diff --git a/extensions/git/package.json b/extensions/git/package.json
index 641d81ae6ed..48dee7d31e1 100644
--- a/extensions/git/package.json
+++ b/extensions/git/package.json
@@ -1665,6 +1665,12 @@
           "scope": "resource",
           "default": true,
           "description": "%config.showCommitInput%"
+        },
+        "git.terminalAuthentication": {
+          "type": "boolean",
+          "scope": "resource",
+          "default": true,
+          "description": "%config.terminalAuthentication%"
         }
       }
     },
diff --git a/extensions/git/package.nls.json b/extensions/git/package.nls.json
index 2ea91658e9c..e2ca167936e 100644
--- a/extensions/git/package.nls.json
+++ b/extensions/git/package.nls.json
@@ -144,6 +144,7 @@
 	"config.untrackedChanges.separate": "Untracked changes appear separately in the Source Control view. They are also excluded from several actions.",
 	"config.untrackedChanges.hidden": "Untracked changes are hidden and excluded from several actions.",
 	"config.showCommitInput": "Controls whether to show the commit input in the Git source control panel.",
+	"config.terminalAuthentication": "Controls whether to enable VS Code to be the authentication handler for git processes spawned in the integrated terminal.",
 	"colors.added": "Color for added resources.",
 	"colors.modified": "Color for modified resources.",
 	"colors.deleted": "Color for deleted resources.",
diff --git a/extensions/git/src/ipc/ipcServer.ts b/extensions/git/src/ipc/ipcServer.ts
index 139ea9dac0a..5cea9faf98f 100644
--- a/extensions/git/src/ipc/ipcServer.ts
+++ b/extensions/git/src/ipc/ipcServer.ts
@@ -29,7 +29,6 @@ export interface IIPCHandler {
 
 export async function createIPCServer(context?: string): Promise<IIPCServer> {
 	const server = http.createServer();
-
 	const hash = crypto.createHash('sha1');
 
 	if (!context) {
diff --git a/extensions/git/src/main.ts b/extensions/git/src/main.ts
index 599f2f34e7e..48d6396e136 100644
--- a/extensions/git/src/main.ts
+++ b/extensions/git/src/main.ts
@@ -23,6 +23,7 @@ import * as fs from 'fs';
 import { GitTimelineProvider } from './timelineProvider';
 import { registerAPICommands } from './api/api1';
 import { GitHubCredentialProvider } from './github';
+import { TerminalEnvironmentManager } from './terminal';
 
 const deactivateTasks: { (): Promise<any>; }[] = [];
 
@@ -40,10 +41,8 @@ async function createModel(context: ExtensionContext, outputChannel: OutputChann
 	disposables.push(askpass);
 
 	const env = askpass.getEnv();
-
-	for (const name of Object.keys(env)) {
-		context.environmentVariableCollection.replace(name, env[name]);
-	}
+	const terminalEnvironmentManager = new TerminalEnvironmentManager(context, env);
+	disposables.push(terminalEnvironmentManager);
 
 	context.subscriptions.push(askpass.registerCredentialsProvider(new GitHubCredentialProvider()));