diff --git a/README.md b/README.md
index a24bcc4..05ab421 100644
--- a/README.md
+++ b/README.md
@@ -1,6 +1,6 @@
 # Mypy extension for Visual Studio Code
 
-A Visual Studio Code extension with support for the `mypy` linter. The extension ships with `mypy=1.5.1`.
+A Visual Studio Code extension with support for the `mypy` linter. The extension ships with `mypy=1.6.1`.
 
 For more information on `mypy`, see https://www.mypy-lang.org/.
 
@@ -20,13 +20,15 @@ If you want to disable mypy, you can [disable this extension](https://code.visua
 | Settings                            | Default                                       | Description                                                                                                                                                                                                                                                                                                                                      |
 | ----------------------------------- | --------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
 | mypy-type-checker.args              | `[]`                                          | Custom arguments passed to `mypy`. E.g `"mypy-type-checker.args" = ["--config-file=<file>"]`                                                                                                                                                                                                                                                     |
+| mypy-type-checker.cwd               | `${workspaceFolder}`                          | This setting specifies the working directory for `mypy`. By default, it uses the root directory of the workspace `${workspaceFolder}`. If you want `mypy` to operate within the directory of the file currently being linted, you can set this to `${fileDirname}`.                                                                              |
 | mypy-type-checker.severity          | `{ "error": "Error", "note": "Information" }` | Controls mapping of severity from `mypy` to VS Code severity when displaying in the problems window. You can override specific `mypy` error codes `{ "error": "Error", "note": "Information", "name-defined": "Warning" }`                                                                                                                       |
 | mypy-type-checker.path              | `[]`                                          | Setting to provide custom `mypy` executable. This will slow down linting, since we will have to run `mypy` executable every time or file save or open. Example 1: `["~/global_env/mypy"]` Example 2: `["conda", "run", "-n", "lint_env", "python", "-m", "mypy"]`                                                                                |
 | mypy-type-checker.interpreter       | `[]`                                          | Path to a Python interpreter to use to run the linter server. When set to `[]`, the interpreter for the workspace is obtained from `ms-python.python` extension. If set to some path, that path takes precedence, and the Python extension is not queried for the interpreter.                                                                   |
 | mypy-type-checker.importStrategy    | `useBundled`                                  | Setting to choose where to load `mypy` from. `useBundled` picks mypy bundled with the extension. `fromEnvironment` uses `mypy` available in the environment.                                                                                                                                                                                     |
 | mypy-type-checker.showNotifications | `off`                                         | Setting to control when a notification is shown.                                                                                                                                                                                                                                                                                                 |
 | mypy-type-checker.reportingScope    | `file`                                        | (experimental) Setting to control if problems are reported for files open in the editor (`file`) or for the entire workspace (`workspace`).                                                                                                                                                                                                      |
-| mypy-type-checker.preferDaemon      | true                                          | (experimental) Setting to control how to invoke mypy. If true, `dmypy` is preferred over mypy; otherwise, mypy is preferred. Be aware, that the latter may slow down linting since it requires the `mypy` executable to be run whenever a file is saved or opened. Note that this setting will be overridden if `mypy-type-checker.path` is set. |
+| mypy-type-checker.preferDaemon      | `true`                                        | (experimental) Setting to control how to invoke mypy. If true, `dmypy` is preferred over mypy; otherwise, mypy is preferred. Be aware, that the latter may slow down linting since it requires the `mypy` executable to be run whenever a file is saved or opened. Note that this setting will be overridden if `mypy-type-checker.path` is set. |
+| mypy-type-checker.ignorePatterns    | `[]`                                          | Glob patterns used to exclude files and directories from being linted.                                                                                                                                                                                                                                                                           |
 
 ## Commands
 
diff --git a/bundled/tool/lsp_server.py b/bundled/tool/lsp_server.py
index 94265b3..4bfde5b 100644
--- a/bundled/tool/lsp_server.py
+++ b/bundled/tool/lsp_server.py
@@ -9,6 +9,7 @@
 import pathlib
 import re
 import sys
+import sysconfig
 import tempfile
 import traceback
 import uuid
@@ -28,6 +29,26 @@ def update_sys_path(path_to_add: str, strategy: str) -> None:
             sys.path.append(path_to_add)
 
 
+# **********************************************************
+# Update PATH before running anything.
+# **********************************************************
+def update_environ_path() -> None:
+    """Update PATH environment variable with the 'scripts' directory.
+    Windows: .venv/Scripts
+    Linux/MacOS: .venv/bin
+    """
+    scripts = sysconfig.get_path("scripts")
+    paths_variants = ["Path", "PATH"]
+
+    for var_name in paths_variants:
+        if var_name in os.environ:
+            paths = os.environ[var_name].split(os.pathsep)
+            if scripts not in paths:
+                paths.insert(0, scripts)
+                os.environ[var_name] = os.pathsep.join(paths)
+                break
+
+
 # Ensure that we can import LSP libraries, and other bundled libraries.
 BUNDLE_DIR = pathlib.Path(__file__).parent.parent
 BUNDLED_LIBS = os.fspath(BUNDLE_DIR / "libs")
@@ -37,6 +58,7 @@ def update_sys_path(path_to_add: str, strategy: str) -> None:
     BUNDLED_LIBS,
     os.getenv("LS_IMPORT_STRATEGY", "useBundled"),
 )
+update_environ_path()
 
 # **********************************************************
 # Imports needed for the language server goes below this.
@@ -117,7 +139,7 @@ def _run_unidentified_tool(
 
     This is supposed to be called only in `get_mypy_info`.
     """
-    cwd = settings["cwd"]
+    cwd = get_cwd(settings, None)
 
     if settings["path"]:
         argv = settings["path"]
@@ -158,7 +180,7 @@ def did_close(params: lsp.DidCloseTextDocumentParams) -> None:
     settings = _get_settings_by_document(document)
     if settings["reportingScope"] == "file":
         # Publishing empty diagnostics to clear the entries for this file.
-        LSP_SERVER.publish_diagnostics(document.uri, [])
+        _clear_diagnostics(document)
 
 
 def _is_empty_diagnostics(
@@ -175,6 +197,10 @@ def _is_empty_diagnostics(
 _reported_file_paths = set()
 
 
+def _clear_diagnostics(document: workspace.Document) -> None:
+    LSP_SERVER.publish_diagnostics(document.uri, [])
+
+
 def _linting_helper(document: workspace.Document) -> None:
     global _reported_file_paths
     try:
@@ -183,6 +209,28 @@ def _linting_helper(document: workspace.Document) -> None:
         # deep copy here to prevent accidentally updating global settings.
         settings = copy.deepcopy(_get_settings_by_document(document))
 
+        if str(document.uri).startswith("vscode-notebook-cell"):
+            # We don't support running mypy on notebook cells.
+            log_warning(f"Skipping notebook cells [Not Supported]: {str(document.uri)}")
+            _clear_diagnostics(document)
+            return None
+
+        if settings["reportingScope"] == "file" and utils.is_stdlib_file(document.path):
+            log_warning(
+                f"Skipping standard library file (stdlib excluded): {document.path}"
+            )
+            _clear_diagnostics(document)
+            return None
+
+        if settings["reportingScope"] == "file" and utils.is_match(
+            settings["ignorePatterns"], document.path
+        ):
+            log_warning(
+                f"Skipping file due to `mypy-type-checker.ignorePatterns` match: {document.path}"
+            )
+            _clear_diagnostics(document)
+            return None
+
         version = get_mypy_info(settings).version
         if (version.major, version.minor) >= (0, 991) and sys.version_info >= (3, 8):
             extra_args += ["--show-error-end"]
@@ -210,7 +258,7 @@ def _linting_helper(document: workspace.Document) -> None:
                 if _is_empty_diagnostics(document.path, parse_results):
                     # Ensure that if nothing is returned for this document, at least
                     # an empty diagnostic is returned to clear any old errors out.
-                    LSP_SERVER.publish_diagnostics(document.uri, [])
+                    _clear_diagnostics(document)
 
             if reportingScope == "workspace":
                 for file_path in _reported_file_paths:
@@ -218,7 +266,7 @@ def _linting_helper(document: workspace.Document) -> None:
                         uri = uris.from_fs_path(file_path)
                         LSP_SERVER.publish_diagnostics(uri, [])
         else:
-            LSP_SERVER.publish_diagnostics(document.uri, [])
+            _clear_diagnostics(document)
     except Exception:
         LSP_SERVER.show_message_log(
             f"Linting failed with error:\r\n{traceback.format_exc()}",
@@ -447,10 +495,12 @@ def _get_global_defaults():
                 "note": "Information",
             },
         ),
+        "ignorePatterns": [],
         "importStrategy": GLOBAL_SETTINGS.get("importStrategy", "useBundled"),
         "showNotifications": GLOBAL_SETTINGS.get("showNotifications", "off"),
         "extraPaths": GLOBAL_SETTINGS.get("extraPaths", []),
         "reportingScope": GLOBAL_SETTINGS.get("reportingScope", "file"),
+        "preferDaemon": GLOBAL_SETTINGS.get("preferDaemon", True),
     }
 
 
@@ -590,27 +640,35 @@ def _get_env_vars(settings: Dict[str, Any]) -> Dict[str, str]:
     return new_env
 
 
+def get_cwd(settings: Dict[str, Any], document: Optional[workspace.Document]) -> str:
+    """Returns cwd for the given settings and document."""
+    if settings["cwd"] == "${workspaceFolder}":
+        return settings["workspaceFS"]
+
+    if settings["cwd"] == "${fileDirname}":
+        if document is not None:
+            return os.fspath(pathlib.Path(document.path).parent)
+        return settings["workspaceFS"]
+
+    return settings["cwd"]
+
+
 def _run_tool_on_document(
     document: workspace.Document,
-    extra_args: Sequence[str] = [],
+    extra_args: Sequence[str] = None,
 ) -> utils.RunResult | None:
     """Runs tool on the given document.
 
     if use_stdin is true then contents of the document is passed to the
     tool via stdin.
     """
-    if str(document.uri).startswith("vscode-notebook-cell"):
-        # We don't support running mypy on notebook cells.
-        log_to_output("Skipping mypy on notebook cells.")
-        return None
-
-    if utils.is_stdlib_file(document.path):
-        log_to_output("Skipping mypy on stdlib file: " + document.path)
-        return None
+    if extra_args is None:
+        extra_args = []
 
     # deep copy here to prevent accidentally updating global settings.
     settings = copy.deepcopy(_get_settings_by_document(document))
-    cwd = settings["cwd"]
+
+    cwd = get_cwd(settings, document)
 
     if settings["path"]:
         argv = settings["path"]
@@ -646,7 +704,7 @@ def _run_dmypy_command(
         log_error(f"dmypy command called in non-daemon context: {command}")
         raise ValueError(f"dmypy command called in non-daemon context: {command}")
 
-    cwd = settings["cwd"]
+    cwd = get_cwd(settings, None)
 
     if settings["path"]:
         argv = settings["path"]
diff --git a/bundled/tool/lsp_utils.py b/bundled/tool/lsp_utils.py
index 284a2f7..b955c29 100644
--- a/bundled/tool/lsp_utils.py
+++ b/bundled/tool/lsp_utils.py
@@ -87,6 +87,13 @@ def is_stdlib_file(file_path: str) -> bool:
     return any(normalized_path.startswith(path) for path in _stdlib_paths)
 
