Fix handling of empty settings (#18131)

packages/cli/src/config/extensions/extensionSettings.test.ts

@@ -786,6 +786,23 @@ describe('extensionSettings', () => {
       expect(await userKeychain.getSecret('VAR2')).toBeNull();
     });
 
+    it('should delete a non-sensitive setting if the new value is empty', async () => {
+      mockRequestSetting.mockResolvedValue('');
+
+      await updateSetting(
+        config,
+        '12345',
+        'VAR1',
+        mockRequestSetting,
+        ExtensionSettingScope.USER,
+        tempWorkspaceDir,
+      );
+
+      const expectedEnvPath = path.join(extensionDir, '.env');
+      const actualContent = await fsPromises.readFile(expectedEnvPath, 'utf-8');
+      expect(actualContent).not.toContain('VAR1=');
+    });
+
     it('should not throw if deleting a non-existent sensitive setting with empty value', async () => {
       mockRequestSetting.mockResolvedValue('');
       // Ensure it doesn't exist first

packages/cli/src/config/extensions/extensionSettings.ts

@@ -251,7 +251,11 @@ export async function updateSetting(
   }
 
   const parsedEnv = dotenv.parse(envContent);
-  parsedEnv[settingToUpdate.envVar] = newValue;
+  if (!newValue) {
+    delete parsedEnv[settingToUpdate.envVar];
+  } else {
+    parsedEnv[settingToUpdate.envVar] = newValue;
+  }
 
   // We only want to write back the variables that are not sensitive.
   const nonSensitiveSettings: Record<string, string> = {};