diff --git a/pkgs/misc/vscode-extensions/terraform/default.nix b/pkgs/misc/vscode-extensions/terraform/default.nix
index 3a587efcc5b2..66d23e491161 100644
--- a/pkgs/misc/vscode-extensions/terraform/default.nix
+++ b/pkgs/misc/vscode-extensions/terraform/default.nix
@@ -3,8 +3,8 @@ vscode-utils.buildVscodeMarketplaceExtension rec {
   mktplcRef = {
     name = "terraform";
     publisher = "hashicorp";
-    version = "2.15.0";
-    sha256 = "0bqf9ry0idqw61714dc6y1rh5js35mi14q19yqhiwayyfakwraq9";
+    version = "2.16.0";
+    sha256 = "0ya0xmmn4rmbvh8mxz466msbb3y2xqi4bg9dgymy2wq8cwzbn81b";
   };
 
   patches = [ ./fix-terraform-ls.patch ];
diff --git a/pkgs/misc/vscode-extensions/terraform/fix-terraform-ls.patch b/pkgs/misc/vscode-extensions/terraform/fix-terraform-ls.patch
index 2f34d09fd115..e20c29a74b56 100644
--- a/pkgs/misc/vscode-extensions/terraform/fix-terraform-ls.patch
+++ b/pkgs/misc/vscode-extensions/terraform/fix-terraform-ls.patch
@@ -1,5 +1,5 @@
 diff --git a/out/serverPath.js b/out/serverPath.js
-index ffb1b80..990ca2b 100644
+index d25f5d4..289f0dd 100644
 --- a/out/serverPath.js
 +++ b/out/serverPath.js
 @@ -8,7 +8,13 @@ exports.CUSTOM_BIN_PATH_OPTION_NAME = 'languageServer.pathToBinary';
@@ -16,4 +16,4 @@ index ffb1b80..990ca2b 100644
 +        }
      }
      installPath() {
-         return this.context.asAbsolutePath(INSTALL_FOLDER_NAME);
+         return path.join(this.context.globalStorageUri.fsPath, INSTALL_FOLDER_NAME);