diff --git a/api/libs/handlers/src/chats/mod.rs b/api/libs/handlers/src/chats/mod.rs
index ab2f70ca2..6fbf5543c 100644
--- a/api/libs/handlers/src/chats/mod.rs
+++ b/api/libs/handlers/src/chats/mod.rs
@@ -17,5 +17,6 @@ pub use delete_chats_handler::delete_chats_handler;
 pub use list_chats_handler::list_chats_handler;
 pub use sharing::delete_chat_sharing_handler;
 pub use sharing::create_chat_sharing_handler;
+pub use sharing::update_chat_sharing_handler;
 pub use types::*;
 pub use streaming_parser::StreamingParser;
\ No newline at end of file
diff --git a/api/libs/handlers/src/chats/sharing/mod.rs b/api/libs/handlers/src/chats/sharing/mod.rs
index 2d80f947a..74148049d 100644
--- a/api/libs/handlers/src/chats/sharing/mod.rs
+++ b/api/libs/handlers/src/chats/sharing/mod.rs
@@ -1,7 +1,9 @@
 mod list_sharing_handler;
 mod delete_sharing_handler;
 mod create_sharing_handler;
+mod update_sharing_handler;
 
 pub use list_sharing_handler::list_chat_sharing_handler;
 pub use delete_sharing_handler::delete_chat_sharing_handler;
 pub use create_sharing_handler::create_chat_sharing_handler;
+pub use update_sharing_handler::update_chat_sharing_handler;
diff --git a/api/libs/handlers/src/chats/sharing/update_sharing_handler.rs b/api/libs/handlers/src/chats/sharing/update_sharing_handler.rs
new file mode 100644
index 000000000..b6d2f9a8c
--- /dev/null
+++ b/api/libs/handlers/src/chats/sharing/update_sharing_handler.rs
@@ -0,0 +1,97 @@
+use anyhow::{anyhow, Result};
+use database::{
+    enums::{AssetPermissionRole, AssetType, IdentityType},
+};
+use sharing::{create_share_by_email, has_permission};
+use tracing::info;
+use uuid::Uuid;
+
+use super::create_sharing_handler::get_chat_exists;
+
+/// Updates sharing permissions for a chat
+///
+/// # Arguments
+/// * `chat_id` - The ID of the chat to update sharing for
+/// * `user_id` - The ID of the user updating the sharing permissions
+/// * `emails_and_roles` - List of (email, role) pairs representing the recipients and their access levels
+///
+/// # Returns
+/// * `Result<()>` - Success or error
+pub async fn update_chat_sharing_handler(
+    chat_id: &Uuid,
+    user_id: &Uuid,
+    emails_and_roles: Vec<(String, AssetPermissionRole)>,
+) -> Result<()> {
+    info!(
+        chat_id = %chat_id,
+        user_id = %user_id,
+        "Updating sharing permissions for chat"
+    );
+    
+    // 1. Validate the chat exists
+    let chat_exists = get_chat_exists(chat_id).await?;
+    
+    if !chat_exists {
+        return Err(anyhow!("Chat not found"));
+    }
+
+    // 2. Check if user has permission to update sharing for the chat (Owner or FullAccess)
+    let has_perm = has_permission(
+        *chat_id,
+        AssetType::Chat,
+        *user_id,
+        IdentityType::User,
+        AssetPermissionRole::FullAccess, // Owner role implicitly has FullAccess permissions
+    ).await?;
+
+    if !has_perm {
+        return Err(anyhow!("User does not have permission to update sharing for this chat"));
+    }
+
+    // 3. Process each email and update sharing permissions
+    for (email, role) in emails_and_roles {
+        // The create_share_by_email function handles both creation and updates
+        // It performs an upsert operation in the database
+        match create_share_by_email(
+            &email,
+            *chat_id,
+            AssetType::Chat,
+            role,
+            *user_id,
+        ).await {
+            Ok(_) => {
+                info!("Updated sharing permission for email: {} on chat: {} with role: {:?}", email, chat_id, role);
+            },
+            Err(e) => {
+                tracing::error!("Failed to update sharing for email {}: {}", email, e);
+                return Err(anyhow!("Failed to update sharing for email {}: {}", email, e));
+            }
+        }
+    }
+
+    Ok(())
+}
+
+#[cfg(test)]
+mod tests {
+    use super::*;
+    use uuid::Uuid;
+
+    #[tokio::test]
+    async fn test_update_chat_sharing_handler_chat_not_found() {
+        // Mock UUID for chat and user
+        let chat_id = Uuid::new_v4();
+        let user_id = Uuid::new_v4();
+        
+        // Test with empty request to simplify the test
+        let emails_and_roles: Vec<(String, AssetPermissionRole)> = vec![];
+        
+        // Call handler - should fail because the chat doesn't exist
+        let result = update_chat_sharing_handler(&chat_id, &user_id, emails_and_roles).await;
+        
+        // Since we can't easily mock the function in an integration test
+        // This is just a placeholder for the real test
+        // The actual error could be different based on the testing environment
+        assert!(result.is_err());
+    }
+}
\ No newline at end of file
diff --git a/api/prds/active/api_chats_sharing_summary.md b/api/prds/active/api_chats_sharing_summary.md
index fc413a70b..c38f77b83 100644
--- a/api/prds/active/api_chats_sharing_summary.md
+++ b/api/prds/active/api_chats_sharing_summary.md
@@ -26,17 +26,17 @@ The implementation is broken down into the following components, each with its o
 ### PRD Development Order
 The PRDs can be developed in the following order, with opportunities for parallel work:
 
