diff --git a/src/test/features/terminal/shellStartupSetupHandlers.unit.test.ts b/src/test/features/terminal/shellStartupSetupHandlers.unit.test.ts
new file mode 100644
index 00000000..05f22aa2
--- /dev/null
+++ b/src/test/features/terminal/shellStartupSetupHandlers.unit.test.ts
@@ -0,0 +1,181 @@
+import * as assert from 'assert';
+import * as sinon from 'sinon';
+import { Disposable, Progress } from 'vscode';
+
+import * as commandApi from '../../../common/command.api';
+import { Common } from '../../../common/localize';
+import * as windowApis from '../../../common/window.apis';
+import {
+    cleanupStartupScripts,
+    handleSettingUpShellProfile,
+} from '../../../features/terminal/shellStartupSetupHandlers';
+import { ShellScriptEditState, ShellStartupScriptProvider } from '../../../features/terminal/shells/startupProvider';
+import * as terminalUtils from '../../../features/terminal/utils';
+
+class TestStartupProvider implements ShellStartupScriptProvider {
+    public readonly name: string;
+    public readonly shellType: string;
+
+    public setupResult: ShellScriptEditState = ShellScriptEditState.Edited;
+    public teardownResult: ShellScriptEditState = ShellScriptEditState.Edited;
+
+    public setupCalls = 0;
+    public teardownCalls = 0;
+
+    constructor(name: string, shellType: string) {
+        this.name = name;
+        this.shellType = shellType;
+    }
+
+    async isSetup(): Promise<never> {
+        throw new Error('Not used in these unit tests');
+    }
+
+    async setupScripts(): Promise<ShellScriptEditState> {
+        this.setupCalls += 1;
+        return this.setupResult;
+    }
+
+    async teardownScripts(): Promise<ShellScriptEditState> {
+        this.teardownCalls += 1;
+        return this.teardownResult;
+    }
+
+    async clearCache(): Promise<void> {
+        // Not needed
+    }
+}
+
+suite('Shell Startup Setup Handlers', () => {
+    teardown(() => sinon.restore());
+
+    test('handleSettingUpShellProfile: when user accepts and all providers edit, callback(true) is reported', async () => {
+        sinon.stub(windowApis, 'showInformationMessage').resolves(Common.yes);
+        sinon.stub(windowApis, 'withProgress').callsFake(async (_opts, task) => {
+            const progress: Progress<{ message?: string; increment?: number }> = { report: () => undefined };
+            const token = {
+                isCancellationRequested: false,
+                onCancellationRequested: () => new Disposable(() => undefined),
+            };
+            return task(progress, token);
+        });
+
+        const showError = sinon.stub(windowApis, 'showErrorMessage');
+        const callback = sinon.stub();
+
+        const p1 = new TestStartupProvider('bash', 'bash');
+        const p2 = new TestStartupProvider('zsh', 'zsh');
+
+        await handleSettingUpShellProfile([p1, p2], callback);
+
+        // allow setImmediate prompt scheduling to run
+        await new Promise<void>((resolve) => setImmediate(resolve));
+
+        assert.strictEqual(showError.called, false);
+        assert.strictEqual(callback.callCount, 2);
+        assert.deepStrictEqual(
+            callback.args.map((a) => a[1]),
+            [true, true],
+        );
+    });
+
+    test('handleSettingUpShellProfile: when user accepts but a provider fails, callback(false) and error prompt shown', async () => {
+        sinon.stub(windowApis, 'showInformationMessage').resolves(Common.yes);
+        sinon.stub(windowApis, 'withProgress').callsFake(async (_opts, task) => {
+            const progress: Progress<{ message?: string; increment?: number }> = { report: () => undefined };
+            const token = {
+                isCancellationRequested: false,
+                onCancellationRequested: () => new Disposable(() => undefined),
+            };
+            return task(progress, token);
+        });
+
