diff --git a/.gitignore b/.gitignore
index 1b5bada..2b798cf 100644
--- a/.gitignore
+++ b/.gitignore
@@ -3,3 +3,4 @@ dist/
 *.vsix
 bun.lockb
 .vscode-test/
+package-lock.json
diff --git a/README.md b/README.md
index 052bdbe..073768c 100644
--- a/README.md
+++ b/README.md
@@ -15,17 +15,29 @@ Opens [Plannotator](https://github.com/backnotprop/plannotator) plan reviews ins
 - Persists your Plannotator settings (identity, permissions, editor preferences) across sessions
 - Auto-closes the panel when you approve or send feedback on a plan
 - Works with Claude Code running in VS Code's integrated terminal
+- Works with Claude Code as a VS Code extension
 - Configurable via VS Code settings
 - Manual URL opening via command palette
 
 ## How It Works
 
-When Plannotator opens a browser to show a plan review, this extension intercepts the request and opens it in a VS Code panel instead:
+When Plannotator opens a browser to show a plan review, this extension intercepts the request and opens it in a VS Code panel instead.
+
+### For Claude Code in Integrated Terminal:
 
 1. The extension injects a `PLANNOTATOR_BROWSER` environment variable into integrated terminals
 2. When Plannotator opens a URL, the bundled router script sends it to the extension via a local HTTP server
 3. The extension opens the URL in a custom WebviewPanel with an embedded iframe
-4. A local reverse proxy handles cookie persistence (VS Code webview iframes don't support cookies natively) — settings are stored in VS Code's global state and restored transparently
+
+### For Claude Code as VS Code Extension:
+
+1. The extension registers an external URI opener for HTTP/HTTPS URLs
+2. When Claude Code (or any extension) tries to open a localhost URL via `vscode.env.openExternal()`, the opener intercepts it
+3. If the URL is a localhost URL (matching `http://localhost:*`, `https://localhost:*`, `http://127.0.0.1:*`, or `https://127.0.0.1:*`), it opens in a VS Code panel instead of an external browser
+
+### Cookie Persistence:
+
+A local reverse proxy handles cookie persistence (VS Code webview iframes don't support cookies natively) — settings are stored in VS Code's global state and restored transparently across sessions.
 
 ## Requirements
 
diff --git a/mocks/vscode.ts b/mocks/vscode.ts
index 90f5923..0ef8705 100644
--- a/mocks/vscode.ts
+++ b/mocks/vscode.ts
@@ -5,8 +5,19 @@ export interface UriHandler {
   handleUri(uri: Uri): ProviderResult<void>;
 }
 
+export interface ExternalUriOpener {
+  canOpenExternalUri?(uri: Uri): number | undefined;
+  openExternalUri(uri: Uri): void | Promise<void>;
+}
+
+export interface ExternalUriOpenerMetadata {
+  schemes: string[];
+  label: string;
+}
+
 // eslint-disable-next-line @typescript-eslint/no-explicit-any
-export type ProviderResult<T> = T | undefined | null | Thenable<T | undefined | null>;
+export type ProviderResult<T> = T | undefined | null | Promise<T | undefined | null>;
+export type Thenable<T> = Promise<T>;
 
 export interface ExtensionContext {
   subscriptions: { dispose(): void }[];
@@ -19,7 +30,7 @@ export interface ExtensionContext {
   };
   globalState: {
     get<T>(key: string, defaultValue?: T): T | undefined;
-    update(key: string, value: unknown): Thenable<void>;
+    update(key: string, value: unknown): Promise<void>;
   };
 }
 
@@ -49,6 +60,7 @@ export class Uri {
   }
 
   static parse(value: string): Uri {
+    // Use globalThis.URL for explicit global scope reference
     const parsed = new globalThis.URL(value);
     return new Uri(
       parsed.protocol.replace(":", ""),
@@ -58,6 +70,15 @@ export class Uri {
       parsed.hash.replace("#", ""),
     );
   }
+
+  toString(): string {
+    let result = `${this.scheme}://`;
+    if (this.authority) result += this.authority;
+    result += this.path;
+    if (this.query) result += `?${this.query}`;
+    if (this.fragment) result += `#${this.fragment}`;
+    return result;
+  }
 }
 
 export const commands = {
@@ -85,6 +106,13 @@ export const window = {
   registerUriHandler(_handler: unknown) {
     return { dispose() {} };
   },
+  registerExternalUriOpener(
+    _id: string,
+    _opener: ExternalUriOpener,
+    _metadata: ExternalUriOpenerMetadata,
+  ) {
+    return { dispose() {} };
+  },
   async showInformationMessage(_message: string) {
     return undefined;
   },
diff --git a/src/extension.test.ts b/src/extension.test.ts
index b609bdf..ec212d6 100644
--- a/src/extension.test.ts
+++ b/src/extension.test.ts
@@ -74,7 +74,73 @@ describe("activate", () => {
   it("pushes disposables to context.subscriptions", async () => {
     await activate(context as unknown as vscode.ExtensionContext);
 
