diff --git a/packages/tailwindcss-language-server/tests/diagnostics/diagnostics.test.js b/packages/tailwindcss-language-server/tests/diagnostics/diagnostics.test.js
index 4a37ee2d..67d83fc4 100644
--- a/packages/tailwindcss-language-server/tests/diagnostics/diagnostics.test.js
+++ b/packages/tailwindcss-language-server/tests/diagnostics/diagnostics.test.js
@@ -59,6 +59,23 @@ withFixture('v4/basic', (c) => {
     })
   }
 
+  function testInline(fixture, { code, expected, language = 'html' }) {
+    test(fixture, async () => {
+      let promise = new Promise((resolve) => {
+        c.onNotification('textDocument/publishDiagnostics', ({ diagnostics }) => {
+          resolve(diagnostics)
+        })
+      })
+
+      let doc = await c.openDocument({ text: code, lang: language })
+      let diagnostics = await promise
+
+      expected = JSON.parse(JSON.stringify(expected).replaceAll('{{URI}}', doc.uri))
+
+      expect(diagnostics).toEqual(expected)
+    })
+  }
+
   testFixture('css-conflict/simple')
   testFixture('css-conflict/variants-negative')
   testFixture('css-conflict/variants-positive')
@@ -69,5 +86,171 @@ withFixture('v4/basic', (c) => {
   // testFixture('css-conflict/css-multi-rule')
   // testFixture('css-conflict/css-multi-prop')
   // testFixture('invalid-screen/simple')
-  // testFixture('invalid-theme/simple')
+
+  testInline('simple typos in theme keys (in key)', {
+    code: '.test { color: theme(--color-red-901) }',
+    language: 'css',
+    expected: [
+      {
+        code: 'invalidConfigPath',
+        range: { start: { line: 0, character: 21 }, end: { line: 0, character: 36 } },
+        severity: 1,
+        message: "'--color-red-901' does not exist in your theme. Did you mean '--color-red-900'?",
+        suggestions: ['--color-red-900'],
+      },
+    ],
+  })
+
+  testInline('simple typos in theme keys (in namespace)', {
+    code: '.test { color: theme(--colors-red-901) }',
+    language: 'css',
+    expected: [
+      {
+        code: 'invalidConfigPath',
+        range: { start: { line: 0, character: 21 }, end: { line: 0, character: 37 } },
+        severity: 1,
+        message: "'--colors-red-901' does not exist in your theme. Did you mean '--color-red-900'?",
+        suggestions: ['--color-red-900'],
+      },
+    ],
+  })
+
+  testInline('No similar theme key exists', {
+    code: '.test { color: theme(--font-obliqueness-90) }',
+    language: 'css',
+    expected: [
+      {
+        code: 'invalidConfigPath',
+        range: { start: { line: 0, character: 21 }, end: { line: 0, character: 42 } },
+        severity: 1,
+        message: "'--font-obliqueness-90' does not exist in your theme.",
+        suggestions: [],
+      },
+    ],
+  })
+
+  testInline('valid theme keys dont issue diagnostics', {
+    code: '.test { color: theme(--color-red-900) }',
+    language: 'css',
+    expected: [],
+  })
+
+  testInline('types in legacy theme config paths', {
+    code: '.test { color: theme(colors.red.901) }',
+    language: 'css',
+    expected: [
+      {
+        code: 'invalidConfigPath',
+        range: { start: { line: 0, character: 21 }, end: { line: 0, character: 35 } },
+        severity: 1,
+        message: "'colors.red.901' does not exist in your theme config.",
+        suggestions: [],
+      },
+    ],
+  })
+
+  testInline('valid legacy theme config paths', {
+    code: '.test { color: theme(colors.red.900) }',
+    language: 'css',
+    expected: [],
+  })
+})
+
+withFixture('v4/with-prefix', (c) => {
+  function testInline(fixture, { code, expected, language = 'html' }) {
+    test(fixture, async () => {
+      let promise = new Promise((resolve) => {
+        c.onNotification('textDocument/publishDiagnostics', ({ diagnostics }) => {
+          resolve(diagnostics)
+        })
+      })
+
+      let doc = await c.openDocument({ text: code, lang: language })
+      let diagnostics = await promise
+
+      expected = JSON.parse(JSON.stringify(expected).replaceAll('{{URI}}', doc.uri))
+
+      expect(diagnostics).toEqual(expected)
+    })
+  }
+
+  // testFixture('css-conflict/simple')
+  // testFixture('css-conflict/variants-negative')
+  // testFixture('css-conflict/variants-positive')
+  // testFixture('css-conflict/jsx-concat-negative')
+  // testFixture('css-conflict/jsx-concat-positive')
+  // testFixture('css-conflict/vue-style-lang-sass')
+
+  // testFixture('css-conflict/css')
+  // testFixture('css-conflict/css-multi-rule')
+  // testFixture('css-conflict/css-multi-prop')
+  // testFixture('invalid-screen/simple')
+
+  testInline('simple typos in theme keys (in key)', {
+    code: '.test { color: theme(--color-red-901) }',
+    language: 'css',
+    expected: [
