diff --git a/python_files/tests/pytestadapter/.data/coverage_w_config/pyproject.toml b/python_files/tests/pytestadapter/.data/coverage_w_config/pyproject.toml
index 334fa05bd25e..c3406cc68929 100644
--- a/python_files/tests/pytestadapter/.data/coverage_w_config/pyproject.toml
+++ b/python_files/tests/pytestadapter/.data/coverage_w_config/pyproject.toml
@@ -2,4 +2,4 @@
 # Licensed under the MIT License.
 
 [tool.coverage.report]
-omit = ["test_ignore.py"]
+omit = ["test_ignore.py", "tests/*.py"]
diff --git a/python_files/tests/pytestadapter/.data/coverage_w_config/tests/test_disregard.py b/python_files/tests/pytestadapter/.data/coverage_w_config/tests/test_disregard.py
new file mode 100644
index 000000000000..110a11534171
--- /dev/null
+++ b/python_files/tests/pytestadapter/.data/coverage_w_config/tests/test_disregard.py
@@ -0,0 +1,5 @@
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the MIT License.
+
+def test_i_hope_this_is_ignored():
+    assert True
diff --git a/python_files/tests/pytestadapter/test_coverage.py b/python_files/tests/pytestadapter/test_coverage.py
index bbf5e2f83976..d0f802a23672 100644
--- a/python_files/tests/pytestadapter/test_coverage.py
+++ b/python_files/tests/pytestadapter/test_coverage.py
@@ -101,11 +101,14 @@ def test_coverage_w_omit_config():
     │   ├── test_ignore.py
     │   ├── test_ran.py
     │   └── pyproject.toml
+    │   ├── tests
+    │   │   └── test_disregard.py
 
     pyproject.toml file with the following content:
     [tool.coverage.report]
     omit = [
         "test_ignore.py",
+        "tests/*.py" (this will ignore the coverage in the file tests/test_disregard.py)
     ]
 
 
diff --git a/python_files/vscode_pytest/__init__.py b/python_files/vscode_pytest/__init__.py
index 58d4b72fc46e..f7ba1d5842ef 100644
--- a/python_files/vscode_pytest/__init__.py
+++ b/python_files/vscode_pytest/__init__.py
@@ -453,11 +453,11 @@ def pytest_sessionfinish(session, exitstatus):
         # remove files omitted per coverage report config if any
         omit_files = cov.config.report_omit
         if omit_files:
-            omit_files = set(omit_files)
-            # convert to absolute paths, check against file set
-            omit_files = {os.fspath(pathlib.Path(file).absolute()) for file in omit_files}
-            print("Files to omit from reporting", omit_files)
-            file_set = file_set - omit_files
+            print("Plugin info[vscode-pytest]: Omit files/rules: ", omit_files)
+            for pattern in omit_files:
+                for file in list(file_set):
+                    if pathlib.Path(file).match(pattern):
+                        file_set.remove(file)
 
         for file in file_set:
             try: