diff --git a/vscode-extension/package.json b/vscode-extension/package.json
index fd9f7ab4d..24a4984d5 100644
--- a/vscode-extension/package.json
+++ b/vscode-extension/package.json
@@ -15,6 +15,10 @@
     "Other"
   ],
   "main": "./out/extension.js",
+  "activationEvents": [
+    "workspaceContains:**.aiconfig.**",
+    "onView:extension"
+  ],
   "contributes": {
     "commands": [
       {
@@ -102,6 +106,11 @@
           "type": "string",
           "default": "",
           "description": "Path to the python interpreter for this VS Code workspace"
+        },
+        "vscode-aiconfig.version": {
+          "type": "string",
+          "default": "",
+          "description": "Version of the AIConfig Editor extension last time it was activated. We use this value to check if the extension has been updated to prompt users to reload VS Code"
         }
       }
     },
diff --git a/vscode-extension/src/constants.ts b/vscode-extension/src/constants.ts
index c3e02f2c7..a2033eb9b 100644
--- a/vscode-extension/src/constants.ts
+++ b/vscode-extension/src/constants.ts
@@ -1 +1,5 @@
 export const PYTHON_INTERPRETER_CACHE_KEY_NAME = "pythonInterpreter";
+
+// Used for prompting user to reload VS Code window on update, and ensuring
+// that walkthrough gets shown on first install
+export const VERSION_KEY_NAME = "version";
diff --git a/vscode-extension/src/extension.ts b/vscode-extension/src/extension.ts
index d1f1a2632..30c4d5c74 100644
--- a/vscode-extension/src/extension.ts
+++ b/vscode-extension/src/extension.ts
@@ -25,6 +25,7 @@ import {
   initialize,
   savePythonInterpreterToCache,
 } from "./utilities/pythonSetupUtils";
+import { performVersionInstallAndUpdateActionsIfNeeded } from "./utilities/versionUpdateUtils";
 import { AIConfigEditorProvider } from "./aiConfigEditor";
 import {
   AIConfigEditorManager,
@@ -49,6 +50,8 @@ export async function activate(context: vscode.ExtensionContext) {
     log: true,
   });
 
+  await performVersionInstallAndUpdateActionsIfNeeded(context);
+
   const setupCommand = vscode.commands.registerCommand(COMMANDS.INIT, () => {
     initialize(context, extensionOutputChannel);
   });
@@ -175,6 +178,10 @@ export async function activate(context: vscode.ExtensionContext) {
           aiconfigEditorManager.getRegisteredEditors()
         );
         if (editors.length > 0) {
+          // TODO: Check if user has set python interpreter, only do it if:
+          // after env is created
+          // python interpreter has actually changed
+
           vscode.window
             .showInformationMessage(
               "Python Interpreter Updated: Would you like to refresh active AIConfig files?",
diff --git a/vscode-extension/src/utilities/versionUpdateUtils.ts b/vscode-extension/src/utilities/versionUpdateUtils.ts
new file mode 100644
index 000000000..a7d48e05f
--- /dev/null
+++ b/vscode-extension/src/utilities/versionUpdateUtils.ts
@@ -0,0 +1,44 @@
+/**
+ * Utils file for handling actions to perform whenever user
+ * installs or updates the extension.
+ * VS Code automatically checks for version updates
+ * (https://code.visualstudio.com/docs/editor/extension-marketplace#_extension-autoupdate)
+ * but I haven't been able to find a way to use this to trigger any
+ * actions. Also even though the Walkthrough documentation says
+ * that this gets triggered on first install, I haven't been able
+ * to trigger this either, so I am calling this manually
+ * https://code.visualstudio.com/api/references/contribution-points#contributes.walkthroughs
+ */
+
+import * as vscode from "vscode";
+
+import { EXTENSION_NAME } from "../util";
+import { VERSION_KEY_NAME } from "../constants";
+
+export async function performVersionInstallAndUpdateActionsIfNeeded(
+  context: vscode.ExtensionContext
+) {
+  const extension = vscode.extensions.getExtension(context.extension.id);
+  const currExtensionVersion = extension?.packageJSON.version;
+  const config = vscode.workspace.getConfiguration(EXTENSION_NAME);
+  const lastActivatedVersion = config.get<string>(VERSION_KEY_NAME);
+  if (currExtensionVersion !== lastActivatedVersion) {
+    await config.update(
+      VERSION_KEY_NAME,
+      currExtensionVersion,
+      vscode.ConfigurationTarget.Global
+    );
+  }
+
+  if (lastActivatedVersion === undefined || lastActivatedVersion === "") {
+    // First time activating extension, show walkthrough
+    // Will implement next PR
+    // vscode.commands.executeCommand("workbench.action.openWalkthrough");
+  } else if (
+    currExtensionVersion > lastActivatedVersion
+    // TODO: Add check for if version string follows format of %d.%d.%d
+  ) {
+    // Extension has been updated, prompt user to refresh VS Code window
+    // Will implement next PR
+  }
+}