diff --git a/vscode/extension/tests/broken_project.spec.ts b/vscode/extension/tests/broken_project.spec.ts
index 5638d167b2..d030f9224a 100644
--- a/vscode/extension/tests/broken_project.spec.ts
+++ b/vscode/extension/tests/broken_project.spec.ts
@@ -3,7 +3,11 @@ import fs from 'fs-extra'
 import os from 'os'
 import path from 'path'
 import { openLineageView, saveFile, SUSHI_SOURCE_PATH } from './utils'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 test('bad project, double model', async ({ page }) => {
   const tempDir = await fs.mkdtemp(
@@ -25,8 +29,8 @@ test('bad project, double model', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
 
@@ -60,8 +64,8 @@ test('working project, then broken through adding double model, then refixed', a
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
     await page.waitForLoadState('networkidle')
@@ -173,8 +177,8 @@ test('bad project, double model, then fixed', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
 
@@ -246,8 +250,8 @@ test('bad project, double model, check lineage', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
     await page.waitForLoadState('networkidle')
diff --git a/vscode/extension/tests/completions.spec.ts b/vscode/extension/tests/completions.spec.ts
index 02ad2a2b79..c5921204b0 100644
--- a/vscode/extension/tests/completions.spec.ts
+++ b/vscode/extension/tests/completions.spec.ts
@@ -3,7 +3,11 @@ import path from 'path'
 import fs from 'fs-extra'
 import os from 'os'
 import { SUSHI_SOURCE_PATH } from './utils'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 test('Autocomplete for model names', async ({ page }) => {
   const tempDir = await fs.mkdtemp(path.join(os.tmpdir(), 'vscode-test-sushi-'))
@@ -11,8 +15,8 @@ test('Autocomplete for model names', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
@@ -74,8 +78,8 @@ test.describe('Macro Completions', () => {
 
     const context = await startCodeServer({
       tempDir,
-      placeFileWithPythonInterpreter: true,
     })
+    await createPythonInterpreterSettingsSpecifier(tempDir)
 
     try {
       await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
@@ -132,8 +136,8 @@ test.describe('Macro Completions', () => {
 
     const context = await startCodeServer({
       tempDir,
-      placeFileWithPythonInterpreter: true,
     })
+    await createPythonInterpreterSettingsSpecifier(tempDir)
 
     try {
       await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
diff --git a/vscode/extension/tests/diagnostics.spec.ts b/vscode/extension/tests/diagnostics.spec.ts
index 4566102d95..b2b21911d5 100644
--- a/vscode/extension/tests/diagnostics.spec.ts
+++ b/vscode/extension/tests/diagnostics.spec.ts
@@ -3,7 +3,11 @@ import path from 'path'
 import fs from 'fs-extra'
 import os from 'os'
 import { runCommand, SUSHI_SOURCE_PATH } from './utils'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 test('Workspace diagnostics show up in the diagnostics panel', async ({
   page,
@@ -13,8 +17,8 @@ test('Workspace diagnostics show up in the diagnostics panel', async ({
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   const configPath = path.join(tempDir, 'config.py')
   const configContent = await fs.readFile(configPath, 'utf8')
diff --git a/vscode/extension/tests/find_references.spec.ts b/vscode/extension/tests/find_references.spec.ts
index f7880094ca..5ea00848db 100644
--- a/vscode/extension/tests/find_references.spec.ts
+++ b/vscode/extension/tests/find_references.spec.ts
@@ -7,6 +7,7 @@ import {
   startCodeServer,
   stopCodeServer,
   CodeServerContext,
+  createPythonInterpreterSettingsSpecifier,
 } from './utils_code_server'
 
