diff --git a/package.json b/package.json
index 55b4ef2cec06c..d298ee3603911 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "code-oss-dev",
-  "version": "1.54.2",
+  "version": "1.54.3",
   "distro": "28e2c339381bc0156a513a647044295f0d311d8e",
   "author": {
     "name": "Microsoft Corporation"
diff --git a/src/vs/base/node/extpath.ts b/src/vs/base/node/extpath.ts
index b43c407d519a8..eaf62cd8e1251 100644
--- a/src/vs/base/node/extpath.ts
+++ b/src/vs/base/node/extpath.ts
@@ -4,6 +4,7 @@
  *--------------------------------------------------------------------------------------------*/
 
 import * as fs from 'fs';
+import { promisify } from 'util';
 import { rtrim } from 'vs/base/common/strings';
 import { sep, join, normalize, dirname, basename } from 'vs/base/common/path';
 import { readdirSync } from 'vs/base/node/pfs';
@@ -52,7 +53,11 @@ export function realcaseSync(path: string): string | null {
 
 export async function realpath(path: string): Promise<string> {
 	try {
-		return await fs.promises.realpath(path);
+		// DO NOT USE `fs.promises.realpath` here as it internally
+		// calls `fs.native.realpath` which will result in subst
+		// drives to be resolved to their target on Windows
+		// https://github.com/microsoft/vscode/issues/118562
+		return await promisify(fs.realpath)(path);
 	} catch (error) {
 
 		// We hit an error calling fs.realpath(). Since fs.realpath() is doing some path normalization