Find and Replace Inside a Text File from a Bash Command

The easiest way is to use sed (or perl):

sed -i -e 's/abc/XYZ/g' /tmp/file.txt

Which will invoke sed to do an in-place edit due to the -i option. This can be called from bash.

If you really really want to use just bash, then the following can work:

while IFS='' read -r a; do
    echo "${a//abc/XYZ}"
done < /tmp/file.txt > /tmp/file.txt.t
mv /tmp/file.txt{.t,}

This loops over each line, doing a substitution, and writing to a temporary file (don't want to clobber the input). The move at the end just moves temporary to the original name. (For robustness and security, the temporary file name should not be static or predictable, but let's not go there.)

For Mac users:

sed -i '' 's/abc/XYZ/g' /tmp/file.txt

(See the comment below why)

File manipulation isn't normally done by Bash, but by programs invoked by Bash, e.g.:

perl -pi -e 's/abc/XYZ/g' /tmp/file.txt

The -i flag tells it to do an in-place replacement.

See man perlrun for more details, including how to take a backup of the original file.