diff --git a/Extension/src/LanguageServer/client.ts b/Extension/src/LanguageServer/client.ts
index 8ee0e22f6..d1f0cb8c9 100644
--- a/Extension/src/LanguageServer/client.ts
+++ b/Extension/src/LanguageServer/client.ts
@@ -58,7 +58,7 @@ import { DataBinding } from './dataBinding';
 import { cachedEditorConfigSettings, getEditorConfigSettings } from './editorConfig';
 import { CppSourceStr, clients, configPrefix, updateLanguageConfigurations, usesCrashHandler, watchForCrashes } from './extension';
 import { LocalizeStringParams, getLocaleId, getLocalizedString } from './localization';
-import { PersistentFolderState, PersistentWorkspaceState } from './persistentState';
+import { PersistentFolderState, PersistentState, PersistentWorkspaceState } from './persistentState';
 import { RequestCancelled, ServerCancelled, createProtocolFilter } from './protocolFilter';
 import * as refs from './references';
 import { CppSettings, OtherSettings, SettingsParams, WorkspaceFolderSettingsParams } from './settings';
@@ -564,6 +564,16 @@ export interface ProjectContextResult {
     fileContext: FileContextResult;
 }
 
+interface FolderFilesEncodingChanged {
+    uri: string;
+    filesEncoding: string;
+}
+
+interface FilesEncodingChanged {
+    workspaceFallbackEncoding?: string;
+    foldersFilesEncoding: FolderFilesEncodingChanged[];
+}
+
 // Requests
 const PreInitializationRequest: RequestType<void, string, void> = new RequestType<void, string, void>('cpptools/preinitialize');
 const InitializationRequest: RequestType<CppInitializationParams, void, void> = new RequestType<CppInitializationParams, void, void>('cpptools/initialize');
@@ -642,6 +652,7 @@ const ReportCodeAnalysisTotalNotification: NotificationType<number> = new Notifi
 const DoxygenCommentGeneratedNotification: NotificationType<GenerateDoxygenCommentResult> = new NotificationType<GenerateDoxygenCommentResult>('cpptools/insertDoxygenComment');
 const CanceledReferencesNotification: NotificationType<void> = new NotificationType<void>('cpptools/canceledReferences');
 const IntelliSenseResultNotification: NotificationType<IntelliSenseResult> = new NotificationType<IntelliSenseResult>('cpptools/intelliSenseResult');
+const FilesEncodingChangedNotification: NotificationType<FilesEncodingChanged> = new NotificationType<FilesEncodingChanged>('cpptools/filesEncodingChanged');
 
 let failureMessageShown: boolean = false;
 
@@ -819,6 +830,7 @@ export interface Client {
     getIncludes(maxDepth: number): Promise<GetIncludesResult>;
     getChatContext(uri: vscode.Uri, token: vscode.CancellationToken): Promise<ChatContextResult>;
     getProjectContext(uri: vscode.Uri): Promise<ProjectContextResult>;
+    filesEncodingChanged(filesEncodingChanged: FilesEncodingChanged): void;
 }
 
 export function createClient(workspaceFolder?: vscode.WorkspaceFolder): Client {
@@ -1367,7 +1379,13 @@ export class DefaultClient implements Client {
         DefaultClient.isStarted.resolve();
     }
 
