diff --git a/Cargo.lock b/Cargo.lock
index 1bfbc9ca57..cb35413633 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -5463,7 +5463,6 @@ dependencies = [
  "tree-sitter-go",
  "tree-sitter-gomod",
  "tree-sitter-gowork",
- "tree-sitter-hcl",
  "tree-sitter-heex",
  "tree-sitter-jsdoc",
  "tree-sitter-json 0.20.0",
@@ -10417,15 +10416,6 @@ dependencies = [
  "tree-sitter",
 ]
 
-[[package]]
-name = "tree-sitter-hcl"
-version = "0.0.1"
-source = "git+https://github.com/MichaHoffmann/tree-sitter-hcl?rev=v1.1.0#636dbe70301ecbab8f353c8c78b3406fe4f185f5"
-dependencies = [
- "cc",
- "tree-sitter",
-]
-
 [[package]]
 name = "tree-sitter-heex"
 version = "0.0.1"
@@ -12683,6 +12673,13 @@ dependencies = [
  "zed_extension_api 0.0.6 (registry+https://github.com/rust-lang/crates.io-index)",
 ]
 
+[[package]]
+name = "zed_terraform"
+version = "0.0.1"
+dependencies = [
+ "zed_extension_api 0.0.6 (registry+https://github.com/rust-lang/crates.io-index)",
+]
+
 [[package]]
 name = "zed_toml"
 version = "0.0.2"
diff --git a/Cargo.toml b/Cargo.toml
index 17a96c5a36..f58d998a8b 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -117,6 +117,7 @@ members = [
     "extensions/prisma",
     "extensions/purescript",
     "extensions/svelte",
+    "extensions/terraform",
     "extensions/toml",
     "extensions/uiua",
     "extensions/zig",
@@ -322,7 +323,6 @@ tree-sitter-embedded-template = "0.20.0"
 tree-sitter-go = { git = "https://github.com/tree-sitter/tree-sitter-go", rev = "aeb2f33b366fd78d5789ff104956ce23508b85db" }
 tree-sitter-gomod = { git = "https://github.com/camdencheek/tree-sitter-go-mod" }
 tree-sitter-gowork = { git = "https://github.com/d1y/tree-sitter-go-work" }
-tree-sitter-hcl = { git = "https://github.com/MichaHoffmann/tree-sitter-hcl", rev = "v1.1.0" }
 rustc-demangle = "0.1.23"
 tree-sitter-heex = { git = "https://github.com/phoenixframework/tree-sitter-heex", rev = "2e1348c3cf2c9323e87c2744796cf3f3868aa82a" }
 tree-sitter-html = "0.19.0"
diff --git a/crates/extension/src/extension_lsp_adapter.rs b/crates/extension/src/extension_lsp_adapter.rs
index 457ec30cc9..655f701115 100644
--- a/crates/extension/src/extension_lsp_adapter.rs
+++ b/crates/extension/src/extension_lsp_adapter.rs
@@ -10,7 +10,7 @@ use gpui::AsyncAppContext;
 use language::{
     CodeLabel, HighlightId, Language, LanguageServerName, LspAdapter, LspAdapterDelegate,
 };
-use lsp::LanguageServerBinary;
+use lsp::{CodeActionKind, LanguageServerBinary};
 use serde::Serialize;
 use serde_json::Value;
 use std::ops::Range;
@@ -129,6 +129,24 @@ impl LspAdapter for ExtensionLspAdapter {
         None
     }
 
+    fn code_action_kinds(&self) -> Option<Vec<CodeActionKind>> {
+        if self.extension.manifest.id.as_ref() == "terraform" {
+            // This is taken from the original Terraform implementation, including
+            // the TODOs:
+            // TODO: file issue for server supported code actions
+            // TODO: reenable default actions / delete override
+            return Some(vec![]);
+        }
+
+        Some(vec![
+            CodeActionKind::EMPTY,
+            CodeActionKind::QUICKFIX,
+            CodeActionKind::REFACTOR,
+            CodeActionKind::REFACTOR_EXTRACT,
+            CodeActionKind::SOURCE,
+        ])
+    }
+
     fn language_ids(&self) -> HashMap<String, String> {
         // TODO: The language IDs can be provided via the language server options
         // in `extension.toml now but we're leaving these existing usages in place temporarily
diff --git a/crates/extensions_ui/src/extension_suggest.rs b/crates/extensions_ui/src/extension_suggest.rs
index 2d4d164020..ce4911712d 100644
--- a/crates/extensions_ui/src/extension_suggest.rs
+++ b/crates/extensions_ui/src/extension_suggest.rs
@@ -59,6 +59,7 @@ const SUGGESTIONS_BY_EXTENSION_ID: &[(&str, &[&str])] = &[
     ("svelte", &["svelte"]),
     ("swift", &["swift"]),
     ("templ", &["templ"]),
+    ("terraform", &["tf", "tfvars", "hcl"]),
     ("toml", &["Cargo.lock", "toml"]),
     ("wgsl", &["wgsl"]),
     ("zig", &["zig"]),
diff --git a/crates/languages/Cargo.toml b/crates/languages/Cargo.toml
index d43c733902..08b8f0afcb 100644
--- a/crates/languages/Cargo.toml
+++ b/crates/languages/Cargo.toml
@@ -45,7 +45,6 @@ tree-sitter-embedded-template.workspace = true
