diff --git a/packages/vsx-registry/package.json b/packages/vsx-registry/package.json
index 65f6aa0e4ffc8..9cb6671888d99 100644
--- a/packages/vsx-registry/package.json
+++ b/packages/vsx-registry/package.json
@@ -5,6 +5,7 @@
   "dependencies": {
     "@theia/core": "1.46.0",
     "@theia/filesystem": "1.46.0",
+    "@theia/navigator": "1.46.0",
     "@theia/ovsx-client": "1.46.0",
     "@theia/plugin-ext": "1.46.0",
     "@theia/plugin-ext-vscode": "1.46.0",
diff --git a/packages/vsx-registry/src/browser/vsx-extension-commands.ts b/packages/vsx-registry/src/browser/vsx-extension-commands.ts
index e79ba161d5ed3..7184b74eb0fdf 100644
--- a/packages/vsx-registry/src/browser/vsx-extension-commands.ts
+++ b/packages/vsx-registry/src/browser/vsx-extension-commands.ts
@@ -36,6 +36,13 @@ export namespace VSXExtensionsCommands {
         label: nls.localizeByDefault('Install from VSIX') + '...',
         dialogLabel: nls.localizeByDefault('Install from VSIX')
     };
+    export const INSTALL_VSIX: Command = {
+        id: 'vsxExtensions.installVSIX',
+        label: nls.localizeByDefault('Install Extension VSIX'),
+        originalLabel: 'Install Extension VSIX',
+        category: nls.localizeByDefault(EXTENSIONS_CATEGORY),
+        originalCategory: EXTENSIONS_CATEGORY,
+    };
     export const INSTALL_ANOTHER_VERSION: Command = {
         id: 'vsxExtensions.installAnotherVersion'
     };
diff --git a/packages/vsx-registry/src/browser/vsx-extensions-contribution.ts b/packages/vsx-registry/src/browser/vsx-extensions-contribution.ts
index b301d3a0fc75d..f990ab69a4971 100644
--- a/packages/vsx-registry/src/browser/vsx-extensions-contribution.ts
+++ b/packages/vsx-registry/src/browser/vsx-extensions-contribution.ts
@@ -14,29 +14,32 @@
 // SPDX-License-Identifier: EPL-2.0 OR GPL-2.0-only WITH Classpath-exception-2.0
 // *****************************************************************************
 
