diff --git a/CHANGELOG.md b/CHANGELOG.md
index 3dcbac73a..f27c6f1bc 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -2,6 +2,10 @@
 
 Notable changes.
 
+## Unreleased
+
+- Add support for the `extends` keyword so one `devcontainer.json` can inherit another, with optional `extendsMergeMode` (`combine` uses image metadata merge logic; `override` uses `{ ...base, ...overlay }` so each set top-level property from the child fully replaces the inherited value). (https://github.com/devcontainers/spec/issues/22, https://github.com/devcontainers/cli/pull/311)
+
 ## August 2026
 
 ### [0.89.0]
diff --git a/src/spec-configuration/configuration.ts b/src/spec-configuration/configuration.ts
index 5995e7e2b..a9728dfcf 100644
--- a/src/spec-configuration/configuration.ts
+++ b/src/spec-configuration/configuration.ts
@@ -21,6 +21,8 @@ export type UserEnvProbe = 'none' | 'loginInteractiveShell' | 'interactiveShell'
 
 export type DevContainerConfigCommand = 'initializeCommand' | 'onCreateCommand' | 'updateContentCommand' | 'postCreateCommand' | 'postStartCommand' | 'postAttachCommand';
 
+export type DevContainerExtendsMergeMode = 'combine' | 'override';
+
 export interface HostGPURequirements {
 	cores?: number;
 	memory?: string;
@@ -73,6 +75,8 @@ export interface DevContainerFromImageConfig {
 	features?: Record<string, string | boolean | Record<string, string | boolean>>;
 	overrideFeatureInstallOrder?: string[];
 	hostRequirements?: HostRequirements;
+	extends?: string;
+	extendsMergeMode?: DevContainerExtendsMergeMode;
 	customizations?: Record<string, any>;
 }
 
@@ -110,6 +114,8 @@ export type DevContainerFromDockerfileConfig = {
 	features?: Record<string, string | boolean | Record<string, string | boolean>>;
 	overrideFeatureInstallOrder?: string[];
 	hostRequirements?: HostRequirements;
+	extends?: string;
+	extendsMergeMode?: DevContainerExtendsMergeMode;
 	customizations?: Record<string, any>;
 } & (
 		{
@@ -168,6 +174,8 @@ export interface DevContainerFromDockerComposeConfig {
 	features?: Record<string, string | boolean | Record<string, string | boolean>>;
 	overrideFeatureInstallOrder?: string[];
 	hostRequirements?: HostRequirements;
+	extends?: string;
+	extendsMergeMode?: DevContainerExtendsMergeMode;
 	customizations?: Record<string, any>;
 }
 
diff --git a/src/spec-node/configContainer.ts b/src/spec-node/configContainer.ts
index 3ee8873ee..e5a6059c8 100644
--- a/src/spec-node/configContainer.ts
+++ b/src/spec-node/configContainer.ts
@@ -17,10 +17,11 @@ import { URI } from 'vscode-uri';
 import { CLIHost } from '../spec-common/commonUtils';
 import { Log } from '../spec-utils/log';
 import { getDefaultDevContainerConfigPath, getDevContainerConfigPathIn } from '../spec-configuration/configurationCommonUtils';
-import { DevContainerConfig, DevContainerFromDockerComposeConfig, DevContainerFromDockerfileConfig, DevContainerFromImageConfig, updateFromOldProperties } from '../spec-configuration/configuration';
+import { DevContainerConfig, DevContainerFromDockerComposeConfig, DevContainerFromDockerfileConfig, DevContainerFromImageConfig, resolveConfigFilePath, updateFromOldProperties } from '../spec-configuration/configuration';
 import { ensureNoDisallowedFeatures } from './disallowedFeatures';
 import { DockerCLIParameters } from '../spec-shutdown/dockerUtils';
 import { createDocuments } from '../spec-configuration/editableFiles';