-    private getWorkspaceFolderSettings(workspaceFolderUri: vscode.Uri | undefined, settings: CppSettings, otherSettings: OtherSettings): WorkspaceFolderSettingsParams {
+    private getWorkspaceFolderSettings(workspaceFolderUri: vscode.Uri | undefined, workspaceFolder: vscode.WorkspaceFolder | undefined, settings: CppSettings, otherSettings: OtherSettings): WorkspaceFolderSettingsParams {
+        const filesEncoding: string = otherSettings.filesEncoding;
+        let filesEncodingChanged: boolean = false;
+        if (workspaceFolder) {
+            const lastFilesEncoding: PersistentFolderState<string> = new PersistentFolderState<string>("CPP.lastFilesEncoding", "", workspaceFolder);
+            filesEncodingChanged = lastFilesEncoding.Value !== filesEncoding;
+        }
         const result: WorkspaceFolderSettingsParams = {
             uri: workspaceFolderUri?.toString(),
             intelliSenseEngine: settings.intelliSenseEngine,
@@ -1464,7 +1482,8 @@ export class DefaultClient implements Client {
             doxygenSectionTags: settings.doxygenSectionTags,
             filesExclude: otherSettings.filesExclude,
             filesAutoSaveAfterDelay: otherSettings.filesAutoSaveAfterDelay,
-            filesEncoding: otherSettings.filesEncoding,
+            filesEncoding: filesEncoding,
+            filesEncodingChanged: filesEncodingChanged,
             searchExclude: otherSettings.searchExclude,
             editorAutoClosingBrackets: otherSettings.editorAutoClosingBrackets,
             editorInlayHintsEnabled: otherSettings.editorInlayHintsEnabled,
@@ -1480,10 +1499,10 @@ export class DefaultClient implements Client {
         const workspaceFolderSettingsParams: WorkspaceFolderSettingsParams[] = [];
         if (vscode.workspace.workspaceFolders && vscode.workspace.workspaceFolders.length > 0) {
             for (const workspaceFolder of vscode.workspace.workspaceFolders) {
-                workspaceFolderSettingsParams.push(this.getWorkspaceFolderSettings(workspaceFolder.uri, new CppSettings(workspaceFolder.uri), new OtherSettings(workspaceFolder.uri)));
+                workspaceFolderSettingsParams.push(this.getWorkspaceFolderSettings(workspaceFolder.uri, workspaceFolder, new CppSettings(workspaceFolder.uri), new OtherSettings(workspaceFolder.uri)));
             }
         } else {
-            workspaceFolderSettingsParams.push(this.getWorkspaceFolderSettings(this.RootUri, workspaceSettings, workspaceOtherSettings));
+            workspaceFolderSettingsParams.push(this.getWorkspaceFolderSettings(this.RootUri, undefined, workspaceSettings, workspaceOtherSettings));
         }
         return workspaceFolderSettingsParams;
     }
@@ -1498,9 +1517,13 @@ export class DefaultClient implements Client {
         if (this.currentCopilotHoverEnabled && workspaceSettings.copilotHover !== this.currentCopilotHoverEnabled.Value) {
             void util.promptForReloadWindowDueToSettingsChange();
         }
+        const workspaceFallbackEncoding: string = workspaceOtherSettings.filesEncoding;
+        const lastWorkspaceFallbackEncoding: PersistentState<string> = new PersistentState<string>("CPP.lastWorkspaceFallbackEncoding", "");
+        const workspaceFallbackEncodingChanged = lastWorkspaceFallbackEncoding.Value !== workspaceFallbackEncoding;
         return {
             filesAssociations: workspaceOtherSettings.filesAssociations,
-            workspaceFallbackEncoding: workspaceOtherSettings.filesEncoding,
+            workspaceFallbackEncoding: workspaceFallbackEncoding,
+            workspaceFallbackEncodingChanged: workspaceFallbackEncodingChanged,
             maxConcurrentThreads: workspaceSettings.maxConcurrentThreads,
             maxCachedProcesses: workspaceSettings.maxCachedProcesses,
             maxMemory: workspaceSettings.maxMemory,
@@ -2438,6 +2461,7 @@ export class DefaultClient implements Client {
         this.languageClient.onNotification(ReportCodeAnalysisTotalNotification, (e) => this.updateCodeAnalysisTotal(e));
         this.languageClient.onNotification(DoxygenCommentGeneratedNotification, (e) => void this.insertDoxygenComment(e));
         this.languageClient.onNotification(CanceledReferencesNotification, this.serverCanceledReferences);
+        this.languageClient.onNotification(FilesEncodingChangedNotification, (e) => this.filesEncodingChanged(e));
     }
 
     private handleIntelliSenseResult(intelliSenseResult: IntelliSenseResult): void {
@@ -4085,6 +4109,20 @@ export class DefaultClient implements Client {
     public getCopilotHoverProvider(): CopilotHoverProvider | undefined {
         return this.copilotHoverProvider;
     }
+
+    public filesEncodingChanged(filesEncodingChanged: FilesEncodingChanged): void {
+        if (filesEncodingChanged.workspaceFallbackEncoding !== undefined) {
+            const lastWorkspaceFallbackEncoding: PersistentState<string> = new PersistentState<string>("CPP.lastWorkspaceFallbackEncoding", "");
+            lastWorkspaceFallbackEncoding.Value = filesEncodingChanged.workspaceFallbackEncoding;
+        }
+        for (const folderFilesEncoding of filesEncodingChanged.foldersFilesEncoding) {
+            const workspaceFolder: vscode.WorkspaceFolder | undefined = vscode.workspace.getWorkspaceFolder(vscode.Uri.parse(folderFilesEncoding.uri));
+            if (workspaceFolder !== undefined) {
+                const lastFilesEncoding: PersistentFolderState<string> = new PersistentFolderState<string>("CPP.lastFilesEncoding", "", workspaceFolder);
+                lastFilesEncoding.Value = folderFilesEncoding.filesEncoding;
+            }
+        }
+    }
 }
 
 function getLanguageServerFileName(): string {
@@ -4200,4 +4238,5 @@ class NullClient implements Client {
     getIncludes(maxDepth: number): Promise<GetIncludesResult> { return Promise.resolve({} as GetIncludesResult); }
     getChatContext(uri: vscode.Uri, token: vscode.CancellationToken): Promise<ChatContextResult> { return Promise.resolve({} as ChatContextResult); }
     getProjectContext(uri: vscode.Uri): Promise<ProjectContextResult> { return Promise.resolve({} as ProjectContextResult); }
+    filesEncodingChanged(filesEncodingChanged: FilesEncodingChanged): void { }
 }
diff --git a/Extension/src/LanguageServer/settings.ts b/Extension/src/LanguageServer/settings.ts
index a33a4b803..fb96b2afa 100644
--- a/Extension/src/LanguageServer/settings.ts
+++ b/Extension/src/LanguageServer/settings.ts
@@ -131,6 +131,7 @@ export interface WorkspaceFolderSettingsParams {
     filesExclude: Excludes;
     filesAutoSaveAfterDelay: boolean;
     filesEncoding: string;
+    filesEncodingChanged: boolean;
     searchExclude: Excludes;
     editorAutoClosingBrackets: string;
     editorInlayHintsEnabled: boolean;
@@ -141,6 +142,7 @@ export interface WorkspaceFolderSettingsParams {
 export interface SettingsParams {
     filesAssociations: Associations;
     workspaceFallbackEncoding: string;
+    workspaceFallbackEncodingChanged: boolean;
     maxConcurrentThreads: number | null;
     maxCachedProcesses: number | null;
     maxMemory: number | null;