diff --git a/compiler/apps/playground/components/Editor/ConfigEditor.tsx b/compiler/apps/playground/components/Editor/ConfigEditor.tsx
index 43b3f1e8a9164..63522987db052 100644
--- a/compiler/apps/playground/components/Editor/ConfigEditor.tsx
+++ b/compiler/apps/playground/components/Editor/ConfigEditor.tsx
@@ -10,14 +10,8 @@ import type {editor} from 'monaco-editor';
 import * as monaco from 'monaco-editor';
 import React, {useState, useCallback} from 'react';
 import {Resizable} from 're-resizable';
-import {useSnackbar} from 'notistack';
 import {useStore, useStoreDispatch} from '../StoreContext';
 import {monacoOptions} from './monacoOptions';
-import {
-  ConfigError,
-  generateOverridePragmaFromConfig,
-  updateSourceWithOverridePragma,
-} from '../../lib/configUtils';
 
 // @ts-expect-error - webpack asset/source loader handles .d.ts files as strings
 import compilerTypeDefs from 'babel-plugin-react-compiler/dist/index.d.ts';
@@ -28,61 +22,17 @@ export default function ConfigEditor(): React.ReactElement {
   const [isExpanded, setIsExpanded] = useState(false);
   const store = useStore();
   const dispatchStore = useStoreDispatch();
-  const {enqueueSnackbar} = useSnackbar();
 
   const toggleExpanded = useCallback(() => {
     setIsExpanded(prev => !prev);
   }, []);
 
-  const handleApplyConfig: () => Promise<void> = async () => {
-    try {
-      const config = store.config || '';
-
-      if (!config.trim()) {
-        enqueueSnackbar(
-          'Config is empty. Please add configuration options first.',
-          {
-            variant: 'warning',
-          },
-        );
-        return;
-      }
-      const newPragma = await generateOverridePragmaFromConfig(config);
-      const updatedSource = updateSourceWithOverridePragma(
-        store.source,
-        newPragma,
-      );
-
-      dispatchStore({
-        type: 'updateFile',
-        payload: {
-          source: updatedSource,
-          config: config,
-        },
-      });
-    } catch (error) {
-      console.error('Failed to apply config:', error);
-
-      if (error instanceof ConfigError && error.message.trim()) {
-        enqueueSnackbar(error.message, {
-          variant: 'error',
-        });
-      } else {
-        enqueueSnackbar('Unexpected error: failed to apply config.', {
-          variant: 'error',
-        });
-      }
-    }
-  };
-
   const handleChange: (value: string | undefined) => void = value => {
     if (value === undefined) return;
 
