AWS has announced the integration of LocalStack with the AWS Toolkit for Visual Studio Code, addressing a long-standing challenge in serverless development where developers needed to juggle multiple tools and complex configurations for local testing of event-driven applications.
The integration, available in AWS Toolkit for VS Code version 3.74.0, allows developers to connect directly to LocalStack endpoints from within their IDE. This eliminates the previous requirement for manual endpoint configuration and context switching between different development tools when testing serverless applications that involve multiple AWS services like Amazon SQS, EventBridge, and DynamoDB.
While AWS SAM CLI has provided effective local testing for individual Lambda functions, developers working with event-driven architectures involving multiple AWS services faced significant friction. Although LocalStack provided local emulation of AWS services, developers had to previously manage it as a standalone tool, requiring complex configuration and frequent context switching between multiple interfaces, which slowed down the development cycle.
The new integration transforms this experience by embedding LocalStack management directly into the VS Code interface. Developers can now install LocalStack through a guided walkthrough, deploy serverless applications to the emulated environment, and test functions locally without leaving their IDE.
Standard output from AWS SAM, as well as LocalStack
The LocalStack integration complements AWS’s recently launched console-to-IDE integration and remote debugging capabilities, creating what the company describes as a tiered testing approach. During early development phases, developers can use LocalStack for rapid iteration without dealing with IAM permissions, VPC configurations, or service boundary complexities. When validation against actual AWS service behaviors becomes necessary, they can seamlessly transition to cloud-based testing using remote debugging capabilities.
This approach allows developers to focus on business logic during initial development while maintaining the flexibility to test against real AWS environments when needed. The integration supports deployment using familiar AWS SAM CLI commands, with developers able to run sam deploy --guided --profile localstack to deploy their stacks to the local environment.
The setup process has been streamlined significantly. Through the Application Builder walkthrough in VS Code, developers can install LocalStack with a single click, automatically installing the LocalStack extension and configuring the necessary connections. Once configured, LocalStack appears as a selectable profile alongside other AWS configurations, making it seamless to switch between local and cloud deployments.
The feature is available across all commercial AWS regions except AWS GovCloud (US) regions, with no additional costs from AWS for using the integration. Developers can start with the free LocalStack version for core AWS service emulation, with additional tiers available for expanded service coverage and advanced capabilities.
This integration represents part of AWS’s broader strategy to make VS Code the preferred development environment for serverless applications. Combined with previous enhancements, including console-to-IDE integration and remote debugging features launched earlier in 2025, these tools create a more cohesive development experience that addresses different testing needs throughout the application lifecycle.
The move also reflects the growing importance of local development environments in serverless workflows, where rapid iteration and debugging capabilities are essential for developer productivity. By reducing the operational overhead of managing separate emulation tools, AWS is addressing one of the key friction points that have historically slowed serverless development cycles.
Several alternatives to LocalStack exist, each tailored to different testing and development needs. Moto is one of the most popular, offering a Python library that mocks many AWS services at the SDK level. Instead of emulating a full AWS environment, Moto intercepts requests to AWS SDKs and returns mocked responses, making it lightweight and effective for unit and integration testing. However, because it doesn’t recreate service endpoints or networking, it’s less suitable for end-to-end or system testing where realistic AWS-like behavior is required. Another strong option is the AWS SAM CLI, which allows developers to build and test serverless applications locally. It’s especially useful for Lambda and API Gateway workflows, providing teams with a way to simulate deployments and trigger functions using mock events. While limited to serverless stacks and lacking support for many AWS services, it provides a close approximation of Lambda execution. For more fine-grained control, Testcontainers provides flexibility. Testcontainers allows developers to spin up Dockerized versions of individual services, such as DynamoDB Local or S3-like storage, within ephemeral containers for reproducible integration tests. Together, these alternatives illustrate that while LocalStack provides the most comprehensive “AWS in a box” approach, there are targeted, often lighter-weight solutions that may be a better fit depending on the project’s scope.
