diff --git a/src/windows/service/exe/LxssUserSession.cpp b/src/windows/service/exe/LxssUserSession.cpp
index 4b1c247..f8b066a 100644
--- a/src/windows/service/exe/LxssUserSession.cpp
+++ b/src/windows/service/exe/LxssUserSession.cpp
@@ -2678,13 +2678,20 @@ try
         std::wstring systemDirectory;
         THROW_IF_FAILED(wil::GetSystemDirectory(systemDirectory));
 
-        e["commandline"] = WideToMultiByte(std::format(
-            L"{}\\{} {} {} {} {}", systemDirectory, WSL_BINARY_NAME, WSL_DISTRIBUTION_ID_ARG, distributionIdString, WSL_CHANGE_DIRECTORY_ARG, WSL_CWD_HOME));
+        e["commandline"] =
+            WideToMultiByte(std::format(L"{}\\{} {} {}", systemDirectory, WSL_BINARY_NAME, WSL_DISTRIBUTION_ID_ARG, distributionIdString));
 
         e["name"] = WideToMultiByte(Configuration.Name);
         e["guid"] = WideToMultiByte(distributionProfileId);
         e["icon"] = WideToMultiByte(IconPath.native());
 
+        // Set default starting directory to home directory if not already specified
+        // This allows Windows Terminal to override with startingDirectory setting
+        if (e.find("startingDirectory") == e.end())
+        {
+            e["startingDirectory"] = "~";
+        }
+
         // See https://github.com/microsoft/terminal/pull/18195. Supported in terminal >= 1.23
         e["pathTranslationStyle"] = "wsl";
 
diff --git a/test/windows/UnitTests.cpp b/test/windows/UnitTests.cpp
index aabb72a..d9ffe67 100644
--- a/test/windows/UnitTests.cpp
+++ b/test/windows/UnitTests.cpp
@@ -2539,9 +2539,12 @@ Error code: Wsl/InstallDistro/WSL_E_DISTRO_NOT_FOUND
         wil::GetSystemDirectoryW(systemDir);
 
         VERIFY_ARE_EQUAL(
-            std::format("{}\\{} {} {} {} {}", systemDir, WSL_BINARY_NAME, WSL_DISTRIBUTION_ID_ARG, distroIdString, WSL_CHANGE_DIRECTORY_ARG, WSL_CWD_HOME),
+            std::format("{}\\{} {} {}", systemDir, WSL_BINARY_NAME, WSL_DISTRIBUTION_ID_ARG, distroIdString),
             launchProfile["commandline"].get<std::string>());
 
+        // Verify that startingDirectory is set to home directory
+        VERIFY_ARE_EQUAL(launchProfile["startingDirectory"].get<std::string>(), "~");
+
         auto iconLocation = wsl::shared::string::MultiByteToWide(launchProfile["icon"].get<std::string>());
         if (defaultIcon)
         {