diff --git a/src/CodingWithCalvin.ProjectRenamifier/CodingWithCalvin.ProjectRenamifier.csproj b/src/CodingWithCalvin.ProjectRenamifier/CodingWithCalvin.ProjectRenamifier.csproj
index e85f232..e409917 100644
--- a/src/CodingWithCalvin.ProjectRenamifier/CodingWithCalvin.ProjectRenamifier.csproj
+++ b/src/CodingWithCalvin.ProjectRenamifier/CodingWithCalvin.ProjectRenamifier.csproj
@@ -71,6 +71,7 @@
     </Compile>
     <Compile Include="ProjectRenamifierPackage.cs" />
     <Compile Include="Services\ProjectFileService.cs" />
+    <Compile Include="Services\ProjectReferenceService.cs" />
     <Compile Include="Services\SourceFileService.cs" />
     <Compile Include="source.extension.cs">
       <AutoGen>True</AutoGen>
diff --git a/src/CodingWithCalvin.ProjectRenamifier/Commands/RenamifyProjectCommand.cs b/src/CodingWithCalvin.ProjectRenamifier/Commands/RenamifyProjectCommand.cs
index dd6fef9..37c07df 100644
--- a/src/CodingWithCalvin.ProjectRenamifier/Commands/RenamifyProjectCommand.cs
+++ b/src/CodingWithCalvin.ProjectRenamifier/Commands/RenamifyProjectCommand.cs
@@ -80,6 +80,10 @@ private void RenameProject(Project project, DTE2 dte)
             var newName = dialog.NewProjectName;
             var projectFilePath = project.FullName;
 
+            // Collect projects that reference this project before removal
+            var referencingProjects = ProjectReferenceService.FindProjectsReferencingTarget(dte.Solution, projectFilePath);
+            var oldProjectFilePath = projectFilePath;
+
             // Remove project from solution before file operations
             dte.Solution.Remove(project);
 
@@ -95,12 +99,14 @@ private void RenameProject(Project project, DTE2 dte)
             // Rename parent directory if it matches the old project name
             projectFilePath = ProjectFileService.RenameParentDirectoryIfMatches(projectFilePath, currentName, newName);
 
+            // Update references in projects that referenced this project
+            ProjectReferenceService.UpdateProjectReferences(referencingProjects, oldProjectFilePath, projectFilePath);
+
             // Re-add project to solution with new path
             dte.Solution.AddFromFile(projectFilePath);
 
