diff --git a/patches/disable-show-local.diff b/patches/disable-show-local.diff
new file mode 100644
index 000000000000..84b2a318dc3f
--- /dev/null
+++ b/patches/disable-show-local.diff
@@ -0,0 +1,137 @@
+Index: code-server/lib/vscode/src/vs/server/node/serverEnvironmentService.ts
+===================================================================
+--- code-server.orig/lib/vscode/src/vs/server/node/serverEnvironmentService.ts
++++ code-server/lib/vscode/src/vs/server/node/serverEnvironmentService.ts
+@@ -17,6 +17,7 @@ export const serverOptions: OptionDescri
+ 	'disable-update-check': { type: 'boolean' },
+ 	'auth': { type: 'string' },
+ 	'disable-file-downloads': { type: 'boolean' },
++	'disable-show-local': { type: 'boolean' },
+ 	'locale': { type: 'string' },
+ 	'disable-getting-started-override': { type: 'boolean' },
+ 
+@@ -101,6 +102,7 @@ export interface ServerParsedArgs {
+ 	'disable-update-check'?: boolean;
+ 	'auth'?: string
+ 	'disable-file-downloads'?: boolean;
++	'disable-show-local'?: boolean;
+ 	'locale'?: string
+ 	'disable-getting-started-override'?: boolean,
+ 
+Index: code-server/lib/vscode/src/vs/server/node/webClientServer.ts
+===================================================================
+--- code-server.orig/lib/vscode/src/vs/server/node/webClientServer.ts
++++ code-server/lib/vscode/src/vs/server/node/webClientServer.ts
+@@ -335,6 +335,7 @@ export class WebClientServer {
+ 			webviewEndpoint: vscodeBase + this._staticRoute + '/out/vs/workbench/contrib/webview/browser/pre',
+ 			userDataPath: this._environmentService.userDataPath,
+ 			isEnabledFileDownloads: !this._environmentService.args['disable-file-downloads'],
++			isEnabledShowLocal: !this._environmentService.args['disable-show-local'],
+ 			isEnabledCoderGettingStarted: !this._environmentService.args['disable-getting-started-override'],
+ 			_wrapWebWorkerExtHostInIframe,
+ 			developmentOptions: { enableSmokeTestDriver: this._environmentService.args['enable-smoke-test-driver'] ? true : undefined, logLevel: this._logService.getLevel() },
+Index: code-server/lib/vscode/src/vs/workbench/browser/web.api.ts
+===================================================================
+--- code-server.orig/lib/vscode/src/vs/workbench/browser/web.api.ts
++++ code-server/lib/vscode/src/vs/workbench/browser/web.api.ts
+@@ -287,6 +287,11 @@ export interface IWorkbenchConstructionO
+ 	readonly isEnabledFileDownloads?: boolean
+ 
+ 	/**
++	 * Whether the "Show local" button is enabled.
++	 */
++	readonly isEnabledShowLocal?: boolean
++
++	/**
+ 	 * Whether to use Coder's custom Getting Started text.
+ 	 */
+ 	readonly isEnabledCoderGettingStarted?: boolean
+Index: code-server/lib/vscode/src/vs/workbench/services/environment/browser/environmentService.ts
+===================================================================
+--- code-server.orig/lib/vscode/src/vs/workbench/services/environment/browser/environmentService.ts
++++ code-server/lib/vscode/src/vs/workbench/services/environment/browser/environmentService.ts
+@@ -39,6 +39,11 @@ export interface IBrowserWorkbenchEnviro
+ 	readonly isEnabledFileDownloads?: boolean;
+ 
+ 	/**
++	 * Enable Show Local button on File Dialogs.
++	 */
++	readonly isEnabledShowLocal?: boolean;
++
++	/**
+ 	 * Enable Coder's custom getting started text.
