VS Code not selecting environment in .venv/ on open with Environments extension installed

[nnja]

On Mac OS with the Python & Python Environments extensions installed, VS Code is failing to automatically activate a virtual environment in the .venv/ folder of the project when opened via code . in the terminal, or via opening the folder via the UI.

Despite being present in the Select Python Environment List.

.venv is present in the Python-envs: Workspace Search Paths setting.

To reproduce:

➜  projects uv init pyenvtest
Initialized project `pyenvtest` at `/Users/nina/projects/pyenvtest`
➜  projects cd pyenvtest
➜  pyenvtest git:(main) ✗ uv venv
Using CPython 3.14.4 interpreter at: /opt/homebrew/opt/python@3.14/bin/python3.14
Creating virtual environment at: .venv
Activate with: source .venv/bin/activate
➜  pyenvtest git:(main) ✗ code .

Uninstalling the Python Environments extension fixes the issue, and the environment in .venv/ is automatically selected when VS Code opens.

[nnja]

Doing a little more investigation, and I found this setting in my User settings. To my knowledge, I did not manually add it.

"python-envs.defaultEnvManager": "ms-python.python:system",

Possibly related to this issue? #1118 (comment)

[gboeer]

Probably also related to #1449 #1446 #1467 #1463 #1466 #1431 #1363

[kirisakow]

Uninstalling the Python Environments extension fixes the issue, and the environment in .venv/ is automatically selected when VS Code opens.

FYI guys: Another possible way to fix it is to remove the "python.useEnvironmentsExtension": true setting from User settings.json, as in #1472. As Python Environments extension developers say, the extension is currently under an ongoing rollout, thus behaving weirdly lately:

Note: The Python Environments icon may no longer appear in the Activity Bar due to the ongoing rollout of the Python Environments extension. To restore the extension, add "python.useEnvironmentsExtension": true to your User settings. This setting is temporarily necessary until the rollout is complete!