diff --git a/.github/actions/build-vsix/action.yml b/.github/actions/build-vsix/action.yml
index eaabe5141e8b..1922f6196ee5 100644
--- a/.github/actions/build-vsix/action.yml
+++ b/.github/actions/build-vsix/action.yml
@@ -70,8 +70,15 @@ runs:
       shell: bash
 
     - name: Update optional extension dependencies
-      run: npm run addExtensionPackDependencies
+      run: |
+        if [[ "${VSIX_NAME}" == *"insiders"* ]]; then
+        npm run addExtensionPackDependenciesPreRelease
+        else
+        npm run addExtensionPackDependencies
+        fi
       shell: bash
+      env:
+        VSIX_NAME: ${{ inputs.vsix_name }}
 
     - name: Build Webpack
       run: |
diff --git a/build/azure-pipeline.pre-release.yml b/build/azure-pipeline.pre-release.yml
index ab087673f1e7..82c991189a82 100644
--- a/build/azure-pipeline.pre-release.yml
+++ b/build/azure-pipeline.pre-release.yml
@@ -91,7 +91,7 @@ extends:
       - script: python ./build/update_package_file.py
         displayName: Update telemetry in package.json
 
-      - script: npm run addExtensionPackDependencies
+      - script: npm run addExtensionPackDependenciesPreRelease
         displayName: Update optional extension dependencies
 
       - script: npx gulp prePublishBundle
diff --git a/gulpfile.js b/gulpfile.js
index 0b919f16572a..3a03332c4f5c 100644
--- a/gulpfile.js
+++ b/gulpfile.js
@@ -93,16 +93,23 @@ gulp.task('addExtensionPackDependencies', async () => {
     await addExtensionPackDependencies();
 });
 
-async function addExtensionPackDependencies() {
+// This task adds 'ms-python.vscode-python-envs' as required deps only for pre-release builds.
+gulp.task('addExtensionPackDependenciesPreRelease', async () => {
+    await buildLicense();
+    await addExtensionPackDependencies(true);
+});
+
+async function addExtensionPackDependencies(isPreRelease = false) {
     // Update the package.json to add extension pack dependencies at build time so that
     // extension dependencies need not be installed during development
     const packageJsonContents = await fsExtra.readFile('package.json', 'utf-8');
     const packageJson = JSON.parse(packageJsonContents);
-    packageJson.extensionPack = [
-        'ms-python.vscode-pylance',
-        'ms-python.debugpy',
-        'ms-python.vscode-python-envs',
-    ].concat(packageJson.extensionPack ? packageJson.extensionPack : []);
+    let deps = ['ms-python.vscode-pylance', 'ms-python.debugpy'];
+    if (isPreRelease) {
+        deps.push('ms-python.vscode-python-envs');
+    }
+    packageJson.extensionPack = deps.concat(packageJson.extensionPack ? packageJson.extensionPack : []);
+
     // Remove potential duplicates.
     packageJson.extensionPack = packageJson.extensionPack.filter(
         (item, index) => packageJson.extensionPack.indexOf(item) === index,
diff --git a/package.json b/package.json
index 47cb84c49fbd..6d76ded9febc 100644
--- a/package.json
+++ b/package.json
@@ -1671,6 +1671,7 @@
         "format-fix": "prettier --write 'src/**/*.ts' 'build/**/*.js' '.github/**/*.yml' gulpfile.js",
         "clean": "gulp clean",
         "addExtensionPackDependencies": "gulp addExtensionPackDependencies",
+        "addExtensionPackDependenciesPreRelease": "gulp addExtensionPackDependenciesPreRelease",
         "updateBuildNumber": "gulp updateBuildNumber",
         "verifyBundle": "gulp verifyBundle",
         "webpack": "webpack"