How to turn VS Code into an all-in-one AI workspace with Claude

Most AI desktop apps are great at conversation but terrible as real workspaces. They’re slow, locked down, and force you to bounce between tools just to get simple things done. A better approach is to bring AI into the app where you already spend your day—and for many people, that’s VS Code.

With the right setup, VS Code can become an all-in-one AI workspace where Claude works directly on your live files, you can run multiple AI agents side by side, and every part of your business lives in one organized system.

Why use VS Code as your AI command center?

VS Code is marketed as a code editor, but with a few tweaks, it becomes a powerful AI hub for knowledge work, content creation, and business operations—not just programming.

Instead of a sandboxed AI desktop app that can’t properly touch your files, VS Code lets AI work directly inside your actual folders and documents. That means no more copying and pasting between tools, no more token burn for tiny edits, and no more juggling windows just to get context into your AI.

In this setup, your screen is split into three main areas:

• Left: Your file system (your entire "OS" folder with all your work)

• Middle: The active file you’re editing (scripts, docs, spreadsheets, etc.)

• Right: Claude Code and another AI agent, working directly on those files

The result is an AI workspace that feels more like a collaborative Notion or Confluence setup—but with live access to your actual files and folders.

Meet Claude Code inside VS Code

The core of this workflow is the official Claude Code extension for VS Code. Instead of chatting with Claude in a separate desktop app, you get a dedicated side panel where you can run multiple sessions, see your history, and interact with your files in context.

From the Claude Code panel, you can:

• Browse and reopen previous code or work sessions

• Start new sessions tied to specific folders or projects

• Switch models (for example, using Anthropic’s latest models like Fable 5)

• Run long-running agent tasks using goal and workflow features

The key advantage is that Claude isn’t isolated. It can see your open files, understand your folder structure, and work on real documents in place—no exporting, no temporary sandboxes.

Working on live files like a shared doc

In the center of VS Code, you open the file you’re actually working on—say, a YouTube script, a proposal, or a research outline. Claude can edit and comment on that same file in real time.

This feels a lot like collaborating in a shared Notion or Google Doc, but with more control:

• You can make quick manual edits without sending every change back through the AI.

• Claude can rewrite sections, add ideas, or restructure the document directly.

• You’re not wasting tokens asking the AI to fix tiny things you could just type yourself.

With the right markdown extensions, your documents are rendered beautifully. You can use slash commands for headings, lists, and dividers, making VS Code feel like a polished writing app rather than a plain text editor.

Opening PDFs, Office docs, and images in one place

Out of the box, VS Code is pretty rough for non-code files. PDFs and Office docs show up as unreadable binaries, and markdown is just raw text. With a handful of extensions, that changes completely.

In this setup, you can open and work with:

• PDFs directly in VS Code

• Word, Excel, and PowerPoint files with native viewers

• Images like thumbnails and diagrams

That means you can review a PDF, tweak a Word document, or check a thumbnail image without ever leaving your main workspace. If you’re using another model like Gemini to generate thumbnails or visuals, you can still keep everything inside the same VS Code window.

This kind of unified workspace pairs nicely with more advanced agent setups. If you’re interested in running complex workflows with multiple models, you might also like this guide on using Hermes Agent with DeepSeek V4.

The extensions that make it all work

Vanilla VS Code isn’t enough—you need a small set of extensions to turn it into an AI-first workspace. The heavy lifters are:

• Claude Code: The official Anthropic extension that puts Claude in the right-hand panel and lets it work across your files and folders.

• Codex (OpenAI’s coding agent): A second AI assistant you can run alongside Claude in the same window, useful when you want two different models or roles working in parallel.

On top of those, there are several quality-of-life extensions:

• Markdown preview and rich editing

• Native viewers for Word, Excel, PowerPoint, and PDFs

• Excalidraw for quick diagrams and visual thinking

• Live preview for landing pages and dashboards

• A clean icon pack and custom theme so everything is easy to scan

All of this can be bundled into a single VS Code profile. Importing that profile installs the extensions and settings in one go, and it lives separately from any existing VS Code setup you already have. You can switch profiles from the gear icon in the top-right corner.

Building your AI operating system folder

The real power of this setup isn’t just the tools—it’s the file structure behind them. Think of it as your personal operating system (OS) for work, with one main folder that contains everything your AI needs to understand your world.

The left-hand panel in VS Code is simply showing that OS folder. It’s similar to the idea of "projects" in cloud AI apps, but with fewer limits:

• Projects can nest inside each other.

• You’re not capped at a small number of workspaces.

• Files are always live and visible to Claude at the same time, not one upload at a time.

Every part of your business or work has a home in this structure, and Claude can use it all as context.

Step 1: Create your high-level OS folder

Start by creating a single top-level folder on your computer. This is your AI OS.

You can call it whatever you like—"OS", "Workspace", or your business name. This is the folder you’ll open in VS Code, and everything else will live inside it.

Step 2: Add folders for each major area of your work

Inside your OS folder, create a folder for each independent area you work on. For example:

• Brand: Shared assets like fonts, logos, testimonials, and any reusable materials that show up across projects.

• Content: Scripts, posts, newsletters, and any other content you produce.

• Context farming: A place where automated agents can drop notes and summaries from Slack, meetings, and emails.

• Sales: Subfolders for prospects and clients, including proposals, call notes, and deliverables.

If you run multiple businesses, give each one its own top-level folder inside the OS and repeat the same structure within it.

Each major folder can also include a claude.md (or similar) file with project-specific instructions—who you are, what this area is about, and how you want Claude to behave when working there.

Step 3: Design subfolders that match how you actually work

Within each major area, add subfolders that reflect your real workflow. The goal is for every task to have an obvious home.

Take the Content folder as an example. You might split it like this:

• YouTube

• Instagram

• Lead magnets

Inside the YouTube folder, each video gets its own subfolder. That subfolder might contain:

• A workspace folder for messy drafts, brainstorms, and outlines

• A final folder for the polished script, thumbnail, and final assets

This way, when you open a video’s folder, you see the entire lifecycle of that piece of content in one place—and Claude can see it too.

This kind of structured OS also pairs well with more automated workflows, where an AI agent takes a single goal and builds out an entire campaign or launch. If that interests you, check out this walkthrough of using AI to build a full launch from one goal.

Using a context farming folder to keep AI up to date

One of the most powerful pieces of this OS is the context farming folder. This is where automated agents can continuously drop in:

• Summaries of Slack conversations

• Notes and transcripts from meetings

• Key emails or decisions

Because all of this lives inside your OS folder, Claude can see what’s happening across your business and life without you manually pasting context into every new chat. Over time, this becomes a living knowledge base that your AI can draw on for better answers and more accurate work.

Bringing it all together

By combining VS Code, Claude Code, a second AI agent like Codex, and a thoughtful file structure, you can replace clunky AI desktop apps with a fast, flexible workspace that actually matches how you work.

Everything—content, sales, brand assets, research, and context from your communications—lives in one OS folder. VS Code becomes the front-end for that system, and Claude becomes the brain that helps you navigate, create, and ship work faster.

Once it’s set up, you’re no longer "using an AI tool" in isolation. You’re running your entire day from a single, AI-augmented workspace.