diff --git a/src/vs/workbench/api/browser/mainThreadLanguageFeatures.ts b/src/vs/workbench/api/browser/mainThreadLanguageFeatures.ts
index c744021cf31d8..b4393ec99b119 100644
--- a/src/vs/workbench/api/browser/mainThreadLanguageFeatures.ts
+++ b/src/vs/workbench/api/browser/mainThreadLanguageFeatures.ts
@@ -632,6 +632,11 @@ export class MainThreadLanguageFeatures extends Disposable implements MainThread
 					await this._proxy.$handleInlineCompletionPartialAccept(handle, completions.pid, item.idx, acceptedCharacters, info);
 				}
 			},
+			handleRejection: async (completions, item): Promise<void> => {
+				if (supportsHandleEvents) {
+					await this._proxy.$handleInlineCompletionRejection(handle, completions.pid, item.idx);
+				}
+			},
 			freeInlineCompletions: (completions: IdentifiableInlineCompletions): void => {
 				this._proxy.$freeInlineCompletionsList(handle, completions.pid);
 			},
diff --git a/src/vs/workbench/api/common/extHost.protocol.ts b/src/vs/workbench/api/common/extHost.protocol.ts
index 0e4072c38d904..853347b81e47a 100644
--- a/src/vs/workbench/api/common/extHost.protocol.ts
+++ b/src/vs/workbench/api/common/extHost.protocol.ts
@@ -2333,6 +2333,7 @@ export interface ExtHostLanguageFeaturesShape {
 	$provideInlineEditsForRange(handle: number, resource: UriComponents, range: IRange, context: languages.InlineCompletionContext, token: CancellationToken): Promise<IdentifiableInlineCompletions | undefined>;
 	$handleInlineCompletionDidShow(handle: number, pid: number, idx: number, updatedInsertText: string): void;
 	$handleInlineCompletionPartialAccept(handle: number, pid: number, idx: number, acceptedCharacters: number, info: languages.PartialAcceptInfo): void;
+	$handleInlineCompletionRejection(handle: number, pid: number, idx: number): void;
 	$freeInlineCompletionsList(handle: number, pid: number): void;
 	$provideSignatureHelp(handle: number, resource: UriComponents, position: IPosition, context: languages.SignatureHelpContext, token: CancellationToken): Promise<ISignatureHelpDto | undefined>;
 	$releaseSignatureHelp(handle: number, id: number): void;
diff --git a/src/vs/workbench/api/common/extHostLanguageFeatures.ts b/src/vs/workbench/api/common/extHostLanguageFeatures.ts
index a44a8709b8ba2..89c0a65611b7a 100644
--- a/src/vs/workbench/api/common/extHostLanguageFeatures.ts
+++ b/src/vs/workbench/api/common/extHostLanguageFeatures.ts
@@ -1314,6 +1314,8 @@ class InlineCompletionAdapterBase {
 	handleDidShowCompletionItem(pid: number, idx: number, updatedInsertText: string): void { }
 
 	handlePartialAccept(pid: number, idx: number, acceptedCharacters: number, info: languages.PartialAcceptInfo): void { }
+
+	handleRejection(pid: number, idx: number): void { }
 }
 
 class InlineCompletionAdapter extends InlineCompletionAdapterBase {
@@ -1538,6 +1540,15 @@ class InlineCompletionAdapter extends InlineCompletionAdapterBase {
 			}
 		}
 	}
+
+	override handleRejection(pid: number, idx: number): void {
+		const completionItem = this._references.get(pid)?.items[idx];
+		if (completionItem) {
+			if (this._provider.handleDidRejectCompletionItem && this._isAdditionsProposedApiEnabled) {
+				this._provider.handleDidRejectCompletionItem(completionItem);
+			}
+		}
+	}
 }
 
 class InlineEditAdapter {
@@ -2706,6 +2717,12 @@ export class ExtHostLanguageFeatures implements extHostProtocol.ExtHostLanguageF
 		}, undefined, undefined);
 	}
 
+	$handleInlineCompletionRejection(handle: number, pid: number, idx: number): void {
+		this._withAdapter(handle, InlineCompletionAdapterBase, async adapter => {
+			adapter.handleRejection(pid, idx);
+		}, undefined, undefined);
+	}
+
 	$freeInlineCompletionsList(handle: number, pid: number): void {
 		this._withAdapter(handle, InlineCompletionAdapterBase, async adapter => { adapter.disposeCompletions(pid); }, undefined, undefined);
 	}
diff --git a/src/vscode-dts/vscode.proposed.inlineCompletionsAdditions.d.ts b/src/vscode-dts/vscode.proposed.inlineCompletionsAdditions.d.ts
index 8ab645ba5f98a..cea764b6ef58b 100644
--- a/src/vscode-dts/vscode.proposed.inlineCompletionsAdditions.d.ts
+++ b/src/vscode-dts/vscode.proposed.inlineCompletionsAdditions.d.ts
@@ -76,6 +76,13 @@ declare module 'vscode' {
 		// eslint-disable-next-line local/vscode-dts-provider-naming
 		handleDidPartiallyAcceptCompletionItem?(completionItem: InlineCompletionItem, info: PartialAcceptInfo): void;
 
+		/**
+		 * Is called when an inline completion item was rejected.
+		 * @param completionItem The completion item that was rejected.
+		 */
+		// eslint-disable-next-line local/vscode-dts-provider-naming
+		handleDidRejectCompletionItem?(completionItem: InlineCompletionItem): void;
+
 		provideInlineEditsForRange?(document: TextDocument, range: Range, context: InlineCompletionContext, token: CancellationToken): ProviderResult<InlineCompletionItem[] | InlineCompletionList>;
 
 		readonly debounceDelayMs?: number;