diff --git a/src/vs/workbench/api/electron-browser/mainThreadTerminalService.ts b/src/vs/workbench/api/electron-browser/mainThreadTerminalService.ts
index 8e974b94935ee841b28014cbcb6161f4ed535240..434652bfaf6c983159be4c45e0d3ec530ae3d629 100644
--- a/src/vs/workbench/api/electron-browser/mainThreadTerminalService.ts
+++ b/src/vs/workbench/api/electron-browser/mainThreadTerminalService.ts
@@ -5,31 +5,32 @@
 'use strict';
 
 import { IDisposable, dispose } from 'vs/base/common/lifecycle';
-import { ITerminalService, ITerminalInstance, IShellLaunchConfig } from 'vs/workbench/parts/terminal/common/terminal';
+import { ITerminalService, ITerminalInstance, IShellLaunchConfig, ITerminalProcessExtHostProxy, ITerminalProcessExtHostRequest } from 'vs/workbench/parts/terminal/common/terminal';
 import { TPromise } from 'vs/base/common/winjs.base';
-import { ExtHostContext, ExtHostTerminalServiceShape, MainThreadTerminalServiceShape, MainContext, IExtHostContext } from '../node/extHost.protocol';
+import { ExtHostContext, ExtHostTerminalServiceShape, MainThreadTerminalServiceShape, MainContext, IExtHostContext, ShellLaunchConfigDto } from '../node/extHost.protocol';
 import { extHostNamedCustomer } from 'vs/workbench/api/electron-browser/extHostCustomers';
 
 @extHostNamedCustomer(MainContext.MainThreadTerminalService)
 export class MainThreadTerminalService implements MainThreadTerminalServiceShape {
 
 	private _proxy: ExtHostTerminalServiceShape;
-	private _toDispose: IDisposable[];
+	private _toDispose: IDisposable[] = [];
+	private _terminalProcesses: { [id: number]: ITerminalProcessExtHostProxy } = {};
 
 	constructor(
 		extHostContext: IExtHostContext,
 		@ITerminalService private terminalService: ITerminalService
 	) {
 		this._proxy = extHostContext.getProxy(ExtHostContext.ExtHostTerminalService);
-		this._toDispose = [];
 		this._toDispose.push(terminalService.onInstanceCreated((terminalInstance) => {
 			// Delay this message so the TerminalInstance constructor has a chance to finish and
 			// return the ID normally to the extension host. The ID that is passed here will be used
 			// to register non-extension API terminals in the extension host.
 			setTimeout(() => this._onTerminalOpened(terminalInstance), 100);
 		}));
-		this._toDispose.push(terminalService.onInstanceDisposed((terminalInstance) => this._onTerminalDisposed(terminalInstance)));
-		this._toDispose.push(terminalService.onInstanceProcessIdReady((terminalInstance) => this._onTerminalProcessIdReady(terminalInstance)));
+		this._toDispose.push(terminalService.onInstanceDisposed(terminalInstance => this._onTerminalDisposed(terminalInstance)));
+		this._toDispose.push(terminalService.onInstanceProcessIdReady(terminalInstance => this._onTerminalProcessIdReady(terminalInstance)));
+		this._toDispose.push(terminalService.onInstanceRequestExtHostProcess(request => this._onTerminalRequestExtHostProcess(request)));
 
 		// Set initial ext host state
 		this.terminalService.terminalInstances.forEach(t => {
@@ -97,4 +98,36 @@ export class MainThreadTerminalService implements MainThreadTerminalServiceShape
 	private _onTerminalProcessIdReady(terminalInstance: ITerminalInstance): void {
 		this._proxy.$acceptTerminalProcessId(terminalInstance.id, terminalInstance.processId);
 	}
+
+	private _onTerminalRequestExtHostProcess(request: ITerminalProcessExtHostRequest): void {
+		this._terminalProcesses[request.proxy.terminalId] = request.proxy;
+		const shellLaunchConfigDto: ShellLaunchConfigDto = {
+			name: request.shellLaunchConfig.name,
+			executable: request.shellLaunchConfig.executable,
+			args: request.shellLaunchConfig.args,
+			cwd: request.shellLaunchConfig.cwd,
+			env: request.shellLaunchConfig.env
+		};
+		this._proxy.$createProcess(request.proxy.terminalId, shellLaunchConfigDto, request.cols, request.rows);
+		request.proxy.onInput(data => this._proxy.$acceptProcessInput(request.proxy.terminalId, data));
+		request.proxy.onResize((cols, rows) => this._proxy.$acceptProcessResize(request.proxy.terminalId, cols, rows));
+		request.proxy.onShutdown(() => this._proxy.$acceptProcessShutdown(request.proxy.terminalId));
+	}
+
+	public $sendProcessTitle(terminalId: number, title: string): void {
+		this._terminalProcesses[terminalId].emitTitle(title);
+	}
+
+	public $sendProcessData(terminalId: number, data: string): void {
+		this._terminalProcesses[terminalId].emitData(data);
+	}
+
+	public $sendProcessPid(terminalId: number, pid: number): void {
+		this._terminalProcesses[terminalId].emitPid(pid);
+	}
+
+	public $sendProcessExit(terminalId: number, exitCode: number): void {
+		this._terminalProcesses[terminalId].emitExit(exitCode);
+		delete this._terminalProcesses[terminalId];
+	}
 }
diff --git a/src/vs/workbench/api/node/extHost.api.impl.ts b/src/vs/workbench/api/node/extHost.api.impl.ts
index c91f1a47d3fa01b594a9708237e598436c3d2654..33fb8a807b9b768643c65ea1ea165020f4399689 100644
--- a/src/vs/workbench/api/node/extHost.api.impl.ts
+++ b/src/vs/workbench/api/node/extHost.api.impl.ts
@@ -114,7 +114,7 @@ export function createApiFactory(
 	const extHostFileSystem = rpcProtocol.set(ExtHostContext.ExtHostFileSystem, new ExtHostFileSystem(rpcProtocol, extHostLanguageFeatures));
 	const extHostFileSystemEvent = rpcProtocol.set(ExtHostContext.ExtHostFileSystemEventService, new ExtHostFileSystemEventService());
 	const extHostQuickOpen = rpcProtocol.set(ExtHostContext.ExtHostQuickOpen, new ExtHostQuickOpen(rpcProtocol, extHostWorkspace, extHostCommands));
-	const extHostTerminalService = rpcProtocol.set(ExtHostContext.ExtHostTerminalService, new ExtHostTerminalService(rpcProtocol));
+	const extHostTerminalService = rpcProtocol.set(ExtHostContext.ExtHostTerminalService, new ExtHostTerminalService(rpcProtocol, extHostConfiguration, extHostLogService));
 	const extHostSCM = rpcProtocol.set(ExtHostContext.ExtHostSCM, new ExtHostSCM(rpcProtocol, extHostCommands, extHostLogService));
 	const extHostSearch = rpcProtocol.set(ExtHostContext.ExtHostSearch, new ExtHostSearch(rpcProtocol));
 	const extHostTask = rpcProtocol.set(ExtHostContext.ExtHostTask, new ExtHostTask(rpcProtocol, extHostWorkspace));
diff --git a/src/vs/workbench/api/node/extHost.protocol.ts b/src/vs/workbench/api/node/extHost.protocol.ts
index 7e1410d4de18e8712d8300dd6abb14c88b1d868a..a6130803b52385f8f2dbf142a32d7f0ba2e8cda0 100644
--- a/src/vs/workbench/api/node/extHost.protocol.ts
+++ b/src/vs/workbench/api/node/extHost.protocol.ts
@@ -319,6 +319,11 @@ export interface MainThreadTerminalServiceShape extends IDisposable {
 	$hide(terminalId: number): void;
 	$sendText(terminalId: number, text: string, addNewLine: boolean): void;
 	$show(terminalId: number, preserveFocus: boolean): void;
+
+	$sendProcessTitle(terminalId: number, title: string): void;
+	$sendProcessData(terminalId: number, data: string): void;
+	$sendProcessPid(terminalId: number, pid: number): void;
+	$sendProcessExit(terminalId: number, exitCode: number): void;
 }
 
 export interface MyQuickPickItems extends IPickOpenEntry {
@@ -729,10 +734,22 @@ export interface ExtHostQuickOpenShape {
 	$validateInput(input: string): TPromise<string>;
 }
 