 // Helper function to set up a test environment for model references
@@ -15,8 +16,8 @@ async function setupModelTestEnvironment(): Promise<CodeServerContext> {
   await fs.copy(SUSHI_SOURCE_PATH, tempDir)
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
   return context
 }
 
diff --git a/vscode/extension/tests/format.spec.ts b/vscode/extension/tests/format.spec.ts
index 3f979d8222..be304c00cd 100644
--- a/vscode/extension/tests/format.spec.ts
+++ b/vscode/extension/tests/format.spec.ts
@@ -3,7 +3,11 @@ import path from 'path'
 import fs from 'fs-extra'
 import os from 'os'
 import { runCommand, SUSHI_SOURCE_PATH } from './utils'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 test('Format project works correctly', async ({ page }) => {
   const tempDir = await fs.mkdtemp(path.join(os.tmpdir(), 'vscode-test-sushi-'))
@@ -11,8 +15,8 @@ test('Format project works correctly', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
diff --git a/vscode/extension/tests/go_to_definition.spec.ts b/vscode/extension/tests/go_to_definition.spec.ts
index 241b2062df..3ef20628dd 100644
--- a/vscode/extension/tests/go_to_definition.spec.ts
+++ b/vscode/extension/tests/go_to_definition.spec.ts
@@ -3,7 +3,11 @@ import path from 'path'
 import fs from 'fs-extra'
 import os from 'os'
 import { goToDefinition, SUSHI_SOURCE_PATH } from './utils'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 test('Stop server works', async ({ page }) => {
   const tempDir = await fs.mkdtemp(path.join(os.tmpdir(), 'vscode-test-sushi-'))
@@ -11,8 +15,8 @@ test('Stop server works', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   try {
     // Navigate to code-server instance
@@ -53,8 +57,8 @@ test('Go to definition for model', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   try {
     // Navigate to code-server instance
diff --git a/vscode/extension/tests/hints.spec.ts b/vscode/extension/tests/hints.spec.ts
index 6486e1bba6..eded1a97e4 100644
--- a/vscode/extension/tests/hints.spec.ts
+++ b/vscode/extension/tests/hints.spec.ts
@@ -3,7 +3,11 @@ import path from 'path'
 import fs from 'fs-extra'
 import os from 'os'
 import { SUSHI_SOURCE_PATH } from './utils'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 test('Model type hinting', async ({ page }) => {
   const tempDir = await fs.mkdtemp(path.join(os.tmpdir(), 'vscode-test-sushi-'))
@@ -11,8 +15,8 @@ test('Model type hinting', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   try {
     // Navigate to code-server instance
diff --git a/vscode/extension/tests/lineage.spec.ts b/vscode/extension/tests/lineage.spec.ts
index 6b2c3d3861..110dd08f61 100644
--- a/vscode/extension/tests/lineage.spec.ts
+++ b/vscode/extension/tests/lineage.spec.ts
@@ -4,7 +4,11 @@ import fs from 'fs-extra'
 import os from 'os'
 import { openLineageView, SUSHI_SOURCE_PATH } from './utils'
 import { writeFileSync } from 'fs'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 /**
  * Helper function to launch VS Code and test lineage with given project path config
@@ -24,8 +28,8 @@ test('Lineage panel renders correctly - no project path config (default)', async
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
@@ -146,8 +150,8 @@ test('Lineage panel renders correctly - absolute path project outside of workspa
   await fs.ensureDir(workspaceDir)
   const context = await startCodeServer({
     tempDir: workspaceDir,
-    placeFileWithPythonInterpreter: false,
   })
+  await createPythonInterpreterSettingsSpecifier(workspaceDir)
 
   const settings = {
     'sqlmesh.projectPath': projectDir,
@@ -203,8 +207,8 @@ test.skip('Lineage panel renders correctly - multiworkspace setup', async ({
 
   const context = await startCodeServer({
     tempDir: workspaceDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(workspaceDir)
 
