diff --git a/src/vs/workbench/services/files/node/watcher/nsfw/nsfwWatcherService.ts b/src/vs/workbench/services/files/node/watcher/nsfw/nsfwWatcherService.ts
index b05274d5856eb3c2124612e23596c38418f82037..d3ef72006c88c7d3090f6c755bacdb355f3734b4 100644
--- a/src/vs/workbench/services/files/node/watcher/nsfw/nsfwWatcherService.ts
+++ b/src/vs/workbench/services/files/node/watcher/nsfw/nsfwWatcherService.ts
@@ -15,6 +15,7 @@ import { ThrottledDelayer } from 'vs/base/common/async';
 import { FileChangeType } from 'vs/platform/files/common/files';
 import { normalizeNFC } from 'vs/base/common/normalization';
 import { Event, Emitter } from 'vs/base/common/event';
+import { realcaseSync, realpathSync } from 'vs/base/node/extfs';
 
 const nsfwActionToRawChangeType: { [key: number]: number } = [];
 nsfwActionToRawChangeType[nsfw.actions.CREATED] = FileChangeType.ADDED;
@@ -70,6 +71,34 @@ export class NsfwWatcherService implements IWatcherService {
 			}
 		});
 
+		// NSFW does not report file changes in the path provided on macOS if
+		// - the path uses wrong casing
+		// - the path is a symbolic link
+		// We have to detect this case and massage the events to correct this.
+		let realBasePathDiffers = false;
+		let realBasePathLength = request.basePath.length;
+		if (platform.isMacintosh) {
+			try {
+
+				// First check for symbolic link
+				let realBasePath = realpathSync(request.basePath);
+
+				// Second check for casing difference
+				if (request.basePath === realBasePath) {
+					realBasePath = (realcaseSync(request.basePath) || request.basePath);
+				}
+
+				if (request.basePath !== realBasePath) {
+					realBasePathLength = realBasePath.length;
+					realBasePathDiffers = true;
+
+					console.warn(`Watcher basePath does not match version on disk and will be corrected (original: ${request.basePath}, real: ${realBasePath})`);
+				}
+			} catch (error) {
+				// ignore
+			}
+		}
+
 		nsfw(request.basePath, events => {
 			for (let i = 0; i < events.length; i++) {
 				const e = events[i];
@@ -114,9 +143,17 @@ export class NsfwWatcherService implements IWatcherService {
 				const events = undeliveredFileEvents;
 				undeliveredFileEvents = [];
 
-				// Mac uses NFD unicode form on disk, but we want NFC
 				if (platform.isMacintosh) {
-					events.forEach(e => e.path = normalizeNFC(e.path));
+					events.forEach(e => {
+
+						// Mac uses NFD unicode form on disk, but we want NFC
+						e.path = normalizeNFC(e.path);
+
+						// Convert paths back to original form in case it differs
+						if (realBasePathDiffers) {
+							e.path = request.basePath + e.path.substr(realBasePathLength);
+						}
+					});
 				}
 
 				// Broadcast to clients normalized