diff --git a/src/client/pythonEnvironments/common/environmentIdentifier.ts b/src/client/pythonEnvironments/common/environmentIdentifier.ts
index 4bc759869423..619343196904 100644
--- a/src/client/pythonEnvironments/common/environmentIdentifier.ts
+++ b/src/client/pythonEnvironments/common/environmentIdentifier.ts
@@ -3,6 +3,7 @@
 
 import { isCondaEnvironment } from '../discovery/locators/services/condaLocator';
 import { isVenvEnvironment } from '../discovery/locators/services/venvLocator';
+import { isVirtualenvEnvironment } from '../discovery/locators/services/virtualenvLocator';
 import { isWindowsStoreEnvironment } from '../discovery/locators/services/windowsStoreLocator';
 import { EnvironmentType } from '../info';
 
@@ -42,6 +43,10 @@ export async function identifyEnvironment(interpreterPath: string): Promise<Envi
         return EnvironmentType.Venv;
     }
 
+    if (await isVirtualenvEnvironment(interpreterPath)) {
+        return EnvironmentType.VirtualEnv;
+    }
+
     // additional identifiers go here
 
     return EnvironmentType.Unknown;
diff --git a/src/client/pythonEnvironments/discovery/locators/services/virtualenvLocator.ts b/src/client/pythonEnvironments/discovery/locators/services/virtualenvLocator.ts
new file mode 100644
index 000000000000..056fd3a97dab
--- /dev/null
+++ b/src/client/pythonEnvironments/discovery/locators/services/virtualenvLocator.ts
@@ -0,0 +1,23 @@
+// Copyright (c) Microsoft Corporation. All rights reserved.
+// Licensed under the MIT License.
+
+import * as fsapi from 'fs-extra';
+import * as path from 'path';
+
+/**
+ * Checks if the given interpreter belongs to a virtualenv based environment.
+ * @param {string} interpreterPath: Absolute path to the python interpreter.
+ * @returns {boolean} : Returns true if the interpreter belongs to a virtualenv environment.
+ */
+export async function isVirtualenvEnvironment(interpreterPath:string): Promise<boolean> {
+    // Check if there are any activate.* files in the same directory as the interpreter.
+    //
+    // env
+    // |__ activate, activate.*  <--- check if any of these files exist
+    // |__ python  <--- interpreterPath
+    const directory = path.dirname(interpreterPath);
+    const files = await fsapi.readdir(directory);
+    const regex = /^activate(\.([A-z]|\d)+)?$/;
+
+    return files.find((file) => regex.test(file)) !== undefined;
+}
diff --git a/src/test/pythonEnvironments/common/environmentIdentifier.unit.test.ts b/src/test/pythonEnvironments/common/environmentIdentifier.unit.test.ts
index f501c461374d..98e2f2f53672 100644
--- a/src/test/pythonEnvironments/common/environmentIdentifier.unit.test.ts
+++ b/src/test/pythonEnvironments/common/environmentIdentifier.unit.test.ts
@@ -109,4 +109,21 @@ suite('Environment Identifier', () => {
             assert.deepEqual(envType, EnvironmentType.Venv);
         });
     });
+
+    suite('Virtualenv', () => {
+        const activateFiles = [
+            { folder: 'virtualenv1', file: 'activate' },
+            { folder: 'virtualenv2', file: 'activate.sh' },
+            { folder: 'virtualenv3', file: 'activate.ps1' },
+        ];
+
+        activateFiles.forEach(({ folder, file }) => {
+            test(`Folder contains ${file}`, async () => {
+                const interpreterPath = path.join(TEST_LAYOUT_ROOT, folder, 'bin', 'python');
+                const envType = await identifyEnvironment(interpreterPath);
+
+                assert.deepStrictEqual(envType, EnvironmentType.VirtualEnv);
+            });
+        });
+    });
 });
diff --git a/src/test/pythonEnvironments/common/envlayouts/virtualenv1/bin/activate b/src/test/pythonEnvironments/common/envlayouts/virtualenv1/bin/activate
new file mode 100644
index 000000000000..e69de29bb2d1
diff --git a/src/test/pythonEnvironments/common/envlayouts/virtualenv2/bin/activate.sh b/src/test/pythonEnvironments/common/envlayouts/virtualenv2/bin/activate.sh
new file mode 100644
index 000000000000..e69de29bb2d1
diff --git a/src/test/pythonEnvironments/common/envlayouts/virtualenv3/bin/activate.ps1 b/src/test/pythonEnvironments/common/envlayouts/virtualenv3/bin/activate.ps1
new file mode 100644
index 000000000000..e69de29bb2d1
diff --git a/src/test/pythonEnvironments/discovery/locators/virtualenvLocator.unit.test.ts b/src/test/pythonEnvironments/discovery/locators/virtualenvLocator.unit.test.ts
new file mode 100644
index 000000000000..a16a5c2139c9
--- /dev/null
+++ b/src/test/pythonEnvironments/discovery/locators/virtualenvLocator.unit.test.ts
@@ -0,0 +1,34 @@
+// Copyright (c) Microsoft Corporation. All rights reserved.
+// Licensed under the MIT License.
+
+import * as assert from 'assert';
+import * as fsapi from 'fs-extra';
+import * as path from 'path';
+import * as sinon from 'sinon';
+import { isVirtualenvEnvironment } from '../../../../client/pythonEnvironments/discovery/locators/services/virtualenvLocator';
+
+suite('Virtualenv Locator Tests', () => {
+    const envRoot = path.join('path', 'to', 'env');
+    const interpreter = path.join(envRoot, 'python');
+    let readDirStub: sinon.SinonStub;
+
+    setup(() => {
+        readDirStub = sinon.stub(fsapi, 'readdir');
+    });
+
+    teardown(() => {
+        readDirStub.restore();
+    });
+
+    test('Interpreter folder contains an activate file', async () => {
+        readDirStub.resolves(['activate', 'python']);
+
+        assert.ok(await isVirtualenvEnvironment(interpreter));
+    });
+
+    test('Interpreter folder does not contain any activate.* files', async () => {
+        readDirStub.resolves(['mymodule', 'python']);
+
+        assert.strictEqual(await isVirtualenvEnvironment(interpreter), false);
+    });
+});