+import { mergeDevContainerConfigs } from './imageMetadata';
 
 
 export async function resolve(params: DockerResolverParameters, configFile: URI | undefined, overrideConfigFile: URI | undefined, providedIdLabels: string[] | undefined, additionalFeatures: Record<string, string | boolean | Record<string, string | boolean>>): Promise<ResolverResult> {
@@ -79,16 +80,53 @@ async function resolveWithLocalFolder(params: DockerResolverParameters, parsedAu
 	return result;
 }
 
-export async function readDevContainerConfigFile(cliHost: CLIHost, workspace: Workspace | undefined, configFile: URI, mountWorkspaceGitRoot: boolean, mountGitWorktreeCommonDir: boolean, output: Log, consistency?: BindMountConsistency, overrideConfigFile?: URI) {
+async function readDevContainerConfigObject(cliHost: CLIHost, configUri: URI, seen: Set<string>): Promise<DevContainerConfig | undefined> {
+	const configKey = configUri.toString();
+	if (seen.has(configKey)) {
+		throw new ContainerError({ description: `Dev container config (${uriToFsPath(configUri, cliHost.platform)}) has a cyclic "extends" reference.` });
+	}
+	seen.add(configKey);
+
 	const documents = createDocuments(cliHost);
-	const content = await documents.readDocument(overrideConfigFile ?? configFile);
+	const content = await documents.readDocument(configUri);
 	if (!content) {
 		return undefined;
 	}
 	const raw = jsonc.parse(content) as DevContainerConfig | undefined;
 	const updated = raw && updateFromOldProperties(raw);
 	if (!updated || typeof updated !== 'object' || Array.isArray(updated)) {
-		throw new ContainerError({ description: `Dev container config (${uriToFsPath(configFile, cliHost.platform)}) must contain a JSON object literal.` });
+		throw new ContainerError({ description: `Dev container config (${uriToFsPath(configUri, cliHost.platform)}) must contain a JSON object literal.` });
+	}
+
+	const extendsPath = updated.extends;
+	const extendsMergeMode = updated.extendsMergeMode ?? 'combine';
+	delete updated.extends;
+	delete updated.extendsMergeMode;
+	if (!extendsPath) {
+		return updated;
+	}
+	if (typeof extendsPath !== 'string' || !extendsPath.trim()) {
+		throw new ContainerError({ description: `"extends" in (${uriToFsPath(configUri, cliHost.platform)}) must be a relative path to a JSON or JSONC file.` });
+	}
+	if (extendsMergeMode !== 'combine' && extendsMergeMode !== 'override') {
+		throw new ContainerError({ description: `"extendsMergeMode" in (${uriToFsPath(configUri, cliHost.platform)}) must be "combine" or "override".` });
+	}
+	if (cliHost.path.isAbsolute(extendsPath) || /^[a-zA-Z][a-zA-Z0-9+.-]*:/.test(extendsPath)) {
+		throw new ContainerError({ description: `"extends" in (${uriToFsPath(configUri, cliHost.platform)}) must be a relative path within the same repository.` });
+	}
+
+	const parentUri = resolveConfigFilePath(cliHost, configUri, extendsPath);
+	const parent = await readDevContainerConfigObject(cliHost, parentUri, new Set(seen));
+	if (!parent) {
+		throw new ContainerError({ description: `Dev container config extended from (${uriToFsPath(configUri, cliHost.platform)}) was not found: ${uriToFsPath(parentUri, cliHost.platform)}.` });
+	}
+	return mergeDevContainerConfigs(parent, updated, extendsMergeMode);
+}
+
+export async function readDevContainerConfigFile(cliHost: CLIHost, workspace: Workspace | undefined, configFile: URI, mountWorkspaceGitRoot: boolean, mountGitWorktreeCommonDir: boolean, output: Log, consistency?: BindMountConsistency, overrideConfigFile?: URI) {
