diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminal.ts b/src/vs/workbench/parts/terminal/electron-browser/terminal.ts
index b4719ff7148..9074a99164c 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminal.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminal.ts
@@ -58,6 +58,7 @@ export interface ITerminalService {
 	focus(): TPromise<any>;
 	focusNext(): TPromise<any>;
 	focusPrevious(): TPromise<any>;
+	hide(): TPromise<any>;
 	runSelectedText(): TPromise<any>;
 	setActiveTerminal(index: number): TPromise<any>;
 	toggle(): TPromise<any>;
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminalPanel.ts b/src/vs/workbench/parts/terminal/electron-browser/terminalPanel.ts
index 9528bb889e0..66b5bd65e34 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminalPanel.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminalPanel.ts
@@ -47,7 +47,8 @@ export class TerminalPanel extends Panel {
 		if (!dimension) {
 			return;
 		}
-		if (this.terminalInstances.length > 0) {
+		let activeIndex = this.terminalService.getActiveTerminalIndex();
+		if (activeIndex !== -1 && this.terminalInstances.length > 0) {
 			this.terminalInstances[this.terminalService.getActiveTerminalIndex()].layout(dimension);
 		}
 	}
@@ -152,11 +153,14 @@ export class TerminalPanel extends Panel {
 			this.terminalInstances[index].dispose();
 			this.terminalInstances.splice(index, 1);
 		}
-		if (this.terminalInstances.length === 0) {
-			this.terminalService.toggle();
-		} else {
+		if (this.terminalInstances.length > 0) {
 			this.setActiveTerminal(this.terminalService.getActiveTerminalIndex());
 		}
+		if (this.terminalInstances.length === 0) {
+			this.terminalService.hide();
+		} else {
+			this.terminalService.focus();
+		}
 	}
 
 	private updateTheme(themeId?: string): void {
@@ -202,8 +206,9 @@ export class TerminalPanel extends Panel {
 	}
 
 	public focus(): void {
-		if (this.terminalInstances.length > 0) {
-			this.terminalInstances[this.terminalService.getActiveTerminalIndex()].focus(true);
+		let activeIndex = this.terminalService.getActiveTerminalIndex();
+		if (activeIndex !== -1 && this.terminalInstances.length > 0) {
+			this.terminalInstances[activeIndex].focus(true);
 		}
 	}
 
diff --git a/src/vs/workbench/parts/terminal/electron-browser/terminalService.ts b/src/vs/workbench/parts/terminal/electron-browser/terminalService.ts
index 9eae9e53d5e..9183945670d 100644
--- a/src/vs/workbench/parts/terminal/electron-browser/terminalService.ts
+++ b/src/vs/workbench/parts/terminal/electron-browser/terminalService.ts
@@ -129,6 +129,14 @@ export class TerminalService implements ITerminalService {
 		return this.panelService.openPanel(TERMINAL_PANEL_ID, true);
 	}
 
+	public hide(): TPromise<any> {
+		const panel = this.panelService.getActivePanel();
+		if (panel && panel.getId() === TERMINAL_PANEL_ID) {
+			this.partService.setPanelHidden(true);
+		}
+		return TPromise.as(null);
+	}
+
 	public createNew(): TPromise<any> {
 		let self = this;
 		return this.toggleAndGetTerminalPanel().then((terminalPanel) => {
@@ -182,7 +190,7 @@ export class TerminalService implements ITerminalService {
 			let wasActiveTerminal = (index === this.getActiveTerminalIndex());
 			// Push active index back if the closed process was before the active process
 			if (this.getActiveTerminalIndex() >= index) {
-				this.activeTerminalIndex--;
+				this.activeTerminalIndex = Math.max(0, this.activeTerminalIndex - 1);
 			}
 			this.terminalProcesses.splice(index, 1);
 			this._onInstancesChanged.fire();