diff --git a/calm-plugins/vscode/src/extension/extension.test.ts b/calm-plugins/vscode/src/extension/extension.test.ts
new file mode 100644
index 0000000000..a8172a43e2
--- /dev/null
+++ b/calm-plugins/vscode/src/extension/extension.test.ts
@@ -0,0 +1,151 @@
+import { afterEach, beforeEach, describe, expect, it, vi } from 'vitest';
+import * as vscode from 'vscode';
+import { activate, disconnectFromHub, hubMenuItems } from './extension';
+
+interface ConfigUpdate {
+    section: string;
+    key: string;
+    value: unknown;
+}
+
+type CommandCallback = (...args: unknown[]) => unknown;
+
+const registeredCommands = new Map<string, CommandCallback>();
+const configUpdates: ConfigUpdate[] = [];
+
+function context(): vscode.ExtensionContext {
+    return {
+        subscriptions: [],
+        extensionUri: vscode.Uri.file('/tmp/extension'),
+        secrets: {
+            get: async () => undefined,
+            store: async () => {},
+            delete: async () => {},
+            onDidChange: () => ({ dispose: () => {} }),
+        },
+    } as unknown as vscode.ExtensionContext;
+}
+
+beforeEach(() => {
+    registeredCommands.clear();
+    configUpdates.length = 0;
+
+    (vscode.commands as unknown as { registerCommand: unknown }).registerCommand = (
+        command: string,
+        callback: CommandCallback
+    ) => {
+        registeredCommands.set(command, callback);
+        return { dispose: () => {} };
+    };
+
+    (vscode.workspace as unknown as { getConfiguration: unknown }).getConfiguration = (
+        section?: string
+    ) => ({
+        get: <T>(key: string, defaultValue?: T): T | undefined => {
+            if (key === 'url') return 'https://calmhub.example.com' as unknown as T;
+            // Keep activate() from starting a real connectToHub in every test.
+            if (key === 'autoConnect') return false as unknown as T;
+            return defaultValue;
+        },
+        update: async (key: string, value: unknown) => {
+            configUpdates.push({ section: section ?? '', key, value });
+        },
+    });
+
+    activate(context());
+});
+
+describe('disconnecting from CALM Hub', () => {
+    it('keeps the saved URL so the status bar can reconnect', async () => {
+        await disconnectFromHub();
+
+        expect(configUpdates).toEqual([]);
+    });
+
+    it('keeps the saved URL when the disconnect command runs', async () => {
+        const disconnect = registeredCommands.get('calm.disconnectFromHub');
+        expect(disconnect).toBeDefined();
+
+        await disconnect!();
+
+        expect(configUpdates).toEqual([]);
+    });
+
+    it('forgets the saved URL only for Clear URL', async () => {
+        await disconnectFromHub({ clearUrl: true });
+
+        expect(configUpdates).toEqual([
+            { section: 'calm.hub', key: 'url', value: undefined },
+        ]);
+    });
+});
+
+describe('CALM Hub menu', () => {
+    it('offers Disconnect, and no Clear URL, while connected', () => {
+        expect(hubMenuItems('connected').map((item) => item.action)).toEqual([
+            'namespaces',
+            'refresh',
+            'change',
+            'disconnect',
+        ]);
+    });
+
+    it('offers Clear URL, and no Disconnect, after a failed connection', () => {
+        expect(hubMenuItems('error').map((item) => item.action)).toEqual([
+            'change',
+            'retry',
+            'clearUrl',
+        ]);
+    });
+});
+
+describe('the Clear URL menu item', () => {
+    afterEach(() => {
+        vi.unstubAllGlobals();
+    });
+
+    it('does not connect while autoConnect is off', async () => {
+        const fetchStub = vi.fn();
+        vi.stubGlobal('fetch', fetchStub);
+
+        // The stub in beforeEach reports autoConnect: false, so activating the
+        // extension must not send a request of its own.
+        activate(context());
+        // activate() starts auto-connect without awaiting it, so give that path
+        // the chance to reach the network before asserting it never did.
+        await new Promise((resolve) => setTimeout(resolve, 50));
+
+        expect(fetchStub).not.toHaveBeenCalled();
+    });
+
+    it('forgets the saved URL when the status bar is in its error state', async () => {
+        // A failed connection leaves the status bar in its error state, which is
+        // the only state that offers "Clear URL".
+        const fetchStub = vi.fn().mockRejectedValue(new Error('offline'));
+        vi.stubGlobal('fetch', fetchStub);
+
+        const connect = registeredCommands.get('calm.connectToHub');
+        expect(connect).toBeDefined();
+
+        await connect!();
+        expect(fetchStub).toHaveBeenCalled();
+
+        const placeholders: string[] = [];
+        (vscode.window as unknown as { showQuickPick: unknown }).showQuickPick = async (
+            items: vscode.QuickPickItem[] & { action?: string }[],
+            options?: vscode.QuickPickOptions
+        ) => {
+            placeholders.push(options?.placeHolder ?? '');
+            return (items as unknown as { action: string }[]).find(
+                (item) => item.action === 'clearUrl'
+            );
+        };
+
+        await connect!();
+
+        expect(placeholders[0]).toContain('Failed to connect');
+        expect(configUpdates).toEqual([
+            { section: 'calm.hub', key: 'url', value: undefined },
+        ]);
+    });
+});
diff --git a/calm-plugins/vscode/src/extension/extension.ts b/calm-plugins/vscode/src/extension/extension.ts
index a57a175d96..f1fdb09606 100644
--- a/calm-plugins/vscode/src/extension/extension.ts
+++ b/calm-plugins/vscode/src/extension/extension.ts
@@ -139,6 +139,40 @@ export function activate(context: vscode.ExtensionContext): void {
     }
 }
 
