pytest discovery does not use specified environment

[wdawson]

Type: Bug

Behaviour

In a monorepo with a Python project in a subdirectory that has its own venv, the Python extension fails to discover tests because the pytest module cannot be found. This appears to be because the test discovery process is attempting to use the system Python interpreter instead of the one specified and activated in the extensions.

Based on the output logs (see Diagnostic Data below), I suspect this is caused by some sort of race between the Environments extension and the Python extension, but I am not sure.

I would have expected test discovery to use the environment specified in each project and aggregate them, but it appears to use only the root-level project and error when it fails.

Steps to reproduce:

1. Have some system python installed and available on your PATH WITHOUT pytest installed
2. Clone the example repo
3. Create a python environment in the apps/example-py directory (e.g. cd apps/example-py && uv sync)
4. Install the Python extension and Python Environments extension (and opt-in to the latter)
5. Open a python file like main.py from the repo in the editor
6. Ensure you see the selected interpreter as the venv one — you may need to configure the apps/example-py directory as a Python Project for the environments extension, though that should be taken care of in the settings.json
7. Expected test panel loads correctly | Actual error logs

Environments

Diagnostic data

Output for Python in the Output panel (View→Output, change the drop-down the upper-right of the Output panel to Python)

2026-01-08 09:32:24.724 [info] Native locator: Refresh started
2026-01-08 09:32:24.801 [info] > pyenv which python
2026-01-08 09:32:24.801 [info] cwd: .
2026-01-08 09:32:24.858 [info] Active interpreter [/Users/wils/dev/monorepo-example]:  /Users/wils/dev/monorepo-example/apps/example-py/.venv/bin/python
2026-01-08 09:32:24.866 [info] Native locator: Refresh finished in 142 ms
2026-01-08 09:32:24.997 [info] Active interpreter [/Users/wils/dev/monorepo-example]:  /opt/homebrew/bin/python3
2026-01-08 09:32:24.997 [info] Editor support is inactive since language server is set to None.
2026-01-08 09:32:25.091 [info] Environment variables set for pytest discovery: PYTHONPATH=/Users/wils/.vscode/extensions/ms-python.python-2025.20.1-darwin-arm64/python_files, TEST_RUN_PIPE=/var/folders/bc/h0znscsx3xlf1qhy1sd73hhc0000gn/T/python-test-discovery-040a5a86b8a624012118
2026-01-08 09:32:25.091 [info] Using environment extension for pytest discovery in workspace /Users/wils/dev/monorepo-example
2026-01-08 09:32:25.092 [info] Started pytest discovery subprocess (environment extension) for workspace /Users/wils/dev/monorepo-example
2026-01-08 09:32:25.096 [info] Editor support is inactive since language server is set to None.
2026-01-08 09:32:25.096 [info] Editor support is inactive since language server is set to None.
2026-01-08 09:32:25.368 [info] Active interpreter [/Users/wils/dev/monorepo-example]:  /Users/wils/dev/monorepo-example/apps/example-py/.venv/bin/python
2026-01-08 09:32:25.369 [error] Test discovery already in progress, not starting a new one.
2026-01-08 09:32:25.390 [error] /opt/homebrew/opt/python@3.14/bin/python3.14: No module named pytest

2026-01-08 09:32:25.394 [error] pytest discovery failed with exit code 1 and signal null for workspace /Users/wils/dev/monorepo-example. Creating error payload.
2026-01-08 09:32:25.394 [error] pytest test discovery error for workspace:  /Users/wils/dev/monorepo-example 
  
 The python test process was terminated before it could exit on its own, the process errored with: Code: 1, Signal: null for workspace /Users/wils/dev/monorepo-example
2026-01-08 09:32:25.394 [info] Pytest discovery completed for workspace /Users/wils/dev/monorepo-example
2026-01-08 09:34:03.303 [info] Editor support is inactive since language server is set to None.
2026-01-08 09:34:03.550 [error] Unable to find workspace for given file

Extension version: 2025.20.1
VS Code version: Code 1.107.1 (Universal) (994fd12f8d3a5aa16f17d42c041e5809167e845a, 2025-12-17T14:15:14.850Z)
OS version: Darwin arm64 24.6.0
Modes:

• Python version (& distribution if applicable, e.g. Anaconda): 3.14.2.final.0
• Type of virtual environment used (e.g. conda, venv, virtualenv, etc.): System
• Value of the python.languageServer setting: None

User Settings

languageServer: "None"

testing
• pytestArgs: "<placeholder>"
• pytestEnabled: true

Installed Extensions

Extension Name	Extension Id	Version
ayu	tea	1.1.7
better-kill-ring	wda	1.0.0
biome	bio	1.6.2
code-spell-checker	str	4.4.0
copilot-chat	Git	0.35.3
debugpy	ms-	2025.18.0
EditorConfig	Edi	0.17.4
js-debug	ms-	1.105.0
js-debug-companion	ms-	1.1.3
makefile-tools	ms-	0.12.17
prettier-vscode	esb	11.0.2
python	ms-	2025.20.1
ruff	cha	2025.32.0
strict-whitespace	sid	0.2.0
ty	ast	2026.2.0
vscode-js-profile-table	ms-	1.0.10
vscode-python-envs	ms-	1.14.0
vscode-yaml	red	1.19.1

System Info

Item	Value
CPUs	Apple M4 Max (14 x 2400)
GPU Status	2d_canvas: enabled direct_rendering_display_compositor: disabled_off_ok gpu_compositing: enabled multiple_raster_threads: enabled_on opengl: enabled_on rasterization: enabled raw_draw: disabled_off_ok skia_graphite: enabled_on trees_in_viz: disabled_off video_decode: enabled video_encode: enabled webgl: enabled webgl2: enabled webgpu: enabled webnn: disabled_off
Load (avg)	4, 4, 4
Memory (System)	36.00GB (0.07GB free)
Process Argv	--crash-reporter-id 4f906965-5506-45c9-b6ac-f758854435af
Screen Reader	no
VM	0%

A/B Experiments

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binariesv615:30325510
nativeloc1:31344060
dwcopilot:31170013
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e5gg6876:31282496
pythonrdcb7:31342333
6518g693:31436602
aj953862:31281341
b6b4d950:31327385
6abeh943:31336334
envsdeactivate2:31353495
cloudbuttont:31379625
3efgi100_wstrepl:31403338
use-responses-api:31390855
anonusage:31403420
je187915:31401257
ec5jj548:31422691
terminalsuggestenabled:31431119
cmp-ext-treat:31426748
cp_cls_c_966_ss:31442353
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3gif2411:31435631
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ge8j1254_inline_auto_hint_haiku:31431912
a5gib710:31434435
5j92g670_sonnet:31434465
no_request_with_suggest:31435826
rename_enabled:31436409
7a04d226_do_not_restore_last_panel_session:31438103
anthropic_thinking_t:31432745
cp_cls_t_1081:31443828
copilot-nes-oct-trt:31432596
nes-jump-on-with-edit:31442062
nes-slash-models-on:31441832
nes-set-to-on:31441941
a43f0576c:31442824

[eleanorjboyd]

Hi! Thank you for the detailed report! Right now the testing infra doesn't use the python envs api and I am adding that this month (fingers crossed)! Will use this issue for tracking since the other one is in the python envs repo