diff --git a/news/2 Fixes/12429.md b/news/2 Fixes/12429.md
new file mode 100644
index 000000000000..4fea2a4f8f5c
--- /dev/null
+++ b/news/2 Fixes/12429.md	
@@ -0,0 +1 @@
+Fixed issue when `python.jediEnabled` setting was not removed and `python.languageServer` setting was not updated.
diff --git a/src/client/testing/common/updateTestSettings.ts b/src/client/testing/common/updateTestSettings.ts
index 1f5c79faf32c..b7b60aad8ad8 100644
--- a/src/client/testing/common/updateTestSettings.ts
+++ b/src/client/testing/common/updateTestSettings.ts
@@ -31,7 +31,7 @@ export class UpdateTestSettingService implements IExtensionActivationService {
         const filesToBeFixed = await this.getFilesToBeFixed(resource);
         await Promise.all(filesToBeFixed.map((file) => this.fixSettingInFile(file)));
     }
-    public getSettingsFiles(resource: Resource) {
+    public getSettingsFiles(resource: Resource): string[] {
         const settingsFiles: string[] = [];
         if (this.application.userSettingsFile) {
             settingsFiles.push(this.application.userSettingsFile);
@@ -42,7 +42,7 @@ export class UpdateTestSettingService implements IExtensionActivationService {
         }
         return settingsFiles;
     }
-    public async getFilesToBeFixed(resource: Resource) {
+    public async getFilesToBeFixed(resource: Resource): Promise<string[]> {
         const files = this.getSettingsFiles(resource);
         const result = await Promise.all(
             files.map(async (file) => {
@@ -87,10 +87,11 @@ export class UpdateTestSettingService implements IExtensionActivationService {
         return fileContents;
     }
 
-    public async doesFileNeedToBeFixed(filePath: string) {
+    public async doesFileNeedToBeFixed(filePath: string): Promise<boolean> {
         try {
             const contents = await this.fs.readFile(filePath);
             return (
+                contents.indexOf('python.jediEnabled') > 0 ||
                 contents.indexOf('python.unitTest.') > 0 ||
                 contents.indexOf('.pyTest') > 0 ||
                 contents.indexOf('.pep8') > 0
@@ -106,13 +107,13 @@ export class UpdateTestSettingService implements IExtensionActivationService {
         //   - `true` or missing then set to `languageServer: Jedi`.
         //   - `false` and `languageServer` is present, do nothing.
         //   - `false` and `languageServer` is NOT present, set `languageServer` to `Microsoft`.
-        // `jediEnabled` is then removed.
+        // `jediEnabled` is NOT removed since JSONC parser may also remove comments.
         const jediEnabledPath = ['python.jediEnabled'];
         const languageServerPath = ['python.languageServer'];
 
         try {
-            let ast = parseTree(fileContent);
-            let jediEnabledNode = findNodeAtLocation(ast, jediEnabledPath);
+            const ast = parseTree(fileContent);
+            const jediEnabledNode = findNodeAtLocation(ast, jediEnabledPath);
             const jediEnabled = jediEnabledNode ? getNodeValue(jediEnabledNode) : true;
             const languageServerNode = findNodeAtLocation(ast, languageServerPath);
             const formattingOptions: FormattingOptions = {
@@ -134,13 +135,6 @@ export class UpdateTestSettingService implements IExtensionActivationService {
             }
 
             fileContent = applyEdits(fileContent, edits);
-            // Remove jediEnabled
-            ast = parseTree(fileContent);
-            jediEnabledNode = findNodeAtLocation(ast, jediEnabledPath);
-            if (jediEnabledNode) {
-                edits = modify(fileContent, jediEnabledPath, undefined, { formattingOptions });
-                fileContent = applyEdits(fileContent, edits);
-            }
             // tslint:disable-next-line:no-empty
         } catch {}
         return fileContent;
diff --git a/src/test/application/diagnostics/checks/updateTestSettings.unit.test.ts b/src/test/application/diagnostics/checks/updateTestSettings.unit.test.ts
index 819b27b9f8cb..d70dd05728ef 100644
--- a/src/test/application/diagnostics/checks/updateTestSettings.unit.test.ts
+++ b/src/test/application/diagnostics/checks/updateTestSettings.unit.test.ts
@@ -168,6 +168,12 @@ suite('Application Diagnostics - Check Test Settings', () => {
         assert.ok(!needsToBeFixed);
         verify(fs.readFile(__filename)).once();
     });
+    test('Verify `python.jediEnabled` is found in user settings', async () => {
+        when(fs.readFile(__filename)).thenResolve('"python.jediEnabled": false');
+        const needsToBeFixed = await diagnosticService.doesFileNeedToBeFixed(__filename);
+        assert.ok(needsToBeFixed);
+        verify(fs.readFile(__filename)).once();
+    });
 
     [
         {
@@ -218,32 +224,32 @@ suite('Application Diagnostics - Check Test Settings', () => {
         {
             testTitle: 'jediEnabled: true, no languageServer setting',
             contents: '{ "python.jediEnabled": true }',
-            expectedContent: '{"python.languageServer": "Jedi"}'
+            expectedContent: '{ "python.jediEnabled": true, "python.languageServer": "Jedi"}'
         },
         {
             testTitle: 'jediEnabled: true, languageServer setting present',
             contents: '{ "python.jediEnabled": true }',
-            expectedContent: '{"python.languageServer": "Jedi"}'
+            expectedContent: '{ "python.jediEnabled": true, "python.languageServer": "Jedi"}'
         },
         {
             testTitle: 'jediEnabled: false, no languageServer setting',
             contents: '{ "python.jediEnabled": false }',
-            expectedContent: '{"python.languageServer": "Microsoft"}'
+            expectedContent: '{ "python.jediEnabled": false, "python.languageServer": "Microsoft"}'
         },
         {
             testTitle: 'jediEnabled: false, languageServer is Microsoft',
             contents: '{ "python.jediEnabled": false, "python.languageServer": "Microsoft" }',
-            expectedContent: '{"python.languageServer": "Microsoft"}'
+            expectedContent: '{ "python.jediEnabled": false, "python.languageServer": "Microsoft"}'
         },
         {
             testTitle: 'jediEnabled: false, languageServer is None',
             contents: '{ "python.jediEnabled": false, "python.languageServer": "None" }',
-            expectedContent: '{"python.languageServer": "None"}'
+            expectedContent: '{ "python.jediEnabled": false, "python.languageServer": "None"}'
         },
         {
             testTitle: 'jediEnabled: false, languageServer is Jedi',
             contents: '{ "python.jediEnabled": false, "python.languageServer": "Jedi" }',
-            expectedContent: '{"python.languageServer": "Jedi"}'
+            expectedContent: '{ "python.jediEnabled": false, "python.languageServer": "Jedi"}'
         }
     ].forEach((item) => {
         test(item.testTitle, async () => {