diff --git a/src/client/common/utils/localize.ts b/src/client/common/utils/localize.ts
index 7b7560c74e05..178e7f263761 100644
--- a/src/client/common/utils/localize.ts
+++ b/src/client/common/utils/localize.ts
@@ -218,7 +218,7 @@ export namespace Interpreters {
         '{0} environment was successfully activated, even though {1} indicator may not be present in the terminal prompt. [Learn more](https://aka.ms/vscodePythonTerminalActivation).',
     );
     export const shellIntegrationEnvVarCollectionDescription = l10n.t(
-        'Enables `python.terminal.shellIntegration.enabled` by modifying `PYTHONSTARTUP` and `PYTHON_BASIC_REPL`',
+        'Enables `python.terminal.shellIntegration.enabled` by modifying `PYTHONSTARTUP`',
     );
     export const shellIntegrationDisabledEnvVarCollectionDescription = l10n.t(
         'Disables `python.terminal.shellIntegration.enabled` by unsetting `PYTHONSTARTUP` and `PYTHON_BASIC_REPL`',
diff --git a/src/client/terminals/pythonStartup.ts b/src/client/terminals/pythonStartup.ts
index b6f68c860b46..46297978938c 100644
--- a/src/client/terminals/pythonStartup.ts
+++ b/src/client/terminals/pythonStartup.ts
@@ -22,8 +22,6 @@ async function applyPythonStartupSetting(context: ExtensionContext): Promise<voi
         const sourcePath = path.join(EXTENSION_ROOT_DIR, 'python_files', 'pythonrc.py');
         await copy(Uri.file(sourcePath), destPath, { overwrite: true });
         context.environmentVariableCollection.replace('PYTHONSTARTUP', destPath.fsPath);
-        // When shell integration is enabled, we disable PyREPL from cpython.
-        context.environmentVariableCollection.replace('PYTHON_BASIC_REPL', '1');
         context.environmentVariableCollection.description = new MarkdownString(
             Interpreters.shellIntegrationEnvVarCollectionDescription,
         );
diff --git a/src/test/terminals/shellIntegration/pythonStartup.test.ts b/src/test/terminals/shellIntegration/pythonStartup.test.ts
index 833a4f29e972..16f45fb26a40 100644
--- a/src/test/terminals/shellIntegration/pythonStartup.test.ts
+++ b/src/test/terminals/shellIntegration/pythonStartup.test.ts
@@ -135,15 +135,25 @@ suite('Terminal - Shell Integration with PYTHONSTARTUP', () => {
         globalEnvironmentVariableCollection.verify((c) => c.delete('PYTHONSTARTUP'), TypeMoq.Times.once());
     });
 
-    test('PYTHON_BASIC_REPL is set when shell integration is enabled', async () => {
+    test('PYTHON_BASIC_REPL is not set when shell integration is enabled', async () => {
         pythonConfig.setup((p) => p.get('terminal.shellIntegration.enabled')).returns(() => true);
+
         await registerPythonStartup(context.object);
+
         globalEnvironmentVariableCollection.verify(
-            (c) => c.replace('PYTHON_BASIC_REPL', '1', TypeMoq.It.isAny()),
-            TypeMoq.Times.once(),
+            (c) => c.replace('PYTHON_BASIC_REPL', TypeMoq.It.isAny(), TypeMoq.It.isAny()),
+            TypeMoq.Times.never(),
         );
     });
 
+    test('PYTHON_BASIC_REPL is deleted when shell integration is disabled', async () => {
+        pythonConfig.setup((p) => p.get('terminal.shellIntegration.enabled')).returns(() => false);
+
+        await registerPythonStartup(context.object);
+
+        globalEnvironmentVariableCollection.verify((c) => c.delete('PYTHON_BASIC_REPL'), TypeMoq.Times.once());
+    });
+
     test('Ensure registering terminal link calls registerTerminalLinkProvider', async () => {
         const registerTerminalLinkProviderStub = sinon.stub(
             pythonStartupLinkProvider,