diff --git a/extensions/vscode-api-tests/src/singlefolder-tests/terminal.test.ts b/extensions/vscode-api-tests/src/singlefolder-tests/terminal.test.ts
index b6c6ec8c4f9..b8d10e1ee5d 100644
--- a/extensions/vscode-api-tests/src/singlefolder-tests/terminal.test.ts
+++ b/extensions/vscode-api-tests/src/singlefolder-tests/terminal.test.ts
@@ -3,7 +3,7 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { window, commands, Terminal, TerminalDimensionsChangeEvent } from 'vscode';
+import { window, commands, Terminal, TerminalDimensionsChangeEvent, TerminalVirtualProcess, EventEmitter } from 'vscode';
 import { doesNotThrow, equal, ok } from 'assert';
 
 suite('window namespace tests', () => {
@@ -198,6 +198,67 @@ suite('window namespace tests', () => {
 				done();
 			});
 		});
+
+		suite('Virtual process terminals', () => {
+			test('should fire onDidOpenTerminal and onDidCloseTerminal', (done) => {
+				const reg1 = window.onDidOpenTerminal(term => {
+					equal(term.name, 'c');
+					reg1.dispose();
+					const reg2 = window.onDidCloseTerminal(() => {
+						reg2.dispose();
+						done();
+					});
+					term.dispose();
+				});
+				const virtualProcess: TerminalVirtualProcess = {
+					write: new EventEmitter<string>().event
+				};
+				window.createTerminal({ name: 'c', virtualProcess });
+			});
+
+			test('should get dimensions event when shown', (done) => {
+				const reg1 = window.onDidOpenTerminal(term => {
+					reg1.dispose();
+					equal(terminal, term);
+					term.show();
+				});
+				const virtualProcess: TerminalVirtualProcess = {
+					write: new EventEmitter<string>().event,
+					onDidChangeDimensions: dimensions => {
+						ok(dimensions.columns > 0);
+						ok(dimensions.rows > 0);
+						const reg2 = window.onDidCloseTerminal(() => {
+							reg2.dispose();
+							done();
+						});
+						terminal.dispose();
+					}
+				};
+				const terminal = window.createTerminal({ name: 'foo', virtualProcess });
+			});
+
+			test('should fire Terminal.onData on write', (done) => {
+				const reg1 = window.onDidOpenTerminal(term => {
+					equal(terminal, term);
+					reg1.dispose();
+					const reg2 = terminal.onDidWriteData(data => {
+						equal(data, 'bar');
+						reg2.dispose();
+						const reg3 = window.onDidCloseTerminal(() => {
+							reg3.dispose();
+							done();
+						});
+						terminal.dispose();
+					});
+					writeEmitter.fire('bar');
+				});
+				const writeEmitter = new EventEmitter<string>();
+				const virtualProcess: TerminalVirtualProcess = {
+					write: writeEmitter.event
+				};
+				const terminal = window.createTerminal({ name: 'foo', virtualProcess });
+			});
+		});
 	});
 });
 
diff --git a/src/vs/workbench/api/browser/mainThreadTerminalService.ts b/src/vs/workbench/api/browser/mainThreadTerminalService.ts
index a388f623d74..d340fd55ed6 100644
--- a/src/vs/workbench/api/browser/mainThreadTerminalService.ts
+++ b/src/vs/workbench/api/browser/mainThreadTerminalService.ts
@@ -264,8 +264,9 @@ export class MainThreadTerminalService implements MainThreadTerminalServiceShape
 		this._terminalProcessesReady[proxy.terminalId](proxy);
 		delete this._terminalProcessesReady[proxy.terminalId];
 
+		// Note that onReisze is not being listened to here as it needs to fire when max dimensions
+		// change, excluding the dimension override
 		proxy.onInput(data => this._proxy.$acceptProcessInput(proxy.terminalId, data));
-		proxy.onResize(dimensions => this._proxy.$acceptProcessResize(proxy.terminalId, dimensions.cols, dimensions.rows));
 		proxy.onShutdown(immediate => this._proxy.$acceptProcessShutdown(proxy.terminalId, immediate));
 		proxy.onRequestCwd(() => this._proxy.$acceptProcessRequestCwd(proxy.terminalId));
 		proxy.onRequestInitialCwd(() => this._proxy.$acceptProcessRequestInitialCwd(proxy.terminalId));
diff --git a/src/vs/workbench/api/node/extHostTerminalService.ts b/src/vs/workbench/api/node/extHostTerminalService.ts
index 66b370a505e..0605a48b680 100644
--- a/src/vs/workbench/api/node/extHostTerminalService.ts
+++ b/src/vs/workbench/api/node/extHostTerminalService.ts
@@ -433,13 +433,20 @@ export class ExtHostTerminalService implements ExtHostTerminalServiceShape {
 	}
 
 	public $acceptTerminalMaximumDimensions(id: number, cols: number, rows: number): void {
-		this._getTerminalByIdEventually(id).then(() => {
-			// When a terminal's dimensions change, a renderer's _maximum_ dimensions change
-			const renderer = this._getTerminalRendererById(id);
-			if (renderer) {
-				renderer._setMaximumDimensions(cols, rows);
-			}
-		});
+		if (this._terminalProcesses[id]) {
+			// Virtual processes only - when virtual process resize fires it means that the
+			// terminal's maximum dimensions changed
+			this._terminalProcesses[id].resize(cols, rows);
+		} else {
+			// Terminal renderer
+			this._getTerminalByIdEventually(id).then(() => {
+				// When a terminal's dimensions change, a renderer's _maximum_ dimensions change
+				const renderer = this._getTerminalRendererById(id);
+				if (renderer) {
+					renderer._setMaximumDimensions(cols, rows);
+				}
+			});
+		}
 	}
 
 	public $acceptTerminalRendererInput(id: number, data: string): void {
diff --git a/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts b/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
index cfe096303a2..9cff1fd187d 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
@@ -363,14 +363,17 @@ export class TerminalInstance implements ITerminalInstance {
 		if (this._cols !== newCols || this._rows !== newRows) {
 			this._cols = newCols;
 			this._rows = newRows;
-			if (this.shellLaunchConfig.isRendererOnly) {
-				this._onMaximumDimensionsChanged.fire();
-			}
+			this._fireMaximumDimensionsChanged();
 		}
 
 		return dimension.width;
 	}
 
+	@debounce(50)
+	private _fireMaximumDimensionsChanged(): void {
+		this._onMaximumDimensionsChanged.fire();
+	}
+
 	private _getDimension(width: number, height: number): dom.Dimension | null {
 		// The font needs to have been initialized
 		const font = this._configHelper.getFont(this._xterm);