 tree-sitter-go.workspace = true
 tree-sitter-gomod.workspace = true
 tree-sitter-gowork.workspace = true
-tree-sitter-hcl.workspace = true
 tree-sitter-heex.workspace = true
 tree-sitter-jsdoc.workspace = true
 tree-sitter-json.workspace = true
diff --git a/crates/languages/src/lib.rs b/crates/languages/src/lib.rs
index 38d8fc50c3..634d54db8e 100644
--- a/crates/languages/src/lib.rs
+++ b/crates/languages/src/lib.rs
@@ -23,7 +23,6 @@ mod python;
 mod ruby;
 mod rust;
 mod tailwind;
-mod terraform;
 mod typescript;
 mod vue;
 mod yaml;
@@ -63,7 +62,6 @@ pub fn init(
         ("go", tree_sitter_go::language()),
         ("gomod", tree_sitter_gomod::language()),
         ("gowork", tree_sitter_gowork::language()),
-        ("hcl", tree_sitter_hcl::language()),
         ("heex", tree_sitter_heex::language()),
         ("jsdoc", tree_sitter_jsdoc::language()),
         ("json", tree_sitter_json::language()),
@@ -280,12 +278,6 @@ pub fn init(
         ]
     );
     language!("proto");
-    language!("terraform", vec![Arc::new(terraform::TerraformLspAdapter)]);
-    language!(
-        "terraform-vars",
-        vec![Arc::new(terraform::TerraformLspAdapter)]
-    );
-    language!("hcl", vec![]);
 
     languages.register_secondary_lsp_adapter(
         "Astro".into(),
diff --git a/crates/languages/src/terraform.rs b/crates/languages/src/terraform.rs
deleted file mode 100644
index a7e6b69f95..0000000000
--- a/crates/languages/src/terraform.rs
+++ /dev/null
@@ -1,181 +0,0 @@
-use anyhow::{anyhow, Context, Result};
-use async_trait::async_trait;
-use collections::HashMap;
-use futures::StreamExt;
-pub use language::*;
-use lsp::{CodeActionKind, LanguageServerBinary};
-use smol::fs::{self, File};
-use std::{any::Any, ffi::OsString, path::PathBuf};
-use util::{
-    fs::remove_matching,
-    github::{latest_github_release, GitHubLspBinaryVersion},
-    maybe, ResultExt,
-};
-
-fn terraform_ls_binary_arguments() -> Vec<OsString> {
-    vec!["serve".into()]
-}
-
-pub struct TerraformLspAdapter;
-
-#[async_trait(?Send)]
-impl LspAdapter for TerraformLspAdapter {
-    fn name(&self) -> LanguageServerName {
-        LanguageServerName("terraform-ls".into())
-    }
-
-    async fn fetch_latest_server_version(
-        &self,
-        delegate: &dyn LspAdapterDelegate,
-    ) -> Result<Box<dyn 'static + Send + Any>> {
-        // TODO: maybe use release API instead
-        // https://api.releases.hashicorp.com/v1/releases/terraform-ls?limit=1
-        let release = latest_github_release(
-            "hashicorp/terraform-ls",
-            false,
-            false,
-            delegate.http_client(),
-        )
-        .await?;
-
-        Ok(Box::new(GitHubLspBinaryVersion {
-            name: release.tag_name,
-            url: Default::default(),
-        }))
-    }
-
-    async fn fetch_server_binary(
-        &self,
-        version: Box<dyn 'static + Send + Any>,
-        container_dir: PathBuf,
-        delegate: &dyn LspAdapterDelegate,
-    ) -> Result<LanguageServerBinary> {
-        let version = version.downcast::<GitHubLspBinaryVersion>().unwrap();
-        let zip_path = container_dir.join(format!("terraform-ls_{}.zip", version.name));
-        let version_dir = container_dir.join(format!("terraform-ls_{}", version.name));
-        let binary_path = version_dir.join("terraform-ls");
-        let url = build_download_url(version.name)?;
-
-        if fs::metadata(&binary_path).await.is_err() {
-            let mut response = delegate
-                .http_client()
-                .get(&url, Default::default(), true)
-                .await
-                .context("error downloading release")?;
-            let mut file = File::create(&zip_path).await?;
-            if !response.status().is_success() {
-                Err(anyhow!(
-                    "download failed with status {}",
-                    response.status().to_string()
-                ))?;
-            }
-            futures::io::copy(response.body_mut(), &mut file).await?;
-
-            let unzip_status = smol::process::Command::new("unzip")
-                .current_dir(&container_dir)
-                .arg(&zip_path)
-                .arg("-d")
-                .arg(&version_dir)
-                .output()
-                .await?
