diff --git a/src/vs/workbench/browser/parts/editor/textDiffEditor.ts b/src/vs/workbench/browser/parts/editor/textDiffEditor.ts
index 67e7442ffd765833facfaa52276d3b756aaae461..1b239b03cddeb20fe29a5fab22259039898734dc 100644
--- a/src/vs/workbench/browser/parts/editor/textDiffEditor.ts
+++ b/src/vs/workbench/browser/parts/editor/textDiffEditor.ts
@@ -31,6 +31,7 @@ import { EditorActivation, IEditorOptions } from 'vs/platform/editor/common/edit
 import { IContextKeyService } from 'vs/platform/contextkey/common/contextkey';
 import { isEqual } from 'vs/base/common/resources';
 import { multibyteAwareBtoa } from 'vs/base/browser/dom';
+import { IFileService } from 'vs/platform/files/common/files';
 
 /**
  * The text editor that leverages the diff text editor for the editing experience.
@@ -61,9 +62,28 @@ export class TextDiffEditor extends BaseTextEditor implements ITextDiffEditorPan
 		@ITextResourceConfigurationService configurationService: ITextResourceConfigurationService,
 		@IEditorService editorService: IEditorService,
 		@IThemeService themeService: IThemeService,
-		@IEditorGroupsService editorGroupService: IEditorGroupsService
+		@IEditorGroupsService editorGroupService: IEditorGroupsService,
+		@IFileService private readonly fileService: IFileService
 	) {
 		super(TextDiffEditor.ID, telemetryService, instantiationService, storageService, configurationService, themeService, editorService, editorGroupService);
+
+		// Listen to file system provider changes
+		this._register(this.fileService.onDidChangeFileSystemProviderCapabilities(e => this.onDidFileSystemProviderChange(e.scheme)));
+		this._register(this.fileService.onDidChangeFileSystemProviderRegistrations(e => this.onDidFileSystemProviderChange(e.scheme)));
+	}
+
+	private onDidFileSystemProviderChange(scheme: string): void {
+		const control = this.getControl();
+		const input = this.input;
+
+		if (control && input instanceof DiffEditorInput) {
+			if (input.originalInput.resource?.scheme === scheme || input.modifiedInput.resource?.scheme === scheme) {
+				control.updateOptions({
+					readOnly: input.modifiedInput.isReadonly(),
+					originalEditable: !input.originalInput.isReadonly()
+				});
+			}
+		}
 	}
 
 	protected onWillCloseEditorInGroup(editor: IEditorInput): void {
diff --git a/src/vs/workbench/contrib/files/browser/editors/textFileEditor.ts b/src/vs/workbench/contrib/files/browser/editors/textFileEditor.ts
index 2ba73b76a95874e80be3cc8bd9d9c801553d77c2..82731d702fa98a477c94942e4d6179246415cd0d 100644
--- a/src/vs/workbench/contrib/files/browser/editors/textFileEditor.ts
+++ b/src/vs/workbench/contrib/files/browser/editors/textFileEditor.ts
@@ -60,6 +60,10 @@ export class TextFileEditor extends BaseTextEditor {
 
 		// Move view state for moved files
 		this._register(this.fileService.onDidRunOperation(e => this.onDidRunOperation(e)));
+
+		// Listen to file system provider changes
+		this._register(this.fileService.onDidChangeFileSystemProviderCapabilities(e => this.onDidFileSystemProviderChange(e.scheme)));
+		this._register(this.fileService.onDidChangeFileSystemProviderRegistrations(e => this.onDidFileSystemProviderChange(e.scheme)));
 	}
 
 	private onDidFilesChange(e: FileChangesEvent): void {
@@ -75,6 +79,14 @@ export class TextFileEditor extends BaseTextEditor {
 		}
 	}
 
+	private onDidFileSystemProviderChange(scheme: string): void {
+		const control = this.getControl();
+		const input = this.input;
+		if (control && input?.resource.scheme === scheme) {
+			control.updateOptions({ readOnly: input.isReadonly() });
+		}
+	}
+
 	protected onWillCloseEditorInGroup(editor: IEditorInput): void {
 
 		// React to editors closing to preserve or clear view state. This needs to happen