[Python Environments] automatic activation of a wrong venv on spawning new terminal

[kirisakow]

Type: Bug

Description

As I work with multiple Python virtual environments, I started to systematically observe, lately, automatic activation of Python executable from another venv than that of a directory currently opened in VS Code. It doesn't help even to add a local ./.vscode/settings.json with "python.defaultInterpreterPath" setting (see below) in each project directory: the setting seems to be ignored.

Steps to Reproduce

1. Open a directory in VS Code
2. Spawn Terminal > New

Expected Behavior

No venv is activated or the right venv is activated.

Actual Behavior

A wrong venv is activated.

Addendum: Workspace Settings (my-proj/.vscode/settings.json)

{
    "python.defaultInterpreterPath": "~/AppData/Local/pypoetry/Cache/virtualenvs/my-env-Jf--Zmr2-py3.10/Scripts/python.exe",
    "python-envs.defaultEnvManager": "ms-python.python:poetry",
    "python-envs.defaultPackageManager": "ms-python.python:poetry",
}

Environment Information

Extension Version: 1.28.0
Python Extension Version: 2026.4.0

Registered Environment Managers (5):
  - ms-python.python:system (Global)
  - ms-python.python:venv (venv)
  - ms-python.python:pyenv (PyEnv)
  - ms-python.python:pipenv (Pipenv)
  - ms-python.python:poetry (Poetry)

Total Available Environments: 4
Environment Details:
  1. Python 3.10 (64-bit) (3.10.11) - C:\Program Files\Python 3.10.11\python.exe
  2. poetry (3.10.11) (3.10.11.final.0) - C:\Users\kisakov\AppData\Local\pypoetry\Cache\virtualenvs\dfc-algo-non-fleche-ta-XDwmDIVE-py3.10
  3. poetry (3.10.11) (3.10.11.final.0) - C:\Users\kisakov\AppData\Local\pypoetry\Cache\virtualenvs\dfc-installation-poste-nouvel-arrivant-gvd-Jf--Zmr2-py3.10
  4. poetry (3.10.11) (3.10.11.final.0) - C:\Users\kisakov\AppData\Local\pypoetry\Cache\virtualenvs\dfc-predict-fraude-of-j_gWKM4I-py3.10

Python Projects (1):
  1. c:\DEVELOPPEMENT\dfc-installation-poste-nouvel-arrivant-gvd
     Environment: poetry (3.10.11)

Extension Settings:
  Default Environment Manager: ms-python.python:poetry
  Default Package Manager: ms-python.python:poetry
Auto-activation is "command". Activation based on first 'py-env.terminal.autoActivationType' setting which is 'command' and 'python.terminal.activateEnvironment' if the first is undefined which is 'true'.

Extension version: 1.28.0
VS Code version: Code 1.116.0 (560a9dba96f961efea7b1612916f89e5d5d4d679, 2026-04-15T00:28:13Z)
OS version: Windows_NT x64 10.0.26100
Modes:

System Info

Item	Value
CPUs	12th Gen Intel(R) Core(TM) i5-1240P (16 x 2112)
GPU Status	2d_canvas: enabled GPU0: VENDOR= 0x8086, DEVICE=0x46a6 [Intel(R) Iris(R) Xe Graphics], DRIVER_VENDOR=Intel, DRIVER_VERSION=32.0.101.5763 ACTIVE GPU1: VENDOR= 0x1414, DEVICE=0x008c [Microsoft Basic Render Driver], DRIVER_VERSION=10.0.26100.7309 Machine model name: Machine model version: direct_rendering_display_compositor: disabled_off_ok gpu_compositing: enabled multiple_raster_threads: enabled_on opengl: enabled_on rasterization: enabled raw_draw: disabled_off_ok skia_graphite: disabled_off trees_in_viz: disabled_off video_decode: enabled video_encode: enabled webgl: enabled webgl2: enabled webgpu: enabled webnn: disabled_off
Load (avg)	undefined
Memory (System)	31.65GB (17.49GB free)
Process Argv	C:\DEVELOPPEMENT\dfc-installation-poste-nouvel-arrivant-gvd --crash-reporter-id 54d17900-a134-43ae-be6d-3f8adf52dd4b
Screen Reader	no
VM	0%

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logging_disabled_new:31493366
output_1x:31496637
56dj4588:31497896

[sdg002]

I am facing a similar issue.
I have a local .venv folder but VS Code magically remembers another virtual environment and very stubbornly activates that

For now I have placed this extension in the unwanted list through my extensions.json file.

    "unwantedRecommendations": [
        "ms-python.vscode-python-envs"
    ]

Please - we need a more consistent and a transparent approach. I do not mind having an extra setting which tells which Virtual environment to load - but the "black magic" worries me .