diff --git a/build/esbuild/build.ts b/build/esbuild/build.ts
index 4a46d57b0..576120536 100644
--- a/build/esbuild/build.ts
+++ b/build/esbuild/build.ts
@@ -483,7 +483,8 @@ async function buildAll() {
             copyZeroMQ(),
             copyZeroMQOld(),
             copyNodeGypBuild(),
-            buildVSCodeJsonRPC()
+            buildVSCodeJsonRPC(),
+            buildSqlLanguageServer()
         );
     }
 
@@ -540,6 +541,84 @@ async function copyNodeGypBuild() {
     await fs.copy(source, target, { recursive: true });
 }
 
+async function buildSqlLanguageServer() {
+    // Bundle the sql-language-server with all its dependencies into a single file
+    const entryPoint = path.join(
+        extensionFolder,
+        'node_modules',
+        '@deepnote',
+        'sql-language-server',
+        'dist',
+        'bin',
+        'vscodeExtensionServer.js'
+    );
+    const outfile = path.join(extensionFolder, 'dist', 'sqlLanguageServer.cjs');
+
+    await esbuild.build({
+        entryPoints: [entryPoint],
+        bundle: true,
+        platform: 'node',
+        target: 'node18',
+        outfile,
+        format: 'cjs',
+        external: [
+            // These are optional database drivers - exclude to reduce bundle size
+            // They will be loaded dynamically if available
+            'sqlite3',
+            'mysql2',
+            'pg',
+            'pg-native',
+            '@google-cloud/bigquery',
+            // SSH tunneling dependencies with native modules - must be copied separately
+            'ssh2',
+            'cpu-features',
+            'node-ssh-forward'
+        ],
+        minify: false,
+        sourcemap: false
+    });
+
+    // Copy ALL node_modules that the sql-language-server needs
+    // This includes the full transitive dependency tree for:
+    // - node-ssh-forward (SSH tunneling)
+    // - mysql2, pg, sqlite3 (database drivers)
+    // Instead of manually tracking dependencies, we copy all required packages
+    const sqlLspNodeModules = path.join(extensionFolder, 'dist', 'sql-lsp-modules');
+    await fs.ensureDir(sqlLspNodeModules);
+
+    // Create a minimal package.json and install dependencies
+    const packageJson = {
+        name: 'sql-lsp-deps',
+        version: '1.0.0',
+        dependencies: {
+            'node-ssh-forward': '^0.6.3',
+            mysql2: '^3.9.8',
+            pg: '^8.9.0',
+            sqlite3: '^5.0.3',
+            '@google-cloud/bigquery': '^8.1.1'
+        }
+    };
+
+    const packageJsonPath = path.join(sqlLspNodeModules, 'package.json');
+    await fs.writeFile(packageJsonPath, JSON.stringify(packageJson, null, 2));
+
+    // Run npm install in the sql-lsp-modules directory
+    const { execSync } = require('child_process');
+
+    try {
+        execSync('npm install --omit=dev --ignore-scripts', {
+            cwd: sqlLspNodeModules,
+            stdio: 'inherit'
+        });
+    } catch (error) {
+        console.error('Failed to install sql-lsp dependencies:', error);
+        throw error;
+    }
+
+    // Keep package.json for debugging/audit purposes, remove only lock file
+    await fs.remove(path.join(sqlLspNodeModules, 'package-lock.json'));
+}
+
 async function buildVSCodeJsonRPC() {
     const source = path.join(extensionFolder, 'node_modules', 'vscode-jsonrpc');
     const target = path.join(extensionFolder, 'dist', 'node_modules', 'vscode-jsonrpc', 'index.js');
diff --git a/src/kernels/deepnote/deepnoteLspClientManager.node.ts b/src/kernels/deepnote/deepnoteLspClientManager.node.ts
index fe52e5a76..227e29bda 100644
--- a/src/kernels/deepnote/deepnoteLspClientManager.node.ts
+++ b/src/kernels/deepnote/deepnoteLspClientManager.node.ts
@@ -1,3 +1,4 @@
+import * as fs from 'fs';
 import * as vscode from 'vscode';
 import { CancellationError } from 'vscode';
 import { inject, injectable } from 'inversify';
@@ -381,12 +382,20 @@ export class DeepnoteLspClientManager
         logger.info(`Starting SQL LSP with ${connections.length} database connection(s)`);
 
         // Use IPC transport - must match the server's hardcoded 'node-ipc' method
+        // Set NODE_PATH to include the sql-lsp-modules directory for runtime dependencies
+        const sqlLspModulesPath = this.getSqlLspModulesPath();
+        const nodePathEnv = sqlLspModulesPath ? { NODE_PATH: sqlLspModulesPath } : {};
+
         const serverOptions: ServerOptions = {
-            run: { module: serverModule, transport: TransportKind.ipc },
+            run: {
+                module: serverModule,
+                transport: TransportKind.ipc,
+                options: { env: { ...process.env, ...nodePathEnv } }
+            },
             debug: {
                 module: serverModule,
                 transport: TransportKind.ipc,
-                options: { execArgv: ['--nolazy', '--inspect=6009'] }
+                options: { execArgv: ['--nolazy', '--inspect=6009'], env: { ...process.env, ...nodePathEnv } }
             }
         };
 
@@ -532,7 +541,7 @@ export class DeepnoteLspClientManager
      * @returns Path to the vscodeExtensionServer.js module for IPC transport
      */
     private getSqlLanguageServerModule(): string {
-        // Try require.resolve first - this handles different package layouts
+        // Try require.resolve first - this handles different package layouts (works in dev mode)
         try {
             const serverModule = require.resolve('@deepnote/sql-language-server/dist/bin/vscodeExtensionServer.js');
 
@@ -543,7 +552,8 @@ export class DeepnoteLspClientManager
             logger.trace('require.resolve failed, falling back to path construction:', error);
         }
 
-        // Fallback: use extension path construction
+        // Fallback: use extension path construction (works in packaged extension)
+        // The sql-language-server is bundled into dist/sqlLanguageServer.cjs during build
         let extensionPath = vscode.extensions.getExtension('Deepnote.vscode-deepnote')?.extensionPath;
 
         if (!extensionPath) {
@@ -552,20 +562,33 @@ export class DeepnoteLspClientManager
             logger.trace('Using __dirname to find extension path:', extensionPath);
         }
 
-        const serverModule = path.join(
-            extensionPath,
-            'node_modules',
-            '@deepnote',
-            'sql-language-server',
-            'dist',
-            'bin',
-            'vscodeExtensionServer.js'
-        );
+        const serverModule = path.join(extensionPath, 'dist', 'sqlLanguageServer.cjs');
         logger.trace('SQL LSP server module (fallback):', serverModule);
 
         return serverModule;
     }
 
+    /**
+     * Get the path to the sql-lsp-modules directory containing runtime dependencies
+     * @returns Path to the node_modules directory for SQL LSP, or undefined if not found
+     */
+    private getSqlLspModulesPath(): string | undefined {
+        let extensionPath = vscode.extensions.getExtension('Deepnote.vscode-deepnote')?.extensionPath;
+
+        if (!extensionPath) {
+            extensionPath = path.join(__dirname, '..', '..', '..');
+        }
+
+        const modulesPath = path.join(extensionPath, 'dist', 'sql-lsp-modules', 'node_modules');
+
+        // Return undefined if the directory doesn't exist
+        if (!fs.existsSync(modulesPath)) {
+            return undefined;
+        }
+
+        return modulesPath;
+    }
+
     /**
      * Get SQL connections configuration from integration storage for the current project.
      * Only returns integrations that are configured for the specific project.