diff --git a/README.md b/README.md
index 7b89c5e..40c6af1 100644
--- a/README.md
+++ b/README.md
@@ -76,6 +76,8 @@ Both handler constructors take the following parameters:
   `config` frontmatter value.
 - `maxAttempts`: How many times to attempt the `callback` before giving up.
   Defaults to `1` (no retries). If all attempts fail, the webhook is dropped.
+- `watch`: If `true`, Lure watches `luresDir` for changes and reloads lures as
+  they are added, modified, or removed. Defaults to `false`.
 
 ## Generating lures
 
@@ -154,6 +156,12 @@ AND WHAT THE LLM RECEIVING THE PROMPT SHOULD DO IN RESPONSE]
 2. Lure traverses the specified directory and discovers any `.lure` files.
 3. Each `.lure` file has their frontmatter validated. The parsed config and
    template content are cached.
+4. If `watch` is enabled, a filesystem watcher is started on `luresDir`. When
+   a `.lure` file is added or modified, it is re-validated and its cache entry
+   updated. If validation fails, the previous cached version is retained and an
+   error is logged. When a `.lure` file is removed, its cache entry is
+   discarded. Changes take effect immediately — queue processing always uses the
+   current cache, so a reload applies to any items already in the queue as well.
 
 ### Per Request