diff --git a/.github/workflows/build.yml b/.github/workflows/build.yml
index d23f9c780094..27f67a681e7c 100644
--- a/.github/workflows/build.yml
+++ b/.github/workflows/build.yml
@@ -252,6 +252,7 @@ jobs:
           }
           & $condaPythonPath ./build/ci/addEnvPath.py ${{env.PYTHON_VIRTUAL_ENVS_LOCATION}} condaExecPath $condaExecPath
           & $condaPythonPath ./build/ci/addEnvPath.py ${{env.PYTHON_VIRTUAL_ENVS_LOCATION}} condaPath
+          & $condaExecPath init --all
 
           # 2. For `interpreterLocatorService.testvirtualenvs.ts`
 
diff --git a/.github/workflows/nightly-coverage.yml b/.github/workflows/nightly-coverage.yml
index 18f97ad6354d..48c228b81d1c 100644
--- a/.github/workflows/nightly-coverage.yml
+++ b/.github/workflows/nightly-coverage.yml
@@ -119,6 +119,7 @@ jobs:
           }
           & $condaPythonPath ./build/ci/addEnvPath.py ${{env.PYTHON_VIRTUAL_ENVS_LOCATION}} condaExecPath $condaExecPath
           & $condaPythonPath ./build/ci/addEnvPath.py ${{env.PYTHON_VIRTUAL_ENVS_LOCATION}} condaPath
+          & $condaExecPath init --all
 
           # 2. For `interpreterLocatorService.testvirtualenvs.ts`
 
diff --git a/.github/workflows/pr-check.yml b/.github/workflows/pr-check.yml
index 9bfa4831cb73..de4d06c5f05b 100644
--- a/.github/workflows/pr-check.yml
+++ b/.github/workflows/pr-check.yml
@@ -231,6 +231,7 @@ jobs:
           }
           & $condaPythonPath ./build/ci/addEnvPath.py ${{env.PYTHON_VIRTUAL_ENVS_LOCATION}} condaExecPath $condaExecPath
           & $condaPythonPath ./build/ci/addEnvPath.py ${{env.PYTHON_VIRTUAL_ENVS_LOCATION}} condaPath
+          & $condaExecPath init --all
 
           # 2. For `interpreterLocatorService.testvirtualenvs.ts`
 
@@ -545,6 +546,7 @@ jobs:
           }
           & $condaPythonPath ./build/ci/addEnvPath.py ${{env.PYTHON_VIRTUAL_ENVS_LOCATION}} condaExecPath $condaExecPath
           & $condaPythonPath ./build/ci/addEnvPath.py ${{env.PYTHON_VIRTUAL_ENVS_LOCATION}} condaPath
+          & $condaExecPath init --all
 
           # 2. For `interpreterLocatorService.testvirtualenvs.ts`
 
diff --git a/src/client/pythonEnvironments/common/environmentManagers/conda.ts b/src/client/pythonEnvironments/common/environmentManagers/conda.ts
index 1eb577ee1b1f..30359a06fda7 100644
--- a/src/client/pythonEnvironments/common/environmentManagers/conda.ts
+++ b/src/client/pythonEnvironments/common/environmentManagers/conda.ts
@@ -2,7 +2,7 @@ import * as fsapi from 'fs-extra';
 import * as path from 'path';
 import { traceVerbose } from '../../../common/logger';
 import { getEnvironmentVariable, getOSType, getUserHomeDir, OSType } from '../../../common/utils/platform';
-import { exec, pathExists, readFile } from '../externalDependencies';
+import { exec, getPythonSetting, pathExists, readFile } from '../externalDependencies';
 
 import { PythonVersion, UNKNOWN_PYTHON_VERSION } from '../../base/info';
 import { parseVersion } from '../../base/info/pythonVersion';
@@ -238,6 +238,11 @@ export class Conda {
 
         // Produce a list of candidate binaries to be probed by exec'ing them.
         async function* getCandidates() {
+            const customCondaPath = getPythonSetting<string>('condaPath');
+            if (customCondaPath && customCondaPath !== 'conda') {
+                // If user has specified a custom conda path, use it first.
+                yield customCondaPath;
+            }
             // Check unqualified filename first, in case it's on PATH.
             yield 'conda';
             if (getOSType() === OSType.Windows) {
diff --git a/src/test/common/terminals/environmentActivationProviders/terminalActivation.testvirtualenvs.ts b/src/test/common/terminals/environmentActivationProviders/terminalActivation.testvirtualenvs.ts
index 8a3d7c44208d..dc2324ac9900 100644
--- a/src/test/common/terminals/environmentActivationProviders/terminalActivation.testvirtualenvs.ts
+++ b/src/test/common/terminals/environmentActivationProviders/terminalActivation.testvirtualenvs.ts
@@ -24,9 +24,8 @@ import {
 import { EXTENSION_ROOT_DIR_FOR_TESTS, TEST_TIMEOUT } from '../../../constants';
 import { sleep } from '../../../core';
 import { initialize, initializeTest } from '../../../initialize';
-import * as ExperimentHelpers from '../../../../client/common/experiments/helpers';
 