+	const updated = await readDevContainerConfigObject(cliHost, overrideConfigFile ?? configFile, new Set());
+	if (!updated) {
+		return undefined;
 	}
 	const workspaceConfig = await getWorkspaceConfiguration(cliHost, workspace, updated, mountWorkspaceGitRoot, mountGitWorktreeCommonDir, output, consistency);
 	const substitute0: SubstituteConfig = value => substitute({
diff --git a/src/spec-node/imageMetadata.ts b/src/spec-node/imageMetadata.ts
index 3f10914af..b640b9bfd 100644
--- a/src/spec-node/imageMetadata.ts
+++ b/src/spec-node/imageMetadata.ts
@@ -6,7 +6,7 @@
 import { ContainerError } from '../spec-common/errors';
 import { PlatformInfo } from '../spec-common/commonUtils';
 import { LifecycleCommand, LifecycleHooksInstallMap } from '../spec-common/injectHeadless';
-import { DevContainerConfig, DevContainerConfigCommand, DevContainerFromDockerComposeConfig, DevContainerFromDockerfileConfig, DevContainerFromImageConfig, getDockerComposeFilePaths, getDockerfilePath, HostGPURequirements, HostRequirements, isDockerFileConfig, PortAttributes, UserEnvProbe } from '../spec-configuration/configuration';
+import { DevContainerConfig, DevContainerConfigCommand, DevContainerExtendsMergeMode, DevContainerFromDockerComposeConfig, DevContainerFromDockerfileConfig, DevContainerFromImageConfig, getDockerComposeFilePaths, getDockerfilePath, HostGPURequirements, HostRequirements, isDockerFileConfig, PortAttributes, UserEnvProbe } from '../spec-configuration/configuration';
 import { Feature, FeaturesConfig, Mount, parseMount, SchemaFeatureLifecycleHooks } from '../spec-configuration/containerFeaturesConfiguration';
 import { ContainerDetails, DockerCLIParameters, ImageDetails } from '../spec-shutdown/dockerUtils';
 import { Log, LogLevel } from '../spec-utils/log';
@@ -199,6 +199,100 @@ export function mergeConfiguration(config: DevContainerConfig, imageMetadata: Im
 	return merged;
 }
 
+/**
+ * Merge a base `devcontainer.json` with an overlay using the image metadata merge logic
+ * (https://containers.dev/implementors/spec/#merge-logic) so `extends` behaves the same as
+ * combining a prebuilt image's metadata with a project's config.
+ */
+export function mergeDevContainerConfigs(base: DevContainerConfig, overlay: DevContainerConfig, extendsMergeMode: DevContainerExtendsMergeMode = 'combine'): DevContainerConfig {
+	if (extendsMergeMode === 'override') {
+		return mergeDevContainerConfigsOverride(base, overlay);
+	}
+
+	const metadata: ImageMetadataEntry[] = [base, overlay];
+	const merged = {
+		...base,
+		...overlay,
+	} as DevContainerConfig;
+	delete merged.extends;
+	delete merged.extendsMergeMode;
+
+	if (base.init || overlay.init) {
+		merged.init = true;
+	} else if (base.init === false || overlay.init === false) {
+		merged.init = false;
+	}
+
+	if (base.privileged || overlay.privileged) {
+		merged.privileged = true;
+	} else if (base.privileged === false || overlay.privileged === false) {
+		merged.privileged = false;
+	}
+
+	assignOrDelete(merged, 'capAdd', unionOrUndefined([base.capAdd, overlay.capAdd]));
+	assignOrDelete(merged, 'securityOpt', unionOrUndefined([base.securityOpt, overlay.securityOpt]));
+	assignOrDelete(merged, 'mounts', mergeMounts(metadata));
+	assignOrDelete(merged, 'forwardPorts', mergeForwardPorts(metadata));
