diff --git a/CHANGELOG.md b/CHANGELOG.md
index 49f03d68..118962e8 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -31,6 +31,7 @@ Bug Fixes:
 - Fix "Makefile Tools" being translated in localized languages when it should remain as a proper noun. [#731](https://github.com/microsoft/vscode-makefile-tools/issues/731)
 - Fix binary path links in output log not being clickable on Windows when the path has no .exe extension. [#698](https://github.com/microsoft/vscode-makefile-tools/issues/698)
 - Fix `parseCompilerArgs.bat` failing when macro definitions contain numeric expressions like `-1` inside quoted values. [#755](https://github.com/microsoft/vscode-makefile-tools/issues/755)
+- Fix launch target resetting to "Unset" when `binaryArgs` is added to `makefile.launchConfigurations` on Windows. [#737](https://github.com/microsoft/vscode-makefile-tools/issues/737)
 - Fix Project Outline showing "Unset" for launch configurations that have a `name` field. [#808](https://github.com/microsoft/vscode-makefile-tools/issues/808)
 
 ## 0.11
diff --git a/src/configuration.ts b/src/configuration.ts
index 4028cf7a..6d8c7419 100644
--- a/src/configuration.ts
+++ b/src/configuration.ts
@@ -912,7 +912,12 @@ export async function setCurrentLaunchConfiguration(
 
 function getLaunchConfiguration(name: string): LaunchConfiguration | undefined {
   return launchConfigurations.find((k) => {
-    if (launchConfigurationToString(k) === name) {
+    if (
+      util.areLaunchConfigurationStringsEqual(
+        launchConfigurationToString(k),
+        name
+      )
+    ) {
       return { ...k, keep: true };
     }
   });
@@ -2838,7 +2843,10 @@ export async function selectLaunchConfiguration(): Promise<void> {
       getCurrentLaunchConfiguration();
     if (
       !currentLaunchConfiguration ||
-      chosenId !== launchConfigurationToString(currentLaunchConfiguration)
+      !util.areLaunchConfigurationStringsEqual(
+        chosenId,
+        launchConfigurationToString(currentLaunchConfiguration)
+      )
     ) {
       let telemetryProperties: telemetry.Properties | null = {
         state: "launchConfiguration",
diff --git a/src/test/fakeSuite/extension.test.ts b/src/test/fakeSuite/extension.test.ts
index bd8ee0ac..2589c883 100644
--- a/src/test/fakeSuite/extension.test.ts
+++ b/src/test/fakeSuite/extension.test.ts
@@ -255,6 +255,85 @@ suite("Configuration settings", () => {
   });
 });
 
