diff --git a/src/constants.ts b/src/constants.ts
index 0345b5a0..31150834 100644
--- a/src/constants.ts
+++ b/src/constants.ts
@@ -36,11 +36,15 @@ export namespace ExtensionName {
     export const APP_MODERNIZATION_FOR_JAVA = "vscjava.migrate-java-to-azure";
     // Java upgrade extension is merged into app modernization extension
     export const APP_MODERNIZATION_UPGRADE_FOR_JAVA = APP_MODERNIZATION_FOR_JAVA;
-    export const APP_MODERNIZATION_EXTENSION_NAME = "GitHub Copilot app modernization";
+    export const APP_MODERNIZATION_EXTENSION_NAME = "GitHub Copilot modernization";
 }
 
 export namespace Upgrade {
     export const PACKAGE_ID_FOR_JAVA_RUNTIME = "java:*";
+    /** Minimum version of the appmod extension that supports gotoAgentMode command */
+    export const MIN_APPMOD_VERSION = "1.15.0";
+    export const SOURCE_JAVA_UPGRADE = "vscode-java-dependency.java-upgrade";
+    export const SOURCE_CVE = "vscode-java-dependency.cve";
 }
 
 /**
diff --git a/src/upgrade/display/notificationManager.ts b/src/upgrade/display/notificationManager.ts
index 524184b5..d8e6a461 100644
--- a/src/upgrade/display/notificationManager.ts
+++ b/src/upgrade/display/notificationManager.ts
@@ -1,13 +1,13 @@
 // Copyright (c) Microsoft Corporation. All rights reserved.
 // Licensed under the MIT license.
 
-import { commands, ExtensionContext, extensions, window } from "vscode";
+import { commands, ExtensionContext, window } from "vscode";
 import { UpgradeReason, type IUpgradeIssuesRenderer, type UpgradeIssue } from "../type";
-import { buildCVENotificationMessage, buildFixPrompt, buildNotificationMessage } from "../utility";
+import { buildCVENotificationMessage, buildFixPrompt, buildNotificationMessage, getExtensionState } from "../utility";
 import { Commands } from "../../commands";
 import { Settings } from "../../settings";
 import { instrumentOperation, sendInfo } from "vscode-extension-telemetry-wrapper";
-import { ExtensionName } from "../../constants";
+import { ExtensionName, Upgrade } from "../../constants";
 import { CveUpgradeIssue } from "../cve";
 
 const KEY_PREFIX = 'javaupgrade.notificationManager';
@@ -17,6 +17,8 @@ const BUTTON_TEXT_UPGRADE = "Upgrade Now";
 const BUTTON_TEXT_FIX_CVE = "Fix Now";
 const BUTTON_TEXT_INSTALL_AND_UPGRADE = "Install Extension and Upgrade";
 const BUTTON_TEXT_INSTALL_AND_FIX_CVE = "Install Extension and Fix";
+const BUTTON_TEXT_UPDATE_AND_UPGRADE = "Update Extension and Upgrade";
+const BUTTON_TEXT_UPDATE_AND_FIX_CVE = "Update Extension and Fix";
 const BUTTON_TEXT_NOT_NOW = "Not Now";
 
 const SECONDS_IN_A_DAY = 24 * 60 * 60;
@@ -61,20 +63,36 @@ class NotificationManager implements IUpgradeIssuesRenderer {
                 }
                 this.hasShown = true;
 
-                const hasExtension = !!extensions.getExtension(ExtensionName.APP_MODERNIZATION_UPGRADE_FOR_JAVA);
+                const extensionState = getExtensionState(ExtensionName.APP_MODERNIZATION_UPGRADE_FOR_JAVA);
                 const prompt = buildFixPrompt(issue);
 
                 let notificationMessage = "";
 
                 if (hasCVEIssue) {
-                    notificationMessage = buildCVENotificationMessage(cveIssues, hasExtension);
+                    notificationMessage = buildCVENotificationMessage(cveIssues, extensionState);
                 } else {
-                    notificationMessage = buildNotificationMessage(issue, hasExtension);
+                    notificationMessage = buildNotificationMessage(issue, extensionState);
+                }
+
+                let upgradeButtonText: string;
+                let fixCVEButtonText: string;
+                switch (extensionState) {
+                    case "up-to-date":
+                        upgradeButtonText = BUTTON_TEXT_UPGRADE;
+                        fixCVEButtonText = BUTTON_TEXT_FIX_CVE;
+                        break;
+                    case "outdated":
+                        upgradeButtonText = BUTTON_TEXT_UPDATE_AND_UPGRADE;
+                        fixCVEButtonText = BUTTON_TEXT_UPDATE_AND_FIX_CVE;
+                        break;
+                    case "not-installed":
+                        upgradeButtonText = BUTTON_TEXT_INSTALL_AND_UPGRADE;
+                        fixCVEButtonText = BUTTON_TEXT_INSTALL_AND_FIX_CVE;
+                        break;
                 }
-                const upgradeButtonText = hasExtension ? BUTTON_TEXT_UPGRADE : BUTTON_TEXT_INSTALL_AND_UPGRADE;
-                const fixCVEButtonText = hasExtension ? BUTTON_TEXT_FIX_CVE : BUTTON_TEXT_INSTALL_AND_FIX_CVE;
                 sendInfo(operationId, {
                     operationName: "java.dependency.upgradeNotification.show",
+                    extensionState,
                 });
 
