diff --git a/jupyter_server/services/contents/handlers.py b/jupyter_server/services/contents/handlers.py
index 462cbff35e..4059177246 100644
--- a/jupyter_server/services/contents/handlers.py
+++ b/jupyter_server/services/contents/handlers.py
@@ -17,6 +17,8 @@
 from jupyter_server.base.handlers import APIHandler, JupyterHandler, path_regex
 from jupyter_server.utils import ensure_async, url_escape, url_path_join
 
+from .ydoc import YDocWebSocketHandler
+
 AUTH_RESOURCE = "contents"
 
 
@@ -367,4 +369,5 @@ async def post(self, path=""):
     (r"/api/contents%s/trust" % path_regex, TrustNotebooksHandler),
     (r"/api/contents%s" % path_regex, ContentsHandler),
     (r"/api/notebooks/?(.*)", NotebooksRedirectHandler),
+    (r"/api/yjs/(.*)", YDocWebSocketHandler),
 ]
diff --git a/jupyter_server/services/contents/ydoc.py b/jupyter_server/services/contents/ydoc.py
new file mode 100644
index 0000000000..c92e2fb2cf
--- /dev/null
+++ b/jupyter_server/services/contents/ydoc.py
@@ -0,0 +1,203 @@
+# Copyright (c) Jupyter Development Team.
+# Distributed under the terms of the Modified BSD License.
+
+import asyncio
+from typing import Optional, Tuple
+
+from jupyter_ydoc import ydocs as YDOCS
+from tornado import web
+from tornado.websocket import WebSocketHandler
+from ypy_websocket.websocket_server import WebsocketServer, YRoom
+
+from jupyter_server.base.handlers import JupyterHandler
+from jupyter_server.utils import ensure_async
+
+YFILE = YDOCS["file"]
+
+RENAME_SESSION = 127
+
+
+class JupyterRoom(YRoom):
+    def __init__(self, type):
+        super().__init__(ready=False)
+        self.type = type
+        self.cleaner = None
+        self.watcher = None
+        self.document = YDOCS.get(type, YFILE)(self.ydoc)
+
+
+class JupyterWebsocketServer(WebsocketServer):
+    def get_room(self, path: str) -> JupyterRoom:
+        file_format, file_type, file_path = path.split(":", 2)
+        if path not in self.rooms.keys():
+            self.rooms[path] = JupyterRoom(file_type)
+        return self.rooms[path]
+
+
+class YDocWebSocketHandler(WebSocketHandler, JupyterHandler):
+
+    saving_document: Optional[asyncio.Task]
+    websocket_server = JupyterWebsocketServer(rooms_ready=False, auto_clean_rooms=False)
+    _message_queue: asyncio.Queue
+
+    # Override max_message size to 1GB
+    @property
+    def max_message_size(self):
+        return 1024 * 1024 * 1024
+
+    def __aiter__(self):
+        # needed to be compatible with WebsocketServer (async for message in websocket)
+        return self
+
+    async def __anext__(self):
+        # needed to be compatible with WebsocketServer (async for message in websocket)
+        message = await self._message_queue.get()
+        if not message:
+            raise StopAsyncIteration()
+        return message
+
+    def get_file_info(self) -> Tuple[str, str, str]:
+        room_name = self.websocket_server.get_room_name(self.room)
+        file_format: str
+        file_type: str
+        file_path: str
+        file_format, file_type, file_path = room_name.split(":", 2)
+        return file_format, file_type, file_path
+
+    def set_file_info(self, value: str) -> None:
+        self.websocket_server.rename_room(value, from_room=self.room)
+        self.path = value  # needed to be compatible with WebsocketServer (websocket.path)
+
+    async def get(self, *args, **kwargs):
+        if self.get_current_user() is None:
+            self.log.warning("Couldn't authenticate WebSocket connection")
+            raise web.HTTPError(403)
+        return await super().get(*args, **kwargs)
+
+    async def open(self, path):
+        self._message_queue = asyncio.Queue()
+        self.room = self.websocket_server.get_room(path)
+        self.set_file_info(path)
+        self.saving_document = None
+        asyncio.create_task(self.websocket_server.serve(self))
+
+        # cancel the deletion of the room if it was scheduled
+        if self.room.cleaner is not None:
+            self.room.cleaner.cancel()
+
+        if not self.room.ready:
+            file_format, file_type, file_path = self.get_file_info()
+            model = await ensure_async(
+                self.contents_manager.get(file_path, type=file_type, format=file_format)
+            )
+            self.last_modified = model["last_modified"]
+            # check again if ready, because loading the file can be async
+            if not self.room.ready:
+                self.room.document.source = model["content"]
+                self.room.document.dirty = False
+                self.room.ready = True
+                self.room.watcher = asyncio.create_task(self.watch_file())
+                # save the document when changed
+                self.room.document.observe(self.on_document_change)
+
+    async def watch_file(self):
+        poll_interval = self.settings["collaborative_file_poll_interval"]
