MCP Configuration in VS Code and Copilot CLI

MCP configuration looks similar across AI clients, but the clients do not all discover the same files or expect the same top-level JSON key. VS Code and Copilot CLI are the important example: both can start MCP servers, but their native configuration formats are different.

The Short Version

The server entries are conceptually similar. The file location and the top-level key are the compatibility boundary.

VS Code Configuration

For a VS Code-only workspace, create .vscode/mcp.json:

{
	"servers": {
		"playwright": {
			"command": "npx",
			"args": ["-y", "@microsoft/mcp-server-playwright"]
		},
		"github": {
			"type": "http",
			"url": "https://api.githubcopilot.com/mcp"
		}
	}
}

VS Code also supports a user-profile configuration. Run MCP: Open User Configuration from the Command Palette rather than looking for a fixed file in the home directory. User-profile servers are available across workspaces; workspace servers can be checked into source control when the configuration is appropriate for the team.

VS Code provides IntelliSense and management actions for mcp.json. You can also run MCP: Add Server, or manage installed servers from the Extensions view and the Command Palette.

Copilot CLI and Agent Host Configuration

For a configuration that the Agent Host reads natively, use the CLI format:

{
	"mcpServers": {
		"playwright": {
			"command": "npx",
			"args": ["-y", "@microsoft/mcp-server-playwright"]
		},
		"github": {
			"type": "http",
			"url": "https://api.githubcopilot.com/mcp"
		}
	}
}

At workspace scope, put this configuration in .mcp.json at the repository root. Copilot CLI can also discover .github/mcp.json, and a project-level configuration may use the bare format in which each top-level key is a server name.

At user scope, the default file is:

~/.copilot/mcp-config.json

Set COPILOT_HOME when the Copilot home directory should be somewhere else.

The Agent Host Detail in VS Code

A VS Code chat session can run on the Agent Host instead of the traditional extension host. In that case, the Agent Host does not read .vscode/mcp.json directly. VS Code forwards the configuration to it, except for servers that need interactive input such as ${input:...} variables.

This creates two practical choices:

1. Use .vscode/mcp.json when the configuration is specifically for VS Code.
2. Use the Agent Host format in a repository-level .mcp.json when the same configuration should work natively in VS Code Agent Host and Copilot CLI.

The second option avoids maintaining two files, but it also means that tools which only understand VS Code’s servers format will not consume the file.

Migrating a Configuration

The conversion is structural rather than a redesign of every server entry:

- .vscode/mcp.json
+ .mcp.json

- "servers": {
+ "mcpServers": {

Then review the server-specific transport fields. Local stdio servers usually keep their command, args, and env; remote servers may differ in whether the client supports HTTP, SSE, or another transport.

Do not copy secrets directly into either file. Use the client’s input-variable or environment-file mechanism, and review local server configurations before trusting them: a local MCP server can run arbitrary code on the machine.

Choosing a Format

Use this rule of thumb:

• VS Code only: .vscode/mcp.json with servers.
• VS Code Agent Host and Copilot CLI: repository .mcp.json with mcpServers.
• Personal Agent Host configuration: ~/.copilot/mcp-config.json.
• Shared team configuration: commit the workspace file only after checking that it contains no credentials or machine-specific paths.

MCP is the shared protocol; configuration discovery is still client-specific. When a server is missing, check the file location, the top-level key, the transport fields, and whether the current session is using the extension host or Agent Host.

References

• Add and manage MCP servers in VS Code - documents VS Code workspace and user configuration, the servers schema, Agent Host forwarding behavior, the native .mcp.json and ~/.copilot/mcp-config.json locations, server trust, and secret-handling guidance.