diff --git a/lua/lazyvim/config/options.lua b/lua/lazyvim/config/options.lua
index a9b3bec8..bd43e123 100644
--- a/lua/lazyvim/config/options.lua
+++ b/lua/lazyvim/config/options.lua
@@ -12,6 +12,12 @@ vim.g.autoformat = true
 -- * a function with signature `function(buf) -> string|string[]`
 vim.g.root_spec = { "lsp", { ".git", "lua" }, "cwd" }
 
+-- Optionally setup the terminal to use
+-- This sets `vim.o.shell` and does some additional configuration for:
+-- * pwsh
+-- * powershell
+-- LazyVim.terminal.setup("pwsh")
+
 local opt = vim.opt
 
 opt.autowrite = true -- Enable auto write
diff --git a/lua/lazyvim/util/terminal.lua b/lua/lazyvim/util/terminal.lua
index 7787615b..c61c3664 100644
--- a/lua/lazyvim/util/terminal.lua
+++ b/lua/lazyvim/util/terminal.lua
@@ -9,6 +9,37 @@ local M = setmetatable({}, {
 ---@type table<string,LazyFloat>
 local terminals = {}
 
+---@param shell? string
+function M.setup(shell)
+  vim.o.shell = shell or vim.o.shell
+
+  -- Special handling for pwsh
+  if shell == "pwsh" or shell == "powershell" then
+    -- Check if 'pwsh' is executable and set the shell accordingly
+    if vim.fn.executable("pwsh") == 1 then
+      vim.o.shell = "pwsh"
+    elseif vim.fn.executable("powershell") == 1 then
+      vim.o.shell = "powershell"
+    else
+      return LazyVim.error("No powershell executable found")
+    end
+
+    -- Setting shell command flags
+    vim.o.shellcmdflag =
+      "-NoLogo -ExecutionPolicy RemoteSigned -Command [Console]::InputEncoding=[Console]::OutputEncoding=[System.Text.UTF8Encoding]::new();$PSDefaultParameterValues['Out-File:Encoding']='utf8';"
+
+    -- Setting shell redirection
+    vim.o.shellredir = '2>&1 | %{ "$_" } | Out-File %s; exit $LastExitCode'
+
+    -- Setting shell pipe
+    vim.o.shellpipe = '2>&1 | %{ "$_" } | Tee-Object %s; exit $LastExitCode'
+
+    -- Setting shell quote options
+    vim.o.shellquote = ""
+    vim.o.shellxquote = ""
+  end
+end
+
 ---@class LazyTermOpts: LazyCmdOptions
 ---@field interactive? boolean
 ---@field esc_esc? boolean