How to Set Up MCP in VS Code with GitHub Copilot

Prerequisites

VS Code 1.99+ or VS Code Insiders
GitHub Copilot extension installed and active
Node.js 18+ installed (for npx-based MCP servers)
GitHub Copilot agent mode enabled

Step 1: Create the MCP Configuration File

VS Code reads MCP server configurations from .vscode/mcp.json in your workspace root.

// .vscode/mcp.json
{
  "servers": {
    "github": {
      "command": "npx",
      "args": ["@modelcontextprotocol/server-github"],
      "env": { "GITHUB_TOKEN": "ghp_your_token_here" }
    },
    "filesystem": {
      "command": "npx",
      "args": ["@modelcontextprotocol/server-filesystem", "${workspaceFolder}"]
    },
    "postgres": {
      "command": "npx",
      "args": ["@modelcontextprotocol/server-postgres"],
      "env": { "DATABASE_URL": "postgresql://localhost:5432/mydb" }
    }
  }
}

Step 2: Enable Agent Mode in Copilot Chat

MCP tools are available in Copilot's Agent Mode. Open Copilot Chat (Ctrl+Shift+I) and select the Agent mode dropdown. Your configured MCP servers will appear as available tools.

Step 3: Use MCP Tools in Chat

"List all open issues in this repo" → Copilot uses the GitHub MCP server

"Show me the database schema for the users table" → Uses PostgreSQL MCP server

"Read the deployment config file" → Uses Filesystem MCP server

VS Code Settings for MCP

// settings.json — User or Workspace settings
{
  "chat.mcp.enabled": true,
  "chat.mcp.discovery.enabled": true
}

These settings enable MCP support and auto-discovery of .vscode/mcp.json files.

VS Code vs Cursor vs Claude Code: MCP Comparison

Feature	VS Code + Copilot	Cursor	Claude Code
Config file	`.vscode/mcp.json`	`.cursor/mcp.json`	`.claude.json`
GUI setup	Yes	Yes	CLI only
Agent mode	Copilot Agent	Composer	Always-on
Auto-approve tools	Ask each time	Configurable	Configurable
AI Skills support	Limited	.cursorrules	SKILL.md