diff --git a/src/vs/workbench/api/electron-browser/mainThreadTerminalService.ts b/src/vs/workbench/api/electron-browser/mainThreadTerminalService.ts
index 49bee8d7d2dc6847d9f6f32cb9218e8bbd03bbf8..84ed8b00b64c77e48b6eaa015e2d4859ebf2a8cf 100644
--- a/src/vs/workbench/api/electron-browser/mainThreadTerminalService.ts
+++ b/src/vs/workbench/api/electron-browser/mainThreadTerminalService.ts
@@ -12,7 +12,6 @@ import { extHostNamedCustomer } from 'vs/workbench/api/electron-browser/extHostC
 export class MainThreadTerminalService implements MainThreadTerminalServiceShape {
 
 	private _proxy: ExtHostTerminalServiceShape;
-	private _remoteAuthority: string | null;
 	private _toDispose: IDisposable[] = [];
 	private _terminalProcesses: { [id: number]: ITerminalProcessExtHostProxy } = {};
 	private _terminalOnDidWriteDataListeners: { [id: number]: IDisposable } = {};
@@ -23,7 +22,6 @@ export class MainThreadTerminalService implements MainThreadTerminalServiceShape
 		@ITerminalService private readonly terminalService: ITerminalService
 	) {
 		this._proxy = extHostContext.getProxy(ExtHostContext.ExtHostTerminalService);
-		this._remoteAuthority = extHostContext.remoteAuthority;
 		this._toDispose.push(terminalService.onInstanceCreated((instance) => {
 			// 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
@@ -204,11 +202,6 @@ export class MainThreadTerminalService implements MainThreadTerminalServiceShape
 	}
 
 	private _onTerminalRequestExtHostProcess(request: ITerminalProcessExtHostRequest): void {
-		// Only allow processes on remote ext hosts
-		if (!this._remoteAuthority) {
-			return;
-		}
-
 		this._terminalProcesses[request.proxy.terminalId] = request.proxy;
 		const shellLaunchConfigDto: ShellLaunchConfigDto = {
 			name: request.shellLaunchConfig.name,
diff --git a/src/vs/workbench/api/node/extHostTerminalService.ts b/src/vs/workbench/api/node/extHostTerminalService.ts
index 90a3c7ad382dac7ec5abfa2d467741a7394720d4..99ba5c8878d1875c68089b5ea1565bc4c3166127 100644
--- a/src/vs/workbench/api/node/extHostTerminalService.ts
+++ b/src/vs/workbench/api/node/extHostTerminalService.ts
@@ -405,13 +405,14 @@ export class ExtHostTerminalService implements ExtHostTerminalServiceShape {
 		// 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 platformKey = platform.isWindows ? 'windows' : (platform.isMacintosh ? 'osx' : 'linux');
+		// const envFromConfig = terminalEnvironment.resolveConfigurationVariables(this._configurationResolverService, { ...terminalConfig.env[platformKey] }, lastActiveWorkspaceRoot);
+		const envFromConfig = { ...terminalConfig.env[platformKey] };
 		// const envFromShell = terminalEnvironment.resolveConfigurationVariables(this._configurationResolverService, { ...shellLaunchConfig.env }, lastActiveWorkspaceRoot);
 
 		// Merge process env with the env from config
 		const env = { ...process.env };
-		// terminalEnvironment.mergeEnvironments(env, envFromConfig);
+		terminalEnvironment.mergeEnvironments(env, envFromConfig);
 		terminalEnvironment.mergeEnvironments(env, shellLaunchConfig.env);
 
 		// Sanitize the environment, removing any undesirable VS Code and Electron environment
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminalProcessManager.ts b/src/vs/workbench/parts/terminal/electron-browser/terminalProcessManager.ts
index ffab899d1012d539eee4f5d7656bc389f310f4ac..f838343e3ff25a92a06b43d5028ce5169cf29a79 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminalProcessManager.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminalProcessManager.ts
@@ -90,14 +90,13 @@ export class TerminalProcessManager implements ITerminalProcessManager {
 		cols: number,
 		rows: number
 	): void {
-
 		let launchRemotely = false;
 
 		if (shellLaunchConfig.cwd && typeof shellLaunchConfig.cwd === 'object') {
 			launchRemotely = !!getRemoteAuthority(shellLaunchConfig.cwd);
 			shellLaunchConfig.cwd = shellLaunchConfig.cwd.fsPath;
 		} else {
-			launchRemotely = !!this._windowService.getConfiguration().remoteAuthority;
+			launchRemotely = !!this._windowService.getConfiguration().remoteAuthority || (this._configHelper.config as any).extHostProcess;
 		}
 
 		if (launchRemotely) {