diff --git a/CHANGELOG.md b/CHANGELOG.md
index 6babe5a..7e2dc2c 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -11,6 +11,10 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 - `dx -v` now prints the CLI version, matching the documented lowercase version flag. Version checks are also skipped for help/version output and global-option-only invocations, preventing update prompts from interfering with those commands.
 
+### Updated
+
+- Updated the skill, the `dx reports create/update` help text, and the blank report template created on `dx reports init`, to include the relevant context about variable usage.
+
 ## 0.5.5 - 2026-07-13
 
 ### Updated
diff --git a/skills/dx-cli/SKILL.md b/skills/dx-cli/SKILL.md
index 88e35ff..c8bfe7d 100644
--- a/skills/dx-cli/SKILL.md
+++ b/skills/dx-cli/SKILL.md
@@ -74,6 +74,14 @@ Use this for any question about DX itself rather than the user's own data: produ
 
 **Exemption** — A time-bound approved pass on a failing check for a specific entity. A check result with a non-null `exemption_expires_at` is exempted: it may still be failing, but is not counted against the entity until the exemption expires.
 
+### Data Studio terms
+
+**Report** — A saved collection of tiles (see `dx studio reports`), organized on a dedicated page for dashboards and sharing.
+
+**Tile** — A single saved query and chart configuration within a report. Each tile's SQL can reference report variables.
+
+**Variable** — A named, `$`-prefixed placeholder (e.g. `$team_ids`) that a report's tile SQL can reference for interactive filtering. **Built-in variables** (`$service_ids`, `$team_ids`, `$tag_ids`, `$user_ids`, `$repo_ids`, `$start_date`, `$end_date`) are provided out of the box and just need to be toggled on. **Custom variables** are account-defined dropdown filters backed by a SQL query that returns `value` and `label` columns. Variables cannot be managed through the CLI/API — enabling/disabling built-ins and adding/updating/deleting custom variables must be done in the Data Studio UI — but once enabled on a report, any tile's SQL (including tiles set via `dx studio reports create`/`update`) can reference them.
+
 ## Reference Docs
 
 - [Catalog management](./references/catalog-management.md) — Entities and entity types: listing, inspecting, creating, updating, and deleting.
diff --git a/skills/dx-cli/references/report-creation.md b/skills/dx-cli/references/report-creation.md
index bdbd3d3..642eed8 100644
--- a/skills/dx-cli/references/report-creation.md
+++ b/skills/dx-cli/references/report-creation.md
@@ -118,3 +118,31 @@ Provide `editor_emails` only when `edit_access_type` is `specific_users`.
 Supported tile `chart_type` values are `line`, `pie`, `stacked_bar`, `scatter`, and `table`.
 
 `line`, `stacked_bar`, and `scatter` chart configs require `xAxis` and `yAxes`; `pie` chart configs require `labelColumn` and `valueColumn`; `table` chart configs can be `{}`.
+
+---
+
+## Variables
+
+Tile `sql` can reference report variables to make a report interactive: place `$variable_name` anywhere in the query, and the selected value(s) are substituted in when the report runs.
+
+### Built-in variables
+
+- `$service_ids` — filter by specific services
+- `$team_ids` — filter by team assignments
+- `$tag_ids` — filter by attributes
+- `$user_ids` — filter by individual users
+- `$repo_ids` — filter by specific repositories
+- `$start_date` and `$end_date` — filter by date range
+
+### Custom variables
+
+Custom variables are account-defined dropdown filters backed by a SQL query. Each has a title, a variable name (used as `$variable_name` in tile SQL), a description, and a SQL statement that must return exactly two columns: `value` (used in the substitution) and `label` (shown to users in the dropdown).
+
+### Limitation: no CLI/API management
+
+Variables cannot be created, updated, enabled, or disabled through this CLI or the API. There is no field for them in the report YAML.
+
+- Built-in variables are toggled on/off per report in the Data Studio UI.
+- Custom variables are added, edited, and deleted per account in the Data Studio UI.
+
+Once a variable is enabled on a report (via the UI), any tile's `sql` — including tiles created or updated via `dx studio reports create`/`update` — can reference it as `$variable_name`.
diff --git a/src/commandHelpers.ts b/src/commandHelpers.ts
index 1a02289..d0eb3ec 100644
--- a/src/commandHelpers.ts
+++ b/src/commandHelpers.ts
@@ -129,6 +129,52 @@ export function createExampleText(examples: Example[]): string {
   return lines.join("\n");
 }
 
