diff --git a/skyrl-train/docs/index.rst b/skyrl-train/docs/index.rst
index 71e727d349..35a69c0da2 100644
--- a/skyrl-train/docs/index.rst
+++ b/skyrl-train/docs/index.rst
@@ -26,6 +26,7 @@ SkyRL is a full-stack RL library designed for modularity and extensibility.
    tutorials/new_env
    tutorials/async
    tutorials/tools_guide
+   tutorials/skyrl_gym_generator
 
 .. toctree::
    :maxdepth: 2
diff --git a/skyrl-train/docs/tutorials/skyrl_gym_generator.rst b/skyrl-train/docs/tutorials/skyrl_gym_generator.rst
new file mode 100644
index 0000000000..35058ab913
--- /dev/null
+++ b/skyrl-train/docs/tutorials/skyrl_gym_generator.rst
@@ -0,0 +1,199 @@
+SkyRLGymGenerator: Multi-turn Tokenization and Token-in-Token-out
+=================================================================
+
+Last updated: 2025-08-22
+
+This document explains how ``SkyRLGymGenerator`` manages the chat history and tokens for both
+single-turn and multi-turn rollouts, and how token-in-token-out (TI/TO) is enforced.
+
+Overview
+--------
+
+``SkyRLGymGenerator`` is an implementation of the ``GeneratorInterface``, where we use SkyRL Gym for
+the environment of the rollouts. If you would like to use other environments, you can write your
+own Generator by extending ``GeneratorInterface``.
+
+A ``SkyRLGymGenerator`` uses an ``InferenceEngineClient`` like an LLM endpoint to generate response,
+ultimately returning ``GeneratorOutput`` (including ``response_ids`` and ``loss_masks``) to
+the training loop for updating the model.
+
+``SkyRLGymGenerator`` is implemented to enforce token-in-token-out (TI/TO) in most cases. To see
+what TI/TO is and why it is important, please refer to `issue #123 <https://github.com/NovaSky-AI/SkyRL/issues/123>`_.
+
+To implement ``GeneratorInterface.generate()``, ``SkyRLGymGenerator`` implements ``generate_batched()``
+for single-turn generation, and ``agent_loop()`` for multi-turn generation.
+
+Single-turn generation
+----------------------
+
+``SkyRLGymGenerator.generate_batched()`` is used when ``config.generator.batched`` is set to ``True``.
+In this case, only a single assistant message is generated for each prompt. It is used for tasks
+such as math problems, where the model is expected to generate a single response without interacting
+with the environment. We pass a list of prompts to each invocation of the underlying LLM engine's
+``.generate()`` method (hence "batched").
+
+Multi-turn generation
+---------------------
+
+``SkyRLGymGenerator.agent_loop()`` is used when ``config.generator.batched`` is set to ``False``, where
+the model is expected to interact with the environment for multiple turns (though ``agent_loop()`` can
+also be used for single-turn generation). We pass a single prompt to each invocation of the underlying
+LLM engine's ``.generate()`` method.
+
+There are three distinct codepaths in ``agent_loop()``, each managing the chat history and tokens
+differently. The codepaths are determined by:
+
+- Config's ``generator.use_conversation_multi_turn``: If ``False``, all turns' observations and assistant
+  generations are stored in the same assistant message. If ``True``, each observation from the
+  environment's ``step()`` is a message.
+- Whether ``get_custom_chat_template(model_name)`` returns a template (currently used for Qwen3).
+
+The three codepaths are:
+
+1) Multi-turn conversation with chat template (the more conventional way)
+
+   - Enabled when ``use_conversation_multi_turn == True`` and ``custom_chat_template is None``.
+   - Each observation is a turn of message following the model's chat template, appending
+     LLM-generated response and observations as raw tokens to maintain TI/TO, but requires the
+     fixed-base approach to ensure the raw tokens follow the model's chat template correctly.
+   - TI/TO: enforced.
+   - Example with Qwen2.5 chat template:
+
+.. code-block:: python
+
+  <|im_start|>system
+  System prompt here<|im_end|>
+  <|im_start|>user
+  Question here<|im_end|>
+  <|im_start|>assistant
+  Response1<|im_end|>
+  <|im_start|>user
+  Observation1<|im_end|>
+  <|im_start|>assistant
+  Response2<|im_end|>
+  <|im_start|>user
+  Observation2<|im_end|>
+  ...
+
+2) Single assistant-message for all turns (single-turn chat template)
+
+   - Enabled when ``use_conversation_multi_turn == False``.
+   - Keep an entire multi-step interaction inside a single assistant message, appending
+     LLM-generated response and observations as raw tokens to maintain TI/TO.
