diff --git a/src/vs/workbench/contrib/terminal/browser/terminalActions.ts b/src/vs/workbench/contrib/terminal/browser/terminalActions.ts
index 9a974a203d8..2901cc6a637 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalActions.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalActions.ts
@@ -146,11 +146,10 @@ export function registerTerminalActions() {
 				precondition: TerminalContextKeys.processSupported
 			});
 		}
-		async run(accessor: ServicesAccessor) {
+		async run(accessor: ServicesAccessor, args?: unknown) {
 			const terminalService = accessor.get(ITerminalService);
-			const instance = await terminalService.createTerminal({
-				location: TerminalLocation.Editor
-			});
+			const options = (typeof args === 'object' && args && 'location' in args) ? args as ICreateTerminalOptions : { location: TerminalLocation.Editor };
+			const instance = await terminalService.createTerminal(options);
 			instance.focusWhenReady();
 		}
 	});
diff --git a/src/vs/workbench/contrib/terminal/browser/terminalEditor.ts b/src/vs/workbench/contrib/terminal/browser/terminalEditor.ts
index 5378eddcc56..5da5960a2ef 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalEditor.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalEditor.ts
@@ -31,7 +31,7 @@ import { BrowserFeatures } from 'vs/base/browser/canIUse';
 import { INotificationService } from 'vs/platform/notification/common/notification';
 import { openContextMenu } from 'vs/workbench/contrib/terminal/browser/terminalContextMenu';
 import { ICommandService } from 'vs/platform/commands/common/commands';
-import { TerminalLocation } from 'vs/platform/terminal/common/terminal';
+import { ACTIVE_GROUP } from 'vs/workbench/services/editor/common/editorService';
 
 const findWidgetSelector = '.simple-find-part-wrapper';
 
@@ -201,7 +201,8 @@ export class TerminalEditor extends EditorPane {
 	override getActionViewItem(action: IAction): IActionViewItem | undefined {
 		switch (action.id) {
 			case TerminalCommandId.CreateWithProfileButton: {
-				const actions = getTerminalActionBarArgs(TerminalLocation.Editor, this._terminalService.availableProfiles, this._getDefaultProfileName(), this._terminalContributionService.terminalProfiles, this._instantiationService, this._terminalService, this._contextKeyService, this._commandService, this._dropdownMenu);
+				const location = { viewColumn: ACTIVE_GROUP };
+				const actions = getTerminalActionBarArgs(location, this._terminalService.availableProfiles, this._getDefaultProfileName(), this._terminalContributionService.terminalProfiles, this._instantiationService, this._terminalService, this._contextKeyService, this._commandService, this._dropdownMenu);
 				const button = this._instantiationService.createInstance(DropdownWithPrimaryActionViewItem, actions.primaryAction, actions.dropdownAction, actions.dropdownMenuActions, actions.className, this._contextMenuService, {});
 				return button;
 			}
diff --git a/src/vs/workbench/contrib/terminal/browser/terminalMenus.ts b/src/vs/workbench/contrib/terminal/browser/terminalMenus.ts
index 5aaab86b38b..d4679dfdecc 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalMenus.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalMenus.ts
@@ -13,7 +13,7 @@ import { ContextKeyAndExpr, ContextKeyEqualsExpr, ContextKeyExpr, IContextKeySer
 import { IInstantiationService } from 'vs/platform/instantiation/common/instantiation';
 import { IExtensionTerminalProfile, ITerminalProfile, TerminalLocation, TerminalSettingId } from 'vs/platform/terminal/common/terminal';
 import { ResourceContextKey } from 'vs/workbench/common/resources';
-import { ICreateTerminalOptions, ITerminalService } from 'vs/workbench/contrib/terminal/browser/terminal';
+import { ICreateTerminalOptions, ITerminalLocationOptions, ITerminalService } from 'vs/workbench/contrib/terminal/browser/terminal';
 import { TerminalCommandId, TERMINAL_VIEW_ID } from 'vs/workbench/contrib/terminal/common/terminal';
 import { TerminalContextKeys, TerminalContextKeyStrings } from 'vs/workbench/contrib/terminal/common/terminalContextKey';
 import { terminalStrings } from 'vs/workbench/contrib/terminal/common/terminalStrings';
@@ -572,7 +572,7 @@ export function setupTerminalMenus(): void {
 	});
 }
 
