Claude Code VS Code extension times out with "Subprocess initialization did not complete within 60000ms

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?

Claude Code CLI works normally in macOS Terminal and also works inside the VS Code integrated Terminal, but the Claude Code VS Code side panel always fails with:

Subprocess initialization did not complete within 60000ms — check authentication and network connectivity

What I already tested:

• Claude Pro account authenticated successfully
• CLI works in normal Terminal
• CLI works in VS Code Terminal
• which claude worked when installed
• VS Code can run Claude Code from Terminal
• reinstalled Claude Code extension
• tried an older extension version
• tried a temporary/fresh VS Code profile
• tried disabling the extension login prompt
• tried setting the process wrapper path
• same error every time

Environment:

• MacBook Pro M4 Pro
• macOS Sequoia 15.3.2
• VS Code 1.133.0
• Apple Silicon / arm64
• Node architecture: arm64
• Claude Code extension: 2.1.233 when first reproduced

<img width="1155" height="788" alt="Image" src="https://github.com/user-attachments/assets/71090bd6-0ac2-4207-8b1e-981a632755b1" />

What Should Happen?

Claude Code should initialize successfully in the VS Code side panel and allow me to start a conversation.

Error Messages/Logs

Error: Subprocess initialization did not complete within 60000ms — check authentication and network connectivity

Steps to Reproduce

1. Install the official Claude Code for VS Code extension.
2. Sign in with a valid Claude Pro account.
3. Open the Claude Code side panel in VS Code.
4. Type a simple message such as hello.
5. The side panel waits and then shows:

Error: Subprocess initialization did not complete within 60000ms — check authentication and network connectivity

1. Claude Code CLI works normally in macOS Terminal.
2. Claude Code CLI also works normally inside VS Code’s integrated Terminal.
3. Reinstalling the extension does not fix the issue.
4. Downgrading the extension does not fix the issue.
5. A fresh VS Code temporary profile with only the Claude Code extension installed still produces the same error.

Environment:

• MacBook Pro with Apple M4 Pro
• macOS Sequoia 15.3.2
• VS Code 1.133.0
• Apple Silicon arm64
• Node architecture arm64
• Claude Code extension 2.1.233 when first reproduced

Claude Model

None

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

2.1.233

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_