Cursor AI Setup Guide: From Install to First Project (2026)

Cursor AI Setup Guide: From Install to First Project (2026)

Cursor is an AI-native code editor built on VS Code that integrates AI assistance directly into your development workflow. It offers inline code completion, multi-file editing, an agent mode that can build entire features, and deep integration with models like Claude Sonnet 4 and GPT-4o.

This guide walks you through everything from installation to building your first project with Cursor's AI features.

Step 1: Download and Install Cursor

macOS

1. Visit cursor.com and click Download for Mac
2. Open the downloaded .dmg file
3. Drag Cursor to your Applications folder
4. Launch Cursor from Applications

# Or install via Homebrew
brew install --cask cursor

Windows

1. Download the .exe installer from cursor.com
2. Run the installer and follow the prompts
3. Cursor will appear in your Start menu

Linux

# Download the AppImage
wget https://download.cursor.com/linux/appImage/x64 -O cursor.AppImage
chmod +x cursor.AppImage
./cursor.AppImage

Step 2: Initial Configuration

When you first launch Cursor, you will go through an onboarding wizard.

Create an Account

1. Click Sign Up or Log In
2. Sign up with your email, Google, or GitHub account
3. You will start on the free Hobby plan (50 fast requests/month)

Import VS Code Settings

If you are coming from VS Code, Cursor can import everything automatically:

1. During onboarding, select Import from VS Code
2. Cursor imports your:
   • Extensions
   • Keybindings
   • Settings (settings.json)
   • Themes
   • Snippets

If you skip this during onboarding, you can do it later:

Cursor > Settings > General > Import VS Code Settings

Configure Your Theme and Font

Cursor supports all VS Code themes. Set your preferred look:

1. Open the Command Palette: Cmd+Shift+P (Mac) or Ctrl+Shift+P (Windows/Linux)
2. Type "Color Theme" and select your preference
3. For font: go to Settings > Text Editor > Font Family

Step 3: Understand Cursor's AI Features

Before building anything, understand the four main AI features:

Feature	Shortcut	What It Does
Cursor Tab	Auto-triggers	Inline code completion as you type
Chat	Cmd+L	Side panel AI chat with codebase context
Inline Edit	Cmd+K	Edit selected code with AI instructions
Agent Mode	Cmd+L > Agent	Autonomous multi-file editing and terminal

Cursor Tab (Autocomplete)

Cursor Tab is the inline autocomplete that suggests code as you type. It goes beyond traditional autocomplete by understanding your entire file and project context.

// Start typing a function and Cursor Tab completes it:
function calculateTax(amount: number, rate: number) {
  // Cursor Tab suggests: return amount * (rate / 100);
}

Cursor Tab activates automatically. Press Tab to accept a suggestion or Esc to dismiss it.

Chat (Cmd+L)

The chat panel lets you have a conversation with Claude or GPT about your code. It automatically includes relevant files as context.

Key chat features:

• @-mentions: Tag specific files, folders, or symbols with @filename
• Codebase search: Cursor indexes your project for semantic search
• Apply button: One-click apply code suggestions to your files
• Agent mode: Toggle for autonomous multi-step task execution

Inline Edit (Cmd+K)

Select code, press Cmd+K, type your instruction, and Cursor rewrites the selection:

1. Select a block of code
2. Press Cmd+K
3. Type: "add error handling and input validation"
4. Press Enter
5. Review the diff and accept or reject

Agent Mode

Agent mode is the most powerful feature. It can:

• Read and write multiple files
• Run terminal commands
• Install packages
• Create entire features end-to-end

Enable it in the chat panel by clicking the Agent toggle.

Step 4: Configure AI Models

Cursor lets you choose which AI models to use for different features.

Go to Settings > Models to configure:

Feature	Recommended Model	Why
Chat	Claude Sonnet 4	Best balance of speed and quality
Agent	Claude Sonnet 4	Excellent at multi-step tasks
Cursor Tab	Default (Cursor-small)	Optimized for speed
Inline Edit	Claude Sonnet 4 or GPT-4o	Fast and accurate

You can also add custom API keys to use your own model access:

1. Go to Settings > Models > API Keys
2. Enter your Anthropic, OpenAI, or other provider key
3. Select custom models from the model dropdown

// Example: Using your own Anthropic API key
{
  "anthropicApiKey": "sk-ant-xxxxx",
  "preferredModel": "claude-sonnet-4-20250514"
}

Step 5: Set Up Your First Project

Let us build a simple Next.js application from scratch using Cursor's AI features.

