OpenCode Setup Guide: The Open-Source Cursor Alternative That Works Offline

Let's be honest: Cursor is an incredible piece of software. It single-handedly pushed the industry forward by proving that AI shouldn't just be an autocomplete plugin, but should be integrated into the editor itself.

But Cursor has two major problems for a lot of developers. First, the subscription fee ($20/month) adds up. Second, and more importantly, it requires sending your proprietary, secret company codebase to cloud APIs like OpenAI and Anthropic. For developers working in enterprise, healthcare, or fintech, that is a hard "No" from the security team.

Enter OpenCode. OpenCode has exploded in popularity because it offers a very similar "agentic" workflow to Cursor, but it is entirely open-source, and crucially, it can be run 100% offline using local AI models. Let me show you how to set up the ultimate private AI coding environment.

Unlike Cursor, which is a standalone fork of VS Code, OpenCode is designed as an extension that plugs directly into your existing VS Code or VSCodium editor. This means you don't have to migrate your settings, themes, or other extensions.

• Open VS Code.
• Navigate to the Extensions Marketplace.
• Search for "OpenCode".
• Hit install. You'll see a new OpenCode sidebar icon appear.

By default, OpenCode will prompt you to use their free cloud service. If you don't care about privacy, you can use that. But we're here to build a completely offline, private setup. So, click "Configure Local Model".

To run an AI offline, we need a local inference engine. Ollama is the industry standard for this. It makes running Large Language Models on your PC as easy as running a Docker container.

1. Go to ollama.com and download the installer for your OS.
2. Once installed, open your terminal.
3. We need to pull a model that is heavily trained on coding. I highly recommend Qwen2.5-Coder-7B or Llama-3.1-8B.
4. Run this command: ollama run qwen2.5-coder

Ollama will download the model weights (about 4GB-5GB). Once it says "success", the model is running on your localhost at port 11434. Your offline brain is ready.

Now we just need to introduce OpenCode to Ollama.

Go back to VS Code and open the OpenCode settings via the gear icon in the sidebar. Scroll down to the "Model Provider" section.

• Provider: Select Ollama
• Base URL: http://localhost:11434
• Model Name: Type exactly the name of the model you pulled (e.g., qwen2.5-coder).
• Context Window: Set it to 8192 (or higher if your machine has 32GB+ RAM).

Hit save. The green status indicator in OpenCode should light up, meaning it has successfully connected to your local model. You can now literally disconnect your computer from the WiFi.

With my WiFi physically turned off, I opened a React project and highlighted a messy, 150-line component that handled data fetching.

I hit the OpenCode shortcut (Cmd+L) and typed: "Refactor this component to use React Query instead of standard useEffect fetching. Handle loading and error states."

Because it was running locally on my M2 MacBook Pro, I could hear the fans spin up slightly. Within 4 seconds, the code started streaming into the diff viewer. It wasn't quite as blazing fast as Claude 3.5 Sonnet on the cloud, but it was easily ~30 tokens a second—plenty fast enough for real work.

It successfully imported React Query, swapped out my useState spaghetti, and provided clean error boundaries. And not a single byte of my code was transmitted over the internet.

Running OpenCode offline is incredible, but I have to be realistic about hardware. Local AI is resource-intensive.

If you have an Apple Silicon Mac (M1/M2/M3) with 16GB of unified memory, or a PC with an Nvidia RTX 3060 / 4060 GPU with 8GB VRAM, this setup will feel seamless and fast. The Qwen-Coder 7B model will fly.

If you are running on an older Intel Mac, or a standard laptop with 8GB of RAM and integrated graphics, it is going to struggle. The AI might take 10-15 seconds to start typing, which breaks the flow state. In that case, I recommend using OpenCode with their free cloud tier instead of forcing local generation.

OpenCode combined with Ollama is the holy grail for enterprise developers, privacy advocates, or anyone tired of subscription fatigue. You get a world-class agentic coding experience, right inside VS Code, completely free forever.

The open-source community is moving at a terrifying speed. What cost $20 a month and required massive data centers a year ago can now run entirely offline in your backpack. Set this up this weekend—you won't regret it.