diff --git a/sandpack-react/src/components/CodeEditor/CodeMirror.stories.tsx b/sandpack-react/src/components/CodeEditor/CodeMirror.stories.tsx
index 966cbe6ec..1b161be4d 100644
--- a/sandpack-react/src/components/CodeEditor/CodeMirror.stories.tsx
+++ b/sandpack-react/src/components/CodeEditor/CodeMirror.stories.tsx
@@ -70,7 +70,7 @@ stories.add("ShowLineNumber", () => (
 #header {
   width: @width;
   height: @height;
-}  
+}
 `}
       fileType="less"
       initMode="immediate"
@@ -138,3 +138,54 @@ export default function List() {
     />
   </SandpackProvider>
 ));
+
+type Decorators = Array<{ className: string; line: number }>;
+
+stories.add("DecoratorsDynamic", () => {
+  const [decorators, setDecorators] = React.useState<Decorators>([]);
+  const [file, setFile] = React.useState(`const people = [{
+  id: 0,
+  name: 'Creola Katherine Johnson',
+  profession: 'mathematician',
+}, {
+  id: 1,
+  name: 'Mario José Molina-Pasquel Henríquez',
+  profession: 'chemist',
+}];
+
+export default function List() {
+  const [text, setText] = useState("")
+  const listItems = people.map(person =>
+    <li>{person}</li>
+  );
+  return <ul>{listItems}</ul>;
+}`);
+
+  React.useEffect(() => {
+    const lines = file.split("\n");
+
+    setDecorators([
+      {
+        className: "highlight",
+        line: Math.floor(Math.random() * lines.length),
+      },
+    ]);
+  }, [file]);
+
+  return (
+    <SandpackProvider>
+      <style>
+        {`.highlight, .widget {
+        background: red;
+      }`}
+      </style>
+      <CodeEditor
+        code={file}
+        decorators={decorators}
+        fileType="jsx"
+        initMode="immediate"
+        onCodeUpdate={(newCode) => setFile(newCode)}
+      />
+    </SandpackProvider>
+  );
+});
diff --git a/sandpack-react/src/components/CodeEditor/CodeMirror.tsx b/sandpack-react/src/components/CodeEditor/CodeMirror.tsx
index 86e8213d4..db03e5188 100644
--- a/sandpack-react/src/components/CodeEditor/CodeMirror.tsx
+++ b/sandpack-react/src/components/CodeEditor/CodeMirror.tsx
@@ -186,91 +186,6 @@ export const CodeMirror = React.forwardRef<CodeMirrorRef, CodeMirrorProps>(
     React.useEffect(() => {
       if (!wrapper.current || !shouldInitEditor) return;
 
-      const customCommandsKeymap: KeyBinding[] = [
-        {
-          key: "Tab",
-          run: (view): boolean => {
-            indentMore(view);
-
-            const customKey = extensionsKeymap.find(({ key }) => key === "Tab");
-
-            return customKey?.run?.(view) ?? true;
-          },
-        },
-        {
-          key: "Shift-Tab",
-          run: ({ state, dispatch }): boolean => {
-            indentLess({ state, dispatch });
-
-            const customKey = extensionsKeymap.find(
-              ({ key }) => key === "Shift-Tab"
-            );
-
-            return customKey?.run?.(view) ?? true;
-          },
-        },
-        {
-          key: "Escape",
-          run: (): boolean => {
-            if (readOnly) return true;
-
-            if (wrapper.current) {
-              wrapper.current.focus();
-            }
-
-            return true;
-          },
-        },
-        {
-          key: "mod-Backspace",
-          run: deleteGroupBackward,
-        },
-      ];
-
-      const extensionList = [
-        highlightSpecialChars(),
-        history(),
-        closeBrackets(),
-
-        ...extensions,
-
-        keymap.of([
-          ...closeBracketsKeymap,
-          ...defaultKeymap,
-          ...historyKeymap,
-          ...customCommandsKeymap,
-          ...extensionsKeymap,
-        ] as KeyBinding[]),
-        langSupport,
-
-        getEditorTheme(),
-        syntaxHighlighting(highlightTheme),
-      ];
-
-      if (readOnly) {
-        extensionList.push(EditorState.readOnly.of(true));
-        extensionList.push(EditorView.editable.of(false));
-      } else {
-        extensionList.push(bracketMatching());
-        extensionList.push(highlightActiveLine());
-      }
-
-      if (sortedDecorators) {
-        extensionList.push(highlightDecorators(sortedDecorators));
-      }
-
-      if (wrapContent) {
-        extensionList.push(EditorView.lineWrapping);
-      }
-
-      if (showLineNumbers) {
-        extensionList.push(lineNumbers());
-      }
-
-      if (showInlineErrors) {
-        extensionList.push(highlightInlineError());
-      }
-
       const parentDiv = wrapper.current;
       const existingPlaceholder = parentDiv.querySelector(
         ".sp-pre-placeholder"
@@ -281,7 +196,7 @@ export const CodeMirror = React.forwardRef<CodeMirrorRef, CodeMirrorProps>(
 