   const settings = {
     'python.defaultInterpreterPath': context.defaultPythonInterpreter,
diff --git a/vscode/extension/tests/lineage_settings.spec.ts b/vscode/extension/tests/lineage_settings.spec.ts
index c4b5a39dfa..ce50e7275e 100644
--- a/vscode/extension/tests/lineage_settings.spec.ts
+++ b/vscode/extension/tests/lineage_settings.spec.ts
@@ -3,7 +3,11 @@ import path from 'path'
 import fs from 'fs-extra'
 import os from 'os'
 import { openLineageView, SUSHI_SOURCE_PATH } from './utils'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 test('Settings button is visible in the lineage view', async ({ page }) => {
   const tempDir = await fs.mkdtemp(path.join(os.tmpdir(), 'vscode-test-sushi-'))
@@ -11,8 +15,8 @@ test('Settings button is visible in the lineage view', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
diff --git a/vscode/extension/tests/python_env.spec.ts b/vscode/extension/tests/python_env.spec.ts
index fe6b9024a1..7c7b6f96ce 100644
--- a/vscode/extension/tests/python_env.spec.ts
+++ b/vscode/extension/tests/python_env.spec.ts
@@ -35,6 +35,7 @@ if test_var is None or test_var == "":
 
 async function runTest(page: Page, context: CodeServerContext): Promise<void> {
   await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
+  await page.waitForSelector('text=models')
   await openLineageView(page)
 }
 
diff --git a/vscode/extension/tests/rename_cte.spec.ts b/vscode/extension/tests/rename_cte.spec.ts
index 8dc96a6e25..39fb62162f 100644
--- a/vscode/extension/tests/rename_cte.spec.ts
+++ b/vscode/extension/tests/rename_cte.spec.ts
@@ -3,7 +3,11 @@ import path from 'path'
 import fs from 'fs-extra'
 import os from 'os'
 import { findAllReferences, renameSymbol, SUSHI_SOURCE_PATH } from './utils'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 async function setupTestEnvironment({ page }: { page: Page }) {
   const tempDir = await fs.mkdtemp(path.join(os.tmpdir(), 'vscode-test-sushi-'))
@@ -11,8 +15,8 @@ async function setupTestEnvironment({ page }: { page: Page }) {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   // Navigate to code-server instance
   await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
diff --git a/vscode/extension/tests/render.spec.ts b/vscode/extension/tests/render.spec.ts
index 2e9132e8ae..6593708976 100644
--- a/vscode/extension/tests/render.spec.ts
+++ b/vscode/extension/tests/render.spec.ts
@@ -3,7 +3,11 @@ import path from 'path'
 import fs from 'fs-extra'
 import os from 'os'
 import { openLineageView, runCommand, SUSHI_SOURCE_PATH } from './utils'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 test('Render works correctly', async ({ page }) => {
   const tempDir = await fs.mkdtemp(path.join(os.tmpdir(), 'vscode-test-sushi-'))
@@ -11,8 +15,8 @@ test('Render works correctly', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
 
@@ -55,8 +59,8 @@ test('Render works correctly with model without a description', async ({
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
 
@@ -99,8 +103,8 @@ test('Render works correctly with every rendered model opening a new tab', async
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
 
@@ -153,8 +157,8 @@ test('Render shows model picker when no active editor is open', async ({
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   try {
     // Navigate to code-server instance
diff --git a/vscode/extension/tests/stop.spec.ts b/vscode/extension/tests/stop.spec.ts
index 911c791720..2cd126f413 100644
--- a/vscode/extension/tests/stop.spec.ts
+++ b/vscode/extension/tests/stop.spec.ts
@@ -3,7 +3,11 @@ import { runCommand, SUSHI_SOURCE_PATH } from './utils'
 import os from 'os'
 import { test } from '@playwright/test'
 import fs from 'fs-extra'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 test('Stop server works', async ({ page }) => {
   const tempDir = await fs.mkdtemp(path.join(os.tmpdir(), 'vscode-test-sushi-'))
@@ -11,8 +15,8 @@ test('Stop server works', async ({ page }) => {
 
