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Is it possible to edit the contents of a smart object without opening it in a new window? I need to be able to edit it as if it were a regular layer in my project, instead of having to edit it separately and then return to what I was doing.

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Unfortunately and as far as I'm concerned: No.

Smart objects are the equivalent of a file that can open in Photoshop or Illustrator. They are always opened as a new document.

As a temporary fix, if your object is not too big and you are only using it once, you can drag the layers to the document, edit them and turn them into a smart object again.

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Thanks. The problem with dragging the layers back into the document is that you have to reposition them every time which can be a problem. Also if you are working with a scaled object and you are using smartobjects for lossless scaling, this will not be possible at all. – stas Feb 23 '13 at 23:46
You don't have to drag them back in. Simply save and close them and your main file should update them accordingly. – KMSTR Feb 24 '13 at 11:23

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