diff --git a/_extension/package.json b/_extension/package.json
index b218b3496a..0635664c30 100644
--- a/_extension/package.json
+++ b/_extension/package.json
@@ -31,6 +31,11 @@
             {
                 "title": "TypeScript Native Preview",
                 "properties": {
+                    "typescript.native-preview.customConfigFileName": {
+                        "type": "string",
+                        "description": "Custom config file name to use, before defaulting to tsconfig.json/jsconfig.json.",
+                        "tags": ["experimental"]
+                    },
                     "typescript.native-preview.trace.server": {
                         "type": "string",
                         "enum": [
diff --git a/_extension/src/client.ts b/_extension/src/client.ts
index b759501e97..05c78c18c7 100644
--- a/_extension/src/client.ts
+++ b/_extension/src/client.ts
@@ -90,10 +90,11 @@ export class Client {
         this.exe = exe;
         this.outputChannel.appendLine(`Resolved to ${this.exe.path}`);
 
-        // Get pprofDir
+		// Get pprofDir
         const config = vscode.workspace.getConfiguration("typescript.native-preview");
         const pprofDir = config.get<string>("pprofDir");
         const pprofArgs = pprofDir ? ["--pprofDir", pprofDir] : [];
+		const customConfigFileName = config.get<string>("customConfigFileName") ?? "";
 
         const serverOptions: ServerOptions = {
             run: {
@@ -108,12 +109,17 @@ export class Client {
             },
         };
 
-        this.client = new LanguageClient(
-            "typescript.native-preview",
-            "typescript.native-preview-lsp",
-            serverOptions,
-            this.clientOptions,
-        );
+		this.client = new LanguageClient(
+			"typescript.native-preview",
+			"typescript.native-preview-lsp",
+			serverOptions,
+			{
+				...this.clientOptions,
+				initializationOptions: {
+					customConfigFileName,
+				},
+			},
+		);
 
         this.outputChannel.appendLine(`Starting language server...`);
         await this.client.start();
diff --git a/_extension/src/extension.ts b/_extension/src/extension.ts
index d1fe6036eb..675ca87b21 100644
--- a/_extension/src/extension.ts
+++ b/_extension/src/extension.ts
@@ -42,6 +42,15 @@ export async function activate(context: vscode.ExtensionContext) {
                 }
             }
         }
+        if (event.affectsConfiguration("typescript.native-preview.customConfigFileName")) {
+            // Show prompt to restart to pick up the new initialization options
+            setTimeout(async () => {
+                const selected = await vscode.window.showInformationMessage("TypeScript Native Preview settings have changed. Restart extensions to apply changes.", "Restart Extensions");
+                if (selected) {
+                    vscode.commands.executeCommand("workbench.action.restartExtensionHost");
+                }
+            }, 100);
+        }
     }));
 
     const useTsgo = vscode.workspace.getConfiguration("typescript").get<boolean>("experimental.useTsgo");
diff --git a/_submodules/TypeScript b/_submodules/TypeScript
index 9e8eaa1746..add6971195 160000
--- a/_submodules/TypeScript
+++ b/_submodules/TypeScript
@@ -1 +1 @@
-Subproject commit 9e8eaa1746b0d09c3cd29048126ef9cf24f29c03
+Subproject commit add697119549734b24d46b30b9f6d2e757c6d53a
diff --git a/internal/lsp/server.go b/internal/lsp/server.go
index cecd426747..6a67622fc4 100644
--- a/internal/lsp/server.go
+++ b/internal/lsp/server.go
@@ -701,15 +701,26 @@ func (s *Server) handleInitialized(ctx context.Context, params *lsproto.Initiali
 		cwd = s.cwd
 	}
 
