diff --git a/src/PowerShellEditorServices/Services/Analysis/AnalysisService.cs b/src/PowerShellEditorServices/Services/Analysis/AnalysisService.cs
index 5fd9f5ef0..873a269f9 100644
--- a/src/PowerShellEditorServices/Services/Analysis/AnalysisService.cs
+++ b/src/PowerShellEditorServices/Services/Analysis/AnalysisService.cs
@@ -7,7 +7,9 @@
 using System.Collections;
 using System.Collections.Concurrent;
 using System.Collections.Generic;
+using System.IO;
 using System.Linq;
+using System.Runtime.InteropServices;
 using System.Text;
 using System.Threading;
 using System.Threading.Tasks;
@@ -91,10 +93,12 @@ internal static string GetUniqueIdFromDiagnostic(Diagnostic diagnostic)
 
         private readonly ConcurrentDictionary<ScriptFile, CorrectionTableEntry> _mostRecentCorrectionsByFile;
 
-        private Lazy<PssaCmdletAnalysisEngine> _analysisEngine;
+        private Lazy<PssaCmdletAnalysisEngine> _analysisEngineLazy;
 
         private CancellationTokenSource _diagnosticsCancellationTokenSource;
 
+        private string _pssaSettingsFilePath;
+
         /// <summary>
         /// Construct a new AnalysisService.
         /// </summary>
@@ -115,13 +119,14 @@ public AnalysisService(
             _workplaceService = workspaceService;
             _analysisDelayMillis = 750;
             _mostRecentCorrectionsByFile = new ConcurrentDictionary<ScriptFile, CorrectionTableEntry>();
-            _analysisEngine = new Lazy<PssaCmdletAnalysisEngine>(InstantiateAnalysisEngine);
+            _analysisEngineLazy = new Lazy<PssaCmdletAnalysisEngine>(InstantiateAnalysisEngine);
+            _pssaSettingsFilePath = null;
         }
 
         /// <summary>
         /// The analysis engine to use for running script analysis.
         /// </summary>
-        private PssaCmdletAnalysisEngine AnalysisEngine => _analysisEngine.Value;
+        private PssaCmdletAnalysisEngine AnalysisEngine => _analysisEngineLazy?.Value;
 
         /// <summary>
         /// Sets up a script analysis run, eventually returning the result.
@@ -133,6 +138,8 @@ public void RunScriptDiagnostics(
             ScriptFile[] filesToAnalyze,
             CancellationToken cancellationToken)
         {
+            EnsureEngineSettingsCurrent();
+
             if (AnalysisEngine == null)
             {
                 return;
@@ -183,6 +190,8 @@ public void RunScriptDiagnostics(
         /// <returns>The text of the formatted PowerShell script.</returns>
         public Task<string> FormatAsync(string scriptFileContents, Hashtable formatSettings, int[] formatRange = null)
         {
+            EnsureEngineSettingsCurrent();
+
             if (AnalysisEngine == null)
             {
                 return null;
@@ -254,23 +263,61 @@ public void ClearMarkers(ScriptFile file)
         /// <param name="settings">The new language server settings.</param>
         public void OnConfigurationUpdated(object sender, LanguageServerSettings settings)
         {
-            ClearOpenFileMarkers();
-            _analysisEngine = new Lazy<PssaCmdletAnalysisEngine>(InstantiateAnalysisEngine);
+            InitializeAnalysisEngineToCurrentSettings();
         }
 
-        private PssaCmdletAnalysisEngine InstantiateAnalysisEngine()
+        private void EnsureEngineSettingsCurrent()
         {
-            if (!(_configurationService.CurrentSettings.ScriptAnalysis.Enable ?? false))
+            if (_pssaSettingsFilePath != null
+                && !File.Exists(_pssaSettingsFilePath))
             {
-                return null;
+                InitializeAnalysisEngineToCurrentSettings();
+            }
+        }
+
+        private void InitializeAnalysisEngineToCurrentSettings()
+        {
+            // If script analysis has been disabled, just return null
+            if (_configurationService.CurrentSettings.ScriptAnalysis.Enable != true)
+            {
+                if (_analysisEngineLazy != null && _analysisEngineLazy.IsValueCreated)
+                {
+                    _analysisEngineLazy.Value.Dispose();
+                }
+
+                _analysisEngineLazy = null;
+                return;
+            }
+
+            // We may be triggered after the lazy factory is set,
+            // but before it's been able to instantiate
+            if (_analysisEngineLazy == null)
+            {
+                _analysisEngineLazy = new Lazy<PssaCmdletAnalysisEngine>(InstantiateAnalysisEngine);
+                return;
+            }
+            else if (!_analysisEngineLazy.IsValueCreated)
+            {
+                return;
             }
 
