that were resolved.
+        """
+        resolved: List[str] = []
+
+        # Build a map of tool_call_id -> content for "other" context
+        other_tool_contents: Dict[str, Any] = {}
+        for msg in other._messages:
+            if isinstance(msg, dict) and msg.get("role") == "tool":
+                tool_call_id = msg.get("tool_call_id")
+                if tool_call_id:
+                    other_tool_contents[tool_call_id] = msg.get("content")
+
+        # Find tool messages in self that are IN_PROGRESS but resolved in other
+        for msg in self._messages:
+            if isinstance(msg, dict) and msg.get("role") == "tool":
+                if msg.get("content") == "IN_PROGRESS":
+                    tool_call_id = msg.get("tool_call_id")
+                    if tool_call_id and tool_call_id in other_tool_contents:
+                        other_content = other_tool_contents[tool_call_id]
+                        if other_content != "IN_PROGRESS":
+                            resolved.append(tool_call_id)
+
+        return resolved
+
+    def _compute_tools_diff(self, other: "LLMContext") -> ToolsSchemaDiff:
+        """Compute the difference in tools between self and other.
+
+        Args:
+            other: The context to compare against (the "after" state).
+
+        Returns:
+            ToolsSchemaDiff if there are changes, None if both are NOT_GIVEN or identical.
+        """
+        self_has_tools = isinstance(self._tools, ToolsSchema)
+        other_has_tools = isinstance(other._tools, ToolsSchema)
+
+        if not self_has_tools and not other_has_tools:
+            # Both are NOT_GIVEN
+            return ToolsSchemaDiff()
+
+        if self_has_tools and other_has_tools:
+            # Both have tools - use ToolsSchema.diff()
+            diff = self._tools.diff(other._tools)
+            return diff
+
+        if not self_has_tools and other_has_tools:
+            # Tools were added (self is NOT_GIVEN, other has tools)
+            return ToolsSchemaDiff(
+                standard_tools_added=[tool.name for tool in other._tools.standard_tools],
+                custom_tools_changed=other._tools.custom_tools is not None,
+            )
+
+        # Tools were removed (self has tools, other is NOT_GIVEN)
+        return ToolsSchemaDiff(
+            standard_tools_removed=[tool.name for tool in self._tools.standard_tools],
+            custom_tools_changed=self._tools.custom_tools is not None,
+        )
diff --git a/src/pipecat/services/google/gemini_live/llm.py b/src/pipecat/services/google/gemini_live/llm.py
index 895489955..bae6437c4 100644
--- a/src/pipecat/services/google/gemini_live/llm.py
+++ b/src/pipecat/services/google/gemini_live/llm.py
@@ -13,6 +13,7 @@ voice transcription, streaming responses, and tool usage.
 
 import asyncio
 import base64
+import copy
 import io
 import time
 import uuid
@@ -59,7 +60,7 @@ from pipecat.frames.frames import (
     UserStoppedSpeakingFrame,
 )
 from pipecat.metrics.metrics import LLMTokenUsage
-from pipecat.processors.aggregators.llm_context import LLMContext
+from pipecat.processors.aggregators.llm_context import NOT_GIVEN, LLMContext, LLMContextDiff
 from pipecat.processors.aggregators.llm_response import (
     LLMAssistantAggregatorParams,
     LLMUserAggregatorParams,
@@ -684,6 +685,7 @@ class GeminiLiveLLMService(LLMService):
         self._audio_input_paused = start_audio_paused
         self._video_input_paused = start_video_paused
         self._context = None
+        self._context_snapshot = None
         self._api_key = api_key
         self._http_options = update_google_client_http_options(http_options)
         self._session: AsyncSession = None
@@ -826,6 +828,9 @@ class GeminiLiveLLMService(LLMService):
             logger.error("Context already set. Can only set up Gemini Live context once.")
             return
         self._context = GeminiLiveContext.upgrade(context)
+        self._context_snapshot = copy.deepcopy(
+            self._context
+        )  # Take a static snapshot guaranteed not to change
         await self._create_initial_response()
 
     #
@@ -950,7 +955,13 @@ class GeminiLiveLLMService(LLMService):
         elif isinstance(frame, LLMUpdateSettingsFrame):
             await self._update_settings(frame.settings)
         elif isinstance(frame, LLMSetToolsFrame):
-            await self._update_settings()
+            # TODO: you are here - setting tools doesn't work yet (requires reconnection)
+            # Do we have reference to previous tools to compare?