 
+def is_match(patterns: List[str], file_path: str) -> bool:
+    """Returns true if the file matches one of the glob patterns."""
+    if not patterns:
+        return False
+    return any(pathlib.Path(file_path).match(pattern) for pattern in patterns)
+
+
 # pylint: disable-next=too-few-public-methods
 class RunResult:
     """Object to hold result from running tool."""
diff --git a/package-lock.json b/package-lock.json
index 0b19aba..3a0e198 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -14,27 +14,27 @@
                 "vscode-languageclient": "^8.1.0"
             },
             "devDependencies": {
-                "@types/chai": "^4.3.6",
-                "@types/fs-extra": "^11.0.2",
+                "@types/chai": "^4.3.9",
+                "@types/fs-extra": "^11.0.3",
                 "@types/glob": "^8.1.0",
-                "@types/mocha": "^10.0.2",
+                "@types/mocha": "^10.0.3",
                 "@types/node": "16.x",
-                "@types/sinon": "^10.0.18",
+                "@types/sinon": "^10.0.20",
                 "@types/vscode": "^1.74.0",
-                "@typescript-eslint/eslint-plugin": "^6.7.4",
-                "@typescript-eslint/parser": "^6.7.4",
+                "@typescript-eslint/eslint-plugin": "^6.8.0",
+                "@typescript-eslint/parser": "^6.8.0",
                 "@vscode/test-electron": "^2.3.5",
                 "@vscode/vsce": "^2.21.1",
                 "chai": "^4.3.10",
-                "eslint": "^8.50.0",
+                "eslint": "^8.51.0",
                 "glob": "^10.3.10",
                 "mocha": "^10.2.0",
                 "prettier": "^3.0.3",
-                "sinon": "^16.0.0",
-                "ts-loader": "^9.4.4",
+                "sinon": "^16.1.1",
+                "ts-loader": "^9.5.0",
                 "typemoq": "^2.1.0",
                 "typescript": "^5.2.2",
-                "webpack": "^5.88.2",
+                "webpack": "^5.89.0",
                 "webpack-cli": "^5.1.4"
             },
             "engines": {
@@ -107,9 +107,9 @@
             }
         },
         "node_modules/@eslint/js": {
-            "version": "8.50.0",
-            "resolved": "https://registry.npmjs.org/@eslint/js/-/js-8.50.0.tgz",
-            "integrity": "sha512-NCC3zz2+nvYd+Ckfh87rA47zfu2QsQpvc6k1yzTk+b9KzRj0wkGa8LSoGOXN6Zv4lRf/EIoZ80biDh9HOI+RNQ==",
+            "version": "8.51.0",
+            "resolved": "https://registry.npmjs.org/@eslint/js/-/js-8.51.0.tgz",
+            "integrity": "sha512-HxjQ8Qn+4SI3/AFv6sOrDB+g6PpUTDwSJiQqOrnneEk8L71161srI9gjzzZvYVbzHiVg/BvcH95+cK/zfIt4pg==",
             "dev": true,
             "engines": {
                 "node": "^12.22.0 || ^14.17.0 || >=16.0.0"
@@ -372,9 +372,9 @@
             }
         },
         "node_modules/@types/chai": {
-            "version": "4.3.6",
-            "resolved": "https://registry.npmjs.org/@types/chai/-/chai-4.3.6.tgz",
-            "integrity": "sha512-VOVRLM1mBxIRxydiViqPcKn6MIxZytrbMpd6RJLIWKxUNr3zux8no0Oc7kJx0WAPIitgZ0gkrDS+btlqQpubpw==",
+            "version": "4.3.9",
+            "resolved": "https://registry.npmjs.org/@types/chai/-/chai-4.3.9.tgz",
+            "integrity": "sha512-69TtiDzu0bcmKQv3yg1Zx409/Kd7r0b5F1PfpYJfSHzLGtB53547V4u+9iqKYsTu/O2ai6KTb0TInNpvuQ3qmg==",
             "dev": true
         },
         "node_modules/@types/eslint": {
@@ -404,9 +404,9 @@
             "dev": true
         },
         "node_modules/@types/fs-extra": {
-            "version": "11.0.2",
-            "resolved": "https://registry.npmjs.org/@types/fs-extra/-/fs-extra-11.0.2.tgz",
-            "integrity": "sha512-c0hrgAOVYr21EX8J0jBMXGLMgJqVf/v6yxi0dLaJboW9aQPh16Id+z6w2Tx1hm+piJOLv8xPfVKZCLfjPw/IMQ==",
+            "version": "11.0.3",
+            "resolved": "https://registry.npmjs.org/@types/fs-extra/-/fs-extra-11.0.3.tgz",
+            "integrity": "sha512-sF59BlXtUdzEAL1u0MSvuzWd7PdZvZEtnaVkzX5mjpdWTJ8brG0jUqve3jPCzSzvAKKMHTG8F8o/WMQLtleZdQ==",
             "dev": true,
             "dependencies": {
                 "@types/jsonfile": "*",
@@ -445,9 +445,9 @@
             "dev": true
         },
         "node_modules/@types/mocha": {
-            "version": "10.0.2",
-            "resolved": "https://registry.npmjs.org/@types/mocha/-/mocha-10.0.2.tgz",
-            "integrity": "sha512-NaHL0+0lLNhX6d9rs+NSt97WH/gIlRHmszXbQ/8/MV/eVcFNdeJ/GYhrFuUc8K7WuPhRhTSdMkCp8VMzhUq85w==",
+            "version": "10.0.3",
+            "resolved": "https://registry.npmjs.org/@types/mocha/-/mocha-10.0.3.tgz",
+            "integrity": "sha512-RsOPImTriV/OE4A9qKjMtk2MnXiuLLbcO3nCXK+kvq4nr0iMfFgpjaX3MPLb6f7+EL1FGSelYvuJMV6REH+ZPQ==",
             "dev": true
         },
         "node_modules/@types/node": {
@@ -457,15 +457,15 @@
             "dev": true
         },
         "node_modules/@types/semver": {
-            "version": "7.5.3",
-            "resolved": "https://registry.npmjs.org/@types/semver/-/semver-7.5.3.tgz",
-            "integrity": "sha512-OxepLK9EuNEIPxWNME+C6WwbRAOOI2o2BaQEGzz5Lu2e4Z5eDnEo+/aVEDMIXywoJitJ7xWd641wrGLZdtwRyw==",
+            "version": "7.5.4",
+            "resolved": "https://registry.npmjs.org/@types/semver/-/semver-7.5.4.tgz",
+            "integrity": "sha512-MMzuxN3GdFwskAnb6fz0orFvhfqi752yjaXylr0Rp4oDg5H0Zn1IuyRhDVvYOwAXoJirx2xuS16I3WjxnAIHiQ==",
             "dev": true
         },
         "node_modules/@types/sinon": {
-            "version": "10.0.18",
-            "resolved": "https://registry.npmjs.org/@types/sinon/-/sinon-10.0.18.tgz",
-            "integrity": "sha512-OpQC9ug8BcnNxue2WF5aTruMaDRFn6NyfaE4DmAKOlQMn54b7CnCvDFV3wj5fk/HbSSTYmOYs2bTb5ShANjyQg==",
+            "version": "10.0.20",
+            "resolved": "https://registry.npmjs.org/@types/sinon/-/sinon-10.0.20.tgz",
+            "integrity": "sha512-2APKKruFNCAZgx3daAyACGzWuJ028VVCUDk6o2rw/Z4PXT0ogwdV4KUegW0MwVs0Zu59auPXbbuBJHF12Sx1Eg==",
             "dev": true,
             "dependencies": {
                 "@types/sinonjs__fake-timers": "*"
@@ -484,16 +484,16 @@
             "dev": true
         },
         "node_modules/@typescript-eslint/eslint-plugin": {
-            "version": "6.7.4",
-            "resolved": "https://registry.npmjs.org/@typescript-eslint/eslint-plugin/-/eslint-plugin-6.7.4.tgz",
-            "integrity": "sha512-DAbgDXwtX+pDkAHwiGhqP3zWUGpW49B7eqmgpPtg+BKJXwdct79ut9+ifqOFPJGClGKSHXn2PTBatCnldJRUoA==",
+            "version": "6.8.0",
+            "resolved": "https://registry.npmjs.org/@typescript-eslint/eslint-plugin/-/eslint-plugin-6.8.0.tgz",
+            "integrity": "sha512-GosF4238Tkes2SHPQ1i8f6rMtG6zlKwMEB0abqSJ3Npvos+doIlc/ATG+vX1G9coDF3Ex78zM3heXHLyWEwLUw==",
             "dev": true,
             "dependencies": {
                 "@eslint-community/regexpp": "^4.5.1",
-                "@typescript-eslint/scope-manager": "6.7.4",
-                "@typescript-eslint/type-utils": "6.7.4",
-                "@typescript-eslint/utils": "6.7.4",
-                "@typescript-eslint/visitor-keys": "6.7.4",
+                "@typescript-eslint/scope-manager": "6.8.0",
+                "@typescript-eslint/type-utils": "6.8.0",
+                "@typescript-eslint/utils": "6.8.0",
+                "@typescript-eslint/visitor-keys": "6.8.0",
                 "debug": "^4.3.4",
                 "graphemer": "^1.4.0",
                 "ignore": "^5.2.4",
@@ -519,15 +519,15 @@
             }
         },
         "node_modules/@typescript-eslint/parser": {
-            "version": "6.7.4",
-            "resolved": "https://registry.npmjs.org/@typescript-eslint/parser/-/parser-6.7.4.tgz",
-            "integrity": "sha512-I5zVZFY+cw4IMZUeNCU7Sh2PO5O57F7Lr0uyhgCJmhN/BuTlnc55KxPonR4+EM3GBdfiCyGZye6DgMjtubQkmA==",
+            "version": "6.8.0",
+            "resolved": "https://registry.npmjs.org/@typescript-eslint/parser/-/parser-6.8.0.tgz",
+            "integrity": "sha512-5tNs6Bw0j6BdWuP8Fx+VH4G9fEPDxnVI7yH1IAPkQH5RUtvKwRoqdecAPdQXv4rSOADAaz1LFBZvZG7VbXivSg==",
             "dev": true,
             "dependencies": {
-                "@typescript-eslint/scope-manager": "6.7.4",
-                "@typescript-eslint/types": "6.7.4",
-                "@typescript-eslint/typescript-estree": "6.7.4",
-                "@typescript-eslint/visitor-keys": "6.7.4",
+                "@typescript-eslint/scope-manager": "6.8.0",
+                "@typescript-eslint/types": "6.8.0",
+                "@typescript-eslint/typescript-estree": "6.8.0",
+                "@typescript-eslint/visitor-keys": "6.8.0",
                 "debug": "^4.3.4"
             },
             "engines": {
@@ -547,13 +547,13 @@
             }
         },
         "node_modules/@typescript-eslint/scope-manager": {
-            "version": "6.7.4",
-            "resolved": "https://registry.npmjs.org/@typescript-eslint/scope-manager/-/scope-manager-6.7.4.tgz",
-            "integrity": "sha512-SdGqSLUPTXAXi7c3Ob7peAGVnmMoGzZ361VswK2Mqf8UOYcODiYvs8rs5ILqEdfvX1lE7wEZbLyELCW+Yrql1A==",
+            "version": "6.8.0",
+            "resolved": "https://registry.npmjs.org/@typescript-eslint/scope-manager/-/scope-manager-6.8.0.tgz",
+            "integrity": "sha512-xe0HNBVwCph7rak+ZHcFD6A+q50SMsFwcmfdjs9Kz4qDh5hWhaPhFjRs/SODEhroBI5Ruyvyz9LfwUJ624O40g==",
             "dev": true,
             "dependencies": {
-                "@typescript-eslint/types": "6.7.4",
-                "@typescript-eslint/visitor-keys": "6.7.4"
+                "@typescript-eslint/types": "6.8.0",
+                "@typescript-eslint/visitor-keys": "6.8.0"
             },
             "engines": {
                 "node": "^16.0.0 || >=18.0.0"
@@ -564,13 +564,13 @@
             }
         },
         "node_modules/@typescript-eslint/type-utils": {
-            "version": "6.7.4",
-            "resolved": "https://registry.npmjs.org/@typescript-eslint/type-utils/-/type-utils-6.7.4.tgz",
-            "integrity": "sha512-n+g3zi1QzpcAdHFP9KQF+rEFxMb2KxtnJGID3teA/nxKHOVi3ylKovaqEzGBbVY2pBttU6z85gp0D00ufLzViQ==",
+            "version": "6.8.0",
+            "resolved": "https://registry.npmjs.org/@typescript-eslint/type-utils/-/type-utils-6.8.0.tgz",
+            "integrity": "sha512-RYOJdlkTJIXW7GSldUIHqc/Hkto8E+fZN96dMIFhuTJcQwdRoGN2rEWA8U6oXbLo0qufH7NPElUb+MceHtz54g==",
             "dev": true,
             "dependencies": {
-                "@typescript-eslint/typescript-estree": "6.7.4",
-                "@typescript-eslint/utils": "6.7.4",
+                "@typescript-eslint/typescript-estree": "6.8.0",
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-            "integrity": "sha512-PRQAs+HUn85Qdk+khAxsVV+oULy3VkbH3hQ8hxLRJXWBEd7iI+GbQxH5SEUSH7kbEoTp6oT1bOwyga24ELALTA==",
+            "version": "6.8.0",
+            "resolved": "https://registry.npmjs.org/@typescript-eslint/utils/-/utils-6.8.0.tgz",
+            "integrity": "sha512-dKs1itdE2qFG4jr0dlYLQVppqTE+Itt7GmIf/vX6CSvsW+3ov8PbWauVKyyfNngokhIO9sKZeRGCUo1+N7U98Q==",
             "dev": true,
             "requires": {
                 "@eslint-community/eslint-utils": "^4.4.0",
                 "@types/json-schema": "^7.0.12",
                 "@types/semver": "^7.5.0",
-                "@typescript-eslint/scope-manager": "6.7.4",
-                "@typescript-eslint/types": "6.7.4",
-                "@typescript-eslint/typescript-estree": "6.7.4",
+                "@typescript-eslint/scope-manager": "6.8.0",
+                "@typescript-eslint/types": "6.8.0",
+                "@typescript-eslint/typescript-estree": "6.8.0",
                 "semver": "^7.5.4"
             }
         },
         "@typescript-eslint/visitor-keys": {
-            "version": "6.7.4",
-            "resolved": "https://registry.npmjs.org/@typescript-eslint/visitor-keys/-/visitor-keys-6.7.4.tgz",
-            "integrity": "sha512-pOW37DUhlTZbvph50x5zZCkFn3xzwkGtNoJHzIM3svpiSkJzwOYr/kVBaXmf+RAQiUDs1AHEZVNPg6UJCJpwRA==",
+            "version": "6.8.0",
+            "resolved": "https://registry.npmjs.org/@typescript-eslint/visitor-keys/-/visitor-keys-6.8.0.tgz",
+            "integrity": "sha512-oqAnbA7c+pgOhW2OhGvxm0t1BULX5peQI/rLsNDpGM78EebV3C9IGbX5HNZabuZ6UQrYveCLjKo8Iy/lLlBkkg==",
             "dev": true,
             "requires": {
-                "@typescript-eslint/types": "6.7.4",
+                "@typescript-eslint/types": "6.8.0",
                 "eslint-visitor-keys": "^3.4.1"
             }
         },
@@ -6919,15 +6930,15 @@
             "dev": true
         },
         "eslint": {
-            "version": "8.50.0",
-            "resolved": "https://registry.npmjs.org/eslint/-/eslint-8.50.0.tgz",
-            "integrity": "sha512-FOnOGSuFuFLv/Sa+FDVRZl4GGVAAFFi8LecRsI5a1tMO5HIE8nCm4ivAlzt4dT3ol/PaaGC0rJEEXQmHJBGoOg==",
+            "version": "8.51.0",
+            "resolved": "https://registry.npmjs.org/eslint/-/eslint-8.51.0.tgz",
+            "integrity": "sha512-2WuxRZBrlwnXi+/vFSJyjMqrNjtJqiasMzehF0shoLaW7DzS3/9Yvrmq5JiT66+pNjiX4UBnLDiKHcWAr/OInA==",
             "dev": true,
             "requires": {
                 "@eslint-community/eslint-utils": "^4.2.0",
                 "@eslint-community/regexpp": "^4.6.1",
                 "@eslint/eslintrc": "^2.1.2",
-                "@eslint/js": "8.50.0",
+                "@eslint/js": "8.51.0",
                 "@humanwhocodes/config-array": "^0.11.11",
                 "@humanwhocodes/module-importer": "^1.0.1",
                 "@nodelib/fs.walk": "^1.2.8",
@@ -8782,9 +8793,9 @@
             }
         },
         "sinon": {
-            "version": "16.0.0",
-            "resolved": "https://registry.npmjs.org/sinon/-/sinon-16.0.0.tgz",
-            "integrity": "sha512-B8AaZZm9CT5pqe4l4uWJztfD/mOTa7dL8Qo0W4+s+t74xECOgSZDDQCBjNgIK3+n4kyxQrSTv2V5ul8K25qkiQ==",
