diff --git a/.vscode/launch.json b/.vscode/launch.json
index fd5b5d4a..707ea5fa 100644
--- a/.vscode/launch.json
+++ b/.vscode/launch.json
@@ -13,15 +13,6 @@
       "outFiles": ["${workspaceRoot}/out/src/**/*.js"],
       "preLaunchTask": "compile typescript"
     },
-    {
-      // A launch configuration that compiles the extension and runs mocha unit tests
-      "type": "node",
-      "request": "launch",
-      "name": "Launch Tests",
-      "program": "${workspaceRoot}/node_modules/mocha/bin/_mocha",
-      "args": ["-u", "tdd", "--timeout", "999999", "--colors", "-r", "ts-node/register", "${workspaceRoot}/test/*.test.ts"],
-      "preLaunchTask": "compile typescript"
-    },
     {
       "name": "Extension Tests",
       "type": "extensionHost",
diff --git a/.vscode/tasks.json b/.vscode/tasks.json
index 98c6bb8d..39a29253 100644
--- a/.vscode/tasks.json
+++ b/.vscode/tasks.json
@@ -12,7 +12,7 @@
       "command": "yarn run compile",
       // show the output window only if unrecognized errors occur.
       "presentation": {
-        "reveal": "silent"
+        "reveal": "never"
       },
       // The tsc compiler is started in watching mode
       "isBackground": true,
diff --git a/src/extension.ts b/src/extension.ts
index 2afae680..40a7ec5e 100644
--- a/src/extension.ts
+++ b/src/extension.ts
@@ -121,7 +121,7 @@ export async function activate(context: ExtensionContext): Promise<SchemaExtensi
   // Create the language client and start it
   client = new LanguageClient('yaml', lsName, serverOptions, clientOptions);
 
-  const schemaCache = new JSONSchemaCache(context.globalStoragePath, context.globalState, client.outputChannel);
+  const schemaCache = new JSONSchemaCache(context.globalStorageUri.fsPath, context.globalState, client.outputChannel);
   const disposable = client.start();
 
   const schemaExtensionAPI = new SchemaExtensionAPI(client);
diff --git a/src/json-schema-cache.ts b/src/json-schema-cache.ts
index e75719da..4443a8c1 100644
--- a/src/json-schema-cache.ts
+++ b/src/json-schema-cache.ts
@@ -33,6 +33,18 @@ export class JSONSchemaCache {
 
   private async init(): Promise<void> {
     await fs.ensureDir(this.cachePath);
+    const cachedFiles = await fs.readdir(this.cachePath);
+    // clean up memento if cached files was deleted from fs
+    const cachedValues = cachedFiles.map((it) => path.join(this.cachePath, it));
+    for (const key in this.cache) {
+      if (Object.prototype.hasOwnProperty.call(this.cache, key)) {
+        const cacheEntry = this.cache[key];
+        if (!cachedValues.includes(cacheEntry.schemaPath)) {
+          delete this.cache[key];
+        }
+      }
+    }
+    await this.memento.update(CACHE_KEY, this.cache);
     this.isInitialized = true;
   }
 
@@ -44,6 +56,9 @@ export class JSONSchemaCache {
   }
 
   getETag(schemaUri: string): string | undefined {
+    if (!this.isInitialized) {
+      return undefined;
+    }
     return this.cache[schemaUri]?.eTag;
   }
 
diff --git a/test/helper.ts b/test/helper.ts
index ff4f741f..906ffbfa 100644
--- a/test/helper.ts
+++ b/test/helper.ts
@@ -123,3 +123,16 @@ export async function testDiagnostics(docUri: vscode.Uri, expectedDiagnostics: v
     assert.equal(actualDiagnostic.severity, expectedDiagnostic.severity);
   });
 }
+
+export class TestMemento implements vscode.Memento {
+  get<T>(key: string): T;
+  get<T>(key: string, defaultValue: T): T;
+  // eslint-disable-next-line @typescript-eslint/no-unused-vars
+  get<T>(key: string, defaultValue?: T): T | undefined {
+    throw new Error('Method not implemented.');
+  }
+  // eslint-disable-next-line @typescript-eslint/no-unused-vars
+  update(key: string, value: unknown): Thenable<void> {
+    throw new Error('Method not implemented.');
+  }
+}
diff --git a/test/json-schema-cache.test.ts b/test/json-schema-cache.test.ts
new file mode 100644
index 00000000..218db526
--- /dev/null
+++ b/test/json-schema-cache.test.ts
@@ -0,0 +1,68 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Red Hat, Inc. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import * as sinon from 'sinon';
+import * as sinonChai from 'sinon-chai';
+import * as chai from 'chai';
+import * as vscode from 'vscode';
+import * as fs from 'fs-extra';
+import { JSONSchemaCache } from '../src/json-schema-cache';
+import { TestMemento } from './helper';
+
+const expect = chai.expect;
+chai.use(sinonChai);
+describe('JSON Schema Cache Tests', () => {
+  const sandbox = sinon.createSandbox();
+  let memento: sinon.SinonStubbedInstance<vscode.Memento>;
+  let ensureDirStub: sinon.SinonStub;
+  let readdirStub: sinon.SinonStub;
+  let pathExistsStub: sinon.SinonStub;
+  let readFileStub: sinon.SinonStub;
+
+  afterEach(() => {
+    sandbox.restore();
+  });
+
+  beforeEach(() => {
+    memento = sandbox.stub(new TestMemento());
+    ensureDirStub = sandbox.stub(fs, 'ensureDir');
+    readdirStub = sandbox.stub(fs, 'readdir');
+    pathExistsStub = sandbox.stub(fs, 'pathExists');
+    readFileStub = sandbox.stub(fs, 'readFile');
+  });
+
+  it('should clean up cache if there are no schema file', async () => {
+    memento.get.returns({ somePath: { schemaPath: '/foo/path/' } });
+    memento.update.resolves();
+
+    ensureDirStub.resolves();
+    readdirStub.resolves([]);
+
+    pathExistsStub.resolves(false);
+    readFileStub.resolves();
+
+    const cache = new JSONSchemaCache('/some/path/', (memento as unknown) as vscode.Memento, {} as vscode.OutputChannel);
+    const result = await cache.getSchema('/some/uri');
+    expect(result).is.undefined;
+    expect(memento.update).calledOnceWith('json-schema-key', {});
+  });
+
+  it('should check cache', async () => {
+    const mementoData = { somePath: { schemaPath: '/some/path/foo.json' } };
+    memento.get.returns(mementoData);
+    memento.update.resolves();
+
+    ensureDirStub.resolves();
+    readdirStub.resolves(['foo.json']);
+
+    pathExistsStub.resolves(false);
+    readFileStub.resolves();
+
+    const cache = new JSONSchemaCache('/some/path/', (memento as unknown) as vscode.Memento, {} as vscode.OutputChannel);
+    const result = await cache.getSchema('/some/uri');
+    expect(result).is.undefined;
+    expect(memento.update).calledOnceWith('json-schema-key', mementoData);
+  });
+});