+            # New tools should already have been set on the context by the user aggregator.
+            # LLMSetToolsFrame without a user aggregator is not supported.
+            # If tools have changed, update context snapshot.
+            # await self._update_settings()
+            pass
         else:
             await self.push_frame(frame, direction)
 
@@ -958,6 +969,9 @@ class GeminiLiveLLMService(LLMService):
         if not self._context:
             # We got our initial context
             self._context = context
+            self._context_snapshot = copy.deepcopy(
+                context
+            )  # Take a static snapshot guaranteed not to change
 
             # If context contains system instruction or tools, reconnect in
             # order to apply them.
@@ -1011,17 +1025,54 @@ class GeminiLiveLLMService(LLMService):
             # We got an updated context.
             self._context = context
 
-            # Here we assume that the updated context will contain either:
-            # - new messages (that the Gemini Live service, with its own
-            #   context management, is already aware of), or
-            # - tool call results (that we need to tell the remote service
-            #   about).
-            # (In the future, we could do more sophisticated diffing here,
-            # which would enable the user to programmatically manipulate the
-            # context).
+            diff = self._context_snapshot.diff(self._context)
+            self._context_snapshot = copy.deepcopy(
+                context
+            )  # Take a static snapshot guaranteed not to change
 
-            # Send results for newly-completed function calls, if any.
-            await self._process_completed_function_calls(send_new_results=True)
+            if self._context_update_requires_reconnect(diff):
+                # Reconnect
+                print("[pk] Context update requires reconnect. Reconnecting...")
+                # TODO: necessary?
+                self._session_resumption_handle = None
+                # TODO: do something special here to handle the context like it's the initial one again?
+                await self._reconnect()
+                await self._create_initial_response()
+            else:
+                # Send results for newly-completed function calls, if any.
+                print(
+                    "[pk] Context update does not require reconnect. Sending any newly-completed function call results..."
+                )
+                await self._process_completed_function_calls(send_new_results=True)
+
+    def _context_update_requires_reconnect(self, diff: LLMContextDiff) -> bool:
+        """Check if an update to our LLM context requires reconnection.
+
+        Args:
+            diff: The context diff representing the update
+        Returns:
+            True if reconnection is required, False otherwise.
+        """
+        # During the course of a "normal" conversation with no external context
+        # manipulation (like adding tools, changing system instructions,
+        # rewriting history), context updates will contain either:
+        # - new messages (that the Gemini Live service, with its own internal
+        #   context management, is already aware of), or
+        # - tool call results (that we need to tell the remote service
+        #   about).
+        # Any other changes to the context require reconnection.
+        # TODO: the below
+        # Note that it's possible that the developer is trying to
+        # programmatically append messages, in which case we'd miss that
+        # update...maybe we can check the number of appended messages...
+        if diff.history_edited or diff.tools_diff.has_changes() or diff.tool_choice_changed:
+            if diff.history_edited:
+                print("[pk] Context diff: history edited.")
+            if diff.tools_diff.has_changes():
+                print("[pk] Context diff: tools changed.")
+            if diff.tool_choice_changed:
+                print("[pk] Context diff: tool choice changed.")
+            return True
 
     async def _process_completed_function_calls(self, send_new_results: bool):
         # Check for set of completed function calls in the context
@@ -1446,6 +1497,7 @@ class GeminiLiveLLMService(LLMService):
 
     @traced_gemini_live(operation="llm_setup")
     async def _handle_session_ready(self, session: AsyncSession):
+        print("[pk] Handling session ready...")