+ 	 */
+ 	readonly isEnabledCoderGettingStarted?: boolean;
+@@ -128,6 +133,13 @@ export class BrowserWorkbenchEnvironment
+ 		return this.options.isEnabledFileDownloads;
+ 	}
+ 
++	get isEnabledShowLocal(): boolean {
++		if (typeof this.options.isEnabledShowLocal === "undefined") {
++			throw new Error('isEnabledShowLocal was not provided to the browser');
++		}
++		return this.options.isEnabledShowLocal;
++	}
++
+ 	get isEnabledCoderGettingStarted(): boolean {
+ 		if (typeof this.options.isEnabledCoderGettingStarted === "undefined") {
+ 			throw new Error('isEnabledCoderGettingStarted was not provided to the browser');
+Index: code-server/lib/vscode/src/vs/workbench/services/dialogs/browser/simpleFileDialog.ts
+===================================================================
+--- code-server.orig/lib/vscode/src/vs/workbench/services/dialogs/browser/simpleFileDialog.ts
++++ code-server/lib/vscode/src/vs/workbench/services/dialogs/browser/simpleFileDialog.ts
+@@ -18,7 +18,7 @@ import { IModelService } from 'vs/editor
+ import { ILanguageService } from 'vs/editor/common/languages/language';
+ import { getIconClasses } from 'vs/editor/common/services/getIconClasses';
+ import { Schemas } from 'vs/base/common/network';
+-import { IWorkbenchEnvironmentService } from 'vs/workbench/services/environment/common/environmentService';
++import { IBrowserWorkbenchEnvironmentService } from 'vs/workbench/services/environment/browser/environmentService';
+ import { IRemoteAgentService } from 'vs/workbench/services/remote/common/remoteAgentService';
+ import { IContextKeyService, IContextKey, RawContextKey } from 'vs/platform/contextkey/common/contextkey';
+ import { equalsIgnoreCase, format, startsWithIgnoreCase } from 'vs/base/common/strings';
+@@ -142,7 +142,7 @@ export class SimpleFileDialog implements
+ 		@IFileDialogService private readonly fileDialogService: IFileDialogService,
+ 		@IModelService private readonly modelService: IModelService,
+ 		@ILanguageService private readonly languageService: ILanguageService,
+-		@IWorkbenchEnvironmentService protected readonly environmentService: IWorkbenchEnvironmentService,
++		@IBrowserWorkbenchEnvironmentService protected readonly environmentService: IBrowserWorkbenchEnvironmentService,
+ 		@IRemoteAgentService private readonly remoteAgentService: IRemoteAgentService,
+ 		@IPathService protected readonly pathService: IPathService,
+ 		@IKeybindingService private readonly keybindingService: IKeybindingService,
+@@ -286,20 +286,22 @@ export class SimpleFileDialog implements
+ 			this.filePickBox.autoFocusOnList = false;
+ 			this.filePickBox.ignoreFocusOut = true;
+ 			this.filePickBox.ok = true;
+-			if ((this.scheme !== Schemas.file) && this.options && this.options.availableFileSystems && (this.options.availableFileSystems.length > 1) && (this.options.availableFileSystems.indexOf(Schemas.file) > -1)) {
+-				this.filePickBox.customButton = true;
+-				this.filePickBox.customLabel = nls.localize('remoteFileDialog.local', 'Show Local');
+-				let action;
+-				if (isSave) {
+-					action = SaveLocalFileCommand;
+-				} else {
+-					action = this.allowFileSelection ? (this.allowFolderSelection ? OpenLocalFileFolderCommand : OpenLocalFileCommand) : OpenLocalFolderCommand;
+-				}
+-				const keybinding = this.keybindingService.lookupKeybinding(action.ID);
+-				if (keybinding) {
