diff --git a/src/vs/code/node/cliProcessMain.ts b/src/vs/code/node/cliProcessMain.ts
index af389ec5dc270693eec6da9d1e9a16212f0d9f6d..001eda9bb5492dc982e604e45a4efd28f6bcd51b 100644
--- a/src/vs/code/node/cliProcessMain.ts
+++ b/src/vs/code/node/cliProcessMain.ts
@@ -140,8 +140,18 @@ class Main {
 								return TPromise.wrapError(new Error(`${notFound(id)}\n${useId}`));
 							}
 
-							console.log(localize('foundExtension', "Found '{0}' in the marketplace.", id));
-							console.log(localize('installing', "Installing..."));
+							const installedExtension = installed.filter(e => getId(e.manifest) === id)[0];
+							const installedVersion = installedExtension.manifest.version;
+							const newestVersion = extension.version;
+							const shouldUpdate = installedVersion !== newestVersion;
+
+							if (shouldUpdate) {
+								console.log(localize('foundNewerVersion', "Installed version is '{0}', found newer version '{1}' in the marketplace.", installedVersion, newestVersion));
+								console.log(localize('updating', "Updating..."));
+							} else {
+								console.log(localize('foundExtension', "Found '{0}' in the marketplace.", id));
+								console.log(localize('installing', "Installing..."));
+							}
 
 							return this.extensionManagementService.installFromGallery(extension)
 								.then(