+      {
+        code: 'invalidConfigPath',
+        range: { start: { line: 0, character: 21 }, end: { line: 0, character: 36 } },
+        severity: 1,
+        message: "'--color-red-901' does not exist in your theme. Did you mean '--color-red-900'?",
+        suggestions: ['--color-red-900'],
+      },
+    ],
+  })
+
+  testInline('simple typos in theme keys (in namespace)', {
+    code: '.test { color: theme(--colors-red-901) }',
+    language: 'css',
+    expected: [
+      {
+        code: 'invalidConfigPath',
+        range: { start: { line: 0, character: 21 }, end: { line: 0, character: 37 } },
+        severity: 1,
+        message: "'--colors-red-901' does not exist in your theme. Did you mean '--color-red-900'?",
+        suggestions: ['--color-red-900'],
+      },
+    ],
+  })
+
+  testInline('No similar theme key exists', {
+    code: '.test { color: theme(--font-obliqueness-90) }',
+    language: 'css',
+    expected: [
+      {
+        code: 'invalidConfigPath',
+        range: { start: { line: 0, character: 21 }, end: { line: 0, character: 42 } },
+        severity: 1,
+        message: "'--font-obliqueness-90' does not exist in your theme.",
+        suggestions: [],
+      },
+    ],
+  })
+
+  testInline('valid theme keys dont issue diagnostics', {
+    code: '.test { color: theme(--color-red-900) }',
+    language: 'css',
+    expected: [],
+  })
+
+  testInline('types in legacy theme config paths', {
+    code: '.test { color: theme(colors.red.901) }',
+    language: 'css',
+    expected: [
+      {
+        code: 'invalidConfigPath',
+        range: { start: { line: 0, character: 21 }, end: { line: 0, character: 35 } },
+        severity: 1,
+        message: "'colors.red.901' does not exist in your theme config.",
+        suggestions: [],
+      },
+    ],
+  })
+
+  testInline('valid legacy theme config paths', {
+    code: '.test { color: theme(colors.red.900) }',
+    language: 'css',
+    expected: [],
+  })
 })
diff --git a/packages/tailwindcss-language-server/tests/fixtures/v4/with-prefix/app.css b/packages/tailwindcss-language-server/tests/fixtures/v4/with-prefix/app.css
new file mode 100644
index 00000000..ca9f3ab3
--- /dev/null
+++ b/packages/tailwindcss-language-server/tests/fixtures/v4/with-prefix/app.css
@@ -0,0 +1,5 @@
+@import 'tailwindcss';
+
+@theme prefix(tw) {
+  --color-potato: #907a70;
+}
diff --git a/packages/tailwindcss-language-server/tests/fixtures/v4/with-prefix/package-lock.json b/packages/tailwindcss-language-server/tests/fixtures/v4/with-prefix/package-lock.json
new file mode 100644
index 00000000..3dd65ed8
--- /dev/null
+++ b/packages/tailwindcss-language-server/tests/fixtures/v4/with-prefix/package-lock.json
@@ -0,0 +1,17 @@
+{
+  "name": "with-prefix",
+  "lockfileVersion": 3,
+  "requires": true,
+  "packages": {
+    "": {
+      "dependencies": {
+        "tailwindcss": "^4.0.0-alpha.30"
+      }
+    },
+    "node_modules/tailwindcss": {
+      "version": "4.0.0-alpha.30",
+      "resolved": "https://registry.npmjs.org/tailwindcss/-/tailwindcss-4.0.0-alpha.30.tgz",
+      "integrity": "sha512-e6OsN8n1nRLca2X8ix1QSa+oZA1IYktHw+epLI07+CeQzbLbIDNJieRdbcctM32TAy3vHKvEgdp0rM1WUbpIMQ=="
+    }
+  }
+}
diff --git a/packages/tailwindcss-language-server/tests/fixtures/v4/with-prefix/package.json b/packages/tailwindcss-language-server/tests/fixtures/v4/with-prefix/package.json
new file mode 100644
index 00000000..5e7c8cc9
--- /dev/null
+++ b/packages/tailwindcss-language-server/tests/fixtures/v4/with-prefix/package.json
@@ -0,0 +1,5 @@
+{
+  "dependencies": {
+    "tailwindcss": "^4.0.0-alpha.30"
+  }
+}
diff --git a/packages/tailwindcss-language-service/src/diagnostics/getInvalidConfigPathDiagnostics.ts b/packages/tailwindcss-language-service/src/diagnostics/getInvalidConfigPathDiagnostics.ts
index edb92074..1b3ecb16 100644
--- a/packages/tailwindcss-language-service/src/diagnostics/getInvalidConfigPathDiagnostics.ts
+++ b/packages/tailwindcss-language-service/src/diagnostics/getInvalidConfigPathDiagnostics.ts
@@ -3,10 +3,15 @@ import { type InvalidConfigPathDiagnostic, DiagnosticKind } from './types'
 import { findHelperFunctionsInDocument } from '../util/find'
 import { stringToPath } from '../util/stringToPath'
 import isObject from '../util/isObject'
-import { closest } from '../util/closest'
+import { closest, distance } from '../util/closest'
 import { combinations } from '../util/combinations'
 import dlv from 'dlv'
 import type { TextDocument } from 'vscode-languageserver-textdocument'
+import type { DesignSystem } from '../util/v4'
+
+type ValidationResult =
+  | { isValid: true; value: any }
+  | { isValid: false; reason: string; suggestions: string[] }
 