+export function createNoteText(paragraphs: string[]): string {
+  const width = getHelpWidth();
+  const indent = "  ";
+  const output = [];
+
+  output.push(""); // separate from the rest of the help text
+  output.push("Notes:");
+
+  paragraphs.forEach((paragraph, index) => {
+    if (index > 0) {
+      output.push(""); // blank line between paragraphs
+    }
+    output.push(...wrapParagraph(paragraph, width, indent));
+  });
+
+  return output.join("\n");
+}
+
+function getHelpWidth(): number {
+  return process.stdout.isTTY && process.stdout.columns
+    ? process.stdout.columns
+    : 80;
+}
+
+function wrapParagraph(text: string, width: number, indent: string): string[] {
+  const words = text.split(/\s+/).filter(Boolean);
+  const lines: string[] = [];
+  let current = "";
+
+  for (const word of words) {
+    const candidate = current ? `${current} ${word}` : word;
+    if (current && indent.length + candidate.length > width) {
+      lines.push(`${indent}${current}`);
+      current = word;
+    } else {
+      current = candidate;
+    }
+  }
+
+  if (current) {
+    lines.push(`${indent}${current}`);
+  }
+
+  return lines;
+}
+
 function inferContext(command?: Command, argv?: string[]): CliContext {
   if (command) {
     return getContext(command);
diff --git a/src/commands/studio/report-blank-template.yaml b/src/commands/studio/report-blank-template.yaml
index 09df0b9..e5cbc6a 100644
--- a/src/commands/studio/report-blank-template.yaml
+++ b/src/commands/studio/report-blank-template.yaml
@@ -22,6 +22,11 @@ edit_access_type: read_only
 editor_emails: []
 
 # Supported chart_type values: line, pie, stacked_bar, scatter, table
+#
+# Tile sql can reference report variables (e.g. $team_ids, $start_date, or a
+# custom variable) as $variable_name. Variables themselves can't be managed
+# from the CLI/API — enable built-in variables or add/edit custom ones for
+# this report in the Data Studio UI, then reference them here.
 tiles:
   - title: ""
     sql: |-
diff --git a/src/commands/studio/reports.ts b/src/commands/studio/reports.ts
index 85b8e2c..2dfa5f6 100644
--- a/src/commands/studio/reports.ts
+++ b/src/commands/studio/reports.ts
@@ -5,6 +5,7 @@ import { parse as parseYaml, stringify as stringifyYaml } from "yaml";
 
 import {
   createExampleText,
+  createNoteText,
   getContext,
   parsePositiveIntOption,
   wrapAction,
@@ -16,6 +17,11 @@ import { buildRuntime } from "../../runtime.js";
 import type { Runtime } from "../../types.js";
 import * as ui from "../../ui.js";
 
+const VARIABLES_NOTE_TEXT = [
+  "Tile SQL can reference report variables using `$variable_name` syntax. Built-in variables — $service_ids, $team_ids, $tag_ids, $user_ids, $repo_ids, $start_date, $end_date — filter by service, team, attribute, user, repo, and date range, respectively. Custom variables are account-defined dropdown filters backed by a SQL query.",
+  "Variables cannot be created, updated, enabled, or disabled via this CLI or the API. Built-in variables must be toggled, and custom variables must be added, edited, or removed, from the report's settings in the Data Studio UI. Once a variable is enabled on a report, its `$variable_name` can be used in any tile's SQL via --from-file/--from-stdin.",
+];
+
 export function reportsCommand() {
   const reports = new Command()
     .name("reports")
@@ -32,6 +38,7 @@ export function reportsCommand() {
       "--from-stdin",
       "Read YAML from stdin and create a report from its contents",
     )
+    .addHelpText("afterAll", createNoteText(VARIABLES_NOTE_TEXT))
     .addHelpText(
       "afterAll",
       createExampleText([
@@ -252,6 +259,7 @@ export function reportsCommand() {
       "--from-stdin",
       "Read YAML from stdin and update the report with its contents",
     )
+    .addHelpText("afterAll", createNoteText(VARIABLES_NOTE_TEXT))
     .addHelpText(
       "afterAll",
       createExampleText([