diff --git a/bin/omarchy-theme-set-vscode b/bin/omarchy-theme-set-vscode
index d8ea056b..97144172 100755
--- a/bin/omarchy-theme-set-vscode
+++ b/bin/omarchy-theme-set-vscode
@@ -5,6 +5,56 @@
 
 VS_CODE_THEME_DESCRIPTOR="$HOME/.config/omarchy/current/theme/vscode.json"
 GENERATED_THEME="$HOME/.config/omarchy/current/theme/vscode-theme.json"
+GENERATED_EXTENSION_NAME="omarchy-theme"
+GENERATED_EXTENSION_ID="local.$GENERATED_EXTENSION_NAME"
+GENERATED_EXTENSION_VERSION="1.0.0"
+
+register_generated_extension() {
+  local ext_dir="$1"
+  local ext_base extensions_file obsolete_file relative tmp
+
+  ext_base=$(dirname "$ext_dir")
+  extensions_file="$ext_base/extensions.json"
+  obsolete_file="$ext_base/.obsolete"
+  relative=$(basename "$ext_dir")
+
+  if [[ -f $obsolete_file ]]; then
+    tmp=$(mktemp)
+    if jq --arg key "$GENERATED_EXTENSION_ID-$GENERATED_EXTENSION_VERSION" 'del(.[$key])' "$obsolete_file" >"$tmp"; then
+      mv "$tmp" "$obsolete_file"
+      [[ $(jq 'length' "$obsolete_file") == "0" ]] && rm -f "$obsolete_file"
+    else
+      rm -f "$tmp"
+    fi
+  fi
+
+  [[ -f $extensions_file ]] || printf '[]\n' >"$extensions_file"
+
+  tmp=$(mktemp)
+  if jq \
+    --arg id "$GENERATED_EXTENSION_ID" \
+    --arg version "$GENERATED_EXTENSION_VERSION" \
+    --arg fs_path "$ext_dir" \
+    --arg external "file://$ext_dir" \
+    --arg relative "$relative" \
+    'map(select(.identifier.id != $id)) + [{
+      identifier: { id: $id },
+      version: $version,
+      location: {
+        "$mid": 1,
+        fsPath: $fs_path,
+        external: $external,
+        path: $fs_path,
+        scheme: "file"
+      },
+      relativeLocation: $relative
+    }]' \
+    "$extensions_file" >"$tmp"; then
+    mv "$tmp" "$extensions_file"
+  else
+    rm -f "$tmp"
+  fi
+}
 
 # Install generated theme as a local extension for a given editor
 install_generated_extension() {
@@ -19,15 +69,15 @@ install_generated_extension() {
   fi
 
   mkdir -p "$ext_dir/themes"
-  cp "$GENERATED_THEME" "$ext_dir/themes/omarchy-color-theme.json"
+  ln -sfn "$GENERATED_THEME" "$ext_dir/themes/omarchy-color-theme.json"
 
   cat > "$ext_dir/package.json" <<EOF
 {
-    "name": "omarchy-theme",
+    "name": "$GENERATED_EXTENSION_NAME",
     "displayName": "Omarchy",
     "description": "Omarchy color theme",
     "publisher": "local",
-    "version": "1.0.0",
+    "version": "$GENERATED_EXTENSION_VERSION",
     "engines": { "vscode": "^1.70.0" },
     "categories": ["Themes"],
     "contributes": {
@@ -39,6 +89,8 @@ install_generated_extension() {
     }
 }
 EOF
+
+  register_generated_extension "$ext_dir"
 }
 
 set_theme() {
@@ -61,7 +113,7 @@ set_theme() {
     fi
   elif [[ -f "$GENERATED_THEME" ]]; then
     # VS Code only discovers local color themes through an extension package.
-    install_generated_extension "$ext_base/omarchy-theme"
+    install_generated_extension "$ext_base/$GENERATED_EXTENSION_NAME"
     theme_name="Omarchy"
   fi
 
diff --git a/default/themed/neovim.lua.tpl b/default/themed/neovim.lua.tpl
index 52ef07ea..7e6f29dc 100644
--- a/default/themed/neovim.lua.tpl
+++ b/default/themed/neovim.lua.tpl
@@ -6,38 +6,38 @@ return {
     priority = 1000,
     opts = {
       colors = {
-        bg         = "{{ bg }}",
-        dark_bg    = "{{ dark_bg }}",
-        darker_bg  = "{{ darker_bg }}",
+        bg = "{{ bg }}",
+        dark_bg = "{{ dark_bg }}",
+        darker_bg = "{{ darker_bg }}",
         lighter_bg = "{{ lighter_bg }}",
 
