diff --git a/src/app/editor/[projectId]/FlowchartEditor.tsx b/src/app/editor/[projectId]/FlowchartEditor.tsx
index ee0c8f6..275304c 100644
--- a/src/app/editor/[projectId]/FlowchartEditor.tsx
+++ b/src/app/editor/[projectId]/FlowchartEditor.tsx
@@ -23,6 +23,7 @@ import DialogueNode from '@/components/editor/nodes/DialogueNode'
 import ChoiceNode from '@/components/editor/nodes/ChoiceNode'
 import VariableNode from '@/components/editor/nodes/VariableNode'
 import ProjectSettingsModal from '@/components/editor/ProjectSettingsModal'
+import { EditorProvider } from '@/components/editor/EditorContext'
 import type { FlowchartData, FlowchartNode, FlowchartEdge, Character, Variable } from '@/types/flowchart'
 
 type FlowchartEditorProps = {
@@ -81,6 +82,31 @@ function FlowchartEditorInner({ initialData }: FlowchartEditorProps) {
   const [variables, setVariables] = useState<Variable[]>(initialData.variables)
   const [showSettings, setShowSettings] = useState(false)
 
+  const handleAddCharacter = useCallback(
+    (name: string, color: string): string => {
+      const id = nanoid()
+      const newCharacter: Character = { id, name, color }
+      setCharacters((prev) => [...prev, newCharacter])
+      return id
+    },
+    []
+  )
+
+  const handleAddVariableDefinition = useCallback(
+    (name: string, type: 'numeric' | 'string' | 'boolean', initialValue: number | string | boolean): string => {
+      const id = nanoid()
+      const newVariable: Variable = { id, name, type, initialValue }
+      setVariables((prev) => [...prev, newVariable])
+      return id
+    },
+    []
+  )
+
+  const editorContextValue = useMemo(
+    () => ({ characters, onAddCharacter: handleAddCharacter, variables, onAddVariable: handleAddVariableDefinition }),
+    [characters, handleAddCharacter, variables, handleAddVariableDefinition]
+  )
+
   const getCharacterUsageCount = useCallback(
     (characterId: string) => {
       return nodes.filter((n) => n.type === 'dialogue' && n.data?.characterId === characterId).length
@@ -194,44 +220,46 @@ function FlowchartEditorInner({ initialData }: FlowchartEditorProps) {
   }, [])
 
   return (
-    <div className="flex h-full w-full flex-col">
-      <Toolbar
-        onAddDialogue={handleAddDialogue}
-        onAddChoice={handleAddChoice}
-        onAddVariable={handleAddVariable}
-        onSave={handleSave}
-        onExport={handleExport}
-        onImport={handleImport}
-        onProjectSettings={() => setShowSettings(true)}
-      />
-      <div className="flex-1">
-        <ReactFlow
-          nodes={nodes}
-          edges={edges}
-          nodeTypes={nodeTypes}
-          onNodesChange={onNodesChange}
-          onEdgesChange={onEdgesChange}
-          onEdgesDelete={onEdgesDelete}
-          onConnect={onConnect}
-          deleteKeyCode={['Delete', 'Backspace']}
-          fitView
-        >
-          <Background variant={BackgroundVariant.Dots} gap={16} size={1} />
-          <Controls position="bottom-right" />
-        </ReactFlow>
-      </div>
-      {showSettings && (
-        <ProjectSettingsModal
-          characters={characters}
-          variables={variables}
-          onCharactersChange={setCharacters}
-          onVariablesChange={setVariables}
-          onClose={() => setShowSettings(false)}
-          getCharacterUsageCount={getCharacterUsageCount}
-          getVariableUsageCount={getVariableUsageCount}
+    <EditorProvider value={editorContextValue}>
+      <div className="flex h-full w-full flex-col">
+        <Toolbar
+          onAddDialogue={handleAddDialogue}
+          onAddChoice={handleAddChoice}
+          onAddVariable={handleAddVariable}
+          onSave={handleSave}
+          onExport={handleExport}
+          onImport={handleImport}
+          onProjectSettings={() => setShowSettings(true)}
         />
-      )}
-    </div>
+        <div className="flex-1">
+          <ReactFlow
+            nodes={nodes}
+            edges={edges}
+            nodeTypes={nodeTypes}
+            onNodesChange={onNodesChange}
+            onEdgesChange={onEdgesChange}
+            onEdgesDelete={onEdgesDelete}
+            onConnect={onConnect}
+            deleteKeyCode={['Delete', 'Backspace']}
+            fitView
+          >
+            <Background variant={BackgroundVariant.Dots} gap={16} size={1} />
+            <Controls position="bottom-right" />
+          </ReactFlow>
+        </div>
+        {showSettings && (
+          <ProjectSettingsModal
+            characters={characters}
+            variables={variables}
+            onCharactersChange={setCharacters}
+            onVariablesChange={setVariables}
+            onClose={() => setShowSettings(false)}
+            getCharacterUsageCount={getCharacterUsageCount}
+            getVariableUsageCount={getVariableUsageCount}
+          />
+        )}
+      </div>
+    </EditorProvider>
   )
 }
 