-                .status;
-            if !unzip_status.success() {
-                Err(anyhow!("failed to unzip Terraform LS archive"))?;
-            }
-
-            remove_matching(&container_dir, |entry| entry != version_dir).await;
-        }
-
-        Ok(LanguageServerBinary {
-            path: binary_path,
-            env: None,
-            arguments: terraform_ls_binary_arguments(),
-        })
-    }
-
-    async fn cached_server_binary(
-        &self,
-        container_dir: PathBuf,
-        _: &dyn LspAdapterDelegate,
-    ) -> Option<LanguageServerBinary> {
-        get_cached_server_binary(container_dir).await
-    }
-
-    async fn installation_test_binary(
-        &self,
-        container_dir: PathBuf,
-    ) -> Option<LanguageServerBinary> {
-        get_cached_server_binary(container_dir)
-            .await
-            .map(|mut binary| {
-                binary.arguments = vec!["version".into()];
-                binary
-            })
-    }
-
-    fn code_action_kinds(&self) -> Option<Vec<CodeActionKind>> {
-        // TODO: file issue for server supported code actions
-        // TODO: reenable default actions / delete override
-        Some(vec![])
-    }
-
-    fn language_ids(&self) -> HashMap<String, String> {
-        HashMap::from_iter([
-            ("Terraform".into(), "terraform".into()),
-            ("Terraform Vars".into(), "terraform-vars".into()),
-        ])
-    }
-}
-
-fn build_download_url(version: String) -> Result<String> {
-    let v = version.strip_prefix('v').unwrap_or(&version);
-    let os = match std::env::consts::OS {
-        "linux" => "linux",
-        "macos" => "darwin",
-        "win" => "windows",
-        _ => Err(anyhow!("unsupported OS {}", std::env::consts::OS))?,
-    }
-    .to_string();
-    let arch = match std::env::consts::ARCH {
-        "x86" => "386",
-        "x86_64" => "amd64",
-        "arm" => "arm",
-        "aarch64" => "arm64",
-        _ => Err(anyhow!("unsupported ARCH {}", std::env::consts::ARCH))?,
-    }
-    .to_string();
-
-    let url = format!(
-        "https://releases.hashicorp.com/terraform-ls/{v}/terraform-ls_{v}_{os}_{arch}.zip",
-    );
-
-    Ok(url)
-}
-
-async fn get_cached_server_binary(container_dir: PathBuf) -> Option<LanguageServerBinary> {
-    maybe!(async {
-        let mut last = None;
-        let mut entries = fs::read_dir(&container_dir).await?;
-        while let Some(entry) = entries.next().await {
-            last = Some(entry?.path());
-        }
-
-        match last {
-            Some(path) if path.is_dir() => {
-                let binary = path.join("terraform-ls");
-                if fs::metadata(&binary).await.is_ok() {
-                    return Ok(LanguageServerBinary {
-                        path: binary,
-                        env: None,
-                        arguments: terraform_ls_binary_arguments(),
-                    });
-                }
-            }
-            _ => {}
-        }
-
-        Err(anyhow!("no cached binary"))
-    })
-    .await
-    .log_err()
-}
diff --git a/extensions/terraform/Cargo.toml b/extensions/terraform/Cargo.toml
new file mode 100644
index 0000000000..f957a435ae
--- /dev/null
+++ b/extensions/terraform/Cargo.toml
@@ -0,0 +1,16 @@
+[package]
+name = "zed_terraform"
+version = "0.0.1"
+edition = "2021"
+publish = false
+license = "Apache-2.0"
+
+[lints]
+workspace = true
+
+[lib]
+path = "src/terraform.rs"
+crate-type = ["cdylib"]
+
+[dependencies]
+zed_extension_api = "0.0.6"
diff --git a/extensions/terraform/LICENSE-APACHE b/extensions/terraform/LICENSE-APACHE
new file mode 120000
index 0000000000..1cd601d0a3
--- /dev/null
+++ b/extensions/terraform/LICENSE-APACHE
@@ -0,0 +1 @@
+../../LICENSE-APACHE
\ No newline at end of file
diff --git a/extensions/terraform/extension.toml b/extensions/terraform/extension.toml
new file mode 100644
index 0000000000..a14180c41e
--- /dev/null
+++ b/extensions/terraform/extension.toml
@@ -0,0 +1,16 @@
+id = "terraform"
+name = "Terraform"
+description = "Terraform support."
