diff --git a/src/client/terminals/envCollectionActivation/service.ts b/src/client/terminals/envCollectionActivation/service.ts
index a527abe90454..43b8ceeb8e06 100644
--- a/src/client/terminals/envCollectionActivation/service.ts
+++ b/src/client/terminals/envCollectionActivation/service.ts
@@ -472,6 +472,7 @@ function shouldSkip(env: string) {
         'PYTHONUTF8',
         // We have deactivate service which takes care of setting it.
         '_OLD_VIRTUAL_PATH',
+        'PWD',
     ].includes(env);
 }