diff --git a/src/settings.ts b/src/settings.ts
index 1e3330ed2..eee8d8367 100644
--- a/src/settings.ts
+++ b/src/settings.ts
@@ -5,7 +5,7 @@ import * as path from 'path';
 import { commands, ConfigurationTarget, env, ExtensionContext, Position, Range, Selection, SnippetString, TextDocument, Uri, window, workspace, WorkspaceConfiguration, WorkspaceFolder } from 'vscode';
 import { Commands } from './commands';
 import { cleanupLombokCache } from './lombokSupport';
-import { ensureExists, getJavaConfiguration } from './utils';
+import { ensureExists, getJavaConfiguration, resolvePathVariables } from './utils';
 import { apiManager } from './apiManager';
 import { isActive, setActive, smartSemicolonDetection } from './smartSemicolonDetection';
 import { BuildFileSelector, IMPORT_METHOD, PICKED_BUILD_FILES } from './buildFilesSelector';
@@ -242,7 +242,7 @@ export async function checkJavaPreferences(context: ExtensionContext): Promise<{
 	}
 
 	return {
-		javaHome,
+		javaHome: resolvePathVariables(javaHome),
 		preference
 	};
 }
diff --git a/src/utils.ts b/src/utils.ts
index 02a0becd5..7b3a739c0 100644
--- a/src/utils.ts
+++ b/src/utils.ts
@@ -284,6 +284,8 @@ export async function getJavaConfig(javaHome: string) {
 		javaConfig.implementationCodeLens = deprecatedImplementations ? "types" : "none";
 	}
 
+	javaConfig.import.gradle.java.home = resolvePathVariables(javaConfig.import.gradle.java.home);
+
 	return javaConfig;
 }
 
@@ -363,6 +365,13 @@ export function getVSCodeVariablesMap(): any {
 	return res;
 }
 
+export function resolvePathVariables(pathStr: string): string {
+	if (!pathStr) {
+		return pathStr;
+	}
+	return vscodeVariables(pathStr);
+}
+
 /**
  * Check if the extension version is a pre-release version or running an insider editor.
  * @param context The extension context or extension path