diff --git a/vscode-extension/CHANGELOG.md b/vscode-extension/CHANGELOG.md
index 06af881d646..58812611bf2 100644
--- a/vscode-extension/CHANGELOG.md
+++ b/vscode-extension/CHANGELOG.md
@@ -4,6 +4,10 @@ All notable changes to the "devbox" extension will be documented in this file.
 
 Check [Keep a Changelog](http://keepachangelog.com/) for recommendations on how to structure this file.
 
+## [0.1.9]
+
+- Added `devbox.runInitHookOnReopen` setting (off by default) to run the project's `init_hook` and include its environment variables when reopening in the Devbox environment.
+
 ## [0.1.8]
 
 - Added support "Reopen in Devbox" feature for Windows with WSL
diff --git a/vscode-extension/README.md b/vscode-extension/README.md
index afc8884f2d2..88e95b8518a 100644
--- a/vscode-extension/README.md
+++ b/vscode-extension/README.md
@@ -46,6 +46,10 @@ No need to take any action for this feature. When writing a devbox.json, if this
 
 ---
 
+### Run init_hook on Reopen
+
+By default, `"Devbox: Reopen in Devbox Shell environment"` does not run your project's `init_hook`, so any environment variables it exports won't be present in the reopened window. Enable `devbox.runInitHookOnReopen` in extension settings to run the `init_hook` and include the variables it sets. Requires a devbox CLI version that supports `devbox integrate vscode --run-init-hook`.
+
 ### Debug Mode
 
 Enabling debug mode in extension settings will create a sequence of logs in the file: `.devbox/extension.log`. This feature only tracks the logs for `"Devbox: Reopen in Devbox Shell environment"`.
diff --git a/vscode-extension/package.json b/vscode-extension/package.json
index c4ea0ead8e3..8e5bccc876a 100644
--- a/vscode-extension/package.json
+++ b/vscode-extension/package.json
@@ -2,7 +2,7 @@
   "name": "devbox",
   "displayName": "devbox by Jetify",
   "description": "devbox integration for VSCode",
-  "version": "0.1.8",
+  "version": "0.1.9",
   "icon": "assets/icon.png",
   "repository": {
     "type": "git",
@@ -130,6 +130,11 @@
           "type": "boolean",
           "default": false,
           "description": "Enables debug mode for this extension which creates an extension.log in .devbox/ directory. Currently only works for 'Devbox: Reopen in Devbox shell environment' command."
+        },
+        "devbox.runInitHookOnReopen": {
+          "type": "boolean",
+          "default": false,
+          "description": "Run the project's init_hook when using 'Devbox: Reopen in Devbox shell environment' and include any environment variables it sets in the reopened editor. Off by default since init hooks can be slow or have side effects. Requires a devbox CLI version that supports `devbox integrate vscode --run-init-hook`."
         }
       }
     }
diff --git a/vscode-extension/src/devbox.ts b/vscode-extension/src/devbox.ts
index 2fb61a3784d..d83fe0003d2 100644
--- a/vscode-extension/src/devbox.ts
+++ b/vscode-extension/src/devbox.ts
@@ -58,7 +58,13 @@ export async function devboxReopen() {
           const debugModeFlag = workspace.getConfiguration("devbox").get("enableDebugMode");
           // name of the currently open editor
           const ideName = appNameBinaryMap[env.appName.toLocaleLowerCase()] || 'code';
-          let child = spawn(devbox, ['integrate', 'vscode', '--debugmode='+debugModeFlag, '--ide='+ideName], {
+          const args = ['integrate', 'vscode', '--debugmode='+debugModeFlag, '--ide='+ideName];
+          // Only pass --run-init-hook when enabled so older CLIs that don't
+          // know the flag keep working with the default settings.
+          if (workspace.getConfiguration("devbox").get("runInitHookOnReopen")) {
+            args.push('--run-init-hook');
+          }
+          let child = spawn(devbox, args, {
             cwd: workingDir.path,
             stdio: [0, 1, 2, 'ipc']
           });