+export interface ShellLaunchConfigDto {
+	name?: string;
+	executable?: string;
+	args?: string[] | string;
+	cwd?: string;
+	env?: { [key: string]: string };
+}
+
 export interface ExtHostTerminalServiceShape {
 	$acceptTerminalClosed(id: number): void;
 	$acceptTerminalOpened(id: number, name: string): void;
 	$acceptTerminalProcessId(id: number, processId: number): void;
+	$createProcess(id: number, shellLaunchConfig: ShellLaunchConfigDto, cols: number, rows: number): void;
+	$acceptProcessInput(id: number, data: string): void;
+	$acceptProcessResize(id: number, cols: number, rows: number): void;
+	$acceptProcessShutdown(id: number): void;
 }
 
 export interface ExtHostSCMShape {
diff --git a/src/vs/workbench/api/node/extHostTerminalService.ts b/src/vs/workbench/api/node/extHostTerminalService.ts
index 4e993934fd2957456f01259c4ba4d82883c52d7d..cb546c2e8d8365c53d909d3980785eb70dd63933 100644
--- a/src/vs/workbench/api/node/extHostTerminalService.ts
+++ b/src/vs/workbench/api/node/extHostTerminalService.ts
@@ -5,11 +5,18 @@
 'use strict';
 
 import * as vscode from 'vscode';
+import * as cp from 'child_process';
+import * as os from 'os';
+import * as platform from 'vs/base/common/platform';
+import * as terminalEnvironment from 'vs/workbench/parts/terminal/node/terminalEnvironment';
+import Uri from 'vs/base/common/uri';
 import { Event, Emitter } from 'vs/base/common/event';
-import { ExtHostTerminalServiceShape, MainContext, MainThreadTerminalServiceShape, IMainContext } from './extHost.protocol';
+import { ExtHostTerminalServiceShape, MainContext, MainThreadTerminalServiceShape, IMainContext, ShellLaunchConfigDto } from 'vs/workbench/api/node/extHost.protocol';
+import { IMessageFromTerminalProcess } from 'vs/workbench/parts/terminal/node/terminal';
+import { ExtHostConfiguration } from 'vs/workbench/api/node/extHostConfiguration';
+import { ILogService } from 'vs/platform/log/common/log';
 
 export class ExtHostTerminal implements vscode.Terminal {
-
 	private _name: string;
 	private _id: number;
 	private _proxy: MainThreadTerminalServiceShape;
@@ -81,8 +88,11 @@ export class ExtHostTerminal implements vscode.Terminal {
 	}
 
 	public _setProcessId(processId: number): void {
-		this._pidPromiseComplete(processId);
-		this._pidPromiseComplete = null;
+		// The event may fire 2 times when the panel is restored
+		if (this._pidPromiseComplete) {
+			this._pidPromiseComplete(processId);
+			this._pidPromiseComplete = null;
+		}
 	}
 
 	private _queueApiRequest(callback: (...args: any[]) => void, args: any[]) {
@@ -102,19 +112,22 @@ export class ExtHostTerminal implements vscode.Terminal {
 }
 
 export class ExtHostTerminalService implements ExtHostTerminalServiceShape {
-
 	private readonly _onDidCloseTerminal: Emitter<vscode.Terminal>;
 	private readonly _onDidOpenTerminal: Emitter<vscode.Terminal>;
 	private _proxy: MainThreadTerminalServiceShape;
-	private _terminals: ExtHostTerminal[];
+	private _terminals: ExtHostTerminal[] = [];
+	private _terminalProcesses: { [id: number]: cp.ChildProcess } = {};
 
 	public get terminals(): ExtHostTerminal[] { return this._terminals; }
 
-	constructor(mainContext: IMainContext) {
+	constructor(
+		mainContext: IMainContext,
+		private _extHostConfiguration: ExtHostConfiguration,
+		private _logService: ILogService
+	) {
 		this._onDidCloseTerminal = new Emitter<vscode.Terminal>();
 		this._onDidOpenTerminal = new Emitter<vscode.Terminal>();
 		this._proxy = mainContext.getProxy(MainContext.MainThreadTerminalService);
-		this._terminals = [];
 	}
 
 	public createTerminal(name?: string, shellPath?: string, shellArgs?: string[]): vscode.Terminal {
@@ -168,6 +181,99 @@ export class ExtHostTerminalService implements ExtHostTerminalServiceShape {
 		}
 	}
 