-export function getTerminalActionBarArgs(location: TerminalLocation, profiles: ITerminalProfile[], defaultProfileName: string, contributedProfiles: readonly IExtensionTerminalProfile[], instantiationService: IInstantiationService, terminalService: ITerminalService, contextKeyService: IContextKeyService, commandService: ICommandService, dropdownMenu: IMenu): {
+export function getTerminalActionBarArgs(location: ITerminalLocationOptions, profiles: ITerminalProfile[], defaultProfileName: string, contributedProfiles: readonly IExtensionTerminalProfile[], instantiationService: IInstantiationService, terminalService: ITerminalService, contextKeyService: IContextKeyService, commandService: ICommandService, dropdownMenu: IMenu): {
 	primaryAction: MenuItemAction,
 	dropdownAction: IAction,
 	dropdownMenuActions: IAction[],
@@ -611,7 +611,7 @@ export function getTerminalActionBarArgs(location: TerminalLocation, profiles: I
 			},
 			location
 		})));
-		const splitLocation = location === TerminalLocation.Editor ? { viewColumn: SIDE_GROUP } : location;
+		const splitLocation = (location === TerminalLocation.Editor || typeof location === 'object' && 'viewColumn' in location) ? { viewColumn: SIDE_GROUP } : location;
 		submenuActions.push(new Action(TerminalCommandId.NewWithProfile, title, undefined, true, () => terminalService.createTerminal({
 			config: {
 				extensionIdentifier: contributed.extensionIdentifier,
diff --git a/src/vs/workbench/contrib/terminal/browser/terminalService.ts b/src/vs/workbench/contrib/terminal/browser/terminalService.ts
index a3937089afd..9d48153bfc2 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalService.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalService.ts
@@ -48,6 +48,8 @@ import { IWorkbenchEnvironmentService } from 'vs/workbench/services/environment/
 import { IExtensionService } from 'vs/workbench/services/extensions/common/extensions';
 import { ILifecycleService, ShutdownReason, WillShutdownEvent } from 'vs/workbench/services/lifecycle/common/lifecycle';
 import { IRemoteAgentService } from 'vs/workbench/services/remote/common/remoteAgentService';
+import { ACTIVE_GROUP } from 'vs/workbench/services/editor/common/editorService';
+import { IEditorGroupsService } from 'vs/workbench/services/editor/common/editorGroupsService';
 
 export class TerminalService implements ITerminalService {
 	declare _serviceBrand: undefined;
@@ -173,6 +175,7 @@ export class TerminalService implements ITerminalService {
 		@ITerminalGroupService private readonly _terminalGroupService: ITerminalGroupService,
 		@ITerminalInstanceService private readonly _terminalInstanceService: ITerminalInstanceService,
 		@IEditorResolverService editorResolverService: IEditorResolverService,
+		@IEditorGroupsService private readonly _editorGroupsService: IEditorGroupsService,
 		@IExtensionService private readonly _extensionService: IExtensionService,
 		@INotificationService private readonly _notificationService: INotificationService,
 		@IThemeService private readonly _themeService: IThemeService,
@@ -1237,6 +1240,11 @@ export class TerminalService implements ITerminalService {
 
 	private _getEditorOptions(location?: ITerminalLocationOptions): TerminalEditorLocation | undefined {
 		if (location && typeof location === 'object' && 'viewColumn' in location) {
+			// When ACTIVE_GROUP is used, resolve it to an actual group to ensure the is created in
+			// the active group even if it is locked
+			if (location.viewColumn === ACTIVE_GROUP) {
+				location.viewColumn = this._editorGroupsService.activeGroup.index;
+			}
 			return location;
 		}
 		return undefined;