How to set the root directory for Visual Studio Code Python Extension?

If you are using the Pylance extension you can set your source folder via the python.analysis.extraPaths option. It also looks for common source folder names like src by default, this option is called python.analysis.autoSearchPaths.

Go to File > Preferences > Settings, search for pythonpath. Under the Pylance options you should see Extra Paths, this is where you set your source folder.

You can create a .env file with:

PYTHONPATH=server

That will add your server folder to PYTHONPATH as needed.

(You may need to restart VSCode for it to take PYTHONPATH into account correctly.)

Edited to clarify...

Create a file named .env under the repo root e.g. your_repo/.env.

Also creating the file under the folder where your consuming code is, instead of under repo root, seems to work e.g. your_repo/service/.env.

For more details, see documentation on environment variable definition files.

For me this worked without restarting VSC, perhaps this is a matter of newer VSC and extensions versions.