Enhancements described support transparent remote execution of development tool extensions. Compute-intensive extensions may be executed on an extension machine external to a developer machine which runs a user interface renderer of the development tool. User interface extensions may run locally. Instead of sharing a filesystem, the renderer on the developer machine and an extension host and extension(s) on the extension machine may access distinct respective machine filesystems. Instead of spawning debug extension and other extension-support processes locally, the renderer may instruct the extension host or an extension host agent to spawn the processes remotely on the extension machine. Existing extensions and newly created extensions are binary-compatible with single-machine or multi-machine development tool deployments. Project files remain inside a firewalled and data-loss-prevention environment while being fully accessible to authorized developers working remotely and to operations performed by language servers, debug adapters, and tool extensions.