-    // Only update the config
     dispatchStore({
-      type: 'updateFile',
+      type: 'updateConfig',
       payload: {
-        source: store.source,
         config: value,
       },
     });
@@ -120,49 +70,40 @@ export default function ConfigEditor(): React.ReactElement {
   return (
     <div className="flex flex-row relative">
       {isExpanded ? (
-        <>
-          <Resizable
-            className="border-r"
-            minWidth={300}
-            maxWidth={600}
-            defaultSize={{width: 350, height: 'auto'}}
-            enable={{right: true}}>
-            <h2
-              title="Minimize config editor"
-              aria-label="Minimize config editor"
-              onClick={toggleExpanded}
-              className="p-4 duration-150 ease-in border-b cursor-pointer border-grey-200 font-light text-secondary hover:text-link">
-              - Config Overrides
-            </h2>
-            <div className="h-[calc(100vh_-_3.5rem_-_4rem)]">
-              <MonacoEditor
-                path={'config.ts'}
-                language={'typescript'}
-                value={store.config}
-                onMount={handleMount}
-                onChange={handleChange}
-                options={{
-                  ...monacoOptions,
-                  lineNumbers: 'off',
-                  folding: false,
-                  renderLineHighlight: 'none',
-                  scrollBeyondLastLine: false,
-                  hideCursorInOverviewRuler: true,
-                  overviewRulerBorder: false,
-                  overviewRulerLanes: 0,
-                  fontSize: 12,
-                }}
-              />
-            </div>
-          </Resizable>
-          <button
-            onClick={handleApplyConfig}
-            title="Apply config overrides to input"
-            aria-label="Apply config overrides to input"
-            className="absolute right-0 top-1/2 transform -translate-y-1/2 translate-x-1/2 z-10 w-8 h-8 bg-blue-500 hover:bg-blue-600 text-white rounded-full border-2 border-white shadow-lg flex items-center justify-center text-sm font-medium transition-colors duration-150">
-            →
-          </button>
-        </>
+        <Resizable
+          className="border-r"
+          minWidth={300}
+          maxWidth={600}
+          defaultSize={{width: 350, height: 'auto'}}
+          enable={{right: true}}>
+          <h2
+            title="Minimize config editor"
+            aria-label="Minimize config editor"
+            onClick={toggleExpanded}
+            className="p-4 duration-150 ease-in border-b cursor-pointer border-grey-200 font-light text-secondary hover:text-link">
+            - Config Overrides
+          </h2>
+          <div className="h-[calc(100vh_-_3.5rem_-_4rem)]">
+            <MonacoEditor
+              path={'config.ts'}
+              language={'typescript'}
+              value={store.config}
+              onMount={handleMount}
+              onChange={handleChange}
+              options={{
+                ...monacoOptions,
+                lineNumbers: 'off',
+                folding: false,
+                renderLineHighlight: 'none',
+                scrollBeyondLastLine: false,
+                hideCursorInOverviewRuler: true,
+                overviewRulerBorder: false,
+                overviewRulerLanes: 0,
+                fontSize: 12,
+              }}
+            />
+          </div>
+        </Resizable>
       ) : (
         <div className="relative items-center h-full px-1 py-6 align-middle border-r border-grey-200">
           <button
diff --git a/compiler/apps/playground/components/Editor/EditorImpl.tsx b/compiler/apps/playground/components/Editor/EditorImpl.tsx
index 0c12b482a3b7d..d6a2bccc8edef 100644
--- a/compiler/apps/playground/components/Editor/EditorImpl.tsx
+++ b/compiler/apps/playground/components/Editor/EditorImpl.tsx
@@ -22,6 +22,7 @@ import BabelPluginReactCompiler, {
   parsePluginOptions,
   printReactiveFunctionWithOutlined,
   printFunctionWithOutlined,
+  type LoggerEvent,
 } from 'babel-plugin-react-compiler';
 import clsx from 'clsx';
 import invariant from 'invariant';
@@ -46,7 +47,6 @@ import {
   PrintedCompilerPipelineValue,
 } from './Output';
 import {transformFromAstSync} from '@babel/core';
-import {LoggerEvent} from 'babel-plugin-react-compiler/dist/Entrypoint';
 import {useSearchParams} from 'next/navigation';
 
 function parseInput(
@@ -147,6 +147,7 @@ const COMMON_HOOKS: Array<[string, Hook]> = [
 function compile(
   source: string,
   mode: 'compiler' | 'linter',
+  configOverrides: string,
 ): [CompilerOutput, 'flow' | 'typescript'] {
   const results = new Map<string, Array<PrintedCompilerPipelineValue>>();
   const error = new CompilerError();
@@ -207,7 +208,7 @@ function compile(
         }
       }
     };
-    const parsedOptions = parseConfigPragmaForTests(pragma, {
+    const parsedPragmaOptions = parseConfigPragmaForTests(pragma, {
       compilationMode: 'infer',
       environment:
         mode === 'linter'
@@ -227,10 +228,26 @@ function compile(
               /* use defaults for compiler mode */
             },
     });
+
+    // Parse config overrides from config editor
+    let configOverrideOptions: any = {};
+    const configMatch = configOverrides.match(/^\s*import.*?\n\n\((.*)\)/s);
+    // TODO: initialize store with URL params, not empty store
+    if (configOverrides.trim()) {
+      if (configMatch && configMatch[1]) {
+        const configString = configMatch[1].replace(/satisfies.*$/, '').trim();
+        configOverrideOptions = new Function(`return (${configString})`)();
+      } else {
+        throw new Error('Invalid config overrides');
+      }
+    }
+
     const opts: PluginOptions = parsePluginOptions({
-      ...parsedOptions,
+      ...parsedPragmaOptions,
+      ...configOverrideOptions,
       environment: {
-        ...parsedOptions.environment,
+        ...parsedPragmaOptions.environment,
+        ...configOverrideOptions.environment,
         customHooks: new Map([...COMMON_HOOKS]),
       },
       logger: {
@@ -285,19 +302,14 @@ export default function Editor(): JSX.Element {
   const dispatchStore = useStoreDispatch();
   const {enqueueSnackbar} = useSnackbar();
   const [compilerOutput, language] = useMemo(
-    () => compile(deferredStore.source, 'compiler'),
-    [deferredStore.source],
+    () => compile(deferredStore.source, 'compiler', deferredStore.config),
+    [deferredStore.source, deferredStore.config],
   );
   const [linterOutput] = useMemo(
-    () => compile(deferredStore.source, 'linter'),
-    [deferredStore.source],
+    () => compile(deferredStore.source, 'linter', deferredStore.config),
+    [deferredStore.source, deferredStore.config],
   );
 
