diff --git a/CHANGELOG.md b/CHANGELOG.md
index 62ffb38..3afa1d3 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -4,7 +4,10 @@
 ## Unreleased
 
 ### New features
-- Add `FS_NOTIFY_ERRORS` flag to display notifications for FS errors (#282)
+- Added `FS_NOTIFY_ERRORS` flag to display notifications for FS errors (#282)
+- Added a `${workingDirectory}` variable that gets replaced during terminal creation (#323)
+  - This applies to both the `Terminal Command` setting and `ssh-shell` task type
+  - See the issue (#323) for why this got added and how you can use it
 
 ### Changes
 - Small improvements to Dropdown(WithInput) UI components
diff --git a/src/pseudoTerminal.ts b/src/pseudoTerminal.ts
index 6ea9d43..077949f 100644
--- a/src/pseudoTerminal.ts
+++ b/src/pseudoTerminal.ts
@@ -205,7 +205,8 @@ export async function createTerminal(options: TerminalOptions): Promise<SSHPseud
                     commands.unshift(`cd ${workingDirectory}`);
                 }
                 const pseudoTtyOptions: PseudoTtyOptions = { ...PSEUDO_TTY_OPTIONS, cols: dims?.columns, rows: dims?.rows };
-                const cmd = joinCommands(commands, separator)!;
+                let cmd = joinCommands(commands, separator)!;
+                cmd = cmd.replace(/\${workingDirectory}/g, workingDirectory || '');
                 Logging.debug(`Starting shell for ${connection.actualConfig.name}: ${cmd}`);
                 const channel = await toPromise<ClientChannel | undefined>(cb => client.exec(cmd, { pty: pseudoTtyOptions }, cb));
                 if (!channel) throw new Error('Could not create remote terminal');
diff --git a/src/utils.ts b/src/utils.ts
index 0fd2f1a..c6b9597 100644
--- a/src/utils.ts
+++ b/src/utils.ts
@@ -80,7 +80,7 @@ export function validatePort(port: string | number): number {
 
 const CLEAN_BASH_VALUE_REGEX = /^[\w-/\\]+$/;
 /** Based on way 1 in https://stackoverflow.com/a/20053121 */
-function escapeBashValue(value: string) {
+export function escapeBashValue(value: string) {
     if (CLEAN_BASH_VALUE_REGEX.test(value)) return value;
     return `'${value.replace(/'/g, `'\\''`)}'`;
 }