+suite("Launch configuration string comparison", () => {
+  test("areLaunchConfigurationStringsEqual - same strings", () => {
+    const str1 = "c:\\Users\\test\\project>out()";
+    const str2 = "c:\\Users\\test\\project>out()";
+    expect(util.areLaunchConfigurationStringsEqual(str1, str2)).to.be.true;
+  });
+
+  test("areLaunchConfigurationStringsEqual - different strings", () => {
+    const str1 = "c:\\Users\\test\\project>out()";
+    const str2 = "c:\\Users\\test\\project>out(arg1)";
+    expect(util.areLaunchConfigurationStringsEqual(str1, str2)).to.be.false;
+  });
+
+  test("areLaunchConfigurationStringsEqual - same strings with args", () => {
+    const str1 = "c:\\Users\\test\\project>out(arg1,arg2)";
+    const str2 = "c:\\Users\\test\\project>out(arg1,arg2)";
+    expect(util.areLaunchConfigurationStringsEqual(str1, str2)).to.be.true;
+  });
+
+  test("areLaunchConfigurationStringsEqual - handles null/undefined", () => {
+    expect(util.areLaunchConfigurationStringsEqual(null as any, null as any)).to
+      .be.true;
+    expect(
+      util.areLaunchConfigurationStringsEqual(undefined as any, undefined as any)
+    ).to.be.true;
+    expect(
+      util.areLaunchConfigurationStringsEqual(
+        "c:\\Users\\test\\project>out()",
+        null as any
+      )
+    ).to.be.false;
+    expect(
+      util.areLaunchConfigurationStringsEqual(
+        null as any,
+        "c:\\Users\\test\\project>out()"
+      )
+    ).to.be.false;
+  });
+
+  // When the string doesn't match the expected cwd>binary(args) format,
+  // the function falls back to case-insensitive comparison on Windows.
+  if (process.platform === "win32") {
+    test("areLaunchConfigurationStringsEqual - fallback for non-standard format on Windows", () => {
+      const str1 = "some-random-string";
+      const str2 = "Some-Random-String";
+      expect(util.areLaunchConfigurationStringsEqual(str1, str2)).to.be.true;
+    });
+
+    test("areLaunchConfigurationStringsEqual - fallback mismatch for non-standard format on Windows", () => {
+      const str1 = "some-random-string";
+      const str2 = "different-string";
+      expect(util.areLaunchConfigurationStringsEqual(str1, str2)).to.be.false;
+    });
+  }
+
+  // On Windows, paths are case-insensitive but arguments are case-sensitive
+  if (process.platform === "win32") {
+    test("areLaunchConfigurationStringsEqual - different path case on Windows", () => {
+      const str1 = "c:\\Users\\test\\project>out()";
+      const str2 = "C:\\Users\\Test\\Project>OUT()";
+      expect(util.areLaunchConfigurationStringsEqual(str1, str2)).to.be.true;
+    });
+
+    test("areLaunchConfigurationStringsEqual - different path case same args on Windows", () => {
+      const str1 = "c:\\users\\test\\project>out(arg1,arg2)";
+      const str2 = "C:\\Users\\TEST\\Project>Out(arg1,arg2)";
+      // Paths are compared case-insensitively, args are case-sensitive
+      expect(util.areLaunchConfigurationStringsEqual(str1, str2)).to.be.true;
+    });
+
+    test("areLaunchConfigurationStringsEqual - different args case on Windows", () => {
+      const str1 = "c:\\users\\test\\project>out(arg1,arg2)";
+      const str2 = "C:\\Users\\TEST\\Project>Out(Arg1,Arg2)";
+      // Arguments are case-sensitive even on Windows
+      expect(util.areLaunchConfigurationStringsEqual(str1, str2)).to.be.false;
+    });
+  }
+});
+
 // TODO: refactor initialization and cleanup of each test
 suite("Fake dryrun parsing", () => {
   suiteSetup(async function (this: Mocha.Context) {
diff --git a/src/util.ts b/src/util.ts
index 41c6c953..b0b709d3 100644
--- a/src/util.ts
+++ b/src/util.ts
@@ -864,6 +864,49 @@ export function hasProperties(obj: any): boolean {
   return props && props.length > 0;
 }
 
+// Helper for comparing launch configuration strings.
+// On Windows, paths are case-insensitive, so we need to do a case-insensitive comparison
+// for the path portions (cwd and binaryPath), while keeping the arguments case-sensitive.
+// Launch configuration string format: [CWD path]>[binaryPath]([binaryArg1,binaryArg2,...])
+export function areLaunchConfigurationStringsEqual(
+  str1: string,
+  str2: string
+): boolean {
+  // Handle null/undefined inputs
+  if (str1 === null || str1 === undefined) {
+    return str2 === null || str2 === undefined;
+  }
+  if (str2 === null || str2 === undefined) {
+    return false;
+  }
+
+  if (process.platform !== "win32") {
+    return str1 === str2;
+  }
+
+  // On Windows, parse the launch configuration strings to compare
+  // paths case-insensitively while keeping arguments case-sensitive.
+  // Format: [CWD path]>[binaryPath]([binaryArg1,binaryArg2,...])
+  const regexp: RegExp = /^(.*)\>(.*)\((.*)\)$/;
+  const match1: RegExpExecArray | null = regexp.exec(str1);
+  const match2: RegExpExecArray | null = regexp.exec(str2);
+
+  // If either string doesn't match the expected format, fall back to case-insensitive comparison
+  if (!match1 || !match2) {
+    return str1.toLowerCase() === str2.toLowerCase();
+  }
+
+  // Compare cwd and binaryPath case-insensitively, and args case-sensitively
+  const cwd1: string = match1[1].toLowerCase();
+  const cwd2: string = match2[1].toLowerCase();
+  const binPath1: string = match1[2].toLowerCase();
+  const binPath2: string = match2[2].toLowerCase();
+  const args1: string = match1[3];
+  const args2: string = match2[3];
+
+  return cwd1 === cwd2 && binPath1 === binPath2 && args1 === args2;
+}
+
 // Apply any properties from source to destination, logging for overwrite.
 // To make things simpler for the caller, create a valid dst if given null or undefined.
 export function mergeProperties(dst: any, src: any): any {