-  // TODO: Remove this once the config editor is more stable
-  const searchParams = useSearchParams();
-  const search = searchParams.get('showConfig');
-  const shouldShowConfig = search === 'true';
-
   useMountEffect(() => {
     // Initialize store
     let mountStore: Store;
@@ -339,7 +351,7 @@ export default function Editor(): JSX.Element {
   return (
     <>
       <div className="relative flex basis top-14">
-        {shouldShowConfig && <ConfigEditor />}
+        <ConfigEditor />
         <div className={clsx('relative sm:basis-1/4')}>
           <Input language={language} errors={errors} />
         </div>
diff --git a/compiler/apps/playground/components/Editor/Input.tsx b/compiler/apps/playground/components/Editor/Input.tsx
index 0441f3f9a4be0..f4c64a14a0501 100644
--- a/compiler/apps/playground/components/Editor/Input.tsx
+++ b/compiler/apps/playground/components/Editor/Input.tsx
@@ -17,7 +17,6 @@ import {useStore, useStoreDispatch} from '../StoreContext';
 import {monacoOptions} from './monacoOptions';
 // @ts-expect-error TODO: Make TS recognize .d.ts files, in addition to loading them with webpack.
 import React$Types from '../../node_modules/@types/react/index.d.ts';
-import {parseAndFormatConfig} from '../../lib/configUtils.ts';
 
 loader.config({monaco});
 
@@ -83,14 +82,10 @@ export default function Input({errors, language}: Props): JSX.Element {
   const handleChange: (value: string | undefined) => void = async value => {
     if (!value) return;
 