diff --git a/src/components/editor/EditorContext.tsx b/src/components/editor/EditorContext.tsx
new file mode 100644
index 0000000..39a921d
--- /dev/null
+++ b/src/components/editor/EditorContext.tsx
@@ -0,0 +1,24 @@
+'use client'
+
+import { createContext, useContext } from 'react'
+import type { Character, Variable } from '@/types/flowchart'
+
+type EditorContextValue = {
+  characters: Character[]
+  onAddCharacter: (name: string, color: string) => string // returns new character id
+  variables: Variable[]
+  onAddVariable: (name: string, type: 'numeric' | 'string' | 'boolean', initialValue: number | string | boolean) => string // returns new variable id
+}
+
+const EditorContext = createContext<EditorContextValue>({
+  characters: [],
+  onAddCharacter: () => '',
+  variables: [],
+  onAddVariable: () => '',
+})
+
+export const EditorProvider = EditorContext.Provider
+
+export function useEditorContext() {
+  return useContext(EditorContext)
+}
diff --git a/src/components/editor/nodes/VariableNode.tsx b/src/components/editor/nodes/VariableNode.tsx
index ee7ec4b..07fe50d 100644
--- a/src/components/editor/nodes/VariableNode.tsx
+++ b/src/components/editor/nodes/VariableNode.tsx
@@ -1,23 +1,52 @@
 'use client'
 
-import { useCallback, ChangeEvent } from 'react'
+import { useCallback, useMemo, useState, ChangeEvent } from 'react'
 import { Handle, Position, NodeProps, useReactFlow } from 'reactflow'
+import Combobox from '@/components/editor/Combobox'
+import type { ComboboxItem } from '@/components/editor/Combobox'
+import { useEditorContext } from '@/components/editor/EditorContext'
 
 type VariableNodeData = {
   variableName: string
+  variableId?: string
   operation: 'set' | 'add' | 'subtract'
   value: number
 }
 
 export default function VariableNode({ id, data }: NodeProps<VariableNodeData>) {
   const { setNodes } = useReactFlow()
+  const { variables, onAddVariable } = useEditorContext()
 
