diff --git a/python/tests/test_server.py b/python/tests/test_server.py
index ba24166..632e30a 100644
--- a/python/tests/test_server.py
+++ b/python/tests/test_server.py
@@ -201,6 +201,24 @@ def test_multi_workspace_settings_include_defaults(self, mock_uris):
             assert "args" in ws_settings
             assert "importStrategy" in ws_settings
 
+    @patch("vscode_common_python_lsp.server.uris")
+    def test_workspace_without_filesystem_path_is_skipped(self, mock_uris):
+        mock_uris.to_fs_path.side_effect = lambda u: (
+            "/local-workspace" if u == "file:///local-workspace" else None
+        )
+        ts = _make_server()
+        ts.update_workspace_settings(
+            [
+                {"workspace": "file:///local-workspace", "args": []},
+                {"workspace": "pico:", "args": []},
+            ]
+        )
+
+        assert len(ts.workspace_settings) == 1
+        settings = next(iter(ts.workspace_settings.values()))
+        assert settings["workspace"] == "file:///local-workspace"
+        assert settings["workspaceFS"]
+
 
 class TestGetSettingsByPath:
     def test_matches_closest_workspace(self):
diff --git a/python/vscode_common_python_lsp/server.py b/python/vscode_common_python_lsp/server.py
index c1eecb1..1b87762 100644
--- a/python/vscode_common_python_lsp/server.py
+++ b/python/vscode_common_python_lsp/server.py
@@ -149,8 +149,14 @@ def update_workspace_settings(self, settings: list[dict[str, Any]] | None) -> No
             return
 
         for setting in settings:
+            workspace_path = uris.to_fs_path(setting["workspace"])
+            # Virtual workspace roots, such as "pico:", have no local
+            # filesystem path, so they cannot be registered here.
+            if workspace_path is None:
+                continue
+
             key = normalize_path(
-                uris.to_fs_path(setting["workspace"]),
+                workspace_path,
                 resolve_symlinks=self.config.resolve_symlinks,
             )
             self.workspace_settings[key] = {