+-					const label = keybinding.getLabel();
+-					if (label) {
+-						this.filePickBox.customHover = format('{0} ({1})', action.LABEL, label);
++			if ((this.environmentService.isEnabledFileDownloads || !isSave) && this.environmentService.isEnabledShowLocal) {
++				if ((this.scheme !== Schemas.file) && this.options && this.options.availableFileSystems && (this.options.availableFileSystems.length > 1) && (this.options.availableFileSystems.indexOf(Schemas.file) > -1)) {
++					this.filePickBox.customButton = true;
++					this.filePickBox.customLabel = nls.localize('remoteFileDialog.local', 'Show Local');
++					let action;
++					if (isSave) {
++						action = SaveLocalFileCommand;
++					} else {
++						action = this.allowFileSelection ? (this.allowFolderSelection ? OpenLocalFileFolderCommand : OpenLocalFileCommand) : OpenLocalFolderCommand;
++					}
++					const keybinding = this.keybindingService.lookupKeybinding(action.ID);
++					if (keybinding) {
++						const label = keybinding.getLabel();
++						if (label) {
++							this.filePickBox.customHover = format('{0} ({1})', action.LABEL, label);
++						}
+ 					}
+ 				}
+ 			}
diff --git a/patches/series b/patches/series
index 898d2974af05..df752110e519 100644
--- a/patches/series
+++ b/patches/series
@@ -19,3 +19,4 @@ display-language.diff
 cli-window-open.diff
 getting-started.diff
 safari.diff
+disable-show-local.diff
diff --git a/src/node/cli.ts b/src/node/cli.ts
index ff80c88729c0..f448eae5e674 100644
--- a/src/node/cli.ts
+++ b/src/node/cli.ts
@@ -48,6 +48,7 @@ export interface UserProvidedCodeArgs {
   "github-auth"?: string
   "disable-update-check"?: boolean
   "disable-file-downloads"?: boolean
+  "disable-show-local"?: boolean
   "disable-workspace-trust"?: boolean
   "disable-getting-started-override"?: boolean
   "disable-proxy"?: boolean
@@ -170,6 +171,11 @@ export const options: Options<Required<UserProvidedArgs>> = {
     description:
       "Disable file downloads from Code. This can also be set with CS_DISABLE_FILE_DOWNLOADS set to 'true' or '1'.",
   },
+  "disable-show-local": {
+    type: "boolean",
+    description:
+      "Disable 'Show Local' button in Save and Open dialogs.",
+  },
   "disable-workspace-trust": {
     type: "boolean",
     description: "Disable Workspace Trust feature. This switch only affects the current session.",
diff --git a/test/e2e/downloads.test.ts b/test/e2e/downloads.test.ts
index f155f2387f3b..bb533410da46 100644
--- a/test/e2e/downloads.test.ts
+++ b/test/e2e/downloads.test.ts
@@ -23,6 +23,26 @@ describe("Downloads (enabled)", ["--disable-workspace-trust"], {}, async () => {
 
     expect(await codeServerPage.page.isVisible("text=Download...")).toBe(true)
   })
+  
+  test("should see the 'Show Local' button on 'Save As'", async ({ codeServerPage }) => {
+    // Setup
+    const workspaceDir = await codeServerPage.workspaceDir
+    const fileName = "unique-file-save-as.txt"
+    const tmpFilePath = path.join(workspaceDir, fileName)
+    await fs.writeFile(tmpFilePath, "Hello World")
+
+    // Action
+    await codeServerPage.page.waitForSelector(`text=${fileName}`)
+
+    await codeServerPage.openFile(fileName)
+    await codeServerPage.page.click(".tab")
+    await codeServerPage.navigateMenus(["File", "Auto Save"])
+    await codeServerPage.page.keyboard.type("Making some edits.")
+    await codeServerPage.navigateMenus(["File", "Save As..."])