+	// Read customConfigFileName from initializationOptions if provided
+	var customConfigFileName string
+	if s.initializeParams != nil && s.initializeParams.InitializationOptions != nil && *s.initializeParams.InitializationOptions != nil {
+		if m, ok := (*s.initializeParams.InitializationOptions).(map[string]any); ok {
+			if v, ok := m["customConfigFileName"].(string); ok {
+				customConfigFileName = v
+			}
+		}
+	}
+
 	s.session = project.NewSession(&project.SessionInit{
 		Options: &project.SessionOptions{
-			CurrentDirectory:   cwd,
-			DefaultLibraryPath: s.defaultLibraryPath,
-			TypingsLocation:    s.typingsLocation,
-			PositionEncoding:   s.positionEncoding,
-			WatchEnabled:       s.watchEnabled,
-			LoggingEnabled:     true,
-			DebounceDelay:      500 * time.Millisecond,
+			CurrentDirectory:     cwd,
+			DefaultLibraryPath:   s.defaultLibraryPath,
+			TypingsLocation:      s.typingsLocation,
+			PositionEncoding:     s.positionEncoding,
+			WatchEnabled:         s.watchEnabled,
+			LoggingEnabled:       true,
+			DebounceDelay:        500 * time.Millisecond,
+			CustomConfigFileName: customConfigFileName,
 		},
 		FS:          s.fs,
 		Logger:      s.logger,
diff --git a/internal/project/configfileregistrybuilder.go b/internal/project/configfileregistrybuilder.go
index 6dbb3c5f34..20c874ed9d 100644
--- a/internal/project/configfileregistrybuilder.go
+++ b/internal/project/configfileregistrybuilder.go
@@ -495,19 +495,37 @@ func (c *configFileRegistryBuilder) handleConfigChange(entry *dirty.SyncMapEntry
 
 func (c *configFileRegistryBuilder) computeConfigFileName(fileName string, skipSearchInDirectoryOfFile bool, logger *logging.LogTree) string {
 	searchPath := tspath.GetDirectoryPath(fileName)
+	// Prefer custom config file if provided; search ancestors with correct skip behavior.
+	if c.sessionOptions.CustomConfigFileName != "" {
+		skipCustom := skipSearchInDirectoryOfFile
+		if result, _ := tspath.ForEachAncestorDirectory(searchPath, func(directory string) (result string, stop bool) {
+			customConfigFilePath := tspath.CombinePaths(directory, c.sessionOptions.CustomConfigFileName)
+			if !skipCustom && c.FS().FileExists(customConfigFilePath) {
+				return customConfigFilePath, true
+			}
+			skipCustom = false
+			return "", false
+		}); result != "" {
+			logger.Logf("computeConfigFileName:: File: %s:: Result: %s", fileName, result)
+			return result
+		}
+	}
+
+	// Fallback to tsconfig.json/jsconfig.json
+	skip := skipSearchInDirectoryOfFile
 	result, _ := tspath.ForEachAncestorDirectory(searchPath, func(directory string) (result string, stop bool) {
 		tsconfigPath := tspath.CombinePaths(directory, "tsconfig.json")
-		if !skipSearchInDirectoryOfFile && c.FS().FileExists(tsconfigPath) {
+		if !skip && c.FS().FileExists(tsconfigPath) {
 			return tsconfigPath, true
 		}
 		jsconfigPath := tspath.CombinePaths(directory, "jsconfig.json")
-		if !skipSearchInDirectoryOfFile && c.FS().FileExists(jsconfigPath) {
+		if !skip && c.FS().FileExists(jsconfigPath) {
 			return jsconfigPath, true
 		}
 		if strings.HasSuffix(directory, "/node_modules") {
 			return "", true
 		}
-		skipSearchInDirectoryOfFile = false
+		skip = false
 		return "", false
 	})
 	logger.Logf("computeConfigFileName:: File: %s:: Result: %s", fileName, result)
diff --git a/internal/project/session.go b/internal/project/session.go
index 0e2b2de6b1..c1fda4515a 100644
--- a/internal/project/session.go
+++ b/internal/project/session.go
@@ -37,13 +37,14 @@ const (
 // SessionOptions are the immutable initialization options for a session.
 // Snapshots may reference them as a pointer since they never change.
 type SessionOptions struct {
-	CurrentDirectory   string
-	DefaultLibraryPath string
-	TypingsLocation    string
-	PositionEncoding   lsproto.PositionEncodingKind
-	WatchEnabled       bool
-	LoggingEnabled     bool
-	DebounceDelay      time.Duration
+	CurrentDirectory     string
+	DefaultLibraryPath   string
+	TypingsLocation      string
+	PositionEncoding     lsproto.PositionEncodingKind
+	WatchEnabled         bool
+	LoggingEnabled       bool
+	DebounceDelay        time.Duration
+	CustomConfigFileName string
 }
 
 type SessionInit struct {