diff --git a/apps/vscode/CHANGELOG.md b/apps/vscode/CHANGELOG.md
index 086c8580..a46b6b77 100644
--- a/apps/vscode/CHANGELOG.md
+++ b/apps/vscode/CHANGELOG.md
@@ -4,6 +4,7 @@
 
 - Fixed an issue where attribute values containing '='s could be truncated in some scenarios (<https://github.com/quarto-dev/quarto/pull/814>).
 - Fixed an issue where a loading spinner for qmd previews wasn't dismissed on preview errors (<https://github.com/quarto-dev/quarto/pull/823>)
+- Diagnostics are no longer reported for internal temporary virtual document files (<https://github.com/quarto-dev/quarto/pull/832>).
 
 ## 1.124.0 (Release on 2025-08-20)
 
diff --git a/apps/vscode/src/lsp/client.ts b/apps/vscode/src/lsp/client.ts
index 5cf9fca3..07f92e9f 100644
--- a/apps/vscode/src/lsp/client.ts
+++ b/apps/vscode/src/lsp/client.ts
@@ -23,7 +23,8 @@ import {
   LocationLink,
   Definition,
   LogOutputChannel,
-  Uri
+  Uri,
+  Diagnostic
 } from "vscode";
 import {
   LanguageClient,
@@ -46,6 +47,7 @@ import {
   ProvideHoverSignature,
   ProvideSignatureHelpSignature,
   State,
+  HandleDiagnosticsSignature
 } from "vscode-languageclient";
 import { MarkdownEngine } from "../markdown/engine";
 import {
@@ -54,6 +56,7 @@ import {
   virtualDoc,
   withVirtualDocUri,
 } from "../vdoc/vdoc";
+import { isVirtualDoc } from "../vdoc/vdoc-tempfile";
 import { activateVirtualDocEmbeddedContent } from "../vdoc/vdoc-content";
 import { vdocCompletions } from "../vdoc/vdoc-completion";
 
@@ -99,6 +102,7 @@ export async function activateLsp(
   const config = workspace.getConfiguration("quarto");
   activateVirtualDocEmbeddedContent();
   const middleware: Middleware = {
+    handleDiagnostics: createDiagnosticFilter(),
     provideCompletionItem: embeddedCodeCompletionProvider(engine),
     provideDefinition: embeddedGoToDefinitionProvider(engine),
     provideDocumentFormattingEdits: embeddedDocumentFormattingProvider(engine),
@@ -338,3 +342,21 @@ function isWithinYamlComment(doc: TextDocument, pos: Position) {
   const line = doc.lineAt(pos.line).text;
   return !!line.match(/^\s*#\s*\| /);
 }
+
+/**
+ * Creates a diagnostic handler middleware that filters out diagnostics from virtual documents
+ *
+ * @returns A handler function for the middleware
+ */
+export function createDiagnosticFilter() {
+  return (uri: Uri, diagnostics: Diagnostic[], next: HandleDiagnosticsSignature) => {
+    // If this is not a virtual document, pass through all diagnostics
+    if (!isVirtualDoc(uri)) {
+      next(uri, diagnostics);
+      return;
+    }
+
+    // For virtual documents, filter out all diagnostics
+    next(uri, []);
+  };
+}
diff --git a/apps/vscode/src/test/diagnosticFiltering.test.ts b/apps/vscode/src/test/diagnosticFiltering.test.ts
new file mode 100644
index 00000000..673bcf7b
--- /dev/null
+++ b/apps/vscode/src/test/diagnosticFiltering.test.ts
@@ -0,0 +1,53 @@
+import * as vscode from "vscode";
+import * as assert from "assert";
+import { createDiagnosticFilter } from "../lsp/client";
+
+suite("Diagnostic Filtering", function () {
+
+  test("Diagnostic filter removes diagnostics for virtual documents", async function () {
+    // Create mocks
+    const virtualDocUri = vscode.Uri.file("/tmp/.vdoc.12345678-1234-1234-1234-123456789abc.py");
+    const regularDocUri = vscode.Uri.file("/tmp/regular-file.py");
+
+    // Create some test diagnostics
+    const testDiagnostics = [
+      new vscode.Diagnostic(
+        new vscode.Range(0, 0, 0, 10),
+        "Test diagnostic message",
+        vscode.DiagnosticSeverity.Error
+      )
+    ];
+
+    // Create a mock diagnostics handler function to verify behavior
+    let capturedUri: vscode.Uri | undefined;
+    let capturedDiagnostics: vscode.Diagnostic[] | undefined;
+
+    const mockHandler = (uri: vscode.Uri, diagnostics: vscode.Diagnostic[]) => {
+      capturedUri = uri;
+      capturedDiagnostics = diagnostics;
+    };
+
+    // Create the filter function
+    const diagnosticFilter = createDiagnosticFilter();
+
+    // Test with a virtual document
+    diagnosticFilter(virtualDocUri, testDiagnostics, mockHandler);
+
+    // Verify diagnostics were filtered (empty array)
+    assert.strictEqual(capturedUri, virtualDocUri, "URI should be passed through");
+    assert.strictEqual(capturedDiagnostics!.length, 0, "Diagnostics should be empty for virtual documents");
+
+    // Reset captured values
+    capturedUri = undefined;
+    capturedDiagnostics = undefined;
+
+    // Test with a regular document
+    diagnosticFilter(regularDocUri, testDiagnostics, mockHandler);
+
+    // Verify diagnostics were not filtered
+    assert.strictEqual(capturedUri, regularDocUri, "URI should be passed through");
+    assert.strictEqual(capturedDiagnostics!.length, testDiagnostics.length, "Diagnostics should not be filtered for regular documents");
+    assert.deepStrictEqual(capturedDiagnostics!, testDiagnostics, "Original diagnostics should be passed through unchanged");
+  });
+
+});
diff --git a/apps/vscode/src/vdoc/vdoc-tempfile.ts b/apps/vscode/src/vdoc/vdoc-tempfile.ts
index b016c258..0a0bb337 100644
--- a/apps/vscode/src/vdoc/vdoc-tempfile.ts
+++ b/apps/vscode/src/vdoc/vdoc-tempfile.ts
@@ -150,3 +150,14 @@ function createVirtualDoc(filepath: string, content: string): void {
 function generateVirtualDocFilepath(directory: string, extension: string): string {
   return path.join(directory, ".vdoc." + uuid.v4() + "." + extension);
 }
+
+export function isVirtualDoc(uri: Uri): boolean {
+  // Check for tempfile virtual docs
+  if (uri.scheme === "file") {
+    const filename = path.basename(uri.fsPath);
+    // Virtual docs have a specific filename pattern .vdoc.[uuid].[extension]
+    return filename.startsWith(".vdoc.") && filename.split(".").length > 3;
+  }
+
+  return false;
+}