diff --git a/package-lock.json b/package-lock.json
index a67ced5..cfbdfe5 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -33,7 +33,7 @@
         "vscode-test": "^1.4.0"
       },
       "engines": {
-        "vscode": "^1.76.0"
+        "vscode": "^1.80.0"
       }
     },
     "node_modules/@aashutoshrathi/word-wrap": {
diff --git a/package.json b/package.json
index 646022d..2a833b7 100644
--- a/package.json
+++ b/package.json
@@ -104,9 +104,12 @@
         },
         "zig.path": {
           "scope": "machine-overridable",
-          "type": "string",
-          "default": "",
-          "description": "Set a custom path to the Zig binary. Empty string will lookup zig in PATH."
+          "type": [
+            "string",
+            "null"
+          ],
+          "default": null,
+          "description": "Set a custom path to the Zig binary. The string \"zig\" means lookup zig in PATH."
         },
         "zig.checkForUpdate": {
           "scope": "resource",
@@ -164,9 +167,12 @@
         },
         "zig.zls.path": {
           "scope": "machine-overridable",
-          "type": "string",
-          "default": "",
-          "description": "Path to `zls` executable. Example: `C:/zls/zig-cache/bin/zls.exe`. Empty string will lookup ZLS in PATH.",
+          "type": [
+            "string",
+            "null"
+          ],
+          "default": null,
+          "description": "Path to `zls` executable. Example: `C:/zls/zig-cache/bin/zls.exe`. The string \"zls\" means lookup ZLS in PATH.",
           "format": "path"
         },
         "zig.zls.enableSnippets": {
diff --git a/src/zigSetup.ts b/src/zigSetup.ts
index 951aa40..0c92699 100644
--- a/src/zigSetup.ts
+++ b/src/zigSetup.ts
@@ -191,13 +191,9 @@ async function checkUpdate(context: vscode.ExtensionContext) {
 
 async function getUpdatedVersion(context: vscode.ExtensionContext): Promise<ZigVersion | null> {
     const configuration = vscode.workspace.getConfiguration("zig");
-    const zigPath = configuration.get<string>("path");
-    if (zigPath) {
-        const zigBinPath = vscode.Uri.joinPath(context.globalStorageUri, "zig_install", "zig").fsPath;
-        if (!zigPath.startsWith(zigBinPath)) return null;
-    } else {
-        return null;
-    }
+    const zigPath = configuration.get<string | null>("path", null);
+    const zigBinPath = vscode.Uri.joinPath(context.globalStorageUri, "zig_install", "zig").fsPath;
+    if (!zigPath?.startsWith(zigBinPath)) return null;
 
     const curVersion = getVersion(zigPath, "version");
     if (!curVersion) return null;
@@ -240,6 +236,24 @@ export async function setupZig(context: vscode.ExtensionContext) {
         await checkUpdate(context);
     });
 
+    {
+        // convert an empty string for `zig.path` and `zig.zls.path` to `zig` and `zls` respectively.
+        // This check can be removed once enough time has passed so that most users switched to the new value
+
+        const zigConfig = vscode.workspace.getConfiguration("zig");
+        const initialSetupDone = zigConfig.get<boolean>("initialSetupDone", false);
+        const zigPath = zigConfig.get<string | null>("path");
+        if (zigPath === "" || (initialSetupDone && zigPath === null)) {
+            await zigConfig.update("path", "zig", true);
+        }
+
+        const zlsConfig = vscode.workspace.getConfiguration("zig.zls");
+        const zlsPath = zlsConfig.get<string | null>("path");
+        if (zlsPath === "" || (initialSetupDone && zlsPath === null)) {
+            await zlsConfig.update("path", "zls", true);
+        }
+    }
+
     context.environmentVariableCollection.description = "Add Zig to PATH";
     updateZigEnvironmentVariableCollection(context);
     vscode.workspace.onDidChangeConfiguration((change) => {
@@ -253,7 +267,6 @@ export async function setupZig(context: vscode.ExtensionContext) {
         await configuration.update("initialSetupDone", await initialSetup(context), true);
     }
 
-    if (!configuration.get<string>("path")) return;
     if (!configuration.get<boolean>("checkForUpdate")) return;
     if (!(await shouldCheckUpdate(context, "zigUpdate"))) return;
     await checkUpdate(context);
@@ -262,7 +275,7 @@ export async function setupZig(context: vscode.ExtensionContext) {
 async function initialSetup(context: vscode.ExtensionContext): Promise<boolean> {
     const zigConfig = vscode.workspace.getConfiguration("zig");
 
-    if (zigConfig.get<string>("path") === "") {
+    if (zigConfig.get<string | null>("path", null) === null) {
         const zigResponse = await vscode.window.showInformationMessage(
             "Zig path hasn't been set, do you want to specify the path or install Zig?",
             { modal: true },
@@ -273,7 +286,7 @@ async function initialSetup(context: vscode.ExtensionContext): Promise<boolean>
         switch (zigResponse) {
             case "Install":
                 await selectVersionAndInstall(context);
-                const zigPath = zigConfig.get<string>("path");
+                const zigPath = vscode.workspace.getConfiguration("zig").get<string | null>("path", null);
                 if (!zigPath) return false;
                 break;
             case "Specify path":
@@ -291,16 +304,17 @@ async function initialSetup(context: vscode.ExtensionContext): Promise<boolean>
                 await zigConfig.update("path", uris[0].path, true);
                 break;
             case "Use Zig in PATH":
-                await zigConfig.update("path", "", true);
+                await zigConfig.update("path", "zig", true);
                 break;
             case undefined:
+                await zigConfig.update("path", undefined, true);
                 return false;
         }
     }
 
     const zlsConfig = vscode.workspace.getConfiguration("zig.zls");
 