+	assignOrDelete(merged, 'hostRequirements', mergeHostRequirements(metadata));
+
+	const remoteEnv = Object.assign({}, base.remoteEnv, overlay.remoteEnv);
+	assignOrDelete(merged, 'remoteEnv', Object.keys(remoteEnv).length ? remoteEnv : undefined);
+	const containerEnv = Object.assign({}, base.containerEnv, overlay.containerEnv);
+	assignOrDelete(merged, 'containerEnv', Object.keys(containerEnv).length ? containerEnv : undefined);
+	const portsAttributes = Object.assign({}, base.portsAttributes, overlay.portsAttributes);
+	assignOrDelete(merged, 'portsAttributes', Object.keys(portsAttributes).length ? portsAttributes : undefined);
+	const features = Object.assign({}, base.features, overlay.features);
+	assignOrDelete(merged, 'features', Object.keys(features).length ? features : undefined);
+	const customizations = Object.assign({}, base.customizations, overlay.customizations);
+	assignOrDelete(merged, 'customizations', Object.keys(customizations).length ? customizations : undefined);
+
+	const runArgs = unionOrUndefined([
+		'runArgs' in base ? base.runArgs : undefined,
+		'runArgs' in overlay ? overlay.runArgs : undefined,
+	]);
+	if ('runArgs' in merged || runArgs) {
+		(merged as DevContainerFromImageConfig).runArgs = runArgs;
+		if (!runArgs) {
+			delete (merged as DevContainerFromImageConfig).runArgs;
+		}
+	}
+
+	const runServices = unionOrUndefined([
+		'dockerComposeFile' in base ? base.runServices : undefined,
+		'dockerComposeFile' in overlay ? overlay.runServices : undefined,
+	]);
+	if ('runServices' in merged || runServices) {
+		(merged as DevContainerFromDockerComposeConfig).runServices = runServices;
+		if (!runServices) {
+			delete (merged as DevContainerFromDockerComposeConfig).runServices;
+		}
+	}
+
+	return merged;
+}
+
+/**
+ * Overlay-style merge: each top-level property from the overlay replaces the base value when set;
+ * omitted overlay keys keep the inherited base value ({ ...base, ...overlay }).
+ */
+function mergeDevContainerConfigsOverride(base: DevContainerConfig, overlay: DevContainerConfig): DevContainerConfig {
+	const merged = {
+		...base,
+		...overlay,
+	} as DevContainerConfig;
+	delete merged.extends;
+	delete merged.extendsMergeMode;
+	return merged;
+}
+
+function assignOrDelete<K extends keyof DevContainerConfig>(target: DevContainerConfig, key: K, value: DevContainerConfig[K] | undefined) {
+	if (value !== undefined) {
+		target[key] = value;
+	} else {
+		delete target[key];
+	}
+}
+
 function mergeForwardPorts(imageMetadata: ImageMetadataEntry[]): (number | string)[] | undefined {
 	const forwardPorts = [
 		...new Set(
diff --git a/src/test/configContainer.test.ts b/src/test/configContainer.test.ts
new file mode 100644
index 000000000..2e0df7c74
--- /dev/null
+++ b/src/test/configContainer.test.ts
@@ -0,0 +1,96 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import * as path from 'path';
+import { assert } from 'chai';
+import { URI } from 'vscode-uri';
+import { getCLIHost, loadNativeModule } from '../spec-common/commonUtils';
+import { DevContainerFromImageConfig } from '../spec-configuration/configuration';
+import { readDevContainerConfigFile } from '../spec-node/configContainer';
+import { Workspace } from '../spec-utils/workspaces';
+import { nullLog } from '../spec-utils/log';
+
+const workspace: Workspace = {
+	isWorkspaceFile: false,
+	workspaceOrFolderPath: '/foo/bar',
