diff --git a/src/vs/vscode.proposed.d.ts b/src/vs/vscode.proposed.d.ts
index 2a170de1c92..b70ba71e62c 100644
--- a/src/vs/vscode.proposed.d.ts
+++ b/src/vs/vscode.proposed.d.ts
@@ -887,6 +887,59 @@ declare module 'vscode' {
 
 	//#endregion
 
+	//#region Terminal state event https://github.com/microsoft/vscode/issues/127717
+
+	/**
+	 * Represents the state of a {@link Terminal}.
+	 */
+	export interface TerminalState {
+		/**
+		 * Whether the {@link Terminal} has been interacted with. Interaction means that the
+		 * terminal has sent data to the process which depending on the terminal's _mode_. By
+		 * default input is sent when a key is pressed but based on the terminal's mode it can also
+		 * happen on:
+		 *
+		 * - a pointer click event
+		 * - a pointer scroll event
+		 * - a pointer move event
+		 * - terminal focus in/out
+		 *
+		 * For more information on events that can send data see "DEC Private Mode Set (DECSET)" on
+		 * https://invisible-island.net/xterm/ctlseqs/ctlseqs.html
+		 */
+		readonly interactedWith: boolean;
+	}
+
+	export interface Terminal {
+		/**
+		 * The current state of the {@link Terminal}.
+		 */
+		readonly state: TerminalState;
+	}
+
+	/**
+	 * An event representing a change in a {@link Terminal.state terminal's state}.
+	 */
+	export interface TerminalStateChangeEvent {
+		/**
+		 * The {@link Terminal} this event occurred on.
+		 */
+		readonly terminal: Terminal;
+		/**
+		 * The {@link Terminal.state current state} of the {@link Terminal}.
+		 */
+		readonly state: TerminalState;
+	}
+
+	export namespace window {
+		/**
+		 * An {@link Event} which fires when a {@link Terminal.state terminal's state} has changed.
+		 */
+		export const onDidChangeTerminalState: Event<TerminalStateChangeEvent>;
+	}
+
+	//#endregion
+
 	//#region Terminal name change event https://github.com/microsoft/vscode/issues/114898
 
 	export interface Pseudoterminal {
diff --git a/src/vs/workbench/api/common/extHost.api.impl.ts b/src/vs/workbench/api/common/extHost.api.impl.ts
index c3d6ddb95c8..06f21c73ef5 100644
--- a/src/vs/workbench/api/common/extHost.api.impl.ts
+++ b/src/vs/workbench/api/common/extHost.api.impl.ts
@@ -568,6 +568,10 @@ export function createApiFactoryAndRegisterActors(accessor: ServicesAccessor): I
 				checkProposedApiEnabled(extension);
 				return extHostTerminalService.onDidChangeTerminalDimensions(listener, thisArg, disposables);
 			},
+			onDidChangeTerminalState(listener, thisArg?, disposables?) {
+				checkProposedApiEnabled(extension);
+				return extHostTerminalService.onDidChangeTerminalState(listener, thisArg, disposables);
+			},
 			onDidWriteTerminalData(listener, thisArg?, disposables?) {
 				checkProposedApiEnabled(extension);
 				return extHostTerminalService.onDidWriteTerminalData(listener, thisArg, disposables);
diff --git a/src/vs/workbench/api/common/extHostTerminalService.ts b/src/vs/workbench/api/common/extHostTerminalService.ts
index 6f6da4761c6..9a9273a2c10 100644
--- a/src/vs/workbench/api/common/extHostTerminalService.ts
+++ b/src/vs/workbench/api/common/extHostTerminalService.ts
@@ -326,16 +326,18 @@ export abstract class BaseExtHostTerminalService extends Disposable implements I
 	public get activeTerminal(): vscode.Terminal | undefined { return this._activeTerminal?.value; }
 	public get terminals(): vscode.Terminal[] { return this._terminals.map(term => term.value); }
 
-	protected readonly _onDidCloseTerminal: Emitter<vscode.Terminal> = new Emitter<vscode.Terminal>();
-	public get onDidCloseTerminal(): Event<vscode.Terminal> { return this._onDidCloseTerminal && this._onDidCloseTerminal.event; }
-	protected readonly _onDidOpenTerminal: Emitter<vscode.Terminal> = new Emitter<vscode.Terminal>();
-	public get onDidOpenTerminal(): Event<vscode.Terminal> { return this._onDidOpenTerminal && this._onDidOpenTerminal.event; }
-	protected readonly _onDidChangeActiveTerminal: Emitter<vscode.Terminal | undefined> = new Emitter<vscode.Terminal | undefined>();
-	public get onDidChangeActiveTerminal(): Event<vscode.Terminal | undefined> { return this._onDidChangeActiveTerminal && this._onDidChangeActiveTerminal.event; }
-	protected readonly _onDidChangeTerminalDimensions: Emitter<vscode.TerminalDimensionsChangeEvent> = new Emitter<vscode.TerminalDimensionsChangeEvent>();
-	public get onDidChangeTerminalDimensions(): Event<vscode.TerminalDimensionsChangeEvent> { return this._onDidChangeTerminalDimensions && this._onDidChangeTerminalDimensions.event; }
+	protected readonly _onDidCloseTerminal = new Emitter<vscode.Terminal>();
+	readonly onDidCloseTerminal = this._onDidCloseTerminal.event;
+	protected readonly _onDidOpenTerminal = new Emitter<vscode.Terminal>();
+	readonly onDidOpenTerminal = this._onDidOpenTerminal.event;
+	protected readonly _onDidChangeActiveTerminal = new Emitter<vscode.Terminal | undefined>();
+	readonly onDidChangeActiveTerminal = this._onDidChangeActiveTerminal.event;
+	protected readonly _onDidChangeTerminalDimensions = new Emitter<vscode.TerminalDimensionsChangeEvent>();
+	readonly onDidChangeTerminalDimensions = this._onDidChangeTerminalDimensions.event;
+	protected readonly _onDidChangeTerminalState = new Emitter<vscode.TerminalDimensionsChangeEvent>();
+	readonly onDidChangeTerminalState = this._onDidChangeTerminalState.event;
 	protected readonly _onDidWriteTerminalData: Emitter<vscode.TerminalDataWriteEvent>;
-	public get onDidWriteTerminalData(): Event<vscode.TerminalDataWriteEvent> { return this._onDidWriteTerminalData && this._onDidWriteTerminalData.event; }
+	readonly onDidWriteTerminalData: Event<vscode.TerminalDataWriteEvent>;
 
 	constructor(
 		supportsProcesses: boolean,
@@ -348,6 +350,7 @@ export abstract class BaseExtHostTerminalService extends Disposable implements I
 			onFirstListenerAdd: () => this._proxy.$startSendingDataEvents(),
 			onLastListenerRemove: () => this._proxy.$stopSendingDataEvents()
 		});
+		this.onDidWriteTerminalData = this._onDidWriteTerminalData.event;
 		this._proxy.$registerProcessSupport(supportsProcesses);
 		this._register({
 			dispose: () => {