+    await codeServerPage.page.waitForSelector(".quick-input-widget")
+    expect(await codeServerPage.page.isVisible("text=Show Local")).toBe(true)
+  })
+  
 })
 
 describe("Downloads (disabled)", ["--disable-workspace-trust", "--disable-file-downloads"], {}, async () => {
@@ -35,7 +55,7 @@ describe("Downloads (disabled)", ["--disable-workspace-trust", "--disable-file-d
     // Setup
     const workspaceDir = await codeServerPage.workspaceDir
     const tmpFilePath = path.join(workspaceDir, "unique-file.txt")
-    await fs.writeFile(tmpFilePath, "hello world")
+    await fs.writeFile(tmpFilePath, "Hello World")
 
     // Action
     const fileInExplorer = await codeServerPage.page.waitForSelector("text=unique-file.txt")
@@ -45,4 +65,20 @@ describe("Downloads (disabled)", ["--disable-workspace-trust", "--disable-file-d
 
     expect(await codeServerPage.page.isVisible("text=Download...")).toBe(false)
   })
+  
+  test("should not see the 'Show Local' button on 'Save As'", async ({ codeServerPage }) => {
+    // Setup
+    const workspaceDir = await codeServerPage.workspaceDir
+    const fileName = "unique-file-save-as.txt"
+    const tmpFilePath = path.join(workspaceDir, fileName)
+    await fs.writeFile(tmpFilePath, "Hello World")
+
+    // Action
+    await codeServerPage.page.waitForSelector(`text=${fileName}`)
+    await codeServerPage.openFile(fileName)
+    await codeServerPage.page.click(".tab")
+    await codeServerPage.navigateMenus(["File", "Save As..."])
+    expect(await codeServerPage.page.isVisible("text=Show Local")).toBe(false)
+  })
+
 })
diff --git a/test/e2e/models/CodeServer.ts b/test/e2e/models/CodeServer.ts
index 27ce15459f16..76accbc4c24d 100644
--- a/test/e2e/models/CodeServer.ts
+++ b/test/e2e/models/CodeServer.ts
@@ -401,7 +401,7 @@ export class CodeServerPage {
    * Open a file by using menus.
    */
   async openFile(file: string) {
-    await this.navigateMenus(["File", "Open File"])
+    await this.navigateMenus(["File", "Open File..."])
     await this.navigateQuickInput([path.basename(file)])
     await this.waitForTab(file)
   }
@@ -488,19 +488,19 @@ export class CodeServerPage {
         // splitting them into two steps each we can cancel before running the
         // action.
         steps.push({
-          fn: () => this.page.hover(`${selector} :text("${item}")`, { trial: true }),
+          fn: () => this.page.hover(`${selector} :text-is("${item}")`, { trial: true }),
           name: `${item}:hover:trial`,
         })
         steps.push({
-          fn: () => this.page.hover(`${selector} :text("${item}")`, { force: true }),
+          fn: () => this.page.hover(`${selector} :text-is("${item}")`, { force: true }),
           name: `${item}:hover:force`,
         })
         steps.push({
-          fn: () => this.page.click(`${selector} :text("${item}")`, { trial: true }),
+          fn: () => this.page.click(`${selector} :text-is("${item}")`, { trial: true }),
           name: `${item}:click:trial`,
         })
         steps.push({
-          fn: () => this.page.click(`${selector} :text("${item}")`, { force: true }),
+          fn: () => this.page.click(`${selector} :text-is("${item}")`, { force: true }),
           name: `${item}:click:force`,
         })
       }
diff --git a/test/e2e/show-local.test.ts b/test/e2e/show-local.test.ts
new file mode 100644
index 000000000000..9a2327eb2b65
--- /dev/null
+++ b/test/e2e/show-local.test.ts
@@ -0,0 +1,99 @@
+import { promises as fs } from "fs"
+import * as path from "path"
+import { clean } from "../utils/helpers"
+import { describe, test, expect } from "./baseFixture"
+
+describe("Show Local (enabled)", ["--disable-workspace-trust"], {}, () => {
+  const testName = "show-local-enabled"
+  test.beforeAll(async () => {
+    await clean(testName)
+  })
+
+  test("should see the 'Show Local' button on Open File", async ({ codeServerPage }) => {
+    // Action
+    await codeServerPage.navigateMenus(["File", "Open File..."])
