diff --git a/CHANGELOG.md b/CHANGELOG.md
index 1706c15bc..64b0fbf57 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -22,6 +22,12 @@ Code v99.99.999
 
 ## Unreleased
 
+Code v1.127.0
+
+### Changed
+
+- Update to Code 1.127.0
+
 ## [4.126.0](https://github.com/coder/code-server/releases/tag/v4.126.0) - 2026-06-24
 
 Code v1.126.0
diff --git a/lib/vscode b/lib/vscode
index 7e7950df8..a22d00300 160000
--- a/lib/vscode
+++ b/lib/vscode
@@ -1 +1 @@
-Subproject commit 7e7950df89d055b5a378379db9ee14290772148a
+Subproject commit a22d00300655c17490ce63dffc28bcdcedcd82c4
diff --git a/patches/display-language.diff b/patches/display-language.diff
index 6c721eb2c..3ff62227f 100644
--- a/patches/display-language.diff
+++ b/patches/display-language.diff
@@ -18,7 +18,7 @@ Index: code-server/lib/vscode/src/vs/server/node/serverServices.ts
  import { ProtocolConstants } from '../../base/parts/ipc/common/ipc.net.js';
  import { IConfigurationService } from '../../platform/configuration/common/configuration.js';
  import { ConfigurationService } from '../../platform/configuration/common/configurationService.js';
-@@ -359,6 +359,9 @@ export async function setupServerService
+@@ -358,6 +358,9 @@ export async function setupServerService
  
  		socketServer.registerChannel('mcpManagement', new McpManagementChannel(mcpManagementService, (ctx: RemoteAgentConnectionContext) => getUriTransformer(ctx.remoteAuthority)));
  
diff --git a/patches/external-file-actions.diff b/patches/external-file-actions.diff
index 9624a1ae1..abbfac2cb 100644
--- a/patches/external-file-actions.diff
+++ b/patches/external-file-actions.diff
@@ -147,7 +147,7 @@ Index: code-server/lib/vscode/src/vs/workbench/browser/contextkeys.ts
  		@IProductService private readonly productService: IProductService,
  		@IEditorGroupsService private readonly editorGroupService: IEditorGroupsService,
  		@IEditorService private readonly editorService: IEditorService,
-@@ -201,6 +201,10 @@ export class WorkbenchContextKeysHandler
+@@ -202,6 +202,10 @@ export class WorkbenchContextKeysHandler
  		this.auxiliaryBarMaximizedContext = AuxiliaryBarMaximizedContext.bindTo(this.contextKeyService);
  		this.auxiliaryBarMaximizedContext.set(this.layoutService.isAuxiliaryBarMaximized());
  
diff --git a/patches/getting-started.diff b/patches/getting-started.diff
index db7f80c73..9d50f8f47 100644
--- a/patches/getting-started.diff
+++ b/patches/getting-started.diff
@@ -222,7 +222,7 @@ Index: code-server/lib/vscode/src/vs/workbench/browser/contextkeys.ts
  import { preferredSideBySideGroupDirection, GroupDirection, IEditorGroupsService } from '../services/editor/common/editorGroupsService.js';
  import { IConfigurationService } from '../../platform/configuration/common/configuration.js';
  import { IBrowserWorkbenchEnvironmentService } from '../services/environment/browser/environmentService.js';
-@@ -204,6 +204,7 @@ export class WorkbenchContextKeysHandler
+@@ -205,6 +205,7 @@ export class WorkbenchContextKeysHandler
  		// code-server
  		IsEnabledFileDownloads.bindTo(this.contextKeyService).set(this.environmentService.isEnabledFileDownloads ?? true)
  		IsEnabledFileUploads.bindTo(this.contextKeyService).set(this.environmentService.isEnabledFileUploads ?? true)
diff --git a/patches/integration.diff b/patches/integration.diff
index cb2e458dd..acb355827 100644
--- a/patches/integration.diff
+++ b/patches/integration.diff
@@ -263,7 +263,7 @@ Index: code-server/lib/vscode/src/server-main.ts
 ===================================================================
 --- code-server.orig/lib/vscode/src/server-main.ts
 +++ code-server/lib/vscode/src/server-main.ts
-@@ -22,6 +22,9 @@ import { IServerAPI } from './vs/server/
+@@ -23,6 +23,9 @@ import { IServerAPI } from './vs/server/
  perf.mark('code/server/start');
  (globalThis as { vscodeServerStartTime?: number }).vscodeServerStartTime = performance.now();
  
@@ -273,7 +273,7 @@ Index: code-server/lib/vscode/src/server-main.ts
  // Do a quick parse to determine if a server or the cli needs to be started
  const parsedArgs = minimist(process.argv.slice(2), {
  	boolean: ['start-server', 'list-extensions', 'print-ip-address', 'help', 'version', 'accept-server-license-terms', 'update-extensions'],
-@@ -150,6 +153,7 @@ if (shouldSpawnCli) {
+@@ -153,6 +156,7 @@ if (shouldSpawnCli) {
  		}
  	});
  }
@@ -281,7 +281,7 @@ Index: code-server/lib/vscode/src/server-main.ts
  
  function sanitizeStringArg(val: unknown): string | undefined {
  	if (Array.isArray(val)) { // if an argument is passed multiple times, minimist creates an array
-@@ -283,3 +287,22 @@ function prompt(question: string): Promi
+@@ -406,3 +410,22 @@ function prompt(question: string): Promi
  		});
  	});
  }
diff --git a/patches/sourcemaps.diff b/patches/sourcemaps.diff
index f90d489b0..22ca7ef04 100644
--- a/patches/sourcemaps.diff
+++ b/patches/sourcemaps.diff
@@ -6,7 +6,7 @@ Index: code-server/lib/vscode/build/gulpfile.reh.ts
 ===================================================================
 --- code-server.orig/lib/vscode/build/gulpfile.reh.ts
 +++ code-server/lib/vscode/build/gulpfile.reh.ts
-@@ -297,10 +297,15 @@ function packageTask(type: string, platf
+@@ -344,10 +344,15 @@ function packageTask(type: string, platf
  	const destination = path.join(BUILD_ROOT, destinationFolderName);
  
  	return () => {