                 const buttons = hasCVEIssue
@@ -91,9 +109,12 @@ class NotificationManager implements IUpgradeIssuesRenderer {
                 });
 
                 switch (selection) {
-                    case fixCVEButtonText:
+                    case fixCVEButtonText: {
+                        commands.executeCommand(Commands.JAVA_UPGRADE_WITH_COPILOT, prompt, Upgrade.SOURCE_CVE);
+                        break;
+                    }
                     case upgradeButtonText: {
-                        commands.executeCommand(Commands.JAVA_UPGRADE_WITH_COPILOT, prompt);
+                        commands.executeCommand(Commands.JAVA_UPGRADE_WITH_COPILOT, prompt, Upgrade.SOURCE_JAVA_UPGRADE);
                         break;
                     }
                     case BUTTON_TEXT_NOT_NOW: {
diff --git a/src/upgrade/upgradeManager.ts b/src/upgrade/upgradeManager.ts
index 1f9f1d3a..90a60b2a 100644
--- a/src/upgrade/upgradeManager.ts
+++ b/src/upgrade/upgradeManager.ts
@@ -5,7 +5,7 @@ import { commands, type ExtensionContext, workspace, type WorkspaceFolder } from
 
 import { Jdtls } from "../java/jdtls";
 import { languageServerApiManager } from "../languageServerApi/languageServerApiManager";
-import { ExtensionName } from "../constants";
+import { ExtensionName, Upgrade } from "../constants";
 import { instrumentOperation, instrumentOperationAsVsCodeCommand, sendInfo } from "vscode-extension-telemetry-wrapper";
 import { Commands } from "../commands";
 import notificationManager from "./display/notificationManager";
@@ -25,10 +25,18 @@ class UpgradeManager {
         notificationManager.initialize(context);
 
         // Upgrade project
-        context.subscriptions.push(instrumentOperationAsVsCodeCommand(Commands.JAVA_UPGRADE_WITH_COPILOT, async (promptText?: string) => {
-            await checkOrInstallAppModExtensionForUpgrade(ExtensionName.APP_MODERNIZATION_UPGRADE_FOR_JAVA);
+        context.subscriptions.push(instrumentOperationAsVsCodeCommand(
+            Commands.JAVA_UPGRADE_WITH_COPILOT, async (promptText?: string, source?: string) => {
+            const canProceed = await checkOrInstallAppModExtensionForUpgrade(
+                ExtensionName.APP_MODERNIZATION_UPGRADE_FOR_JAVA);
+            if (!canProceed) {
+                return;
+            }
             const promptToUse = promptText ?? DEFAULT_UPGRADE_PROMPT;
-            await commands.executeCommand(Commands.GOTO_AGENT_MODE, { prompt: promptToUse, useCustomAgent: true });
+            const upgradeSource = source ?? Upgrade.SOURCE_JAVA_UPGRADE;
+            await commands.executeCommand(Commands.GOTO_AGENT_MODE, {
+                prompt: promptToUse, useCustomAgent: true, source: upgradeSource,
+            });
         }));
 
         // Show modernization view
diff --git a/src/upgrade/utility.ts b/src/upgrade/utility.ts
index 40fb2de2..97461b75 100644
--- a/src/upgrade/utility.ts
+++ b/src/upgrade/utility.ts
@@ -22,7 +22,33 @@ function findEolDate(currentVersion: string, eolDate: Record<string, string>): s
     return null;
 }
 
-export function buildNotificationMessage(issue: UpgradeIssue, hasExtension: boolean): string {
+export type ExtensionState = "up-to-date" | "outdated" | "not-installed";
+
+export function getExtensionState(extensionId: string): ExtensionState {
+    const ext = extensions.getExtension(extensionId);
+    if (!ext) {
+        return "not-installed";
+    }
+    const version = ext.packageJSON?.version;
+    if (version && semver.gte(version, Upgrade.MIN_APPMOD_VERSION)) {
+        return "up-to-date";
+    }
+    // Treat missing version as outdated (conservative)
+    return "outdated";
+}
+
+function getActionWord(extensionState: ExtensionState, verb: string): string {
+    switch (extensionState) {
+        case "up-to-date":
+            return verb;
+        case "outdated":
+            return `update ${ExtensionName.APP_MODERNIZATION_EXTENSION_NAME} extension and ${verb}`;
+        case "not-installed":
+            return `install ${ExtensionName.APP_MODERNIZATION_EXTENSION_NAME} extension and ${verb}`;
+    }
+}
+
+export function buildNotificationMessage(issue: UpgradeIssue, extensionState: ExtensionState): string {
     const {
         packageId,
         currentVersion,
@@ -31,7 +57,7 @@ export function buildNotificationMessage(issue: UpgradeIssue, hasExtension: bool
         packageDisplayName
     } = issue;
 
