diff --git a/src/vs/workbench/browser/positronNewProjectWizard/newProjectModalDialog.tsx b/src/vs/workbench/browser/positronNewProjectWizard/newProjectModalDialog.tsx
index a4b6a04d5b7..31c1a552b10 100644
--- a/src/vs/workbench/browser/positronNewProjectWizard/newProjectModalDialog.tsx
+++ b/src/vs/workbench/browser/positronNewProjectWizard/newProjectModalDialog.tsx
@@ -118,6 +118,7 @@ export const showNewProjectModalDialog = async (
 
 					// Create the new project configuration.
 					const newProjectConfig: NewProjectConfiguration = {
+						folderScheme: folder.scheme,
 						runtimeMetadata: result.selectedRuntime || undefined,
 						projectType: result.projectType || '',
 						projectFolder: folder.fsPath,
diff --git a/src/vs/workbench/services/positronNewProject/common/positronNewProject.ts b/src/vs/workbench/services/positronNewProject/common/positronNewProject.ts
index c3e60ddf6dd..24a7bb2f4a9 100644
--- a/src/vs/workbench/services/positronNewProject/common/positronNewProject.ts
+++ b/src/vs/workbench/services/positronNewProject/common/positronNewProject.ts
@@ -84,6 +84,7 @@ export enum NewProjectTask {
  * NewProjectConfiguration interface. Defines the configuration for a new project.
  */
 export interface NewProjectConfiguration {
+	readonly folderScheme: string;
 	readonly runtimeMetadata: ILanguageRuntimeMetadata | undefined;
 	readonly projectType: string;
 	readonly projectFolder: string;
diff --git a/src/vs/workbench/services/positronNewProject/common/positronNewProjectService.ts b/src/vs/workbench/services/positronNewProject/common/positronNewProjectService.ts
index c113578efd8..c61d1fa49c0 100644
--- a/src/vs/workbench/services/positronNewProject/common/positronNewProjectService.ts
+++ b/src/vs/workbench/services/positronNewProject/common/positronNewProjectService.ts
@@ -22,6 +22,7 @@ import { URI } from 'vs/base/common/uri';
 import { INotificationService } from 'vs/platform/notification/common/notification';
 import { localize } from 'vs/nls';
 import { IRuntimeSessionService } from 'vs/workbench/services/runtimeSession/common/runtimeSessionService';
+import { Schemas } from 'vs/base/common/network';
 
 /**
  * PositronNewProjectService class.
@@ -327,7 +328,7 @@ export class PositronNewProjectService extends Disposable implements IPositronNe
 	 * Relies on extension vscode.git
 	 */
 	private async _runGitInit() {
-		const projectRoot = URI.file(this._newProjectConfig?.projectFolder!);
+		const projectRoot = URI.from({ scheme: this._newProjectConfig?.folderScheme ?? Schemas.file, path: this._newProjectConfig?.projectFolder });
 
 		// true to skip the folder prompt
 		await this._commandService.executeCommand('git.init', true)