diff --git a/cli/lsp/config.rs b/cli/lsp/config.rs
index afc976b8fe..2aaba928ca 100644
--- a/cli/lsp/config.rs
+++ b/cli/lsp/config.rs
@@ -853,7 +853,8 @@ impl Settings {
       Some(false)
     } else if let Some(enable_paths) = &enable_paths {
       for enable_path in enable_paths {
-        if path.starts_with(enable_path) {
+        // Also enable if the checked path is a dir containing an enabled path.
+        if path.starts_with(enable_path) || enable_path.starts_with(&path) {
           return Some(true);
         }
       }
diff --git a/cli/lsp/language_server.rs b/cli/lsp/language_server.rs
index 958c3a4606..6861d9dd63 100644
--- a/cli/lsp/language_server.rs
+++ b/cli/lsp/language_server.rs
@@ -4005,12 +4005,14 @@ mod tests {
     temp_dir.write("root1/target/main.ts", ""); // no, because there is a Cargo.toml in the root directory
 
     temp_dir.create_dir_all("root2/folder");
+    temp_dir.create_dir_all("root2/folder2/inner_folder");
     temp_dir.create_dir_all("root2/sub_folder");
     temp_dir.create_dir_all("root2/root2.1");
     temp_dir.write("root2/file1.ts", ""); // yes, enabled
     temp_dir.write("root2/file2.ts", ""); // no, not enabled
     temp_dir.write("root2/folder/main.ts", ""); // yes, enabled
     temp_dir.write("root2/folder/other.ts", ""); // no, disabled
+    temp_dir.write("root2/folder2/inner_folder/main.ts", ""); // yes, enabled (regression test for https://github.com/denoland/vscode_deno/issues/1239)
     temp_dir.write("root2/sub_folder/a.js", ""); // no, not enabled
     temp_dir.write("root2/sub_folder/b.ts", ""); // no, not enabled
     temp_dir.write("root2/sub_folder/c.js", ""); // no, not enabled
@@ -4051,6 +4053,7 @@ mod tests {
             enable_paths: Some(vec![
               "file1.ts".to_string(),
               "folder".to_string(),
+              "folder2/inner_folder".to_string(),
             ]),
             disable_paths: vec!["folder/other.ts".to_string()],
             ..Default::default()
@@ -4101,6 +4104,10 @@ mod tests {
         temp_dir.url().join("root1/folder/mod.ts").unwrap(),
         temp_dir.url().join("root2/folder/main.ts").unwrap(),
         temp_dir.url().join("root2/root2.1/main.ts").unwrap(),
+        temp_dir
+          .url()
+          .join("root2/folder2/inner_folder/main.ts")
+          .unwrap(),
       ])
     );
   }