-    // Parse and format the config
-    const config = await parseAndFormatConfig(value);
-
     dispatchStore({
-      type: 'updateFile',
+      type: 'updateSource',
       payload: {
         source: value,
-        config,
       },
     });
   };
diff --git a/compiler/apps/playground/components/StoreContext.tsx b/compiler/apps/playground/components/StoreContext.tsx
index e5f3b23605831..52de6c0fa3e4c 100644
--- a/compiler/apps/playground/components/StoreContext.tsx
+++ b/compiler/apps/playground/components/StoreContext.tsx
@@ -53,9 +53,14 @@ type ReducerAction =
       };
     }
   | {
-      type: 'updateFile';
+      type: 'updateSource';
       payload: {
         source: string;
+      };
+    }
+  | {
+      type: 'updateConfig';
+      payload: {
         config: string;
       };
     }
@@ -69,11 +74,18 @@ function storeReducer(store: Store, action: ReducerAction): Store {
       const newStore = action.payload.store;
       return newStore;
     }
-    case 'updateFile': {
-      const {source, config} = action.payload;
+    case 'updateSource': {
+      const source = action.payload.source;
       const newStore = {
         ...store,
         source,
+      };
+      return newStore;
+    }
+    case 'updateConfig': {
+      const config = action.payload.config;
+      const newStore = {
+        ...store,
         config,
       };
       return newStore;
diff --git a/compiler/apps/playground/lib/configUtils.ts b/compiler/apps/playground/lib/configUtils.ts
deleted file mode 100644
index 108ba759d1384..0000000000000
--- a/compiler/apps/playground/lib/configUtils.ts
+++ /dev/null
@@ -1,120 +0,0 @@
-/**
- * Copyright (c) Meta Platforms, Inc. and affiliates.
- *
- * This source code is licensed under the MIT license found in the
- * LICENSE file in the root directory of this source tree.
- */
-
-import parserBabel from 'prettier/plugins/babel';
-import prettierPluginEstree from 'prettier/plugins/estree';
-import * as prettier from 'prettier/standalone';
-import {parsePluginOptions} from 'babel-plugin-react-compiler';
-import {parseConfigPragmaAsString} from '../../../packages/babel-plugin-react-compiler/src/Utils/TestUtils';
-
-export class ConfigError extends Error {
-  constructor(message: string) {
-    super(message);
-    this.name = 'ConfigError';
-  }
-}
-/**
- * Parse config from pragma and format it with prettier
- */
-export async function parseAndFormatConfig(source: string): Promise<string> {
-  const pragma = source.substring(0, source.indexOf('\n'));
-  let configString = parseConfigPragmaAsString(pragma);
-  if (configString !== '') {
-    configString = `\
-    import type { PluginOptions } from 'babel-plugin-react-compiler/dist';
-
-    (${configString} satisfies Partial<PluginOptions>)`;
-  }
-
-  try {
-    const formatted = await prettier.format(configString, {
-      semi: true,
-      parser: 'babel-ts',
-      plugins: [parserBabel, prettierPluginEstree],
-    });
-    return formatted;
-  } catch (error) {
-    console.error('Error formatting config:', error);
-    return ''; // Return empty string if not valid for now
-  }
-}
-
-function extractCurlyBracesContent(input: string): string {
-  const startIndex = input.indexOf('({') + 1;
-  const endIndex = input.lastIndexOf('}');
-  if (startIndex === -1 || endIndex === -1 || endIndex <= startIndex) {
-    throw new Error('No outer curly braces found in input.');
-  }
-  return input.slice(startIndex, endIndex + 1);
-}
-
-function cleanContent(content: string): string {
-  return content
-    .replace(/[\r\n]+/g, ' ')
-    .replace(/\s+/g, ' ')
-    .trim();
-}
-
-/**
- * Validate that a config string can be parsed as a valid PluginOptions object
- * Throws an error if validation fails.
- */
-function validateConfigAsPluginOptions(configString: string): void {
-  // Validate that config can be parse as JS obj
-  let parsedConfig: unknown;
-  try {
-    parsedConfig = new Function(`return (${configString})`)();
-  } catch (_) {
-    throw new ConfigError('Config has invalid syntax.');
-  }
-
-  // Validate against PluginOptions schema
-  try {
-    parsePluginOptions(parsedConfig);
-  } catch (_) {
-    throw new ConfigError('Config does not match the expected schema.');
-  }
-}
-
-/**
- * Generate a the override pragma comment from a formatted config object string
- */
-export async function generateOverridePragmaFromConfig(
-  formattedConfigString: string,
-): Promise<string> {
-  const content = extractCurlyBracesContent(formattedConfigString);
-  const cleanConfig = cleanContent(content);
-
-  validateConfigAsPluginOptions(cleanConfig);
-
-  // Format the config to ensure it's valid
-  await prettier.format(`(${cleanConfig})`, {
-    semi: false,
-    parser: 'babel-ts',
-    plugins: [parserBabel, prettierPluginEstree],
-  });
-
-  return `// @OVERRIDE:${cleanConfig}`;
-}
-
-/**
- * Update the override pragma comment in source code.
- */
-export function updateSourceWithOverridePragma(
-  source: string,
-  newPragma: string,
-): string {
-  const firstLineEnd = source.indexOf('\n');
-  const firstLine = source.substring(0, firstLineEnd);
-
-  const pragmaRegex = /^\/\/\s*@/;
-  if (firstLineEnd !== -1 && pragmaRegex.test(firstLine.trim())) {
-    return newPragma + source.substring(firstLineEnd);
-  } else {
-    return newPragma + '\n' + source;
-  }
-}
diff --git a/compiler/apps/playground/lib/defaultStore.ts b/compiler/apps/playground/lib/defaultStore.ts
index 77f28aa7e1a93..17a80094a6628 100644
--- a/compiler/apps/playground/lib/defaultStore.ts
+++ b/compiler/apps/playground/lib/defaultStore.ts
@@ -17,22 +17,9 @@ export const defaultConfig = `\
 import type { PluginOptions } from 'babel-plugin-react-compiler/dist';
 
