diff --git a/src/vs/platform/remote/browser/remoteAuthorityResolverService.ts b/src/vs/platform/remote/browser/remoteAuthorityResolverService.ts
index 76bb55627fe14..dd02058056a65 100644
--- a/src/vs/platform/remote/browser/remoteAuthorityResolverService.ts
+++ b/src/vs/platform/remote/browser/remoteAuthorityResolverService.ts
@@ -8,6 +8,8 @@ import { Disposable } from 'vs/base/common/lifecycle';
 import { RemoteAuthorities } from 'vs/base/common/network';
 import { URI } from 'vs/base/common/uri';
 import { IRemoteAuthorityResolverService, IRemoteConnectionData, ResolvedAuthority, ResolverResult } from 'vs/platform/remote/common/remoteAuthorityResolver';
+import { Options } from 'vs/base/common/ipc';
+import { getOptions } from 'vs/base/common/util';
 
 export class RemoteAuthorityResolverService extends Disposable implements IRemoteAuthorityResolverService {
 
@@ -59,11 +61,14 @@ export class RemoteAuthorityResolverService extends Disposable implements IRemot
 
 	private _doResolveAuthority(authority: string): ResolverResult {
 		const connectionToken = this._connectionTokens.get(authority) || this._connectionToken;
+		// NOTE@coder: Add the proxy URI to the environment for use in the remote.
+		const options = getOptions<Options>();
+		const extensionHostEnv = { VSCODE_PROXY_URI: `${window.location.origin}${options.base}/proxy/{port}` };
 		if (authority.indexOf(':') >= 0) {
 			const pieces = authority.split(':');
-			return { authority: { authority, host: pieces[0], port: parseInt(pieces[1], 10), connectionToken } };
+			return { authority: { authority, host: pieces[0], port: parseInt(pieces[1], 10), connectionToken }, options: { extensionHostEnv } };
 		}
-		return { authority: { authority, host: authority, port: 80, connectionToken } };
+		return { authority: { authority, host: authority, port: 80, connectionToken }, options: { extensionHostEnv } };
 	}
 
 	_clearResolvedAuthority(authority: string): void {
diff --git a/src/vs/server/connection/extensionHostConnection.ts b/src/vs/server/connection/extensionHostConnection.ts
index 52d21db35c5ad..bb37dfbd9fd0e 100644
--- a/src/vs/server/connection/extensionHostConnection.ts
+++ b/src/vs/server/connection/extensionHostConnection.ts
@@ -143,6 +143,7 @@ export class ExtensionHostConnection extends AbstractConnection {
 			debug: this.startParams.break ? undefined : portNumber,
 			args: ['--type=extensionHost', '--skipWorkspaceStorageLock'],
 			env: <ForkEnvironmentVariables>{
+				...(this.startParams.env || {}),
 				VSCODE_AMD_ENTRYPOINT: 'vs/workbench/services/extensions/node/extensionHostProcess',
 				VSCODE_PIPE_LOGGING: true,
 				VSCODE_VERBOSE_LOGGING: true,
diff --git a/src/vs/server/ipc/terminalProviderIpc.ts b/src/vs/server/ipc/terminalProviderIpc.ts
index 5cd4e8f361ca1..6ebb24af5f1ec 100644
--- a/src/vs/server/ipc/terminalProviderIpc.ts
+++ b/src/vs/server/ipc/terminalProviderIpc.ts
@@ -140,11 +140,11 @@ export class TerminalProviderChannel implements IServerChannel<RemoteAgentConnec
 		};
 
 		// ptyHostService calls getEnvironment in the ptyHost process it creates,
-		// which uses that process's environment. The process spawned doesn't have
-		// VSCODE_IPC_HOOK_CLI in its env, so we add it here.
+		// which uses that process's environment, and adds some variables.
 		const getEnvironment = async (): Promise<platform.IProcessEnvironment> => {
 			const env = await this.ptyService.getEnvironment();
-			env.VSCODE_IPC_HOOK_CLI = process.env['VSCODE_IPC_HOOK_CLI']!;
+			env.VSCODE_IPC_HOOK_CLI = process.env.VSCODE_IPC_HOOK_CLI;
+			env.VSCODE_PROXY_URI = args.resolverEnv?.VSCODE_PROXY_URI || process.env.VSCODE_PROXY_URI;
 			return env;
 		};