 function pathToString(path: string | string[]): string {
   if (typeof path === 'string') return path
@@ -21,8 +26,13 @@ export function validateConfigPath(
   state: State,
   path: string | string[],
   base: string[] = [],
-): { isValid: true; value: any } | { isValid: false; reason: string; suggestions: string[] } {
+): ValidationResult {
   let keys = Array.isArray(path) ? path : stringToPath(path)
+
+  if (state.v4) {
+    return validateV4ThemePath(state, pathToString(keys))
+  }
+
   let fullPath = [...base, ...keys]
   let value = dlv(state.config, fullPath)
   let suggestions: string[] = []
@@ -195,3 +205,113 @@ export function getInvalidConfigPathDiagnostics(
 
   return diagnostics
 }
+
+function resolveThemeValue(design: DesignSystem, path: string) {
+  let prefix = design.theme.prefix ?? null
+  let candidate = prefix ? `${prefix}:[--custom:theme(${path})]` : `[--custom:theme(${path})]`
+
+  // Compile a dummy candidate that uses the theme function with the given path.
+  //
+  // We'll get a rule with a declaration from which we read the value. No rule
+  // will be generated and the root will be empty if the path is invalid.
+  //
+  // Non-CSS representable values are not a concern here because the validation
+  // only happens for calls in a CSS context.
+  let [root] = design.compile([candidate])
+
+  let value: string | null = null
+
+  root.walkDecls((decl) => {
+    value = decl.value
+  })
+
+  return value
+}
+
+function resolveKnownThemeKeys(design: DesignSystem): string[] {
+  let validThemeKeys = Array.from(design.theme.entries(), ([key]) => key)
+
+  let prefixLength = design.theme.prefix?.length ?? 0
+
+  return prefixLength > 0
+    ? // Strip the configured prefix from the list of valid theme keys
+      validThemeKeys.map((key) => `--${key.slice(prefixLength + 3)}`)
+    : validThemeKeys
+}
+
+function validateV4ThemePath(state: State, path: string): ValidationResult {
+  let prefix = state.designSystem.theme.prefix ?? null
+
+  let value = resolveThemeValue(state.designSystem, path)
+
+  if (value !== null && value !== undefined) {
+    return { isValid: true, value }
+  }
+
+  let reason = path.startsWith('--')
+    ? `'${path}' does not exist in your theme.`
+    : `'${path}' does not exist in your theme config.`
+
+  let suggestions = suggestAlternativeThemeKeys(state, path)
+
+  if (suggestions.length > 0) {
+    reason += ` Did you mean '${suggestions[0]}'?`
+  }
+
+  return {
+    isValid: false,
+    reason,
+    suggestions,
+  }
+}
+
+function suggestAlternativeThemeKeys(state: State, path: string): string[] {
+  // Non-v4 projects don't contain CSS variable theme keys
+  if (!state.v4) return []
+
+  // v4 only supports suggesting keys currently known by the theme
+  // it does not support suggesting keys from the config as that is not
+  // exposed in any v4 API
+  if (!path.startsWith('--')) return []
+
+  let parts = path.slice(2).split('-')
+  parts[0] = `--${parts[0]}`
+
+  let validThemeKeys = resolveKnownThemeKeys(state.designSystem)
+  let potentialThemeKey: string | null = null
+
+  while (parts.length > 1) {
+    // Slice off the end of the theme key at the `-`
