diff --git a/packages/vscode/src/extension.ts b/packages/vscode/src/extension.ts
index f886e363..652796be 100644
--- a/packages/vscode/src/extension.ts
+++ b/packages/vscode/src/extension.ts
@@ -4,6 +4,7 @@ import { AgentManagerPanelProvider } from './AgentManagerPanelProvider';
 import { SessionEditorPanelProvider } from './SessionEditorPanelProvider';
 import { createOpenCodeManager, type OpenCodeManager } from './opencode';
 import { startGlobalEventWatcher, stopGlobalEventWatcher, setChatViewProvider } from './sessionActivityWatcher';
+import { pathsEqualWithNormalizedDriveLetter } from './pathUtils';
 import { resolveWorkspaceFolders } from './workspaceResolver';
 
 let chatViewProvider: ChatViewProvider | undefined;
@@ -537,7 +538,9 @@ export async function activate(context: vscode.ExtensionContext) {
       const debug = openCodeManager?.getDebugInfo();
       const resolvedApiUrl = openCodeManager?.getApiUrl();
       const workingDirectory = openCodeManager?.getWorkingDirectory() ?? '';
-      const workingDirectoryMatchesWorkspace = Boolean(primaryWorkspace && workingDirectory === primaryWorkspace);
+      const workingDirectoryMatchesWorkspace = Boolean(
+        primaryWorkspace && pathsEqualWithNormalizedDriveLetter(workingDirectory, primaryWorkspace)
+      );
       let resolvedApiPath = '';
       if (resolvedApiUrl) {
         try {
diff --git a/packages/vscode/src/pathUtils.test.ts b/packages/vscode/src/pathUtils.test.ts
new file mode 100644
index 00000000..0088124b
--- /dev/null
+++ b/packages/vscode/src/pathUtils.test.ts
@@ -0,0 +1,24 @@
+import assert from 'node:assert/strict';
+import { describe, test } from 'node:test';
+import { pathsEqualWithNormalizedDriveLetter } from './pathUtils';
+
+describe('pathsEqualWithNormalizedDriveLetter', () => {
+  test('matches Windows paths that differ only in drive-letter case', () => {
+    assert.equal(
+      pathsEqualWithNormalizedDriveLetter('C:\\Users\\user\\project', 'c:\\Users\\user\\project'),
+      true
+    );
+  });
+
+  test('does not ignore case outside the drive letter', () => {
+    assert.equal(
+      pathsEqualWithNormalizedDriveLetter('C:\\Users\\user\\project', 'C:\\Users\\User\\project'),
+      false
+    );
+  });
+
+  test('preserves exact comparison for paths without a Windows drive letter', () => {
+    assert.equal(pathsEqualWithNormalizedDriveLetter('/work/project', '/work/project'), true);
+    assert.equal(pathsEqualWithNormalizedDriveLetter('/work/project', '/work/other'), false);
+  });
+});
diff --git a/packages/vscode/src/pathUtils.ts b/packages/vscode/src/pathUtils.ts
index 85245a9d..0dd63c74 100644
--- a/packages/vscode/src/pathUtils.ts
+++ b/packages/vscode/src/pathUtils.ts
@@ -7,3 +7,6 @@
  */
 export const normalizeWindowsDriveLetter = (p: string): string =>
   p.replace(/^([a-z]):/, (_, letter: string) => letter.toUpperCase() + ':');
+
+export const pathsEqualWithNormalizedDriveLetter = (left: string, right: string): boolean =>
+  normalizeWindowsDriveLetter(left) === normalizeWindowsDriveLetter(right);