+export type HubMenuAction =
+    | 'namespaces'
+    | 'refresh'
+    | 'change'
+    | 'disconnect'
+    | 'retry'
+    | 'clearUrl';
+
+export interface HubMenuItem {
+    label: string;
+    action: HubMenuAction;
+}
+
+/**
+ * Items of the CALM Hub status bar menu. A plain disconnect keeps the saved URL,
+ * so "Disconnect" stays in the connected state and the tooltip's "Click to
+ * reconnect" works; only the failed state offers "Clear URL" (#3494).
+ */
+export function hubMenuItems(state: 'connected' | 'error'): HubMenuItem[] {
+    if (state === 'connected') {
+        return [
+            { label: '$(list-selection) Select Namespaces', action: 'namespaces' },
+            { label: '$(sync) Refresh from Hub', action: 'refresh' },
+            { label: '$(pencil) Change Hub URL', action: 'change' },
+            { label: '$(sign-out) Disconnect', action: 'disconnect' },
+        ];
+    }
+    return [
+        { label: '$(pencil) Change Hub URL', action: 'change' },
+        { label: '$(debug-restart) Retry Connection', action: 'retry' },
+        { label: '$(sign-out) Clear URL', action: 'clearUrl' },
+    ];
+}
+
 async function connectToHub(
     context: vscode.ExtensionContext
 ): Promise<void> {
@@ -147,18 +181,9 @@ async function connectToHub(
         .get<string>('url');
 
     if (url && (hubStatusBar?.state === 'connected' || hubStatusBar?.state === 'error')) {
-        const items = hubStatusBar?.state === 'connected'
-            ? [
-                { label: '$(list-selection) Select Namespaces', action: 'namespaces' },
-                { label: '$(sync) Refresh from Hub', action: 'refresh' },
-                { label: '$(pencil) Change Hub URL', action: 'change' },
-                { label: '$(sign-out) Disconnect', action: 'disconnect' },
-            ]
-            : [
-                { label: '$(pencil) Change Hub URL', action: 'change' },
-                { label: '$(debug-restart) Retry Connection', action: 'retry' },
-                { label: '$(sign-out) Clear URL', action: 'disconnect' },
-            ];
+        const items = hubMenuItems(
+            hubStatusBar?.state === 'connected' ? 'connected' : 'error'
+        );
 
         const choice = await vscode.window.showQuickPick(items, {
             placeHolder: hubStatusBar?.state === 'connected'
@@ -167,6 +192,10 @@ async function connectToHub(
         });
         if (!choice) return;
         if (choice.action === 'disconnect') { await disconnectFromHub(); return; }
+        if (choice.action === 'clearUrl') {
+            await disconnectFromHub({ clearUrl: true });
+            return;
+        }
         if (choice.action === 'namespaces') { await selectNamespaces(); return; }
         if (choice.action === 'refresh' || choice.action === 'retry') {
             // Fall through to reconnect with existing URL
@@ -252,7 +281,18 @@ async function connectToHub(
     }
 }
 
-async function disconnectFromHub(): Promise<void> {
+export interface DisconnectOptions {
+    /**
+     * Also forget the saved `calm.hub.url`. Only the error menu's "Clear URL"
+     * asks for this; a plain disconnect keeps the URL so the status bar's
+     * "Click to reconnect" works (#3494).
+     */
+    clearUrl?: boolean;
+}
+
+export async function disconnectFromHub(
+    options: DisconnectOptions = {}
+): Promise<void> {
     if (hubAuthService) {
         await hubAuthService.signOut();
     }
@@ -260,8 +300,16 @@ async function disconnectFromHub(): Promise<void> {
     hubAuthService = undefined;
     hubStatusBar?.setState('disconnected');
     void canvasPanel?.setHubConnection(undefined);
-    await vscode.workspace.getConfiguration('calm.hub').update('url', undefined, vscode.ConfigurationTarget.Global);
-    outputChannel.appendLine('[INFO] Disconnected from CalmHub');
+    if (options.clearUrl) {
+        await vscode.workspace
+            .getConfiguration('calm.hub')
+            .update('url', undefined, vscode.ConfigurationTarget.Global);
+    }
+    outputChannel.appendLine(
+        options.clearUrl
+            ? '[INFO] Disconnected from CalmHub and cleared the saved URL'
+            : '[INFO] Disconnected from CalmHub'
+    );
 }
 
 async function refreshFromHub(): Promise<void> {