diff --git a/.gitignore b/.gitignore
index 4929c46f..1a0d00ef 100644
--- a/.gitignore
+++ b/.gitignore
@@ -9,6 +9,7 @@ release-packages/
 release-gcp/
 release-images/
 node_modules
+/lib/vscode/node_modules.asar
 node-*
 /plugins
 /lib/coder-cloud-agent
diff --git a/ci/build/build-release.sh b/ci/build/build-release.sh
index 3b88ed7e..c87645d3 100755
--- a/ci/build/build-release.sh
+++ b/ci/build/build-release.sh
@@ -96,6 +96,10 @@ EOF
   # yarn to fetch node_modules if necessary without build scripts running.
   # We cannot use --no-scripts because we still want dependent package scripts to run.
   jq 'del(.scripts)' < "$VSCODE_SRC_PATH/package.json" > "$VSCODE_OUT_PATH/package.json"
+
+  pushd "$VSCODE_OUT_PATH"
+  symlink_asar
+  popd
 }
 
 main "$@"
diff --git a/ci/build/npm-postinstall.sh b/ci/build/npm-postinstall.sh
index 743b549f..b12d9a86 100755
--- a/ci/build/npm-postinstall.sh
+++ b/ci/build/npm-postinstall.sh
@@ -41,6 +41,16 @@ main() {
 vscode_yarn() {
   cd lib/vscode
   yarn --production --frozen-lockfile
+
+  # This is a copy of symlink_asar in ../lib.sh. Look there for details.
+  if [ ! -e node_modules.asar ]; then
+    if [ "${WINDIR-}" ]; then
+      mklink /J node_modules.asar node_modules
+    else
+      ln -s node_modules node_modules.asar
+    fi
+  fi
+
   cd extensions
   yarn --production --frozen-lockfile
   for ext in */; do
diff --git a/ci/dev/postinstall.sh b/ci/dev/postinstall.sh
new file mode 100755
index 00000000..2ca2e059
--- /dev/null
+++ b/ci/dev/postinstall.sh
@@ -0,0 +1,14 @@
+#!/usr/bin/env bash
+set -euo pipefail
+
+main() {
+  cd "$(dirname "$0")/../.."
+  source ./ci/lib.sh
+
+  cd lib/vscode
+  yarn ${CI+--frozen-lockfile}
+
+  symlink_asar
+}
+
+main "$@"
diff --git a/ci/lib.sh b/ci/lib.sh
index e65541fd..49f9ed95 100755
--- a/ci/lib.sh
+++ b/ci/lib.sh
@@ -1,4 +1,5 @@
 #!/usr/bin/env bash
+set -euo pipefail
 
 pushd() {
   builtin pushd "$@" > /dev/null
@@ -93,3 +94,22 @@ export OS
 # RELEASE_PATH is the destination directory for the release from the root.
 # Defaults to release
 RELEASE_PATH="${RELEASE_PATH-release}"
+
+# VS Code bundles some modules into an asar which is an archive format that
+# works like tar. It then seems to get unpacked into node_modules.asar.
+#
+# I don't know why they do this but all the dependencies they bundle already
+# exist in node_modules so just symlink it. We have to do this since not only VS
+# Code itself but also extensions will look specifically in this directory for
+# files (like the ripgrep binary or the oniguruma wasm).
+symlink_asar() {
+  if [ ! -e node_modules.asar ]; then
+    if [ "${WINDIR-}" ]; then
+      # mklink takes the link name first.
+      mklink /J node_modules.asar node_modules
+    else
+      # ln takes the link name second.
+      ln -s node_modules node_modules.asar
+    fi
+  fi
+}
diff --git a/lib/vscode/src/vs/workbench/services/extensions/node/extensionHostProcessSetup.ts b/lib/vscode/src/vs/workbench/services/extensions/node/extensionHostProcessSetup.ts
index 5529222b..98c59ef1 100644
--- a/lib/vscode/src/vs/workbench/services/extensions/node/extensionHostProcessSetup.ts
+++ b/lib/vscode/src/vs/workbench/services/extensions/node/extensionHostProcessSetup.ts
@@ -58,13 +58,12 @@ const args = minimist(process.argv.slice(2), {
 	const Module = require.__$__nodeRequire('module') as any;
 	const originalLoad = Module._load;
 
-	Module._load = function (request: string, parent: object, isMain: boolean) {
+	Module._load = function (request: string) {
 		if (request === 'natives') {
 			throw new Error('Either the extension or a NPM dependency is using the "natives" node module which is unsupported as it can cause a crash of the extension host. Click [here](https://go.microsoft.com/fwlink/?linkid=871887) to find out more');
 		}
 
-		// NOTE@coder: Map node_module.asar requests to regular node_modules.
-		return originalLoad.apply(this, [request.replace(/node_modules\.asar(\.unpacked)?/, 'node_modules'), parent, isMain]);
+		return originalLoad.apply(this, arguments);
 	};
 })();
 
diff --git a/package.json b/package.json
index d0cb4e33..a5599794 100644
--- a/package.json
+++ b/package.json
@@ -19,7 +19,7 @@
     "release:github-assets": "./ci/build/release-github-assets.sh",
     "test:standalone-release": "./ci/build/test-standalone-release.sh",
     "package": "./ci/build/build-packages.sh",
-    "postinstall": "cd lib/vscode && yarn ${CI+--frozen-lockfile}",
+    "postinstall": "./ci/dev/postinstall.sh",
     "_____": "",
     "fmt": "./ci/dev/fmt.sh",
     "lint": "./ci/dev/lint.sh",