diff --git a/src/debug.ts b/src/debug.ts
index 8db2f0d..5ad4721 100644
--- a/src/debug.ts
+++ b/src/debug.ts
@@ -24,6 +24,8 @@ export function debugYaml(pykisoConfigPath: vscode.Uri) {
     module: "pykiso",
     justMyCode: false,
     args: ["-c", pykisoConfigPath.fsPath],
+    cwd: pykisoConfigPath.path.substring(0, pykisoConfigPath.path.lastIndexOf('/')),
+    purpose: ["debug-in-terminal"]
   };
 
   vscode.debug.startDebugging(workspaceFolder, pykisoDebugConfig);
diff --git a/src/pykisoRunner.ts b/src/pykisoRunner.ts
index 79f21f8..a8f55b6 100644
--- a/src/pykisoRunner.ts
+++ b/src/pykisoRunner.ts
@@ -23,17 +23,25 @@ export class PykisoRunner {
     var activeFile = filePath!.split("\\").pop()!.split("/").pop();
     this.updatePythonInterpreter();
 
+    var filePathUri = vscode.Uri.parse(filePath);
+
     if (!debug) {
-      var terminal = vscode.window.createTerminal(
-        `Pykiso #${this.nextTermID++} ${activeFile}`
-      );
+      const terminalOptions = {
+        name: `Pykiso #${this.nextTermID++} ${activeFile}`,
+        cwd: filePathUri.path.substring(0, filePathUri.path.lastIndexOf('/')),
+      };
+
+      var terminal = vscode.window.createTerminal(terminalOptions);
       terminal.sendText(
         `${this.pythonInterpreterPath} -m pykiso -c \"${filePath}\"`
       );
     } else {
-      var terminal = vscode.window.createTerminal(
-        `Pykiso DEBUG #${this.nextTermID++} ${activeFile}`
-      );
+      const terminalOptions = {
+        name: `Pykiso DEBUG #${this.nextTermID++} ${activeFile}`,
+        cwd: filePathUri.path.substring(0, filePathUri.path.lastIndexOf('/')),
+      };
+
+      var terminal = vscode.window.createTerminal(terminalOptions);
       terminal.sendText(
         `${this.pythonInterpreterPath} -m pykiso -c \"${filePath}\" --log-level DEBUG`
       );
diff --git a/src/test/suite/extension.test.ts b/src/test/suite/extension.test.ts
index fb8fbb2..b4fd829 100644
--- a/src/test/suite/extension.test.ts
+++ b/src/test/suite/extension.test.ts
@@ -37,7 +37,7 @@ suite("Extension Test Suite", () => {
 
     assert(stubUpdatePythonInterpreter.calledOnce);
     assert(stubCreateTerminal.calledOnce);
-    expect(stubCreateTerminal).to.be.called.calledWith("Pykiso #1 dummy.yaml");
+    expect(stubCreateTerminal).to.be.called.calledWith({ name: 'Pykiso #1 dummy.yaml', cwd: '' });
     expect(stubTerminal.sendText).to.be.called.calledWith(
       'C:/Python -m pykiso -c "/dummy.yaml"'
     );
@@ -66,8 +66,8 @@ suite("Extension Test Suite", () => {
     assert(stubUpdatePythonInterpreter.calledTwice);
     assert(stubCreateTerminal.calledTwice);
     expect(stubCreateTerminal)
-      .to.be.called.calledWith("Pykiso DEBUG #1 dummy.yaml")
-      .calledWith("Pykiso DEBUG #2 dummy.yaml");
+      .to.be.called.calledWith({ name: 'Pykiso DEBUG #1 dummy.yaml', cwd: '' })
+      .calledWith({ name: 'Pykiso DEBUG #2 dummy.yaml', cwd: '/somePath' });
 
     expect(stubTerminal.sendText).to.be.called.calledWith(
       'C:/Python -m pykiso -c "/dummy.yaml" --log-level DEBUG'