diff --git a/src/managers/conda/condaUtils.ts b/src/managers/conda/condaUtils.ts
index 098aa9c7..24d18265 100644
--- a/src/managers/conda/condaUtils.ts
+++ b/src/managers/conda/condaUtils.ts
@@ -82,19 +82,21 @@ export function getCondaPathSetting(): string | undefined {
 }
 
 export async function getCondaForWorkspace(fsPath: string): Promise<string | undefined> {
+    // Check persisted user selection first so explicit choices survive restarts
+    const state = await getWorkspacePersistentState();
+    const data = await state.get<unknown>(CONDA_WORKSPACE_KEY);
+    if (data && typeof data === 'object') {
+        const workspaceSelections = data as { [key: string]: string };
+        if (Object.prototype.hasOwnProperty.call(workspaceSelections, fsPath)) {
+            return workspaceSelections[fsPath];
+        }
+    }
+
+    // Fall back to CONDA_PREFIX only when no explicit selection exists
     if (process.env.CONDA_PREFIX) {
         return process.env.CONDA_PREFIX;
     }
 
-    const state = await getWorkspacePersistentState();
-    const data: { [key: string]: string } | undefined = await state.get(CONDA_WORKSPACE_KEY);
-    if (data) {
-        try {
-            return data[fsPath];
-        } catch {
-            return undefined;
-        }
-    }
     return undefined;
 }
 
diff --git a/src/test/managers/conda/condaUtils.getCondaForWorkspace.unit.test.ts b/src/test/managers/conda/condaUtils.getCondaForWorkspace.unit.test.ts
new file mode 100644
index 00000000..22a10dc7
--- /dev/null
+++ b/src/test/managers/conda/condaUtils.getCondaForWorkspace.unit.test.ts
@@ -0,0 +1,107 @@
+import assert from 'assert';
+import * as sinon from 'sinon';
+import * as persistentState from '../../../common/persistentState';
+import { CONDA_WORKSPACE_KEY, getCondaForWorkspace } from '../../../managers/conda/condaUtils';
+
+suite('Conda Utils - getCondaForWorkspace prioritization', () => {
+    let mockState: { get: sinon.SinonStub; set: sinon.SinonStub };
+    let getWorkspacePersistentStateStub: sinon.SinonStub;
+    let originalCondaPrefix: string | undefined;
+
+    setup(() => {
+        originalCondaPrefix = process.env.CONDA_PREFIX;
+
+        mockState = {
+            get: sinon.stub(),
+            set: sinon.stub().resolves(),
+        };
+        getWorkspacePersistentStateStub = sinon.stub(persistentState, 'getWorkspacePersistentState');
+        getWorkspacePersistentStateStub.resolves(mockState);
+    });
+
+    teardown(() => {
+        if (originalCondaPrefix === undefined) {
+            delete process.env.CONDA_PREFIX;
+        } else {
+            process.env.CONDA_PREFIX = originalCondaPrefix;
+        }
+        sinon.restore();
+    });
+
+    test('Persisted selection takes priority over CONDA_PREFIX', async () => {
+        const workspacePath = '/home/user/project';
+        const userSelectedEnv = '/home/user/miniconda3/envs/myenv';
+        process.env.CONDA_PREFIX = '/home/user/miniconda3';
+
+        mockState.get.withArgs(CONDA_WORKSPACE_KEY).resolves({
+            [workspacePath]: userSelectedEnv,
+        });
+
+        const result = await getCondaForWorkspace(workspacePath);
+
+        assert.strictEqual(result, userSelectedEnv);
+    });
+
+    test('CONDA_PREFIX is used as fallback when no persisted selection exists', async () => {
+        const workspacePath = '/home/user/project';
+        const condaBase = '/home/user/miniconda3';
+        process.env.CONDA_PREFIX = condaBase;
+
+        mockState.get.withArgs(CONDA_WORKSPACE_KEY).resolves(undefined);
+
+        const result = await getCondaForWorkspace(workspacePath);
+
+        assert.strictEqual(result, condaBase);
+    });
+
+    test('CONDA_PREFIX is used when persisted data exists but not for this workspace', async () => {
+        const workspacePath = '/home/user/project';
+        const condaBase = '/home/user/miniconda3';
+        process.env.CONDA_PREFIX = condaBase;
+
+        mockState.get.withArgs(CONDA_WORKSPACE_KEY).resolves({
+            '/home/user/other-project': '/home/user/miniconda3/envs/other',
+        });
+
+        const result = await getCondaForWorkspace(workspacePath);
+
+        assert.strictEqual(result, condaBase);
+    });
+
+    test('Returns undefined when no persisted selection and no CONDA_PREFIX', async () => {
+        delete process.env.CONDA_PREFIX;
+
+        mockState.get.withArgs(CONDA_WORKSPACE_KEY).resolves(undefined);
+
+        const result = await getCondaForWorkspace('/home/user/project');
+
+        assert.strictEqual(result, undefined);
+    });
+
+    test('Returns persisted selection when CONDA_PREFIX is not set', async () => {
+        const workspacePath = '/home/user/project';
+        const userSelectedEnv = '/home/user/miniconda3/envs/myenv';
+        delete process.env.CONDA_PREFIX;
+
+        mockState.get.withArgs(CONDA_WORKSPACE_KEY).resolves({
+            [workspacePath]: userSelectedEnv,
+        });
+
+        const result = await getCondaForWorkspace(workspacePath);
+
+        assert.strictEqual(result, userSelectedEnv);
+    });
+
+    test('Returns persisted empty string without falling back to CONDA_PREFIX', async () => {
+        const workspacePath = '/home/user/project';
+        process.env.CONDA_PREFIX = '/home/user/miniconda3';
+
+        mockState.get.withArgs(CONDA_WORKSPACE_KEY).resolves({
+            [workspacePath]: '',
+        });
+
+        const result = await getCondaForWorkspace(workspacePath);
+
+        assert.strictEqual(result, '');
+    });
+});