+   - TI/TO: enforced.
+   - Example with Qwen2.5 chat template:
+
+.. code-block:: python
+
+  <|im_start|>system
+  System prompt here<|im_end|>
+  <|im_start|>user
+  Question here<|im_end|>
+  <|im_start|>assistant
+  Response1
+  <observation>Observation1</observation>
+  Response2
+  <observation>Observation2</observation>
+  ...<|im_end|>
+
+3) Always re-tokenize full chat history (no TI/TO)
+
+   - Enabled when ``use_conversation_multi_turn == True`` and a ``custom_chat_template`` is present.
+   - Serve models like Qwen3 that require special handling (e.g., strip non-last-turn thinking
+     tokens). We can also get ``[assistant_masks]`` and ``[input_ids]`` from the final tokenized chat
+     history with the help of ``{% generation %}`` and ``{% endgeneration %}`` tags in the jinja template.
+   - Chat history is maintained as string messages and re-tokenized every turn and
+     at the end to obtain ``assistant_masks`` and final ``response_ids``.
+   - TI/TO: NOT enforced
+
+.. note::
+
+  Currently, the Qwen3 model by default follows the 3rd codepath (i.e. TI/TO is not enforced). That
+  is, this codepath rolls out Qwen3 by following the inference chat template, and returns only the
+  last-turn thinking tokens to Generator for the training pipeline.
+
+  It is debatable whether this is the best method to train Qwen3. We will soon add a configuration flag
+  that only directs to codepath 3 when turned on. Otherwise when false, Qwen3 will follow the
+  first two codepaths and save all thinking tokens to the training pipeline.
+
+Multi-turn Tokenization and TI/TO
+---------------------------------
+
+In this section, we elaborate how TI/TO is enforced in the multi-turn generation, specifically
+for the first codepath. TI/TO for the second codepath is simple since we keep appending the
+generated tokens to the same message and hence do not need to worry about the chat templating
+between messages. The third codepath does not enforce TI/TO.
+
+In codepath 1, the agent loop does the following:
+  1. Tokenize dataset's prompt to initialize ``input_ids``
+  2. Feed ``input_ids`` to LLM engine, get ``output_ids`` out
+  3. ``input_ids += output_ids`` (a.k.a. token-in-token-out) -- the next turn's input IDs are precisely what the LLM generated
+  4. Tokenize observations got from SkyRL-Gym's environment output (i.e. ``env.step()``), and append to ``input_ids``
+  5. Repeat 2-4 until ``env.step()`` marks done
+
+To correctly tokenize the observations in step 4, we follow the fixed-base approach described in
+`this blog <https://jybsuper.github.io/posts/multiturn_tokenization/#the-breakthrough-fixed-base-approach>`_.
+
+Specifically, we instantiate a ``base_conversation`` that we never change ("fixed base"):
+
+.. code-block:: python
+  
+  self.base_conversation = [
+    {"role": "system", "content": "You are a helpful assistant."},
+    {"role": "user", "content": "I am a user."},
+    {"role": "assistant", "content": "I am an assistant."},
+  ]
+  self.base_conversation_token_ids = tokenizer.apply_chat_template(
+    self.base_conversation,
+    add_generation_prompt=False,
+    tokenize=True,
+  )
+
+When we get new observations ``new_obs``, which is a list of ``{role: str, content: str}``, we
+convert them to token IDs while following the model's chat template by:
+
+.. code-block:: python
+
+  observation_ids = self.tokenizer.apply_chat_template(
+    [*self.base_conversation, *new_obs],
+    add_generation_prompt=True,
+    tokenize=True,
+  )[len(self.base_conversation_token_ids) :]
+  input_ids += observation_ids
+  loss_mask += [0] * len(observation_ids)
+
+One tricky part is that, for some models, there are tokens after the last EOS token for a turn of
+message. For instance, in Qwen2.5 and Qwen3, the ``base_conversation_token_ids`` are equivalent to:
+
+.. code-block:: python
+
+  <|im_start|>system\nYou are a helpful assistant.<|im_end|>\n
+  <|im_start|>user\nI am a user.<|im_end|>\n
+  <|im_start|>assistant\nI am an assistant.<|im_end|>\n
+
+Note that there is a ``\n`` in the assistant's message before the next user's message starts.
+If we do token-in-token-out, there is no way for the LLM engine to generate ``\n`` since the
+EOS token is ``<|im_end|>``. Therefore, we need to add the ``\n`` back when creating ``observation_ids``.
