Can I display a file with ANSI color escape sequences in Visual Studio Code?

I have a process that writes a log file which includes ANSI color codes. When I view the file on the terminal with cat, the colors are rendered correctly. When I view it with less, by default I see codes like ESC[32m but I can use the -R switch to see the colors (e.g. less -R log.txt).

I would like to be able to view and even possibly edit the file in VSCode, with the colors displayed correctly. How can I do this?

The ANSI Colors extension exists since 2020/10/13:

TL;DR

Once installed, you can use the preview button in the top right (just like for Markdown):

Long Version

0. Install the ANSI Colors extension.
1. Open your ANSI file.
2. Use the preview button, or their custom commands to open the ANSI color preview, just like in this screenshot:
   • Press F1 or CTRL/Command + SHIFT + P (to open the VSCode command interface).
   • Type "ansi" or "preview" to find the commands.
   • Select with Up/Down arrow keys.
   • Finally, hit enter.
   • NOTE: As you can see, the command interface also shows you keyboard shortcuts, if you prefer those.

More usage and configuration options are explained on the extension page.