diff --git a/extension-terminal-sample/.gitignore b/extension-terminal-sample/.gitignore
new file mode 100644
index 00000000..8e5962ee
--- /dev/null
+++ b/extension-terminal-sample/.gitignore
@@ -0,0 +1,2 @@
+out
+node_modules
\ No newline at end of file
diff --git a/extension-terminal-sample/.vscode/launch.json b/extension-terminal-sample/.vscode/launch.json
new file mode 100644
index 00000000..a8090de8
--- /dev/null
+++ b/extension-terminal-sample/.vscode/launch.json
@@ -0,0 +1,22 @@
+// A launch configuration that compiles the extension and then opens it inside a new window
+// Use IntelliSense to learn about possible attributes.
+// Hover to view descriptions of existing attributes.
+// For more information, visit: https://go.microsoft.com/fwlink/?linkid=830387
+{
+	"version": "0.2.0",
+    "configurations": [
+        {
+            "name": "Extension",
+            "type": "extensionHost",
+            "request": "launch",
+            "runtimeExecutable": "${execPath}",
+            "args": [
+                "--extensionDevelopmentPath=${workspaceFolder}"
+            ],
+            "outFiles": [
+                "${workspaceFolder}/out/**/*.js"
+            ],
+            "preLaunchTask": "npm: watch"
+        }
+    ]
+}
\ No newline at end of file
diff --git a/extension-terminal-sample/.vscode/settings.json b/extension-terminal-sample/.vscode/settings.json
new file mode 100644
index 00000000..e46111f1
--- /dev/null
+++ b/extension-terminal-sample/.vscode/settings.json
@@ -0,0 +1,3 @@
+{
+	"editor.insertSpaces": false
+}
\ No newline at end of file
diff --git a/extension-terminal-sample/.vscode/tasks.json b/extension-terminal-sample/.vscode/tasks.json
new file mode 100644
index 00000000..604e38f5
--- /dev/null
+++ b/extension-terminal-sample/.vscode/tasks.json
@@ -0,0 +1,20 @@
+// See https://go.microsoft.com/fwlink/?LinkId=733558
+// for the documentation about the tasks.json format
+{
+    "version": "2.0.0",
+    "tasks": [
+        {
+            "type": "npm",
+            "script": "watch",
+            "problemMatcher": "$tsc-watch",
+            "isBackground": true,
+            "presentation": {
+                "reveal": "never"
+            },
+            "group": {
+                "kind": "build",
+                "isDefault": true
+            }
+        }
+    ]
+}
\ No newline at end of file
diff --git a/extension-terminal-sample/.vscodeignore b/extension-terminal-sample/.vscodeignore
new file mode 100644
index 00000000..93e28ff2
--- /dev/null
+++ b/extension-terminal-sample/.vscodeignore
@@ -0,0 +1,9 @@
+.vscode/**
+typings/**
+out/test/**
+test/**
+src/**
+**/*.map
+.gitignore
+tsconfig.json
+vsc-extension-quickstart.md
diff --git a/extension-terminal-sample/README.md b/extension-terminal-sample/README.md
new file mode 100644
index 00000000..be61b2d8
--- /dev/null
+++ b/extension-terminal-sample/README.md
@@ -0,0 +1,30 @@
+# extension-terminal-sample
+
+This extension shows how to leverage the extension terminal API proposed in v1.37 that enables an extension to handle a terminal's input and emit output.
+
+## VS Code API
+
+### `vscode` module
+
+- [window.createTerminal](https://code.visualstudio.com/api/references/vscode-api#window.createTerminal)
+- [window.onDidChangeActiveTerminal](https://code.visualstudio.com/api/references/vscode-api#window.onDidChangeActiveTerminal)
+- [window.onDidCloseTerminal](https://code.visualstudio.com/api/references/vscode-api#window.onDidCloseTerminal)
+- [window.onDidOpenTerminal](https://code.visualstudio.com/api/references/vscode-api#window.onDidOpenTerminal)
+- [window.Pseudoterminal](https://code.visualstudio.com/api/references/vscode-api#window.Pseudoterminal)
+- [window.ExtensionTerminalOptions](https://code.visualstudio.com/api/references/vscode-api#window.ExtensionTerminalOptions) 
+
+### Proposed API
+
+- `window.Pseudoterminal`
+- `window.ExtensionTerminalOptions`
+
+### Contribution Points
+
+- [`contributes.commands`](https://code.visualstudio.com/api/references/contribution-points#contributes.commands)
+
+## Running the Sample
+
+- Run `npm install` in terminal to install dependencies
+- Run the `Run Extension` target in the Debug View. This will:
+	- Start a task `npm: watch` to compile the code
+	- Run the extension in a new VS Code window
diff --git a/extension-terminal-sample/package-lock.json b/extension-terminal-sample/package-lock.json
new file mode 100644
index 00000000..c9b30973
--- /dev/null
+++ b/extension-terminal-sample/package-lock.json
@@ -0,0 +1,323 @@
+{
+	"name": "vscode-terminal-api-example",
