How to Set Up AI Coding in VS Code

Introduction

VS Code is the most popular editor for AI-assisted coding, with the widest selection of AI extensions and the best integration support. Setting it up properly makes the difference between AI tools that feel magical and tools that feel frustrating. This guide walks you through configuring VS Code for optimal AI assistance, including extension selection, keyboard shortcut setup, context management, and how to use multiple AI tools without conflicts.

Step-by-Step Guide

Install and configure your primary AI extension

Choose your primary AI extension: GitHub Copilot, Continue, Codeium, or Supermaven for inline completions, or Cursor (which is a VS Code fork with built-in AI). Install it from the VS Code marketplace, authenticate, and configure the basic settings. Set your preferred model and response style.

> TIP: Start with a single AI extension and add more only after you're comfortable; multiple extensions can conflict on the Tab key.

Set up keyboard shortcuts for AI actions

Configure keyboard shortcuts for the AI actions you'll use most frequently: accept suggestion, reject suggestion, open chat panel, and inline edit. Default shortcuts often conflict with other extensions. Set up distinct shortcuts so muscle memory builds quickly and you don't accidentally trigger the wrong action.

> TIP: Use Cmd/Ctrl+Shift+A for AI chat and Cmd/Ctrl+Shift+I for inline edit as they're unlikely to conflict with existing shortcuts.

Configure context and file inclusion settings

Set up which files and directories the AI tool should include in its context. Exclude large generated files, node_modules, build outputs, and binary files. Some tools let you pin specific files as 'always included' context, which is useful for configuration files, types, and shared utilities.

> TIP: Create a .aiignore or equivalent file to exclude generated code, test fixtures, and vendor directories from AI context.

Set up the integrated terminal for CLI tools

If you're using CLI-based AI tools like Claude Code or Aider, configure the VS Code integrated terminal to work smoothly with them. Set your default shell, configure environment variables (API keys), and set up terminal profiles for different AI tools. This lets you switch between inline and CLI-based AI tools seamlessly.

> TIP: Create VS Code terminal profiles for each CLI tool so you can launch them with a single click from the terminal dropdown.

Configure workspace-level AI settings

VS Code supports workspace-level settings that override user settings. Create .vscode/settings.json entries for AI tool configurations that should apply to the specific project. This ensures the right model, context, and behavior for each project without manual switching.

> TIP: Commit .vscode/settings.json to version control (excluding API keys) so team members get consistent AI configurations.

Install complementary extensions

Add extensions that enhance AI-assisted development: Error Lens for immediate error feedback, GitLens for understanding code history, and a test runner extension for quick validation of AI-generated code. These tools create a faster feedback loop between AI generation and verification.

> TIP: Install the 'Code Spell Checker' extension since AI-generated code sometimes contains plausible-looking but misspelled identifiers.

Key Takeaways

Start with a single AI extension and add more only when you understand how they interact
Custom keyboard shortcuts prevent conflicts and build muscle memory faster
File exclusion rules prevent AI tools from wasting context on generated and vendor code
Workspace-level settings ensure the right AI configuration for each project
Complementary extensions (Error Lens, GitLens) create faster feedback loops for AI-generated code

Common Pitfalls to Avoid

Installing multiple AI extensions that compete for the Tab key, causing unpredictable suggestion behavior
Not excluding generated files and node_modules from AI context, wasting tokens and degrading suggestion quality
Using default keyboard shortcuts that conflict with other extensions, causing frustrating mis-triggers
Not setting up workspace-level AI configurations, getting inappropriate suggestions when switching between projects

Recommended Tools

These AI coding tools work best for this tutorial:

GitHub Copilot Freemium Continue Free Windsurf Freemium Supermaven Freemium Cursor $20/mo Claude Code $20/mo

FAQ