+	rootFolderPath: '/foo/bar',
+	configFolderPath: '/foo/bar',
+};
+
+async function readConfig(relativePath: string) {
+	const cliHost = await getCLIHost(process.cwd(), loadNativeModule, false);
+	const configFile = URI.file(path.resolve(relativePath));
+	return readDevContainerConfigFile(cliHost, workspace, configFile, false, false, nullLog);
+}
+
+async function expectReadConfigError(relativePath: string, pattern: RegExp) {
+	try {
+		await readConfig(relativePath);
+		assert.fail('expected read to throw');
+	} catch (err: any) {
+		assert.match(String(err.description || err.message), pattern);
+	}
+}
+
+describe('readDevContainerConfigFile', function () {
+	it('can read a basic configuration file', async function () {
+		const configs = await readConfig('./src/test/configs/example/.devcontainer.json');
+		assert.isOk(configs);
+		assert.property(configs, 'config');
+		assert.isOk(configs?.config.config);
+
+		const features = configs?.config.config.features as Record<string, string | boolean | Record<string, string | boolean>>;
+		assert.hasAllKeys(features, ['ghcr.io/devcontainers/features/github-cli:1']);
+	});
+
+	it('can resolve an "extends" file reference', async function () {
+		const configs = await readConfig('./src/test/configs/extends/.devcontainer.json');
+		assert.isOk(configs);
+		const raw = configs?.config.raw as DevContainerFromImageConfig;
+		assert.strictEqual(raw.name, 'Overrides');
+		assert.strictEqual(raw.image, 'ubuntu:latest');
+		assert.deepEqual(raw.forwardPorts, [80, 443]);
+		assert.deepEqual(raw.capAdd, ['SYS_PTRACE', 'NET_ADMIN']);
+		assert.strictEqual(raw.hostRequirements?.cpus, 2);
+		assert.strictEqual(raw.hostRequirements?.memory, `${8 * 2 ** 30}`);
+		assert.deepEqual(raw.remoteEnv, { FROM_BASE: 'base', OVERRIDE_ME: 'child' });
+		assert.notProperty(raw, 'extends');
+		assert.notProperty(raw, 'extendsMergeMode');
+	});
+
+	it('can resolve nested "extends" file references', async function () {
+		const configs = await readConfig('./src/test/configs/extends/.devcontainer.nested.json');
+		assert.isOk(configs);
+		assert.strictEqual(configs?.config.raw.name, 'Nested');
+		assert.deepEqual(configs?.config.raw.forwardPorts, [80, 443, 2222]);
+		assert.strictEqual((configs?.config.raw as DevContainerFromImageConfig).image, 'ubuntu:latest');
+	});
+
+	it('rejects a cyclic "extends" reference', async function () {
+		await expectReadConfigError('./src/test/configs/extends/.devcontainer.cycle-a.json', /cyclic "extends" reference/);
+	});
+
+	it('can resolve "extends" with extendsMergeMode override', async function () {
+		const configs = await readConfig('./src/test/configs/extends/.devcontainer.override.json');
+		assert.isOk(configs);
+		const raw = configs?.config.raw as DevContainerFromImageConfig;
+		assert.strictEqual(raw.name, 'Override merge');
+		assert.strictEqual(raw.image, 'ubuntu:latest');
+		assert.deepEqual(raw.forwardPorts, [443]);
+		assert.strictEqual(raw.init, false);
+		assert.deepEqual(raw.remoteEnv, { OVERRIDE_ME: 'child' });
+		assert.deepEqual(raw.hostRequirements, { memory: '4gb' });
+		assert.notProperty(raw, 'extends');
+		assert.notProperty(raw, 'extendsMergeMode');
+	});
+
+	it('rejects an invalid "extendsMergeMode" value', async function () {
+		await expectReadConfigError('./src/test/configs/extends/.devcontainer.invalid-merge.json', /extendsMergeMode.*combine.*override/);
