Change highlight text color in Visual Studio Code

Add the following lines into "Editor: Token Color Customizations" setting, inside settings.json file.

"workbench.colorCustomizations": {
    "editor.selectionBackground": "#135564",
    "editor.selectionHighlightBackground": "#135564"
},

See Theme Color Reference for more options

The above answers cover the Selected text and areas with same content as selection, but they miss the Current Search Match and Other Search Matches -- which have the same problem.

"workbench.colorCustomizations": {
    "editor.findMatchBackground": "#00cc44a8", //Current SEARCH MATCH
    "editor.findMatchHighlightBackground": "#ff7b00a1" //Other SEARCH MATCHES
}

Note that the above settings will also affect the colors when using Change All Occurrences CtrlF2 (a super-useful command that intelligently selects all occurrences of a string, placing cursors at each location for multiple-instance editing).

UPDATEs:

For those using the popular extension Numbered Bookmarks - you can now change the background color of bookmarked lines - makes it über-easy to notice them. (Have you ever wanted a way to temporarily mark line(s) in your code, as with a highlighter on paper?) Add this line to your settings.json (also under workbench.colorCustomizations):

        "numberedBookmarks.lineBackground": "#007700"

And don't miss Henry Zhu's useful tip here. I added Henry's tip to the settings above, and find the overall effect improved. (Henry's tip is not included within this answer - please click the link to read Henry's additional tip)

Tom Mai adds via a comment:

Make sure both colors for editor.findMatchBackground and editor.findMatchHighlightBackground have transparency (or have some alpha values), in order for editor.selectionBackground and editor.selectionHighlightBackground to show through the searches. You can keep both colors, editor.selectionBackground and editor.selectionHighlightBackground, non-transparent (without alpha values) to an extent, and it works flawlessly

Example of a typical settings file, post mod:

    {
        "git.enableSmartCommit": true,
        "git.autofetch": true,
        "breadcrumbs.enabled": true,
        "git.confirmSync": false,
        "explorer.confirmDelete": false,
        "code-runner.saveFileBeforeRun": true,
        "code-runner.saveAllFilesBeforeRun": true,
        "workbench.activityBar.visible": true,
        "files.trimTrailingWhitespace": true,
        "telemetry.enableTelemetry": false,
        "scm.providers.visible": 0, //0 allows manual resize of the Source Control panels
        "editor.renameOnType": true, //Added Aug 2020: renames matching HTML tags
        "workbench.colorCustomizations": {
            "editor.selectionBackground": "#e788ff7c", //Currently SELECTED text
            "editor.selectionHighlightBackground": "#ff00005b", //Same content as selection
            "editor.findMatchBackground": "#00cc44a8", //Current SEARCH MATCH
            "editor.findMatchHighlightBackground": "#ff7b00a1", //Other SEARCH MATCHES
            "numberedBookmarks.lineBackground": "#007700"
            //Henry's tip goes here... (don't forget to add comma to line above)
        }
    }

Where to find the settings.json file:

Depending on your platform, the user settings file is located here:

Windows %APPDATA%\Code\User\settings.json
macOS $HOME/Library/Application Support/Code/User/settings.json
Linux $HOME/.config/Code/User/settings.json

ALTERNATE method to open the settings.json file:

1. Ctrl + , (comma) to open Settings

2. Workbench

3. Settings Editor

4. In the search box at top, paste-in workbench.colorCustomizations

5. On the left, click Workbench and then Appearance

6. Click the link to right: Edit in settings.json

References:

https://code.visualstudio.com/api/references/theme-color#editor-colors

https://code.visualstudio.com/docs/getstarted/themes#_customize-a-color-theme

https://code.visualstudio.com/docs/getstarted/settings