diff --git a/crates/project/src/lsp_store.rs b/crates/project/src/lsp_store.rs
index 72f04f8c3814834d86a7a12877b67c9178410954..9410697d03dd10ca0ce4f9e459a20c1a8975f370 100644
--- a/crates/project/src/lsp_store.rs
+++ b/crates/project/src/lsp_store.rs
@@ -36,7 +36,7 @@ use crate::{
         ManifestTree,
     },
     prettier_store::{self, PrettierStore, PrettierStoreEvent},
-    project_settings::{LspSettings, ProjectSettings},
+    project_settings::{BinarySettings, LspSettings, ProjectSettings},
     toolchain_store::{LocalToolchainStore, ToolchainStoreEvent},
     trusted_worktrees::{PathTrust, TrustedWorktrees, TrustedWorktreesEvent},
     worktree_store::{WorktreeStore, WorktreeStoreEvent},
@@ -226,12 +226,22 @@ struct UnifiedLanguageServer {
     project_roots: HashSet<Arc<RelPath>>,
 }
 
+/// Settings that affect language server identity.
+///
+/// Dynamic settings (`LspSettings::settings`) are excluded because they can be
+/// updated via `workspace/didChangeConfiguration` without restarting the server.
+#[derive(Clone, Debug, Hash, PartialEq, Eq)]
+struct LanguageServerSeedSettings {
+    binary: Option<BinarySettings>,
+    initialization_options: Option<serde_json::Value>,
+}
+
 #[derive(Clone, Debug, Hash, PartialEq, Eq)]
 struct LanguageServerSeed {
     worktree_id: WorktreeId,
     name: LanguageServerName,
     toolchain: Option<Toolchain>,
-    settings: Arc<LspSettings>,
+    settings: LanguageServerSeedSettings,
 }
 
 #[derive(Debug)]
@@ -332,7 +342,10 @@ impl LocalLspStore {
         let key = LanguageServerSeed {
             worktree_id: worktree_handle.read(cx).id(),
             name: disposition.server_name.clone(),
-            settings: disposition.settings.clone(),
+            settings: LanguageServerSeedSettings {
+                binary: disposition.settings.binary.clone(),
+                initialization_options: disposition.settings.initialization_options.clone(),
+            },
             toolchain: disposition.toolchain.clone(),
         };
         if let Some(state) = self.language_server_ids.get_mut(&key) {
@@ -5052,7 +5065,13 @@ impl LspStore {
                             let key = LanguageServerSeed {
                                 worktree_id,
                                 name: disposition.server_name.clone(),
-                                settings: disposition.settings.clone(),
+                                settings: LanguageServerSeedSettings {
+                                    binary: disposition.settings.binary.clone(),
+                                    initialization_options: disposition
+                                        .settings
+                                        .initialization_options
+                                        .clone(),
+                                },
                                 toolchain: local.toolchain_store.read(cx).active_toolchain(
                                     path.worktree_id,
                                     &path.path,
diff --git a/crates/project/src/manifest_tree/server_tree.rs b/crates/project/src/manifest_tree/server_tree.rs
index b6828fdb281d51600096bbcad411f94a91c69e54..4756f541d01d4ff33ca5c1a185164ae73e5d918e 100644
--- a/crates/project/src/manifest_tree/server_tree.rs
+++ b/crates/project/src/manifest_tree/server_tree.rs
@@ -421,11 +421,13 @@ impl ServerTreeRebase {
                     .and_then(|worktree_nodes| worktree_nodes.roots.get(&disposition.path.path))
                     .and_then(|roots| roots.get(&disposition.server_name))
                     .filter(|(old_node, _)| {
-                        (&disposition.toolchain, &disposition.settings)
-                            == (
-                                &old_node.disposition.toolchain,
-                                &old_node.disposition.settings,
-                            )
+                        // Only compare settings that require server restart.
+                        // Dynamic settings (settings.settings) can be updated via DidChangeConfiguration
+                        // without restarting the server.
+                        disposition.toolchain == old_node.disposition.toolchain
+                            && disposition.settings.binary == old_node.disposition.settings.binary
+                            && disposition.settings.initialization_options
+                                == old_node.disposition.settings.initialization_options
                     })
                 else {
                     return Some(node);
diff --git a/crates/project/src/project_settings.rs b/crates/project/src/project_settings.rs
index af730c6e86290dc6bf7a6dd6a2c430e4c95224c7..4e0b176b7d5da949422fb130f1e3317c12dddfd0 100644
--- a/crates/project/src/project_settings.rs
+++ b/crates/project/src/project_settings.rs
@@ -17,6 +17,7 @@ use rpc::{
 };
 use schemars::JsonSchema;
 use serde::{Deserialize, Serialize};
+pub use settings::BinarySettings;
 pub use settings::DirenvSettings;
 pub use settings::LspSettings;
 use settings::{