diff --git a/libs/localenv/envkey.go b/libs/localenv/envkey.go
index 070668ba82..23dc0f9ca5 100644
--- a/libs/localenv/envkey.go
+++ b/libs/localenv/envkey.go
@@ -14,6 +14,14 @@ import (
 // by 3.10.6, so only the former bumps the minor.
 var clauseRe = regexp.MustCompile(`^(>=|<=|===|==|~=|!=|<|>)?\s*(\d+)\.(\d+)(\.\d+)?`)
 
+// defaultServerlessVersion is the serverless environment version used when the
+// source (a serverless job with no recorded version, or a bundle that only
+// records "serverless") does not pin one. It is a documented stand-in for the
+// latest LTS (spec §4.3 / §target-resolution); VS Code resolves the real version
+// itself and passes --serverless-version explicitly, so this fallback only
+// applies when the version is genuinely unknown.
+const defaultServerlessVersion = "v5"
+
 // NormalizeServerless returns the canonical "vN" spelling of a serverless
 // version accepting "4", "v4", or "V4".
 func NormalizeServerless(version string) string {
diff --git a/libs/localenv/target.go b/libs/localenv/target.go
index 92246f6bc0..cdb2a20c2e 100644
--- a/libs/localenv/target.go
+++ b/libs/localenv/target.go
@@ -118,11 +118,11 @@ func ResolveTarget(ctx context.Context, f TargetFlags, c ComputeClient, bt Bundl
 		}
 		if isServerless {
 			// Use the job's recorded serverless environment version when present;
-			// fall back to v4 when the job did not pin one (documented stand-in from
-			// the original script, spec §4.3).
+			// fall back to the default when the job did not pin one (documented
+			// stand-in, spec §4.3).
 			v := version
 			if v == "" {
-				v = "v4"
+				v = defaultServerlessVersion
 			}
 			return &TargetInfo{
 				Source:            "job",
@@ -145,12 +145,12 @@ func ResolveTarget(ctx context.Context, f TargetFlags, c ComputeClient, bt Bundl
 	}
 
 	if bt.Serverless {
-		// Default to serverless-v4: the serverless env version is not recorded
-		// in the bundle/project (documented stand-in from the original script).
+		// The bundle records that the target is serverless but not which version,
+		// so use the default stand-in (spec §4.3).
 		return &TargetInfo{
 			Source:            "bundle",
-			ServerlessVersion: "v4",
-			EnvKey:            EnvKeyForServerless("v4"),
+			ServerlessVersion: NormalizeServerless(defaultServerlessVersion),
+			EnvKey:            EnvKeyForServerless(defaultServerlessVersion),
 		}, nil
 	}
 
diff --git a/libs/localenv/target_test.go b/libs/localenv/target_test.go
index 1033b90909..3c64d15462 100644
--- a/libs/localenv/target_test.go
+++ b/libs/localenv/target_test.go
@@ -93,10 +93,11 @@ func TestResolveBundleNothingSelected(t *testing.T) {
 }
 
 func TestResolveBundleServerless(t *testing.T) {
+	// The bundle records serverless but no version, so the default stand-in applies.
 	ti, err := ResolveTarget(t.Context(), TargetFlags{}, stubCompute{}, BundleTarget{Selected: true, Serverless: true})
 	require.NoError(t, err)
 	assert.Equal(t, "bundle", ti.Source)
-	assert.Equal(t, "serverless/serverless-v4", ti.EnvKey)
+	assert.Equal(t, "serverless/serverless-"+defaultServerlessVersion, ti.EnvKey)
 }
 
 // jobStubCompute returns distinct values for the first (sparkVersion) and third
@@ -143,13 +144,13 @@ func TestResolveJobServerlessUsesRecordedVersion(t *testing.T) {
 	assert.Equal(t, "serverless/serverless-v3", ti.EnvKey)
 }
 
-func TestResolveJobServerlessEmptyVersionFallsBackToV4(t *testing.T) {
-	// When the job records no serverless version, ResolveTarget defaults to v4
-	// (documented stand-in), matching the bundle serverless path.
+func TestResolveJobServerlessEmptyVersionFallsBackToDefault(t *testing.T) {
+	// When the job records no serverless version, ResolveTarget uses the default
+	// stand-in, matching the bundle serverless path.
 	c := jobStubCompute{isServerless: true, version: ""}
 	ti, err := ResolveTarget(t.Context(), TargetFlags{Job: "42"}, c, BundleTarget{})
 	require.NoError(t, err)
-	assert.Equal(t, "serverless/serverless-v4", ti.EnvKey)
+	assert.Equal(t, "serverless/serverless-"+defaultServerlessVersion, ti.EnvKey)
 }
 
 func TestValidateTargetFlagsMutuallyExclusive(t *testing.T) {