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
 
   try {
     // Navigate to code-server instance
diff --git a/vscode/extension/tests/tcloud.spec.ts b/vscode/extension/tests/tcloud.spec.ts
index 5bebfee781..c72e3ddca3 100644
--- a/vscode/extension/tests/tcloud.spec.ts
+++ b/vscode/extension/tests/tcloud.spec.ts
@@ -9,7 +9,11 @@ import {
   SUSHI_SOURCE_PATH,
 } from './utils'
 import { setTcloudVersion, setupAuthenticatedState } from './tcloud_utils'
-import { startCodeServer, stopCodeServer } from './utils_code_server'
+import {
+  createPythonInterpreterSettingsSpecifier,
+  startCodeServer,
+  stopCodeServer,
+} from './utils_code_server'
 
 /**
  * Helper function to create and set up a Python virtual environment
@@ -384,8 +388,8 @@ test.skip('tcloud not signed in and not installed, shows sign in window and then
   // Start VS Code
   const context = await startCodeServer({
     tempDir,
-    placeFileWithPythonInterpreter: true,
   })
+  await createPythonInterpreterSettingsSpecifier(tempDir)
   await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
 
   try {
diff --git a/vscode/extension/tests/utils_code_server.ts b/vscode/extension/tests/utils_code_server.ts
index db6c426912..68bf2ed597 100644
--- a/vscode/extension/tests/utils_code_server.ts
+++ b/vscode/extension/tests/utils_code_server.ts
@@ -28,6 +28,30 @@ function getExtensionsDir(): string {
   return extensionsDir
 }
 
+/**
+ * Creates a .vscode/settings.json specifier for the Python interpreter
+ */
+export const createPythonInterpreterSettingsSpecifier = async (
+  directory: string,
+): Promise<string> => {
+  const defaultPythonInterpreter = path.join(
+    __dirname,
+    '..',
+    '..',
+    '..',
+    '.venv',
+    'bin',
+    'python',
+  )
+  const vscodeDir = path.join(directory, '.vscode')
+  await fs.ensureDir(vscodeDir)
+  const settingsFilePath = path.join(vscodeDir, 'settings.json')
+  await fs.writeJson(settingsFilePath, {
+    'python.defaultInterpreterPath': defaultPythonInterpreter,
+  })
+  return settingsFilePath
+}
+
 /**
  * @param tempDir - The temporary directory to use for the code-server instance
  * @param placeFileWithPythonInterpreter - Whether to place a vscode/settings.json file in the temp directory that points to the python interpreter of the environmen the test is running in.
@@ -35,10 +59,8 @@ function getExtensionsDir(): string {
  */
 export async function startCodeServer({
   tempDir,
-  placeFileWithPythonInterpreter = false,
 }: {
   tempDir: string
-  placeFileWithPythonInterpreter?: boolean
 }): Promise<CodeServerContext> {
   // Get the extensions directory set up by global setup
   const extensionsDir = getExtensionsDir()
@@ -59,20 +81,6 @@ export async function startCodeServer({
     path.join(os.tmpdir(), 'vscode-test-sushi-user-data-dir-'),
   )
 
-  // Create .vscode/settings.json with Python interpreter if requested
-  if (placeFileWithPythonInterpreter) {
-    const vscodeDir = path.join(tempDir, '.vscode')
-    await fs.ensureDir(vscodeDir)
-
-    const settings = {
-      'python.defaultInterpreterPath': defaultPythonInterpreter,
-    }
-
-    await fs.writeJson(path.join(vscodeDir, 'settings.json'), settings, {
-      spaces: 2,
-    })
-  }
-
   // Start code-server instance using the shared extensions directory
   const codeServerProcess = spawn(
     'pnpm',
diff --git a/vscode/extension/tests/venv_naming.spec.ts b/vscode/extension/tests/venv_naming.spec.ts
index f20246c9bb..37cffb8da3 100644
--- a/vscode/extension/tests/venv_naming.spec.ts
+++ b/vscode/extension/tests/venv_naming.spec.ts
@@ -40,6 +40,7 @@ test('venv being named .env', async ({ page }, testInfo) => {
 
   try {
     await page.goto(`http://127.0.0.1:${context.codeServerPort}`)
+    await page.waitForSelector('text=models')
     await openLineageView(page)
     await page.waitForSelector('text=Loaded SQLMesh Context')
   } finally {