+    parts.pop()
+
+    // Look at all theme keys that start with that
+    let prefix = parts.join('-')
+
+    let possibleKeys = validThemeKeys.filter((key) => key.startsWith(prefix))
+
+    // If there are none, slice again and repeat
+    if (possibleKeys.length === 0) continue
+
+    // Find the closest match using the Fast String Distance (SIFT) algorithm
+    // ensuring `--color-red-901` suggests `--color-red-900` instead of
+    // `--color-red-950`. We could in theory use the algorithm directly but it
+    // does not make sense to suggest keys from an unrelated namespace which is
+    // why we do filtering beforehand.
+    potentialThemeKey = closest(path, possibleKeys)!
+
+    break
+  }
+
+  // If we haven't found a key based on prefix matching, we'll do one more
+  // search based on the full list of available keys. This is useful if the
+  // namespace itself has a typo.
+  potentialThemeKey ??= closest(path, validThemeKeys)!
+
+  // This number was chosen arbitrarily. From some light testing it seems like
+  // it's a decent threshold for determine if a key is a reasonable suggestion.
+  // This wasn't chosen by rigorous testing so if it needs to be adjusted it can
+  // be. Chances are it'll need to be increased instead of decreased.
+  const MAX_DISTANCE = 5
+
+  return distance(path, potentialThemeKey) <= MAX_DISTANCE ? [potentialThemeKey] : []
+}
diff --git a/packages/tailwindcss-language-service/src/util/closest.ts b/packages/tailwindcss-language-service/src/util/closest.ts
index ebdfacc2..15d51b2c 100644
--- a/packages/tailwindcss-language-service/src/util/closest.ts
+++ b/packages/tailwindcss-language-service/src/util/closest.ts
@@ -3,3 +3,7 @@ import sift from 'sift-string'
 export function closest(input: string, options: string[]): string | undefined {
   return options.concat([]).sort((a, b) => sift(input, a) - sift(input, b))[0]
 }
+
+export function distance(a: string, b: string): number {
+  return sift(a, b)
+}
diff --git a/packages/tailwindcss-language-service/src/util/v4/design-system.ts b/packages/tailwindcss-language-service/src/util/v4/design-system.ts
index 0f47d30c..75da6316 100644
--- a/packages/tailwindcss-language-service/src/util/v4/design-system.ts
+++ b/packages/tailwindcss-language-service/src/util/v4/design-system.ts
@@ -2,7 +2,11 @@ import postcss from 'postcss'
 import type { Rule } from './ast'
 import type { NamedVariant } from './candidate'
 
-export interface Theme {}
+export interface Theme {
+  // Prefix didn't exist on
+  prefix?: string
+  entries(): [string, any][]
+}
 
 export interface ClassMetadata {
   modifiers: string[]
diff --git a/packages/vscode-tailwindcss/CHANGELOG.md b/packages/vscode-tailwindcss/CHANGELOG.md
index 066f3a3a..5155e1dd 100644
--- a/packages/vscode-tailwindcss/CHANGELOG.md
+++ b/packages/vscode-tailwindcss/CHANGELOG.md
@@ -3,6 +3,7 @@
 ## Prerelease
 
 - Fix display of color swatches using new v4 oklch color palette ([#1073](https://github.com/tailwindlabs/tailwindcss-intellisense/pull/1073))
+- Properly validate `theme(…)` function paths in v4 ([#1074](https://github.com/tailwindlabs/tailwindcss-intellisense/pull/1074))
 
 ## 0.12.12