         """Handle the session being ready."""
         self._session = session
         # If we were just waititng for the session to be ready to run the LLM,
diff --git a/tests/test_context_aggregators.py b/tests/test_context_aggregators.py
index 17a24113e..fb153932b 100644
--- a/tests/test_context_aggregators.py
+++ b/tests/test_context_aggregators.py
@@ -1055,3 +1055,285 @@ class TestLLMAssistantAggregator(
             0,
             "Hello Pipecat. Here's some code: ```python\nprint('Hello, World!')\n``` ```javascript\nconsole.log('Hello, World!');\n``` And some more: ```html\n<div>Hello, World!</div>\n``` Hope that helps!",
         )
+
+
+class TestLLMContextDiff(unittest.TestCase):
+    """Tests for the LLMContext.diff() method."""
+
+    def test_diff_identical_contexts(self):
+        """Test diff of two identical contexts returns no changes."""
+        messages = [{"role": "user", "content": "Hello"}]
+        context1 = LLMContext(messages=messages.copy())
+        context2 = LLMContext(messages=messages.copy())
+
+        diff = context1.diff(context2)
+        self.assertFalse(diff.has_changes())
+        self.assertEqual(diff.messages_appended, [])
+        self.assertFalse(diff.history_edited)
+        self.assertEqual(diff.tool_calls_resolved, [])
+        self.assertFalse(diff.tools_diff.has_changes())
+        self.assertFalse(diff.tool_choice_changed)
+
+    def test_diff_messages_appended(self):
+        """Test diff detects appended messages."""
+        msg1 = {"role": "user", "content": "Hello"}
+        msg2 = {"role": "assistant", "content": "Hi there!"}
+
+        context1 = LLMContext(messages=[msg1])
+        context2 = LLMContext(messages=[msg1, msg2])
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(len(diff.messages_appended), 1)
+        self.assertEqual(diff.messages_appended[0], msg2)
+        self.assertFalse(diff.history_edited)
+
+    def test_diff_multiple_messages_appended(self):
+        """Test diff detects multiple appended messages."""
+        msg1 = {"role": "user", "content": "Hello"}
+        msg2 = {"role": "assistant", "content": "Hi!"}
+        msg3 = {"role": "user", "content": "How are you?"}
+
+        context1 = LLMContext(messages=[msg1])
+        context2 = LLMContext(messages=[msg1, msg2, msg3])
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(len(diff.messages_appended), 2)
+        self.assertEqual(diff.messages_appended[0], msg2)
+        self.assertEqual(diff.messages_appended[1], msg3)
+        self.assertFalse(diff.history_edited)
+
+    def test_diff_message_removed(self):
+        """Test diff detects message removal as history edit."""
+        msg1 = {"role": "user", "content": "Hello"}
+        msg2 = {"role": "assistant", "content": "Hi!"}
+
+        context1 = LLMContext(messages=[msg1, msg2])
+        context2 = LLMContext(messages=[msg1])
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(diff.messages_appended, [])  # Empty when history edited
+        self.assertTrue(diff.history_edited)
+
+    def test_diff_message_modified(self):
+        """Test diff detects message modification as history edit."""
+        msg1 = {"role": "user", "content": "Hello"}
+        msg2_v1 = {"role": "assistant", "content": "Hi!"}
+        msg2_v2 = {"role": "assistant", "content": "Hello there!"}
+
+        context1 = LLMContext(messages=[msg1, msg2_v1])
+        context2 = LLMContext(messages=[msg1, msg2_v2])
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertTrue(diff.history_edited)
+        self.assertEqual(diff.messages_appended, [])
+
+    def test_diff_message_inserted_in_middle(self):
+        """Test diff detects message insertion in middle as history edit."""
+        msg1 = {"role": "user", "content": "Hello"}
+        msg2 = {"role": "assistant", "content": "Hi!"}
+        msg_inserted = {"role": "system", "content": "System message"}
+
+        context1 = LLMContext(messages=[msg1, msg2])
+        context2 = LLMContext(messages=[msg1, msg_inserted, msg2])
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertTrue(diff.history_edited)
+        self.assertEqual(diff.messages_appended, [])
+
+    def test_diff_tool_call_resolved_to_result(self):
+        """Test diff detects tool call resolution to actual result."""
