diff --git a/src/vs/workbench/contrib/terminal/browser/links/terminalLinkManager.ts b/src/vs/workbench/contrib/terminal/browser/links/terminalLinkManager.ts
index 2eeb08c9d7701f4e0f09cf8e0c132720a4ac0875..63946a0606d58aac2137d370d3c95f77d2a9fdc2 100644
--- a/src/vs/workbench/contrib/terminal/browser/links/terminalLinkManager.ts
+++ b/src/vs/workbench/contrib/terminal/browser/links/terminalLinkManager.ts
@@ -37,7 +37,8 @@ const excludedPathCharactersClause = '[^\\0\\s!$`&*()\\[\\]+\'":;\\\\]';
 /** A regex that matches paths in the form /foo, ~/foo, ./foo, ../foo, foo/bar */
 const unixLocalLinkClause = '((' + pathPrefix + '|(' + excludedPathCharactersClause + ')+)?(' + pathSeparatorClause + '(' + excludedPathCharactersClause + ')+)+)';
 
-const winDrivePrefix = '(?:\\\\\\\\\\?\\\\)?[a-zA-Z]:';
+// Valid absolute formats: C:, \\?\C: and \\?\%VAR%
+const winDrivePrefix = '(?:\\\\\\\\\\?\\\\)?([a-zA-Z]:|%)';
 const winPathPrefix = '(' + winDrivePrefix + '|\\.\\.?|\\~)';
 const winPathSeparatorClause = '(\\\\|\\/)';
 const winExcludedPathCharactersClause = '[^\\0<>\\?\\|\\/\\s!$`&*()\\[\\]+\'":;]';