diff --git a/panel/io/jupyter_server_extension.py b/panel/io/jupyter_server_extension.py
index fbbccb8ba4..4c866f4e0d 100644
--- a/panel/io/jupyter_server_extension.py
+++ b/panel/io/jupyter_server_extension.py
@@ -112,6 +112,7 @@ def get_server_root_dir(settings):
 import pathlib
 import sys
 
+os.environ['BOKEH_RESOURCES'] = 'server'
 app = r'{{ path }}'
 os.chdir(str(pathlib.Path(app).parent))
 sys.path = [os.getcwd()] + sys.path[1:]
diff --git a/panel/tests/ui/io/test_jupyter_server_extension.py b/panel/tests/ui/io/test_jupyter_server_extension.py
index bcbabc174b..d2424d85a4 100644
--- a/panel/tests/ui/io/test_jupyter_server_extension.py
+++ b/panel/tests/ui/io/test_jupyter_server_extension.py
@@ -1,3 +1,7 @@
+import sys
+
+from pathlib import Path
+
 import pytest
 
 pytest.importorskip("playwright")
@@ -49,3 +53,9 @@ def test_jupyter_server_session_arg_theme(page, jupyter_preview):
     page.goto(f"{jupyter_preview}/app.py?theme=dark", timeout=30000)
 
     expect(page.locator('body')).to_have_css('color', 'rgb(0, 0, 0)')
+
+
+def test_jupyter_config():
+    # If this test fails, run `pip install -e .` again
+    jp_files = (Path(sys.prefix) / 'etc' / 'jupyter').rglob('panel-client-jupyter.json')
+    assert len(list(jp_files)) == 2
diff --git a/setup.py b/setup.py
index a2ee4cc78b..5472d3ef1b 100644
--- a/setup.py
+++ b/setup.py
@@ -1,6 +1,7 @@
 #!/usr/bin/env python
 import json
 import os
+import shutil
 import sys
 
 from setuptools import find_packages, setup
@@ -47,12 +48,23 @@ def _build_paneljs():
         fcntl.fcntl(sys.stdout, fcntl.F_SETFL, flags&~os.O_NONBLOCK)
 
 
+def _install_jupyter_server_extension():
+    # data_files are not copied for editable installs returning
+    files = setup_args['data_files']
+    for dst, (src,) in files:
+        dst = os.path.join(sys.prefix, dst)
+        os.makedirs(dst, exist_ok=True)
+        shutil.copy2(src, dst)
+        print(f"Copied {src} to {dst}")
+
+
 class CustomDevelopCommand(develop):
     """Custom installation for development mode."""
 
     def run(self):
         if not PANEL_LITE_BUILD:
             _build_paneljs()
+            _install_jupyter_server_extension()
         develop.run(self)