+            "version": "16.1.1",
+            "resolved": "https://registry.npmjs.org/sinon/-/sinon-16.1.1.tgz",
+            "integrity": "sha512-tu0DS1g4Rm2xHT9mWK5g5aTogTXWwGGz3fQK/L5fnECPkcAQ3YcbAbJ4XxOkpDDnV4EV5n+lee5neq5QyVxoSg==",
             "dev": true,
             "requires": {
                 "@sinonjs/commons": "^3.0.0",
@@ -9035,15 +9046,24 @@
             "requires": {}
         },
         "ts-loader": {
-            "version": "9.4.4",
-            "resolved": "https://registry.npmjs.org/ts-loader/-/ts-loader-9.4.4.tgz",
-            "integrity": "sha512-MLukxDHBl8OJ5Dk3y69IsKVFRA/6MwzEqBgh+OXMPB/OD01KQuWPFd1WAQP8a5PeSCAxfnkhiuWqfmFJzJQt9w==",
+            "version": "9.5.0",
+            "resolved": "https://registry.npmjs.org/ts-loader/-/ts-loader-9.5.0.tgz",
+            "integrity": "sha512-LLlB/pkB4q9mW2yLdFMnK3dEHbrBjeZTYguaaIfusyojBgAGf5kF+O6KcWqiGzWqHk0LBsoolrp4VftEURhybg==",
             "dev": true,
             "requires": {
                 "chalk": "^4.1.0",
                 "enhanced-resolve": "^5.0.0",
                 "micromatch": "^4.0.0",
-                "semver": "^7.3.4"
+                "semver": "^7.3.4",
+                "source-map": "^0.7.4"
+            },
+            "dependencies": {
+                "source-map": {
+                    "version": "0.7.4",
+                    "resolved": "https://registry.npmjs.org/source-map/-/source-map-0.7.4.tgz",
+                    "integrity": "sha512-l3BikUxvPOcn5E74dZiq5BGsTb5yEwhaTSzccU6t4sDOH8NWJCstKO5QT2CvtFoK6F0saL7p9xHAqHOlCPJygA==",
+                    "dev": true
+                }
             }
         },
         "tunnel": {
@@ -9207,9 +9227,9 @@
             }
         },
         "webpack": {
-            "version": "5.88.2",
-            "resolved": "https://registry.npmjs.org/webpack/-/webpack-5.88.2.tgz",
-            "integrity": "sha512-JmcgNZ1iKj+aiR0OvTYtWQqJwq37Pf683dY9bVORwVbUrDhLhdn/PlO2sHsFHPkj7sHNQF3JwaAkp49V+Sq1tQ==",
+            "version": "5.89.0",
+            "resolved": "https://registry.npmjs.org/webpack/-/webpack-5.89.0.tgz",
+            "integrity": "sha512-qyfIC10pOr70V+jkmud8tMfajraGCZMBWJtrmuBymQKCrLTRejBI8STDp1MCyZu/QTdZSeacCQYpYNQVOzX5kw==",
             "dev": true,
             "requires": {
                 "@types/eslint-scope": "^3.7.3",
diff --git a/package.json b/package.json
index a734300..9c5ef10 100644
--- a/package.json
+++ b/package.json
@@ -74,6 +74,16 @@
                     "scope": "resource",
                     "type": "array"
                 },
+                "mypy-type-checker.cwd": {
+                    "default": "${workspaceFolder}",
+                    "description": "%settings.cwd.description%",
+                    "scope": "resource",
+                    "type": "string",
+                    "examples": [
+                        "${workspaceFolder}/src",
+                        "${fileDirname}"
+                    ]
+                },
                 "mypy-type-checker.path": {
                     "default": [],
                     "markdownDescription": "%settings.path.description%",
@@ -83,6 +93,22 @@
                     },
                     "type": "array"
                 },
+                "mypy-type-checker.ignorePatterns": {
+                    "default": [],
+                    "description": "%settings.ignorePatterns.description%",
+                    "items": {
+                        "type": "string"
+                    },
+                    "scope": "resource",
+                    "type": "array",
+                    "uniqueItems": true,
+                    "examples": [
+                        [
+                            "**/site-packages/**/*.py",
+                            ".vscode/*.py"
+                        ]
+                    ]
+                },
                 "mypy-type-checker.importStrategy": {
                     "default": "useBundled",
                     "markdownDescription": "%settings.importStrategy.description%",
@@ -184,27 +210,27 @@
         "vscode-languageclient": "^8.1.0"
     },
     "devDependencies": {
-        "@types/chai": "^4.3.6",
-        "@types/fs-extra": "^11.0.2",
+        "@types/chai": "^4.3.9",
+        "@types/fs-extra": "^11.0.3",
         "@types/glob": "^8.1.0",
-        "@types/mocha": "^10.0.2",
+        "@types/mocha": "^10.0.3",
         "@types/node": "16.x",
-        "@types/sinon": "^10.0.18",
+        "@types/sinon": "^10.0.20",
         "@types/vscode": "^1.74.0",
-        "@typescript-eslint/eslint-plugin": "^6.7.4",
-        "@typescript-eslint/parser": "^6.7.4",
+        "@typescript-eslint/eslint-plugin": "^6.8.0",
+        "@typescript-eslint/parser": "^6.8.0",
         "@vscode/test-electron": "^2.3.5",
         "@vscode/vsce": "^2.21.1",
         "chai": "^4.3.10",
-        "eslint": "^8.50.0",
+        "eslint": "^8.51.0",
         "glob": "^10.3.10",
         "mocha": "^10.2.0",
         "prettier": "^3.0.3",
-        "sinon": "^16.0.0",
-        "ts-loader": "^9.4.4",
+        "sinon": "^16.1.1",
+        "ts-loader": "^9.5.0",
         "typemoq": "^2.1.0",
         "typescript": "^5.2.2",
-        "webpack": "^5.88.2",
+        "webpack": "^5.89.0",
         "webpack-cli": "^5.1.4"
     }
 }
diff --git a/package.nls.json b/package.nls.json
index 95a3869..ed08343 100644
--- a/package.nls.json
+++ b/package.nls.json
@@ -2,8 +2,10 @@
     "extension.description": "Linting support for Python files using `mypy`.",
     "command.restartServer": "Restart Server",
     "settings.args.description": "Arguments passed in. Each argument is a separate string in the array.",
+    "settings.cwd.description": "The current working directory used to run `mypy`. To use the directory of the file currently being linted, you can use `${fileDirname}` .",
     "settings.severity.description": "Mapping from severity of `mypy` message type to severity shown in problem window.",
     "settings.path.description": "When set to a path to `mypy` binary, extension will use that for linting. NOTE: Using this option may slowdown linting.",
+    "settings.ignorePatterns.description": "Patterns used to exclude files or folders from being linted. Applies to `reportingScope==file` only.",
     "settings.importStrategy.description": "Defines where `mypy` is imported from. This setting may be ignored if `mypy-type-checker.path` is set.",
     "settings.importStrategy.useBundled.description": "Always use the bundled version of `mypy`.",
     "settings.importStrategy.fromEnvironment.description": "Use `mypy` from environment, fallback to bundled version only if `mypy` not available in the environment.",
diff --git a/requirements.txt b/requirements.txt
index 26c8ece..6cc9b24 100644
--- a/requirements.txt
+++ b/requirements.txt
@@ -26,34 +26,34 @@ lsprotocol==2023.0.0b1 \
     --hash=sha256:ade2cd0fa0ede7965698cb59cd05d3adbd19178fd73e83f72ef57a032fbb9d62 \
     --hash=sha256:f7a2d4655cbd5639f373ddd1789807450c543341fa0a32b064ad30dbb9f510d4
     # via pygls
-mypy==1.5.1 \
-    --hash=sha256:159aa9acb16086b79bbb0016145034a1a05360626046a929f84579ce1666b315 \
-    --hash=sha256:258b22210a4a258ccd077426c7a181d789d1121aca6db73a83f79372f5569ae0 \
-    --hash=sha256:26f71b535dfc158a71264e6dc805a9f8d2e60b67215ca0bfa26e2e1aa4d4d373 \
-    --hash=sha256:26fb32e4d4afa205b24bf645eddfbb36a1e17e995c5c99d6d00edb24b693406a \
-    --hash=sha256:2fc3a600f749b1008cc75e02b6fb3d4db8dbcca2d733030fe7a3b3502902f161 \
-    --hash=sha256:32cb59609b0534f0bd67faebb6e022fe534bdb0e2ecab4290d683d248be1b275 \
-    --hash=sha256:330857f9507c24de5c5724235e66858f8364a0693894342485e543f5b07c8693 \
-    --hash=sha256:361da43c4f5a96173220eb53340ace68cda81845cd88218f8862dfb0adc8cddb \
-    --hash=sha256:4a465ea2ca12804d5b34bb056be3a29dc47aea5973b892d0417c6a10a40b2d65 \
-    --hash=sha256:51cb1323064b1099e177098cb939eab2da42fea5d818d40113957ec954fc85f4 \
-    --hash=sha256:57b10c56016adce71fba6bc6e9fd45d8083f74361f629390c556738565af8eeb \
-    --hash=sha256:596fae69f2bfcb7305808c75c00f81fe2829b6236eadda536f00610ac5ec2243 \
-    --hash=sha256:5d627124700b92b6bbaa99f27cbe615c8ea7b3402960f6372ea7d65faf376c14 \
-    --hash=sha256:6ac9c21bfe7bc9f7f1b6fae441746e6a106e48fc9de530dea29e8cd37a2c0cc4 \
-    --hash=sha256:82cb6193de9bbb3844bab4c7cf80e6227d5225cc7625b068a06d005d861ad5f1 \
-    --hash=sha256:8f772942d372c8cbac575be99f9cc9d9fb3bd95c8bc2de6c01411e2c84ebca8a \
-    --hash=sha256:9fece120dbb041771a63eb95e4896791386fe287fefb2837258925b8326d6160 \
-    --hash=sha256:a156e6390944c265eb56afa67c74c0636f10283429171018446b732f1a05af25 \
-    --hash=sha256:a9ec1f695f0c25986e6f7f8778e5ce61659063268836a38c951200c57479cc12 \
-    --hash=sha256:abed92d9c8f08643c7d831300b739562b0a6c9fcb028d211134fc9ab20ccad5d \
-    --hash=sha256:b031b9601f1060bf1281feab89697324726ba0c0bae9d7cd7ab4b690940f0b92 \
-    --hash=sha256:c543214ffdd422623e9fedd0869166c2f16affe4ba37463975043ef7d2ea8770 \
-    --hash=sha256:d28ddc3e3dfeab553e743e532fb95b4e6afad51d4706dd22f28e1e5e664828d2 \
-    --hash=sha256:f33592ddf9655a4894aef22d134de7393e95fcbdc2d15c1ab65828eee5c66c70 \
-    --hash=sha256:f6b0e77db9ff4fda74de7df13f30016a0a663928d669c9f2c057048ba44f09bb \
-    --hash=sha256:f757063a83970d67c444f6e01d9550a7402322af3557ce7630d3c957386fa8f5 \
-    --hash=sha256:ff0cedc84184115202475bbb46dd99f8dcb87fe24d5d0ddfc0fe6b8575c88d2f
+mypy==1.6.1 \
+    --hash=sha256:19f905bcfd9e167159b3d63ecd8cb5e696151c3e59a1742e79bc3bcb540c42c7 \
+    --hash=sha256:21a1ad938fee7d2d96ca666c77b7c494c3c5bd88dff792220e1afbebb2925b5e \
+    --hash=sha256:40b1844d2e8b232ed92e50a4bd11c48d2daa351f9deee6c194b83bf03e418b0c \
+    --hash=sha256:41697773aa0bf53ff917aa077e2cde7aa50254f28750f9b88884acea38a16169 \
+    --hash=sha256:49ae115da099dcc0922a7a895c1eec82c1518109ea5c162ed50e3b3594c71208 \
+    --hash=sha256:4c46b51de523817a0045b150ed11b56f9fff55f12b9edd0f3ed35b15a2809de0 \
+    --hash=sha256:4cbe68ef919c28ea561165206a2dcb68591c50f3bcf777932323bc208d949cf1 \
+    --hash=sha256:4d01c00d09a0be62a4ca3f933e315455bde83f37f892ba4b08ce92f3cf44bcc1 \
+    --hash=sha256:59a0d7d24dfb26729e0a068639a6ce3500e31d6655df8557156c51c1cb874ce7 \
+    --hash=sha256:68351911e85145f582b5aa6cd9ad666c8958bcae897a1bfda8f4940472463c45 \
+    --hash=sha256:7274b0c57737bd3476d2229c6389b2ec9eefeb090bbaf77777e9d6b1b5a9d143 \
+    --hash=sha256:81af8adaa5e3099469e7623436881eff6b3b06db5ef75e6f5b6d4871263547e5 \
+    --hash=sha256:82e469518d3e9a321912955cc702d418773a2fd1e91c651280a1bda10622f02f \
+    --hash=sha256:8b27958f8c76bed8edaa63da0739d76e4e9ad4ed325c814f9b3851425582a3cd \
+    --hash=sha256:8c223fa57cb154c7eab5156856c231c3f5eace1e0bed9b32a24696b7ba3c3245 \
+    --hash=sha256:8f57e6b6927a49550da3d122f0cb983d400f843a8a82e65b3b380d3d7259468f \
+    --hash=sha256:925cd6a3b7b55dfba252b7c4561892311c5358c6b5a601847015a1ad4eb7d332 \
+    --hash=sha256:a43ef1c8ddfdb9575691720b6352761f3f53d85f1b57d7745701041053deff30 \
+    --hash=sha256:a8032e00ce71c3ceb93eeba63963b864bf635a18f6c0c12da6c13c450eedb183 \
+    --hash=sha256:b96ae2c1279d1065413965c607712006205a9ac541895004a1e0d4f281f2ff9f \
+    --hash=sha256:bb8ccb4724f7d8601938571bf3f24da0da791fe2db7be3d9e79849cb64e0ae85 \
+    --hash=sha256:bbaf4662e498c8c2e352da5f5bca5ab29d378895fa2d980630656178bd607c46 \
+    --hash=sha256:cfd13d47b29ed3bbaafaff7d8b21e90d827631afda134836962011acb5904b71 \
+    --hash=sha256:d4473c22cc296425bbbce7e9429588e76e05bc7342da359d6520b6427bf76660 \
+    --hash=sha256:d8fbb68711905f8912e5af474ca8b78d077447d8f3918997fecbf26943ff3cbb \
+    --hash=sha256:e5012e5cc2ac628177eaac0e83d622b2dd499e28253d4107a08ecc59ede3fc2c \
+    --hash=sha256:eb4f18589d196a4cbe5290b435d135dee96567e07c2b2d43b5c4621b6501531a
     # via -r ./requirements.in
 mypy-extensions==1.0.0 \
     --hash=sha256:4392f6c0eb8a5668a69e23d168ffa70f0be9ccfd32b5cc2d26a34ae5b844552d \
@@ -63,9 +63,9 @@ packaging==23.2 \
     --hash=sha256:048fb0e9405036518eaaf48a55953c750c11e1a1b68e0dd1a9d62ed0c092cfc5 \
     --hash=sha256:8c491190033a9af7e1d931d0b5dacc2ef47509b34dd0de67ed209b5203fc88c7
     # via -r ./requirements.in
-pygls==1.1.0 \
-    --hash=sha256:70acb6fe0df1c8a17b7ce08daa0afdb4aedc6913a6a6696003e1434fda80a06e \
-    --hash=sha256:eb19b818039d3d705ec8adbcdf5809a93af925f30cd7a3f3b7573479079ba00e
+pygls==1.1.1 \
+    --hash=sha256:330704551a335b443bf1cdfb0507f121608591095898d451f0007eeb1510067c \
+    --hash=sha256:b1b4ddd6f800a5573f61f0ec2cd3bc7a859d171f48142b46e1de35a1357c00fe
     # via -r ./requirements.in
 tomli==2.0.1 \
     --hash=sha256:939de3e7a6161af0c887ef91b7d41a53e7c5a1ca976325f429cb46ea9bc30ecc \
diff --git a/src/common/constants.ts b/src/common/constants.ts
index e33f333..402e017 100644
--- a/src/common/constants.ts
+++ b/src/common/constants.ts
@@ -9,3 +9,6 @@ export const EXTENSION_ROOT_DIR =
 export const BUNDLED_PYTHON_SCRIPTS_DIR = path.join(EXTENSION_ROOT_DIR, 'bundled');
 export const SERVER_SCRIPT_PATH = path.join(BUNDLED_PYTHON_SCRIPTS_DIR, 'tool', `lsp_server.py`);
 export const DEBUG_SERVER_SCRIPT_PATH = path.join(BUNDLED_PYTHON_SCRIPTS_DIR, 'tool', `_debug_server.py`);
+export const PYTHON_MAJOR = 3;
+export const PYTHON_MINOR = 8;
+export const PYTHON_VERSION = `${PYTHON_MAJOR}.${PYTHON_MINOR}`;
diff --git a/src/common/python.ts b/src/common/python.ts
index ccd8a05..3294f2a 100644
--- a/src/common/python.ts
+++ b/src/common/python.ts
@@ -5,6 +5,7 @@
 import { commands, Disposable, Event, EventEmitter, Uri } from 'vscode';
 import { traceError, traceLog } from './logging';
 import { PythonExtension, ResolvedEnvironment } from '@vscode/python-extension';
+import { PYTHON_MAJOR, PYTHON_MINOR, PYTHON_VERSION } from './constants';
 