+    await codeServerPage.page.waitForSelector(".quick-input-widget")
+    expect(await codeServerPage.page.isVisible("text=Show Local")).toBe(true)
+  })
+  
+  test("should see the 'Show Local' button on Save as File", async ({ codeServerPage }) => {
+    // Setup
+    const workspaceDir = await codeServerPage.workspaceDir
+    const fileName = "unique-file-save-as.txt"
+    const tmpFilePath = path.join(workspaceDir, fileName)
+    await fs.writeFile(tmpFilePath, "Hello World")
+
+    // Action
+    await codeServerPage.page.waitForSelector(`text=${fileName}`)
+
+    await codeServerPage.openFile(fileName)
+    await codeServerPage.page.click(".tab")
+    await codeServerPage.navigateMenus(["File", "Auto Save"])
+    await codeServerPage.page.keyboard.type("Edit edit edit.")
+    await codeServerPage.navigateMenus(["File", "Save As..."])
+    await codeServerPage.page.waitForSelector(".quick-input-widget")
+    expect(await codeServerPage.page.isVisible("text=Show Local")).toBe(true)
+  })
+  
+  test("should see the 'Show Local' button on Save File", async ({ codeServerPage }) => {
+
+    // Action
+    await codeServerPage.navigateMenus(["File", "New Text File"])
+    await codeServerPage.waitForTab("Untitled-1")
+    await codeServerPage.navigateMenus(["File", "Save"])
+    await codeServerPage.page.waitForSelector(".quick-input-widget")
+    expect(await codeServerPage.page.isVisible("text=Show Local")).toBe(true)
+  })
+  
+  test("should see the 'Show Local' button on Save Workspace As", async ({ codeServerPage }) => {
+    // Action
+    await codeServerPage.navigateMenus(["File", "Save Workspace As..."])
+    await codeServerPage.page.waitForSelector(".quick-input-widget")
+    expect(await codeServerPage.page.isVisible("text=Show Local")).toBe(true)
+  })
+})
+
+describe("Show Local (disabled)", ["--disable-workspace-trust", "--disable-show-local"], {}, () => {
+  const testName = "show-local-disabled"
+  test.beforeAll(async () => {
+    await clean(testName)
+  })
+
+  test("should not see the 'Show Local' button on Open File", async ({ codeServerPage }) => {
+    // Action
+    await codeServerPage.navigateMenus(["File", "Open File..."])
+    await codeServerPage.page.waitForSelector(".quick-input-widget")
+    expect(await codeServerPage.page.isVisible("text=Show Local")).toBe(false)
+  })
+  
+  test("should not see the 'Show Local' button on Save as File'", async ({ codeServerPage }) => {
+    // Setup
+    const workspaceDir = await codeServerPage.workspaceDir
+    const fileName = "unique-file-save-as.txt"
+    const tmpFilePath = path.join(workspaceDir, fileName)
+    await fs.writeFile(tmpFilePath, "Hello World")
+
+    // Action
+    await codeServerPage.page.waitForSelector(`text=${fileName}`)
+    await codeServerPage.openFile(fileName)
+    await codeServerPage.page.click(".tab")
+    await codeServerPage.navigateMenus(["File", "Save As..."])
+    expect(await codeServerPage.page.isVisible("text=Show Local")).toBe(false)
+  })
+  
+  test("should not see the 'Show Local' button on Save File", async ({ codeServerPage }) => {
+    // Action
+    await codeServerPage.navigateMenus(["File", "New Text File"])
+    await codeServerPage.waitForTab("Untitled-1")
+    await codeServerPage.navigateMenus(["File", "Save"])
+    await codeServerPage.page.waitForSelector(".quick-input-widget")
+    expect(await codeServerPage.page.isVisible("text=Show Local")).toBe(false)
+  })
+  
+  test("should not see the 'Show Local' button on Save Workspace As", async ({ codeServerPage }) => {
+    // Action
+    await codeServerPage.navigateMenus(["File", "Save Workspace As..."])
+    await codeServerPage.page.waitForSelector(".quick-input-widget")
+    expect(await codeServerPage.page.isVisible("text=Show Local")).toBe(false)
+  })
+})
\ No newline at end of file