       const view = new EditorView({
         doc: code,
-        extensions: extensionList,
+        extensions: [],
         parent: parentDiv,
         dispatch: (tr): void => {
           view.update([tr]);
@@ -313,14 +228,109 @@ export const CodeMirror = React.forwardRef<CodeMirrorRef, CodeMirrorProps>(
       return (): void => {
         cmView.current?.destroy();
       };
+      // eslint-disable-next-line react-hooks/exhaustive-deps
+    }, [shouldInitEditor]);
+
+    React.useEffect(() => {
+      if (cmView.current) {
+        const customCommandsKeymap: KeyBinding[] = [
+          {
+            key: "Tab",
+            run: (view): boolean => {
+              indentMore(view);
+
+              const customKey = extensionsKeymap.find(
+                ({ key }) => key === "Tab"
+              );
+
+              return customKey?.run?.(view) ?? true;
+            },
+          },
+          {
+            key: "Shift-Tab",
+            run: (view): boolean => {
+              indentLess({ state: view.state, dispatch: view.dispatch });
 
+              const customKey = extensionsKeymap.find(
+                ({ key }) => key === "Shift-Tab"
+              );
+
+              return customKey?.run?.(view) ?? true;
+            },
+          },
+          {
+            key: "Escape",
+            run: (): boolean => {
+              if (readOnly) return true;
+
+              if (wrapper.current) {
+                wrapper.current.focus();
+              }
+
+              return true;
+            },
+          },
+          {
+            key: "mod-Backspace",
+            run: deleteGroupBackward,
+          },
+        ];
+
+        const extensionList = [
+          highlightSpecialChars(),
+          history(),
+          closeBrackets(),
+
+          ...extensions,
+
+          keymap.of([
+            ...closeBracketsKeymap,
+            ...defaultKeymap,
+            ...historyKeymap,
+            ...customCommandsKeymap,
+            ...extensionsKeymap,
+          ] as KeyBinding[]),
+          langSupport,
+
+          getEditorTheme(),
+          syntaxHighlighting(highlightTheme),
+        ];
+
+        if (readOnly) {
+          extensionList.push(EditorState.readOnly.of(true));
+          extensionList.push(EditorView.editable.of(false));
+        } else {
+          extensionList.push(bracketMatching());
+          extensionList.push(highlightActiveLine());
+        }
+
+        if (sortedDecorators) {
+          extensionList.push(highlightDecorators(sortedDecorators));
+        }
+
+        if (wrapContent) {
+          extensionList.push(EditorView.lineWrapping);
+        }
+
+        if (showLineNumbers) {
+          extensionList.push(lineNumbers());
+        }
+
+        if (showInlineErrors) {
+          extensionList.push(highlightInlineError());
+        }
+
+        // Add new hightlight decorators
+        cmView.current.dispatch({
+          effects: StateEffect.reconfigure.of(extensionList),
+        });
+      }
       // eslint-disable-next-line react-hooks/exhaustive-deps
     }, [
-      shouldInitEditor,
+      sortedDecorators,
       showLineNumbers,
       wrapContent,
       themeId,
-      sortedDecorators,
       readOnly,
       autoReload,
     ]);