+            // Retrieve the current script analysis engine so we can recreate it after we've overridden it
+            PssaCmdletAnalysisEngine currentAnalysisEngine = AnalysisEngine;
+
+            // Clear the open file markers and set the new engine factory
+            ClearOpenFileMarkers();
+            _analysisEngineLazy = new Lazy<PssaCmdletAnalysisEngine>(() => RecreateAnalysisEngine(currentAnalysisEngine));
+        }
+
+        private PssaCmdletAnalysisEngine InstantiateAnalysisEngine()
+        {
             var pssaCmdletEngineBuilder = new PssaCmdletAnalysisEngine.Builder(_loggerFactory);
 
             // If there's a settings file use that
             if (TryFindSettingsFile(out string settingsFilePath))
             {
                 _logger.LogInformation($"Configuring PSScriptAnalyzer with rules at '{settingsFilePath}'");
+                _pssaSettingsFilePath = settingsFilePath;
                 pssaCmdletEngineBuilder.WithSettingsFile(settingsFilePath);
             }
             else
@@ -282,26 +329,40 @@ private PssaCmdletAnalysisEngine InstantiateAnalysisEngine()
             return pssaCmdletEngineBuilder.Build();
         }
 
+        private PssaCmdletAnalysisEngine RecreateAnalysisEngine(PssaCmdletAnalysisEngine oldAnalysisEngine)
+        {
+            if (TryFindSettingsFile(out string settingsFilePath))
+            {
+                _logger.LogInformation($"Recreating analysis engine with rules at '{settingsFilePath}'");
+                _pssaSettingsFilePath = settingsFilePath;
+                return oldAnalysisEngine.RecreateWithNewSettings(settingsFilePath);
+            }
+
+            _logger.LogInformation("PSScriptAnalyzer settings file not found. Falling back to default rules");
+            return oldAnalysisEngine.RecreateWithRules(s_defaultRules);
+        }
+
         private bool TryFindSettingsFile(out string settingsFilePath)
         {
             string configuredPath = _configurationService.CurrentSettings.ScriptAnalysis.SettingsPath;
 
-            if (!string.IsNullOrEmpty(configuredPath))
+            if (string.IsNullOrEmpty(configuredPath))
             {
-                settingsFilePath = _workplaceService.ResolveWorkspacePath(configuredPath);
+                settingsFilePath = null;
+                return false;
+            }
 
-                if (settingsFilePath == null)
-                {
-                    _logger.LogError($"Unable to find PSSA settings file at '{configuredPath}'. Loading default rules.");
-                }
+            settingsFilePath = _workplaceService.ResolveWorkspacePath(configuredPath);
 
-                return settingsFilePath != null;
+            if (settingsFilePath == null
+                || !File.Exists(settingsFilePath))
+            {
+                _logger.LogWarning($"Unable to find PSSA settings file at '{configuredPath}'. Loading default rules.");
+                settingsFilePath = null;
+                return false;
             }
 
-            // TODO: Could search for a default here
-
-            settingsFilePath = null;
-            return false;
+            return true;
         }
 
         private void ClearOpenFileMarkers()
@@ -442,7 +503,12 @@ protected virtual void Dispose(bool disposing)
             {
                 if (disposing)
                 {
-                    if (_analysisEngine.IsValueCreated) { _analysisEngine.Value.Dispose(); }
+                    if (_analysisEngineLazy != null
+                        && _analysisEngineLazy.IsValueCreated)
+                    { 
+                        _analysisEngineLazy.Value.Dispose();
+                    }
+
                     _diagnosticsCancellationTokenSource?.Dispose();
                 }
 
diff --git a/src/PowerShellEditorServices/Services/Analysis/PssaCmdletAnalysisEngine.cs b/src/PowerShellEditorServices/Services/Analysis/PssaCmdletAnalysisEngine.cs
index 7eb7e9c02..eb1617c7d 100644
--- a/src/PowerShellEditorServices/Services/Analysis/PssaCmdletAnalysisEngine.cs
+++ b/src/PowerShellEditorServices/Services/Analysis/PssaCmdletAnalysisEngine.cs
@@ -261,6 +261,21 @@ public Task<ScriptFileMarker[]> AnalyzeScriptAsync(string scriptContent, Hashtab
             return GetSemanticMarkersFromCommandAsync(command);
         }
 
+        public PssaCmdletAnalysisEngine RecreateWithNewSettings(string settingsPath)
+        {
+            return new PssaCmdletAnalysisEngine(_logger, _analysisRunspacePool, _pssaModuleInfo, settingsPath);
+        }
+
+        public PssaCmdletAnalysisEngine RecreateWithNewSettings(Hashtable settingsHashtable)
+        {
+            return new PssaCmdletAnalysisEngine(_logger, _analysisRunspacePool, _pssaModuleInfo, settingsHashtable);
+        }
+
+        public PssaCmdletAnalysisEngine RecreateWithRules(string[] rules)
+        {
+            return new PssaCmdletAnalysisEngine(_logger, _analysisRunspacePool, _pssaModuleInfo, rules);
+        }
+
         #region IDisposable Support
         private bool disposedValue = false; // To detect redundant calls