 export interface IInterpreterDetails {
     path?: string[];
@@ -70,11 +71,11 @@ export async function runPythonExtensionCommand(command: string, ...rest: any[])
 
 export function checkVersion(resolved: ResolvedEnvironment | undefined): boolean {
     const version = resolved?.version;
-    if (version?.major === 3 && version?.minor >= 8) {
+    if (version?.major === PYTHON_MAJOR && version?.minor >= PYTHON_MINOR) {
         return true;
     }
     traceError(`Python version ${version?.major}.${version?.minor} is not supported.`);
     traceError(`Selected python path: ${resolved?.executable.uri?.fsPath}`);
-    traceError('Supported versions are 3.8 and above.');
+    traceError(`Supported versions are ${PYTHON_VERSION} and above.`);
     return false;
 }
diff --git a/src/common/server.ts b/src/common/server.ts
index 413b073..77e9cda 100644
--- a/src/common/server.ts
+++ b/src/common/server.ts
@@ -14,7 +14,7 @@ import { DEBUG_SERVER_SCRIPT_PATH, SERVER_SCRIPT_PATH } from './constants';
 import { traceError, traceInfo, traceVerbose } from './logging';
 import { getDebuggerPath } from './python';
 import { getExtensionSettings, getGlobalSettings, ISettings } from './settings';
-import { getDocumentSelector, getLSClientTraceLevel } from './utilities';
+import { getLSClientTraceLevel, getDocumentSelector } from './utilities';
 import { updateStatus } from './status';
 
 export type IInitOptions = { settings: ISettings[]; globalSettings: ISettings };
@@ -96,6 +96,7 @@ export async function restartServer(
         settings: await getExtensionSettings(serverId, true),
         globalSettings: await getGlobalSettings(serverId, false),
     });
+
     traceInfo(`Server: Start requested.`);
     _disposables.push(
         newLSClient.onDidChangeState((e) => {
@@ -120,5 +121,6 @@ export async function restartServer(
         updateStatus(l10n.t('Server failed to start.'), LanguageStatusSeverity.Error);
         traceError(`Server: Start failed: ${ex}`);
     }
+
     return newLSClient;
 }
diff --git a/src/common/settings.ts b/src/common/settings.ts
index a0afb7b..55bb526 100644
--- a/src/common/settings.ts
+++ b/src/common/settings.ts
@@ -2,9 +2,9 @@
 // Licensed under the MIT License.
 
 import { ConfigurationChangeEvent, ConfigurationScope, WorkspaceConfiguration, WorkspaceFolder } from 'vscode';
+import { traceLog, traceWarn } from './logging';
 import { getInterpreterDetails } from './python';
 import { getConfiguration, getWorkspaceFolders } from './vscodeapi';
-import { traceLog } from './logging';
 
 const DEFAULT_SEVERITY: Record<string, string> = {
     error: 'Error',
@@ -17,6 +17,7 @@ export interface ISettings {
     args: string[];
     severity: Record<string, string>;
     path: string[];
+    ignorePatterns: string[];
     interpreter: string[];
     importStrategy: string;
     showNotifications: string;
@@ -29,7 +30,12 @@ export function getExtensionSettings(namespace: string, includeInterpreter?: boo
     return Promise.all(getWorkspaceFolders().map((w) => getWorkspaceSettings(namespace, w, includeInterpreter)));
 }
 
-function resolveVariables(value: string[], workspace?: WorkspaceFolder): string[] {
+function resolveVariables(
+    value: string[],
+    workspace?: WorkspaceFolder,
+    interpreter?: string[],
+    env?: NodeJS.ProcessEnv,
+): string[] {
     const substitutions = new Map<string, string>();
     const home = process.env.HOME || process.env.USERPROFILE;
     if (home) {
@@ -43,7 +49,25 @@ function resolveVariables(value: string[], workspace?: WorkspaceFolder): string[
         substitutions.set('${workspaceFolder:' + w.name + '}', w.uri.fsPath);
     });
 
-    return value.map((s) => {
+    env = env || process.env;
+    if (env) {
+        for (const [key, value] of Object.entries(env)) {
+            if (value) {
+                substitutions.set('${env:' + key + '}', value);
+            }
+        }
+    }
+
+    const modifiedValue = [];
+    for (const v of value) {
+        if (interpreter && v === '${interpreter}') {
+            modifiedValue.push(...interpreter);
+        } else {
+            modifiedValue.push(v);
+        }
+    }
+
+    return modifiedValue.map((s) => {
         for (const [key, value] of substitutions) {
             s = s.replace(key, value);
         }
@@ -51,36 +75,12 @@ function resolveVariables(value: string[], workspace?: WorkspaceFolder): string[
     });
 }
 