-    // Cookie proxy + IPC server + command = at least 3 subscriptions
-    expect(context.subscriptions.length).toBeGreaterThanOrEqual(3);
+    // Cookie proxy + IPC server + command + external URI opener = at least 4 subscriptions
+    expect(context.subscriptions.length).toBeGreaterThanOrEqual(4);
+  });
+
+  it("registers external URI opener for localhost URLs", async () => {
+    const windowWithOpener = vscode.window as typeof vscode.window & {
+      registerExternalUriOpener?: (...args: any[]) => any;
+    };
+    const spy = spyOn(windowWithOpener, "registerExternalUriOpener" as any);
+    spies.push(spy);
+
+    await activate(context as unknown as vscode.ExtensionContext);
+
+    expect(spy).toHaveBeenCalledWith(
+      "plannotator-webview.opener",
+      expect.objectContaining({
+        canOpenExternalUri: expect.any(Function),
+        openExternalUri: expect.any(Function),
+      }),
+      expect.objectContaining({
+        schemes: ["http", "https"],
+        label: "Open Plannotator in VS Code",
+      }),
+    );
+  });
+
+  it("external URI opener returns priority for localhost URLs", async () => {
+    let capturedOpener: any;
+    const windowWithOpener = vscode.window as typeof vscode.window & {
+      registerExternalUriOpener?: (...args: any[]) => any;
+    };
+    const spy = spyOn(windowWithOpener, "registerExternalUriOpener" as any);
+    spy.mockImplementation((_id: string, opener: any) => {
+      capturedOpener = opener;
+      return { dispose() {} };
+    });
+    spies.push(spy);
+
+    await activate(context as unknown as vscode.ExtensionContext);
+
+    // Test localhost with port
+    const testUri = vscode.Uri.parse("http://localhost:3000/");
+    const priority = capturedOpener.canOpenExternalUri(testUri);
+    expect(priority).toBe(2);
+
+    // Test 127.0.0.1 with port
+    const testUri2 = vscode.Uri.parse("http://127.0.0.1:8080/review");
+    const priority2 = capturedOpener.canOpenExternalUri(testUri2);
+    expect(priority2).toBe(2);
+  });
+
+  it("external URI opener returns undefined for non-localhost URLs", async () => {
+    let capturedOpener: any;
+    const windowWithOpener = vscode.window as typeof vscode.window & {
+      registerExternalUriOpener?: (...args: any[]) => any;
+    };
+    const spy = spyOn(windowWithOpener, "registerExternalUriOpener" as any);
+    spy.mockImplementation((_id: string, opener: any) => {
+      capturedOpener = opener;
+      return { dispose() {} };
+    });
+    spies.push(spy);
+
+    await activate(context as unknown as vscode.ExtensionContext);
+
+    const testUri = vscode.Uri.parse("http://example.com");
+    const priority = capturedOpener.canOpenExternalUri(testUri);
+    expect(priority).toBeUndefined();
   });
 });
diff --git a/src/extension.ts b/src/extension.ts
index 2f34711..33db8ce 100644
--- a/src/extension.ts
+++ b/src/extension.ts
@@ -77,6 +77,53 @@ export async function activate(context: vscode.ExtensionContext): Promise<void>
     },
   );
   context.subscriptions.push(openCommand);
+
+  // Register external URI opener to intercept URLs from Claude Code VSCode extension
+  // This uses optional chaining because the API might not be available in older VSCode versions
+  // Note: This API was added in VSCode 1.54 but may not be in all type definitions
+  const windowWithOpener = vscode.window as typeof vscode.window & {
+    registerExternalUriOpener?: (
+      id: string,
+      opener: {
+        canOpenExternalUri(uri: vscode.Uri): number | undefined;
+        openExternalUri(uri: vscode.Uri): void;
+      },
+      metadata: { schemes: string[]; label: string },
+    ) => vscode.Disposable;
+  };
+
+  const externalOpener = windowWithOpener.registerExternalUriOpener?.(
+    "plannotator-webview.opener",
+    {
+      canOpenExternalUri(uri: vscode.Uri): number | undefined {
+        const urlString = uri.toString();
+        // Match localhost URLs - Plannotator runs on localhost with dynamic ports
+        // This matches both http://localhost:PORT and http://127.0.0.1:PORT patterns
+        if (
+          urlString.startsWith("http://localhost:") ||
+          urlString.startsWith("https://localhost:") ||
+          urlString.startsWith("http://127.0.0.1:") ||
+          urlString.startsWith("https://127.0.0.1:")
+        ) {
+          // Priority 2 (higher than default 0) to intercept these URLs before the default browser opener
+          return 2;
+        }
+        return undefined; // Don't handle this URL - let default browser opener handle it
+      },
+      openExternalUri(uri: vscode.Uri): void {
+        const urlString = uri.toString();
+        log.info(`[external-opener] Opening URL: ${urlString}`);
+        openInPanel(urlString);
+      },
+    },
+    {
+      schemes: ["http", "https"],
+      label: "Open Plannotator in VS Code",
+    },
+  );
+  if (externalOpener) {
+    context.subscriptions.push(externalOpener);
+  }
 }
 
 export function deactivate(): void {}