diff --git a/package.json b/package.json
index 286e80baa2df..690bff39b3dc 100644
--- a/package.json
+++ b/package.json
@@ -536,6 +536,12 @@
                     "scope": "window",
                     "type": "string"
                 },
+                "python.languageServer.useJediInEnvPath": {
+                    "default": false,
+                    "description": "%python.languageServer.useJediInEnvPath.description%",
+                    "scope": "window",
+                    "type": "boolean"
+                },
                 "python.interpreter.infoVisibility": {
                     "default": "onPythonRelated",
                     "description": "%python.interpreter.infoVisibility.description%",
diff --git a/package.nls.json b/package.nls.json
index 57f2ed95b2c0..a9a128221761 100644
--- a/package.nls.json
+++ b/package.nls.json
@@ -56,6 +56,7 @@
     "python.languageServer.jediDescription": "Use Jedi behind the Language Server Protocol (LSP) as a language server.",
     "python.languageServer.pylanceDescription": "Use Pylance as a language server.",
     "python.languageServer.noneDescription": "Disable language server capabilities.",
+    "python.languageServer.useJediInEnvPath.description": "Use Jedi in system environment or virtual environments.",
     "python.interpreter.infoVisibility.description": "Controls when to display information of selected interpreter in the status bar.",
     "python.interpreter.infoVisibility.never.description": "Never display information.",
     "python.interpreter.infoVisibility.onPythonRelated.description": "Only display information if Python-related files are opened.",
diff --git a/python_files/run-jedi-language-server.py b/python_files/run-jedi-language-server.py
index 47bf503d596c..9b445e6d7030 100644
--- a/python_files/run-jedi-language-server.py
+++ b/python_files/run-jedi-language-server.py
@@ -2,11 +2,21 @@
 import pathlib
 import sys
 
-# Add the lib path to our sys path so jedi_language_server can find its references
-extension_dir = pathlib.Path(__file__).parent.parent
-EXTENSION_ROOT = os.fsdecode(extension_dir)
-sys.path.insert(0, os.fsdecode(extension_dir / "python_files" / "lib" / "jedilsp"))
-del extension_dir
+use_external_jedi = sys.argv[-1] == "external"
+sys.argv = sys.argv[:-1]
+
+if use_external_jedi:
+    try:
+        import jedi_language_server
+    except Exception:
+        use_external_jedi = False
+
+if not use_external_jedi:
+    # Add the lib path to our sys path so jedi_language_server can find its references
+    extension_dir = pathlib.Path(__file__).parent.parent
+    EXTENSION_ROOT = os.fsdecode(extension_dir)
+    sys.path.insert(0, os.fsdecode(extension_dir / "python_files" / "lib" / "jedilsp"))
+    del extension_dir
 
 
 from jedi_language_server.cli import cli  # noqa: E402
diff --git a/src/client/activation/jedi/languageClientFactory.ts b/src/client/activation/jedi/languageClientFactory.ts
index 70bd65da8d0d..c77a6b3b3db4 100644
--- a/src/client/activation/jedi/languageClientFactory.ts
+++ b/src/client/activation/jedi/languageClientFactory.ts
@@ -2,6 +2,7 @@
 // Licensed under the MIT License.
 
 import * as path from 'path';
+import { WorkspaceConfiguration } from 'vscode';
 import { LanguageClient, LanguageClientOptions, ServerOptions } from 'vscode-languageclient/node';
 
 import { EXTENSION_ROOT_DIR, PYTHON_LANGUAGE } from '../../common/constants';
@@ -13,7 +14,7 @@ import { ILanguageClientFactory } from '../types';
 const languageClientName = 'Python Jedi';
 
 export class JediLanguageClientFactory implements ILanguageClientFactory {
-    constructor(private interpreterService: IInterpreterService) {}
+    constructor(private interpreterService: IInterpreterService, private readonly workspaceConfiguration: WorkspaceConfiguration) {}
 
     public async createLanguageClient(
         resource: Resource,
@@ -23,9 +24,10 @@ export class JediLanguageClientFactory implements ILanguageClientFactory {
         // Just run the language server using a module
         const lsScriptPath = path.join(EXTENSION_ROOT_DIR, 'python_files', 'run-jedi-language-server.py');
         const interpreter = await this.interpreterService.getActiveInterpreter(resource);
+        const useJediInEnv = this.workspaceConfiguration.get<boolean>("languageServer.useJediInEnvPath") === true
         const serverOptions: ServerOptions = {
             command: interpreter ? interpreter.path : 'python',
-            args: [lsScriptPath],
+            args: [lsScriptPath, useJediInEnv ? "external": "internal"],
         };
 
         return new LanguageClient(PYTHON_LANGUAGE, languageClientName, serverOptions, clientOptions);
diff --git a/src/client/languageServer/jediLSExtensionManager.ts b/src/client/languageServer/jediLSExtensionManager.ts
index 4cbfb6f33466..f8ef1e034cf5 100644
--- a/src/client/languageServer/jediLSExtensionManager.ts
+++ b/src/client/languageServer/jediLSExtensionManager.ts
@@ -47,7 +47,7 @@ export class JediLSExtensionManager implements IDisposable, ILanguageServerExten
             configurationService,
             workspaceService,
         );
-        this.clientFactory = new JediLanguageClientFactory(interpreterService);
+        this.clientFactory = new JediLanguageClientFactory(interpreterService, workspaceService.getConfiguration("python"));
         this.serverProxy = new JediLanguageServerProxy(this.clientFactory);
         this.serverManager = new JediLanguageServerManager(
             serviceContainer,