diff --git a/pkgs/misc/vscode-extensions/terraform/default.nix b/pkgs/misc/vscode-extensions/terraform/default.nix
index 66d23e491161..3ab0f893c1a5 100644
--- a/pkgs/misc/vscode-extensions/terraform/default.nix
+++ b/pkgs/misc/vscode-extensions/terraform/default.nix
@@ -3,8 +3,8 @@ vscode-utils.buildVscodeMarketplaceExtension rec {
   mktplcRef = {
     name = "terraform";
     publisher = "hashicorp";
-    version = "2.16.0";
-    sha256 = "0ya0xmmn4rmbvh8mxz466msbb3y2xqi4bg9dgymy2wq8cwzbn81b";
+    version = "2.17.0";
+    sha256 = "sha256-IZlw1lYibbBw3rcSiWEKP8rObxnMCE1ppogwmigNgwE=";
   };
 
   patches = [ ./fix-terraform-ls.patch ];
diff --git a/pkgs/misc/vscode-extensions/terraform/fix-terraform-ls.patch b/pkgs/misc/vscode-extensions/terraform/fix-terraform-ls.patch
index e20c29a74b56..e2dcd0b70aa9 100644
--- a/pkgs/misc/vscode-extensions/terraform/fix-terraform-ls.patch
+++ b/pkgs/misc/vscode-extensions/terraform/fix-terraform-ls.patch
@@ -1,8 +1,8 @@
 diff --git a/out/serverPath.js b/out/serverPath.js
-index d25f5d4..289f0dd 100644
+index fafa915..2e6d376 100644
 --- a/out/serverPath.js
 +++ b/out/serverPath.js
-@@ -8,7 +8,13 @@ exports.CUSTOM_BIN_PATH_OPTION_NAME = 'languageServer.pathToBinary';
+@@ -18,7 +18,13 @@ exports.CUSTOM_BIN_PATH_OPTION_NAME = 'languageServer.pathToBinary';
  class ServerPath {
      constructor(context) {
          this.context = context;