diff --git a/src/NewProjectLocation.res b/src/NewProjectLocation.res
index 0535219..fe2f0a5 100644
--- a/src/NewProjectLocation.res
+++ b/src/NewProjectLocation.res
@@ -2,6 +2,7 @@ open Node
 
 let currentDirectoryArgument = "."
 let packageNameRegExp = /^[a-z0-9-]+$/
+let devcontainerDirectoryName = ".devcontainer"
 
 let allowedCurrentDirectoryEntries = [
   ".git",
@@ -27,17 +28,38 @@ let getPackageName = (~cwd=Process.cwd(), projectName) =>
 let getProjectPath = (~cwd=Process.cwd(), projectName) =>
   isCurrentDirectoryProject(projectName) ? cwd : Path.join2(cwd, projectName)
 
-let isAllowedCurrentDirectoryEntry = entry => {
+let hasDevcontainerDirectory = projectPath =>
+  try {
+    Path.join2(projectPath, devcontainerDirectoryName)->Fs.statSync->Fs.Stats.isDirectory
+  } catch {
+  | Exn.Error(_) => false
+  }
+
+let containsOnlyDevcontainerDirectory = projectPath =>
+  try {
+    switch Fs.readdirSync(projectPath) {
+    | [entry] if entry === devcontainerDirectoryName => hasDevcontainerDirectory(projectPath)
+    | _ => false
+    }
+  } catch {
+  | Exn.Error(_) => false
+  }
+
+let isAllowedCurrentDirectoryEntry = (~cwd, entry) => {
   let normalizedEntry = entry->String.toLowerCase
 
-  allowedCurrentDirectoryEntries
-  ->Array.find(allowedEntry => allowedEntry === normalizedEntry)
-  ->Option.isSome
+  switch entry {
+  | ".devcontainer" => hasDevcontainerDirectory(cwd)
+  | _ =>
+    allowedCurrentDirectoryEntries
+    ->Array.find(allowedEntry => allowedEntry === normalizedEntry)
+    ->Option.isSome
+  }
 }
 
 let validateCurrentDirectory = cwd => {
   let disallowedEntries =
-    Fs.readdirSync(cwd)->Array.filter(entry => !(entry->isAllowedCurrentDirectoryEntry))
+    Fs.readdirSync(cwd)->Array.filter(entry => !isAllowedCurrentDirectoryEntry(~cwd, entry))
 
   switch disallowedEntries {
   | [] => Ok()
@@ -54,7 +76,10 @@ let validateProjectName = (~cwd=Process.cwd(), projectName) => {
     Error("Project name may only contain lower case letters, numbers and hyphens.")
   } else if isCurrentDirectoryProject(projectName) {
     validateCurrentDirectory(cwd)
-  } else if Fs.existsSync(getProjectPath(~cwd, projectName)) {
+  } else if (
+    Fs.existsSync(getProjectPath(~cwd, projectName)) &&
+    !(getProjectPath(~cwd, projectName)->containsOnlyDevcontainerDirectory)
+  ) {
     Error(`The folder ${projectName} already exist in the current directory.`)
   } else {
     Ok()
diff --git a/src/bindings/Node.res b/src/bindings/Node.res
index 44a7f9a..893e7da 100644
--- a/src/bindings/Node.res
+++ b/src/bindings/Node.res
@@ -6,6 +6,14 @@ module Fs = {
   @module("node:fs")
   external readFileSync: (string, @as(json`"utf8"`) _) => string = "readFileSync"
 
+  type stats
+
+  @module("node:fs") external statSync: string => stats = "statSync"
+
+  module Stats = {
+    @send external isDirectory: stats => bool = "isDirectory"
+  }
+
   module Promises = {
     @module("node:fs") @scope("promises")
     external readFile: (string, @as(json`"utf8"`) _) => promise<string> = "readFile"
diff --git a/test/NewProjectLocationTest.res b/test/NewProjectLocationTest.res
index a35d540..4a5a182 100644
--- a/test/NewProjectLocationTest.res
+++ b/test/NewProjectLocationTest.res
@@ -71,4 +71,50 @@ Test.describe("NewProjectLocation", () => {
     )
     await cleanupTestRoot()
   })
+
+  Test.testAsync("allows devcontainer-only project directories", async () => {
+    let projectPath = await resetTestRoot("my-app")
+    await Fs.Promises.mkdir(Path.join2(projectPath, ".devcontainer"))
+
+    NewProjectLocation.validateProjectName(~cwd=testRoot, "my-app")->assertValidationOk
+    NewProjectLocation.validateProjectName(~cwd=projectPath, ".")->assertValidationOk
+    NewProjectLocation.validateProjectName(~cwd=projectPath, "./")->assertValidationOk
+
+    await Fs.Promises.writeFile(Path.join2(projectPath, "README.md"), "")
+    NewProjectLocation.validateProjectName(~cwd=projectPath, ".")->assertValidationOk
+    await cleanupTestRoot()
+  })
+
+  Test.testAsync("rejects devcontainer directories with conflicting project files", async () => {
+    let projectPath = await resetTestRoot("my-app")
+    await Fs.Promises.mkdir(Path.join2(projectPath, ".devcontainer"))
+    await Fs.Promises.writeFile(Path.join2(projectPath, "package.json"), "{}")
+
+    NewProjectLocation.validateProjectName(~cwd=testRoot, "my-app")->assertValidationError(
+      "The folder my-app already exist in the current directory.",
+    )
+    NewProjectLocation.validateProjectName(~cwd=projectPath, ".")->assertValidationError(
+      currentDirectoryConflictMessage,
+    )
+    NewProjectLocation.validateProjectName(~cwd=projectPath, "./")->assertValidationError(
+      currentDirectoryConflictMessage,
+    )
+    await cleanupTestRoot()
+  })
+
+  Test.testAsync("rejects a .devcontainer file", async () => {
+    let projectPath = await resetTestRoot("my-app")
+    await Fs.Promises.writeFile(Path.join2(projectPath, ".devcontainer"), "")
+
+    NewProjectLocation.validateProjectName(~cwd=testRoot, "my-app")->assertValidationError(
+      "The folder my-app already exist in the current directory.",
+    )
+    NewProjectLocation.validateProjectName(~cwd=projectPath, ".")->assertValidationError(
+      currentDirectoryConflictMessage,
+    )
+    NewProjectLocation.validateProjectName(~cwd=projectPath, "./")->assertValidationError(
+      currentDirectoryConflictMessage,
+    )
+    await cleanupTestRoot()
+  })
 })