diff --git a/meta/lib/oeqa/selftest/cases/devtool.py b/meta/lib/oeqa/selftest/cases/devtool.py
index 941f54e36b..d1e15d0180 100644
--- a/meta/lib/oeqa/selftest/cases/devtool.py
+++ b/meta/lib/oeqa/selftest/cases/devtool.py
@@ -4341,7 +4341,7 @@ class DevtoolIdeSdkGccTests(DevtoolIdeSdkTests):
 
 class DevtoolIdeSdkRustTests(DevtoolIdeSdkTests):
 
-    def test_code_cargo_rust_analyzer_recommendation(self):
+    def test_code_cargo_rust_analyzer_configuration(self):
         recipe_name = "cargo-example"
         self._check_workspace()
         self._write_bb_config()
@@ -4349,8 +4349,18 @@ class DevtoolIdeSdkRustTests(DevtoolIdeSdkTests):
         runCmd('devtool ide-sdk %s oe-selftest-image --ide=code' % recipe_name,
                output_log=self._cmd_logger)
 
+        with open(os.path.join(tempdir, '.vscode', 'settings.json')) as settings_file:
+            settings = json.load(settings_file)
         with open(os.path.join(tempdir, '.vscode', 'extensions.json')) as extensions_file:
             extensions = json.load(extensions_file)
+        cargo_config = os.path.join(
+            self.workspacedir, 'ide-sdk', recipe_name, 'cargo-config.toml')
+        self.assertExists(cargo_config, 'Cargo config was not generated')
+        self.assertEqual(settings['rust-analyzer.cargo.configPath'], cargo_config)
+        self.assertEqual(
+            settings['rust-analyzer.cargo.target'],
+            get_bb_var('RUST_HOST_SYS', recipe_name))
+        self.assertNotIn('rust-analyzer.cargo.extraEnv', settings)
         self.assertIn('rust-lang.rust-analyzer', extensions['recommendations'])
 
 class DevtoolIdeSdkKernelTests(DevtoolIdeSdkTests):
diff --git a/scripts/lib/devtool/ide_plugins/ide_code.py b/scripts/lib/devtool/ide_plugins/ide_code.py
index cf7f81293c..85f286335f 100644
--- a/scripts/lib/devtool/ide_plugins/ide_code.py
+++ b/scripts/lib/devtool/ide_plugins/ide_code.py
@@ -228,6 +228,16 @@ class IdeVSCode(IdeBase):
             }
         ]
 
+    def __vscode_settings_cargo(self, settings_dict, modified_recipe):
+        if modified_recipe.build_tool is not BuildTool.CARGO:
+            return
+        cargo_config = modified_recipe.update_cargo_config()
+        settings_dict["rust-analyzer.server.extraEnv"] = {
+            "PATH": modified_recipe.path
+        }
+        settings_dict["rust-analyzer.cargo.target"] = modified_recipe.cargo_target
+        settings_dict["rust-analyzer.cargo.configPath"] = cargo_config
+
     def __vscode_settings_clangd(self, settings_dict, modified_recipe):
         if not (modified_recipe.ide_sdk_intellisense == 'clangd' and modified_recipe.build_tool.is_c_cpp):
             return
@@ -294,6 +304,7 @@ class IdeVSCode(IdeBase):
         self.__vscode_settings_cmake(settings_dict, modified_recipe)
         self.__vscode_settings_meson(settings_dict, modified_recipe)
         self.__vscode_settings_kernel_module(settings_dict, modified_recipe)
+        self.__vscode_settings_cargo(settings_dict, modified_recipe)
         self.__vscode_settings_clangd(settings_dict, modified_recipe)
         self.__vscode_settings_format(settings_dict, modified_recipe)