+        msg1 = {"role": "user", "content": "What's the weather?"}
+        msg2 = {
+            "role": "assistant",
+            "tool_calls": [
+                {"id": "call_123", "function": {"name": "get_weather", "arguments": "{}"}}
+            ],
+        }
+        tool_in_progress = {"role": "tool", "content": "IN_PROGRESS", "tool_call_id": "call_123"}
+        tool_resolved = {
+            "role": "tool",
+            "content": '{"temperature": 72}',
+            "tool_call_id": "call_123",
+        }
+
+        context1 = LLMContext(messages=[msg1, msg2, tool_in_progress])
+        context2 = LLMContext(messages=[msg1, msg2, tool_resolved])
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(diff.tool_calls_resolved, ["call_123"])
+        # Note: the tool message content changed, so history is edited
+        self.assertTrue(diff.history_edited)
+
+    def test_diff_tool_call_resolved_to_completed(self):
+        """Test diff detects tool call resolution to COMPLETED."""
+        msg1 = {"role": "user", "content": "Do something"}
+        tool_in_progress = {"role": "tool", "content": "IN_PROGRESS", "tool_call_id": "call_456"}
+        tool_completed = {"role": "tool", "content": "COMPLETED", "tool_call_id": "call_456"}
+
+        context1 = LLMContext(messages=[msg1, tool_in_progress])
+        context2 = LLMContext(messages=[msg1, tool_completed])
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(diff.tool_calls_resolved, ["call_456"])
+
+    def test_diff_tool_call_resolved_to_cancelled(self):
+        """Test diff detects tool call resolution to CANCELLED."""
+        msg1 = {"role": "user", "content": "Do something"}
+        tool_in_progress = {"role": "tool", "content": "IN_PROGRESS", "tool_call_id": "call_789"}
+        tool_cancelled = {"role": "tool", "content": "CANCELLED", "tool_call_id": "call_789"}
+
+        context1 = LLMContext(messages=[msg1, tool_in_progress])
+        context2 = LLMContext(messages=[msg1, tool_cancelled])
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(diff.tool_calls_resolved, ["call_789"])
+
+    def test_diff_tool_call_still_in_progress(self):
+        """Test diff does not report tool call as resolved if still IN_PROGRESS."""
+        msg1 = {"role": "user", "content": "Do something"}
+        tool_in_progress = {"role": "tool", "content": "IN_PROGRESS", "tool_call_id": "call_123"}
+
+        context1 = LLMContext(messages=[msg1, tool_in_progress])
+        context2 = LLMContext(messages=[msg1, tool_in_progress])
+
+        diff = context1.diff(context2)
+        self.assertFalse(diff.has_changes())
+        self.assertEqual(diff.tool_calls_resolved, [])
+
+    def test_diff_tool_choice_changed(self):
+        """Test diff detects tool_choice changes."""
+        msg1 = {"role": "user", "content": "Hello"}
+
+        context1 = LLMContext(messages=[msg1], tool_choice="auto")
+        context2 = LLMContext(messages=[msg1], tool_choice="none")
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertTrue(diff.tool_choice_changed)
+
+    def test_diff_tool_choice_unchanged(self):
+        """Test diff reports no change when tool_choice is the same."""
+        msg1 = {"role": "user", "content": "Hello"}
+
+        context1 = LLMContext(messages=[msg1], tool_choice="auto")
+        context2 = LLMContext(messages=[msg1], tool_choice="auto")
+
+        diff = context1.diff(context2)
+        self.assertFalse(diff.has_changes())
+        self.assertFalse(diff.tool_choice_changed)
+
+    def test_diff_empty_contexts(self):
+        """Test diff of two empty contexts returns no changes."""
+        context1 = LLMContext()
+        context2 = LLMContext()
+
+        diff = context1.diff(context2)
+        self.assertFalse(diff.has_changes())
+
+
+class TestLLMContextDiffWithTools(unittest.TestCase):
+    """Tests for LLMContext.diff() with tools configuration changes."""