-    const upgradeWord = hasExtension ? "upgrade" : `install ${ExtensionName.APP_MODERNIZATION_EXTENSION_NAME} extension and upgrade`;
+    const upgradeWord = getActionWord(extensionState, "upgrade");
 
     if (packageId === Upgrade.PACKAGE_ID_FOR_JAVA_RUNTIME) {
         return `This project is using an older Java runtime (${currentVersion}). Would you like to ${upgradeWord} it to the latest LTS version?`;
@@ -51,7 +77,7 @@ export function buildNotificationMessage(issue: UpgradeIssue, hasExtension: bool
     }
 }
 
-export function buildCVENotificationMessage(issues: CveUpgradeIssue[], hasExtension: boolean): string {
+export function buildCVENotificationMessage(issues: CveUpgradeIssue[], extensionState: ExtensionState): string {
 
     if (issues.length === 0) {
         return "No CVE issues found.";
@@ -81,7 +107,7 @@ export function buildCVENotificationMessage(issues: CveUpgradeIssue[], hasExtens
       CVESeverityDistribution: severityText,
     });
 
-    const fixWord = hasExtension ? "fix" : `install ${ExtensionName.APP_MODERNIZATION_EXTENSION_NAME} extension and fix`;
+    const fixWord = getActionWord(extensionState, "fix");
 
     if (issues.length === 1) {
       return `${severityText} CVE vulnerability is detected in this project. Would you like to ${fixWord} it now?`;
@@ -154,11 +180,57 @@ export async function checkOrPopupToInstallAppModExtensionForModernization(
 }
 
 export async function checkOrInstallAppModExtensionForUpgrade(
-    extensionIdToCheck: string): Promise<void> {
-    if (extensions.getExtension(extensionIdToCheck)) {
-        return;
-    }
+    extensionIdToCheck: string): Promise<boolean> {
+    return instrumentOperation("java.dependency.upgradeFlow", async (operationId: string) => {
+        const state = getExtensionState(extensionIdToCheck);
+        sendInfo(operationId, {
+            operationName: "java.dependency.upgradeFlow.start",
+            extensionState: state,
+        });
+
+        if (state === "up-to-date") {
+            sendInfo(operationId, {
+                operationName: "java.dependency.upgradeFlow.result",
+                upgradeFlowResult: "proceeded",
+            });
+            return true;
+        }
 
-    await commands.executeCommand("workbench.extensions.installExtension", ExtensionName.APP_MODERNIZATION_FOR_JAVA);
-    await checkOrPromptToEnableAppModExtension("upgrade");
+        await commands.executeCommand("workbench.extensions.installExtension", ExtensionName.APP_MODERNIZATION_FOR_JAVA);
+
+        if (state === "outdated") {
+            // Extension was updated (not freshly installed) — reload required
+            const reload = await window.showInformationMessage(
+                `${ExtensionName.APP_MODERNIZATION_EXTENSION_NAME} extension has been updated. Reload VS Code to start the upgrade experience.`,
+                "Reload Now"
+            );
+            if (reload === "Reload Now") {
+                sendInfo(operationId, {
+                    operationName: "java.dependency.upgradeFlow.result",
+                    upgradeFlowResult: "reload-accepted",
+                });
+                await commands.executeCommand("workbench.action.reloadWindow");
+            } else {
+                sendInfo(operationId, {
+                    operationName: "java.dependency.upgradeFlow.result",
+                    upgradeFlowResult: "reload-dismissed",
+                });
+            }
+            return false;
+        }
+
+        await checkOrPromptToEnableAppModExtension("upgrade");
+
+        // Wait briefly for the newly installed extension to activate
+        await new Promise(resolve => setTimeout(resolve, 2000));
+
+        // Re-check if the newly installed extension is active and meets version requirement
+        const newState = getExtensionState(extensionIdToCheck);
+        const canProceed = newState === "up-to-date";
+        sendInfo(operationId, {
+            operationName: "java.dependency.upgradeFlow.result",
+            upgradeFlowResult: canProceed ? "proceeded" : "activation-timeout",
+        });
+        return canProceed;
+    })();
 }
\ No newline at end of file