[BUG] Claude code terminal chat error in VSCode

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

I am getting the same issue while trying to run Claude in VSCode terminal chat. I need fix for this ASAP. Please find below error

Error: Claude Code on Windows requires git-bash (https://git-scm.com/downloads/win). If installed but not in PATH, set environment variable pointing to your bash.exe, similar to: CLAUDE_CODE_GIT_BASH_PATH=C:\Program Files\Git\bin\bash.exe
View output logs · Troubleshooting resources

What Should Happen?

Claude should allow to build prompt in VSCode for the project

Error Messages/Logs

2026-03-24 10:15:59.895 [info] AuthManager initialized
2026-03-24 10:15:59.895 [info] Claude code extension is now active?
2026-03-24 10:15:59.895 [info] MCP Server running on port 17292 (localhost only)
2026-03-24 10:50:55.180 [info] Getting authentication status
2026-03-24 10:50:55.180 [info] OAuth tokens found in secure storage
2026-03-24 10:50:55.180 [info] AuthManager initialized
2026-03-24 10:50:57.214 [info] Received message from webview: {"type":"request","requestId":"bfo85ciw8qj","request":{"type":"init"}}
2026-03-24 10:50:57.294 [info] Getting authentication status
2026-03-24 10:50:57.294 [info] OAuth tokens found in secure storage
2026-03-24 10:50:57.532 [info] Getting authentication status
2026-03-24 10:50:57.532 [info] OAuth tokens found in secure storage
2026-03-24 10:50:57.536 [info] Received message from webview: {"type":"request","requestId":"u6n5ns7whn8","request":{"type":"get_claude_state"}}
2026-03-24 10:50:58.291 [info] Loading config cache by launching Claude...
2026-03-24 10:50:58.291 [error] Failed to load config cache: Error: Claude Code on Windows requires git-bash (https://git-scm.com/downloads/win). If installed but not in PATH, set environment variable pointing to your bash.exe, similar to: CLAUDE_CODE_GIT_BASH_PATH=C:\Program Files\Git\bin\bash.exe
2026-03-24 10:50:58.291 [error] Error processing client request: Error: Claude Code on Windows requires git-bash (https://git-scm.com/downloads/win). If installed but not in PATH, set environment variable pointing to your bash.exe, similar to: CLAUDE_CODE_GIT_BASH_PATH=C:\Program Files\Git\bin\bash.exe
2026-03-24 10:50:58.292 [info] Received message from webview: {"type":"request","requestId":"a9u35sulpqg","request":{"type":"get_current_selection"}}
2026-03-24 10:50:58.293 [info] Received message from webview: {"type":"request","requestId":"z6m34h4gqar","request":{"type":"get_asset_uris"}}
2026-03-24 10:50:58.295 [info] Received message from webview: {"type":"request","requestId":"bsppsjbb655","request":{"type":"list_sessions_request"}}
2026-03-24 10:50:58.297 [info] Received message from webview: {"type":"launch_claude","channelId":"7cyd76ygld6","cwd":"c:\\Users\\Baluch\\load_test","model":"default","permissionMode":"default","thinkingLevel":"default_on"}
2026-03-24 10:50:58.955 [info] Launching Claude on channel: 7cyd76ygld6
2026-03-24 10:50:58.955 [info] Closing Claude on channel: 7cyd76ygld6
2026-03-24 10:50:58.955 [error] Error spawning Claude (on channel 7cyd76ygld6): Error: Claude Code on Windows requires git-bash (https://git-scm.com/downloads/win). If installed but not in PATH, set environment variable pointing to your bash.exe, similar to: CLAUDE_CODE_GIT_BASH_PATH=C:\Program Files\Git\bin\bash.exe
2026-03-24 10:50:58.956 [info] Received message from webview: {"type":"interrupt_claude","channelId":"u6n5ns7whn8"}
2026-03-24 10:50:58.957 [warning] Channel not found: u6n5ns7whn8

Steps to Reproduce

1. Install Claude extension in VScode
2. Set the Environment PATH
3. Navigate to the Claude terminal chat
4. Error pops up "Error: Claude Code on Windows requires git-bash (https://git-scm.com/downloads/win). If installed but not in PATH, set environment variable pointing to your bash.exe, similar to: CLAUDE_CODE_GIT_BASH_PATH=C:\Program Files\Git\bin\bash.exe

View output logs · Troubleshooting resources"

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.81

Claude Code Version

2.1.81

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

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<img width="954" height="482" alt="Image" src="https://github.com/user-attachments/assets/9449eb8a-3d9b-4dde-ba09-a56913301b9b" />