+
+    def _create_tools_schema(self, tool_names: list[str]) -> "ToolsSchema":
+        """Helper to create a ToolsSchema with named tools."""
+        from pipecat.adapters.schemas.function_schema import FunctionSchema
+        from pipecat.adapters.schemas.tools_schema import ToolsSchema
+
+        tools = [
+            FunctionSchema(name=name, description=f"Test {name}", properties={}, required=[])
+            for name in tool_names
+        ]
+        return ToolsSchema(standard_tools=tools)
+
+    def test_diff_tools_added_from_not_given(self):
+        """Test diff detects tools being added when self has no tools."""
+        from pipecat.processors.aggregators.llm_context import NOT_GIVEN
+
+        msg1 = {"role": "user", "content": "Hello"}
+        tools = self._create_tools_schema(["get_weather", "get_time"])
+
+        context1 = LLMContext(messages=[msg1], tools=NOT_GIVEN)
+        context2 = LLMContext(messages=[msg1], tools=tools)
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(sorted(diff.tools_diff.standard_tools_added), ["get_time", "get_weather"])
+        self.assertEqual(diff.tools_diff.standard_tools_removed, [])
+
+    def test_diff_tools_removed_to_not_given(self):
+        """Test diff detects tools being removed when other has no tools."""
+        from pipecat.processors.aggregators.llm_context import NOT_GIVEN
+
+        msg1 = {"role": "user", "content": "Hello"}
+        tools = self._create_tools_schema(["get_weather", "get_time"])
+
+        context1 = LLMContext(messages=[msg1], tools=tools)
+        context2 = LLMContext(messages=[msg1], tools=NOT_GIVEN)
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(diff.tools_diff.standard_tools_added, [])
+        self.assertEqual(
+            sorted(diff.tools_diff.standard_tools_removed), ["get_time", "get_weather"]
+        )
+
+    def test_diff_both_not_given(self):
+        """Test diff returns None tools_diff when both have no tools."""
+        from pipecat.processors.aggregators.llm_context import NOT_GIVEN
+
+        msg1 = {"role": "user", "content": "Hello"}
+
+        context1 = LLMContext(messages=[msg1], tools=NOT_GIVEN)
+        context2 = LLMContext(messages=[msg1], tools=NOT_GIVEN)
+
+        diff = context1.diff(context2)
+        self.assertFalse(diff.has_changes())
+        self.assertFalse(diff.tools_diff.has_changes())
+
+    def test_diff_tools_modified(self):
+        """Test diff detects tool modification via ToolsSchema.diff()."""
+        from pipecat.adapters.schemas.function_schema import FunctionSchema
+        from pipecat.adapters.schemas.tools_schema import ToolsSchema
+
+        msg1 = {"role": "user", "content": "Hello"}
+
+        tool_v1 = FunctionSchema(
+            name="get_weather",
+            description="Get weather v1",
+            properties={"location": {"type": "string"}},
+            required=["location"],
+        )
+        tool_v2 = FunctionSchema(
+            name="get_weather",
+            description="Get weather v2",
+            properties={"city": {"type": "string"}},
+            required=["city"],
+        )
+
+        context1 = LLMContext(messages=[msg1], tools=ToolsSchema(standard_tools=[tool_v1]))
+        context2 = LLMContext(messages=[msg1], tools=ToolsSchema(standard_tools=[tool_v2]))
+
+        diff = context1.diff(context2)
+        self.assertTrue(diff.has_changes())
+        self.assertTrue(diff.tools_diff.standard_tools_modified)
+
+    def test_diff_tools_unchanged(self):
+        """Test diff returns None tools_diff when tools are identical."""