+	});
+
+	it('rejects a missing "extends" file', async function () {
+		await expectReadConfigError('./src/test/configs/extends/.devcontainer.missing.json', /was not found/);
+	});
+});
diff --git a/src/test/configs/extends/.devcontainer.base.json b/src/test/configs/extends/.devcontainer.base.json
new file mode 100644
index 000000000..c1c74f20c
--- /dev/null
+++ b/src/test/configs/extends/.devcontainer.base.json
@@ -0,0 +1,13 @@
+{
+	"image": "ubuntu:latest",
+	"forwardPorts": [80],
+	"capAdd": ["SYS_PTRACE"],
+	"hostRequirements": {
+		"cpus": 2,
+		"memory": "8gb"
+	},
+	"remoteEnv": {
+		"FROM_BASE": "base",
+		"OVERRIDE_ME": "base"
+	}
+}
diff --git a/src/test/configs/extends/.devcontainer.cycle-a.json b/src/test/configs/extends/.devcontainer.cycle-a.json
new file mode 100644
index 000000000..4918aac06
--- /dev/null
+++ b/src/test/configs/extends/.devcontainer.cycle-a.json
@@ -0,0 +1,4 @@
+{
+	"extends": "./.devcontainer.cycle-b.json",
+	"image": "mcr.microsoft.com/devcontainers/base:latest"
+}
diff --git a/src/test/configs/extends/.devcontainer.cycle-b.json b/src/test/configs/extends/.devcontainer.cycle-b.json
new file mode 100644
index 000000000..250d6be64
--- /dev/null
+++ b/src/test/configs/extends/.devcontainer.cycle-b.json
@@ -0,0 +1,4 @@
+{
+	"extends": "./.devcontainer.cycle-a.json",
+	"name": "cycle"
+}
diff --git a/src/test/configs/extends/.devcontainer.invalid-merge.json b/src/test/configs/extends/.devcontainer.invalid-merge.json
new file mode 100644
index 000000000..7894ae608
--- /dev/null
+++ b/src/test/configs/extends/.devcontainer.invalid-merge.json
@@ -0,0 +1,4 @@
+{
+	"extends": "./.devcontainer.base.json",
+	"extendsMergeMode": "deepmerge"
+}
diff --git a/src/test/configs/extends/.devcontainer.json b/src/test/configs/extends/.devcontainer.json
new file mode 100644
index 000000000..b7a3149b3
--- /dev/null
+++ b/src/test/configs/extends/.devcontainer.json
@@ -0,0 +1,12 @@
+{
+	"extends": "./.devcontainer.base.json",
+	"name": "Overrides",
+	"forwardPorts": [443],
+	"capAdd": ["NET_ADMIN"],
+	"hostRequirements": {
+		"memory": "4gb"
+	},
+	"remoteEnv": {
+		"OVERRIDE_ME": "child"
+	}
+}
diff --git a/src/test/configs/extends/.devcontainer.missing.json b/src/test/configs/extends/.devcontainer.missing.json
new file mode 100644
index 000000000..2851c8341
--- /dev/null
+++ b/src/test/configs/extends/.devcontainer.missing.json
@@ -0,0 +1,4 @@
+{
+	"extends": "./does-not-exist.json",
+	"image": "mcr.microsoft.com/devcontainers/base:latest"
+}
diff --git a/src/test/configs/extends/.devcontainer.nested.json b/src/test/configs/extends/.devcontainer.nested.json
new file mode 100644
index 000000000..261e56bd8
--- /dev/null
+++ b/src/test/configs/extends/.devcontainer.nested.json
@@ -0,0 +1,5 @@
+{
+	"extends": "./.devcontainer.json",
+	"name": "Nested",
+	"forwardPorts": [2222]
+}
diff --git a/src/test/configs/extends/.devcontainer.override.json b/src/test/configs/extends/.devcontainer.override.json
new file mode 100644
index 000000000..2db3baf7c
--- /dev/null
+++ b/src/test/configs/extends/.devcontainer.override.json
@@ -0,0 +1,13 @@
+{
+	"extends": "./.devcontainer.base.json",
+	"extendsMergeMode": "override",
+	"name": "Override merge",
+	"forwardPorts": [443],
+	"hostRequirements": {
+		"memory": "4gb"
+	},
+	"remoteEnv": {
+		"OVERRIDE_ME": "child"
+	},
+	"init": false
+}
diff --git a/src/test/imageMetadata.test.ts b/src/test/imageMetadata.test.ts