 ({
-  compilationMode: 'infer',
-  panicThreshold: 'none',
-  environment: {},
-  logger: null,
-  gating: null,
-  noEmit: false,
-  dynamicGating: null,
-  eslintSuppressionRules: null,
-  flowSuppressions: true,
-  ignoreUseNoForget: false,
-  sources: filename => {
-    return filename.indexOf('node_modules') === -1;
-  },
-  enableReanimatedCheck: true,
-  customOptOutDirectives: null,
-  target: '19',
+  environment: {
+    enableResetCacheOnSourceFileChanges: false
+  }
 } satisfies Partial<PluginOptions>);`;
 
 export const defaultStore: Store = {
diff --git a/compiler/packages/babel-plugin-react-compiler/src/Utils/TestUtils.ts b/compiler/packages/babel-plugin-react-compiler/src/Utils/TestUtils.ts
index 1c3552d44bf03..cfa8cf2910fe0 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/Utils/TestUtils.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/Utils/TestUtils.ts
@@ -188,11 +188,6 @@ export function parseConfigPragmaForTests(
     environment?: PartialEnvironmentConfig;
   },
 ): PluginOptions {
-  const overridePragma = parseConfigPragmaAsString(pragma);
-  if (overridePragma !== '') {
-    return parseConfigStringAsJS(overridePragma, defaults);
-  }
-
   const environment = parseConfigPragmaEnvironmentForTest(
     pragma,
     defaults.environment ?? {},
@@ -228,100 +223,3 @@ export function parseConfigPragmaForTests(
   }
   return parsePluginOptions(options);
 }
-
-export function parseConfigPragmaAsString(pragma: string): string {
-  // Check if it's in JS override format
-  for (const {key, value: val} of splitPragma(pragma)) {
-    if (key === 'OVERRIDE' && val != null) {
-      return val;
-    }
-  }
-  return '';
-}
-
-function parseConfigStringAsJS(
-  configString: string,
-  defaults: {
-    compilationMode: CompilationMode;
-    environment?: PartialEnvironmentConfig;
-  },
-): PluginOptions {
-  let parsedConfig: any;
-  try {
-    // Parse the JavaScript object literal
-    parsedConfig = new Function(`return ${configString}`)();
-  } catch (error) {
-    CompilerError.invariant(false, {
-      reason: 'Failed to parse config pragma as JavaScript object',
-      description: `Could not parse: ${configString}. Error: ${error}`,
-      details: [
-        {
-          kind: 'error',
-          loc: null,
-          message: null,
-        },
-      ],
-      suggestions: null,
-    });
-  }
-
-  const environment = parseConfigPragmaEnvironmentForTest(
-    '',
-    defaults.environment ?? {},
-  );
-
-  const options: Record<keyof PluginOptions, unknown> = {
-    ...defaultOptions,
-    panicThreshold: 'all_errors',
-    compilationMode: defaults.compilationMode,
-    environment,
-  };
-
-  // Apply parsed config, merging environment if it exists
-  if (parsedConfig.environment) {
-    const mergedEnvironment = {
-      ...(options.environment as Record<string, unknown>),
-      ...parsedConfig.environment,
-    };
-
-    // Validate environment config
-    const validatedEnvironment =
-      EnvironmentConfigSchema.safeParse(mergedEnvironment);
-    if (!validatedEnvironment.success) {
-      CompilerError.invariant(false, {
-        reason: 'Invalid environment configuration in config pragma',
-        description: `${fromZodError(validatedEnvironment.error)}`,
-        details: [
-          {
-            kind: 'error',
-            loc: null,
-            message: null,
-          },
-        ],
-        suggestions: null,
-      });
-    }
-
-    options.environment = validatedEnvironment.data;
-  }
-
-  // Apply other config options
-  for (const [key, value] of Object.entries(parsedConfig)) {
-    if (key === 'environment') {
-      continue;
-    }
-
-    if (hasOwnProperty(defaultOptions, key)) {
-      if (key === 'target' && value === 'donotuse_meta_internal') {
-        options[key] = {
-          kind: value,
-          runtimeModule: 'react',
-        };
-      } else {
-        options[key] = value;
-      }
-    }
-  }
-
-  return parsePluginOptions(options);
-}