diff --git a/packages/vscode-typescript/src/session.ts b/packages/vscode-typescript/src/session.ts
index 46303606b836f..a9107f3dbc15c 100644
--- a/packages/vscode-typescript/src/session.ts
+++ b/packages/vscode-typescript/src/session.ts
@@ -20,6 +20,7 @@ import {
     getExe,
     getWorkspaceTsdkConfigValue,
     getWorkspaceTsdkForPrompt,
+    pathHasTsserverJs,
     readNativePreviewConfig,
     resolveTsdkPath,
     resolveTsdkPathToExe,
@@ -498,18 +499,30 @@ async function getStradaExtensionVersion(extensionId: string, pathToTypescript:
     }
 }
 
+const workspacePackageSubpaths: readonly (readonly string[])[] = [
+    ["node_modules", "typescript"],
+    ["node_modules", "@typescript", "native-preview"],
+];
+
 async function findWorkspaceNativePreviewPackages(): Promise<DetectedVersion[]> {
     const results: DetectedVersion[] = [];
     for (const folder of vscode.workspace.workspaceFolders ?? []) {
-        const packagePath = vscode.Uri.joinPath(folder.uri, "node_modules", "@typescript", "native-preview");
-        const resolved = await resolveTsdkPathToExe(path.normalize(packagePath.fsPath));
-        if (!resolved) continue;
-        results.push({
-            folder,
-            version: resolved?.version ?? "unknown",
-            tsdkPath: path.normalize(packagePath.fsPath),
-            exePath: resolved?.path ?? "",
-        });
+        for (const candidate of workspacePackageSubpaths) {
+            const packagePath = vscode.Uri.joinPath(folder.uri, ...candidate);
+            const normalizedPath = path.normalize(packagePath.fsPath);
+            if (await pathHasTsserverJs(normalizedPath)) {
+                continue;
+            }
+            const resolved = await resolveTsdkPathToExe(normalizedPath);
+            if (!resolved) continue;
+            results.push({
+                folder,
+                version: resolved.version ?? "unknown",
+                tsdkPath: normalizedPath,
+                exePath: resolved.path ?? "",
+            });
+            break;
+        }
     }
     return results;
 }
@@ -655,7 +668,7 @@ async function promptSelectVersion(context: vscode.ExtensionContext, client: Cli
 
 /**
  * If the workspace has a tsdk setting pending consent, or has
- * `@typescript/typescript` installed in node_modules, prompt the user
+ * TypeScript 7 installed in node_modules, prompt the user
  * to allow using it.
  */
 export async function promptUseWorkspaceVersion(context: vscode.ExtensionContext): Promise<void> {
@@ -694,7 +707,7 @@ export async function promptUseWorkspaceVersion(context: vscode.ExtensionContext
         }
     }
     else {
-        // No workspace tsdk config, but check if native-preview is installed
+        // No workspace tsdk config, but check if TypeScript 7 is installed
         // in the workspace's node_modules.
         const workspaceVersions = await findWorkspaceNativePreviewPackages();
         if (workspaceVersions.length === 0) return;
diff --git a/packages/vscode-typescript/src/util.ts b/packages/vscode-typescript/src/util.ts
index a299423f81948..4b18a296b667f 100644
--- a/packages/vscode-typescript/src/util.ts
+++ b/packages/vscode-typescript/src/util.ts
@@ -299,7 +299,7 @@ async function getTsdkCandidates(options?: { nativeOnly?: boolean; filter?: (can
     return candidates.filter(options?.filter ?? (() => true)).sort(compareExplicitConfigValues);
 }
 
-async function pathHasTsserverJs(tsdkPath: string): Promise<boolean> {
+export async function pathHasTsserverJs(tsdkPath: string): Promise<boolean> {
     const resolved = workspaceResolve(tsdkPath);
     for (const candidate of [vscode.Uri.joinPath(resolved, "tsserver.js"), vscode.Uri.joinPath(resolved, "lib", "tsserver.js")]) {
         try {
diff --git a/packages/vscode-typescript/test/tsdkPackage.test.ts b/packages/vscode-typescript/test/tsdkPackage.test.ts
index 5a96fa1246110..9894ade065a3a 100644
--- a/packages/vscode-typescript/test/tsdkPackage.test.ts
+++ b/packages/vscode-typescript/test/tsdkPackage.test.ts
@@ -6,15 +6,16 @@ import test, { describe } from "node:test";
 import { resolvePackageExecutable } from "../src/tsdkPackage";
 
 const platformPackage = `typescript-${process.platform}-${process.arch}`;
+const nativePlatformPackage = `native-preview-${process.platform}-${process.arch}`;
 const exeSuffix = process.platform === "win32" ? ".exe" : "";
 const exeName = `tsc${exeSuffix}`;
 const nativeExeName = `tsgo${exeSuffix}`;
 
-function createPackage(root: string, relativePath: string): string {
+function createPackage(root: string, relativePath: string, packageJson: object = {}): string {
     const packagePath = path.join(root, relativePath);
     fs.mkdirSync(packagePath, { recursive: true });
     const packageJsonPath = path.join(packagePath, "package.json");
-    fs.writeFileSync(packageJsonPath, "{}");
+    fs.writeFileSync(packageJsonPath, JSON.stringify(packageJson, undefined, 2));
     return packageJsonPath;
 }
 
@@ -75,14 +76,20 @@ describe("tsdk package resolution", { concurrency: true }, () => {
         platformPath: `node_modules/@typescript/${platformPackage}`,
     });
 
-    const nativePlatformPackage = `native-preview-${process.platform}-${process.arch}`;
-    testResolution("resolves the native-preview package", {
+    testResolution("resolves the @typescript/typescript native-preview package", {
         packagePath: "node_modules/@typescript/typescript",
         platformPath: `node_modules/@typescript/${nativePlatformPackage}`,
         platformPackage: nativePlatformPackage,
         exeName: nativeExeName,
     });
 
+    testResolution("resolves the @typescript/native-preview package", {
+        packagePath: "node_modules/@typescript/native-preview",
+        platformPath: `node_modules/@typescript/${nativePlatformPackage}`,
+        platformPackage: nativePlatformPackage,
+        exeName: nativeExeName,
+    });
+
     testResolution("resolves a non-hoisted platform package", {
         packagePath: "node_modules/@typescript/native",
         platformPath: `node_modules/@typescript/native/node_modules/@typescript/${platformPackage}`,