diff --git a/README.md b/README.md
index eec24fc..38f3b7d 100644
--- a/README.md
+++ b/README.md
@@ -5,6 +5,16 @@ off (`"workbench.editor.showTabs": "none"`), where a side list *is* the tab bar.
 
 It shows up as a **Tabs** view in the Explorer — drag it wherever you want it, including the secondary side bar.
 
+## Two ways to use it
+
+**Just the colours.**  colours files by project wherever VS Code shows file
+decorations — the Explorer, the built-in **Open Editors** view, and the editor tabs. If colour coding is all you
+want, use this and keep the built-in view: it drags to dock, shows file icons, and can focus every kind of tab.
+Set it to  to add a two-letter project badge such as  for .
+
+**The Tabs view.** A drawn list that the built-in view cannot be: a project border down each row, real spacing,
+and file names that keep their extension. Costs drag-and-drop and file icons — see *Known limitations*.
+
 ## What it adds over the built-in Open Editors view
 
 - **A colour per project**, as a border down the left of each row — the way Visual Studio marks them. The
@@ -37,6 +47,8 @@ the close button replaces on hover.
 
 ## Settings
 
+- `verticalTabs.decorateFiles` — colour files by project in the Explorer, Open Editors and tabs:
+  `off`, `color` (default), or `colorAndBadge`
 - `verticalTabs.order` — `open` (default), `project`, or `name`
 - `verticalTabs.pinnedFirst` — list pinned tabs above the rest (default `true`)
 - `verticalTabs.colorByProject` — colour each row's left border by project (default `true`)
diff --git a/package.json b/package.json
index db7e254..93c0a25 100644
--- a/package.json
+++ b/package.json
@@ -170,6 +170,21 @@
           "minimum": 0,
           "maximum": 8,
           "description": "Width in pixels of the project colour border on the left of each row."
+        },
+        "verticalTabs.decorateFiles": {
+          "type": "string",
+          "enum": [
+            "off",
+            "color",
+            "colorAndBadge"
+          ],
+          "enumDescriptions": [
+            "Do not decorate files.",
+            "Colour each file's name by its project.",
+            "Colour the name and add a short project badge, such as AC for Acme.Shop.Client."
+          ],
+          "default": "color",
+          "markdownDescription": "Colour files by project wherever VS Code shows file decorations: the Explorer, the built-in **Open Editors** view, and the editor tabs. This is what makes the built-in Open Editors view project-coloured without giving up its drag-and-drop.\n\nThere is no way to decorate only the Open Editors view, so the Explorer is coloured too. Git also decorates modified files and only one colour wins, so a dirty file may show Git's colour instead of its project's. Requires `explorer.decorations.colors`, which is on by default."
         }
       }
     },
diff --git a/src/decorations.ts b/src/decorations.ts
new file mode 100644
index 0000000..acfa882
--- /dev/null
+++ b/src/decorations.ts
@@ -0,0 +1,78 @@
+import * as vscode from 'vscode';
+import { projectColorIndex, projectOf } from './projects';
+
+export type DecorationMode = 'off' | 'color' | 'colorAndBadge';
+
+/**
+ * Colours files by project wherever VS Code shows file decorations: the Explorer, the
+ * built-in Open Editors view, and the editor tabs.
+ *
+ * This is how the project colours reach views we do not own. It is also the reason the
+ * custom list is optional — if all you want is colour coding, this gives it to the
+ * built-in Open Editors view while keeping every native behaviour it has, including
+ * drag-and-drop.
+ *
+ * Two caveats worth knowing:
+ *  - There is no way to decorate only the Open Editors view. The Explorer gets the same
+ *    colours, which some people like and some find noisy.
+ *  - Git decorates modified files too, and only one colour wins per file, so a dirty
+ *    file may show Git's colour instead of its project's.
+ */
+export class ProjectDecorations implements vscode.FileDecorationProvider {
+    private readonly changed = new vscode.EventEmitter<undefined>();
+    readonly onDidChangeFileDecorations = this.changed.event;
+
+    private mode: DecorationMode = 'color';
+
+    setMode(mode: DecorationMode): void {
+        if (mode !== this.mode) {
+            this.mode = mode;
+            this.changed.fire(undefined);
+        }
+    }
+
+    /** Re-asks for every decoration, after the project layout may have changed. */
+    invalidate(): void {
+        this.changed.fire(undefined);
+    }
+
+    async provideFileDecoration(uri: vscode.Uri): Promise<vscode.FileDecoration | undefined> {
+        if (this.mode === 'off' || uri.scheme !== 'file') {
+            return undefined;
+        }
+        const project = await projectOf(uri);
+        if (!project) {
+            return undefined;
+        }
+
+        const decoration = new vscode.FileDecoration(
+            this.mode === 'colorAndBadge' ? badgeFor(project) : undefined,
+            `Project: ${project}`,
+            new vscode.ThemeColor(`verticalTabs.project${projectColorIndex(project)}`));
+        // Colouring the containing folders too would repaint most of the Explorer.
+        decoration.propagate = false;
+        return decoration;
+    }
+
+    dispose(): void {
+        this.changed.dispose();
+    }
+}
+
+/**
+ * A one or two character badge for a project name — all a `FileDecoration` badge fits.
+ *
+ * `Acme.Shop.Client` becomes `AC`: the initial of the name and of its last segment,
+ * which keeps sibling projects like `…Client` and `…Server` apart.
+ */
+export function badgeFor(project: string): string {
+    const segments = project.split(/[.\-_ ]+/).filter(segment => segment.length > 0);
+    if (segments.length === 0) {
+        return '?';
+    }
+    const first = segments[0][0].toUpperCase();
+    if (segments.length === 1) {
+        return first + (segments[0][1] ?? '').toLowerCase();
+    }
+    return first + segments[segments.length - 1][0].toUpperCase();
+}
diff --git a/src/extension.ts b/src/extension.ts
index eced8c2..3c789cd 100644
--- a/src/extension.ts
+++ b/src/extension.ts
@@ -1,5 +1,6 @@
 import * as vscode from 'vscode';
 import { closeOthers, closeTab, copyPath, openTab, revealInExplorer, togglePin } from './actions';
+import { DecorationMode, ProjectDecorations } from './decorations';
 import { clearProjectCache } from './projects';
 import { Order } from './tabs';
 import { TabsView } from './view';
@@ -9,6 +10,11 @@ function config() {
 }
 