+	public $createProcess(id: number, shellLaunchConfig: ShellLaunchConfigDto, cols: number, rows: number): void {
+		// TODO: This function duplicates a lot of TerminalProcessManager.createProcess, ideally
+		// they would be merged into a single implementation.
+
+		const terminalConfig = this._extHostConfiguration.getConfiguration('terminal.integrated');
+
+		const locale = terminalConfig.get('setLocaleVariables') ? platform.locale : undefined;
+		if (!shellLaunchConfig.executable) {
+			// TODO: This duplicates some of TerminalConfigHelper.mergeDefaultShellPathAndArgs and should be merged
+			// this._configHelper.mergeDefaultShellPathAndArgs(shellLaunchConfig);
+
+			const platformKey = platform.isWindows ? 'windows' : platform.isMacintosh ? 'osx' : 'linux';
+			const shellConfigValue: string = terminalConfig.get(`shell.${platformKey}`);
+			const shellArgsConfigValue: string = terminalConfig.get(`shellArgs.${platformKey}`);
+
+			shellLaunchConfig.executable = shellConfigValue;
+			shellLaunchConfig.args = shellArgsConfigValue;
+		}
+
+		// TODO: Base the cwd on the last active workspace root
+		// const lastActiveWorkspaceRootUri = this._historyService.getLastActiveWorkspaceRoot('file');
+		// this.initialCwd = terminalEnvironment.getCwd(shellLaunchConfig, lastActiveWorkspaceRootUri, this._configHelper);
+		const initialCwd = os.homedir();
+
+		// TODO: Pull in and resolve config settings
+		// // Resolve env vars from config and shell
+		// const lastActiveWorkspaceRoot = this._workspaceContextService.getWorkspaceFolder(lastActiveWorkspaceRootUri);
+		// const platformKey = platform.isWindows ? 'windows' : (platform.isMacintosh ? 'osx' : 'linux');
+		// const envFromConfig = terminalEnvironment.resolveConfigurationVariables(this._configurationResolverService, { ...this._configHelper.config.env[platformKey] }, lastActiveWorkspaceRoot);
+		// const envFromShell = terminalEnvironment.resolveConfigurationVariables(this._configurationResolverService, { ...shellLaunchConfig.env }, lastActiveWorkspaceRoot);
+		// shellLaunchConfig.env = envFromShell;
+
+		// Merge process env with the env from config
+		const parentEnv = { ...process.env };
+		// terminalEnvironment.mergeEnvironments(parentEnv, envFromConfig);
+
+		// Continue env initialization, merging in the env from the launch
+		// config and adding keys that are needed to create the process
+		const env = terminalEnvironment.createTerminalEnv(parentEnv, shellLaunchConfig, initialCwd, locale, cols, rows);
+		let cwd = Uri.parse(require.toUrl('../../parts/terminal/node')).fsPath;
+		const options = { env, cwd, execArgv: [] };
+
+		// Fork the process and listen for messages
+		this._logService.debug(`Terminal process launching on ext host`, options);
+		this._terminalProcesses[id] = cp.fork(Uri.parse(require.toUrl('bootstrap')).fsPath, ['--type=terminal'], options);
+		this._terminalProcesses[id].on('message', (message: IMessageFromTerminalProcess) => {
+			switch (message.type) {
+				case 'pid': this._proxy.$sendProcessPid(id, <number>message.content); break;
+				case 'title': this._proxy.$sendProcessTitle(id, <string>message.content); break;
+				case 'data': this._proxy.$sendProcessData(id, <string>message.content); break;
+			}
+		});
+		this._terminalProcesses[id].on('exit', (exitCode) => this._onProcessExit(id, exitCode));
+	}
+
+	public $acceptProcessInput(id: number, data: string): void {
+		if (this._terminalProcesses[id].connected) {
+			this._terminalProcesses[id].send({ event: 'input', data });
+		}
+	}
+
+	public $acceptProcessResize(id: number, cols: number, rows: number): void {
+		if (this._terminalProcesses[id].connected) {
+			try {
+				this._terminalProcesses[id].send({ event: 'resize', cols, rows });
+			} catch (error) {
+				// We tried to write to a closed pipe / channel.
+				if (error.code !== 'EPIPE' && error.code !== 'ERR_IPC_CHANNEL_CLOSED') {
+					throw (error);
+				}
+			}
+		}
+	}
+
+	public $acceptProcessShutdown(id: number): void {
+		if (this._terminalProcesses[id].connected) {
+			this._terminalProcesses[id].send({ event: 'shutdown' });
+		}
+	}
+
+	private _onProcessExit(id: number, exitCode: number): void {
+		// Remove listeners
+		const process = this._terminalProcesses[id];
+		process.removeAllListeners('message');
+		process.removeAllListeners('exit');
+
+		// Remove process reference
+		delete this._terminalProcesses[id];
+
+		// Send exit event to main side
+		this._proxy.$sendProcessExit(id, exitCode);
+	}
+
 	private _getTerminalById(id: number): ExtHostTerminal {
 		let index = this._getTerminalIndexById(id);
 		return index !== null ? this._terminals[index] : null;
@@ -176,6 +282,7 @@ export class ExtHostTerminalService implements ExtHostTerminalServiceShape {
 	private _getTerminalIndexById(id: number): number {
 		let index: number = null;
 		this._terminals.some((terminal, i) => {
+			// TODO: This shouldn't be cas
 			let thisId = (<any>terminal)._id;
 			if (thisId === id) {
 				index = i;
@@ -188,7 +295,6 @@ export class ExtHostTerminalService implements ExtHostTerminalServiceShape {
 }
 
 class ApiRequest {
-
 	private _callback: (...args: any[]) => void;
 	private _args: any[];
 
diff --git a/src/vs/workbench/parts/terminal/common/terminal.ts b/src/vs/workbench/parts/terminal/common/terminal.ts
index 299cf7327ed0776837930cdc58f64b78d9fd6a36..dfe9d89cc12a294c280fa9b9e2d74215e3e19376 100644
--- a/src/vs/workbench/parts/terminal/common/terminal.ts
+++ b/src/vs/workbench/parts/terminal/common/terminal.ts
@@ -103,26 +103,35 @@ export interface ITerminalFont {
 }
 
 export interface IShellLaunchConfig {
-	/** The name of the terminal, if this is not set the name of the process will be used. */
+	/**
+	 * The name of the terminal, if this is not set the name of the process will be used.
+	 */
 	name?: string;
-	/** The shell executable (bash, cmd, etc.). */
+
+	/**
+	 * The shell executable (bash, cmd, etc.).
+	 */
 	executable?: string;
+
 	/**
 	 * The CLI arguments to use with executable, a string[] is in argv format and will be escaped,
 	 * a string is in "CommandLine" pre-escaped format and will be used as is. The string option is
 	 * only supported on Windows and will throw an exception if used on macOS or Linux.
 	 */
 	args?: string[] | string;
+
 	/**
 	 * The current working directory of the terminal, this overrides the `terminal.integrated.cwd`
 	 * settings key.
 	 */
 	cwd?: string;
+
 	/**
 	 * A custom environment for the terminal, if this is not set the environment will be inherited
 	 * from the VS Code process.
 	 */
 	env?: { [key: string]: string };
+
 	/**
 	 * Whether to ignore a custom cwd from the `terminal.integrated.cwd` settings key (eg. if the
 	 * shell is being launched by an extension).
@@ -151,6 +160,7 @@ export interface ITerminalService {
 	onInstanceCreated: Event<ITerminalInstance>;
 	onInstanceDisposed: Event<ITerminalInstance>;
 	onInstanceProcessIdReady: Event<ITerminalInstance>;
+	onInstanceRequestExtHostProcess: Event<ITerminalProcessExtHostRequest>;
 	onInstancesChanged: Event<void>;
 	onInstanceTitleChanged: Event<string>;
 	terminalInstances: ITerminalInstance[];
@@ -191,6 +201,8 @@ export interface ITerminalService {
 	setContainers(panelContainer: HTMLElement, terminalContainer: HTMLElement): void;
 	selectDefaultWindowsShell(): TPromise<string>;
 	setWorkspaceShellAllowed(isAllowed: boolean): void;
+
+	requestExtHostProcess(proxy: ITerminalProcessExtHostProxy, shellLaunchConfig: IShellLaunchConfig, cols: number, rows: number): void;
 }
 
 export const enum Direction {
@@ -226,9 +238,10 @@ export interface ITerminalInstance {
 	id: number;
 
 	/**
-	 * The process ID of the shell process.
+	 * The process ID of the shell process, this is undefined when there is no process associated
+	 * with this terminal.
 	 */
-	processId: number;
+	processId: number | undefined;
 
 	/**
 	 * An event that fires when the terminal instance's title changes.
@@ -244,6 +257,8 @@ export interface ITerminalInstance {
 
 	onProcessIdReady: Event<ITerminalInstance>;
 
+	onRequestExtHostProcess: Event<ITerminalInstance>;
+
 	processReady: TPromise<void>;
 
 	/**
@@ -466,11 +481,6 @@ export interface ITerminalCommandTracker {
 	selectToNextCommand(): void;
 }
 