-suite.skip('Activation of Environments in Terminal', () => {
+suite('Activation of Environments in Terminal', () => {
     const file = path.join(
         EXTENSION_ROOT_DIR_FOR_TESTS,
         'src',
@@ -61,13 +60,12 @@ suite.skip('Activation of Environments in Terminal', () => {
     let experiments: IExperimentService;
     const sandbox = sinon.createSandbox();
     suiteSetup(async () => {
-        sandbox.stub(ExperimentHelpers, 'inDiscoveryExperiment').resolves(false);
         envPaths = await fs.readJson(envsLocation);
         terminalSettings = vscode.workspace.getConfiguration('terminal', vscode.workspace.workspaceFolders![0].uri);
         pythonSettings = vscode.workspace.getConfiguration('python', vscode.workspace.workspaceFolders![0].uri);
-        defaultShell.Windows = terminalSettings.inspect('integrated.shell.windows').globalValue;
-        defaultShell.Linux = terminalSettings.inspect('integrated.shell.linux').globalValue;
-        await terminalSettings.update('integrated.shell.linux', '/bin/bash', vscode.ConfigurationTarget.Global);
+        defaultShell.Windows = terminalSettings.inspect('integrated.defaultProfile.windows').globalValue;
+        defaultShell.Linux = terminalSettings.inspect('integrated.defaultProfile.linux').globalValue;
+        await terminalSettings.update('integrated.defaultProfile.linux', 'bash', vscode.ConfigurationTarget.Global);
         experiments = (await initialize()).serviceContainer.get<IExperimentService>(IExperimentService);
     });
 
@@ -105,11 +103,15 @@ suite.skip('Activation of Environments in Terminal', () => {
             vscode.ConfigurationTarget.WorkspaceFolder,
         );
         await terminalSettings.update(
-            'integrated.shell.windows',
+            'integrated.defaultProfile.windows',
             defaultShell.Windows,
             vscode.ConfigurationTarget.Global,
         );
-        await terminalSettings.update('integrated.shell.linux', defaultShell.Linux, vscode.ConfigurationTarget.Global);
+        await terminalSettings.update(
+            'integrated.defaultProfile.linux',
+            defaultShell.Linux,
+            vscode.ConfigurationTarget.Global,
+        );
         await pythonSettings.update('condaPath', undefined, vscode.ConfigurationTarget.Workspace);
         if (experiments.inExperimentSync(DeprecatePythonPath.experiment)) {
             await resetGlobalInterpreterPathSetting();
@@ -189,9 +191,10 @@ suite.skip('Activation of Environments in Terminal', () => {
         await testActivation(envPaths.virtualEnvPath);
     });
     test('Should activate with conda', async () => {
+        // Powershell does not work with conda by default, hence use cmd.
         await terminalSettings.update(
-            'integrated.shell.windows',
-            'C:\\Windows\\System32\\cmd.exe',
+            'integrated.defaultProfile.windows',
+            'Command Prompt',
             vscode.ConfigurationTarget.Global,
         );
         await pythonSettings.update('condaPath', envPaths.condaExecPath, vscode.ConfigurationTarget.Workspace);
diff --git a/src/test/pythonEnvironments/base/locators/composite/resolverUtils.unit.test.ts b/src/test/pythonEnvironments/base/locators/composite/resolverUtils.unit.test.ts
index 0574685ffeca..c5de00c3072a 100644
--- a/src/test/pythonEnvironments/base/locators/composite/resolverUtils.unit.test.ts
+++ b/src/test/pythonEnvironments/base/locators/composite/resolverUtils.unit.test.ts
@@ -27,11 +27,21 @@ import {
 import { resolveBasicEnv } from '../../../../../client/pythonEnvironments/base/locators/composite/resolverUtils';
 
