diff --git a/packages/tailwindcss-language-service/src/util/find.test.ts b/packages/tailwindcss-language-service/src/util/find.test.ts
index da6ac60d..77414250 100644
--- a/packages/tailwindcss-language-service/src/util/find.test.ts
+++ b/packages/tailwindcss-language-service/src/util/find.test.ts
@@ -1156,3 +1156,37 @@ test('classFunctions are detected inside of arrays in javascript just after open
     },
   ])
 })
+
+test("--theme's inline helper is not considered part of the path", async ({ expect }) => {
+  let file = createDocument({
+    name: 'file.css',
+    lang: 'css',
+    settings: {
+      tailwindCSS: {
+        classFunctions: ['clsx'],
+      },
+    },
+    content: `
+      .a { color: --theme(--my-color inline); }
+      .a { color: theme(--my-color inline); }
+    `,
+  })
+
+  let fns = findHelperFunctionsInDocument(file.state, file.doc)
+
+  expect(fns).toEqual([
+    {
+      helper: 'theme',
+      path: '--my-color',
+      ranges: { full: range(1, 26, 1, 43), path: range(1, 26, 1, 36) },
+    },
+
+    // This is on purpose:
+    // The `theme()` function doesn't have an inline option only `--theme()`.
+    {
+      helper: 'theme',
+      path: '--my-color inline',
+      ranges: { full: range(2, 24, 2, 41), path: range(2, 24, 2, 41) },
+    },
+  ])
+})
diff --git a/packages/tailwindcss-language-service/src/util/find.ts b/packages/tailwindcss-language-service/src/util/find.ts
index 1b39be69..1bd51cfa 100644
--- a/packages/tailwindcss-language-service/src/util/find.ts
+++ b/packages/tailwindcss-language-service/src/util/find.ts
@@ -557,6 +557,15 @@ export function findHelperFunctionsInRange(
     // Re-slice
     path = text.slice(pathStart, pathEnd)
 
+    // The `--theme(…)` function has an optional `inline` modifier that can appear at the end
+    // NOTE: The non-dashed `theme(…)` function does not have this
+    //
+    // TODO: We should validate that this modifier is `inline` and issue a diagnostic if its not
+    if (path.endsWith(' inline') && match.groups.helper === '--theme') {
+      path = path.slice(0, -7)
+      pathEnd -= 7
+    }
+
     fns.push({
       helper,
       path,
diff --git a/packages/vscode-tailwindcss/CHANGELOG.md b/packages/vscode-tailwindcss/CHANGELOG.md
index 537c948f..0908dd7e 100644
--- a/packages/vscode-tailwindcss/CHANGELOG.md
+++ b/packages/vscode-tailwindcss/CHANGELOG.md
@@ -5,6 +5,7 @@
 - Publish our fork of the CSS language server ([#1437](https://github.com/tailwindlabs/tailwindcss-intellisense/pull/1437))
 - Suggest default variant values when they also support arbitrary values ([#1439](https://github.com/tailwindlabs/tailwindcss-intellisense/pull/1439))
 - Show color swatches for OKLCH colors with units in all positions ([#1442](https://github.com/tailwindlabs/tailwindcss-intellisense/pull/1442))
+- Fix incorrect diagnostic for `--theme(--some-var inline)` ([#1443](https://github.com/tailwindlabs/tailwindcss-intellisense/pull/1443))
 
 ## 0.14.26