Infinite loop occurred in build_nested_folders.

[andreyfedoseev]

Type: Bug

Behaviour

Pytest test discovery fails with error (see the logs below).

Steps to reproduce:

My project structure is:

/my-project
  /backend
    /.venv/
    /tests/
  /frontend/...
  ...

I have the following project-level settings:

  "python.testing.cwd": "${workspaceFolder}/backend",
  "python.testing.pytestArgs": [
    "tests",
    "-vvv"
  ],

This setup worked for my for at least 6 months. It stopped working a few days ago, so it looks like a regression.

I found that some related code was changed recently in #25974

Diagnostic data

Output for Python in the Output panel (View→Output, change the drop-down the upper-right of the Output panel to Python)

  File "/home/user/.vscode/extensions/ms-python.python-2026.4.0-linux-x64/python_files/vscode_pytest/__init__.py", line 817, in build_nested_folders
    raise ValueError(
    ...<4 lines>...
    )
ValueError: ('[vscode-pytest]: Infinite loop occurred in build_nested_folders. iterator_path: ', PosixPath('/'), 'session_node_path: ', PosixPath('/home/user/my-project/backend'))

Extension version: 2026.4.0
VS Code version: Code 1.119.0 (8b640eef5a6c6089c029249d48efa5c99adf7d51, 2026-05-05T11:23:50-07:00)
OS version: Linux x64 6.18.33
Modes:

• Python version (& distribution if applicable, e.g. Anaconda): 3.14.3
• Type of virtual environment used (e.g. conda, venv, virtualenv, etc.): Venv
• Value of the python.languageServer setting: Default

User Settings

languageServer: "Pylance"

testing
• cwd: "${workspaceFolder}/backend"
• pytestArgs: ["tests", "-vvv"]
• pytestEnabled: true

Installed Extensions

Extension Name	Extension Id	Version
Bookmarks	ale	14.1.1
code-spell-checker	str	4.5.6
code-spell-checker-russian	str	2.2.4
copilot-chat	Git	0.47.0
cpptools	ms-	1.32.2
debugpy	ms-	2026.6.0
direnv	mkh	0.17.0
even-better-toml	tam	0.21.2
explorer	vit	1.50.4
go	gol	0.52.2
hexeditor	ms-	1.11.1
js-debug	ms-	1.117.0
js-debug-companion	ms-	1.1.3
jsts-chat-features	Typ	0.0.2
material-icon-theme	PKi	5.34.0
nix-env-selector	arr	1.3.1
nix-ide	jno	0.5.9
python	ms-	2026.4.0
remote-containers	ms-	0.459.0
remote-explorer	ms-	0.5.0
remote-repositories	ms-	0.42.0
remote-ssh	ms-	0.124.0
remote-ssh-edit	ms-	0.87.0
remotehub	Git	0.64.0
rest-client	hum	0.25.1
rewrap-revived	dnu	1.16.3
ruff	cha	2026.46.0
rust-analyzer	rus	0.3.2921
sqlite-viewer	qwt	25.12.2
volar	Vue	3.3.3
vscode-containers	ms-	2.4.5
vscode-edit-csv	jan	0.11.9
vscode-eslint	dba	3.0.24
vscode-icons	vsc	12.18.0
vscode-js-profile-table	ms-	1.0.10
vscode-just-syntax	nef	0.10.1
vscode-markdownlint	Dav	0.61.2
vscode-pull-request-github	Git	0.144.0
vscode-pylance	ms-	2026.2.1
vscode-python-envs	ms-	1.30.0
vscode-tailwindcss	bra	0.14.29