diff --git a/.changeset/heavy-windows-mate.md b/.changeset/heavy-windows-mate.md
new file mode 100644
index 00000000000..e0e9d0fe490
--- /dev/null
+++ b/.changeset/heavy-windows-mate.md
@@ -0,0 +1,5 @@
+---
+'create-qwik': patch
+---
+
+FIX: fix up vscode settings merge. Use JSON5 to parse settings.json to prevent parsing errors.
diff --git a/packages/qwik/package.json b/packages/qwik/package.json
index fa66a5abbf3..5e986adea48 100644
--- a/packages/qwik/package.json
+++ b/packages/qwik/package.json
@@ -30,6 +30,7 @@
   },
   "devDependencies": {
     "@builder.io/qwik": "workspace:^",
+    "@croct/json5-parser": "0.1.1",
     "domino": "2.1.6",
     "ignore": "5.3.1",
     "image-size": "1.1.1",
diff --git a/packages/qwik/src/cli/add/update-files.ts b/packages/qwik/src/cli/add/update-files.ts
index 875c8dce0d0..fea08c55ed0 100644
--- a/packages/qwik/src/cli/add/update-files.ts
+++ b/packages/qwik/src/cli/add/update-files.ts
@@ -1,3 +1,4 @@
+import { JsonParser, JsonObjectNode } from '@croct/json5-parser';
 import fs from 'node:fs';
 import { extname, join } from 'node:path';
 import type { FsUpdates, UpdateAppOptions } from '../types';
@@ -28,8 +29,8 @@ export async function mergeIntegrationDir(
 
         if (destName === 'package.json') {
           await mergePackageJsons(fileUpdates, srcChildPath, destRootPath);
-        } else if (destName === 'settings.json') {
-          await mergeJsons(fileUpdates, srcChildPath, finalDestPath);
+        } else if (destDir.endsWith('.vscode') && destName === 'settings.json') {
+          await mergeVSCodeSettings(fileUpdates, srcChildPath, finalDestPath);
         } else if (destName === 'README.md') {
           await mergeReadmes(fileUpdates, srcChildPath, finalDestPath);
         } else if (
@@ -110,16 +111,19 @@ async function mergePackageJsons(fileUpdates: FsUpdates, srcPath: string, destPa
   }
 }
 
-async function mergeJsons(fileUpdates: FsUpdates, srcPath: string, destPath: string) {
+async function mergeVSCodeSettings(fileUpdates: FsUpdates, srcPath: string, destPath: string) {
   const srcContent = await fs.promises.readFile(srcPath, 'utf-8');
   try {
-    const srcPkgJson = JSON.parse(srcContent);
-    const destPkgJson = JSON.parse(await fs.promises.readFile(destPath, 'utf-8'));
-    Object.assign(srcPkgJson, destPkgJson);
+    const srcPkgJson = JsonParser.parse(srcContent, JsonObjectNode);
+    const destPkgJson = JsonParser.parse(
+      await fs.promises.readFile(destPath, 'utf-8'),
+      JsonObjectNode
+    );
+    destPkgJson.update({ ...destPkgJson.toJSON(), ...srcPkgJson.toJSON() });
 
     fileUpdates.files.push({
       path: destPath,
-      content: JSON.stringify(srcPkgJson, null, 2) + '\n',
+      content: destPkgJson.toString() + '\n',
       type: 'modify',
     });
   } catch (e) {
diff --git a/packages/qwik/src/cli/add/update-files.unit.ts b/packages/qwik/src/cli/add/update-files.unit.ts
index 47b9b4c8f9b..a9124795d4c 100644
--- a/packages/qwik/src/cli/add/update-files.unit.ts
+++ b/packages/qwik/src/cli/add/update-files.unit.ts
@@ -1,3 +1,4 @@
+import { JsonObjectNode, JsonParser } from '@croct/json5-parser';
 import { fs } from 'memfs';
 import { join } from 'path';
 import { describe, expect, test, vi } from 'vitest';
@@ -39,6 +40,16 @@ function createFakeFiles(dir: string) {
   fs.writeFileSync(join(dir, 'fake.ts'), 'fake file');
   fs.writeFileSync(join(dir, 'package.json'), '{"name": "fake"}');
   fs.writeFileSync(join(dir, 'src', 'global.css'), 'p{color: red}');
+  fs.mkdirSync(join(dir, '.vscode'), { recursive: true });
+  const settings = JsonParser.parse<JsonObjectNode>(
+    `{
+          // Comment
+          "name": "John Doe",
+          "age": 42,
+      }`,
+    JsonObjectNode
+  );
+  fs.writeFileSync(join(dir, '.vscode', 'settings.json'), settings.toString());
 }
 
 describe('mergeIntegrationDir', () => {
@@ -51,6 +62,7 @@ describe('mergeIntegrationDir', () => {
     const expectedResults = [
       'destDir/subDestDir/fake.ts',
       'destDir/subDestDir/package.json',
+      'destDir/subDestDir/.vscode/settings.json',
       'destDir/subDestDir/src/global.css',
     ];
 
