[BUG] VS Code Extension crashes on new session initialization with exit code 1

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

VS Code Extension crashes on new session initialization with exit code 1

Environment:

• Version: Claude Code 2.0.42 (VS Code Extension)
• OS: macOS (Darwin 25.1.0, Apple Silicon)
• VS Code: Latest version
• Claude Plan: Claude Max

Description

The VS Code extension consistently crashes when attempting to start a new chat session, displaying the error:

Error: Claude Code process exited with code 1

Reproduction Steps

1. Open VS Code with Claude Code extension installed
2. Click to start a new Claude Code conversation
3. Extension immediately crashes with exit code 1

Observed Behavior

• ❌ New chat sessions fail to initialize
• ✅ Existing/resumed chat sessions work perfectly
• ✅ CLI version (claude command) works without issues

Debug Information

From ~/.claude/debug/latest:

[DEBUG] [Query.streamInput] this.sdkMcpTransports.size = 1
[DEBUG] [Query.streamInput] Entering Promise.race to wait for result
[DEBUG] [Query.streamInput] Timed out waiting for first result, closing input stream
[DEBUG] [Query] Calling transport.endInput() to close stdin to CLI process

The extension appears to initialize an MCP transport (size = 1) even when no MCP servers are configured, causing a timeout during session initialization.

Configuration Checked

• ✅ ~/.claude/.mcp.json is empty {}
• ✅ ~/.claude/settings.json has no MCP config
• ✅ Project .claude/settings.local.json has no MCP config
• ✅ Session cache cleared (~/.claude/session-env/)
• ✅ Extension reinstalled from scratch
• ✅ Extension state deleted (~/Library/Application Support/Code/User/globalStorage/anthropic.claude-code/)
• ✅ Project session files cleaned (168 → 10 files)

Workaround

Using the CLI version (claude command in terminal) works perfectly without any crashes.

Impact

Users cannot start new conversations in VS Code extension, forcing them to use CLI or resume existing sessions only.

Additional Context

This issue persists even after:

• Complete uninstallation and reinstallation of the extension
• Removing all MCP configuration files
• Clearing all caches and session data
• Testing in a clean directory

The fact that existing sessions work suggests this is specifically an initialization bug, not a general compatibility issue.

What Should Happen?

It should just open a new session
Like this:

!Image

Error Messages/Logs

Error: Claude Code process exited with code 1
Troubleshooting resources

Steps to Reproduce

Open a new session, and it will appear every time

!Image

Claude Model

Sonnet (default)

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.0.42 (Claude Code)

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_