diff --git a/packages/terminal/src/browser/terminal-frontend-contribution.ts b/packages/terminal/src/browser/terminal-frontend-contribution.ts
index 739e037fadb3f..d77a4e5f27d60 100644
--- a/packages/terminal/src/browser/terminal-frontend-contribution.ts
+++ b/packages/terminal/src/browser/terminal-frontend-contribution.ts
@@ -564,7 +564,14 @@ export class TerminalFrontendContribution implements TerminalService, CommandCon
     protected async selectTerminalCwd(): Promise<string | undefined> {
         const roots = this.workspaceService.tryGetRoots();
         return this.quickPick.show(roots.map(
-            ({ uri }) => ({ label: this.labelProvider.getName(new URI(uri)), description: this.labelProvider.getLongName(new URI(uri)), value: uri })
+            ({ uri }) => {
+                const normalizedUri = new URI(uri).normalizePath();
+                return {
+                    label: this.labelProvider.getName(normalizedUri),
+                    description: this.labelProvider.getLongName(normalizedUri),
+                    value: normalizedUri.toString()
+                };
+            }
         ), { placeholder: 'Select current working directory for new terminal' });
     }