diff --git a/assets/settings/default.json b/assets/settings/default.json
index dd9098e0c0..20819529ff 100644
--- a/assets/settings/default.json
+++ b/assets/settings/default.json
@@ -569,7 +569,8 @@
     //     "Neighbour"
     "activate_on_close": "history",
     /// Which files containing diagnostic errors/warnings to mark in the tabs.
-    /// This setting can take the following three values:
+    /// Diagnostics are only shown when file icons are also active.
+    /// This setting only works when can take the following three values:
     ///
     /// 1. Do not mark any files:
     ///    "off"
@@ -577,7 +578,7 @@
     ///    "errors"
     /// 3. Mark files with errors and warnings:
     ///    "all"
-    "show_diagnostics": "all"
+    "show_diagnostics": "off"
   },
   // Settings related to preview tabs.
   "preview_tabs": {
diff --git a/crates/workspace/src/item.rs b/crates/workspace/src/item.rs
index 97c27b52a1..7b9478a9a7 100644
--- a/crates/workspace/src/item.rs
+++ b/crates/workspace/src/item.rs
@@ -64,9 +64,9 @@ pub enum ClosePosition {
 #[derive(Copy, Clone, Debug, Default, Serialize, Deserialize, JsonSchema, PartialEq, Eq)]
 #[serde(rename_all = "snake_case")]
 pub enum ShowDiagnostics {
+    #[default]
     Off,
     Errors,
-    #[default]
     All,
 }
 
@@ -99,7 +99,7 @@ pub struct ItemSettingsContent {
     /// Which files containing diagnostic errors/warnings to mark in the tabs.
     /// This setting can take the following three values:
     ///
-    /// Default: all
+    /// Default: off
     show_diagnostics: Option<ShowDiagnostics>,
     /// Whether to always show the close button on tabs.
     ///
diff --git a/crates/workspace/src/pane.rs b/crates/workspace/src/pane.rs
index d213ab630b..a4ca58c11c 100644
--- a/crates/workspace/src/pane.rs
+++ b/crates/workspace/src/pane.rs
@@ -2002,12 +2002,8 @@ impl Pane {
 
         let icon = if decorated_icon.is_none() {
             match item_diagnostic {
-                Some(&DiagnosticSeverity::ERROR) => {
-                    Some(Icon::new(IconName::X).color(Color::Error))
-                }
-                Some(&DiagnosticSeverity::WARNING) => {
-                    Some(Icon::new(IconName::Triangle).color(Color::Warning))
-                }
+                Some(&DiagnosticSeverity::ERROR) => None,
+                Some(&DiagnosticSeverity::WARNING) => None,
                 _ => item.tab_icon(cx).map(|icon| icon.color(Color::Muted)),
             }
             .map(|icon| icon.size(IconSize::Small))
@@ -2144,13 +2140,17 @@ impl Pane {
             .child(
                 h_flex()
                     .gap_1()
-                    .child(if let Some(decorated_icon) = decorated_icon {
-                        div().child(decorated_icon.into_any_element())
-                    } else if let Some(icon) = icon {
-                        div().mt(px(2.5)).child(icon.into_any_element())
-                    } else {
-                        div()
-                    })
+                    .items_center()
+                    .children(
+                        std::iter::once(if let Some(decorated_icon) = decorated_icon {
+                            Some(div().child(decorated_icon.into_any_element()))
+                        } else if let Some(icon) = icon {
+                            Some(div().child(icon.into_any_element()))
+                        } else {
+                            None
+                        })
+                        .flatten(),
+                    )
                     .child(label),
             );