diff --git a/extensions/vscode-api-tests/src/singlefolder-tests/module.test.ts b/extensions/vscode-api-tests/src/singlefolder-tests/module.test.ts
new file mode 100644
index 00000000000..a556bf7dd96
--- /dev/null
+++ b/extensions/vscode-api-tests/src/singlefolder-tests/module.test.ts
@@ -0,0 +1,50 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import * as assert from 'assert';
+import 'mocha';
+import * as vscode from 'vscode';
+import * as fs from 'fs';
+import * as path from 'path';
+
+suite('vscode API - Module Interception', () => {
+
+	test('import and require(vscode) return the same API instance in ESM', async function () {
+		// This file CANNOT be written to the OS temp directory.
+		// The VS Code API module interceptor looks up the extension by associating
+		// the parent URL via path containment. If the file is placed outside the
+		// extension's directory, the interceptor will fail to provide the 'vscode' module.
+		const testFile = path.join(__dirname, 'esm-test.mjs');
+		try {
+			try {
+				fs.writeFileSync(testFile, `
+// THIS IS A TEMPORARY FILE CREATED BY VSCODE-API-TESTS (module.test.ts)
+// IT SHOULD BE AUTO-DELETED. IF YOU SEE THIS, IT IS SAFE TO REMOVE.
+import * as vscode1 from 'vscode';
+import { createRequire } from 'node:module';
+import * as assert from 'assert';
+
+export function runTest() {
+	const vscode2 = createRequire(import.meta.url)('vscode');
+	assert.ok(Object.keys(vscode1).length > 0);
+	for (const key of Object.keys(vscode1)) {
+		assert.strictEqual(vscode1[key], vscode2[key], "Mismatch at " + key);
+	}
+	return true;
+}
+`);
+			} catch (err) {
+				this.skip();
+			}
+
+			const asyncImport = new Function('url', 'return import(url)');
+			const m = await asyncImport(vscode.Uri.file(testFile).toString(true));
+			assert.strictEqual(m.runTest(), true);
+		} finally {
+			try { fs.unlinkSync(testFile); } catch (err) { /* ignore */ }
+		}
+	});
+
+});
diff --git a/src/vs/workbench/api/node/extHostExtensionService.ts b/src/vs/workbench/api/node/extHostExtensionService.ts
index dac895f46bb..ab221e8aed7 100644
--- a/src/vs/workbench/api/node/extHostExtensionService.ts
+++ b/src/vs/workbench/api/node/extHostExtensionService.ts
@@ -23,12 +23,23 @@ import nodeModule from 'node:module';
 import { assertType } from '../../../base/common/types.js';
 import { generateUuid } from '../../../base/common/uuid.js';
 import { BidirectionalMap } from '../../../base/common/map.js';
-import { DisposableStore } from '../../../base/common/lifecycle.js';
-
+import { DisposableStore, toDisposable } from '../../../base/common/lifecycle.js';
 const require = nodeModule.createRequire(import.meta.url);
 
 class NodeModuleRequireInterceptor extends RequireInterceptor {
 
+	private static _createDataUri(scriptContent: string): string {
+		return `data:text/javascript;base64,${Buffer.from(scriptContent).toString('base64')}`;
+	}
+
+	private static _vscodeImportFnName = `_VSCODE_IMPORT_VSCODE_API`;
+
+	private readonly _store = new DisposableStore();
+
+	dispose(): void {
+		this._store.dispose();
+	}
+
 	protected _installInterceptor(): void {
 		const that = this;
 		const node_module = require('module');
@@ -72,29 +83,12 @@ class NodeModuleRequireInterceptor extends RequireInterceptor {
 			}
 			return request;
 		};
-	}
-}
 
