diff --git a/src/vs/workbench/api/common/extHostTerminalService.ts b/src/vs/workbench/api/common/extHostTerminalService.ts
index 1573b96578b..d527f1eba1b 100644
--- a/src/vs/workbench/api/common/extHostTerminalService.ts
+++ b/src/vs/workbench/api/common/extHostTerminalService.ts
@@ -167,7 +167,8 @@ export class ExtHostTerminal {
 			isExtensionCustomPtyTerminal: true,
 			icon: iconPath,
 			color: ThemeColor.isThemeColor(color) ? color.id : undefined,
-			location: this._serializeParentTerminal(location, parentTerminal)
+			location: this._serializeParentTerminal(location, parentTerminal),
+			disablePersistence: true
 		});
 		// At this point, the id has been set via `$acceptTerminalOpened`
 		if (typeof this._id === 'string') {
diff --git a/src/vs/workbench/contrib/terminal/browser/terminalEditorSerializer.ts b/src/vs/workbench/contrib/terminal/browser/terminalEditorSerializer.ts
index e8f31f5c479..e49def31ff0 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalEditorSerializer.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalEditorSerializer.ts
@@ -21,7 +21,7 @@ export class TerminalInputSerializer implements IEditorSerializer {
 	}
 
 	public serialize(editorInput: TerminalEditorInput): string | undefined {
-		if (!editorInput.terminalInstance?.persistentProcessId) {
+		if (!editorInput.terminalInstance?.persistentProcessId || !editorInput.terminalInstance.shouldPersist) {
 			return;
 		}
 		const term = JSON.stringify(this._toJson(editorInput.terminalInstance));
diff --git a/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts b/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
index b9a34618336..8b99157ebe0 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
@@ -330,7 +330,6 @@ export class TerminalInstance extends Disposable implements ITerminalInstance {
 		this._titleReadyPromise = new Promise<string>(c => {
 			this._titleReadyComplete = c;
 		});
-
 		this._fixedRows = _shellLaunchConfig.attachPersistentProcess?.fixedDimensions?.rows;
 		this._fixedCols = _shellLaunchConfig.attachPersistentProcess?.fixedDimensions?.cols;
 		this._icon = _shellLaunchConfig.attachPersistentProcess?.icon || _shellLaunchConfig.icon;
@@ -550,7 +549,7 @@ export class TerminalInstance extends Disposable implements ITerminalInstance {
 	}
 
 	get persistentProcessId(): number | undefined { return this._processManager.persistentProcessId; }
-	get shouldPersist(): boolean { return this._processManager.shouldPersist; }
+	get shouldPersist(): boolean { return this._processManager.shouldPersist && !this.shellLaunchConfig.disablePersistence; }
 
 	/**
 	 * Create xterm.js instance and attach data listeners.