+	"version": "0.0.1",
+	"lockfileVersion": 1,
+	"requires": true,
+	"dependencies": {
+		"@babel/code-frame": {
+			"version": "7.0.0",
+			"resolved": "https://registry.npmjs.org/@babel/code-frame/-/code-frame-7.0.0.tgz",
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+			"dev": true,
+			"requires": {
+				"@babel/highlight": "^7.0.0"
+			}
+		},
+		"@babel/highlight": {
+			"version": "7.0.0",
+			"resolved": "https://registry.npmjs.org/@babel/highlight/-/highlight-7.0.0.tgz",
+			"integrity": "sha512-UFMC4ZeFC48Tpvj7C8UgLvtkaUuovQX+5xNWrsIoMG8o2z+XFKjKaN9iVmS84dPwVN00W4wPmqvYoZF3EGAsfw==",
+			"dev": true,
+			"requires": {
+				"chalk": "^2.0.0",
+				"esutils": "^2.0.2",
+				"js-tokens": "^4.0.0"
+			}
+		},
+		"@types/node": {
+			"version": "6.14.0",
+			"resolved": "https://registry.npmjs.org/@types/node/-/node-6.14.0.tgz",
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+			"dev": true
+		},
+		"@types/vscode": {
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+}
diff --git a/extension-terminal-sample/package.json b/extension-terminal-sample/package.json
new file mode 100644
index 00000000..adb8dc66
--- /dev/null
+++ b/extension-terminal-sample/package.json
@@ -0,0 +1,38 @@
+{
+	"name": "extension-terminal-sample",
+	"displayName": "extension-terminal-sample",
+	"description": "An example usage of the extension terminal API",
+	"version": "0.0.1",
+	"publisher": "vscode-samples",
+	"engines": {
+		"vscode": "^1.37.0"
+	},
+	"enableProposedApi": true,
+	"categories": [
+		"Other"
+	],
+	"activationEvents": [
+		"onCommand:extensionTerminalSample.create"
+	],
+	"main": "./out/extension.js",
+	"contributes": {
+		"commands": [
+			{
+				"command": "extensionTerminalSample.create",
+				"title": "Extension Terminal Sample: Create"
+			}
+		]
+	},
+	"scripts": {
+		"vscode:prepublish": "npm run compile",
+		"compile": "tsc -p ./",
+		"watch": "tsc -watch -p ./",
+		"lint": "tslint -p ./"
+	},
+	"devDependencies": {
+		"@types/node": "^6.0.40",
+		"@types/vscode": "^1.33.0",
+		"tslint": "^5.16.0",
+		"typescript": "^3.5.1"
+	}
+}
diff --git a/extension-terminal-sample/src/extension.ts b/extension-terminal-sample/src/extension.ts
new file mode 100644
index 00000000..b4fe75e4
--- /dev/null
+++ b/extension-terminal-sample/src/extension.ts
@@ -0,0 +1,54 @@
+'use strict';
+
+import * as vscode from 'vscode';
+
+export function activate(context: vscode.ExtensionContext) {
+	context.subscriptions.push(vscode.commands.registerCommand('extensionTerminalSample.create', () => {
+		const writeEmitter = new vscode.EventEmitter<string>();
+		let line = '';
+		const pty = {
+			onDidWrite: writeEmitter.event,
+			open: () => writeEmitter.fire('Type and press enter to echo the text\r\n\r\n'),
+			close: () => {},
+			handleInput: (data: string) => {
+				if (data === '\r') { // Enter
+					writeEmitter.fire(`\r\necho: "${colorText(line)}"\r\n\n`);
+					line = '';
+					return;
+				}
+				if (data === '\x7f') { // Backspace
+					if (line.length === 0) {
+						return;
+					}
+					line = line.substr(0, line.length - 1);
+					// Move cursor backward
+					writeEmitter.fire('\x1b[D');
+					// Delete character
+					writeEmitter.fire('\x1b[P');
+					return;
+				}
+				line += data;
+				writeEmitter.fire(data);
+			}
+		};
+		const terminal = (<any>vscode.window).createTerminal({ name: `My Extension REPL`, pty });
+		terminal.show();
+	}));
+}
+
+function colorText(text: string): string {
+	let output = '';
+	let colorIndex = 1;
+	for (let i = 0; i < text.length; i++) {
+		const char = text.charAt(i);
+		if (char === ' ' || char === '\r' || char === '\n') {
+			output += char;
+		} else {
+			output += `\x1b[3${colorIndex++}m${text.charAt(i)}\x1b[0m`;
+			if (colorIndex > 6) {
+				colorIndex = 1;
+			}
+		}
+	}
+	return output;
+}
\ No newline at end of file
diff --git a/extension-terminal-sample/tsconfig.json b/extension-terminal-sample/tsconfig.json
new file mode 100644
index 00000000..4ce52747
--- /dev/null
+++ b/extension-terminal-sample/tsconfig.json
@@ -0,0 +1,11 @@
+{
+	"compilerOptions": {
+		"module": "commonjs",
+		"target": "es6",
+		"outDir": "out",
+		"sourceMap": true,
+		"strict": true,
+		"rootDir": "src"
+	},
+	"exclude": ["node_modules", ".vscode-test"]
+}
diff --git a/extension-terminal-sample/tslint.json b/extension-terminal-sample/tslint.json
new file mode 100644
index 00000000..0ab0ca6e
--- /dev/null
+++ b/extension-terminal-sample/tslint.json
@@ -0,0 +1,6 @@
+{
+	"rules": {
+		"indent": [true, "tabs"],
+		"semicolon": [true, "always"]
+	}
+}
\ No newline at end of file