diff --git a/README.md b/README.md
index 882e076d..6b23bf80 100644
--- a/README.md
+++ b/README.md
@@ -49,6 +49,8 @@ This VS Code extension provides support for creating and editing XML documents,
* [Minify XML](https://github.com/redhat-developer/vscode-xml/blob/main/docs/Commands.md#minify-xml-document)
* [Generate XML from Grammar](https://github.com/redhat-developer/vscode-xml/blob/main/docs/GenerateXMLFromGrammar.md#generate-xml-from-grammar)
* [Generate Schema from XML](https://github.com/redhat-developer/vscode-xml/blob/main/docs/BindingWithGrammar.md#binding-with-new-grammar)
+ * *[Code Lens](https://github.com/redhat-developer/vscode-xml/blob/main/docs/CodeLens.md) when `xml.codeLens.enabled` is enabled*
+ * *[Inlay Hints](https://github.com/redhat-developer/vscode-xml/blob/main/docs/InlayHint.md) when `xml.inlayHint.enabled` is enabled*
See the [changelog](CHANGELOG.md) for the latest release.
@@ -100,6 +102,7 @@ The following settings are supported:
* `xml.autoCloseTags.enabled` : Enable/disable autoclosing of XML tags. Default is `true`.
**IMPORTANT**: The following settings must be turned of for this to work: `editor.autoClosingTags`, `editor.autoClosingBrackets`.
* [`xml.codeLens.enabled`](https://github.com/redhat-developer/vscode-xml/blob/main/docs/CodeLens.md): Enable/disable XML CodeLens. Default is `false`.
+* [`xml.inlayHint.enabled`](https://github.com/redhat-developer/vscode-xml/blob/main/docs/InlayHint.md): Enable/disable XML Inlay Hints (default values, attribute types, element types). Default is `false`.
* [`xml.preferences.showSchemaDocumentationType`](https://github.com/redhat-developer/vscode-xml/blob/main/docs/Preferences.md#documentation-type): Specifies the source of the XML schema documentation displayed on hover and completion. Default is `all`.
* [`xml.validation.enabled`](https://github.com/redhat-developer/vscode-xml/blob/main/docs/Validation.md): Enable/disable all validation. Default is `true`.
* [`xml.validation.namespaces.enabled`](https://github.com/redhat-developer/vscode-xml/blob/main/docs/Validation.md#xmlvalidationsnamespacesenabled): Enable/disable namespaces validation. Default is `always`. Ignored if [`xml.validation.enabled`](https://github.com/redhat-developer/vscode-xml/blob/main/docs/Validation.md) is set to `false`.
diff --git a/docs/InlayHint.md b/docs/InlayHint.md
new file mode 100644
index 00000000..50c46efb
--- /dev/null
+++ b/docs/InlayHint.md
@@ -0,0 +1,123 @@
+
+## Inlay Hint
+
+Inlay hints display grammar-derived information directly in the editor to help you understand the structure of your XML documents without having to look at the schema.
+
+To enable inlay hints, set `xml.inlayHint.enabled` to `true` (default is `false`).
+
+There are three kinds of inlay hints, each controlled by its own setting:
+
+| Setting | Default | Description |
+|---------|---------|-------------|
+| `xml.inlayHint.enabled` | `false` | Enable/disable XML inlay hints |
+| `xml.inlayHint.showDefaultValue` | `true` | Show default attribute values from the grammar |
+| `xml.inlayHint.showAttributeType` | `true` | Show attribute types (e.g., `: xs:integer`) |
+| `xml.inlayHint.showElementType` | `true` | Show element types (e.g., `: xs:boolean`) |
+
+Types equal to `xs:string` are automatically filtered out as they are too common to be informative.
+
+### Default attribute values
+
+When an XML file is bound to a grammar (XSD, DTD) that defines `default` or `fixed` attribute values, inlay hints show these values next to the element's start tag for attributes that are not explicitly set.
+
+For example, given the following XSD (`form.xsd`):
+
+```xml
+
+