-1. **First: List Chats Sharing Endpoint PRD** (api_chats_sharing_list.md)
+1. **First: List Chats Sharing Endpoint PRD** (api_chats_sharing_list.md) ✅
    - This PRD should be completed first as it establishes the basic data structures and permission checking patterns that other PRDs will build upon.
    - It introduces the core response types and error handling approaches.
 
 2. **Second (Can be done in parallel):**
-   - **Create Chats Sharing Endpoint PRD** (api_chats_sharing_create.md)
-   - **Delete Chats Sharing Endpoint PRD** (api_chats_sharing_delete.md)
+   - **Create Chats Sharing Endpoint PRD** (api_chats_sharing_create.md) ✅
+   - **Delete Chats Sharing Endpoint PRD** (api_chats_sharing_delete.md) ✅
    - These PRDs can be worked on simultaneously by different team members after the List PRD is complete.
    - They use different sharing library functions and have minimal dependencies on each other.
 
-3. **Third: Update Chats Sharing Endpoint PRD** (api_chats_sharing_update.md)
+3. **Third: Update Chats Sharing Endpoint PRD** (api_chats_sharing_update.md) ✅
    - This PRD should be completed after the Create PRD since it builds on similar concepts and uses the same underlying sharing library functions.
    - The update endpoint reuses many patterns from the create endpoint with slight modifications.
 
@@ -61,12 +61,12 @@ After Phase 1 is complete, the following components can be implemented in parall
   - Uses `list_shares` from `@[api/libs/sharing/src]/list_asset_permissions.rs`
   - Uses `check_access` from `@[api/libs/sharing/src]/check_asset_permission.rs`
 
-- **Create Sharing Endpoint**
+- **Create Sharing Endpoint** ✅
   - Uses `find_user_by_email` from `@[api/libs/sharing/src]/user_lookup.rs`
   - Uses `create_share_by_email` from `@[api/libs/sharing/src]/create_asset_permission.rs`
   - Uses `has_permission` from `@[api/libs/sharing/src]/check_asset_permission.rs`
 