+version = "0.0.1"
+schema_version = 1
+authors = ["Caius Durling <dev@caius.name>", "Daniel Banck <dbanck@users.noreply.github.com>"]
+repository = "https://github.com/zed-industries/zed"
+
+[language_servers.terraform-ls]
+name = "Terraform Language Server"
+languages = ["Terraform", "Terraform Vars"]
+language_ids = { Terraform = "terraform", "Terraform Vars" = "terraform-vars" }
+
+[grammars.hcl]
+repository = "https://github.com/MichaHoffmann/tree-sitter-hcl"
+commit = "e936d3fef8bac884661472dce71ad82284761eb1"
diff --git a/crates/languages/src/hcl/config.toml b/extensions/terraform/languages/hcl/config.toml
similarity index 100%
rename from crates/languages/src/hcl/config.toml
rename to extensions/terraform/languages/hcl/config.toml
diff --git a/crates/languages/src/hcl/highlights.scm b/extensions/terraform/languages/hcl/highlights.scm
similarity index 100%
rename from crates/languages/src/hcl/highlights.scm
rename to extensions/terraform/languages/hcl/highlights.scm
diff --git a/crates/languages/src/hcl/indents.scm b/extensions/terraform/languages/hcl/indents.scm
similarity index 100%
rename from crates/languages/src/hcl/indents.scm
rename to extensions/terraform/languages/hcl/indents.scm
diff --git a/crates/languages/src/hcl/injections.scm b/extensions/terraform/languages/hcl/injections.scm
similarity index 100%
rename from crates/languages/src/hcl/injections.scm
rename to extensions/terraform/languages/hcl/injections.scm
diff --git a/crates/languages/src/terraform-vars/config.toml b/extensions/terraform/languages/terraform-vars/config.toml
similarity index 100%
rename from crates/languages/src/terraform-vars/config.toml
rename to extensions/terraform/languages/terraform-vars/config.toml
diff --git a/crates/languages/src/terraform-vars/highlights.scm b/extensions/terraform/languages/terraform-vars/highlights.scm
similarity index 100%
rename from crates/languages/src/terraform-vars/highlights.scm
rename to extensions/terraform/languages/terraform-vars/highlights.scm
diff --git a/crates/languages/src/terraform-vars/indents.scm b/extensions/terraform/languages/terraform-vars/indents.scm
similarity index 100%
rename from crates/languages/src/terraform-vars/indents.scm
rename to extensions/terraform/languages/terraform-vars/indents.scm
diff --git a/crates/languages/src/terraform-vars/injections.scm b/extensions/terraform/languages/terraform-vars/injections.scm
similarity index 100%
rename from crates/languages/src/terraform-vars/injections.scm
rename to extensions/terraform/languages/terraform-vars/injections.scm
diff --git a/crates/languages/src/terraform/config.toml b/extensions/terraform/languages/terraform/config.toml
similarity index 100%
rename from crates/languages/src/terraform/config.toml
rename to extensions/terraform/languages/terraform/config.toml
diff --git a/crates/languages/src/terraform/highlights.scm b/extensions/terraform/languages/terraform/highlights.scm
similarity index 100%
rename from crates/languages/src/terraform/highlights.scm
rename to extensions/terraform/languages/terraform/highlights.scm
diff --git a/crates/languages/src/terraform/indents.scm b/extensions/terraform/languages/terraform/indents.scm
similarity index 100%
rename from crates/languages/src/terraform/indents.scm
rename to extensions/terraform/languages/terraform/indents.scm
diff --git a/crates/languages/src/terraform/injections.scm b/extensions/terraform/languages/terraform/injections.scm
similarity index 100%
rename from crates/languages/src/terraform/injections.scm
rename to extensions/terraform/languages/terraform/injections.scm
diff --git a/extensions/terraform/src/terraform.rs b/extensions/terraform/src/terraform.rs
new file mode 100644
index 0000000000..8dfabce23e
--- /dev/null
+++ b/extensions/terraform/src/terraform.rs
@@ -0,0 +1,101 @@
+use std::fs;
+use zed::LanguageServerId;
+use zed_extension_api::{self as zed, Result};
+
+struct TerraformExtension {
