diff --git a/src/vs/workbench/contrib/terminal/browser/terminalProfileResolverService.ts b/src/vs/workbench/contrib/terminal/browser/terminalProfileResolverService.ts
index f920f87442f..a3a05c3ffd8 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalProfileResolverService.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalProfileResolverService.ts
@@ -116,8 +116,8 @@ export abstract class BaseTerminalProfileResolverService implements ITerminalPro
 		}
 	}
 
-	getDefaultIcon(): TerminalIcon & ThemeIcon {
-		return this._iconRegistry.getIcon(this._configurationService.getValue(TerminalSettingId.TabsDefaultIcon)) || Codicon.terminal;
+	getDefaultIcon(resource?: URI): TerminalIcon & ThemeIcon {
+		return this._iconRegistry.getIcon(this._configurationService.getValue(TerminalSettingId.TabsDefaultIcon, { resource })) || Codicon.terminal;
 	}
 
 	async resolveShellLaunchConfig(shellLaunchConfig: IShellLaunchConfig, options: IShellLaunchConfigResolveOptions): Promise<void> {
@@ -145,9 +145,10 @@ export abstract class BaseTerminalProfileResolverService implements ITerminalPro
 
 		// Verify the icon is valid, and fallback correctly to the generic terminal id if there is
 		// an issue
+		const resource = shellLaunchConfig === undefined || typeof shellLaunchConfig.cwd === 'string' ? undefined : shellLaunchConfig.cwd;
 		shellLaunchConfig.icon = this._getCustomIcon(shellLaunchConfig.icon)
 			|| this._getCustomIcon(resolvedProfile.icon)
-			|| this.getDefaultIcon();
+			|| this.getDefaultIcon(resource);
 
 		// Override the name if specified
 		if (resolvedProfile.overrideName) {
@@ -157,7 +158,7 @@ export abstract class BaseTerminalProfileResolverService implements ITerminalPro
 		// Apply the color
 		shellLaunchConfig.color = shellLaunchConfig.color
 			|| resolvedProfile.color
-			|| this._configurationService.getValue(TerminalSettingId.TabsDefaultColor);
+			|| this._configurationService.getValue(TerminalSettingId.TabsDefaultColor, { resource });
 
 		// Resolve useShellEnvironment based on the setting if it's not set
 		if (shellLaunchConfig.useShellEnvironment === undefined) {
diff --git a/src/vs/workbench/contrib/terminal/common/terminalConfiguration.ts b/src/vs/workbench/contrib/terminal/common/terminalConfiguration.ts
index c5b6caee4af..4b52e0191f4 100644
--- a/src/vs/workbench/contrib/terminal/common/terminalConfiguration.ts
+++ b/src/vs/workbench/contrib/terminal/common/terminalConfiguration.ts
@@ -42,12 +42,14 @@ const terminalConfiguration: IConfigurationNode = {
 		},
 		[TerminalSettingId.TabsDefaultColor]: {
 			description: localize('terminal.integrated.tabs.defaultColor', "A theme color ID to associate with terminal icons by default."),
-			...terminalColorSchema
+			...terminalColorSchema,
+			scope: ConfigurationScope.RESOURCE
 		},
 		[TerminalSettingId.TabsDefaultIcon]: {
 			description: localize('terminal.integrated.tabs.defaultIcon', "A codicon ID to associate with terminal icons by default."),
 			...terminalIconSchema,
 			default: Codicon.terminal.id,
+			scope: ConfigurationScope.RESOURCE
 		},
 		[TerminalSettingId.TabsEnabled]: {
 			description: localize('terminal.integrated.tabs.enabled', 'Controls whether terminal tabs display as a list to the side of the terminal. When this is disabled a dropdown will display instead.'),