-export interface ITerminalProcessMessage {
-	type: 'pid' | 'data' | 'title';
-	content: number | string;
-}
-
 export interface ITerminalProcessManager extends IDisposable {
 	readonly processState: ProcessState;
 	readonly ptyProcessReady: TPromise<void>;
@@ -506,3 +516,24 @@ export enum ProcessState {
 	// was run.
 	KILLED_BY_PROCESS
 }
+
+
+export interface ITerminalProcessExtHostProxy extends IDisposable {
+	readonly terminalId: number;
+
+	emitData(data: string): void;
+	emitTitle(title: string): void;
+	emitPid(pid: number): void;
+	emitExit(exitCode: number): void;
+
+	onInput(listener: (data: string) => void): void;
+	onResize(listener: (cols: number, rows: number) => void): void;
+	onShutdown(listener: () => void): void;
+}
+
+export interface ITerminalProcessExtHostRequest {
+	proxy: ITerminalProcessExtHostProxy;
+	shellLaunchConfig: IShellLaunchConfig;
+	cols: number;
+	rows: number;
+}
\ No newline at end of file
diff --git a/src/vs/workbench/parts/terminal/common/terminalService.ts b/src/vs/workbench/parts/terminal/common/terminalService.ts
index 69fcd5c98f4970bb06fc3cea412ee0a285a9cd87..e294388516b56a0f6e391c17a5813b0975d21530 100644
--- a/src/vs/workbench/parts/terminal/common/terminalService.ts
+++ b/src/vs/workbench/parts/terminal/common/terminalService.ts
@@ -9,7 +9,7 @@ import { IContextKeyService, IContextKey } from 'vs/platform/contextkey/common/c
 import { ILifecycleService, LifecyclePhase } from 'vs/platform/lifecycle/common/lifecycle';
 import { IPanelService } from 'vs/workbench/services/panel/common/panelService';
 import { IPartService } from 'vs/workbench/services/part/common/partService';
-import { ITerminalService, ITerminalInstance, IShellLaunchConfig, ITerminalConfigHelper, KEYBINDING_CONTEXT_TERMINAL_FOCUS, KEYBINDING_CONTEXT_TERMINAL_FIND_WIDGET_VISIBLE, TERMINAL_PANEL_ID, ITerminalTab } from 'vs/workbench/parts/terminal/common/terminal';
+import { ITerminalService, ITerminalInstance, IShellLaunchConfig, ITerminalConfigHelper, KEYBINDING_CONTEXT_TERMINAL_FOCUS, KEYBINDING_CONTEXT_TERMINAL_FIND_WIDGET_VISIBLE, TERMINAL_PANEL_ID, ITerminalTab, ITerminalProcessExtHostProxy, ITerminalProcessExtHostRequest } from 'vs/workbench/parts/terminal/common/terminal';
 import { TPromise } from 'vs/base/common/winjs.base';
 import { IStorageService, StorageScope } from 'vs/platform/storage/common/storage';
 
@@ -22,28 +22,31 @@ export abstract class TerminalService implements ITerminalService {
 	protected _terminalFocusContextKey: IContextKey<boolean>;
 	protected _findWidgetVisible: IContextKey<boolean>;
 	protected _terminalContainer: HTMLElement;
-	protected _onInstancesChanged: Emitter<void>;
-	protected _onTabDisposed: Emitter<ITerminalTab>;
-	protected _onInstanceCreated: Emitter<ITerminalInstance>;
-	protected _onInstanceDisposed: Emitter<ITerminalInstance>;
-	protected _onInstanceProcessIdReady: Emitter<ITerminalInstance>;
-	protected _onInstanceTitleChanged: Emitter<string>;
 	protected _terminalTabs: ITerminalTab[];
 	protected abstract _terminalInstances: ITerminalInstance[];
 
 	private _activeTabIndex: number;
-	private readonly _onActiveTabChanged: Emitter<void>;
 
 	public get activeTabIndex(): number { return this._activeTabIndex; }
+	public get terminalInstances(): ITerminalInstance[] { return this._terminalInstances; }
+	public get terminalTabs(): ITerminalTab[] { return this._terminalTabs; }
+
+	private readonly _onActiveTabChanged: Emitter<void> = new Emitter<void>();
 	public get onActiveTabChanged(): Event<void> { return this._onActiveTabChanged.event; }
-	public get onTabDisposed(): Event<ITerminalTab> { return this._onTabDisposed.event; }
+	protected readonly _onInstanceCreated: Emitter<ITerminalInstance> = new Emitter<ITerminalInstance>();
 	public get onInstanceCreated(): Event<ITerminalInstance> { return this._onInstanceCreated.event; }
+	protected readonly _onInstanceDisposed: Emitter<ITerminalInstance> = new Emitter<ITerminalInstance>();
 	public get onInstanceDisposed(): Event<ITerminalInstance> { return this._onInstanceDisposed.event; }
+	protected readonly _onInstanceProcessIdReady: Emitter<ITerminalInstance> = new Emitter<ITerminalInstance>();
 	public get onInstanceProcessIdReady(): Event<ITerminalInstance> { return this._onInstanceProcessIdReady.event; }
-	public get onInstanceTitleChanged(): Event<string> { return this._onInstanceTitleChanged.event; }
+	protected readonly _onInstanceRequestExtHostProcess: Emitter<ITerminalProcessExtHostRequest> = new Emitter<ITerminalProcessExtHostRequest>();
+	public get onInstanceRequestExtHostProcess(): Event<ITerminalProcessExtHostRequest> { return this._onInstanceRequestExtHostProcess.event; }
+	protected readonly _onInstancesChanged: Emitter<void> = new Emitter<void>();
 	public get onInstancesChanged(): Event<void> { return this._onInstancesChanged.event; }
-	public get terminalInstances(): ITerminalInstance[] { return this._terminalInstances; }
-	public get terminalTabs(): ITerminalTab[] { return this._terminalTabs; }
+	protected readonly _onInstanceTitleChanged: Emitter<string> = new Emitter<string>();
+	public get onInstanceTitleChanged(): Event<string> { return this._onInstanceTitleChanged.event; }
+	protected readonly _onTabDisposed: Emitter<ITerminalTab> = new Emitter<ITerminalTab>();
+	public get onTabDisposed(): Event<ITerminalTab> { return this._onTabDisposed.event; }
 
 	public abstract get configHelper(): ITerminalConfigHelper;
 
@@ -57,14 +60,6 @@ export abstract class TerminalService implements ITerminalService {
 		this._activeTabIndex = 0;
 		this._isShuttingDown = false;
 
-		this._onActiveTabChanged = new Emitter<void>();
-		this._onTabDisposed = new Emitter<ITerminalTab>();
-		this._onInstanceCreated = new Emitter<ITerminalInstance>();
-		this._onInstanceDisposed = new Emitter<ITerminalInstance>();
-		this._onInstanceProcessIdReady = new Emitter<ITerminalInstance>();
-		this._onInstanceTitleChanged = new Emitter<string>();
-		this._onInstancesChanged = new Emitter<void>();
-
 		lifecycleService.onWillShutdown(event => event.veto(this._onWillShutdown()));
 		lifecycleService.onShutdown(() => this._onShutdown());
 		this._terminalFocusContextKey = KEYBINDING_CONTEXT_TERMINAL_FOCUS.bindTo(this._contextKeyService);
@@ -80,6 +75,7 @@ export abstract class TerminalService implements ITerminalService {
 	public abstract getActiveOrCreateInstance(wasNewTerminalAction?: boolean): ITerminalInstance;
 	public abstract selectDefaultWindowsShell(): TPromise<string>;
 	public abstract setContainers(panelContainer: HTMLElement, terminalContainer: HTMLElement): void;
+	public abstract requestExtHostProcess(proxy: ITerminalProcessExtHostProxy, shellLaunchConfig: IShellLaunchConfig, cols: number, rows: number): void;
 