-        fg         = "{{ fg }}",
-        dark_fg    = "{{ dark_fg }}",
-        light_fg   = "{{ light_fg }}",
-        bright_fg  = "{{ bright_fg }}",
-        muted      = "{{ muted }}",
+        fg = "{{ fg }}",
+        dark_fg = "{{ dark_fg }}",
+        light_fg = "{{ light_fg }}",
+        bright_fg = "{{ bright_fg }}",
+        muted = "{{ muted }}",
 
-        red        = "{{ red }}",
-        yellow     = "{{ yellow }}",
-        orange     = "{{ orange }}",
-        green      = "{{ green }}",
-        cyan       = "{{ cyan }}",
-        blue       = "{{ blue }}",
-        purple     = "{{ purple }}",
-        brown      = "{{ brown }}",
+        red = "{{ red }}",
+        yellow = "{{ yellow }}",
+        orange = "{{ orange }}",
+        green = "{{ green }}",
+        cyan = "{{ cyan }}",
+        blue = "{{ blue }}",
+        purple = "{{ purple }}",
+        brown = "{{ brown }}",
 
-        bright_red    = "{{ bright_red }}",
+        bright_red = "{{ bright_red }}",
         bright_yellow = "{{ bright_yellow }}",
-        bright_green  = "{{ bright_green }}",
-        bright_cyan   = "{{ bright_cyan }}",
-        bright_blue   = "{{ bright_blue }}",
+        bright_green = "{{ bright_green }}",
+        bright_cyan = "{{ bright_cyan }}",
+        bright_blue = "{{ bright_blue }}",
         bright_purple = "{{ bright_purple }}",
 
-        accent               = "{{ accent }}",
-        cursor               = "{{ cursor }}",
-        foreground           = "{{ foreground }}",
-        background           = "{{ background }}",
-        selection            = "{{ selection }}",
+        accent = "{{ accent }}",
+        cursor = "{{ cursor }}",
+        foreground = "{{ foreground }}",
+        background = "{{ background }}",
+        selection = "{{ selection }}",
         selection_foreground = "{{ selection_foreground }}",
         selection_background = "{{ selection_background }}",
       },
diff --git a/test/cli b/test/cli
index 649bf33d..97df81ca 100755
--- a/test/cli
+++ b/test/cli
@@ -365,9 +365,18 @@ exit 1
 EOF
 chmod +x "$FAKE_BIN/omarchy-toggle-enabled"
 
+mkdir -p "$PI_TMPDIR/.vscode/extensions"
+echo '{"local.omarchy-theme-1.0.0":true}' >"$PI_TMPDIR/.vscode/extensions/.obsolete"
 PATH="$FAKE_BIN:$ROOT/bin:$PATH" HOME="$PI_TMPDIR" "$ROOT/bin/omarchy-theme-set-vscode"
 jq -e '.contributes.themes[0].uiTheme == "vs"' "$PI_TMPDIR/.vscode/extensions/omarchy-theme/package.json" >/dev/null || fail "vscode generated light theme uses VS Code light uiTheme"
 pass "vscode generated light theme uses VS Code light uiTheme"
+[[ -L $PI_TMPDIR/.vscode/extensions/omarchy-theme/themes/omarchy-color-theme.json ]] || fail "vscode generated theme references current theme file"
+[[ $(readlink "$PI_TMPDIR/.vscode/extensions/omarchy-theme/themes/omarchy-color-theme.json") == "$PI_TMPDIR/.config/omarchy/current/theme/vscode-theme.json" ]] || fail "vscode generated theme references current theme file"
+pass "vscode generated theme references current theme file"
+[[ ! -f $PI_TMPDIR/.vscode/extensions/.obsolete ]] || fail "vscode generated theme clears obsolete extension marker"
+pass "vscode generated theme clears obsolete extension marker"
+jq -e '.[] | select(.identifier.id == "local.omarchy-theme" and .relativeLocation == "omarchy-theme")' "$PI_TMPDIR/.vscode/extensions/extensions.json" >/dev/null || fail "vscode generated theme registers local extension"
+pass "vscode generated theme registers local extension"
 
 for binary in \
   omarchy-update \