-import { DateTime } from 'luxon';
-import { injectable, inject, postConstruct } from '@theia/core/shared/inversify';
-import debounce = require('@theia/core/shared/lodash.debounce');
-import { Command, CommandRegistry } from '@theia/core/lib/common/command';
-import { AbstractViewContribution } from '@theia/core/lib/browser/shell/view-contribution';
-import { VSXExtensionsViewContainer } from './vsx-extensions-view-container';
-import { VSXExtensionsModel } from './vsx-extensions-model';
+import { CommonMenus, LabelProvider, PreferenceService, QuickInputService, QuickPickItem } from '@theia/core/lib/browser';
+import { ClipboardService } from '@theia/core/lib/browser/clipboard-service';
 import { ColorContribution } from '@theia/core/lib/browser/color-application-contribution';
 import { ColorRegistry } from '@theia/core/lib/browser/color-registry';
-import { Color } from '@theia/core/lib/common/color';
 import { FrontendApplication } from '@theia/core/lib/browser/frontend-application';
 import { FrontendApplicationContribution } from '@theia/core/lib/browser/frontend-application-contribution';
-import { MenuModelRegistry, MessageService, nls } from '@theia/core/lib/common';
+import { AbstractViewContribution } from '@theia/core/lib/browser/shell/view-contribution';
+import { MenuModelRegistry, MessageService, SelectionService, nls } from '@theia/core/lib/common';
+import { Color } from '@theia/core/lib/common/color';
+import { Command, CommandRegistry } from '@theia/core/lib/common/command';
+import URI from '@theia/core/lib/common/uri';
+import { UriAwareCommandHandler } from '@theia/core/lib/common/uri-command-handler';
+import { inject, injectable, postConstruct } from '@theia/core/shared/inversify';
 import { FileDialogService, OpenFileDialogProps } from '@theia/filesystem/lib/browser';
-import { LabelProvider, PreferenceService, QuickPickItem, QuickInputService, CommonMenus } from '@theia/core/lib/browser';
+import { NAVIGATOR_CONTEXT_MENU } from '@theia/navigator/lib/browser/navigator-contribution';
+import { OVSXApiFilter, VSXExtensionRaw } from '@theia/ovsx-client';
 import { VscodeCommands } from '@theia/plugin-ext-vscode/lib/browser/plugin-vscode-commands-contribution';
-import { VSXExtensionsContextMenu, VSXExtension } from './vsx-extension';
-import { ClipboardService } from '@theia/core/lib/browser/clipboard-service';
-import { BUILTIN_QUERY, INSTALLED_QUERY, RECOMMENDED_QUERY } from './vsx-extensions-search-model';
+import { DateTime } from 'luxon';
+import { OVSXClientProvider } from '../common/ovsx-client-provider';
 import { IGNORE_RECOMMENDATIONS_ID } from './recommended-extensions/recommended-extensions-preference-contribution';
+import { VSXExtension, VSXExtensionsContextMenu } from './vsx-extension';
 import { VSXExtensionsCommands } from './vsx-extension-commands';
-import { VSXExtensionRaw, OVSXApiFilter } from '@theia/ovsx-client';
-import { OVSXClientProvider } from '../common/ovsx-client-provider';
+import { VSXExtensionsModel } from './vsx-extensions-model';
+import { BUILTIN_QUERY, INSTALLED_QUERY, RECOMMENDED_QUERY } from './vsx-extensions-search-model';
+import { VSXExtensionsViewContainer } from './vsx-extensions-view-container';
+import debounce = require('@theia/core/shared/lodash.debounce');
 
 export namespace VSXCommands {
     export const TOGGLE_EXTENSIONS: Command = {
@@ -57,6 +60,7 @@ export class VSXExtensionsContribution extends AbstractViewContribution<VSXExten
     @inject(OVSXClientProvider) protected clientProvider: OVSXClientProvider;
     @inject(OVSXApiFilter) protected vsxApiFilter: OVSXApiFilter;
     @inject(QuickInputService) protected quickInput: QuickInputService;
+    @inject(SelectionService) protected readonly selectionService: SelectionService;
 
     constructor() {
         super({
@@ -95,6 +99,12 @@ export class VSXExtensionsContribution extends AbstractViewContribution<VSXExten
             execute: () => this.installFromVSIX()
         });
 
+        commands.registerCommand(VSXExtensionsCommands.INSTALL_VSIX,
+            UriAwareCommandHandler.MonoSelect(this.selectionService, {
+                execute: fileURI => this.installVSIX(fileURI)
+            }
+            ));
+
         commands.registerCommand(VSXExtensionsCommands.INSTALL_ANOTHER_VERSION, {
             // Check downloadUrl to ensure we have an idea of where to look for other versions.
             isEnabled: (extension: VSXExtension) => !extension.builtin && !!extension.downloadUrl,
@@ -143,6 +153,11 @@ export class VSXExtensionsContribution extends AbstractViewContribution<VSXExten
             commandId: VSXExtensionsCommands.INSTALL_ANOTHER_VERSION.id,
             label: nls.localizeByDefault('Install Another Version...'),
         });
+        menus.registerMenuAction(NAVIGATOR_CONTEXT_MENU, {
+            commandId: VSXExtensionsCommands.INSTALL_VSIX.id,
+            label: VSXExtensionsCommands.INSTALL_VSIX.label,
+            when: 'resourceScheme == file && resourceExtname == .vsix'
+        });
     }
 