@@ -64,6 +76,18 @@ describe('mergeIntegrationDir', () => {
     const monorepoSubDir = join(fakeDestDir, 'apps', 'subpackage', 'src');
     fs.mkdirSync(monorepoSubDir, { recursive: true });
     fs.writeFileSync(join(monorepoSubDir, 'global.css'), '/* CSS */');
+    const settings = JsonParser.parse<JsonObjectNode>(
+      `{ 
+          // Comment Foo
+          "css.lint.unknownAtRules": "ignore"
+      }`,
+      JsonObjectNode
+    );
+    fs.mkdirSync(join(fakeDestDir, 'apps', 'subpackage', '.vscode'));
+    fs.writeFileSync(
+      join(fakeDestDir, 'apps', 'subpackage', '.vscode', 'settings.json'),
+      settings.toString()
+    );
 
     // Add a file that should stay in the root
     fs.writeFileSync(join(fakeSrcDir, 'should-stay-in-root.ts'), 'fake file');
@@ -84,6 +108,7 @@ describe('mergeIntegrationDir', () => {
       `destDir/subDestDir/should-stay-in-root.ts`,
       `destDir/subDestDir/package.json`,
       `destDir/subDestDir/should-stay/should-also-stay.ts`,
+      'destDir/subDestDir/apps/subpackage/.vscode/settings.json',
       `destDir/subDestDir/apps/subpackage/src/global.css`,
     ];
 
diff --git a/pnpm-lock.yaml b/pnpm-lock.yaml
index f1653307360..d99346b11a5 100644
--- a/pnpm-lock.yaml
+++ b/pnpm-lock.yaml
@@ -569,6 +569,9 @@ importers:
       '@builder.io/qwik':
         specifier: workspace:^
         version: 'link:'
+      '@croct/json5-parser':
+        specifier: 0.1.1
+        version: 0.1.1
       domino:
         specifier: 2.1.6
         version: 2.1.6(patch_hash=cfc92e4c7200dc9749feafd71636da4534f892821d01a38afe3025620807877d)
@@ -1071,6 +1074,12 @@ packages:
     resolution: {integrity: sha512-Ir+AOibqzrIsL6ajt3Rz3LskB7OiMVHqltZmspbW/TJuTVuyOMirVqAkjfY6JISiLHgyNqicAC8AyHHGzNd/dA==}
     engines: {node: '>=0.1.90'}
 
+  '@croct/json5-parser@0.1.1':
+    resolution: {integrity: sha512-7+yo8Kd5JJp+VF3bjYGXW0S1s3zOF6IiJczmQy1d+t/pFn8bo7kJcbzRP+C78kcqZoBW4gs5H/c7ZtsH5DDb7w==}
+
+  '@croct/json@2.1.0':
+    resolution: {integrity: sha512-UrWfjNQVlBxN+OVcFwHmkjARMW55MBN04E9KfGac8ac8z1QnFVuiOOFtMWXCk3UwsyRqhsNaFoYLZC+xxqsVjQ==}
+
   '@cspotcode/source-map-support@0.8.1':
     resolution: {integrity: sha512-IchNf6dN4tHoMFIn/7OE8LWZ19Y6q/67Bmf6vnGREv8RSbBVb9LPJxEcnwrcwX6ixSvaiGoomAUvu4YSxXrVgw==}
     engines: {node: '>=12'}
@@ -10572,6 +10581,12 @@ snapshots:
 
   '@colors/colors@1.6.0': {}
 
+  '@croct/json5-parser@0.1.1':
+    dependencies:
+      '@croct/json': 2.1.0
+
+  '@croct/json@2.1.0': {}
+
   '@cspotcode/source-map-support@0.8.1':
     dependencies:
       '@jridgewell/trace-mapping': 0.3.9