-- **Update Sharing Endpoint**
+- **Update Sharing Endpoint** ✅
   - Uses `create_share_by_email` from `@[api/libs/sharing/src]/create_asset_permission.rs`
   - Uses `has_permission` from `@[api/libs/sharing/src]/check_asset_permission.rs`
 
diff --git a/api/prds/active/api_chats_sharing_update.md b/api/prds/active/api_chats_sharing_update.md
index 4e6861c5e..a034d2d53 100644
--- a/api/prds/active/api_chats_sharing_update.md
+++ b/api/prds/active/api_chats_sharing_update.md
@@ -1,10 +1,10 @@
-# API Chats Sharing - Update Endpoint PRD
+# API Chats Sharing - Update Endpoint PRD ✅
 
 ## Problem Statement
 
 Users need the ability to update sharing permissions for chats through a REST API endpoint.
 
-## Technical Design
+## Technical Design ✅
 
 ### Endpoint Specification
 
diff --git a/api/src/routes/rest/routes/chats/sharing/mod.rs b/api/src/routes/rest/routes/chats/sharing/mod.rs
index 945d43f53..f49e301e6 100644
--- a/api/src/routes/rest/routes/chats/sharing/mod.rs
+++ b/api/src/routes/rest/routes/chats/sharing/mod.rs
@@ -1,18 +1,21 @@
 use axum::{
-    routing::{get, post, delete},
+    routing::{get, post, delete, put},
     Router,
 };
 
 mod list_sharing;
 mod delete_sharing;
 mod create_sharing;
+mod update_sharing;
 
 pub use list_sharing::list_chat_sharing_rest_handler;
 pub use delete_sharing::delete_chat_sharing_rest_handler;
+pub use update_sharing::update_chat_sharing_rest_handler;
 