+        const showError = sinon.stub(windowApis, 'showErrorMessage').resolves(undefined);
+        const callback = sinon.stub();
+
+        const p1 = new TestStartupProvider('bash', 'bash');
+        const p2 = new TestStartupProvider('zsh', 'zsh');
+        p2.setupResult = ShellScriptEditState.NotEdited;
+
+        await handleSettingUpShellProfile([p1, p2], callback);
+
+        await new Promise<void>((resolve) => setImmediate(resolve));
+
+        assert.strictEqual(showError.called, true);
+        assert.strictEqual(callback.callCount, 2);
+        assert.deepStrictEqual(
+            callback.args.map((a) => a[1]),
+            [false, false],
+        );
+    });
+
+    test('handleSettingUpShellProfile: if user clicks "View Logs" on error, executes command', async () => {
+        sinon.stub(windowApis, 'showInformationMessage').resolves(Common.yes);
+        sinon.stub(windowApis, 'withProgress').callsFake(async (_opts, task) => {
+            const progress: Progress<{ message?: string; increment?: number }> = { report: () => undefined };
+            const token = {
+                isCancellationRequested: false,
+                onCancellationRequested: () => new Disposable(() => undefined),
+            };
+            return task(progress, token);
+        });
+
+        sinon.stub(windowApis, 'showErrorMessage').resolves(Common.viewLogs);
+        const exec = sinon.stub(commandApi, 'executeCommand').resolves();
+
+        const p1 = new TestStartupProvider('bash', 'bash');
+        p1.setupResult = ShellScriptEditState.NotEdited;
+
+        await handleSettingUpShellProfile([p1], () => undefined);
+
+        await new Promise<void>((resolve) => setImmediate(resolve));
+
+        assert.strictEqual(exec.calledWith('python-envs.viewLogs'), true);
+    });
+
+    test('handleSettingUpShellProfile: when user declines, does not run setup and switches to command', async () => {
+        sinon.stub(windowApis, 'showInformationMessage').resolves(undefined);
+        const setAuto = sinon.stub(terminalUtils, 'setAutoActivationType').resolves();
+
+        const p1 = new TestStartupProvider('bash', 'bash');
+        const p2 = new TestStartupProvider('zsh', 'zsh');
+
+        await handleSettingUpShellProfile([p1, p2], () => undefined);
+
+        assert.strictEqual(p1.setupCalls, 0);
+        assert.strictEqual(p2.setupCalls, 0);
+        // When user declines, it switches to command activation
+        assert.strictEqual(setAuto.calledWith(terminalUtils.ACT_TYPE_COMMAND), true);
+    });
+
+    test('cleanupStartupScripts: always calls teardown on all providers', async () => {
+        sinon.stub(windowApis, 'showInformationMessage').resolves(undefined);
+        sinon.stub(terminalUtils, 'getAutoActivationType').returns(terminalUtils.ACT_TYPE_COMMAND);
+
+        const setAuto = sinon.stub(terminalUtils, 'setAutoActivationType').resolves();
+
+        const p1 = new TestStartupProvider('bash', 'bash');
+        const p2 = new TestStartupProvider('zsh', 'zsh');
+
+        await cleanupStartupScripts([p1, p2]);
+
+        assert.strictEqual(p1.teardownCalls, 1);
+        assert.strictEqual(p2.teardownCalls, 1);
+        assert.strictEqual(setAuto.called, false);
+    });
+
+    test('cleanupStartupScripts: switches to command when current activation type is shellStartup', async () => {
+        sinon.stub(windowApis, 'showInformationMessage').resolves(undefined);
+        sinon.stub(terminalUtils, 'getAutoActivationType').returns(terminalUtils.ACT_TYPE_SHELL);
+
+        const setAuto = sinon.stub(terminalUtils, 'setAutoActivationType').resolves();
+
+        const p1 = new TestStartupProvider('bash', 'bash');
+
+        await cleanupStartupScripts([p1]);
+
+        await new Promise<void>((resolve) => setImmediate(resolve));
+
+        assert.strictEqual(setAuto.calledWith(terminalUtils.ACT_TYPE_COMMAND), true);
+    });
+});