diff --git a/Documentation/Configuration File.md b/Documentation/Configuration File.md
index e27dd770..7c3b6a4a 100644
--- a/Documentation/Configuration File.md	
+++ b/Documentation/Configuration File.md	
@@ -4,6 +4,7 @@
 - `~/.sourcekit-lsp/config.json`
 - On macOS: `~/Library/Application Support/org.swift.sourcekit-lsp/config.json` from the various `Library` folders on the system
 - If the `XDG_CONFIG_HOME` environment variable is set: `$XDG_CONFIG_HOME/org.swift.sourcekit-lsp/config.json`
+- Initialization options passed in the initialize request
 - A `.sourcekit-lsp/config.json` file in a workspace’s root
 
 The structure of the file is currently not guaranteed to be stable. Options may be removed or renamed.
diff --git a/Sources/SKCore/SourceKitLSPOptions.swift b/Sources/SKCore/SourceKitLSPOptions.swift
index cba4e327..0f9da813 100644
--- a/Sources/SKCore/SourceKitLSPOptions.swift
+++ b/Sources/SKCore/SourceKitLSPOptions.swift
@@ -12,7 +12,7 @@
 
 import Foundation
 import LSPLogging
-import SKCore
+import LanguageServerProtocol
 import SKSupport
 
 import struct TSCBasic.AbsolutePath
@@ -250,6 +250,21 @@ public struct SourceKitLSPOptions: Sendable, Codable {
     self.workDoneProgressDebounceDuration = workDoneProgressDebounceDuration
   }
 
+  public init?(fromLSPAny lspAny: LSPAny?) throws {
+    guard let lspAny else {
+      return nil
+    }
+    let jsonEncoded = try JSONEncoder().encode(lspAny)
+    self = try JSONDecoder().decode(Self.self, from: jsonEncoded)
+  }
+
+  public var asLSPAny: LSPAny {
+    get throws {
+      let jsonEncoded = try JSONEncoder().encode(self)
+      return try JSONDecoder().decode(LSPAny.self, from: jsonEncoded)
+    }
+  }
+
   public init?(path: URL?) {
     guard let path, let contents = try? String(contentsOf: path, encoding: .utf8) else {
       return nil
diff --git a/Sources/SKTestSupport/MultiFileTestProject.swift b/Sources/SKTestSupport/MultiFileTestProject.swift
index b25fa27f..5303cf46 100644
--- a/Sources/SKTestSupport/MultiFileTestProject.swift
+++ b/Sources/SKTestSupport/MultiFileTestProject.swift
@@ -80,6 +80,7 @@ public class MultiFileTestProject {
   public init(
     files: [RelativeFileLocation: String],
     workspaces: (URL) async throws -> [WorkspaceFolder] = { [WorkspaceFolder(uri: DocumentURI($0))] },
+    initializationOptions: LSPAny? = nil,
     capabilities: ClientCapabilities = ClientCapabilities(),
     options: SourceKitLSPOptions = .testDefault(),
     testHooks: TestHooks = TestHooks(),
@@ -118,6 +119,7 @@ public class MultiFileTestProject {
     self.testClient = try await TestSourceKitLSPClient(
       options: options,
       testHooks: testHooks,
+      initializationOptions: initializationOptions,
       capabilities: capabilities,
       usePullDiagnostics: usePullDiagnostics,
       enableBackgroundIndexing: enableBackgroundIndexing,
diff --git a/Sources/SKTestSupport/SwiftPMTestProject.swift b/Sources/SKTestSupport/SwiftPMTestProject.swift
index d481cf63..5ffdb410 100644
--- a/Sources/SKTestSupport/SwiftPMTestProject.swift
+++ b/Sources/SKTestSupport/SwiftPMTestProject.swift
@@ -150,6 +150,7 @@ public class SwiftPMTestProject: MultiFileTestProject {
     files: [RelativeFileLocation: String],
     manifest: String = SwiftPMTestProject.defaultPackageManifest,
     workspaces: (URL) async throws -> [WorkspaceFolder] = { [WorkspaceFolder(uri: DocumentURI($0))] },
+    initializationOptions: LSPAny? = nil,
     capabilities: ClientCapabilities = ClientCapabilities(),
     options: SourceKitLSPOptions = .testDefault(),
     testHooks: TestHooks = TestHooks(),
@@ -190,6 +191,7 @@ public class SwiftPMTestProject: MultiFileTestProject {
     try await super.init(
       files: filesByPath,
       workspaces: workspaces,
+      initializationOptions: initializationOptions,
       capabilities: capabilities,
       options: options,
       testHooks: testHooks,
diff --git a/Sources/SourceKitLSP/SourceKitLSPServer.swift b/Sources/SourceKitLSP/SourceKitLSPServer.swift
index 2e218002..3c8148bb 100644
--- a/Sources/SourceKitLSP/SourceKitLSPServer.swift
+++ b/Sources/SourceKitLSP/SourceKitLSPServer.swift
@@ -104,7 +104,7 @@ public actor SourceKitLSPServer {
   /// This ensures that we only inform the user about background indexing not being supported for these projects once.
   private var didSendBackgroundIndexingNotSupportedNotification = false
 