Create the Project

Open a terminal in Cursor (Ctrl+`` ) and run:

npx create-next-app@latest my-cursor-project --typescript --tailwind --app --src-dir
cd my-cursor-project

Open the project folder in Cursor: File > Open Folder > my-cursor-project

Use Agent Mode to Scaffold a Feature

Open the chat panel (Cmd+L), enable Agent mode, and type:

Build a task management feature with:
1. A task list page at /tasks that displays all tasks
2. An "add task" form with title, description, and priority fields
3. Tasks stored in local state using React useState
4. Ability to mark tasks complete and delete them
5. Styled with Tailwind CSS using a clean, modern design

Use TypeScript interfaces for all types. Follow Next.js App Router conventions.

Cursor's agent will:

1. Create the task types in a new file
2. Build the task list component
3. Create the add task form
4. Set up the page route
5. Add styling with Tailwind classes

Watch as it creates and edits multiple files. Review each change in the diff view before accepting.

Use Inline Edit to Refine

After the agent creates the initial code, use inline edit to refine specific parts:

1. Select the task list component
2. Press Cmd+K
3. Type: "add drag-and-drop reordering with smooth animations"
4. Review and accept the changes

Use Chat for Debugging

If something does not work, paste the error into chat:

1. Press Cmd+L to open chat
2. Type: "I'm getting this error:" and paste the error message
3. Chat will analyze the error with your project context and suggest a fix
4. Click Apply to apply the fix directly

Step 6: Essential Settings to Configure

These settings will improve your Cursor experience significantly.

Cursor Rules File

Create a .cursorrules file in your project root to give Cursor project-specific instructions:

You are a senior TypeScript developer working on a Next.js 15 application.

Tech stack:
- Next.js 15 with App Router
- TypeScript in strict mode
- Tailwind CSS for styling
- shadcn/ui for components

Rules:
- Always use TypeScript with explicit types
- Use server components by default, client components only when needed
- Follow the existing project structure and naming conventions
- Write concise, readable code with meaningful variable names
- Add error handling for all async operations
- Use "use client" directive only when the component needs interactivity

Recommended Settings

Open Settings (Cmd+,) and configure:

{
  "cursor.chat.defaultModel": "claude-sonnet-4-20250514",
  "cursor.tab.enabled": true,
  "cursor.tab.alwaysSuggest": true,
  "editor.inlineSuggest.enabled": true,
  "cursor.chat.showSuggestedFiles": true
}

Useful Keyboard Shortcuts

Shortcut	Action
Cmd+L	Open/focus AI chat
Cmd+K	Inline edit selection
Cmd+Shift+K	Inline edit with terminal context
Cmd+I	Open Composer (multi-file edits)
Tab	Accept autocomplete suggestion
Esc	Dismiss suggestion
Cmd+Shift+P	Command palette
Cmd+.	Quick fix suggestions

Step 7: Install Essential Extensions

Cursor supports all VS Code extensions. Install these for a complete setup:

# Essential extensions (install via Cursor's extension panel)
- ESLint
- Prettier
- Tailwind CSS IntelliSense
- Error Lens
- GitLens
- Auto Rename Tag

Install them through the Extensions panel (Cmd+Shift+X) just like in VS Code.

Common Setup Issues and Fixes

Cursor Tab not working: Check Settings > Cursor Tab and ensure it is enabled. Restart Cursor if needed.

Chat responses are slow: You may be on the free tier using slow requests. Upgrade to Pro or check your request quota in Settings > Subscription.

Extensions not imported from VS Code: Go to Settings > General > Import VS Code Settings. Ensure VS Code is installed on the same machine.

Agent mode creates wrong file structure: Add a .cursorrules file with explicit project structure guidelines. The agent reads this before every task.

High memory usage: Disable extensions you do not use. Cursor inherits VS Code's extension architecture, and too many extensions cause slowdowns.

Cursor Free vs. Pro: Is It Worth Upgrading?

Feature	Free	Pro ($20/mo)
Fast requests	50/month	500/month
Slow requests	2,000/month	Unlimited
Agent mode	Limited	Full
Priority queue	No	Yes
Best for	Learning, side projects	Daily professional use

For most developers, the free tier is sufficient to evaluate whether Cursor fits your workflow. If you find yourself hitting the 50 fast request limit regularly, Pro is worth the investment.

Conclusion

Cursor is one of the most capable AI-powered code editors available in 2026. The setup process is straightforward, especially if you are coming from VS Code. Start with the free tier, set up a .cursorrules file for your project, and use Agent mode for scaffolding and Chat for refinement.

If your projects involve AI-generated media like images, video, or talking avatars, Hypereal AI provides a developer-friendly API that integrates naturally into applications built with Cursor. Try it free with 35 credits, no credit card required.