 pub fn router() -> Router {
     Router::new()
         .route("/", get(list_chat_sharing_rest_handler))
         .route("/", delete(delete_chat_sharing_rest_handler))
         .route("/", post(create_sharing::create_chat_sharing_rest_handler))
+        .route("/", put(update_chat_sharing_rest_handler))
 }
diff --git a/api/src/routes/rest/routes/chats/sharing/update_sharing.rs b/api/src/routes/rest/routes/chats/sharing/update_sharing.rs
new file mode 100644
index 000000000..e7455f2a2
--- /dev/null
+++ b/api/src/routes/rest/routes/chats/sharing/update_sharing.rs
@@ -0,0 +1,55 @@
+use axum::{
+    extract::Path,
+    http::StatusCode,
+    Extension, Json,
+};
+use database::enums::AssetPermissionRole;
+use middleware::AuthenticatedUser;
+use serde::Deserialize;
+use uuid::Uuid;
+
+/// Recipient for sharing a chat
+#[derive(Debug, Deserialize)]
+pub struct ShareRecipient {
+    pub email: String,
+    pub role: AssetPermissionRole,
+}
+
+/// Update sharing permissions for a chat
+///
+/// This endpoint updates sharing permissions for a chat with the provided details.
+/// Requires Owner or FullAccess permission.
+pub async fn update_chat_sharing_rest_handler(
+    Extension(user): Extension<AuthenticatedUser>,
+    Path(id): Path<Uuid>,
+    Json(request): Json<Vec<ShareRecipient>>,
+) -> Result<Json<String>, (StatusCode, String)> {
+    tracing::info!("Processing PUT request for chat sharing with ID: {}, user_id: {}", id, user.id);
+
+    // Convert request to a list of (email, role) pairs
+    let emails_and_roles: Vec<(String, AssetPermissionRole)> = request
+        .into_iter()
+        .map(|recipient| (recipient.email, recipient.role))
+        .collect();
+
+    // Call the handler from the handlers crate
+    match handlers::chats::sharing::update_chat_sharing_handler(&id, &user.id, emails_and_roles).await {
+        Ok(_) => Ok(Json("Sharing permissions updated successfully".to_string())),
+        Err(e) => {
+            tracing::error!("Error updating sharing permissions: {}", e);
+            
+            // Map specific errors to appropriate status codes
+            let error_message = e.to_string();
+            
+            if error_message.contains("not found") {
+                return Err((StatusCode::NOT_FOUND, format!("Chat not found: {}", e)));
+            } else if error_message.contains("permission") {
+                return Err((StatusCode::FORBIDDEN, format!("Insufficient permissions: {}", e)));
+            } else if error_message.contains("Invalid email") {
+                return Err((StatusCode::BAD_REQUEST, format!("Invalid email: {}", e)));
+            }
+            
+            Err((StatusCode::INTERNAL_SERVER_ERROR, format!("Failed to update sharing permissions: {}", e)))
+        }
+    }
+}
\ No newline at end of file
diff --git a/api/tests/integration/chats/sharing/mod.rs b/api/tests/integration/chats/sharing/mod.rs
index 876b0a9a3..084f53d5b 100644
--- a/api/tests/integration/chats/sharing/mod.rs
+++ b/api/tests/integration/chats/sharing/mod.rs
@@ -1,3 +1,4 @@
 mod list_sharing_test;
 pub mod delete_sharing_test;
 pub mod create_sharing_test;
+pub mod update_sharing_test;
diff --git a/api/tests/integration/chats/sharing/update_sharing_test.rs b/api/tests/integration/chats/sharing/update_sharing_test.rs
new file mode 100644
index 000000000..1725bca44
--- /dev/null
+++ b/api/tests/integration/chats/sharing/update_sharing_test.rs
@@ -0,0 +1,224 @@
+use anyhow::Result;
+use axum::{
+    extract::Extension,
+    routing::put,
+    Router,
+};
+use database::enums::{AssetPermissionRole, AssetType, IdentityType};
+use middleware::auth::AuthenticatedUser;
+use serde_json::{json, Value};
+use sharing::create_share;
+use src::routes::rest::routes::chats::sharing::update_chat_sharing_rest_handler;
+use tests::common::{
+    assertions::response::ResponseAssertions,
+    fixtures::builder::FixtureBuilder,
+    http::client::TestClient,
+};
+use uuid::Uuid;
+
+// Test for PUT /chats/:id/sharing
+// Creates a test server, adds test data, and makes a request to update chat sharing
+#[tokio::test]
+async fn test_update_chat_sharing_success() -> Result<()> {
+    // Set up test fixtures
+    let mut fixture = FixtureBuilder::new().await?;
+    
+    // Create a test user (this will be the owner of the chat)
+    let user = fixture.create_user().await?;
+    
+    // Create a test chat owned by the user
+    let chat = fixture.create_chat(&user.id).await?;
+    
+    // Create another user to share with
+    let share_recipient = fixture.create_user().await?;
+    
+    // Create a manual permission so our test user has Owner access to the chat
+    create_share(
+        chat.id,
+        AssetType::Chat,
+        user.id,
+        IdentityType::User,
+        AssetPermissionRole::Owner,
+        user.id,
+    )
+    .await?;
+    
+    // Set up the test server with our endpoint
+    let app = Router::new()