-function getArgs(namespace: string, workspace: WorkspaceFolder): string[] {
-    const config = getConfiguration(namespace, workspace.uri);
-    const args = config.get<string[]>('args', []);
-    return args;
-}
-
-function getPath(namespace: string, workspace: WorkspaceFolder): string[] {
-    const config = getConfiguration(namespace, workspace.uri);
-    const path = config.get<string[]>('path', []);
-
-    if (path.length > 0) {
-        return path;
-    }
-
-    return [];
-}
-
-function getCwd(namespace: string, workspace: WorkspaceFolder): string {
-    const legacyConfig = getConfiguration('python', workspace.uri);
-    const legacyCwd = legacyConfig.get<string>('linting.cwd');
-
-    if (legacyCwd) {
-        traceLog('Using cwd from `python.linting.cwd`.');
-        return resolveVariables([legacyCwd], workspace)[0];
-    }
-
-    return workspace.uri.fsPath;
+function getCwd(config: WorkspaceConfiguration, workspace: WorkspaceFolder): string {
+    const cwd = config.get<string>('cwd', workspace.uri.fsPath);
+    return resolveVariables([cwd], workspace)[0];
 }
 
-function getExtraPaths(namespace: string, workspace: WorkspaceFolder): string[] {
+function getExtraPaths(_namespace: string, workspace: WorkspaceFolder): string[] {
     const legacyConfig = getConfiguration('python', workspace.uri);
     const legacyExtraPaths = legacyConfig.get<string[]>('analysis.extraPaths', []);
 
@@ -100,39 +100,24 @@ export async function getWorkspaceSettings(
     workspace: WorkspaceFolder,
     includeInterpreter?: boolean,
 ): Promise<ISettings> {
-    const config = getConfiguration(namespace, workspace.uri);
+    const config = getConfiguration(namespace, workspace);
 
     let interpreter: string[] = [];
     if (includeInterpreter) {
         interpreter = getInterpreterFromSetting(namespace, workspace) ?? [];
         if (interpreter.length === 0) {
-            traceLog(`No interpreter found from setting ${namespace}.interpreter`);
-            traceLog(`Getting interpreter from ms-python.python extension for workspace ${workspace.uri.fsPath}`);
             interpreter = (await getInterpreterDetails(workspace.uri)).path ?? [];
-            if (interpreter.length > 0) {
-                traceLog(
-                    `Interpreter from ms-python.python extension for ${workspace.uri.fsPath}:`,
-                    `${interpreter.join(' ')}`,
-                );
-            }
-        } else {
-            traceLog(`Interpreter from setting ${namespace}.interpreter: ${interpreter.join(' ')}`);
-        }
-
-        if (interpreter.length === 0) {
-            traceLog(`No interpreter found for ${workspace.uri.fsPath} in settings or from ms-python.python extension`);
         }
     }
 
-    const args = getArgs(namespace, workspace);
-    const mypyPath = getPath(namespace, workspace);
     const extraPaths = getExtraPaths(namespace, workspace);
     const workspaceSetting = {
-        cwd: getCwd(namespace, workspace),
+        cwd: getCwd(config, workspace),
         workspace: workspace.uri.toString(),
-        args: resolveVariables(args, workspace),
+        args: resolveVariables(config.get<string[]>('args', []), workspace),
         severity: config.get<Record<string, string>>('severity', DEFAULT_SEVERITY),
-        path: resolveVariables(mypyPath, workspace),
+        path: resolveVariables(config.get<string[]>('path', []), workspace, interpreter),
+        ignorePatterns: resolveVariables(config.get<string[]>('ignorePatterns', []), workspace),
         interpreter: resolveVariables(interpreter, workspace),
         importStrategy: config.get<string>('importStrategy', 'useBundled'),
         showNotifications: config.get<string>('showNotifications', 'off'),
@@ -160,11 +145,12 @@ export async function getGlobalSettings(namespace: string, includeInterpreter?:
     }
 
     const setting = {
-        cwd: process.cwd(),
+        cwd: getGlobalValue<string>(config, 'cwd', process.cwd()),
         workspace: process.cwd(),
         args: getGlobalValue<string[]>(config, 'args', []),
         severity: getGlobalValue<Record<string, string>>(config, 'severity', DEFAULT_SEVERITY),
         path: getGlobalValue<string[]>(config, 'path', []),
+        ignorePatterns: getGlobalValue<string[]>(config, 'ignorePatterns', []),
         interpreter: interpreter ?? [],
         importStrategy: getGlobalValue<string>(config, 'importStrategy', 'useBundled'),
         showNotifications: getGlobalValue<string>(config, 'showNotifications', 'off'),
@@ -178,13 +164,59 @@ export async function getGlobalSettings(namespace: string, includeInterpreter?:
 export function checkIfConfigurationChanged(e: ConfigurationChangeEvent, namespace: string): boolean {
     const settings = [
         `${namespace}.args`,
+        `${namespace}.cwd`,
         `${namespace}.severity`,
         `${namespace}.path`,
         `${namespace}.interpreter`,
         `${namespace}.importStrategy`,
         `${namespace}.showNotifications`,
         `${namespace}.reportingScope`,
+        `${namespace}.preferDaemon`,
+        `${namespace}.ignorePatterns`,
+        'python.analysis.extraPaths',
     ];
     const changed = settings.map((s) => e.affectsConfiguration(s));
     return changed.includes(true);
 }
+
+export function logLegacySettings(namespace: string): void {
+    getWorkspaceFolders().forEach((workspace) => {
+        try {
+            const legacyConfig = getConfiguration('python', workspace.uri);
+
+            const legacyMypyEnabled = legacyConfig.get<boolean>('linting.mypyEnabled', false);
+            if (legacyMypyEnabled) {
+                traceWarn(`"python.linting.mypyEnabled" is deprecated. You can remove that setting.`);
+                traceWarn(
+                    'The mypy extension is always enabled. However, you can disable it per workspace using the extensions view.',
+                );
+                traceWarn('You can exclude files and folders using the `python.linting.ignorePatterns` setting.');
+                traceWarn(
+                    `"python.linting.mypyEnabled" value for workspace ${workspace.uri.fsPath}: ${legacyMypyEnabled}`,
+                );
+            }
+
+            const legacyCwd = legacyConfig.get<string>('linting.cwd');
+            if (legacyCwd) {
+                traceWarn(`"python.linting.cwd" is deprecated. Use "${namespace}.cwd" instead.`);
+                traceWarn(`"python.linting.cwd" value for workspace ${workspace.uri.fsPath}: ${legacyCwd}`);
+            }
+
+            const legacyArgs = legacyConfig.get<string[]>('linting.mypyArgs', []);
+            if (legacyArgs.length > 0) {
+                traceWarn(`"python.linting.mypyArgs" is deprecated. Use "${namespace}.args" instead.`);
+                traceWarn(`"python.linting.mypyArgs" value for workspace ${workspace.uri.fsPath}:`);
+                traceWarn(`\n${JSON.stringify(legacyArgs, null, 4)}`);
+            }
+
+            const legacyPath = legacyConfig.get<string>('linting.mypyPath', '');
+            if (legacyPath.length > 0 && legacyPath !== 'mypy') {
+                traceWarn(`"python.linting.mypyPath" is deprecated. Use "${namespace}.path" instead.`);
+                traceWarn(`"python.linting.mypyPath" value for workspace ${workspace.uri.fsPath}:`);
+                traceWarn(`\n${JSON.stringify(legacyPath, null, 4)}`);
+            }
+        } catch (err) {
+            traceWarn(`Error while logging legacy settings: ${err}`);
+        }
+    });
+}
diff --git a/src/common/status.ts b/src/common/status.ts
index 0f94604..910f8fe 100644
--- a/src/common/status.ts
+++ b/src/common/status.ts
@@ -3,8 +3,8 @@
 
 import { LanguageStatusItem, Disposable, l10n, LanguageStatusSeverity } from 'vscode';
 import { createLanguageStatusItem } from './vscodeapi';
-import { getDocumentSelector } from './utilities';
 import { Command } from 'vscode-languageclient';
+import { getDocumentSelector } from './utilities';
 
 let _status: LanguageStatusItem | undefined;
 export function registerLanguageStatusItem(id: string, name: string, command: string): Disposable {
diff --git a/src/common/utilities.ts b/src/common/utilities.ts
index c2385f8..0ff78d0 100644
--- a/src/common/utilities.ts
+++ b/src/common/utilities.ts
@@ -68,6 +68,7 @@ export async function getProjectRoot(): Promise<WorkspaceFolder> {
 }
 
 export function getDocumentSelector(): DocumentSelector {
+    // virtual workspaces are not supported yet
     return isVirtualWorkspace()
         ? [{ language: 'python' }]
         : [
diff --git a/src/extension.ts b/src/extension.ts
index 3d29a99..84cf409 100644
--- a/src/extension.ts
+++ b/src/extension.ts
@@ -3,14 +3,20 @@
 
 import * as vscode from 'vscode';
 import { LanguageClient } from 'vscode-languageclient/node';
-import { restartServer } from './common/server';
 import { registerLogger, traceError, traceLog, traceVerbose } from './common/logging';
 import { initializePython, onDidChangePythonInterpreter } from './common/python';
-import { checkIfConfigurationChanged, getInterpreterFromSetting, getWorkspaceSettings } from './common/settings';
+import { restartServer } from './common/server';
+import {
+    checkIfConfigurationChanged,
+    getInterpreterFromSetting,
+    getWorkspaceSettings,
+    logLegacySettings,
+} from './common/settings';
 import { loadServerDefaults } from './common/setup';
-import { getProjectRoot } from './common/utilities';
+import { getLSClientTraceLevel, getProjectRoot } from './common/utilities';
 import { createOutputChannel, onDidChangeConfiguration, registerCommand } from './common/vscodeapi';
 import { registerLanguageStatusItem, updateStatus } from './common/status';
+import { PYTHON_VERSION } from './common/constants';
 
 let lsClient: LanguageClient | undefined;
 export async function activate(context: vscode.ExtensionContext): Promise<void> {
@@ -24,6 +30,20 @@ export async function activate(context: vscode.ExtensionContext): Promise<void>
     const outputChannel = createOutputChannel(serverName);
     context.subscriptions.push(outputChannel, registerLogger(outputChannel));
 
+    const changeLogLevel = async (c: vscode.LogLevel, g: vscode.LogLevel) => {
+        const level = getLSClientTraceLevel(c, g);
+        await lsClient?.setTrace(level);
+    };
+
+    context.subscriptions.push(
+        outputChannel.onDidChangeLogLevel(async (e) => {
+            await changeLogLevel(e, vscode.env.logLevel);
+        }),
+        vscode.env.onDidChangeLogLevel(async (e) => {
+            await changeLogLevel(outputChannel.logLevel, e);
+        }),
+    );
+
     traceLog(`Name: ${serverName}`);
     traceLog(`Module: ${serverInfo.module}`);
     traceVerbose(`Configuration: ${JSON.stringify(serverInfo)}`);
@@ -37,7 +57,7 @@ export async function activate(context: vscode.ExtensionContext): Promise<void>
                 'Python interpreter missing:\r\n' +
                     '[Option 1] Select python interpreter using the ms-python.python.\r\n' +
                     `[Option 2] Set an interpreter using "${serverId}.interpreter" setting.\r\n`,
-                'Please use Python 3.8 or greater.',
+                `Please use Python ${PYTHON_VERSION} or greater.`,
             );
         } else {
             lsClient = await restartServer(workspaceSetting, serverId, serverName, outputChannel, lsClient);
@@ -62,6 +82,11 @@ export async function activate(context: vscode.ExtensionContext): Promise<void>
         registerLanguageStatusItem(serverId, serverName, `${serverId}.showLogs`),
     );
 
+    // This is needed to inform users that they might have some legacy settings that
+    // are no longer supported. Instructions are printed in the output channel on how
+    // to update them.
+    logLegacySettings(serverId);
+
     setImmediate(async () => {
         const interpreter = getInterpreterFromSetting(serverId);
         if (interpreter === undefined || interpreter.length === 0) {
diff --git a/src/test/python_tests/lsp_test_client/defaults.py b/src/test/python_tests/lsp_test_client/defaults.py
index 96fa062..547063e 100644
--- a/src/test/python_tests/lsp_test_client/defaults.py
+++ b/src/test/python_tests/lsp_test_client/defaults.py
@@ -5,215 +5,223 @@
 """
 
 import os
+from typing import Any, Dict
 
-from .constants import TEST_DATA
+from .constants import PROJECT_ROOT
 from .utils import as_uri, get_initialization_options
 