             // TODO: Implement remaining rename operations
             // See open issues for requirements:
-            // - #23: Update project references
             // - #9: Update using statements across solution
             // - #11: Solution folder support
             // - #12: Progress indication
diff --git a/src/CodingWithCalvin.ProjectRenamifier/Services/ProjectReferenceService.cs b/src/CodingWithCalvin.ProjectRenamifier/Services/ProjectReferenceService.cs
new file mode 100644
index 0000000..5c03ae5
--- /dev/null
+++ b/src/CodingWithCalvin.ProjectRenamifier/Services/ProjectReferenceService.cs
@@ -0,0 +1,207 @@
+using System.Collections.Generic;
+using System.IO;
+using System.Xml;
+using EnvDTE;
+
+namespace CodingWithCalvin.ProjectRenamifier.Services
+{
+    /// <summary>
+    /// Service for managing project references during rename operations.
+    /// </summary>
+    internal static class ProjectReferenceService
+    {
+        /// <summary>
+        /// Finds all projects in the solution that reference the specified project.
+        /// </summary>
+        /// <param name="solution">The solution to search.</param>
+        /// <param name="targetProjectPath">The full path to the project being renamed.</param>
+        /// <returns>A list of project paths that reference the target project.</returns>
+        public static List<string> FindProjectsReferencingTarget(Solution solution, string targetProjectPath)
+        {
+            ThreadHelper.ThrowIfNotOnUIThread();
+
+            var referencingProjects = new List<string>();
+            var targetFileName = Path.GetFileName(targetProjectPath);
+
+            foreach (Project project in solution.Projects)
+            {
+                FindReferencesInProject(project, targetProjectPath, targetFileName, referencingProjects);
+            }
+
+            return referencingProjects;
+        }
+
+        /// <summary>
+        /// Recursively searches a project (and solution folders) for references to the target.
+        /// </summary>
+        private static void FindReferencesInProject(Project project, string targetProjectPath, string targetFileName, List<string> referencingProjects)
+        {
+            ThreadHelper.ThrowIfNotOnUIThread();
+
+            if (project == null)
+            {
+                return;
+            }
+
+            // Handle solution folders
+            if (project.Kind == EnvDTE.Constants.vsProjectKindSolutionItems)
+            {
+                foreach (ProjectItem item in project.ProjectItems)
+                {
+                    if (item.SubProject != null)
+                    {
+                        FindReferencesInProject(item.SubProject, targetProjectPath, targetFileName, referencingProjects);
+                    }
+                }
+                return;
+            }
+
+            // Skip the target project itself
+            if (string.Equals(project.FullName, targetProjectPath, System.StringComparison.OrdinalIgnoreCase))
+            {
+                return;
+            }
+
+            // Check if this project references the target
+            if (!string.IsNullOrEmpty(project.FullName) && File.Exists(project.FullName))
+            {
+                if (ProjectReferencesTarget(project.FullName, targetFileName))
+                {
+                    referencingProjects.Add(project.FullName);
+                }
+            }
+        }
+
+        /// <summary>
+        /// Checks if a project file contains a reference to the target project.
+        /// </summary>
+        private static bool ProjectReferencesTarget(string projectFilePath, string targetFileName)
+        {
+            var doc = new XmlDocument();
+            doc.Load(projectFilePath);
+
+            var namespaceManager = new XmlNamespaceManager(doc.NameTable);
+            var msbuildNs = "http://schemas.microsoft.com/developer/msbuild/2003";
+            var hasNamespace = doc.DocumentElement?.NamespaceURI == msbuildNs;
+
+            XmlNodeList nodes;
+            if (hasNamespace)
+            {
+                namespaceManager.AddNamespace("ms", msbuildNs);
+                nodes = doc.SelectNodes("//ms:ProjectReference", namespaceManager);
+            }
+            else
+            {
+                nodes = doc.SelectNodes("//ProjectReference");
+            }
+
+            if (nodes == null)
+            {
+                return false;
+            }
+
+            foreach (XmlNode node in nodes)
+            {
+                var includeAttr = node.Attributes?["Include"]?.Value;
+                if (!string.IsNullOrEmpty(includeAttr))
+                {
+                    var referencedFileName = Path.GetFileName(includeAttr);
+                    if (string.Equals(referencedFileName, targetFileName, System.StringComparison.OrdinalIgnoreCase))
+                    {
+                        return true;
+                    }
+                }
+            }
+
+            return false;
+        }
+
+        /// <summary>
+        /// Updates project references in all projects that referenced the old project path.
+        /// </summary>
+        /// <param name="referencingProjectPaths">Projects that need their references updated.</param>
+        /// <param name="oldProjectPath">The old path to the renamed project.</param>
+        /// <param name="newProjectPath">The new path to the renamed project.</param>
+        public static void UpdateProjectReferences(List<string> referencingProjectPaths, string oldProjectPath, string newProjectPath)
+        {
+            var oldFileName = Path.GetFileName(oldProjectPath);
+
+            foreach (var projectPath in referencingProjectPaths)
+            {
+                UpdateReferencesInProject(projectPath, oldFileName, oldProjectPath, newProjectPath);
+            }
+        }
+
+        /// <summary>
+        /// Updates references in a single project file.
+        /// </summary>
+        private static void UpdateReferencesInProject(string projectFilePath, string oldFileName, string oldProjectPath, string newProjectPath)
+        {
+            var doc = new XmlDocument();
+            doc.PreserveWhitespace = true;
+            doc.Load(projectFilePath);
+
+            var namespaceManager = new XmlNamespaceManager(doc.NameTable);
+            var msbuildNs = "http://schemas.microsoft.com/developer/msbuild/2003";
+            var hasNamespace = doc.DocumentElement?.NamespaceURI == msbuildNs;
+
+            XmlNodeList nodes;
+            if (hasNamespace)
+            {
+                namespaceManager.AddNamespace("ms", msbuildNs);
+                nodes = doc.SelectNodes("//ms:ProjectReference", namespaceManager);
+            }
+            else
+            {
+                nodes = doc.SelectNodes("//ProjectReference");
+            }
+
+            if (nodes == null)
+            {
+                return;
+            }
+
+            var modified = false;
+            var projectDirectory = Path.GetDirectoryName(projectFilePath);
+
+            foreach (XmlNode node in nodes)
+            {
+                var includeAttr = node.Attributes?["Include"];
+                if (includeAttr == null || string.IsNullOrEmpty(includeAttr.Value))
+                {
+                    continue;
+                }
+
+                var referencedFileName = Path.GetFileName(includeAttr.Value);
+                if (!string.Equals(referencedFileName, oldFileName, System.StringComparison.OrdinalIgnoreCase))
+                {
+                    continue;
+                }
+
+                // Calculate new relative path from referencing project to renamed project
+                var newRelativePath = GetRelativePath(projectDirectory, newProjectPath);
+                includeAttr.Value = newRelativePath;
+                modified = true;
+            }
+
+            if (modified)
+            {
+                doc.Save(projectFilePath);
+            }
+        }
+
+        /// <summary>
+        /// Gets a relative path from one directory to a file.
+        /// </summary>
+        private static string GetRelativePath(string fromDirectory, string toFile)
+        {
+            var fromUri = new System.Uri(fromDirectory.TrimEnd(Path.DirectorySeparatorChar) + Path.DirectorySeparatorChar);
+            var toUri = new System.Uri(toFile);
+
+            var relativeUri = fromUri.MakeRelativeUri(toUri);
+            var relativePath = System.Uri.UnescapeDataString(relativeUri.ToString());
+
+            return relativePath.Replace('/', Path.DirectorySeparatorChar);
+        }
+    }
+}