diff --git a/editors/vscode/client/ConfigService.ts b/editors/vscode/client/ConfigService.ts
index c60a687a065c4..3ebba13c0399f 100644
--- a/editors/vscode/client/ConfigService.ts
+++ b/editors/vscode/client/ConfigService.ts
@@ -1,4 +1,5 @@
 import * as path from "node:path";
+import { promises as fs } from "node:fs";
 import { ConfigurationChangeEvent, RelativePattern, Uri, workspace, WorkspaceFolder } from "vscode";
 import { DiagnosticPullMode } from "vscode-languageclient";
 import { validateSafeBinaryPath } from "./PathValidator";
@@ -113,20 +114,8 @@ export class ConfigService implements IDisposable {
     settingsBinary: string | undefined,
     defaultPattern: string,
   ): Promise<string | undefined> {
-    const cwd = this.workspaceConfigs.keys().next().value;
-    if (!cwd) {
-      return undefined;
-    }
-
     if (!settingsBinary) {
-      // try to find the binary in node_modules/.bin, resolve to the first workspace folder
-      const files = await workspace.findFiles(
-        new RelativePattern(cwd, `**/node_modules/.bin/${defaultPattern}`),
-        null,
-        1,
-      );
-
-      return files.length > 0 ? files[0].fsPath : undefined;
+      return this.searchBinaryInWorkspaces(defaultPattern);
     }
 
     if (!workspace.isTrusted) {
@@ -140,6 +129,10 @@ export class ConfigService implements IDisposable {
 
     if (!path.isAbsolute(settingsBinary)) {
       // if the path is not absolute, resolve it to the first workspace folder
+      const cwd = this.workspaceConfigs.keys().next().value;
+      if (!cwd) {
+        return undefined;
+      }
       settingsBinary = path.normalize(path.join(cwd, settingsBinary));
       // strip the leading slash on Windows
       if (process.platform === "win32" && settingsBinary.startsWith("\\")) {
@@ -150,6 +143,51 @@ export class ConfigService implements IDisposable {
     return settingsBinary;
   }
 
+  /**
+   * Search for binary in all workspace folders, using optimized strategy:
+   * 1. Check direct paths in all workspace node_modules/.bin/ first
+   * 2. Fall back to recursive glob search only if needed
+   */
+  private async searchBinaryInWorkspaces(defaultPattern: string): Promise<string | undefined> {
+    const workspacePaths = Array.from(this.workspaceConfigs.keys());
+
+    if (workspacePaths.length === 0) {
+      return undefined;
+    }
+
+    // First, try direct path checks in all workspace folders
+    for (const workspacePath of workspacePaths) {
+      const directPath = path.join(workspacePath, "node_modules", ".bin", defaultPattern);
+      try {
+        await fs.access(directPath);
+        // Convert to proper file system path format (handles Windows path normalization)
+        return Uri.file(directPath).fsPath;
+      } catch {
+        // File doesn't exist, continue to next workspace
+      }
+    }
+
+    // If direct path checks fail, fall back to recursive glob search
+    // Try each workspace folder in order
+    for (const workspacePath of workspacePaths) {
+      try {
+        const files = await workspace.findFiles(
+          new RelativePattern(workspacePath, `**/node_modules/.bin/${defaultPattern}`),
+          null,
+          1,
+        );
+
+        if (files.length > 0) {
+          return files[0].fsPath;
+        }
+      } catch {
+        // Glob search failed (timeout, permission issues, etc.), try next workspace
+      }
+    }
+
+    return undefined;
+  }
+
   private async onVscodeConfigChange(event: ConfigurationChangeEvent): Promise<void> {
     let isConfigChanged = false;
 
diff --git a/editors/vscode/tests/unit/ConfigService.spec.ts b/editors/vscode/tests/unit/ConfigService.spec.ts
index 4a6aadce646ec..66fa6de4863a3 100644
--- a/editors/vscode/tests/unit/ConfigService.spec.ts
+++ b/editors/vscode/tests/unit/ConfigService.spec.ts
@@ -1,5 +1,5 @@
 import { strictEqual } from 'assert';
-import { workspace } from 'vscode';
+import { Uri, workspace, WorkspaceEdit } from 'vscode';
 import { ConfigService } from '../../client/ConfigService.js';
 import { WORKSPACE_FOLDER } from '../test-helpers.js';
 
@@ -110,4 +110,74 @@ suite('ConfigService', () => {
       strictEqual(relativeServerPath, `${workspace_path}\\relative\\oxlint`);
     });
   });
+
+  suite('Binary Auto-Discovery', () => {
+    const createTestBinary = async (binaryName: string, workspaceUri: Uri = WORKSPACE_FOLDER.uri) => {
+      const binDir = Uri.joinPath(workspaceUri, 'node_modules', '.bin');
+      const binaryUri = Uri.joinPath(binDir, binaryName);
+      const edit = new WorkspaceEdit();
+      edit.createFile(binaryUri, {
+        contents: Buffer.from('#!/usr/bin/env node\nconsole.log("test");'),
+        overwrite: true,
+      });
+      await workspace.applyEdit(edit);
+      return binaryUri.fsPath;
+    };
+
+    const cleanupTestBinary = async (binaryName: string, workspaceUri: Uri = WORKSPACE_FOLDER.uri) => {
+      const binDir = Uri.joinPath(workspaceUri, 'node_modules', '.bin');
+      const binaryUri = Uri.joinPath(binDir, binaryName);
+      const edit = new WorkspaceEdit();
+      edit.deleteFile(binaryUri, { ignoreIfNotExists: true });
+      await workspace.applyEdit(edit);
+    };
+
+    teardown(async () => {
+      await cleanupTestBinary('oxlint');
+      await cleanupTestBinary('oxfmt');
+    });
+
+    test('finds binary in workspace node_modules/.bin/', async () => {
+      const expectedPath = await createTestBinary('oxlint');
+      const service = new ConfigService();
+
+      const binaryPath = await service.getOxlintServerBinPath();
+
+      strictEqual(binaryPath, expectedPath);
+    });
+
+    test('returns undefined when binary not found', async () => {
+      const service = new ConfigService();
+
+      const binaryPath = await service.getOxlintServerBinPath();
+
+      strictEqual(binaryPath, undefined);
+    });
+
+    test('finds oxfmt binary in workspace', async () => {
+      const expectedPath = await createTestBinary('oxfmt');
+      const service = new ConfigService();
+
+      const binaryPath = await service.getOxfmtServerBinPath();
+
+      strictEqual(binaryPath, expectedPath);
+    });
+
+    test('returns properly formatted file system path', async () => {
+      await createTestBinary('oxlint');
+      const service = new ConfigService();
+
+      const binaryPath = await service.getOxlintServerBinPath();
+
+      strictEqual(typeof binaryPath, 'string');
+      if (process.platform === 'win32') {
+        // On Windows, fsPath should use backslashes and have drive letter
+        strictEqual(binaryPath!.includes('/'), false, 'Windows path should not contain forward slashes');
+        strictEqual(binaryPath![1], ':', 'Windows path should have drive letter');
+      } else {
+        // On Unix, fsPath should use forward slashes
+        strictEqual(binaryPath!.startsWith('/'), true, 'Unix path should start with /');
+      }
+    });
+  });
 });