diff --git a/packages/bun-vscode/src/features/debug.ts b/packages/bun-vscode/src/features/debug.ts
index a48284dea3..242aed26e1 100644
--- a/packages/bun-vscode/src/features/debug.ts
+++ b/packages/bun-vscode/src/features/debug.ts
@@ -64,8 +64,11 @@ export function registerDebugger(context: vscode.ExtensionContext, factory?: vsc
       vscode.DebugConfigurationProviderTriggerKind.Dynamic,
     ),
     vscode.debug.registerDebugAdapterDescriptorFactory("bun", factory ?? new InlineDebugAdapterFactory()),
-    vscode.window.onDidOpenTerminal(injectDebugTerminal),
   );
+
+  if (getConfig("debugTerminal.enabled")) {
+    injectDebugTerminal2().then(context.subscriptions.push)
+  }
 }
 
 function runFileCommand(resource?: vscode.Uri): void {
@@ -94,8 +97,6 @@ function debugFileCommand(resource?: vscode.Uri) {
 }
 
 async function injectDebugTerminal(terminal: vscode.Terminal): Promise<void> {
-  if (!getConfig("debugTerminal.enabled")) return;
-
   const { name, creationOptions } = terminal;
   if (name !== "JavaScript Debug Terminal") {
     return;
@@ -134,6 +135,41 @@ async function injectDebugTerminal(terminal: vscode.Terminal): Promise<void> {
   setTimeout(() => terminal.dispose(), 100);
 }
 
+async function injectDebugTerminal2() {
+  const jsDebugExt = vscode.extensions.getExtension('ms-vscode.js-debug-nightly') || vscode.extensions.getExtension('ms-vscode.js-debug');
+  if (!jsDebugExt) {
+    return vscode.window.onDidOpenTerminal(injectDebugTerminal)
+  }
+
+  await jsDebugExt.activate()
+  const jsDebug: import('@vscode/js-debug').IExports = jsDebugExt.exports;
+  if (!jsDebug) {
+    return vscode.window.onDidOpenTerminal(injectDebugTerminal)
+  }
+
+  return jsDebug.registerDebugTerminalOptionsProvider({
+    async provideTerminalOptions(options) {
+      const session = new TerminalDebugSession();
+      await session.initialize();
+
+      const { adapter, signal } = session;
+
+      const stopOnEntry = getConfig("debugTerminal.stopOnEntry") === true;
+      const query = stopOnEntry ? "break=1" : "wait=1";
+
+      return {
+        ...options,
+        env: {
+          ...options.env,
+          "BUN_INSPECT": `${adapter.url}?${query}`,
+          "BUN_INSPECT_NOTIFY": signal.url,
+          BUN_INSPECT_CONNECT_TO: " ",
+        },
+      };
+    },
+  });
+}
+
 class DebugConfigurationProvider implements vscode.DebugConfigurationProvider {
   provideDebugConfigurations(folder?: vscode.WorkspaceFolder): vscode.ProviderResult<vscode.DebugConfiguration[]> {
     return [DEBUG_CONFIGURATION, RUN_CONFIGURATION, ATTACH_CONFIGURATION];
@@ -295,7 +331,7 @@ class FileDebugSession extends DebugSession {
     }
 
     this.adapter.on("Adapter.reverseRequest", ({ command, arguments: args }) =>
-      this.sendRequest(command, args, 5000, () => {}),
+      this.sendRequest(command, args, 5000, () => { }),
     );
 
     adapters.set(url, this);
diff --git a/packages/bun-vscode/src/vscode-js-debug.d.ts b/packages/bun-vscode/src/vscode-js-debug.d.ts
new file mode 100644
index 0000000000..475a60f8f7
--- /dev/null
+++ b/packages/bun-vscode/src/vscode-js-debug.d.ts
@@ -0,0 +1,39 @@
+/*---------------------------------------------------------
+ * Copyright (C) Microsoft Corporation. All rights reserved.
+ *--------------------------------------------------------*/
+
+declare module '@vscode/js-debug' {
+    import type * as vscode from 'vscode';
+
+    /** @see {IExports.registerDebugTerminalOptionsProvider} */
+    export interface IDebugTerminalOptionsProvider {
+        /**
+         * Called when the user creates a JavaScript Debug Terminal. It's called
+         * with the options js-debug wants to use to create the terminal. It should
+         * modify and return the options to use in the terminal.
+         *
+         * In order to avoid conflicting with existing logic, participants should
+         * try to modify options in a additive way. For example prefer appending
+         * to rather than reading and overwriting `options.env.PATH`.
+         */
+        provideTerminalOptions(options: vscode.TerminalOptions): vscode.ProviderResult<vscode.TerminalOptions>;
+    }
+
+    /**
+     * Defines the exports of the `js-debug` extension. Once you have this typings
+     * file, these can be acquired in your extension using the following code:
+     *
+     * ```
+     * const jsDebugExt = vscode.extensions.getExtension('ms-vscode.js-debug-nightly')
+     *   || vscode.extensions.getExtension('ms-vscode.js-debug');
+     * await jsDebugExt.activate()
+     * const jsDebug: import('@vscode/js-debug').IExports = jsDebug.exports;
+     * ```
+     */
+    export interface IExports {
+        /**
+         * Registers a participant used when the user creates a JavaScript Debug Terminal.
+         */
+        registerDebugTerminalOptionsProvider(provider: IDebugTerminalOptionsProvider): vscode.Disposable;
+    }
+}
\ No newline at end of file