index b45087d58..499bc1ef1 100644
--- a/src/test/imageMetadata.test.ts
+++ b/src/test/imageMetadata.test.ts
@@ -6,9 +6,9 @@
 import * as assert from 'assert';
 import * as path from 'path';
 import { URI } from 'vscode-uri';
-import { DevContainerConfig, HostGPURequirements } from '../spec-configuration/configuration';
+import { DevContainerConfig, DevContainerFromImageConfig, HostGPURequirements } from '../spec-configuration/configuration';
 import { Feature, FeaturesConfig, FeatureSet, Mount } from '../spec-configuration/containerFeaturesConfiguration';
-import { getDevcontainerMetadata, getDevcontainerMetadataLabel, getImageMetadata, getImageMetadataFromContainer, ImageMetadataEntry, imageMetadataLabel, internalGetImageMetadata0, mergeConfiguration } from '../spec-node/imageMetadata';
+import { getDevcontainerMetadata, getDevcontainerMetadataLabel, getImageMetadata, getImageMetadataFromContainer, ImageMetadataEntry, imageMetadataLabel, internalGetImageMetadata0, mergeConfiguration, mergeDevContainerConfigs } from '../spec-node/imageMetadata';
 import { SubstitutedConfig } from '../spec-node/utils';
 import { ContainerDetails, ImageDetails } from '../spec-shutdown/dockerUtils';
 import { nullLog } from '../spec-utils/log';
@@ -559,6 +559,71 @@ describe('Image Metadata', function () {
 	});
 });
 
+describe('mergeDevContainerConfigs', function () {
+	it('should combine configs using image metadata merge logic', function () {
+		const base: DevContainerConfig = {
+			image: 'ubuntu:latest',
+			init: false,
+			privileged: true,
+			forwardPorts: [80],
+			hostRequirements: {
+				cpus: 4,
+				memory: '4gb',
+			},
+			remoteUser: 'vscode',
+			onCreateCommand: 'echo base',
+		};
+		const overlay: DevContainerConfig = {
+			image: 'ubuntu:latest',
+			init: true,
+			forwardPorts: [443],
+			hostRequirements: {
+				cpus: 2,
+				memory: '8gb',
+			},
+			onCreateCommand: 'echo overlay',
+		};
+
+		const merged = mergeDevContainerConfigs(base, overlay);
+		assert.strictEqual((merged as DevContainerFromImageConfig).image, 'ubuntu:latest');
+		assert.strictEqual(merged.init, true);
+		assert.strictEqual(merged.privileged, true);
+		assert.deepStrictEqual(merged.forwardPorts, [80, 443]);
+		assert.strictEqual(merged.hostRequirements?.cpus, 4);
+		assert.strictEqual(merged.hostRequirements?.memory, `${8 * 2 ** 30}`);
+		assert.strictEqual(merged.remoteUser, 'vscode');
+		assert.strictEqual(merged.onCreateCommand, 'echo overlay');
+	});
+
+	it('should override configs when merge mode is override', function () {
+		const base: DevContainerConfig = {
+			image: 'ubuntu:latest',
+			init: true,
+			privileged: true,
+			forwardPorts: [80],
+			hostRequirements: {
+				cpus: 4,
+				memory: '8gb',
+				storage: '32gb',
+			},
+		};
+		const overlay: DevContainerConfig = {
+			image: 'ubuntu:latest',
+			init: false,
+			forwardPorts: [443],
+			hostRequirements: {
+				memory: '4gb',
+			},
+		};
+
+		const merged = mergeDevContainerConfigs(base, overlay, 'override');
+		assert.strictEqual(merged.init, false);
+		assert.strictEqual(merged.privileged, true);
+		assert.deepStrictEqual(merged.forwardPorts, [443]);
+		assert.deepStrictEqual(merged.hostRequirements, { memory: '4gb' });
+	});
+});
+
 function getFeaturesConfig(features: Feature[]): FeaturesConfig {
 	return {
 		featureSets: features.map((feature): FeatureSet => ({