-class NodeModuleInterceptor extends RequireInterceptor {
-
-	private static _createDataUri(scriptContent: string): string {
-		return `data:text/javascript;base64,${Buffer.from(scriptContent).toString('base64')}`;
-	}
-
-	private static _vscodeImportFnName = `_VSCODE_IMPORT_VSCODE_API`;
-
-	private readonly _store = new DisposableStore();
-
-	dispose(): void {
-		this._store.dispose();
-	}
-
-	protected override _installInterceptor(): void {
 		const apiInstances = new BidirectionalMap<typeof vscode, string>();
 		const apiImportDataUrl = new Map<string, string>();
 
 		// define a global function that can be used to get API instances given a random key
-		Object.defineProperty(globalThis, NodeModuleInterceptor._vscodeImportFnName, {
+		Object.defineProperty(globalThis, NodeModuleRequireInterceptor._vscodeImportFnName, {
 			enumerable: false,
 			configurable: false,
 			writable: false,
@@ -127,18 +121,17 @@ class NodeModuleInterceptor extends RequireInterceptor {
 			// Create and cache a data-url which is the import script for the API instance
 			let scriptDataUrlSrc = apiImportDataUrl.get(key);
 			if (!scriptDataUrlSrc) {
-				const jsCode = `const _vscodeInstance = globalThis.${NodeModuleInterceptor._vscodeImportFnName}('${key}');\n\n${Object.keys(apiInstance).map((name => `export const ${name} = _vscodeInstance['${name}'];`)).join('\n')}`;
-				scriptDataUrlSrc = NodeModuleInterceptor._createDataUri(jsCode);
+				const jsCode = `const _vscodeInstance = globalThis.${NodeModuleRequireInterceptor._vscodeImportFnName}('${key}');\n\n${Object.keys(apiInstance).map((name => `export const ${name} = _vscodeInstance['${name}'];`)).join('\n')}`;
+				scriptDataUrlSrc = NodeModuleRequireInterceptor._createDataUri(jsCode);
 				apiImportDataUrl.set(key, scriptDataUrlSrc);
 			}
 			return scriptDataUrlSrc;
 		};
-		nodeModule.registerHooks({
+		const hooks = nodeModule.registerHooks({
 			resolve: (specifier, context, nextResolve) => {
 				if (specifier !== 'vscode' || !context.parentURL) {
 					return nextResolve(specifier, context);
 				}
-				console.log('ESM resolve', specifier, context);
 				const otherUrl = lookup(context.parentURL);
 				return {
 					url: otherUrl,
@@ -146,6 +139,7 @@ class NodeModuleInterceptor extends RequireInterceptor {
 				};
 			},
 		});
+		this._store.add(toDisposable(() => hooks.deregister()));
 	}
 }
 
@@ -174,15 +168,9 @@ export class ExtHostExtensionService extends AbstractExtHostExtensionService {
 
 		// Module loading tricks based on `module._load`.
 		// `module._load` intercepts `require(...)`.
-		await this._instaService.createInstance(NodeModuleRequireInterceptor, extensionApiFactory, { mine: this._myRegistry, all: this._globalRegistry })
-			.install();
-
 		// Module loading tricks based on `module.registerHooks`.
 		// `module.registerHooks` is a generic interceptor that intercepts `require(...)`, `import ...`, and `import(...)`.
-		// However, at this time, `NodeModuleInterceptor` only intercepts `import 'vscode'` and `import('vscode')`.
-		// This can also intercept `require('vscode')`, but interception by `NodeModuleRequireInterceptor` takes precedence.
-		// In the future, we can consider migrating all interception logic to `NodeModuleInterceptor` and removing `NodeModuleRequireInterceptor`.
-		await this._store.add(this._instaService.createInstance(NodeModuleInterceptor, extensionApiFactory, { mine: this._myRegistry, all: this._globalRegistry }))
+		await this._store.add(this._instaService.createInstance(NodeModuleRequireInterceptor, extensionApiFactory, { mine: this._myRegistry, all: this._globalRegistry }))
 			.install();
 
 		performance.mark('code/extHost/didInitAPI');