diff --git a/.github/workflows/release.yml b/.github/workflows/release.yml
new file mode 100644
index 0000000..7451713
--- /dev/null
+++ b/.github/workflows/release.yml
@@ -0,0 +1,115 @@
+name: Release
+
+on:
+  push:
+    tags:
+      - 'v*'  # Triggers on version tags like v1.0.0, v1.2.3, etc.
+
+jobs:
+  release:
+    runs-on: ubuntu-latest
+    
+    steps:
+    - name: Checkout code
+      uses: actions/checkout@v4
+      
+    - name: Setup Node.js
+      uses: actions/setup-node@v4
+      with:
+        node-version: '20.x'
+        cache: 'npm'
+        
+    - name: Extract version from tag
+      id: extract_version
+      run: |
+        TAG_VERSION=${GITHUB_REF#refs/tags/v}
+        echo "tag_version=$TAG_VERSION" >> $GITHUB_OUTPUT
+        echo "Tag version: $TAG_VERSION"
+        
+    - name: Extract version from package.json
+      id: package_version
+      run: |
+        PACKAGE_VERSION=$(node -p "require('./package.json').version")
+        echo "package_version=$PACKAGE_VERSION" >> $GITHUB_OUTPUT
+        echo "Package version: $PACKAGE_VERSION"
+        
+    - name: Compare versions
+      run: |
+        if [ "${{ steps.extract_version.outputs.tag_version }}" != "${{ steps.package_version.outputs.package_version }}" ]; then
+          echo "❌ Version mismatch!"
+          echo "Tag version: ${{ steps.extract_version.outputs.tag_version }}"
+          echo "Package.json version: ${{ steps.package_version.outputs.package_version }}"
+          echo "Please ensure the tag version matches the version in package.json"
+          exit 1
+        fi
+        echo "✅ Version check passed: ${{ steps.extract_version.outputs.tag_version }}"
+        
+    - name: Install dependencies
+      run: npm ci
+      
+    - name: Run linting
+      run: npm run lint
+      
+    - name: Run type checking
+      run: npm run check-types
+      
+    - name: Compile extension
+      run: npm run compile
+      
+    - name: Build production package
+      run: npm run package
+      
+    - name: Compile tests
+      run: npm run compile-tests
+      
+    - name: Run tests
+      uses: coactions/setup-xvfb@v1
+      with:
+        run: npm test
+        options: -screen 0 1024x768x24
+      continue-on-error: false  # Fail the release if tests fail
+      
+    - name: Create VSIX package
+      run: npx vsce package
+      
+    - name: Get VSIX filename
+      id: vsix_filename
+      run: |
+        VSIX_FILE=$(ls *.vsix | head -n 1)
+        echo "vsix_file=$VSIX_FILE" >> $GITHUB_OUTPUT
+        echo "VSIX file: $VSIX_FILE"
+        
+    - name: Generate release notes
+      id: release_notes
+      run: |
+        # Extract the latest changes from CHANGELOG.md if it has been updated
+        # If not, create basic release notes
+        if grep -q "## \[.*\]" CHANGELOG.md; then
+          # Try to extract the latest version section from changelog
+          NOTES=$(sed -n '/## \[.*\]/,/## \[.*\]/p' CHANGELOG.md | head -n -1 | tail -n +2)
+          if [ -n "$NOTES" ]; then
+            echo "notes<<EOF" >> $GITHUB_OUTPUT
+            echo "$NOTES" >> $GITHUB_OUTPUT
+            echo "EOF" >> $GITHUB_OUTPUT
+          else
+            echo "notes=Release ${{ steps.extract_version.outputs.tag_version }}" >> $GITHUB_OUTPUT
+          fi
+        else
+          echo "notes=Release ${{ steps.extract_version.outputs.tag_version }}" >> $GITHUB_OUTPUT
+        fi
+        
+    - name: Create Release
+      env:
+        GITHUB_TOKEN: ${{ secrets.GITHUB_TOKEN }}
+      run: |
+        # Create release with notes and upload VSIX file
+        gh release create ${{ github.ref_name }} \
+          --title "Release ${{ steps.extract_version.outputs.tag_version }}" \
+          --notes "${{ steps.release_notes.outputs.notes }}" \
+          ./${{ steps.vsix_filename.outputs.vsix_file }}
+        
+    - name: Release Summary
+      run: |
+        echo "🎉 Release ${{ steps.extract_version.outputs.tag_version }} created successfully!"
+        echo "📦 VSIX package: ${{ steps.vsix_filename.outputs.vsix_file }}"
+        echo "🔗 Release URL: https://github.com/${{ github.repository }}/releases/tag/${{ github.ref_name }}"
\ No newline at end of file
diff --git a/CHANGELOG.md b/CHANGELOG.md
index 5096b3c..a44b88e 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -6,4 +6,13 @@ Check [Keep a Changelog](http://keepachangelog.com/) for recommendations on how
 
 ## [Unreleased]
 
-- Initial release
\ No newline at end of file
+- Automated VSIX build and release workflow
+
+## [0.0.1] - Initial Release
+
+- Initial release
+- Real-time token tracking with status bar display  
+- Automatic updates every 5 minutes
+- Click to refresh functionality
+- Smart estimation using character-based analysis
+- Detailed view with comprehensive statistics
\ No newline at end of file
diff --git a/README.md b/README.md
index a7e5a12..2a0b159 100644
--- a/README.md
+++ b/README.md
@@ -75,5 +75,27 @@ The project includes comprehensive GitHub Actions workflows:
 
 - **Build Pipeline**: Tests the extension on Ubuntu, Windows, and macOS with Node.js 18.x and 20.x
 - **CI Pipeline**: Includes VS Code extension testing and VSIX package creation
+- **Release Pipeline**: Automated release creation when version tags are pushed
 - All builds must pass linting, type checking, compilation, and packaging steps
 
+### Automated Releases
+
+The project supports automated VSIX builds and releases when version tags are pushed:
+
+1. Update the version in `package.json`
+2. Commit your changes
+3. Create and push a version tag:
+   ```bash
+   git tag v1.0.0
+   git push origin v1.0.0
+   ```
+
+The release workflow will:
+- Verify the tag version matches `package.json` version
+- Run the full build pipeline (lint, type-check, compile, test)
+- Create a VSIX package
+- Create a GitHub release with auto-generated release notes
+- Attach the VSIX file as a release asset
+
+**Note**: The workflow will fail if the tag version doesn't match the version in `package.json`.
+