diff --git a/vscode/package.json b/vscode/package.json
index 584183418c..25b1f4222c 100644
--- a/vscode/package.json
+++ b/vscode/package.json
@@ -194,6 +194,10 @@
         {
           "command": "qsharp-vscode.populateFilesList",
           "when": "resourceFilename == qsharp.json"
+        },
+        {
+          "command": "qsharp-vscode.addProjectReference",
+          "when": "resourceFilename == qsharp.json"
         }
       ],
       "view/title": [
@@ -241,6 +245,10 @@
         {
           "command": "qsharp-vscode.populateFilesList",
           "when": "resourceFilename == qsharp.json"
+        },
+        {
+          "command": "qsharp-vscode.addProjectReference",
+          "when": "resourceFilename == qsharp.json"
         }
       ]
     },
@@ -378,6 +386,11 @@
         "command": "qsharp-vscode.populateFilesList",
         "category": "Q#",
         "title": "Populate qsharp.json files list"
+      },
+      {
+        "command": "qsharp-vscode.addProjectReference",
+        "category": "Q#",
+        "title": "Add Q# project reference"
       }
     ],
     "breakpoints": [
diff --git a/vscode/src/createProject.ts b/vscode/src/createProject.ts
index 80054269fb..08edc4729b 100644
--- a/vscode/src/createProject.ts
+++ b/vscode/src/createProject.ts
@@ -105,6 +105,22 @@ export async function initProjectCreator(context: vscode.ExtensionContext) {
         const files: string[] = [];
         const srcDir = vscode.Uri.joinPath(qsharpJsonUri, "..", "src");
 
+        // Verify the src directory exists
+        try {
+          const srcDirStat = await vscode.workspace.fs.stat(srcDir);
+          if (srcDirStat.type !== vscode.FileType.Directory) {
+            await vscode.window.showErrorMessage(
+              "The ./src path is not a directory",
+            );
+            return;
+          }
+        } catch (err) {
+          await vscode.window.showErrorMessage(
+            "The ./src directory does not exist. Create the directory and add .qs files to it",
+          );
+          return;
+        }
+
         async function getQsFilesInDir(dir: vscode.Uri) {
           const dirFiles = (await vscode.workspace.fs.readDirectory(dir)).sort(
             (a, b) => {
@@ -149,4 +165,199 @@ export async function initProjectCreator(context: vscode.ExtensionContext) {
       },
     ),
   );
+
+  type LocalProjectRef = {
+    path: string; // Absolute or relative path to the project dir
+  };
+
+  type GitHubProjectRef = {
+    github: {
+      owner: string;
+      repo: string;
+      ref: string;
+      path?: string; // Optional, defaults to the root of the repo
+    };
+  };
+
+  type Dependency = LocalProjectRef | GitHubProjectRef;
+
+  // TODO: Replace with a list of legitimate known Q# projects on GitHub
+  const githubProjects: { [name: string]: GitHubProjectRef } = {
+    assert: {
+      github: {
+        owner: "swernli",
+        repo: "MyQsLib",
+        ref: "29dc67f",
+      },
+    },
+    // Add a template to the end of the list users can use to easily add their own
+    "<id>": {
+      github: {
+        owner: "<owner>",
+        repo: "<project>",
+        ref: "<commit>",
+      },
+    },
+  };
+
+  // Given two directory paths, return the relative path from the first to the second
+  function getRelativeDirPath(from: string, to: string): string {
+    // Ensure we have something
+    if (!from || !to) throw "Invalid arguments";
+
+    // Trim trailing slashes (even from the root "/" case)
+    if (from.endsWith("/")) from = from.slice(0, -1);
+    if (to.endsWith("/")) to = to.slice(0, -1);
+
+    // Break both paths into their components
+    const fromParts = from.split("/");
+    const toParts = to.split("/");
+
+    // Remove the common beginning of the paths
+    while (fromParts[0] === toParts[0]) {
+      fromParts.shift();
+      toParts.shift();
+    }
+
+    // Add a .. for each remaining part in the from path
+    let result = "";
+    while (fromParts.length) {
+      result += "../";
+      fromParts.shift();
+    }
+    // Add the remaining path from the to path
+    result += toParts.join("/");
+    if (result.endsWith("/")) {
+      result = result.slice(0, -1);
+    }
+    return result;
+  }
+
+  context.subscriptions.push(
+    vscode.commands.registerCommand(
+      "qsharp-vscode.addProjectReference",
+      async (qsharpJsonUri: vscode.Uri | undefined) => {
+        // If called from the content menu qsharpJsonUri will be the full qsharp.json uri