-    if (zlsConfig.get<string>("path") === "") {
+    if (zlsConfig.get<string | null>("path", null) === null) {
         const zlsResponse = await vscode.window.showInformationMessage(
             "We recommend enabling ZLS (the Zig Language Server) for a better editing experience. Would you like to install it?",
             { modal: true },
@@ -324,9 +338,11 @@ async function initialSetup(context: vscode.ExtensionContext): Promise<boolean>
 
                 await zlsConfig.update("path", uris[0].path, true);
             case "Use ZLS in PATH":
-                await zlsConfig.update("path", "", true);
+                await zlsConfig.update("path", "zls", true);
                 break;
             case undefined:
+                // explicitly set `zig.zls.path` to null so it is visible in the `settings.json`
+                await zlsConfig.update("path", null, true);
                 break;
         }
     }
diff --git a/src/zigUtil.ts b/src/zigUtil.ts
index 77beea1..ee2a7cb 100644
--- a/src/zigUtil.ts
+++ b/src/zigUtil.ts
@@ -21,7 +21,7 @@ export function getExePath(exePath: string | null, exeName: string, optionName:
         }
     }
 
-    if (!exePath) {
+    if (exePath === null) {
         exePath = which.sync(exeName, { nothrow: true });
     } else if (exePath.startsWith("~")) {
         exePath = path.join(os.homedir(), exePath.substring(1));
@@ -30,7 +30,7 @@ export function getExePath(exePath: string | null, exeName: string, optionName:
     }
 
     let message;
-    if (!exePath) {
+    if (exePath === null) {
         message = `Could not find ${exeName} in PATH`;
     } else if (!fs.existsSync(exePath)) {
         message = `\`${optionName}\` ${exePath} does not exist`;
@@ -48,8 +48,9 @@ export function getExePath(exePath: string | null, exeName: string, optionName:
 
 export function getZigPath(): string {
     const configuration = vscode.workspace.getConfiguration("zig");
-    const zigPath = configuration.get<string>("path") ?? null;
-    return getExePath(zigPath, "zig", "zig.path");
+    const zigPath = configuration.get<string | null>("path", null);
+    const exePath = zigPath !== "zig" ? zigPath : null; // the string "zig" means lookup in PATH
+    return getExePath(exePath, "zig", "zig.path");
 }
 
 // Check timestamp `key` to avoid automatically checking for updates
diff --git a/src/zls.ts b/src/zls.ts
index 0e66756..de2ebfb 100644
--- a/src/zls.ts
+++ b/src/zls.ts
@@ -72,8 +72,9 @@ export async function stopClient() {
 // returns the file system path to the zls executable
 export function getZLSPath(): string {
     const configuration = vscode.workspace.getConfiguration("zig.zls");
-    const zlsPath = configuration.get<string>("path") ?? null;
-    return getExePath(zlsPath, "zls", "zig.zls.path");
+    const zlsPath = configuration.get<string | null>("path", null);
+    const exePath = zlsPath !== "zls" ? zlsPath : null; // the string "zls" means lookup in PATH
+    return getExePath(exePath, "zls", "zig.zls.path");
 }
 
 async function configurationMiddleware(
@@ -182,7 +183,7 @@ async function getVersionIndex(): Promise<VersionIndex> {
 // checks whether there is newer version on master
 async function checkUpdate(context: vscode.ExtensionContext) {
     const configuration = vscode.workspace.getConfiguration("zig.zls");
-    const zlsPath = configuration.get<string>("path");
+    const zlsPath = configuration.get<string | null>("path", null);
     const zlsBinPath = vscode.Uri.joinPath(context.globalStorageUri, "zls_install", "zls").fsPath;
     if (!zlsPath) return;
     if (!zlsPath.startsWith(zlsBinPath)) return;
@@ -325,13 +326,14 @@ async function installVersion(context: vscode.ExtensionContext, version: semver.
 }
 
 function checkInstalled(): boolean {
-    const zlsPath = vscode.workspace.getConfiguration("zig.zls").get<string>("path");
-    if (!zlsPath) {
+    const zlsPath = vscode.workspace.getConfiguration("zig.zls").get<string | null>("path", null);
+    if (zlsPath === null) {
         void vscode.window.showErrorMessage("This command cannot be run without setting 'zig.zls.path'.", {
             modal: true,
         });
+        return false;
     }
-    return !!zlsPath;
+    return true;
 }
 
 export async function activate(context: vscode.ExtensionContext) {
@@ -378,14 +380,14 @@ export async function activate(context: vscode.ExtensionContext) {
         ) {
             await stopClient();
             const zlsConfig = vscode.workspace.getConfiguration("zig.zls");
-            if (!!zlsConfig.get<string>("path")) {
+            if (zlsConfig.get<string | null>("path", null) !== null) {
                 await startClient();
             }
         }
     }, context.subscriptions);
 
     const zlsConfig = vscode.workspace.getConfiguration("zig.zls");
-    if (zlsConfig.get<string>("path") === undefined) return;
+    if (zlsConfig.get<string | null>("path", null) === null) return;
     if (zlsConfig.get<boolean>("checkForUpdate") && (await shouldCheckUpdate(context, "zlsUpdate"))) {
         await checkUpdate(context);
     }