 	private _restoreTabs(): void {
 		if (!this.configHelper.config.experimentalRestore) {
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminal.contribution.ts b/src/vs/workbench/parts/terminal/electron-browser/terminal.contribution.ts
index 11667f01d74918eeb3be8b6e2d3b6cc6442eaefc..d148d55861be1effcfb15e912cbc4c7119330a92 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminal.contribution.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminal.contribution.ts
@@ -14,7 +14,7 @@ import * as platform from 'vs/base/common/platform';
 import * as terminalCommands from 'vs/workbench/parts/terminal/common/terminalCommands';
 import { Extensions, IConfigurationRegistry } from 'vs/platform/configuration/common/configurationRegistry';
 import { ITerminalService, KEYBINDING_CONTEXT_TERMINAL_FOCUS, KEYBINDING_CONTEXT_TERMINAL_FIND_WIDGET_INPUT_FOCUSED, KEYBINDING_CONTEXT_TERMINAL_TEXT_SELECTED, TERMINAL_PANEL_ID, KEYBINDING_CONTEXT_TERMINAL_FIND_WIDGET_VISIBLE, TerminalCursorStyle, KEYBINDING_CONTEXT_TERMINAL_FIND_WIDGET_NOT_VISIBLE } from 'vs/workbench/parts/terminal/common/terminal';
-import { getTerminalDefaultShellUnixLike, getTerminalDefaultShellWindows } from 'vs/workbench/parts/terminal/electron-browser/terminal';
+import { getTerminalDefaultShellUnixLike, getTerminalDefaultShellWindows } from 'vs/workbench/parts/terminal/node/terminal';
 import { IWorkbenchActionRegistry, Extensions as ActionExtensions } from 'vs/workbench/common/actions';
 import { KeyCode, KeyMod } from 'vs/base/common/keyCodes';
 import { ContextKeyExpr } from 'vs/platform/contextkey/common/contextkey';
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminalConfigHelper.ts b/src/vs/workbench/parts/terminal/electron-browser/terminalConfigHelper.ts
index 243f7094819fb099a7edf155ecc43a7b9b27eaa9..a8e3f9ecbae15c58486995a64cabc8e37c40147c 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminalConfigHelper.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminalConfigHelper.ts
@@ -12,7 +12,7 @@ import { IWorkspaceConfigurationService } from 'vs/workbench/services/configurat
 import { IStorageService, StorageScope } from 'vs/platform/storage/common/storage';
 import { ITerminalConfiguration, ITerminalConfigHelper, ITerminalFont, IShellLaunchConfig, IS_WORKSPACE_SHELL_ALLOWED_STORAGE_KEY, TERMINAL_CONFIG_SECTION } from 'vs/workbench/parts/terminal/common/terminal';
 import Severity from 'vs/base/common/severity';
-import { isFedora } from 'vs/workbench/parts/terminal/electron-browser/terminal';
+import { isFedora } from 'vs/workbench/parts/terminal/node/terminal';
 import { Terminal as XTermTerminal } from 'vscode-xterm';
 import { INotificationService } from 'vs/platform/notification/common/notification';
 
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminalInstance.ts b/src/vs/workbench/parts/terminal/electron-browser/terminalInstance.ts
index 654333e1b3a05b6092b3820b5e980a455b54a7c5..0459ce481c8f590005cea325115ac44edc45dc94 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminalInstance.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminalInstance.ts
@@ -71,24 +71,27 @@ export class TerminalInstance implements ITerminalInstance {
 	public disableLayout: boolean;
 	public get id(): number { return this._id; }
 	// TODO: Ideally processId would be merged into processReady
-	public get processId(): number { return this._processManager.shellProcessId; }
+	public get processId(): number | undefined { return this._processManager ? this._processManager.shellProcessId : undefined; }
+	// TODO: How does this work with detached processes?
 	// TODO: Should this be an event as it can fire twice?
-	public get processReady(): TPromise<void> { return this._processManager.ptyProcessReady; }
+	public get processReady(): TPromise<void> { return this._processManager ? this._processManager.ptyProcessReady : TPromise.as(void 0); }
 	public get title(): string { return this._title; }
 	public get hadFocusOnExit(): boolean { return this._hadFocusOnExit; }
 	public get isTitleSetByProcess(): boolean { return !!this._messageTitleDisposable; }
 	public get shellLaunchConfig(): IShellLaunchConfig { return Object.freeze(this._shellLaunchConfig); }
 	public get commandTracker(): TerminalCommandTracker { return this._commandTracker; }
 
-	private readonly _onDisposed: Emitter<ITerminalInstance> = new Emitter<ITerminalInstance>();
-	private readonly _onFocused: Emitter<ITerminalInstance> = new Emitter<ITerminalInstance>();
-	private readonly _onProcessIdReady: Emitter<ITerminalInstance> = new Emitter<ITerminalInstance>();
-	private readonly _onTitleChanged: Emitter<string> = new Emitter<string>();
 
+	private readonly _onDisposed: Emitter<ITerminalInstance> = new Emitter<ITerminalInstance>();
 	public get onDisposed(): Event<ITerminalInstance> { return this._onDisposed.event; }
+	private readonly _onFocused: Emitter<ITerminalInstance> = new Emitter<ITerminalInstance>();
 	public get onFocused(): Event<ITerminalInstance> { return this._onFocused.event; }
+	private readonly _onProcessIdReady: Emitter<ITerminalInstance> = new Emitter<ITerminalInstance>();
 	public get onProcessIdReady(): Event<ITerminalInstance> { return this._onProcessIdReady.event; }
+	private readonly _onTitleChanged: Emitter<string> = new Emitter<string>();
 	public get onTitleChanged(): Event<string> { return this._onTitleChanged.event; }
+	private readonly _onRequestExtHostProcess: Emitter<ITerminalInstance> = new Emitter<ITerminalInstance>();
+	public get onRequestExtHostProcess(): Event<ITerminalInstance> { return this._onRequestExtHostProcess.event; }
 
 	public constructor(
 		private _terminalFocusContextKey: IContextKey<boolean>,
@@ -267,8 +270,9 @@ export class TerminalInstance implements ITerminalInstance {
 		if (this._processManager) {
 			this._processManager.onProcessData(data => this._sendPtyDataToXterm(data));
 			this._xterm.on('data', data => this._processManager.write(data));
+			// TODO: How does the cwd work on detached processes?
+			this._linkHandler = this._instantiationService.createInstance(TerminalLinkHandler, this._xterm, platform.platform, this._processManager.initialCwd);
 		}
-		this._linkHandler = this._instantiationService.createInstance(TerminalLinkHandler, this._xterm, platform.platform, this._processManager.initialCwd);
 		this._commandTracker = new TerminalCommandTracker(this._xterm);
 		this._disposables.push(this._themeService.onThemeChange(theme => this._updateTheme(theme)));
 	}
@@ -394,10 +398,13 @@ export class TerminalInstance implements ITerminalInstance {
 			}));
 
 			this._wrapperElement.appendChild(this._xtermElement);
-			this._widgetManager = new TerminalWidgetManager(this._wrapperElement);
-			this._linkHandler.setWidgetManager(this._widgetManager);
 			this._container.appendChild(this._wrapperElement);
 
