diff --git a/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts b/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
index 5ace875fb3f417..cd7c671dddb930 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
@@ -230,7 +230,6 @@ export class TerminalInstance extends Disposable implements ITerminalInstance {
 		this._instanceId = TerminalInstance._instanceIdCounter++;
 
 		this.hasHadInput = false;
-
 		this._titleReadyPromise = new Promise<string>(c => {
 			this._titleReadyComplete = c;
 		});
@@ -1313,6 +1312,11 @@ export class TerminalInstance extends Disposable implements ITerminalInstance {
 		this._webglAddon = new Addon();
 		try {
 			this._xterm.loadAddon(this._webglAddon);
+			this._webglAddon.onContextLoss(() => {
+				this._logService.info(`Webgl lost context, disposing of webgl renderer`);
+				this._disposeOfWebglRenderer();
+				this._safeSetOption('rendererType', 'dom');
+			});
 			this._storageService.store(SUGGESTED_RENDERER_TYPE, 'auto', StorageScope.GLOBAL, StorageTarget.MACHINE);
 		} catch (e) {
 			this._logService.warn(`Webgl could not be loaded. Falling back to the canvas renderer type.`, e);