diff --git a/plugins/vscode/tsconfig.json b/plugins/vscode/tsconfig.json
index dc18be16..cb0feeca 100644
--- a/plugins/vscode/tsconfig.json
+++ b/plugins/vscode/tsconfig.json
@@ -7,6 +7,11 @@
 		],
 		"sourceMap": true,
 		"outDir": "dist",
+		// `include` reaches into source/ below, and TypeScript 7 infers a
+		// rootDir of plugins/vscode and rejects those files. The extension is
+		// bundled by esbuild (see build:ext) and tsc only type-checks this
+		// project, so widening rootDir to the repo root costs nothing.
+		"rootDir": "../..",
 		"strict": true,
 		"esModuleInterop": true,
 		"skipLibCheck": true,
diff --git a/source/wizards/steps/location-step.spec.tsx b/source/wizards/steps/location-step.spec.tsx
index 4b0f014d..004c13d0 100644
--- a/source/wizards/steps/location-step.spec.tsx
+++ b/source/wizards/steps/location-step.spec.tsx
@@ -4,6 +4,7 @@ import {TitledBoxWithPreferences} from '@/components/ui/titled-box';
 import {useResponsiveTerminal} from '@/hooks/useTerminalWidth';
 import {renderWithTheme as render} from '@/test-utils/render-with-theme';
 import React from 'react';
+import stripAnsi from 'strip-ansi';
 import {LocationStep} from './location-step.js';
 
 // Mirrors base-config-wizard.tsx's real LocationStep box.
@@ -70,7 +71,9 @@ test('LocationStep shows the resolved project path next to the option', t => {
 
 	const output = lastFrame();
 	t.truthy(output);
-	const lines = output!.split('\n');
+	// The path is rendered dimmed, so the frame carries ANSI escapes whenever
+	// colour is on - which it is under CI. Compare against the plain text.
+	const lines = stripAnsi(output!).split('\n');
 	const stemIndex = lines.findIndex(line =>
 		line.includes('Current project directory'),
 	);
diff --git a/tsconfig.json b/tsconfig.json
index 454e4003..d08a39cf 100644
--- a/tsconfig.json
+++ b/tsconfig.json
@@ -16,15 +16,16 @@
 		"declarationMap": true,
 		"sourceMap": true,
 		"types": ["node"],
-		"baseUrl": ".",
+		// TypeScript 7 removed `baseUrl` and rejects non-relative `paths`
+		// targets, so these resolve relative to this file instead.
 		"paths": {
-			"@/*": ["source/*"],
+			"@/*": ["./source/*"],
 			// The real `vscode` module only exists inside the extension host, so
 			// AVA (which loads specs through tsx, and tsx honours these paths)
 			// resolves it to a stub. Test-only: the extension is bundled from
 			// plugins/vscode/tsconfig.json with `--external:vscode`, and nothing
 			// under source/ imports it.
-			"vscode": ["plugins/vscode/test-stubs/vscode.ts"]
+			"vscode": ["./plugins/vscode/test-stubs/vscode.ts"]
 		}
 	},
 	"include": ["source/**/*"],