+In order to do this, we cut the ``\n`` out in ``base_conversation_token_ids``:
+
+.. code-block:: python
+
+  if self.tokenizer.eos_token_id in self.base_conversation_token_ids:
+      last_eos_token_index = (
+          len(self.base_conversation_token_ids)
+          - 1
+          - self.base_conversation_token_ids[::-1].index(self.tokenizer.eos_token_id)
+      )
+      self.base_conversation_token_ids = self.base_conversation_token_ids[: last_eos_token_index + 1]
+
+
+This way, ``observation_ids`` will be ``\n<|im_start|>user\nObservation here<|im_end|>\n`` (note the
+very first ``\n`` that makes up the former assistant's ``\n``). The ``\n`` at the **final** assistant
+turn will still be missing, but this is fine.
+You can see ``tests/cpu/generators/test_skyrl_gym_generator_chat_templating.py`` for more details.
+
+
+References
+----------
+
+- https://jybsuper.github.io/posts/multiturn_tokenization/#the-breakthrough-fixed-base-approach
diff --git a/skyrl-train/skyrl_train/generators/skyrl_gym_generator.py b/skyrl-train/skyrl_train/generators/skyrl_gym_generator.py
index bcd6d0514f..c651ed0aa1 100644
--- a/skyrl-train/skyrl_train/generators/skyrl_gym_generator.py
+++ b/skyrl-train/skyrl_train/generators/skyrl_gym_generator.py
@@ -1,3 +1,10 @@
+"""
+This file implements ``SkyRLGymGenerator``, an implementation of the `GeneratorInterface` that
+uses SkyRL-Gym as the environment.
+
+For details, see https://skyrl.readthedocs.io/en/latest/tutorials/skyrl_gym_generator.html
+"""
+
 import asyncio
 import copy
 from uuid import uuid4
@@ -53,7 +60,7 @@ def __init__(
             raise ValueError("`sampling_params.logprobs` should be `None` if `batched` is `False`")
 
         # base_conversation is used when `use_conversation_multi_turn==True and custom_chat_template==None` to
-        # correctly format and tokenize observations.
+        # correctly format and tokenize observations into `observation_ids`.
         # Follows https://jybsuper.github.io/posts/multiturn_tokenization/#the-breakthrough-fixed-base-approach
         self.base_conversation = [
             {"role": "system", "content": "You are a helpful assistant."},
@@ -65,18 +72,8 @@ def __init__(
             add_generation_prompt=False,
             tokenize=True,
         )
-        # For Qwen2.5 and Qwen3, the above would generate
-        # <|im_start|>system\nYou are a helpful assistant.<|im_end|>\n
-        # <|im_start|>user\nI am a user.<|im_end|>\n
-        # <|im_start|>assistant\nI am an assistant.<|im_end|>\n
-
-        # Note that there is a `\n` in assistant's line before next user's messsage starts.
-        # If we do token-in-token-out, there is no way for LLM engine to generate `\n` since the
-        # EOS token is `<|im_end|>`. Therefore, we need to add it during `observation_ids`.
-        # By cutting `\n` out in `base_conversation_token_ids`, `observation_ids` in
-        # `_get_next_input_ids_with_multiturn_chat_template()` will be `\n<|im_start|>user\nObservation here<|im_end|>\n`.
-        # Note the `\n` at the final assistant turn will still be missing, but this is fine.
-        # See tests/cpu/generators/test_skyrl_gym_generator_chat_templating.py for more details.
+        # We remove tokens after the last EOS token so that it can be captured in `observation_ids`.
+        # For details, see https://skyrl.readthedocs.io/en/latest/tutorials/skyrl_gym_generator.html#multi-turn-tokenization-and-ti-to
         if self.tokenizer.eos_token_id in self.base_conversation_token_ids:
             last_eos_token_index = (
                 len(self.base_conversation_token_ids)
@@ -539,8 +536,8 @@ def _get_next_input_ids_with_multiturn_chat_template(
 
         # 2. apply chat template for observations, also generate generation prompt for next turn
         if len(new_obs) > 0:
-            # For Qwen, this will generate `\n<|user|>Some observation<|im_end|>\n`. Note that the first `\n`
-            # is generated due to `self.base_conversation_token_ids[: last_eos_token_index + 1]` in `__init__()`.
+            # For Qwen, this will generate `\n<|user|>Some observation<|im_end|>\n`. Note that the
+            # first `\n` is generated since we stripped it in ``base_conversation_token_ids``.
             observation_ids = self.tokenizer.apply_chat_template(
                 [*self.base_conversation, *new_obs],
                 add_generation_prompt=True,