 suite('Resolver Utils', () => {
+    let getWorkspaceFolders: sinon.SinonStub;
+    setup(() => {
+        sinon.stub(externalDependencies, 'getPythonSetting').withArgs('condaPath').returns('conda');
+        getWorkspaceFolders = sinon.stub(externalDependencies, 'getWorkspaceFolders');
+        getWorkspaceFolders.returns([]);
+    });
+
+    teardown(() => {
+        sinon.restore();
+    });
+
     suite('Pyenv', () => {
         const testPyenvRoot = path.join(TEST_LAYOUT_ROOT, 'pyenvhome', '.pyenv');
         const testPyenvVersionsDir = path.join(testPyenvRoot, 'versions');
         setup(() => {
-            sinon.stub(externalDependencies, 'getWorkspaceFolders').returns([]);
             sinon.stub(platformApis, 'getEnvironmentVariable').withArgs('PYENV_ROOT').returns(testPyenvRoot);
         });
 
@@ -68,7 +78,6 @@ suite('Resolver Utils', () => {
         const testStoreAppRoot = path.join(testLocalAppData, 'Microsoft', 'WindowsApps');
 
         setup(() => {
-            sinon.stub(externalDependencies, 'getWorkspaceFolders').returns([]);
             sinon.stub(platformApis, 'getEnvironmentVariable').withArgs('LOCALAPPDATA').returns(testLocalAppData);
         });
 
@@ -199,10 +208,6 @@ suite('Resolver Utils', () => {
             };
         }
 
-        setup(() => {
-            sinon.stub(externalDependencies, 'getWorkspaceFolders').returns([]);
-        });
-
         teardown(() => {
             sinon.restore();
         });
@@ -265,7 +270,7 @@ suite('Resolver Utils', () => {
     suite('Simple envs', () => {
         const testVirtualHomeDir = path.join(TEST_LAYOUT_ROOT, 'virtualhome');
         setup(() => {
-            sinon.stub(externalDependencies, 'getWorkspaceFolders').returns([testVirtualHomeDir]);
+            getWorkspaceFolders.returns([testVirtualHomeDir]);
         });
 
         teardown(() => {
@@ -318,7 +323,6 @@ suite('Resolver Utils', () => {
         const testPosixKnownPathsRoot = path.join(TEST_LAYOUT_ROOT, 'posixroot');
         const testLocation3 = path.join(testPosixKnownPathsRoot, 'location3');
         setup(() => {
-            sinon.stub(externalDependencies, 'getWorkspaceFolders').returns([]);
             sinon.stub(platformApis, 'getOSType').callsFake(() => platformApis.OSType.Linux);
         });
 
@@ -514,7 +518,6 @@ suite('Resolver Utils', () => {
         setup(async () => {
             sinon.stub(winreg, 'readRegistryValues').callsFake(fakeRegistryValues);
             sinon.stub(winreg, 'readRegistryKeys').callsFake(fakeRegistryKeys);
-            sinon.stub(externalDependencies, 'getWorkspaceFolders').returns([]);
             sinon.stub(platformApis, 'getOSType').callsFake(() => platformApis.OSType.Windows);
         });
 
diff --git a/src/test/pythonEnvironments/common/environmentManagers/conda.unit.test.ts b/src/test/pythonEnvironments/common/environmentManagers/conda.unit.test.ts
index 7bcb4b54d05b..369c65b3629f 100644
--- a/src/test/pythonEnvironments/common/environmentManagers/conda.unit.test.ts
+++ b/src/test/pythonEnvironments/common/environmentManagers/conda.unit.test.ts
@@ -85,8 +85,12 @@ suite('Conda and its environments are located correctly', () => {
         };
     }
 
+    let getPythonSetting: sinon.SinonStub;
+
     setup(() => {
         osType = platform.OSType.Unknown;
+        getPythonSetting = sinon.stub(externalDependencies, 'getPythonSetting');
+        getPythonSetting.withArgs('condaPath').returns('conda');
         homeDir = undefined;
         execPath = [];
         files = {};
@@ -189,6 +193,17 @@ suite('Conda and its environments are located correctly', () => {
             expect(conda).to.equal(undefined, 'conda should be missing');
         });
 
+        test('Must find conda using `python.condaPath` setting and prefer it', async () => {
+            getPythonSetting.withArgs('condaPath').returns('condaPath/conda');
+
+            files = {
+                condaPath: {
+                    conda: JSON.stringify(condaInfo('4.8.0')),
+                },
+            };
+            await expectConda('/condaPath/conda');
+        });
+
         test('Must find conda on PATH, and prefer it', async () => {
             osType = platform.OSType.Linux;
             execPath = ['/bin'];