-  const updateVariableName = useCallback(
-    (e: ChangeEvent<HTMLInputElement>) => {
+  const [showAddForm, setShowAddForm] = useState(false)
+  const [newName, setNewName] = useState('')
+  const [newType, setNewType] = useState<'numeric' | 'string' | 'boolean'>('numeric')
+
+  const variableItems: ComboboxItem[] = useMemo(
+    () =>
+      variables.map((v) => ({
+        id: v.id,
+        label: v.name,
+        badge: v.type,
+      })),
+    [variables]
+  )
+
+  const selectedVariable = useMemo(() => {
+    if (!data.variableId) return undefined
+    return variables.find((v) => v.id === data.variableId)
+  }, [data.variableId, variables])
+
+  const hasInvalidReference = useMemo(() => {
+    if (!data.variableId) return false
+    return !variables.some((v) => v.id === data.variableId)
+  }, [data.variableId, variables])
+
+  const updateNodeData = useCallback(
+    (updates: Partial<VariableNodeData>) => {
       setNodes((nodes) =>
         nodes.map((node) =>
           node.id === id
-            ? { ...node, data: { ...node.data, variableName: e.target.value } }
+            ? { ...node, data: { ...node.data, ...updates } }
             : node
         )
       )
@@ -25,35 +54,69 @@ export default function VariableNode({ id, data }: NodeProps<VariableNodeData>)
     [id, setNodes]
   )
 
+  const handleVariableSelect = useCallback(
+    (variableId: string) => {
+      const variable = variables.find((v) => v.id === variableId)
+      const updates: Partial<VariableNodeData> = {
+        variableId,
+        variableName: variable?.name || '',
+      }
+      // Reset operation to 'set' if current operation is not valid for the variable's type
+      if (variable && variable.type !== 'numeric' && (data.operation === 'add' || data.operation === 'subtract')) {
+        updates.operation = 'set'
+      }
+      updateNodeData(updates)
+    },
+    [variables, data.operation, updateNodeData]
+  )
+
+  const handleAddNew = useCallback(() => {
+    setShowAddForm(true)
+    setNewName('')
+    setNewType('numeric')
+  }, [])
+
+  const handleSubmitNew = useCallback(() => {
+    if (!newName.trim()) return
+    const defaultValue = newType === 'numeric' ? 0 : newType === 'boolean' ? false : ''
+    const newId = onAddVariable(newName.trim(), newType, defaultValue)
+    updateNodeData({
+      variableId: newId,
+      variableName: newName.trim(),
+    })
+    setShowAddForm(false)
+  }, [newName, newType, onAddVariable, updateNodeData])
+
+  const handleCancelNew = useCallback(() => {
+    setShowAddForm(false)
+  }, [])
+
   const updateOperation = useCallback(
     (e: ChangeEvent<HTMLSelectElement>) => {
-      setNodes((nodes) =>
-        nodes.map((node) =>
-          node.id === id
-            ? { ...node, data: { ...node.data, operation: e.target.value as 'set' | 'add' | 'subtract' } }
-            : node
-        )
-      )
+      updateNodeData({ operation: e.target.value as 'set' | 'add' | 'subtract' })
     },
-    [id, setNodes]
+    [updateNodeData]
   )
 
   const updateValue = useCallback(
     (e: ChangeEvent<HTMLInputElement>) => {
       const value = parseFloat(e.target.value) || 0
-      setNodes((nodes) =>
-        nodes.map((node) =>
-          node.id === id
-            ? { ...node, data: { ...node.data, value } }
-            : node
-        )
-      )
+      updateNodeData({ value })
     },
-    [id, setNodes]
+    [updateNodeData]
   )
 
+  // Filter operations based on selected variable type
+  const isNumeric = !selectedVariable || selectedVariable.type === 'numeric'
+
   return (
-    <div className="min-w-[200px] rounded-lg border-2 border-orange-500 bg-orange-50 p-3 shadow-md dark:border-orange-400 dark:bg-orange-950">
+    <div
+      className={`min-w-[200px] rounded-lg border-2 ${
+        hasInvalidReference
+          ? 'border-orange-500 dark:border-orange-400'
+          : 'border-orange-500 dark:border-orange-400'
+      } bg-orange-50 p-3 shadow-md dark:bg-orange-950`}
+    >
       <Handle
         type="target"
         position={Position.Top}
@@ -65,13 +128,68 @@ export default function VariableNode({ id, data }: NodeProps<VariableNodeData>)
         Variable
       </div>
 