 export function activate(context: vscode.ExtensionContext): void {
+    // Project colours for the views we do not own — the Explorer, the built-in Open
+    // Editors view, and the tabs.
+    const decorations = new ProjectDecorations();
+    decorations.setMode(config().get<DecorationMode>('decorateFiles', 'color'));
+
     const view = new TabsView(context.extensionUri, {
         open: openTab,
         close: closeTab,
@@ -32,16 +38,23 @@ export function activate(context: vscode.ExtensionContext): void {
     context.subscriptions.push(
         vscode.window.registerWebviewViewProvider(TabsView.viewId, view,
             { webviewOptions: { retainContextWhenHidden: true } }),
+        vscode.window.registerFileDecorationProvider(decorations),
+        decorations,
 
         vscode.window.tabGroups.onDidChangeTabs(refresh),
         vscode.window.tabGroups.onDidChangeTabGroups(refresh),
         vscode.workspace.onDidChangeWorkspaceFolders(() => {
             clearProjectCache();
+            decorations.invalidate();
             refresh();
         }),
         vscode.workspace.onDidChangeConfiguration(event => {
             if (event.affectsConfiguration('verticalTabs.projectFiles')) {
                 clearProjectCache();
+                decorations.invalidate();
+            }
+            if (event.affectsConfiguration('verticalTabs.decorateFiles')) {
+                decorations.setMode(config().get<DecorationMode>('decorateFiles', 'color'));
             }
             if (event.affectsConfiguration('verticalTabs')) {
                 refresh();
diff --git a/src/test/suite/tabs.test.ts b/src/test/suite/tabs.test.ts
index 48b2a44..ca533ef 100644
--- a/src/test/suite/tabs.test.ts
+++ b/src/test/suite/tabs.test.ts
@@ -3,6 +3,7 @@ import * as path from 'path';
 import * as vscode from 'vscode';
 
 import { closeOthers, closeTab, togglePin } from '../../actions';
+import { ProjectDecorations, badgeFor } from '../../decorations';
 import { projectColorIndex, projectOf } from '../../projects';
 import {
     TabEntry, buildEntries, describeEntry, duplicateLabels, sortEntries, tabUri,
@@ -84,6 +85,40 @@ suite('Project resolution', () => {
     });
 });
 
+suite('File decorations', () => {
+    test('a badge keeps sibling projects apart', () => {
+        assert.strictEqual(badgeFor('Acme.Shop.Client'), 'AC');
+        assert.strictEqual(badgeFor('Acme.Shop.Server'), 'AS');
+        assert.strictEqual(badgeFor('Nerfed.Runtime'), 'NR');
+        assert.strictEqual(badgeFor('Nerfed.Editor'), 'NE');
+        // A single-word project has no last segment to borrow from.
+        assert.strictEqual(badgeFor('MoonWorks'), 'Mo');
+        assert.strictEqual(badgeFor('a'), 'A', 'badges are uppercased');
+        assert.strictEqual(badgeFor(''), '?');
+    });
+
+    test('decorations name the project and pick its palette colour', async () => {
+        const decorations = new ProjectDecorations();
+        decorations.setMode('colorAndBadge');
+
+        const inProject = uriFor(FILES[0]);
+        const decoration = await decorations.provideFileDecoration(inProject);
+        assert.ok(decoration, 'a file inside a project should be decorated');
+        assert.strictEqual(decoration.badge, 'NR');
+        assert.strictEqual(decoration.tooltip, 'Project: Nerfed.Runtime');
+        assert.deepStrictEqual(decoration.color,
+            new vscode.ThemeColor(`verticalTabs.project${projectColorIndex('Nerfed.Runtime')}`));
+        // Colouring parents would repaint most of the Explorer.
+        assert.strictEqual(decoration.propagate, false);
+
+        // Nothing outside a project, and nothing when switched off.
+        assert.strictEqual(await decorations.provideFileDecoration(uriFor('README.md')), undefined);
+        decorations.setMode('off');
+        assert.strictEqual(await decorations.provideFileDecoration(inProject), undefined);
+        decorations.dispose();
+    });
+});
+
 suite('Tab list', () => {
     suiteSetup(async () => {
         const ext = vscode.extensions.getExtension('local.vertical-tabs');