-  let options: SourceKitLSPOptions
+  var options: SourceKitLSPOptions
 
   let testHooks: TestHooks
 
@@ -959,6 +959,10 @@ extension SourceKitLSPServer {
 
   func initialize(_ req: InitializeRequest) async throws -> InitializeResult {
     capabilityRegistry = CapabilityRegistry(clientCapabilities: req.capabilities)
+    self.options = SourceKitLSPOptions.merging(
+      base: self.options,
+      override: orLog("Parsing SourceKitLSPOptions", { try SourceKitLSPOptions(fromLSPAny: req.initializationOptions) })
+    )
 
     await workspaceQueue.async { [testHooks] in
       if let workspaceFolders = req.workspaceFolders {
@@ -983,12 +987,13 @@ extension SourceKitLSPServer {
       if self.workspaces.isEmpty {
         logger.error("No workspace found")
 
+        let options = self.options
         let workspace = await Workspace(
           documentManager: self.documentManager,
           rootUri: req.rootURI,
           capabilityRegistry: self.capabilityRegistry!,
           toolchainRegistry: self.toolchainRegistry,
-          options: self.options,
+          options: options,
           testHooks: testHooks,
           underlyingBuildSystem: nil,
           index: nil,
diff --git a/Tests/SourceKitLSPTests/WorkspaceTests.swift b/Tests/SourceKitLSPTests/WorkspaceTests.swift
index f5e3c3c6..5542c44f 100644
--- a/Tests/SourceKitLSPTests/WorkspaceTests.swift
+++ b/Tests/SourceKitLSPTests/WorkspaceTests.swift
@@ -861,4 +861,68 @@ final class WorkspaceTests: XCTestCase {
     }
     XCTAssertEqual(diagnostics.items.map(\.message), ["Cannot convert value of type 'Int' to specified type 'String'"])
   }
+
+  func testOptionsInInitializeRequest() async throws {
+    let project = try await SwiftPMTestProject(
+      files: [
+        "Test.swift": """
+        func test() {
+        #if TEST
+          let x: String = 1
+        #endif
+        }
+        """
+      ],
+      initializationOptions: SourceKitLSPOptions(
+        swiftPM: SourceKitLSPOptions.SwiftPMOptions(swiftCompilerFlags: ["-D", "TEST"])
+      ).asLSPAny
+    )
+
+    let (uri, _) = try project.openDocument("Test.swift")
+    let diagnostics = try await project.testClient.send(
+      DocumentDiagnosticsRequest(textDocument: TextDocumentIdentifier(uri))
+    )
+    guard case .full(let diagnostics) = diagnostics else {
+      XCTFail("Expected full diagnostics")
+      return
+    }
+    XCTAssertEqual(diagnostics.items.map(\.message), ["Cannot convert value of type 'Int' to specified type 'String'"])
+  }
+
+  func testWorkspaceOptionsOverrideGlobalOptions() async throws {
+    let project = try await SwiftPMTestProject(
+      files: [
+        "/.sourcekit-lsp/config.json": """
+        {
+          "swiftPM": {
+            "swiftCompilerFlags": ["-D", "TEST"]
+          }
+        }
+        """,
+        "Test.swift": """
+        func test() {
+        #if TEST
+          let x: String = 1
+        #endif
+        #if OTHER
+          let x: String = 1.0
+        #endif
+        }
+        """,
+      ],
+      initializationOptions: SourceKitLSPOptions(
+        swiftPM: SourceKitLSPOptions.SwiftPMOptions(swiftCompilerFlags: ["-D", "OTHER"])
+      ).asLSPAny
+    )
+
+    let (uri, _) = try project.openDocument("Test.swift")
+    let diagnostics = try await project.testClient.send(
+      DocumentDiagnosticsRequest(textDocument: TextDocumentIdentifier(uri))
+    )
+    guard case .full(let diagnostics) = diagnostics else {
+      XCTFail("Expected full diagnostics")
+      return
+    }
+    XCTAssertEqual(diagnostics.items.map(\.message), ["Cannot convert value of type 'Int' to specified type 'String'"])
+  }
 }