-      <input
-        type="text"
-        value={data.variableName || ''}
-        onChange={updateVariableName}
-        placeholder="variableName"
-        className="mb-2 w-full rounded border border-orange-300 bg-white px-2 py-1 text-sm focus:border-orange-500 focus:outline-none focus:ring-1 focus:ring-orange-500 dark:border-orange-600 dark:bg-zinc-800 dark:text-white dark:placeholder-zinc-400"
-      />
+      <div className={`mb-2 ${hasInvalidReference ? 'rounded ring-2 ring-orange-500' : ''}`}>
+        <Combobox
+          items={variableItems}
+          value={data.variableId}
+          onChange={handleVariableSelect}
+          placeholder="Select variable..."
+          onAddNew={handleAddNew}
+        />
+        {hasInvalidReference && (
+          <div className="mt-1 text-xs text-orange-600 dark:text-orange-400">
+            Variable not found
+          </div>
+        )}
+      </div>
+
+      {showAddForm && (
+        <div className="mb-2 rounded border border-orange-300 bg-white p-2 dark:border-orange-600 dark:bg-zinc-800">
+          <div className="mb-1 text-xs font-medium text-zinc-600 dark:text-zinc-300">
+            New variable
+          </div>
+          <div className="flex items-center gap-1.5">
+            <input
+              type="text"
+              value={newName}
+              onChange={(e) => setNewName(e.target.value)}
+              placeholder="Name"
+              className="w-full rounded border border-zinc-300 bg-white px-2 py-0.5 text-sm focus:border-orange-500 focus:outline-none dark:border-zinc-600 dark:bg-zinc-700 dark:text-white dark:placeholder-zinc-400"
+              onKeyDown={(e) => {
+                if (e.key === 'Enter') handleSubmitNew()
+                if (e.key === 'Escape') handleCancelNew()
+              }}
+              autoFocus
+            />
+          </div>
+          <div className="mt-1.5 flex items-center gap-1.5">
+            <select
+              value={newType}
+              onChange={(e) => setNewType(e.target.value as 'numeric' | 'string' | 'boolean')}
+              className="rounded border border-zinc-300 bg-white px-2 py-0.5 text-sm focus:border-orange-500 focus:outline-none dark:border-zinc-600 dark:bg-zinc-700 dark:text-white"
+            >
+              <option value="numeric">numeric</option>
+              <option value="string">string</option>
+              <option value="boolean">boolean</option>
+            </select>
+          </div>
+          <div className="mt-1.5 flex justify-end gap-1">
+            <button
+              onClick={handleCancelNew}
+              className="rounded px-2 py-0.5 text-xs text-zinc-500 hover:bg-zinc-100 dark:text-zinc-400 dark:hover:bg-zinc-700"
+            >
+              Cancel
+            </button>
+            <button
+              onClick={handleSubmitNew}
+              disabled={!newName.trim()}
+              className="rounded bg-orange-600 px-2 py-0.5 text-xs text-white hover:bg-orange-700 disabled:opacity-50"
+            >
+              Add
+            </button>
+          </div>
+        </div>
+      )}
 
       <div className="mb-2 flex gap-2">
         <select
@@ -80,8 +198,8 @@ export default function VariableNode({ id, data }: NodeProps<VariableNodeData>)
           className="flex-1 rounded border border-orange-300 bg-white px-2 py-1 text-sm focus:border-orange-500 focus:outline-none focus:ring-1 focus:ring-orange-500 dark:border-orange-600 dark:bg-zinc-800 dark:text-white"
         >
           <option value="set">set</option>
-          <option value="add">add</option>
-          <option value="subtract">subtract</option>
+          {isNumeric && <option value="add">add</option>}
+          {isNumeric && <option value="subtract">subtract</option>}
         </select>
 
         <input