diff --git a/oe-init-build-env b/oe-init-build-env
index 38333ab8582..82382f27078 100755
--- a/oe-init-build-env
+++ b/oe-init-build-env
@@ -47,6 +47,12 @@ export OEROOT
     unset OEROOT
     return 1
 }
+
+# Generate an initial configuration for VSCode and the yocto-bitbake plugin.
+if command -v code > /dev/null && [ ! -d "$OEROOT/.vscode" ]; then
+    oe-setup-vscode "$OEROOT" "$BUILDDIR"
+fi
+
 unset OEROOT
 
 [ -z "$BUILDDIR" ] || cd "$BUILDDIR"
diff --git a/scripts/oe-setup-vscode b/scripts/oe-setup-vscode
new file mode 100755
index 00000000000..b8642780d57
--- /dev/null
+++ b/scripts/oe-setup-vscode
@@ -0,0 +1,93 @@
+#!/bin/sh
+
+usage() {
+    echo "$0 <OEINIT> <BUILDDIR>"
+    echo "  OEINIT:   path to directory where the .vscode folder is"
+    echo "  BUILDDIR: directory passed to the oe-init-setup-env script"
+}
+
+if [ "$#" -ne 2 ]; then
+    usage
+    exit 1
+fi
+
+OEINIT=$(readlink -f "$1")
+BUILDDIR=$(readlink -f "$2")
+VSCODEDIR=$OEINIT/.vscode
+
+if [ ! -d "$OEINIT" ] || [ ! -d "$BUILDDIR" ]; then
+    echo "$OEINIT and/or $BUILDDIR directories are not present."
+    exit 1
+fi
+
+VSCODE_SETTINGS=$VSCODEDIR/settings.json
+ws_builddir="$(echo "$BUILDDIR" | sed -e "s|$OEINIT|\${workspaceFolder}|g")"
+
+# If BUILDDIR is in scope of VSCode ensure VSCode does not try to index the build folder.
+# This would lead to a busy CPU and finally to an OOM exception.
+mkdir -p "$VSCODEDIR"
+cat <<EOMsettings > "$VSCODE_SETTINGS"
+{
+    "bitbake.pathToBitbakeFolder": "\${workspaceFolder}/bitbake",
+    "bitbake.pathToEnvScript": "\${workspaceFolder}/oe-init-build-env",
+    "bitbake.pathToBuildFolder": "$ws_builddir",
+    "bitbake.commandWrapper": "",
+    "bitbake.workingDirectory": "\${workspaceFolder}",
+    "files.exclude": {
+        "**/.git/**": true,
+        "**/_build/**": true,
+        "**/buildhistory/**": true,
+        "**/cache/**": true,
+        "**/downloads/**": true,
+        "**/node_modules/**": true,
+        "**/oe-logs/**": true,
+        "**/oe-workdir/**": true,
+        "**/sstate-cache/**": true,
+        "**/tmp*/**": true,
+        "**/workspace/attic/**": true,
+        "**/workspace/sources/**": true
+    },
+    "files.watcherExclude": {
+        "**/.git/**": true,
+        "**/_build/**": true,
+        "**/buildhistory/**": true,
+        "**/cache/**": true,
+        "**/downloads/**": true,
+        "**/node_modules/**": true,
+        "**/oe-logs/**": true,
+        "**/oe-workdir/**": true,
+        "**/sstate-cache/**": true,
+        "**/tmp*/**": true,
+        "**/workspace/attic/**": true,
+        "**/workspace/sources/**": true
+    },
+    "python.analysis.exclude": [
+        "**/_build/**",
+        "**/.git/**",
+        "**/buildhistory/**",
+        "**/cache/**",
+        "**/downloads/**",
+        "**/node_modules/**",
+        "**/oe-logs/**",
+        "**/oe-workdir/**",
+        "**/sstate-cache/**",
+        "**/tmp*/**",
+        "**/workspace/attic/**",
+        "**/workspace/sources/**"
+    ]
+}
+EOMsettings
+
+
+# Ask the user if the yocto-bitbake extension should be installed
+VSCODE_EXTENSIONS=$VSCODEDIR/extensions.json
+cat <<EOMextensions > "$VSCODE_EXTENSIONS"
+{
+    "recommendations": [
+        "yocto-project.yocto-bitbake"
+    ]
+}
+EOMextensions
+
+echo "You had no $VSCODEDIR configuration."
+echo "These configuration files have therefore been created for you."