-VSCODE_DEFAULT_INITIALIZE = {
-    "processId": os.getpid(),
-    "clientInfo": {"name": "vscode", "version": "1.45.0"},
-    "rootPath": str(TEST_DATA),
-    "rootUri": as_uri(str(TEST_DATA)),
-    "capabilities": {
-        "workspace": {
-            "applyEdit": True,
-            "workspaceEdit": {
-                "documentChanges": True,
-                "resourceOperations": ["create", "rename", "delete"],
-                "failureHandling": "textOnlyTransactional",
-            },
-            "didChangeConfiguration": {"dynamicRegistration": True},
-            "didChangeWatchedFiles": {"dynamicRegistration": True},
-            "symbol": {
-                "dynamicRegistration": True,
-                "symbolKind": {
-                    "valueSet": [
-                        1,
-                        2,
-                        3,
-                        4,
-                        5,
-                        6,
-                        7,
-                        8,
-                        9,
-                        10,
-                        11,
-                        12,
-                        13,
-                        14,
-                        15,
-                        16,
-                        17,
-                        18,
-                        19,
-                        20,
-                        21,
-                        22,
-                        23,
-                        24,
-                        25,
-                        26,
-                    ]
-                },
-                "tagSupport": {"valueSet": [1]},
-            },
-            "executeCommand": {"dynamicRegistration": True},
-            "configuration": True,
-            "workspaceFolders": True,
-        },
-        "textDocument": {
-            "publishDiagnostics": {
-                "relatedInformation": True,
-                "versionSupport": False,
-                "tagSupport": {"valueSet": [1, 2]},
-                "complexDiagnosticCodeSupport": True,
-            },
-            "synchronization": {
-                "dynamicRegistration": True,
-                "willSave": True,
-                "willSaveWaitUntil": True,
-                "didSave": True,
-            },
-            "completion": {
-                "dynamicRegistration": True,
-                "contextSupport": True,
-                "completionItem": {
-                    "snippetSupport": True,
-                    "commitCharactersSupport": True,
-                    "documentationFormat": ["markdown", "plaintext"],
-                    "deprecatedSupport": True,
-                    "preselectSupport": True,
-                    "tagSupport": {"valueSet": [1]},
-                    "insertReplaceSupport": True,
-                },
-                "completionItemKind": {
-                    "valueSet": [
-                        1,
-                        2,
-                        3,
-                        4,
-                        5,
-                        6,
-                        7,
-                        8,
-                        9,
-                        10,
-                        11,
-                        12,
-                        13,
-                        14,
-                        15,
-                        16,
-                        17,
-                        18,
-                        19,
-                        20,
-                        21,
-                        22,
-                        23,
-                        24,
-                        25,
-                    ]
-                },
-            },
-            "hover": {
-                "dynamicRegistration": True,
-                "contentFormat": ["markdown", "plaintext"],
-            },
-            "signatureHelp": {
-                "dynamicRegistration": True,
-                "signatureInformation": {
-                    "documentationFormat": ["markdown", "plaintext"],
-                    "parameterInformation": {"labelOffsetSupport": True},
-                },
-                "contextSupport": True,
-            },
-            "definition": {"dynamicRegistration": True, "linkSupport": True},
-            "references": {"dynamicRegistration": True},
-            "documentHighlight": {"dynamicRegistration": True},
-            "documentSymbol": {
-                "dynamicRegistration": True,
-                "symbolKind": {
-                    "valueSet": [
-                        1,
-                        2,
-                        3,
-                        4,
-                        5,
-                        6,
-                        7,
-                        8,
-                        9,
-                        10,
-                        11,
-                        12,
-                        13,
-                        14,
-                        15,
-                        16,
-                        17,
-                        18,
-                        19,
-                        20,
-                        21,
-                        22,
-                        23,
-                        24,
-                        25,
-                        26,
-                    ]
+
+def vscode_initialize_defaults() -> Dict[str, Any]:
+    """Default initialize request params as generated by VS Code."""
+    return dict(
+        {
+            "processId": os.getpid(),
+            "clientInfo": {"name": "vscode", "version": "1.45.0"},
+            "rootPath": str(PROJECT_ROOT),
+            "rootUri": as_uri(str(PROJECT_ROOT)),
+            "capabilities": {
+                "workspace": {
+                    "applyEdit": True,
+                    "workspaceEdit": {
+                        "documentChanges": True,
+                        "resourceOperations": ["create", "rename", "delete"],
+                        "failureHandling": "textOnlyTransactional",
+                    },
+                    "didChangeConfiguration": {"dynamicRegistration": True},
+                    "didChangeWatchedFiles": {"dynamicRegistration": True},
+                    "symbol": {
+                        "dynamicRegistration": True,
+                        "symbolKind": {
+                            "valueSet": [
+                                1,
+                                2,
+                                3,
+                                4,
+                                5,
+                                6,
+                                7,
+                                8,
+                                9,
+                                10,
+                                11,
+                                12,
+                                13,
+                                14,
+                                15,
+                                16,
+                                17,
+                                18,
+                                19,
+                                20,
+                                21,
+                                22,
+                                23,
+                                24,
+                                25,
+                                26,
+                            ]
+                        },
+                        "tagSupport": {"valueSet": [1]},
+                    },
+                    "executeCommand": {"dynamicRegistration": True},
+                    "configuration": True,
+                    "workspaceFolders": True,
                 },
-                "hierarchicalDocumentSymbolSupport": True,
-                "tagSupport": {"valueSet": [1]},
-            },
-            "codeAction": {
-                "dynamicRegistration": True,
-                "isPreferredSupport": True,
-                "codeActionLiteralSupport": {
-                    "codeActionKind": {
-                        "valueSet": [
-                            "",
-                            "quickfix",
-                            "refactor",
-                            "refactor.extract",
-                            "refactor.inline",
-                            "refactor.rewrite",
-                            "source",
-                            "source.organizeImports",
-                        ]
-                    }
+                "textDocument": {
+                    "publishDiagnostics": {
+                        "relatedInformation": True,
+                        "versionSupport": False,
+                        "tagSupport": {"valueSet": [1, 2]},
+                        "complexDiagnosticCodeSupport": True,
+                    },
+                    "synchronization": {
+                        "dynamicRegistration": True,
+                        "willSave": True,
+                        "willSaveWaitUntil": True,
+                        "didSave": True,
+                    },
+                    "completion": {
+                        "dynamicRegistration": True,
+                        "contextSupport": True,
+                        "completionItem": {
+                            "snippetSupport": True,
+                            "commitCharactersSupport": True,
+                            "documentationFormat": ["markdown", "plaintext"],
+                            "deprecatedSupport": True,
+                            "preselectSupport": True,
+                            "tagSupport": {"valueSet": [1]},
+                            "insertReplaceSupport": True,
+                        },
+                        "completionItemKind": {
+                            "valueSet": [
+                                1,
+                                2,
+                                3,
+                                4,
+                                5,
+                                6,
+                                7,
+                                8,
+                                9,
+                                10,
+                                11,
+                                12,
+                                13,
+                                14,
+                                15,
+                                16,
+                                17,
+                                18,
+                                19,
+                                20,
+                                21,
+                                22,
+                                23,
+                                24,
+                                25,
+                            ]
+                        },
+                    },
+                    "hover": {
+                        "dynamicRegistration": True,
+                        "contentFormat": ["markdown", "plaintext"],
+                    },
+                    "signatureHelp": {
+                        "dynamicRegistration": True,
+                        "signatureInformation": {
+                            "documentationFormat": ["markdown", "plaintext"],
+                            "parameterInformation": {"labelOffsetSupport": True},
+                        },
+                        "contextSupport": True,
+                    },
+                    "definition": {"dynamicRegistration": True, "linkSupport": True},
+                    "references": {"dynamicRegistration": True},
+                    "documentHighlight": {"dynamicRegistration": True},
+                    "documentSymbol": {
+                        "dynamicRegistration": True,
+                        "symbolKind": {
+                            "valueSet": [
+                                1,
+                                2,
+                                3,
+                                4,
+                                5,
+                                6,
+                                7,
+                                8,
+                                9,
+                                10,
+                                11,
+                                12,
+                                13,
+                                14,
+                                15,
+                                16,
+                                17,
+                                18,
+                                19,
+                                20,
+                                21,
+                                22,
+                                23,
+                                24,
+                                25,
+                                26,
+                            ]
+                        },
+                        "hierarchicalDocumentSymbolSupport": True,
+                        "tagSupport": {"valueSet": [1]},
+                    },
+                    "codeAction": {
+                        "dynamicRegistration": True,
+                        "isPreferredSupport": True,
+                        "codeActionLiteralSupport": {
+                            "codeActionKind": {
+                                "valueSet": [
+                                    "",
+                                    "quickfix",
+                                    "refactor",
+                                    "refactor.extract",
+                                    "refactor.inline",
+                                    "refactor.rewrite",
+                                    "source",
+                                    "source.organizeImports",
+                                ]
+                            }
+                        },
+                    },
+                    "codeLens": {"dynamicRegistration": True},
+                    "formatting": {"dynamicRegistration": True},
+                    "rangeFormatting": {"dynamicRegistration": True},
+                    "onTypeFormatting": {"dynamicRegistration": True},
+                    "rename": {"dynamicRegistration": True, "prepareSupport": True},
+                    "documentLink": {
+                        "dynamicRegistration": True,
+                        "tooltipSupport": True,
+                    },
+                    "typeDefinition": {
+                        "dynamicRegistration": True,
+                        "linkSupport": True,
+                    },
+                    "implementation": {
+                        "dynamicRegistration": True,
+                        "linkSupport": True,
+                    },
+                    "colorProvider": {"dynamicRegistration": True},
+                    "foldingRange": {
+                        "dynamicRegistration": True,
+                        "rangeLimit": 5000,
+                        "lineFoldingOnly": True,
+                    },
+                    "declaration": {"dynamicRegistration": True, "linkSupport": True},
+                    "selectionRange": {"dynamicRegistration": True},
                 },
+                "window": {"workDoneProgress": True},
             },
-            "codeLens": {"dynamicRegistration": True},
-            "formatting": {"dynamicRegistration": True},
-            "rangeFormatting": {"dynamicRegistration": True},
-            "onTypeFormatting": {"dynamicRegistration": True},
-            "rename": {"dynamicRegistration": True, "prepareSupport": True},
-            "documentLink": {
-                "dynamicRegistration": True,
-                "tooltipSupport": True,
-            },
-            "typeDefinition": {
-                "dynamicRegistration": True,
-                "linkSupport": True,
-            },
-            "implementation": {
-                "dynamicRegistration": True,
-                "linkSupport": True,
-            },
-            "colorProvider": {"dynamicRegistration": True},
-            "foldingRange": {
-                "dynamicRegistration": True,
-                "rangeLimit": 5000,
-                "lineFoldingOnly": True,
-            },
-            "declaration": {"dynamicRegistration": True, "linkSupport": True},
-            "selectionRange": {"dynamicRegistration": True},
-        },
-        "window": {"workDoneProgress": True},
-    },
-    "trace": "verbose",
-    "workspaceFolders": [{"uri": as_uri(str(TEST_DATA)), "name": "my_project"}],
-    "initializationOptions": get_initialization_options(),
-}
+            "trace": "verbose",
+            "workspaceFolders": [
+                {"uri": as_uri(str(PROJECT_ROOT)), "name": "my_project"}
+            ],
+            "initializationOptions": get_initialization_options(),
+        }
+    )
diff --git a/src/test/python_tests/lsp_test_client/session.py b/src/test/python_tests/lsp_test_client/session.py
index f5ffc86..060577d 100644
--- a/src/test/python_tests/lsp_test_client/session.py
+++ b/src/test/python_tests/lsp_test_client/session.py
@@ -14,8 +14,8 @@
 from pyls_jsonrpc.endpoint import Endpoint
 from pyls_jsonrpc.streams import JsonRpcStreamReader, JsonRpcStreamWriter
 
+from . import defaults
 from .constants import PROJECT_ROOT
-from .defaults import VSCODE_DEFAULT_INITIALIZE
 
 LSP_EXIT_TIMEOUT = 5000
 
@@ -86,7 +86,7 @@ def initialize(
     ):
         """Sends the initialize request to LSP server."""
         if initialize_params is None:
-            initialize_params = VSCODE_DEFAULT_INITIALIZE
+            initialize_params = defaults.vscode_initialize_defaults()
         server_initialized = Event()
 
         def _after_initialize(fut):
@@ -100,7 +100,7 @@ def _after_initialize(fut):
             params=(
                 initialize_params
                 if initialize_params is not None
-                else VSCODE_DEFAULT_INITIALIZE
+                else defaults.vscode_initialize_defaults()
             ),
             handle_response=_after_initialize,
         )
@@ -143,7 +143,7 @@ def notify_did_close(self, did_close_params):
         self._send_notification("textDocument/didClose", params=did_close_params)
 
     def text_document_formatting(self, formatting_params):
-        """Sends text document references request to LSP server."""
+        """Sends text document format request to LSP server."""
         fut = self._send_request("textDocument/formatting", params=formatting_params)
         return fut.result()
 
diff --git a/src/test/python_tests/lsp_test_client/utils.py b/src/test/python_tests/lsp_test_client/utils.py
index 6e8ff2e..02ef434 100644
--- a/src/test/python_tests/lsp_test_client/utils.py
+++ b/src/test/python_tests/lsp_test_client/utils.py
@@ -3,13 +3,14 @@
 """
 Utility functions for use with tests.
 """
+import contextlib
 import json
 import os
 import pathlib
 import platform
-from random import choice
+import random
 
