diff --git a/src/vs/workbench/parts/tasks/electron-browser/terminalTaskSystem.ts b/src/vs/workbench/parts/tasks/electron-browser/terminalTaskSystem.ts
index 8fbde82681081085c6352c2fa71119b078650f80..8d208465cbf2a6c5de1ab63c5a28123d9c2073c8 100644
--- a/src/vs/workbench/parts/tasks/electron-browser/terminalTaskSystem.ts
+++ b/src/vs/workbench/parts/tasks/electron-browser/terminalTaskSystem.ts
@@ -484,7 +484,15 @@ export class TerminalTaskSystem extends EventEmitter implements ITaskSystem {
 			}
 		}
 		if (options.cwd) {
-			shellLaunchConfig.cwd = options.cwd;
+			let cwd = options.cwd;
+			if (!path.isAbsolute(cwd)) {
+				let workspaceFolder = Task.getWorkspaceFolder(task);
+				if (workspaceFolder.uri.scheme === 'file') {
+					cwd = path.join(workspaceFolder.uri.fsPath, cwd);
+				}
+			}
+			// This must be normalized to the OS
+			shellLaunchConfig.cwd = path.normalize(cwd);
 		}
 		if (options.env) {
 			shellLaunchConfig.env = options.env;