diff --git a/src/extension.ts b/src/extension.ts
index d9124145e..bbbd3660f 100644
--- a/src/extension.ts
+++ b/src/extension.ts
@@ -283,7 +283,11 @@ export function parseVMargs(params:any[], vmargsLine:string) {
 	if (vmargs === null) {
 		return;
 	}
-	vmargs.forEach (function(arg) {
+	vmargs.forEach (arg => {
+		//remove all standalone double quotes
+		arg = arg.replace( /(\\)?"/g, function ($0, $1) { return ($1 ? $0 : ''); });
+		//unescape all escaped double quotes
+		arg = arg.replace( /(\\)"/g, '"');
 		if (params.indexOf(arg) < 0) {
 			params.push(arg);
 		}
diff --git a/test/extension.test.ts b/test/extension.test.ts
index cb1748415..3ef5f0e30 100644
--- a/test/extension.test.ts
+++ b/test/extension.test.ts
@@ -19,7 +19,7 @@ suite('Java Language Extension', () => {
 		return vscode.commands.getCommands(true).then((commands) =>
 		{
 			let javaCmds = commands.filter(function(value){
-				return 'java.open.output' === value || 
+				return 'java.open.output' === value ||
 						'java.show.references' === value;
 			});
 			assert.ok(javaCmds.length === 2, 'missing java commands');
@@ -42,4 +42,16 @@ suite('Java Language Extension', () => {
 		done();
 	});
 
+	test('should parse VM arguments with spaces', function (done) {
+		let userArgs = '-javaagent:"C:\\Program Files\\Java\\lombok.jar" -Xbootclasspath/a:"C:\\Program Files\\Java\\lombok.jar" -Dfoo="Some \\"crazy\\" stuff"';
+		let vmArgs = [];
+
+		java.parseVMargs(vmArgs, userArgs);
+
+		assert.equal(vmArgs.length, 3);
+		assert.equal(vmArgs[0], '-javaagent:C:\\Program Files\\Java\\lombok.jar');
+		assert.equal(vmArgs[1], '-Xbootclasspath/a:C:\\Program Files\\Java\\lombok.jar');
+		assert.equal(vmArgs[2], '-Dfoo=Some "crazy" stuff');
+		done();
+	});
 });
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