diff --git a/lib/ruby_lsp/setup_bundler.rb b/lib/ruby_lsp/setup_bundler.rb
index 55f5fe059..59186fe47 100644
--- a/lib/ruby_lsp/setup_bundler.rb
+++ b/lib/ruby_lsp/setup_bundler.rb
@@ -50,6 +50,7 @@ def initialize(project_path, **options)
       @last_updated_path = T.let(@custom_dir + "last_updated", Pathname)
 
       @dependencies = T.let(load_dependencies, T::Hash[String, T.untyped])
+      @rails_app = T.let(rails_app?, T::Boolean)
       @retry = T.let(false, T::Boolean)
     end
 
@@ -62,7 +63,7 @@ def setup!
       # Do not set up a custom bundle if LSP dependencies are already in the Gemfile
       if @dependencies["ruby-lsp"] &&
           @dependencies["debug"] &&
-          (@dependencies["rails"] ? @dependencies["ruby-lsp-rails"] : true)
+          (@rails_app ? @dependencies["ruby-lsp-rails"] : true)
         $stderr.puts(
           "Ruby LSP> Skipping custom bundle setup since LSP dependencies are already in #{@gemfile}",
         )
@@ -148,7 +149,7 @@ def write_custom_gemfile
         parts << 'gem "debug", require: false, group: :development, platforms: :mri'
       end
 
-      if @dependencies["rails"] && !@dependencies["ruby-lsp-rails"]
+      if @rails_app && !@dependencies["ruby-lsp-rails"]
         parts << 'gem "ruby-lsp-rails", require: false, group: :development'
       end
 
@@ -209,7 +210,7 @@ def run_bundle_install(bundle_gemfile = @gemfile)
         command << " && bundle update "
         command << "ruby-lsp " unless @dependencies["ruby-lsp"]
         command << "debug " unless @dependencies["debug"]
-        command << "ruby-lsp-rails " if @dependencies["rails"] && !@dependencies["ruby-lsp-rails"]
+        command << "ruby-lsp-rails " if @rails_app && !@dependencies["ruby-lsp-rails"]
         command << "--pre" if @experimental
         command.delete_suffix!(" ")
         command << ")"
@@ -244,7 +245,7 @@ def run_bundle_install(bundle_gemfile = @gemfile)
     def should_bundle_update?
       # If `ruby-lsp`, `ruby-lsp-rails` and `debug` are in the Gemfile, then we shouldn't try to upgrade them or else it
       # will produce version control changes
-      if @dependencies["rails"]
+      if @rails_app
         return false if @dependencies.values_at("ruby-lsp", "ruby-lsp-rails", "debug").all?
 
         # If the custom lockfile doesn't include `ruby-lsp`, `ruby-lsp-rails` or `debug`, we need to run bundle install
@@ -280,5 +281,15 @@ def correct_relative_remote_paths
 
       @custom_lockfile.write(content)
     end
+
+    # Detects if the project is a Rails app by looking if the superclass of the main class is `Rails::Application`
+    sig { returns(T::Boolean) }
+    def rails_app?
+      config = Pathname.new("config/application.rb").expand_path(Dir.pwd)
+      application_contents = config.read if config.exist?
+      return false unless application_contents
+
+      /class .* < Rails::Application/.match?(application_contents)
+    end
   end
 end
diff --git a/test/setup_bundler_test.rb b/test/setup_bundler_test.rb
index 6b9a06fe1..77f3b6059 100644
--- a/test/setup_bundler_test.rb
+++ b/test/setup_bundler_test.rb
@@ -75,22 +75,33 @@ def test_creates_custom_bundle
   end
 
   def test_creates_custom_bundle_for_a_rails_app
-    Object.any_instance.expects(:system).with(
-      bundle_env(".ruby-lsp/Gemfile"),
-      "(bundle check || bundle install) 1>&2",
-    ).returns(true)
-    Bundler::LockfileParser.any_instance.expects(:dependencies).returns({ "rails" => true }).at_least_once
-    run_script
+    Dir.mktmpdir do |dir|
+      Dir.chdir(dir) do
+        FileUtils.mkdir(File.join(dir, "config"))
+        File.write(File.join(dir, "config", "application.rb"), <<~RUBY)
+          module MyApp
+            class Application < Rails::Application
+            end
+          end
+        RUBY
 
-    assert_path_exists(".ruby-lsp")
-    assert_path_exists(".ruby-lsp/Gemfile")
-    assert_path_exists(".ruby-lsp/Gemfile.lock")
-    assert_path_exists(".ruby-lsp/main_lockfile_hash")
-    assert_match("ruby-lsp", File.read(".ruby-lsp/Gemfile"))
-    assert_match("debug", File.read(".ruby-lsp/Gemfile"))
-    assert_match("ruby-lsp-rails", File.read(".ruby-lsp/Gemfile"))
-  ensure
-    FileUtils.rm_r(".ruby-lsp") if Dir.exist?(".ruby-lsp")
+        Object.any_instance.expects(:system).with(
+          bundle_env(".ruby-lsp/Gemfile"),
+          "(bundle check || bundle install) 1>&2",
+        ).returns(true)
+        Bundler::LockfileParser.any_instance.expects(:dependencies).returns({ "rails" => true }).at_least_once
+        run_script
+
+        assert_path_exists(".ruby-lsp")
+        assert_path_exists(".ruby-lsp/Gemfile")
+        assert_path_exists(".ruby-lsp/Gemfile.lock")
+        assert_path_exists(".ruby-lsp/main_lockfile_hash")
+        gemfile_content = File.read(".ruby-lsp/Gemfile")
+        assert_match("ruby-lsp", gemfile_content)
+        assert_match("debug", gemfile_content)
+        assert_match("ruby-lsp-rails", gemfile_content)
+      end
+    end
   end
 
   def test_changing_lockfile_causes_custom_bundle_to_be_rebuilt
@@ -486,6 +497,14 @@ def test_ruby_lsp_rails_is_automatically_included_in_rails_apps
           gem "rails"
         GEMFILE
 
+        FileUtils.mkdir(File.join(dir, "config"))
+        File.write(File.join(dir, "config", "application.rb"), <<~RUBY)
+          module MyApp
+            class Application < Rails::Application
+            end
+          end
+        RUBY
+
         capture_subprocess_io do
           Bundler.with_unbundled_env do
             # Run bundle install to generate the lockfile