+        msg1 = {"role": "user", "content": "Hello"}
+        tools1 = self._create_tools_schema(["get_weather"])
+        tools2 = self._create_tools_schema(["get_weather"])
+
+        context1 = LLMContext(messages=[msg1], tools=tools1)
+        context2 = LLMContext(messages=[msg1], tools=tools2)
+
+        diff = context1.diff(context2)
+        self.assertFalse(diff.has_changes())
+        self.assertFalse(diff.tools_diff.has_changes())
diff --git a/tests/test_tools_schema.py b/tests/test_tools_schema.py
new file mode 100644
index 000000000..e74c39c6a
--- /dev/null
+++ b/tests/test_tools_schema.py
@@ -0,0 +1,184 @@
+#
+# Copyright (c) 2024-2026, Daily
+#
+# SPDX-License-Identifier: BSD 2-Clause License
+#
+
+import unittest
+
+from pipecat.adapters.schemas.function_schema import FunctionSchema
+from pipecat.adapters.schemas.tools_schema import AdapterType, ToolsSchema, ToolsSchemaDiff
+
+
+class TestToolsSchemaDiff(unittest.TestCase):
+    """Tests for the ToolsSchemaDiff dataclass."""
+
+    def test_has_changes_empty(self):
+        """Test has_changes returns False for empty diff."""
+        diff = ToolsSchemaDiff()
+        self.assertFalse(diff.has_changes())
+
+    def test_has_changes_with_added(self):
+        """Test has_changes returns True when tools are added."""
+        diff = ToolsSchemaDiff(standard_tools_added=["tool1"])
+        self.assertTrue(diff.has_changes())
+
+    def test_has_changes_with_removed(self):
+        """Test has_changes returns True when tools are removed."""
+        diff = ToolsSchemaDiff(standard_tools_removed=["tool1"])
+        self.assertTrue(diff.has_changes())
+
+    def test_has_changes_with_modified(self):
+        """Test has_changes returns True when tools are modified."""
+        diff = ToolsSchemaDiff(standard_tools_modified=True)
+        self.assertTrue(diff.has_changes())
+
+    def test_has_changes_with_custom_changed(self):
+        """Test has_changes returns True when custom tools changed."""
+        diff = ToolsSchemaDiff(custom_tools_changed=True)
+        self.assertTrue(diff.has_changes())
+
+
+class TestToolsSchemaDiffMethod(unittest.TestCase):
+    """Tests for the ToolsSchema.diff() method."""
+
+    def _create_function_schema(
+        self, name: str, description: str = "Test function", properties: dict = None
+    ) -> FunctionSchema:
+        """Helper to create a FunctionSchema."""
+        return FunctionSchema(
+            name=name,
+            description=description,
+            properties=properties or {},
+            required=[],
+        )
+
+    def test_diff_identical_schemas(self):
+        """Test diff of two identical schemas returns no changes."""
+        tool1 = self._create_function_schema("get_weather")
+        schema1 = ToolsSchema(standard_tools=[tool1])
+        schema2 = ToolsSchema(standard_tools=[self._create_function_schema("get_weather")])
+
+        diff = schema1.diff(schema2)
+        self.assertFalse(diff.has_changes())
+        self.assertEqual(diff.standard_tools_added, [])
+        self.assertEqual(diff.standard_tools_removed, [])
+        self.assertFalse(diff.standard_tools_modified)
+        self.assertFalse(diff.custom_tools_changed)
+
+    def test_diff_tool_added(self):
+        """Test diff detects added tools."""
+        tool1 = self._create_function_schema("get_weather")
+        tool2 = self._create_function_schema("get_time")
+
+        schema1 = ToolsSchema(standard_tools=[tool1])
+        schema2 = ToolsSchema(standard_tools=[tool1, tool2])
+
+        diff = schema1.diff(schema2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(diff.standard_tools_added, ["get_time"])
+        self.assertEqual(diff.standard_tools_removed, [])
+        self.assertFalse(diff.standard_tools_modified)
+
+    def test_diff_tool_removed(self):
+        """Test diff detects removed tools."""