-from .constants import PROJECT_ROOT, TEST_DATA
+from .constants import PROJECT_ROOT
 
 
 def normalizecase(path: str) -> str:
@@ -24,25 +25,18 @@ def as_uri(path: str) -> str:
     return normalizecase(pathlib.Path(path).as_uri())
 
 
-class PythonFile:
-    """Create python file on demand for testing."""
-
-    def __init__(self, contents, root):
-        self.contents = contents
-        self.basename = "".join(
-            choice("abcdefghijklmnopqrstuvwxyz") if i < 8 else ".py" for i in range(9)
-        )
-        self.fullpath = os.path.join(root, self.basename)
-
-    def __enter__(self):
-        """Creates a python file for  testing."""
-        with open(self.fullpath, "w", encoding="utf8") as py_file:
-            py_file.write(self.contents)
-        return self
-
-    def __exit__(self, typ, value, _tb):
-        """Cleans up and deletes the python file."""
-        os.unlink(self.fullpath)
+@contextlib.contextmanager
+def python_file(contents: str, root: pathlib.Path, ext: str = ".py"):
+    """Creates a temporary python file."""
+    basename = (
+        "".join(random.choice("abcdefghijklmnopqrstuvwxyz") for _ in range(9)) + ext
+    )
+    fullpath = root / basename
+    try:
+        fullpath.write_text(contents)
+        yield fullpath
+    finally:
+        os.unlink(str(fullpath))
 
 
 def get_server_info_defaults():
@@ -67,8 +61,9 @@ def get_initialization_options():
         value = properties[prop]["default"]
         setting[name] = value
 
-    setting["workspace"] = as_uri(str(TEST_DATA))
+    setting["workspace"] = as_uri(str(PROJECT_ROOT))
     setting["interpreter"] = []
-    setting["cwd"] = str(TEST_DATA)
+    setting["cwd"] = str(PROJECT_ROOT)
+    setting["extraPaths"] = []
 
-    return {"settings": [setting]}
+    return {"settings": [setting], "globalSettings": setting}
diff --git a/src/test/python_tests/test_extra_paths.py b/src/test/python_tests/test_extra_paths.py
index d555673..3edb53d 100644
--- a/src/test/python_tests/test_extra_paths.py
+++ b/src/test/python_tests/test_extra_paths.py
@@ -1,7 +1,8 @@
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the MIT License.
 """
 Test for extra paths settings.
 """
-import copy
 from threading import Event
 from typing import Dict
 
@@ -38,8 +39,8 @@ def check_for_sys_paths_with_extra_paths(self, argv: Dict[str, str]):
 def test_extra_paths():
     """Test linting using mypy with extraPaths set."""
 
-    init_params = copy.deepcopy(defaults.VSCODE_DEFAULT_INITIALIZE)
-    init_params["initializationOptions"]["settings"][0]["extraPaths"] = [
+    default_init = defaults.vscode_initialize_defaults()
+    default_init["initializationOptions"]["settings"][0]["extraPaths"] = [
         "this/is/an/extra/path",
         "this/is/another/extra/path",
     ]
@@ -61,7 +62,7 @@ def _handler(_params):
 
         ls_session.set_notification_callback(session.PUBLISH_DIAGNOSTICS, _handler)
 
-        ls_session.initialize(init_params)
+        ls_session.initialize(default_init)
         ls_session.notify_did_open(
             {
                 "textDocument": {
diff --git a/src/test/python_tests/test_linting.py b/src/test/python_tests/test_linting.py
index 32ad30f..d2fdb7f 100644
--- a/src/test/python_tests/test_linting.py
+++ b/src/test/python_tests/test_linting.py
@@ -3,10 +3,8 @@
 """
 Test for linting over LSP.
 """
-
-import copy
-import sys
 from threading import Event
+from typing import List
 
 import pytest
 from hamcrest import assert_that, greater_than, is_
@@ -62,7 +60,7 @@ def _log_handler(params):
                     "start": {"line": 2, "character": 6},
                     "end": {
                         "line": 2,
-                        "character": 7 if sys.version_info >= (3, 8) else 6,
+                        "character": 7,
                     },
                 },
                 "message": 'Name "x" is not defined',
@@ -78,7 +76,7 @@ def _log_handler(params):
                     "start": {"line": 6, "character": 21},
                     "end": {
                         "line": 6,
-                        "character": 33 if sys.version_info >= (3, 8) else 21,
+                        "character": 33,
                     },
                 },
                 "message": 'Argument 1 of "__eq__" is incompatible with supertype "object"; supertype defines the argument type as "object"',
@@ -94,7 +92,7 @@ def _log_handler(params):
                     "start": {"line": 6, "character": 21},
                     "end": {
                         "line": 6,
-                        "character": 33 if sys.version_info >= (3, 8) else 21,
+                        "character": 33,
                     },
                 },
                 "message": """This violates the Liskov substitution principle
@@ -160,7 +158,7 @@ def _log_handler(params):
                     "start": {"line": 2, "character": 6},
                     "end": {
                         "line": 2,
-                        "character": 7 if sys.version_info >= (3, 8) else 6,
+                        "character": 7,
                     },
                 },
                 "message": 'Name "x" is not defined',
@@ -176,7 +174,7 @@ def _log_handler(params):
                     "start": {"line": 6, "character": 21},
                     "end": {
                         "line": 6,
-                        "character": 33 if sys.version_info >= (3, 8) else 21,
+                        "character": 33,
                     },
                 },
                 "message": 'Argument 1 of "__eq__" is incompatible with supertype "object"; supertype defines the argument type as "object"',
@@ -192,7 +190,7 @@ def _log_handler(params):
                     "start": {"line": 6, "character": 21},
                     "end": {
                         "line": 6,
-                        "character": 33 if sys.version_info >= (3, 8) else 21,
+                        "character": 33,
                     },
                 },
                 "message": """This violates the Liskov substitution principle
@@ -284,10 +282,10 @@ def test_severity_setting(lint_code):
 
     actual = []
     with session.LspSession() as ls_session:
-        init_args = copy.deepcopy(defaults.VSCODE_DEFAULT_INITIALIZE)
-        init_options = init_args["initializationOptions"]
+        default_init = defaults.vscode_initialize_defaults()
+        init_options = default_init["initializationOptions"]
         init_options["settings"][0]["severity"][lint_code] = "Warning"
-        ls_session.initialize(init_args)
+        ls_session.initialize(default_init)
 
         done = Event()
 
@@ -324,7 +322,7 @@ def _log_handler(params):
                     "start": {"line": 2, "character": 6},
                     "end": {
                         "line": 2,
-                        "character": 7 if sys.version_info >= (3, 8) else 6,
+                        "character": 7,
                     },
                 },
                 "message": 'Name "x" is not defined',
@@ -340,7 +338,7 @@ def _log_handler(params):
                     "start": {"line": 6, "character": 21},
                     "end": {
                         "line": 6,
-                        "character": 33 if sys.version_info >= (3, 8) else 21,
+                        "character": 33,
                     },
                 },
                 "message": 'Argument 1 of "__eq__" is incompatible with supertype "object"; supertype defines the argument type as "object"',
@@ -356,7 +354,7 @@ def _log_handler(params):
                     "start": {"line": 6, "character": 21},
                     "end": {
                         "line": 6,
-                        "character": 33 if sys.version_info >= (3, 8) else 21,
+                        "character": 33,
                     },
                 },
                 "message": """This violates the Liskov substitution principle
@@ -387,10 +385,19 @@ def test_workspace_reporting_scope():
 
     actual = []
     with session.LspSession() as ls_session:
-        init_args = copy.deepcopy(defaults.VSCODE_DEFAULT_INITIALIZE)
-        init_options = init_args["initializationOptions"]
+        default_init = defaults.vscode_initialize_defaults()
+        default_init["rootPath"] = str(constants.TEST_DATA)
+        default_init["rootUri"]: utils.as_uri(str(constants.TEST_DATA))
+        default_init["workspaceFolders"][0]["uri"] = utils.as_uri(
+            str(constants.TEST_DATA)
+        )
+        init_options = default_init["initializationOptions"]
         init_options["settings"][0]["reportingScope"] = "workspace"
-        ls_session.initialize(init_args)
+        init_options["settings"][0]["workspace"] = utils.as_uri(
+            str(constants.TEST_DATA)
+        )
+        init_options["settings"][0]["cwd"] = str(constants.TEST_DATA)
+        ls_session.initialize(default_init)
 
         done = Event()
 
@@ -429,7 +436,7 @@ def _log_handler(params):
                             "start": {"line": 2, "character": 6},
                             "end": {
                                 "line": 2,
-                                "character": 7 if sys.version_info >= (3, 8) else 6,
+                                "character": 7,
                             },
                         },
                         "message": 'Name "x" is not defined',
@@ -445,7 +452,7 @@ def _log_handler(params):
                             "start": {"line": 6, "character": 21},
                             "end": {
                                 "line": 6,
-                                "character": 33 if sys.version_info >= (3, 8) else 21,
+                                "character": 33,
                             },
                         },
                         "message": 'Argument 1 of "__eq__" is incompatible with supertype "object"; supertype defines the argument type as "object"',
@@ -461,7 +468,7 @@ def _log_handler(params):
                             "start": {"line": 6, "character": 21},
                             "end": {
                                 "line": 6,
-                                "character": 33 if sys.version_info >= (3, 8) else 21,
+                                "character": 33,
                             },
                         },
                         "message": """This violates the Liskov substitution principle
@@ -488,7 +495,7 @@ def __eq__(self, other: object) -> bool:
                             "start": {"line": 2, "character": 9},
                             "end": {
                                 "line": 2,
-                                "character": 16 if sys.version_info >= (3, 8) else 9,
+                                "character": 16,
                             },
                         },
                         "message": 'Incompatible types in assignment (expression has type "str", variable has type "int")',
@@ -559,10 +566,19 @@ def test_file_with_no_errors_generates_empty_diagnostics_workspace_mode():
 
     actual = []
     with session.LspSession() as ls_session:
-        init_args = copy.deepcopy(defaults.VSCODE_DEFAULT_INITIALIZE)
-        init_options = init_args["initializationOptions"]
+        default_init = defaults.vscode_initialize_defaults()
+        default_init["rootPath"] = str(constants.TEST_DATA)
+        default_init["rootUri"]: utils.as_uri(str(constants.TEST_DATA))
+        default_init["workspaceFolders"][0]["uri"] = utils.as_uri(
+            str(constants.TEST_DATA)
+        )
+        init_options = default_init["initializationOptions"]
         init_options["settings"][0]["reportingScope"] = "workspace"
-        ls_session.initialize(init_args)
+        init_options["settings"][0]["workspace"] = utils.as_uri(
+            str(constants.TEST_DATA)
+        )
+        init_options["settings"][0]["cwd"] = str(constants.TEST_DATA)
+        ls_session.initialize(default_init)
 
         done = Event()
 
@@ -601,7 +617,7 @@ def _log_handler(params):
                             "start": {"line": 2, "character": 6},
                             "end": {
                                 "line": 2,
-                                "character": 7 if sys.version_info >= (3, 8) else 6,
+                                "character": 7,
                             },
                         },
                         "message": 'Name "x" is not defined',
@@ -617,7 +633,7 @@ def _log_handler(params):
                             "start": {"line": 6, "character": 21},
                             "end": {
                                 "line": 6,
-                                "character": 33 if sys.version_info >= (3, 8) else 21,
+                                "character": 33,
                             },
                         },
                         "message": 'Argument 1 of "__eq__" is incompatible with supertype "object"; supertype defines the argument type as "object"',
@@ -633,7 +649,7 @@ def _log_handler(params):
                             "start": {"line": 6, "character": 21},
                             "end": {
                                 "line": 6,
-                                "character": 33 if sys.version_info >= (3, 8) else 21,
+                                "character": 33,
                             },
                         },
                         "message": """This violates the Liskov substitution principle
@@ -660,7 +676,7 @@ def __eq__(self, other: object) -> bool:
                             "start": {"line": 2, "character": 9},
                             "end": {
                                 "line": 2,
-                                "character": 16 if sys.version_info >= (3, 8) else 9,
+                                "character": 16,
                             },
                         },
                         "message": 'Incompatible types in assignment (expression has type "str", variable has type "int")',
@@ -677,3 +693,158 @@ def __eq__(self, other: object) -> bool:
 
