diff --git a/src/extension.ts b/src/extension.ts
index 207e2199..3ef51ada 100644
--- a/src/extension.ts
+++ b/src/extension.ts
@@ -11,7 +11,7 @@
  */
 
 import { prepareExecutable } from './javaServerStarter';
-import { LanguageClientOptions, RevealOutputChannelOn, LanguageClient, DidChangeConfigurationNotification, RequestType, TextDocumentPositionParams, ReferencesRequest, NotificationType, MessageType } from 'vscode-languageclient';
+import { LanguageClientOptions, RevealOutputChannelOn, LanguageClient, DidChangeConfigurationNotification, RequestType, TextDocumentPositionParams, ReferencesRequest, NotificationType, MessageType, ShowMessageNotification } from 'vscode-languageclient';
 import * as requirements from './requirements';
 import { languages, IndentAction, workspace, window, commands, ExtensionContext, TextDocument, Position, LanguageConfiguration, Uri, extensions, Command } from "vscode";
 import * as path from 'path';
@@ -249,6 +249,13 @@ export function activate(context: ExtensionContext) {
         }));
       }
 
+      // When the current document changes, update ${fileDirname} and ${fileBasenameNoExtension}
+      // for the file associations, and send the updated settings to the server
+      context.subscriptions.push(window.onDidChangeActiveTextEditor(() => {
+        languageClient.sendNotification(DidChangeConfigurationNotification.type, { settings: getXMLSettings(requirements.java_home) });
+        onConfigurationChange();
+      }));
+
       const api: XMLExtensionApi = {
         // add API set catalogs to internal memory
         addXMLCatalogs: (catalogs: string[]) => {
@@ -349,11 +356,50 @@ export function activate(context: ExtensionContext) {
         xml['xml']['catalogs'].push(catalog);
       }
     })
-    externalXmlSettings.xmlFileAssociations.forEach(element => {
-      if (!xml['xml']['fileAssociations'].some(fileAssociation => fileAssociation.systemId === element.systemId)) {
-        xml['xml']['fileAssociations'].push(element);
+    const variableSubstitutedAssociations: XMLFileAssociation[] =
+        xml['xml']['fileAssociations'].map((association: XMLFileAssociation): XMLFileAssociation => {
+
+      const currentFile: string = window.activeTextEditor.document.uri.fsPath;
+      const currentWorkspace: string = workspace.getWorkspaceFolder(window.activeTextEditor.document.uri).uri.fsPath
+          ?? workspace.workspaceFolders[0].uri.fsPath;
+
+      if (!currentWorkspace
+          && (association.pattern.indexOf('&{workspaceFolder}') >= 0
+            || association.systemId.indexOf('&{workspaceFolder}') >= 0)) {
+        return;
+      }
+
+      if (!currentFile
+          && (association.pattern.indexOf('&{fileDirname}') >= 0
+            || association.systemId.indexOf('&{fileDirname}') >= 0
+            || association.pattern.indexOf('&{fileBasenameNoExtension}') >= 0
+            || association.systemId.indexOf('&{fileBasenameNoExtension}') >= 0)) {
+        return;
+      }
+
+      /**
+       * Returns the string with the values for:
+       * * ${workspaceFolder}
+       * * ${fileDirname}
+       * * ${fileBasenameNoExtension}
+       * substituted into the string
+       *
+       * @param val the value to substitute the variables into
+       * @return the string with values for the variables subtituted into the string
+       */
+      const subVars = (val: string): string => {
+        let newVal: string = val.replace(/\$\{workspaceFolder\}/g, currentWorkspace);
+        newVal = newVal.replace(/\$\{fileDirname\}/g, path.dirname(currentFile));
+        newVal = newVal.replace(/\$\{fileBasenameNoExtension\}/g, path.basename(currentFile, path.extname(currentFile)));
+        return newVal;
       }
+
+      return {
+        pattern: subVars(association.pattern),
+        systemId: subVars(association.systemId)
+      };
     });
+    xml['xml']['fileAssociations'] = [...variableSubstitutedAssociations];
 
     return xml;
   }