diff --git a/package.json b/package.json
index 060491d..3b92806 100644
--- a/package.json
+++ b/package.json
@@ -154,6 +154,11 @@
           "type": "boolean",
           "default": false,
           "description": "Set this to true if you have nerd font installed. Default is false. Set this to true if you want to use nerd font icons."
+        },
+        "oil-code.enableWorkspaceEdit": {
+          "type": "boolean",
+          "default": false,
+          "description": "Enable workspace edit for file move/rename operations. When enabled, VS Code will ask to update references when a file is moved or renamed. Default is false."
         }
       }
     }
diff --git a/src/handlers/onDidSaveTextDocument.ts b/src/handlers/onDidSaveTextDocument.ts
index c88eafb..104d792 100644
--- a/src/handlers/onDidSaveTextDocument.ts
+++ b/src/handlers/onDidSaveTextDocument.ts
@@ -12,6 +12,7 @@ import {
 import { select } from "../commands/select";
 import { newline } from "../newline";
 import { logger } from "../logger";
+import { getEnableWorkspaceEditSetting } from "../utils/settings";
 
 export async function onDidSaveTextDocument(document: vscode.TextDocument) {
   // Check if the saved document is our oil file
@@ -165,6 +166,10 @@ export async function onDidSaveTextDocument(document: vscode.TextDocument) {
         return;
       }
       logger.debug("Processing changes...");
+      // Get the workspace edit setting
+      const useWorkspaceEdit = getEnableWorkspaceEditSetting();
+
+      const moveEdits = new vscode.WorkspaceEdit();
       // Process the changes
       // Move files
       for (const [oldPath, newPath] of movedLines) {
@@ -174,8 +179,21 @@ export async function onDidSaveTextDocument(document: vscode.TextDocument) {
           if (!fs.existsSync(dirPath)) {
             fs.mkdirSync(dirPath, { recursive: true });
           }
-          // Move the file to the new location
-          fs.renameSync(oldPath, newPath);
+
+          if (useWorkspaceEdit) {
+            // Use workspace edit for better VS Code integration
+            // Removing tailing slashes triggers lsp update references correctly
+            moveEdits.renameFile(
+              vscode.Uri.file(oldPath.replace(/\/$/, "")),
+              vscode.Uri.file(newPath.replace(/\/$/, "")),
+              {
+                overwrite: false,
+              }
+            );
+          } else {
+            // Use file system rename directly
+            fs.renameSync(oldPath, newPath);
+          }
         } catch (error) {
           vscode.window.showErrorMessage(
             `Failed to move file: ${formatPath(oldPath)} to ${newPath.replace(
@@ -185,6 +203,13 @@ export async function onDidSaveTextDocument(document: vscode.TextDocument) {
           );
         }
       }
+      try {
+        await vscode.workspace.applyEdit(moveEdits);
+      } catch (error) {
+        vscode.window.showErrorMessage(
+          `Failed to apply workspace edit: ${error}`
+        );
+      }
       // Copy files
       for (const [oldPath, newPath] of copiedLines) {
         try {
diff --git a/src/utils/settings.ts b/src/utils/settings.ts
index d39a918..3ff3c96 100644
--- a/src/utils/settings.ts
+++ b/src/utils/settings.ts
@@ -10,6 +10,11 @@ export function getDisableOpenCwdNothingOpenSetting(): boolean {
   return config.get<boolean>("disableOpenCwdNothingOpen") || false;
 }
 
+export function getEnableWorkspaceEditSetting(): boolean {
+  const config = vscode.workspace.getConfiguration("oil-code");
+  return config.get<boolean>("enableWorkspaceEdit") || false;
+}
+
 let restoreAutoSave = false;
 
 export async function checkAndDisableAutoSave() {