         # Only reports diagnostics on files that have problems
         assert_that(actual, is_(expected))
+
+
+@pytest.mark.parametrize(
+    "patterns",
+    [
+        ["**/sample*.py"],
+        ["**/test_data/**/*.py"],
+        ["**/sample*.py", "**/something*.py"],
+    ],
+)
+def test_ignore_patterns_match(patterns: List[str]):
+    """Test to ensure linter uses the ignore pattern."""
+    contents = TEST_FILE_PATH.read_text(encoding="utf-8")
+
+    actual = []
+    with session.LspSession() as ls_session:
+        default_init = defaults.vscode_initialize_defaults()
+        init_options = default_init["initializationOptions"]
+        init_options["settings"][0]["ignorePatterns"] = patterns
+        ls_session.initialize(default_init)
+
+        done = Event()
+
+        def _handler(params):
+            nonlocal actual
+            actual = params
+            done.set()
+
+        ls_session.set_notification_callback(session.PUBLISH_DIAGNOSTICS, _handler)
+
+        ls_session.notify_did_open(
+            {
+                "textDocument": {
+                    "uri": TEST_FILE_URI,
+                    "languageId": "python",
+                    "version": 1,
+                    "text": contents,
+                }
+            }
+        )
+
+        # wait for some time to receive all notifications
+        done.wait(TIMEOUT)
+
+    expected = {
+        "uri": TEST_FILE_URI,
+        "diagnostics": [],
+    }
+
+    assert_that(actual, is_(expected))
+
+
+@pytest.mark.parametrize(
+    "patterns",
+    [
+        ["**/something*.py"],
+        ["**/something/**/*.py"],
+        [],
+    ],
+)
+def test_ignore_patterns_no_match(patterns: List[str]):
+    """Test to ensure linter uses the ignore pattern."""
+    contents = TEST_FILE_PATH.read_text(encoding="utf-8")
+
+    actual = []
+    with session.LspSession() as ls_session:
+        default_init = defaults.vscode_initialize_defaults()
+        init_options = default_init["initializationOptions"]
+        init_options["settings"][0]["ignorePatterns"] = patterns
+        ls_session.initialize(default_init)
+
+        done = Event()
+
+        def _handler(params):
+            nonlocal actual
+            actual = params
+            done.set()
+
+        ls_session.set_notification_callback(session.PUBLISH_DIAGNOSTICS, _handler)
+
+        ls_session.notify_did_open(
+            {
+                "textDocument": {
+                    "uri": TEST_FILE_URI,
+                    "languageId": "python",
+                    "version": 1,
+                    "text": contents,
+                }
+            }
+        )
+
+        # wait for some time to receive all notifications
+        done.wait(TIMEOUT)
+
+    expected = {
+        "uri": TEST_FILE_URI,
+        "diagnostics": [
+            {
+                "range": {
+                    "start": {"line": 2, "character": 6},
+                    "end": {
+                        "line": 2,
+                        "character": 7,
+                    },
+                },
+                "message": 'Name "x" is not defined',
+                "severity": 1,
+                "code": "name-defined",
+                "codeDescription": {
+                    "href": "https://mypy.readthedocs.io/en/latest/_refs.html#code-name-defined"
+                },
+                "source": "Mypy",
+            },
+            {
+                "range": {
+                    "start": {"line": 6, "character": 21},
+                    "end": {
+                        "line": 6,
+                        "character": 33,
+                    },
+                },
+                "message": 'Argument 1 of "__eq__" is incompatible with supertype "object"; supertype defines the argument type as "object"',
+                "severity": 1,
+                "code": "override",
+                "codeDescription": {
+                    "href": "https://mypy.readthedocs.io/en/latest/_refs.html#code-override"
+                },
+                "source": "Mypy",
+            },
+            {
+                "range": {
+                    "start": {"line": 6, "character": 21},
+                    "end": {
+                        "line": 6,
+                        "character": 33,
+                    },
+                },
+                "message": """This violates the Liskov substitution principle
+See https://mypy.readthedocs.io/en/stable/common_issues.html#incompatible-overrides
+It is recommended for "__eq__" to work with arbitrary objects, for example:
+    def __eq__(self, other: object) -> bool:
+        if not isinstance(other, Foo):
+            return NotImplemented
+        return <logic to compare two Foo instances>""",
+                "severity": 3,
+                "code": "note",
+                "codeDescription": {
+                    "href": "https://mypy.readthedocs.io/en/stable/common_issues.html#incompatible-overrides"
+                },
+                "source": "Mypy",
+            },
+        ],
+    }
+
+    assert_that(actual, is_(expected))
diff --git a/src/test/python_tests/test_non_daemon.py b/src/test/python_tests/test_non_daemon.py
index 63de223..7e55501 100644
--- a/src/test/python_tests/test_non_daemon.py
+++ b/src/test/python_tests/test_non_daemon.py
@@ -1,4 +1,6 @@
-import copy
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the MIT License.
+"""Tests for non-daemon mode"""
 from threading import Event
 from typing import Any, Dict, List
 
@@ -25,15 +27,15 @@ def test_daemon_non_daemon_equivalence_for_file_with_errors():
     contents = TEST_FILE1_PATH.read_text(encoding="utf-8")
 
     def run(prefer_daemon: bool):
-        init_params = copy.deepcopy(defaults.VSCODE_DEFAULT_INITIALIZE)
-        init_params["initializationOptions"]["settings"][0][
+        default_init = defaults.vscode_initialize_defaults()
+        default_init["initializationOptions"]["settings"][0][
             "preferDaemon"
         ] = prefer_daemon
 
         result: Dict[str, Any] = {}
         log_messages: List[str] = []
         with session.LspSession() as ls_session:
-            ls_session.initialize(init_params)
+            ls_session.initialize(default_init)
 
             done = Event()
 
diff --git a/src/test/python_tests/test_path_specialization.py b/src/test/python_tests/test_path_specialization.py
index 2a6ee12..bdc3584 100644
--- a/src/test/python_tests/test_path_specialization.py
+++ b/src/test/python_tests/test_path_specialization.py
@@ -1,7 +1,8 @@
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the MIT License.
 """
 Test for path and interpreter settings.
 """
-import copy
 import sys
 from threading import Event
 from typing import Dict
@@ -36,8 +37,8 @@ def check_for_argv_duplication(self, argv: Dict[str, str]):
 def test_path():
     """Test linting using mypy bin path set."""
 
-    init_params = copy.deepcopy(defaults.VSCODE_DEFAULT_INITIALIZE)
-    init_params["initializationOptions"]["settings"][0]["path"] = [
+    default_init = defaults.vscode_initialize_defaults()
+    default_init["initializationOptions"]["settings"][0]["path"] = [
         sys.executable,
         "-m",
         "mypy",
@@ -60,7 +61,7 @@ def _handler(_params):
 
         ls_session.set_notification_callback(session.PUBLISH_DIAGNOSTICS, _handler)
 
-        ls_session.initialize(init_params)
+        ls_session.initialize(default_init)
         ls_session.notify_did_open(
             {
                 "textDocument": {
@@ -98,8 +99,8 @@ def _handler(_params):
 
 def test_interpreter():
     """Test linting using specific python path."""
-    init_params = copy.deepcopy(defaults.VSCODE_DEFAULT_INITIALIZE)
-    init_params["initializationOptions"]["settings"][0]["interpreter"] = ["python"]
+    default_init = defaults.vscode_initialize_defaults()
+    default_init["initializationOptions"]["settings"][0]["interpreter"] = ["python"]
 
     argv_callback_object = CallbackObject()
     contents = TEST_FILE_PATH.read_text(encoding="utf-8")
@@ -118,7 +119,7 @@ def _handler(_params):
 
         ls_session.set_notification_callback(session.PUBLISH_DIAGNOSTICS, _handler)
 
-        ls_session.initialize(init_params)
+        ls_session.initialize(default_init)
         ls_session.notify_did_open(
             {
                 "textDocument": {
diff --git a/src/test/ts_tests/tests/common/settings.unit.test.ts b/src/test/ts_tests/tests/common/settings.unit.test.ts
index b5a6ecf..1961168 100644
--- a/src/test/ts_tests/tests/common/settings.unit.test.ts
+++ b/src/test/ts_tests/tests/common/settings.unit.test.ts
@@ -71,6 +71,14 @@ suite('Settings Tests', () => {
                 .setup((c) => c.get('showNotifications', 'off'))
                 .returns(() => 'off')
                 .verifiable(TypeMoq.Times.atLeastOnce());
+            configMock
+                .setup((c) => c.get('cwd', workspace1.uri.fsPath))
+                .returns(() => workspace1.uri.fsPath)
+                .verifiable(TypeMoq.Times.atLeastOnce());
+            configMock
+                .setup((c) => c.get('ignorePatterns', []))
+                .returns(() => [])
+                .verifiable(TypeMoq.Times.atLeastOnce());
 
             pythonConfigMock
                 .setup((c) => c.get('linting.mypyArgs', []))
@@ -96,6 +104,7 @@ suite('Settings Tests', () => {
             assert.deepStrictEqual(settings.showNotifications, 'off');
             assert.deepStrictEqual(settings.workspace, workspace1.uri.toString());
             assert.deepStrictEqual(settings.extraPaths, []);
+            assert.deepStrictEqual(settings.ignorePatterns, []);
 
             configMock.verifyAll();
             pythonConfigMock.verifyAll();
@@ -113,6 +122,7 @@ suite('Settings Tests', () => {
                     '${workspaceFolder}/bin/mypy',
                     '${workspaceFolder:workspace1}/bin/mypy',
                     '${cwd}/bin/mypy',
+                    '${interpreter}',
                 ])
                 .verifiable(TypeMoq.Times.atLeastOnce());
             configMock
@@ -136,6 +146,14 @@ suite('Settings Tests', () => {
                 .setup((c) => c.get('showNotifications', 'off'))
                 .returns(() => 'off')
                 .verifiable(TypeMoq.Times.atLeastOnce());
+            configMock
+                .setup((c) => c.get('cwd', TypeMoq.It.isAnyString()))
+                .returns(() => '${fileDirname}')
+                .verifiable(TypeMoq.Times.atLeastOnce());
+            configMock
+                .setup((c) => c.get('ignorePatterns', []))
+                .returns(() => [])
+                .verifiable(TypeMoq.Times.atLeastOnce());
 
             pythonConfigMock
                 .setup((c) => c.get('linting.mypyArgs', []))
@@ -157,9 +175,11 @@ suite('Settings Tests', () => {
             pythonConfigMock
                 .setup((c) => c.get('linting.cwd'))
                 .returns(() => '${userHome}/bin')
-                .verifiable(TypeMoq.Times.atLeastOnce());
+                .verifiable(TypeMoq.Times.never());
 
             const settings: ISettings = await getWorkspaceSettings('mypy', workspace1, true);
+
+            assert.deepStrictEqual(settings.cwd, '${fileDirname}');
             assert.deepStrictEqual(settings.args, [
                 process.env.HOME || process.env.USERPROFILE,
                 workspace1.uri.fsPath,
@@ -171,6 +191,10 @@ suite('Settings Tests', () => {
                 `${workspace1.uri.fsPath}/bin/mypy`,
                 `${workspace1.uri.fsPath}/bin/mypy`,
                 `${process.cwd()}/bin/mypy`,
+                `${process.env.HOME || process.env.USERPROFILE}/bin/python`,
+                `${workspace1.uri.fsPath}/bin/python`,
+                `${workspace1.uri.fsPath}/bin/python`,
+                `${process.cwd()}/bin/python`,
             ]);
             assert.deepStrictEqual(settings.interpreter, [
                 `${process.env.HOME || process.env.USERPROFILE}/bin/python`,
@@ -184,7 +208,6 @@ suite('Settings Tests', () => {
                 `${workspace1.uri.fsPath}/lib/python`,
                 `${process.cwd()}/lib/python`,
             ]);
-            assert.deepStrictEqual(settings.cwd, `${process.env.HOME || process.env.USERPROFILE}/bin`);
 
             configMock.verifyAll();
             pythonConfigMock.verifyAll();
@@ -211,6 +234,14 @@ suite('Settings Tests', () => {
                 .setup((c) => c.get('showNotifications', 'off'))
                 .returns(() => 'off')
                 .verifiable(TypeMoq.Times.atLeastOnce());
+            configMock
+                .setup((c) => c.get('cwd', workspace1.uri.fsPath))
+                .returns(() => '${userHome}/bin')
+                .verifiable(TypeMoq.Times.atLeastOnce());
+            configMock
+                .setup((c) => c.get('ignorePatterns', []))
+                .returns(() => [])
+                .verifiable(TypeMoq.Times.atLeastOnce());
 
             pythonConfigMock
                 .setup((c) => c.get<string[]>('linting.mypyArgs', []))
@@ -232,7 +263,7 @@ suite('Settings Tests', () => {
             pythonConfigMock
                 .setup((c) => c.get('linting.cwd'))
                 .returns(() => '${userHome}/bin')
-                .verifiable(TypeMoq.Times.atLeastOnce());
+                .verifiable(TypeMoq.Times.never());
 
             const settings: ISettings = await getWorkspaceSettings('mypy', workspace1);