+        tool1 = self._create_function_schema("get_weather")
+        tool2 = self._create_function_schema("get_time")
+
+        schema1 = ToolsSchema(standard_tools=[tool1, tool2])
+        schema2 = ToolsSchema(standard_tools=[tool1])
+
+        diff = schema1.diff(schema2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(diff.standard_tools_added, [])
+        self.assertEqual(diff.standard_tools_removed, ["get_time"])
+        self.assertFalse(diff.standard_tools_modified)
+
+    def test_diff_tool_modified(self):
+        """Test diff detects modified tools (same name, different definition)."""
+        tool1_v1 = self._create_function_schema(
+            "get_weather", description="Get weather v1", properties={"location": {"type": "string"}}
+        )
+        tool1_v2 = self._create_function_schema(
+            "get_weather",
+            description="Get weather v2",
+            properties={"city": {"type": "string"}},
+        )
+
+        schema1 = ToolsSchema(standard_tools=[tool1_v1])
+        schema2 = ToolsSchema(standard_tools=[tool1_v2])
+
+        diff = schema1.diff(schema2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(diff.standard_tools_added, [])
+        self.assertEqual(diff.standard_tools_removed, [])
+        self.assertTrue(diff.standard_tools_modified)
+
+    def test_diff_multiple_changes(self):
+        """Test diff with multiple types of changes."""
+        tool_keep = self._create_function_schema("keep_tool")
+        tool_remove = self._create_function_schema("remove_tool")
+        tool_add = self._create_function_schema("add_tool")
+
+        schema1 = ToolsSchema(standard_tools=[tool_keep, tool_remove])
+        schema2 = ToolsSchema(standard_tools=[tool_keep, tool_add])
+
+        diff = schema1.diff(schema2)
+        self.assertTrue(diff.has_changes())
+        self.assertEqual(diff.standard_tools_added, ["add_tool"])
+        self.assertEqual(diff.standard_tools_removed, ["remove_tool"])
+
+    def test_diff_empty_schemas(self):
+        """Test diff of two empty schemas returns no changes."""
+        schema1 = ToolsSchema(standard_tools=[])
+        schema2 = ToolsSchema(standard_tools=[])
+
+        diff = schema1.diff(schema2)
+        self.assertFalse(diff.has_changes())
+
+    def test_diff_custom_tools_changed(self):
+        """Test diff detects custom tools changes."""
+        tool1 = self._create_function_schema("get_weather")
+        custom1 = {AdapterType.GEMINI: [{"name": "search"}]}
+        custom2 = {AdapterType.GEMINI: [{"name": "search_v2"}]}
+
+        schema1 = ToolsSchema(standard_tools=[tool1], custom_tools=custom1)
+        schema2 = ToolsSchema(standard_tools=[tool1], custom_tools=custom2)
+
+        diff = schema1.diff(schema2)
+        self.assertTrue(diff.has_changes())
+        self.assertTrue(diff.custom_tools_changed)
+        # Standard tools unchanged
+        self.assertEqual(diff.standard_tools_added, [])
+        self.assertEqual(diff.standard_tools_removed, [])
+        self.assertFalse(diff.standard_tools_modified)
+
+    def test_diff_custom_tools_added(self):
+        """Test diff detects custom tools being added."""
+        tool1 = self._create_function_schema("get_weather")
+
+        schema1 = ToolsSchema(standard_tools=[tool1])
+        schema2 = ToolsSchema(
+            standard_tools=[tool1], custom_tools={AdapterType.GEMINI: [{"name": "search"}]}
+        )
+
+        diff = schema1.diff(schema2)
+        self.assertTrue(diff.has_changes())
+        self.assertTrue(diff.custom_tools_changed)
+
+    def test_diff_custom_tools_removed(self):
+        """Test diff detects custom tools being removed."""
+        tool1 = self._create_function_schema("get_weather")
+
+        schema1 = ToolsSchema(
+            standard_tools=[tool1], custom_tools={AdapterType.GEMINI: [{"name": "search"}]}
+        )
+        schema2 = ToolsSchema(standard_tools=[tool1])
+
+        diff = schema1.diff(schema2)
+        self.assertTrue(diff.has_changes())
+        self.assertTrue(diff.custom_tools_changed)
+
+
+if __name__ == "__main__":
+    unittest.main()