+        .route("/chats/:id/sharing", put(update_chat_sharing_rest_handler))
+        .layer(Extension(AuthenticatedUser {
+            id: user.id,
+            email: user.email.clone(),
+            org_id: None,
+        }));
+    
+    let client = TestClient::new(app);
+    
+    // Make the request to update sharing permissions
+    let payload = json!([
+        {
+            "email": share_recipient.email,
+            "role": "Editor"  // Update to Editor role
+        }
+    ]);
+    
+    let response = client
+        .put(&format!("/chats/{}/sharing", chat.id))
+        .json(&payload)
+        .send()
+        .await?;
+    
+    // Assert the response is successful
+    response.assert_status_ok()?;
+    
+    Ok(())
+}
+
+#[tokio::test]
+async fn test_update_chat_sharing_unauthorized() -> Result<()> {
+    // Set up test fixtures
+    let mut fixture = FixtureBuilder::new().await?;
+    
+    // Create two test users
+    let owner = fixture.create_user().await?;
+    let non_owner = fixture.create_user().await?;
+    
+    // Create a test chat owned by the first user
+    let chat = fixture.create_chat(&owner.id).await?;
+    
+    // Create a manual permission so the owner has Owner access
+    create_share(
+        chat.id,
+        AssetType::Chat,
+        owner.id,
+        IdentityType::User,
+        AssetPermissionRole::Owner,
+        owner.id,
+    )
+    .await?;
+    
+    // Set up the test server with our endpoint but authenticated as non-owner
+    let app = Router::new()
+        .route("/chats/:id/sharing", put(update_chat_sharing_rest_handler))
+        .layer(Extension(AuthenticatedUser {
+            id: non_owner.id, // This user doesn't have permission to update the chat sharing
+            email: non_owner.email.clone(),
+            org_id: None,
+        }));
+    
+    let client = TestClient::new(app);
+    
+    // Make the request
+    let payload = json!([
+        {
+            "email": "test@example.com",
+            "role": "Editor"
+        }
+    ]);
+    
+    let response = client
+        .put(&format!("/chats/{}/sharing", chat.id))
+        .json(&payload)
+        .send()
+        .await?;
+    
+    // Assert the response is forbidden
+    response.assert_status_forbidden()?;
+    
+    Ok(())
+}
+
+#[tokio::test]
+async fn test_update_chat_sharing_not_found() -> Result<()> {
+    // Set up test fixtures
+    let mut fixture = FixtureBuilder::new().await?;
+    
+    // Create a test user
+    let user = fixture.create_user().await?;
+    
+    // Generate a non-existent chat ID
+    let non_existent_chat_id = Uuid::new_v4();
+    
+    // Set up the test server with our endpoint
+    let app = Router::new()
+        .route("/chats/:id/sharing", put(update_chat_sharing_rest_handler))
+        .layer(Extension(AuthenticatedUser {
+            id: user.id,
+            email: user.email.clone(),
+            org_id: None,
+        }));
+    
+    let client = TestClient::new(app);
+    
+    // Make the request
+    let payload = json!([
+        {
+            "email": "test@example.com",
+            "role": "Editor"
+        }
+    ]);
+    
+    let response = client
+        .put(&format!("/chats/{}/sharing", non_existent_chat_id))
+        .json(&payload)
+        .send()
+        .await?;
+    
+    // Assert the response is not found
+    response.assert_status_not_found()?;
+    
+    Ok(())
+}
+
+#[tokio::test]
+async fn test_update_chat_sharing_invalid_email() -> Result<()> {
+    // Set up test fixtures
+    let mut fixture = FixtureBuilder::new().await?;
+    
+    // Create a test user
+    let user = fixture.create_user().await?;
+    
+    // Create a test chat owned by the user
+    let chat = fixture.create_chat(&user.id).await?;
+    
+    // Create a manual permission so our test user has Owner access to the chat
+    create_share(
+        chat.id,
+        AssetType::Chat,
+        user.id,
+        IdentityType::User,
+        AssetPermissionRole::Owner,
+        user.id,
+    )
+    .await?;
+    
+    // Set up the test server with our endpoint
+    let app = Router::new()
+        .route("/chats/:id/sharing", put(update_chat_sharing_rest_handler))
+        .layer(Extension(AuthenticatedUser {
+            id: user.id,
+            email: user.email.clone(),
+            org_id: None,
+        }));
+    
+    let client = TestClient::new(app);
+    
+    // Make the request with an invalid email format
+    let payload = json!([
+        {
+            "email": "invalid-email", // Missing @ symbol
+            "role": "Editor"
+        }
+    ]);
+    
+    let response = client
+        .put(&format!("/chats/{}/sharing", chat.id))
+        .json(&payload)
+        .send()
+        .await?;
+    
+    // Assert the response is bad request
+    response.assert_status_bad_request()?;
+    
+    Ok(())
+}
\ No newline at end of file