hwajeong lee Thanks for posting your question in Microsoft Q&A. Can you validate if you are using Functions 4.x Isolated worker process model when creating Azure Functions since that only supports .NET 8.0? See Supported versions for more info and make sure to set the right runtime (V4) for both project as well as Azure Function core tools. I see there is a similar discussion in vscode-azurefunctions repo (other issues) regarding this error message.
Also, note that .NET 8 SDK support was added in v1.13.0 and you need to use that version or higher version of Azure Function extension in VS code.
If you still need assistance or face issues, please submit a new issue in vscode-azurefunctions repo with details such as Functions runtime, Azure Function Core Tools version, VS code Azure Function extension version etc. Our product team can review and assist accordingly (also right place to track functions extension related issues).
I hope this helps and let me know if any questions.
If you found the answer to your question helpful, please take a moment to mark it as Yes
for others to benefit from your experience. Or simply add a comment tagging me and would be happy to answer your questions.