+        if not poll_interval:
+            self.room.watcher = None
+            return
+        while True:
+            await asyncio.sleep(poll_interval)
+            await self.maybe_load_document()
+
+    async def maybe_load_document(self):
+        file_format, file_type, file_path = self.get_file_info()
+        model = await ensure_async(
+            self.contents_manager.get(file_path, content=False, type=file_type, format=file_format)
+        )
+        # do nothing if the file was saved by us
+        if self.last_modified < model["last_modified"]:
+            model = await ensure_async(
+                self.contents_manager.get(file_path, type=file_type, format=file_format)
+            )
+            self.room.document.source = model["content"]
+            self.last_modified = model["last_modified"]
+
+    async def send(self, message):
+        # needed to be compatible with WebsocketServer (websocket.send)
+        self.write_message(message, binary=True)
+
+    async def recv(self):
+        message = await self._message_queue.get()
+        return message
+
+    def on_message(self, message):
+        self._message_queue.put_nowait(message)
+        if message[0] == RENAME_SESSION:
+            # The client moved the document to a different location. After receiving this message, we make the current document available under a different url.
+            # The other clients are automatically notified of this change because the path is shared through the Yjs document as well.
+            self.set_file_info(message[1:].decode("utf-8"))
+            self.websocket_server.rename_room(self.path, from_room=self.room)
+            # send rename acknowledge
+            self.write_message(bytes([RENAME_SESSION, 1]), binary=True)
+
+    def on_close(self) -> bool:
+        # stop serving this client
+        self._message_queue.put_nowait(b"")
+        if self.room.clients == [self]:
+            # no client in this room after we disconnect
+            # keep the document for a while in case someone reconnects
+            self.room.cleaner = asyncio.create_task(self.clean_room())
+        return True
+
+    async def clean_room(self) -> None:
+        seconds = self.settings["collaborative_document_cleanup_delay"]
+        if seconds is None:
+            return
+        await asyncio.sleep(seconds)
+        if self.room.watcher:
+            self.room.watcher.cancel()
+        self.room.document.unobserve()
+        self.websocket_server.delete_room(room=self.room)
+
+    def on_document_change(self, event):
+        try:
+            dirty = event.keys["dirty"]["newValue"]
+            if not dirty:
+                # we cleared the dirty flag, nothing to save
+                return
+        except Exception:
+            pass
+        # unobserve and observe again because the structure of the document may have changed
+        # e.g. a new cell added to a notebook
+        self.room.document.unobserve()
+        self.room.document.observe(self.on_document_change)
+        if self.saving_document is not None and not self.saving_document.done():
+            # the document is being saved, cancel that
+            self.saving_document.cancel()
+            self.saving_document = None
+        self.saving_document = asyncio.create_task(self.maybe_save_document())
+
+    async def maybe_save_document(self):
+        # save after 1 second of inactivity to prevent too frequent saving
+        await asyncio.sleep(1)
+        file_format, file_type, file_path = self.get_file_info()
+        model = await ensure_async(
+            self.contents_manager.get(file_path, type=file_type, format=file_format)
+        )
+        if self.last_modified < model["last_modified"]:
+            # file changed on disk, let's revert
+            self.room.document.source = model["content"]
+            self.last_modified = model["last_modified"]
+            return
+        if model["content"] != self.room.document.source:
+            # don't save if not needed
+            # this also prevents the dirty flag from bouncing between windows of
+            # the same document opened as different types (e.g. notebook/text editor)
+            model["format"] = file_format
+            model["content"] = self.room.document.source
+            model = await ensure_async(self.contents_manager.save(model, file_path))
+            self.last_modified = model["last_modified"]
+        self.room.document.dirty = False
+
+    def check_origin(self, origin):
+        return True
diff --git a/pyproject.toml b/pyproject.toml
index d157437354..07bcb4d7da 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -44,7 +44,9 @@ dependencies = [
     "tornado>=6.1.0",
     "traitlets>=5.1",
     "websocket-client",
-    "jupyter_telemetry"
+    "jupyter_telemetry",
+    "jupyter_ydoc==0.1.10",
+    "ypy-websocket"
 ]
 
 [project.urls]