+			if (this._processManager) {
+				this._widgetManager = new TerminalWidgetManager(this._wrapperElement);
+				this._linkHandler.setWidgetManager(this._widgetManager);
+			}
+
 			const computedStyle = window.getComputedStyle(this._container);
 			const width = parseInt(computedStyle.getPropertyValue('width').replace('px', ''), 10);
 			const height = parseInt(computedStyle.getPropertyValue('height').replace('px', ''), 10);
@@ -584,8 +591,7 @@ export class TerminalInstance implements ITerminalInstance {
 	}
 
 	protected _createProcess(): void {
-		// TODO: This should be injected in to the terminal instance (from service?)
-		this._processManager = this._instantiationService.createInstance(TerminalProcessManager, this._configHelper);
+		this._processManager = this._instantiationService.createInstance(TerminalProcessManager, this._id, this._configHelper);
 		this._processManager.onProcessReady(() => this._onProcessIdReady.fire(this));
 		this._processManager.onProcessExit(exitCode => this._onProcessExit(exitCode));
 		this._processManager.createProcess(this._shellLaunchConfig, this._cols, this._rows);
@@ -667,7 +673,11 @@ export class TerminalInstance implements ITerminalInstance {
 							return a;
 						}).join(' ');
 					}
-					this._notificationService.error(nls.localize('terminal.integrated.launchFailed', 'The terminal process command \'{0}{1}\' failed to launch (exit code: {2})', this._shellLaunchConfig.executable, args, exitCode));
+					if (this._shellLaunchConfig.executable) {
+						this._notificationService.error(nls.localize('terminal.integrated.launchFailed', 'The terminal process command \'{0}{1}\' failed to launch (exit code: {2})', this._shellLaunchConfig.executable, args, exitCode));
+					} else {
+						this._notificationService.error(nls.localize('terminal.integrated.launchFailedExtHost', 'The terminal process failed to launch (exit code: {0})', exitCode));
+					}
 				} else {
 					if (this._configHelper.config.showExitAlert) {
 						this._notificationService.error(exitCodeMessage);
@@ -868,7 +878,9 @@ export class TerminalInstance implements ITerminalInstance {
 			}
 		}
 
-		this._processManager.ptyProcessReady.then(() => this._processManager.setDimensions(this._cols, this._rows));
+		if (this._processManager) {
+			this._processManager.ptyProcessReady.then(() => this._processManager.setDimensions(this._cols, this._rows));
+		}
 	}
 
 	public setTitle(title: string, eventFromProcess: boolean): void {
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminalProcessManager.ts b/src/vs/workbench/parts/terminal/electron-browser/terminalProcessManager.ts
index b98130fa4683951a364c139941fe7ab5cb4e6fe0..1670b248a0b390cbe101448d012d914bb82a2a6a 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminalProcessManager.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminalProcessManager.ts
@@ -4,18 +4,20 @@
  *--------------------------------------------------------------------------------------------*/
 
 import * as cp from 'child_process';
-import * as path from 'path';
 import * as platform from 'vs/base/common/platform';
 import * as terminalEnvironment from 'vs/workbench/parts/terminal/node/terminalEnvironment';
 import Uri from 'vs/base/common/uri';
 import { IDisposable } from 'vs/base/common/lifecycle';
-import { ProcessState, ITerminalProcessManager, ITerminalProcessMessage, IShellLaunchConfig, ITerminalConfigHelper } from 'vs/workbench/parts/terminal/common/terminal';
+import { ProcessState, ITerminalProcessManager, IShellLaunchConfig, ITerminalConfigHelper } from 'vs/workbench/parts/terminal/common/terminal';
 import { TPromise } from 'vs/base/common/winjs.base';
 import { ILogService } from 'vs/platform/log/common/log';
 import { Emitter, Event } from 'vs/base/common/event';
 import { IConfigurationResolverService } from 'vs/workbench/services/configurationResolver/common/configurationResolver';
 import { IWorkspaceContextService } from 'vs/platform/workspace/common/workspace';
 import { IHistoryService } from 'vs/workbench/services/history/common/history';
+import { ITerminalChildProcess, IMessageFromTerminalProcess } from 'vs/workbench/parts/terminal/node/terminal';
+import { TerminalProcessExtHostProxy } from 'vs/workbench/parts/terminal/node/terminalProcessExtHostProxy';
+import { IInstantiationService } from 'vs/platform/instantiation/common/instantiation';
 
 /** The amount of time to consider terminal errors to be related to the launch */
 const LAUNCHING_DURATION = 500;
@@ -34,7 +36,7 @@ export class TerminalProcessManager implements ITerminalProcessManager {
 	public shellProcessId: number;
 	public initialCwd: string;
 
-	private _process: cp.ChildProcess;
+	private _process: ITerminalChildProcess;
 	private _preLaunchInputQueue: string[] = [];
 	private _disposables: IDisposable[] = [];
 
@@ -48,12 +50,20 @@ export class TerminalProcessManager implements ITerminalProcessManager {
 	public get onProcessExit(): Event<number> { return this._onProcessExit.event; }
 
 	constructor(
+		private _terminalId: number,
 		private _configHelper: ITerminalConfigHelper,
 		@IWorkspaceContextService private readonly _workspaceContextService: IWorkspaceContextService,
 		@IHistoryService private readonly _historyService: IHistoryService,
 		@IConfigurationResolverService private readonly _configurationResolverService: IConfigurationResolverService,
+		@IInstantiationService private readonly _instantiationService: IInstantiationService,
 		@ILogService private _logService: ILogService
 	) {
+		this.ptyProcessReady = new TPromise<void>(c => {
+			this.onProcessReady(() => {
+				this._logService.debug(`Terminal process ready (shellProcessId: ${this.shellProcessId})`);
+				c(void 0);
+			});
+		});
 	}
 
 	public dispose(): void {
@@ -80,39 +90,38 @@ export class TerminalProcessManager implements ITerminalProcessManager {
 		cols: number,
 		rows: number
 	): void {
-		this.ptyProcessReady = new TPromise<void>(c => {
-			this.onProcessReady(() => {
-				this._logService.debug(`Terminal process ready (shellProcessId: ${this.shellProcessId})`);
-				c(void 0);
-			});
-		});
+		const extensionHostOwned = (<any>this._configHelper.config).extHostProcess;
+		if (extensionHostOwned) {
+			this._process = this._instantiationService.createInstance(TerminalProcessExtHostProxy, this._terminalId, shellLaunchConfig, cols, rows);
+		} else {
+			const locale = this._configHelper.config.setLocaleVariables ? platform.locale : undefined;
+			if (!shellLaunchConfig.executable) {
+				this._configHelper.mergeDefaultShellPathAndArgs(shellLaunchConfig);
+			}
 
-		const locale = this._configHelper.config.setLocaleVariables ? platform.locale : undefined;
-		if (!shellLaunchConfig.executable) {
-			this._configHelper.mergeDefaultShellPathAndArgs(shellLaunchConfig);
-		}
+			const lastActiveWorkspaceRootUri = this._historyService.getLastActiveWorkspaceRoot('file');
+			this.initialCwd = terminalEnvironment.getCwd(shellLaunchConfig, lastActiveWorkspaceRootUri, this._configHelper);
 
