This article is the definitive guide to understanding why this happens and, more importantly, how to fix it permanently.

If you are a Python developer who has recently made the switch from pip and venv to for dependency management, you have likely experienced a moment of pure frustration. You’ve just created a fresh virtual environment, added your packages (e.g., poetry add requests ), and written your import statement.

Alex called it the "Blue Snake of Shame."

Result

Now, look in your project folder. You will see a .venv directory. VS Code and Pylance will auto-detect it without any manual intervention.

If you already have an environment, delete it and reinstall so it moves into your project folder: rm -rf .venv # or delete the external one poetry install Use code with caution. Copied to clipboard Step 2: Select the Interpreter in VS Code Now that the is in your project, VS Code needs to use it. Command Palette Ctrl+Shift+P Cmd+Shift+P "Python: Select Interpreter" Choose the one labeled "Python 3.x.x ('.venv': poetry)" Step 3: Configure Pylance Analysis