     registerColors(colors: ColorRegistry): void {
@@ -199,25 +214,33 @@ export class VSXExtensionsContribution extends AbstractViewContribution<VSXExten
             title: VSXExtensionsCommands.INSTALL_FROM_VSIX.dialogLabel,
             openLabel: nls.localizeByDefault('Install from VSIX'),
             filters: { 'VSIX Extensions (*.vsix)': ['vsix'] },
-            canSelectMany: false
+            canSelectMany: false,
+            canSelectFiles: true
         };
         const extensionUri = await this.fileDialogService.showOpenDialog(props);
         if (extensionUri) {
             if (extensionUri.path.ext === '.vsix') {
-                const extensionName = this.labelProvider.getName(extensionUri);
-                try {
-                    await this.commandRegistry.executeCommand(VscodeCommands.INSTALL_FROM_VSIX.id, extensionUri);
-                    this.messageService.info(nls.localizeByDefault('Completed installing {0} extension from VSIX.', extensionName));
-                } catch (e) {
-                    this.messageService.error(nls.localize('theia/vsx-registry/failedInstallingVSIX', 'Failed to install {0} from VSIX.', extensionName));
-                    console.warn(e);
-                }
+                await this.installVSIX(extensionUri);
             } else {
                 this.messageService.error(nls.localize('theia/vsx-registry/invalidVSIX', 'The selected file is not a valid "*.vsix" plugin.'));
             }
         }
     }
 
+    /**
+     * Installs a local extension file.
+     */
+    protected async installVSIX(fileURI: URI): Promise<void> {
+        const extensionName = this.labelProvider.getName(fileURI);
+        try {
+            await this.commandRegistry.executeCommand(VscodeCommands.INSTALL_FROM_VSIX.id, fileURI);
+            this.messageService.info(nls.localizeByDefault('Completed installing {0} extension from VSIX.', extensionName));
+        } catch (e) {
+            this.messageService.error(nls.localize('theia/vsx-registry/failedInstallingVSIX', 'Failed to install {0} from VSIX.', extensionName));
+            console.warn(e);
+        }
+    }
+
     /**
      * Given an extension, displays a quick pick of other compatible versions and installs the selected version.
      *
diff --git a/packages/vsx-registry/src/browser/vsx-extensions-widget.tsx b/packages/vsx-registry/src/browser/vsx-extensions-widget.tsx
index 6b79ed3dea49f..63e2a38579cc7 100644
--- a/packages/vsx-registry/src/browser/vsx-extensions-widget.tsx
+++ b/packages/vsx-registry/src/browser/vsx-extensions-widget.tsx
@@ -15,7 +15,7 @@
 // *****************************************************************************
 
 import { injectable, interfaces, postConstruct, inject } from '@theia/core/shared/inversify';
-import { TreeModel, TreeNode } from '@theia/core/lib/browser';
+import { Message, TreeModel, TreeNode } from '@theia/core/lib/browser';
 import { SourceTreeWidget } from '@theia/core/lib/browser/source-tree';
 import { VSXExtensionsSource, VSXExtensionsSourceOptions } from './vsx-extensions-source';
 import { nls } from '@theia/core/lib/common/nls';
@@ -153,4 +153,13 @@ export class VSXExtensionsWidget extends SourceTreeWidget implements BadgeWidget
         }
         return super.renderTree(model);
     }
+
+    protected override onAfterShow(msg: Message): void {
+        super.onAfterShow(msg);
+        if (this.options.id === VSXExtensionsSourceOptions.INSTALLED) {
+            // This is needed when an Extension was installed outside of the extension view.
+            // E.g. using explorer context menu.
+            this.doUpdateRows();
+        }
+    }
 }
diff --git a/packages/vsx-registry/tsconfig.json b/packages/vsx-registry/tsconfig.json
index ba51f2ea3a5ee..c2d9957cb1436 100644
--- a/packages/vsx-registry/tsconfig.json
+++ b/packages/vsx-registry/tsconfig.json
@@ -18,6 +18,9 @@
     {
       "path": "../filesystem"
     },
+    {
+      "path": "../navigator"
+    },
     {
       "path": "../plugin-ext"
     },