-		const lastActiveWorkspaceRootUri = this._historyService.getLastActiveWorkspaceRoot('file');
-		this.initialCwd = terminalEnvironment.getCwd(shellLaunchConfig, lastActiveWorkspaceRootUri, this._configHelper);
-
-		// Resolve env vars from config and shell
-		const lastActiveWorkspaceRoot = this._workspaceContextService.getWorkspaceFolder(lastActiveWorkspaceRootUri);
-		const platformKey = platform.isWindows ? 'windows' : (platform.isMacintosh ? 'osx' : 'linux');
-		const envFromConfig = terminalEnvironment.resolveConfigurationVariables(this._configurationResolverService, { ...this._configHelper.config.env[platformKey] }, lastActiveWorkspaceRoot);
-		const envFromShell = terminalEnvironment.resolveConfigurationVariables(this._configurationResolverService, { ...shellLaunchConfig.env }, lastActiveWorkspaceRoot);
-		shellLaunchConfig.env = envFromShell;
-
-		// Merge process env with the env from config
-		const parentEnv = { ...process.env };
-		terminalEnvironment.mergeEnvironments(parentEnv, envFromConfig);
-
-		// Continue env initialization, merging in the env from the launch
-		// config and adding keys that are needed to create the process
-		const env = terminalEnvironment.createTerminalEnv(parentEnv, shellLaunchConfig, this.initialCwd, locale, cols, rows);
-		const cwd = Uri.parse(path.dirname(require.toUrl('../node/terminalProcess'))).fsPath;
-		const options = { env, cwd };
-		this._logService.debug(`Terminal process launching`, options);
-		this._process = cp.fork(Uri.parse(require.toUrl('bootstrap')).fsPath, ['--type=terminal'], options);
+			// Resolve env vars from config and shell
+			const lastActiveWorkspaceRoot = this._workspaceContextService.getWorkspaceFolder(lastActiveWorkspaceRootUri);
+			const platformKey = platform.isWindows ? 'windows' : (platform.isMacintosh ? 'osx' : 'linux');
+			const envFromConfig = terminalEnvironment.resolveConfigurationVariables(this._configurationResolverService, { ...this._configHelper.config.env[platformKey] }, lastActiveWorkspaceRoot);
+			const envFromShell = terminalEnvironment.resolveConfigurationVariables(this._configurationResolverService, { ...shellLaunchConfig.env }, lastActiveWorkspaceRoot);
+			shellLaunchConfig.env = envFromShell;
+
+			// Merge process env with the env from config
+			const parentEnv = { ...process.env };
+			terminalEnvironment.mergeEnvironments(parentEnv, envFromConfig);
+
+			// Continue env initialization, merging in the env from the launch
+			// config and adding keys that are needed to create the process
+			const env = terminalEnvironment.createTerminalEnv(parentEnv, shellLaunchConfig, this.initialCwd, locale, cols, rows);
+			const cwd = Uri.parse(require.toUrl('../node')).fsPath;
+			const options = { env, cwd };
+			this._logService.debug(`Terminal process launching`, options);
+
+			this._process = cp.fork(Uri.parse(require.toUrl('bootstrap')).fsPath, ['--type=terminal'], options);
+		}
 		this.processState = ProcessState.LAUNCHING;
 
 		this._process.on('message', message => this._onMessage(message));
@@ -152,7 +161,7 @@ export class TerminalProcessManager implements ITerminalProcessManager {
 		}
 	}
 
-	private _onMessage(message: ITerminalProcessMessage): void {
+	private _onMessage(message: IMessageFromTerminalProcess): void {
 		this._logService.trace(`terminalProcessManager#_onMessage (shellProcessId: ${this.shellProcessId}`, message);
 		switch (message.type) {
 			case 'data':
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminalService.ts b/src/vs/workbench/parts/terminal/electron-browser/terminalService.ts
index c99a2433259c9721ca50de2b964b74c56872c053..1ee8373b6430df0e4b164c99b4b0450d77eb0a8c 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminalService.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminalService.ts
@@ -13,13 +13,13 @@ import { IPanelService } from 'vs/workbench/services/panel/common/panelService';
 import { IPartService } from 'vs/workbench/services/part/common/partService';
 import { IConfigurationService, ConfigurationTarget } from 'vs/platform/configuration/common/configuration';
 import { IQuickOpenService, IPickOpenEntry, IPickOptions } from 'vs/platform/quickOpen/common/quickOpen';
-import { ITerminalInstance, ITerminalService, IShellLaunchConfig, ITerminalConfigHelper, NEVER_SUGGEST_SELECT_WINDOWS_SHELL_STORAGE_KEY, TERMINAL_PANEL_ID } from 'vs/workbench/parts/terminal/common/terminal';
+import { ITerminalInstance, ITerminalService, IShellLaunchConfig, ITerminalConfigHelper, NEVER_SUGGEST_SELECT_WINDOWS_SHELL_STORAGE_KEY, TERMINAL_PANEL_ID, ITerminalProcessExtHostProxy } from 'vs/workbench/parts/terminal/common/terminal';
 import { TerminalService as AbstractTerminalService } from 'vs/workbench/parts/terminal/common/terminalService';
 import { TerminalConfigHelper } from 'vs/workbench/parts/terminal/electron-browser/terminalConfigHelper';
 import { TPromise } from 'vs/base/common/winjs.base';
 import Severity from 'vs/base/common/severity';
 import { IStorageService, StorageScope } from 'vs/platform/storage/common/storage';
-import { getTerminalDefaultShellWindows } from 'vs/workbench/parts/terminal/electron-browser/terminal';
+import { getTerminalDefaultShellWindows } from 'vs/workbench/parts/terminal/node/terminal';
 import { TerminalPanel } from 'vs/workbench/parts/terminal/electron-browser/terminalPanel';
 import { TerminalTab } from 'vs/workbench/parts/terminal/browser/terminalTab';
 import { IDialogService } from 'vs/platform/dialogs/common/dialogs';
@@ -27,6 +27,7 @@ import { INotificationService } from 'vs/platform/notification/common/notificati
 import { ipcRenderer as ipc } from 'electron';
 import { IOpenFileRequest } from 'vs/platform/windows/common/windows';
 import { TerminalInstance } from 'vs/workbench/parts/terminal/electron-browser/terminalInstance';
+import { IExtensionService } from 'vs/workbench/services/extensions/common/extensions';
 
 export class TerminalService extends AbstractTerminalService implements ITerminalService {
 	private _configHelper: TerminalConfigHelper;
@@ -47,7 +48,8 @@ export class TerminalService extends AbstractTerminalService implements ITermina
 		@IInstantiationService private readonly _instantiationService: IInstantiationService,
 		@IQuickOpenService private readonly _quickOpenService: IQuickOpenService,
 		@INotificationService private readonly _notificationService: INotificationService,
-		@IDialogService private readonly _dialogService: IDialogService
+		@IDialogService private readonly _dialogService: IDialogService,
+		@IExtensionService private readonly _extensionService: IExtensionService
 	) {
 		super(contextKeyService, panelService, partService, lifecycleService, storageService);
 
@@ -90,7 +92,17 @@ export class TerminalService extends AbstractTerminalService implements ITermina
 	}
 
 	public createInstance(terminalFocusContextKey: IContextKey<boolean>, configHelper: ITerminalConfigHelper, container: HTMLElement, shellLaunchConfig: IShellLaunchConfig, doCreateProcess: boolean): ITerminalInstance {
-		return this._instantiationService.createInstance(TerminalInstance, terminalFocusContextKey, configHelper, undefined, shellLaunchConfig, true);
+		return this._instantiationService.createInstance(TerminalInstance, terminalFocusContextKey, configHelper, container, shellLaunchConfig, true);
+	}
+
+	public requestExtHostProcess(proxy: ITerminalProcessExtHostProxy, shellLaunchConfig: IShellLaunchConfig, cols: number, rows: number): void {
+		// Ensure extension host is ready before requesting a process
+		this._extensionService.whenInstalledExtensionsRegistered().then(() => {
+			// TODO: MainThreadTerminalService is not ready at this point, fix this
+			setTimeout(() => {
+				this._onInstanceRequestExtHostProcess.fire({ proxy, shellLaunchConfig, cols, rows });
+			}, 500);
+		});
 	}
 
 	public focusFindWidget(): TPromise<void> {
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminal.ts b/src/vs/workbench/parts/terminal/node/terminal.ts
similarity index 74%
rename from src/vs/workbench/parts/terminal/electron-browser/terminal.ts
rename to src/vs/workbench/parts/terminal/node/terminal.ts
index e6d1478907d98cf61459b83f095a88432ae10a38..8cb9bc9dddd25bd8fbf0c03070f0d98ad75d72f8 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminal.ts
+++ b/src/vs/workbench/parts/terminal/node/terminal.ts
@@ -8,6 +8,31 @@ import * as platform from 'vs/base/common/platform';
 import * as processes from 'vs/base/node/processes';
 import { readFile, fileExists } from 'vs/base/node/pfs';
 
