diff --git a/internal/langserver/handlers/did_change_watched_files.go b/internal/langserver/handlers/did_change_watched_files.go
index 9489c4c43..d517afa8a 100644
--- a/internal/langserver/handlers/did_change_watched_files.go
+++ b/internal/langserver/handlers/did_change_watched_files.go
@@ -77,7 +77,17 @@ func (svc *service) DidChangeWatchedFiles(ctx context.Context, params lsp.DidCha
 		}
 
 		// If the .terraform/modules/terraform-sources.json file changes
-		// TODO: implement this
+		if modUri, ok := datadir.ModuleUriFromTerraformSourcesFile(rawURI); ok {
+			modHandle := document.DirHandleFromURI(modUri)
+			// manifest change event handles terraform-sources.json as well
+			svc.eventBus.ManifestChange(eventbus.ManifestChangeEvent{
+				Context:    ctx, // We pass the context for data here
+				Dir:        modHandle,
+				ChangeType: change.Type,
+			})
+
+			continue
+		}
 
 		rawPath, err := uri.PathFromURI(rawURI)
 		if err != nil {
diff --git a/internal/terraform/datadir/paths.go b/internal/terraform/datadir/paths.go
index f6c762817..c009c5938 100644
--- a/internal/terraform/datadir/paths.go
+++ b/internal/terraform/datadir/paths.go
@@ -85,3 +85,11 @@ func ModuleUriFromModuleLockFile(rawUri string) (string, bool) {
 	}
 	return "", false
 }
+
+func ModuleUriFromTerraformSourcesFile(rawUri string) (string, bool) {
+	suffix := "/" + path.Join(terraformSourcesPathElements...)
+	if strings.HasSuffix(rawUri, suffix) {
+		return strings.TrimSuffix(rawUri, suffix), true
+	}
+	return "", false
+}