+    cached_binary_path: Option<String>,
+}
+
+impl TerraformExtension {
+    fn language_server_binary_path(
+        &mut self,
+        language_server_id: &LanguageServerId,
+        worktree: &zed::Worktree,
+    ) -> Result<String> {
+        if let Some(path) = &self.cached_binary_path {
+            if fs::metadata(path).map_or(false, |stat| stat.is_file()) {
+                return Ok(path.clone());
+            }
+        }
+
+        if let Some(path) = worktree.which("terraform-ls") {
+            self.cached_binary_path = Some(path.clone());
+            return Ok(path);
+        }
+
+        zed::set_language_server_installation_status(
+            &language_server_id,
+            &zed::LanguageServerInstallationStatus::CheckingForUpdate,
+        );
+        let release = zed::latest_github_release(
+            "hashicorp/terraform-ls",
+            zed::GithubReleaseOptions {
+                require_assets: false,
+                pre_release: false,
+            },
+        )?;
+
+        let (platform, arch) = zed::current_platform();
+        let download_url = format!(
+            "https://releases.hashicorp.com/terraform-ls/{version}/terraform-ls_{version}_{os}_{arch}.zip",
+            version = release.version.strip_prefix('v').unwrap_or(&release.version),
+            os = match platform {
+                zed::Os::Mac => "darwin",
+                zed::Os::Linux => "linux",
+                zed::Os::Windows => "windows",
+            },
+            arch = match arch {
+                zed::Architecture::Aarch64 => "arm64",
+                zed::Architecture::X86 => "386",
+                zed::Architecture::X8664 => "amd64",
+            },
+        );
+
+        let version_dir = format!("terraform-ls-{}", release.version);
+        let binary_path = format!("{version_dir}/terraform-ls");
+
+        if !fs::metadata(&binary_path).map_or(false, |stat| stat.is_file()) {
+            zed::set_language_server_installation_status(
+                &language_server_id,
+                &zed::LanguageServerInstallationStatus::Downloading,
+            );
+
+            zed::download_file(&download_url, &version_dir, zed::DownloadedFileType::Zip)
+                .map_err(|e| format!("failed to download file: {e}"))?;
+
+            let entries =
+                fs::read_dir(".").map_err(|e| format!("failed to list working directory {e}"))?;
+            for entry in entries {
+                let entry = entry.map_err(|e| format!("failed to load directory entry {e}"))?;
+                if entry.file_name().to_str() != Some(&version_dir) {
+                    fs::remove_dir_all(&entry.path()).ok();
+                }
+            }
+        }
+
+        self.cached_binary_path = Some(binary_path.clone());
+        Ok(binary_path)
+    }
+}
+
+impl zed::Extension for TerraformExtension {
+    fn new() -> Self {
+        Self {
+            cached_binary_path: None,
+        }
+    }
+
+    fn language_server_command(
+        &mut self,
+        language_server_id: &LanguageServerId,
+        worktree: &zed::Worktree,
+    ) -> Result<zed::Command> {
+        Ok(zed::Command {
+            command: self.language_server_binary_path(language_server_id, worktree)?,
+            args: vec!["serve".to_string()],
+            env: Default::default(),
+        })
+    }
+}
+
+zed::register_extension!(TerraformExtension);
diff --git a/script/licenses/zed-licenses.toml b/script/licenses/zed-licenses.toml
index c4557a8c20..3459fee3e5 100644
--- a/script/licenses/zed-licenses.toml
+++ b/script/licenses/zed-licenses.toml
@@ -36,9 +36,3 @@ license = "BSD-3-Clause"
 [[fuchsia-cprng.clarify.files]]
 path = 'LICENSE'
 checksum = '03b114f53e6587a398931762ee11e2395bfdba252a329940e2c8c9e81813845b'
-
-[tree-sitter-hcl.clarify]
-license = "Apache-2.0"
-[[tree-sitter-hcl.clarify.files]]
-path = 'LICENSE'
-checksum = 'c71d239df91726fc519c6eb72d318ec65820627232b2f796219e87dcf35d0ab4'