diff --git a/.vscode-template/settings.json b/.vscode-template/settings.json
new file mode 100644
index 000000000000..725c6df5ca48
--- /dev/null
+++ b/.vscode-template/settings.json
@@ -0,0 +1,21 @@
+// Place your settings in this file to overwrite default and user settings.
+{
+  "editor.tabSize": 2,
+  "editor.insertSpaces": true,
+
+  "files.trimTrailingWhitespace": true,
+
+  "search.exclude": {
+    "**/*.class": true,
+    "**/*.hasTasty": true,
+    "**/target/": true,
+    "scala2-library/{doc,docs,lib,META-INF,scripts,spec,test,tools}/": true, // only allow scala-backend/src
+    "scala2-library/src/[abcefimprs]*": true,  // only allow scala-backend/src/library
+    "scala-backend/{doc,docs,lib,META-INF,scripts,spec,test,tools}/": true, // only allow scala-backend/src
+    "scala-backend/src/[abefilmprs]*": true, // only allow scala-backend/src/compiler
+    "scala-backend/src/scala/reflect/": true,
+    "scala-backend/src/scala/tools/{ant,cmd,reflect,util}*": true,
+    "scala-backend/src/scala/tools/nsc/*.scala": true,
+    "scala-backend/src/scala/tools/nsc/[aijrstu]*": true // only allow scala-backend/src/scala/tools/nsc/backend
+  }
+}
diff --git a/project/Build.scala b/project/Build.scala
index 9f94587fffbb..507b30d8abf1 100644
--- a/project/Build.scala
+++ b/project/Build.scala
@@ -262,7 +262,7 @@ object Build {
     settings(commonNonBootstrappedSettings).
     settings(
       triggeredMessage in ThisBuild := Watched.clearWhenTriggered,
-      submoduleChecks,
+      dottyProjectFolderChecks,
 
       addCommandAlias("run", "dotty-compiler/run") ++
       addCommandAlias("legacyTests", "dotty-compiler/testOnly dotc.tests")
@@ -1115,7 +1115,7 @@ object Build {
     ))
   }
 
-  lazy val submoduleChecks = onLoad in Global := (onLoad in Global).value andThen { state =>
+  lazy val dottyProjectFolderChecks = onLoad in Global := (onLoad in Global).value andThen { state =>
     val submodules = List(new File("scala-backend"), new File("scala2-library"), new File("collection-strawman"))
     if (!submodules.forall(f => f.exists && f.listFiles().nonEmpty)) {
       sLog.value.log(Level.Error,
@@ -1124,6 +1124,10 @@ object Build {
            |  > git submodule update --init
         """.stripMargin)
     }
+
+    // Copy default configuration from .vscode-template/ unless configuration files already exist in .vscode/
+    sbt.IO.copyDirectory(new File(".vscode-template/"), new File(".vscode/"), overwrite = false)
+
     state
   }