diff --git a/CHANGELOG.md b/CHANGELOG.md
index 8d75ad4d5..6aff1d124 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -22,6 +22,12 @@ Code v99.99.999
 
 ## Unreleased
 
+Code v1.128.0
+
+### Changed
+
+- Update to Code 1.128.0
+
 ## [4.127.0](https://github.com/coder/code-server/releases/tag/v4.127.0) - 2026-07-02
 
 Code v1.127.0
diff --git a/lib/vscode b/lib/vscode
index a22d00300..fc3def677 160000
--- a/lib/vscode
+++ b/lib/vscode
@@ -1 +1 @@
-Subproject commit a22d00300655c17490ce63dffc28bcdcedcd82c4
+Subproject commit fc3def6774c76082adf699d366f31a557ce5573f