+export interface IMessageFromTerminalProcess {
+	type: 'pid' | 'data' | 'title';
+	content: number | string;
+}
+
+export interface IMessageToTerminalProcess {
+	event: 'resize' | 'input' | 'shutdown';
+	data?: string;
+	cols?: number;
+	rows?: number;
+}
+
+/**
+ * An interface representing a raw terminal child process, this is a subset of the
+ * child_process.ChildProcess node.js interface.
+ */
+export interface ITerminalChildProcess {
+	readonly connected: boolean;
+
+	send(message: IMessageToTerminalProcess): boolean;
+
+	on(event: 'exit', listener: (code: number) => void): this;
+	on(event: 'message', listener: (message: IMessageFromTerminalProcess) => void): this;
+}
+
 let _TERMINAL_DEFAULT_SHELL_UNIX_LIKE: string = null;
 export function getTerminalDefaultShellUnixLike(): string {
 	if (!_TERMINAL_DEFAULT_SHELL_UNIX_LIKE) {
@@ -50,4 +75,4 @@ if (platform.isLinux) {
 	});
 }
 
-export let isFedora = false;
+export let isFedora = false;
\ No newline at end of file
diff --git a/src/vs/workbench/parts/terminal/node/terminalEnvironment.ts b/src/vs/workbench/parts/terminal/node/terminalEnvironment.ts
index e52554048e2651c320a9cb3f28de255e21c309c8..2c60754603da79e4076fc8b9c1d0e08f5c63cf65 100644
--- a/src/vs/workbench/parts/terminal/node/terminalEnvironment.ts
+++ b/src/vs/workbench/parts/terminal/node/terminalEnvironment.ts
@@ -79,7 +79,6 @@ export function createTerminalEnv(parentEnv: IStringDictionary<string>, shell: I
 	return env;
 }
 
-// TODO:should be protected/non-static
 export function resolveConfigurationVariables(configurationResolverService: IConfigurationResolverService, env: IStringDictionary<string>, lastActiveWorkspaceRoot: IWorkspaceFolder): IStringDictionary<string> {
 	Object.keys(env).forEach((key) => {
 		if (typeof env[key] === 'string') {
diff --git a/src/vs/workbench/parts/terminal/node/terminalProcessExtHostProxy.ts b/src/vs/workbench/parts/terminal/node/terminalProcessExtHostProxy.ts
new file mode 100644
index 0000000000000000000000000000000000000000..9c842fbbfa8cd683a8115a5c32af2bdaea08858a
--- /dev/null
+++ b/src/vs/workbench/parts/terminal/node/terminalProcessExtHostProxy.ts
@@ -0,0 +1,78 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import { ITerminalChildProcess, IMessageToTerminalProcess, IMessageFromTerminalProcess } from 'vs/workbench/parts/terminal/node/terminal';
+import { EventEmitter } from 'events';
+import { ITerminalService, ITerminalProcessExtHostProxy, IShellLaunchConfig } from 'vs/workbench/parts/terminal/common/terminal';
+import { IDisposable, toDisposable } from 'vs/base/common/lifecycle';
+
+export class TerminalProcessExtHostProxy extends EventEmitter implements ITerminalChildProcess, ITerminalProcessExtHostProxy {
+	// For ext host processes connected checks happen on the ext host
+	public connected: boolean = true;
+
+	private _disposables: IDisposable[] = [];
+
+	constructor(
+		public terminalId: number,
+		shellLaunchConfig: IShellLaunchConfig,
+		cols: number,
+		rows: number,
+		@ITerminalService private _terminalService: ITerminalService
+	) {
+		super();
+
+		// TODO: Return TPromise<boolean> indicating success? Teardown if failure?
+		this._terminalService.requestExtHostProcess(this, shellLaunchConfig, cols, rows);
+	}
+
+	public dispose(): void {
+		this._disposables.forEach(d => d.dispose());
+		this._disposables.length = 0;
+	}
+
+	public emitData(data: string): void {
+		this.emit('message', { type: 'data', content: data } as IMessageFromTerminalProcess);
+	}
+
+	public emitTitle(title: string): void {
+		this.emit('message', { type: 'title', content: title } as IMessageFromTerminalProcess);
+	}
+
+	public emitPid(pid: number): void {
+		this.emit('message', { type: 'pid', content: pid } as IMessageFromTerminalProcess);
+	}
+
+	public emitExit(exitCode: number): void {
+		this.emit('exit', exitCode);
+		this.dispose();
+	}
+
+	public send(message: IMessageToTerminalProcess): boolean {
+		switch (message.event) {
+			case 'input': this.emit('input', message.data); break;
+			case 'resize': this.emit('resize', message.cols, message.rows); break;
+			case 'shutdown': this.emit('shutdown'); break;
+		}
+		return true;
+	}
+
+	public onInput(listener: (data: string) => void): void {
+		const outerListener = (data) => listener(data);
+		this.on('input', outerListener);
+		this._disposables.push(toDisposable(() => this.removeListener('input', outerListener)));
+	}
+
+	public onResize(listener: (cols: number, rows: number) => void): void {
+		const outerListener = (cols, rows) => listener(cols, rows);
+		this.on('resize', outerListener);
+		this._disposables.push(toDisposable(() => this.removeListener('resize', outerListener)));
+	}
+
+	public onShutdown(listener: () => void): void {
+		const outerListener = () => listener();
+		this.on('shutdown', outerListener);
+		this._disposables.push(toDisposable(() => this.removeListener('shutdown', outerListener)));
+	}
+}
\ No newline at end of file
diff --git a/src/vs/workbench/parts/terminal/test/electron-browser/terminalConfigHelper.test.ts b/src/vs/workbench/parts/terminal/test/electron-browser/terminalConfigHelper.test.ts
index 4a37a7ae84c2a805247733797812ae4dce001999..cc4cec690c45ca1ed66b6ba137b98ddcfda5d046 100644
--- a/src/vs/workbench/parts/terminal/test/electron-browser/terminalConfigHelper.test.ts
+++ b/src/vs/workbench/parts/terminal/test/electron-browser/terminalConfigHelper.test.ts
@@ -6,7 +6,7 @@
 import * as assert from 'assert';
 import { TerminalConfigHelper } from 'vs/workbench/parts/terminal/electron-browser/terminalConfigHelper';
 import { EDITOR_FONT_DEFAULTS } from 'vs/editor/common/config/editorOptions';
-import { isFedora } from 'vs/workbench/parts/terminal/electron-browser/terminal';
+import { isFedora } from 'vs/workbench/parts/terminal/node/terminal';
 import { TestConfigurationService } from 'vs/platform/configuration/test/common/testConfigurationService';
 
 suite('Workbench - TerminalConfigHelper', () => {