diff --git a/compiler-core/src/language_server/code_action.rs b/compiler-core/src/language_server/code_action.rs
index 3e27bb86773..9e07b10492a 100644
--- a/compiler-core/src/language_server/code_action.rs
+++ b/compiler-core/src/language_server/code_action.rs
@@ -2605,12 +2605,18 @@ pub struct ExtractVariable<'a> {
     module: &'a Module,
     params: &'a CodeActionParams,
     edits: TextEdits<'a>,
-    inside_capture_body: bool,
+    position: Option<ExtractVariablePosition>,
     selected_expression: Option<SrcSpan>,
     statement_before_selected_expression: Option<SrcSpan>,
     latest_statement: Option<SrcSpan>,
 }
 
+#[derive(PartialEq, Eq, Copy, Clone)]
+enum ExtractVariablePosition {
+    InsideCaptureBody,
+    TopLevelStatement,
+}
+
 impl<'a> ExtractVariable<'a> {
     pub fn new(
         module: &'a Module,
@@ -2621,7 +2627,7 @@ impl<'a> ExtractVariable<'a> {
             module,
             params,
             edits: TextEdits::new(line_numbers),
-            inside_capture_body: false,
+            position: None,
             selected_expression: None,
             latest_statement: None,
             statement_before_selected_expression: None,
@@ -2669,21 +2675,58 @@ impl<'ast> ast::visit::Visit<'ast> for ExtractVariable<'ast> {
         // A capture body is comprised of just a single expression statement
         // that is inserted by the compiler, we don't really want to put
         // anything before that; so in this case we avoid tracking it.
-        if !self.inside_capture_body {
+        if self.position != Some(ExtractVariablePosition::InsideCaptureBody) {
             self.latest_statement = Some(stmt.location());
         }
+
+        let previous_position = self.position;
+        self.position = Some(ExtractVariablePosition::TopLevelStatement);
         ast::visit::visit_typed_statement(self, stmt);
+        self.position = previous_position;
     }
 
     fn visit_typed_expr(&mut self, expr: &'ast TypedExpr) {
         let expr_location = expr.location();
         let expr_range = self.edits.src_span_to_lsp_range(expr_location);
-        if within(self.params.range, expr_range) {
-            self.selected_expression = Some(expr_location);
-            self.statement_before_selected_expression = self.latest_statement;
+
+        // If the expression is a top level statement we don't want to extract
+        // it into a variable. It would mean we would turn this:
+        //
+        // ```gleam
+        // pub fn main() {
+        //   let wibble = 1
+        //   //           ^ cursor here
+        // }
+        //
+        // // into:
+        //
+        // pub fn main() {
+        //   let value = 1
+        //   let wibble = value
+        // }
+        // ```
+        //
+        // Not all that useful!
+        //
+        if self.position != Some(ExtractVariablePosition::TopLevelStatement)
+            && within(self.params.range, expr_range)
+        {
+            match expr {
+                // We don't extract variables, they're already good.
+                // And we don't extract module selects by themselves but always
+                // want to consider those as part of a function call.
+                TypedExpr::Var { .. } | TypedExpr::ModuleSelect { .. } => (),
+                _ => {
+                    self.selected_expression = Some(expr_location);
+                    self.statement_before_selected_expression = self.latest_statement;
+                }
+            }
         }
 
+        let previous_position = self.position;
+        self.position = None;
         ast::visit::visit_typed_expr(self, expr);
+        self.position = previous_position;
     }
 
     fn visit_typed_expr_fn(
@@ -2695,29 +2738,18 @@ impl<'ast> ast::visit::Visit<'ast> for ExtractVariable<'ast> {
         body: &'ast [TypedStatement],
         return_annotation: &'ast Option<ast::TypeAst>,
     ) {
-        self.inside_capture_body = match kind {
+        let previous_position = self.position;
+        self.position = match kind {
             // If a fn is a capture `int.wibble(1, _)` its body will consist of
             // just a single expression statement. When visiting we must record
             // we're inside a capture body.
-            FunctionLiteralKind::Capture => true,
-            FunctionLiteralKind::Anonymous { .. } | FunctionLiteralKind::Use { .. } => false,
+            FunctionLiteralKind::Capture => Some(ExtractVariablePosition::InsideCaptureBody),
+            FunctionLiteralKind::Anonymous { .. } | FunctionLiteralKind::Use { .. } => {
+                self.position
+            }
         };
         ast::visit::visit_typed_expr_fn(self, location, type_, kind, args, body, return_annotation);
-        self.inside_capture_body = false;
-    }
-
-    // We don't want to offer the action if the cursor is over a variable
-    // already!
-    fn visit_typed_expr_var(
-        &mut self,
-        location: &'ast SrcSpan,
-        _constructor: &'ast type_::ValueConstructor,
-        _name: &'ast EcoString,
-    ) {
-        let var_range = self.edits.src_span_to_lsp_range(*location);
-        if within(self.params.range, var_range) {
-            self.selected_expression = None;
-        }
+        self.position = previous_position;
     }
 
     // We don't want to offer the action if the cursor is over some invalid
diff --git a/compiler-core/src/language_server/tests/action.rs b/compiler-core/src/language_server/tests/action.rs
index 0410ac35270..b5fd5f464ac 100644
--- a/compiler-core/src/language_server/tests/action.rs
+++ b/compiler-core/src/language_server/tests/action.rs
@@ -3961,6 +3961,45 @@ fn extract_variable_in_block() {
     );
 }
 
+#[test]
+fn do_not_extract_top_level_expression_statement() {
+    assert_no_code_actions!(
+        EXTRACT_VARIABLE,
+        r#"pub fn main() {
+    1
+}
+"#,
+        find_position_of("1").to_selection()
+    );
+}
+
+#[test]
+fn do_not_extract_top_level_expression_in_let_statement() {
+    assert_no_code_actions!(
+        EXTRACT_VARIABLE,
+        r#"pub fn main() {
+    let a = 1
+}
+"#,
+        find_position_of("1").to_selection()
+    );
+}
+
+#[test]
+fn do_not_extract_top_level_module_call() {
+    let src = r#"
+import list
+pub fn main() {
+  list.map([1, 2, 3], todo)
+}"#;
+
+    assert_no_code_actions!(
+        EXTRACT_VARIABLE,
+        TestProject::for_source(src).add_module("list", "pub fn map(l, f) { todo }"),
+        find_position_of("map").to_selection()
+    );
+}
+
 #[test]
 fn expand_function_capture() {
     assert_code_action!(