+        // If called from the command palette is will be undefined, so use the active editor
+        log.info("addProjectReference called with", qsharpJsonUri);
+
+        qsharpJsonUri =
+          qsharpJsonUri ?? vscode.window.activeTextEditor?.document.uri;
+        if (!qsharpJsonUri) {
+          log.error(
+            "addProjectReference called, but argument or active editor is not qsharp.json",
+          );
+          return;
+        }
+
+        log.debug("Adding project reference to ", qsharpJsonUri.path);
+
+        // First, verify the qsharp.json can be opened and is a valid json file
+        const qsharpJsonDoc =
+          await vscode.workspace.openTextDocument(qsharpJsonUri);
+        if (!qsharpJsonDoc) {
+          log.error("Unable to open the qsharp.json file at ", qsharpJsonDoc);
+          return;
+        }
+        const qsharpJsonDir = vscode.Uri.joinPath(qsharpJsonUri, "..");
+
+        let manifestObj: any = {};
+        try {
+          manifestObj = JSON.parse(qsharpJsonDoc.getText());
+        } catch (err: any) {
+          await vscode.window.showErrorMessage(
+            `Unable to parse the contents of ${qsharpJsonUri.path}`,
+          );
+          return;
+        }
+
+        // Find all the other Q# projects in the workspace
+        const projectFiles = (
+          await vscode.workspace.findFiles("**/qsharp.json")
+        ).filter((file) => file.toString() !== qsharpJsonUri.toString());
+
+        const projectChoices: Array<{ name: string; ref: Dependency }> = [];
+
+        projectFiles.forEach((file) => {
+          const dirName = file.path.slice(0, -"/qsharp.json".length);
+          const relPath = getRelativeDirPath(qsharpJsonDir.path, dirName);
+          projectChoices.push({
+            name: dirName.slice(dirName.lastIndexOf("/") + 1),
+            ref: {
+              path: relPath,
+            },
+          });
+        });
+
+        Object.keys(githubProjects).forEach((name) => {
+          projectChoices.push({
+            name: name,
+            ref: githubProjects[name],
+          });
+        });
+
+        // Convert any spaces, dashes, dots, tildes, or quotes in project names
+        // to underscores. (Leave more 'exotic' non-identifier patterns to the user to fix)
+        //
+        // Note: At some point we may want to detect/avoid duplicate names, e.g. if the user already
+        // references a project via 'foo', and they add a reference to a 'foo' on GitHub or in another dir.
+        projectChoices.forEach(
+          (val, idx, arr) =>
+            (arr[idx].name = val.name.replace(/[- "'.~]/g, "_")),
+        );
+
+        const folderIcon = new vscode.ThemeIcon("folder");
+        const githubIcon = new vscode.ThemeIcon("github");
+
+        // Ask the user to pick a project to add as a reference
+        const projectChoice = await vscode.window.showQuickPick(
+          projectChoices.map((choice) => {
+            if ("github" in choice.ref) {
+              return {
+                label: choice.name,
+                detail: `github://${choice.ref.github.owner}/${choice.ref.github.repo}#${choice.ref.github.ref}`,
+                iconPath: githubIcon,
+                ref: choice.ref,
+              };
+            } else {
+              return {
+                label: choice.name,
+                detail: choice.ref.path,
+                iconPath: folderIcon,
+                ref: choice.ref,
+              };
+            }
+          }),
+          { placeHolder: "Pick a project to add as a reference" },
+        );
+
+        if (!projectChoice) {
+          log.info("User cancelled project choice");
+          return;
+        }
+
+        log.info("User picked project: ", projectChoice);
+
+        if (!manifestObj["dependencies"]) manifestObj["dependencies"] = {};
+        manifestObj["dependencies"][projectChoice.label] = projectChoice.ref;
+
+        // Apply the edits to the qsharp.json
+        const edit = new vscode.WorkspaceEdit();
+        edit.replace(
+          qsharpJsonUri,
+          new vscode.Range(0, 0, qsharpJsonDoc.lineCount, 0),
+          JSON.stringify(manifestObj, null, 2),
+        );
+        if (!(await vscode.workspace.applyEdit(edit))) {
+          vscode.window.showErrorMessage(
+            "Unable to update the qsharp.json file. Check the file is writable",
+          );
+          return;
+        }
+
+        // Bring the qsharp.json to the front for the user to save
+        await vscode.window.showTextDocument(qsharpJsonDoc);
+      },
+    ),
+  );
 }