diff --git a/nix/oci/tanzu/default.nix b/nix/oci/tanzu/default.nix
index c613d5f3..594a8af6 100644
--- a/nix/oci/tanzu/default.nix
+++ b/nix/oci/tanzu/default.nix
@@ -274,8 +274,7 @@ in
         "TERM=xterm"
         "TZ=UTC"
         "WORKDIR=/workdir"
-        "VSCODE_CONTAINER_ENV=FALSE"
-        "VSCODE_REMOTE_ENV=FALSE"
+        "ENVIRONMENT_VSCODE=none"
       ];
       WorkingDir = "/workdir";
       WorkDir = "/workdir";
diff --git a/nix/oci/tanzu/root/etc/profile.d/tanzu.sh b/nix/oci/tanzu/root/etc/profile.d/tanzu.sh
index b85806f9..14649103 100755
--- a/nix/oci/tanzu/root/etc/profile.d/tanzu.sh
+++ b/nix/oci/tanzu/root/etc/profile.d/tanzu.sh
@@ -49,7 +49,7 @@ if [[ -f "${HOME}/.config/tanzu/config.yaml" ]]; then
 fi
 
 # Make sure that the interactive parts are not run in a a VSCode remote env.
-if [[ "${VSCODE_REMOTE_ENV:-FALSE}" == "TRUE" ]]; then
+if [[ "${ENVIRONMENT_VSCODE^^}" == "REMOTE" ]]; then
 
 	echo "$(date '+%Y/%m/%d %T'): INFO: VSCode remote environment detected, skipping interactive parts." | tee -a "/tmp/vscode-remote-env.log"
 
diff --git a/nix/oci/tanzu/root/etc/skel/.bashrc b/nix/oci/tanzu/root/etc/skel/.bashrc
index 416bc3c4..09d43651 100644
--- a/nix/oci/tanzu/root/etc/skel/.bashrc
+++ b/nix/oci/tanzu/root/etc/skel/.bashrc
@@ -115,7 +115,7 @@ if ! shopt -oq posix; then
 fi
 
 # Make sure that the interactive parts are not run in a a VSCode remote env.
-if [[ ${VSCODE_REMOTE_ENV:-FALSE} == "TRUE" ]]; then
+if [[ "${ENVIRONMENT_VSCODE^^}" == "REMOTE" ]]; then
 
 	echo "$(date '+%Y/%m/%d %T'): INFO: VSCode remote environment detected, skipping interactive parts." | tee -a "/tmp/vscode-remote-env.log"
 
diff --git a/nix/oci/tanzu/root/usr/local/bin/entrypoint.sh b/nix/oci/tanzu/root/usr/local/bin/entrypoint.sh
index 0e0f8890..0d060529 100755
--- a/nix/oci/tanzu/root/usr/local/bin/entrypoint.sh
+++ b/nix/oci/tanzu/root/usr/local/bin/entrypoint.sh
@@ -8,7 +8,7 @@ fi
 /usr/bin/env bash --login -i || true
 
 # Make sure that the interactive parts are not run in a a VSCode remote env.
-if [[ "${VSCODE_REMOTE_ENV:-FALSE}" == "TRUE" ]]; then
+if [[ "${ENVIRONMENT_VSCODE^^}" == "REMOTE" ]]; then
 
 	echo "$(date '+%Y/%m/%d %T'): INFO: VSCode remote environment detected, skipping interactive parts." | tee -a "/tmp/vscode-remote-env.log"