Add POETRY_VIRTUALENVS_IN_PROJECT env var support to poetryUtils.ts

Co-authored-by: karthiknadig <3840081+karthiknadig@users.noreply.github.com>

Author: Copilot

package-lock.json

@@ -17,6 +17,19 @@ import {
 } from '../common/nativePythonFinder';
 import { getShellActivationCommands, shortVersion, sortEnvironments } from '../common/utils';
 
+/**
+ * Checks if the POETRY_VIRTUALENVS_IN_PROJECT environment variable is set to a truthy value.
+ * When true, Poetry creates virtualenvs in the project's `.venv` directory.
+ * Mirrors the PET server logic in `pet-poetry/src/env_variables.rs`.
+ */
+export function isPoetryVirtualenvsInProject(): boolean {
+    const value = process.env.POETRY_VIRTUALENVS_IN_PROJECT;
+    if (value === undefined) {
+        return false;
+    }
+    return value === '1' || value.toLowerCase() === 'true';
+}
+
 async function findPoetry(): Promise<string | undefined> {
     try {
         return await which('poetry');
@@ -251,19 +264,28 @@ async function nativeToPythonEnv(
 
     // Determine if the environment is in Poetry's global virtualenvs directory
     let isGlobalPoetryEnv = false;
-    const virtualenvsPath = poetryVirtualenvsPath; // Use the cached value if available
-    if (virtualenvsPath) {
-        const normalizedVirtualenvsPath = path.normalize(virtualenvsPath);
-        isGlobalPoetryEnv = normalizedPrefix.startsWith(normalizedVirtualenvsPath);
+
+    // If POETRY_VIRTUALENVS_IN_PROJECT is set, environments are created in-project (.venv)
+    // and should not be classified as global
+    if (isPoetryVirtualenvsInProject() && info.project) {
+        isGlobalPoetryEnv = false;
     } else {
-        // Fall back to checking the default location if we haven't cached the path yet
-        const homeDir = getUserHomeDir();
-        if (homeDir) {
-            const defaultPath = path.normalize(path.join(homeDir, '.cache', 'pypoetry', 'virtualenvs'));
-            isGlobalPoetryEnv = normalizedPrefix.startsWith(defaultPath);
-
-            // Try to get the actual path asynchronously for next time
-            getPoetryVirtualenvsPath(_poetry).catch((e) => traceError(`Error getting Poetry virtualenvs path: ${e}`));
+        const virtualenvsPath = poetryVirtualenvsPath; // Use the cached value if available
+        if (virtualenvsPath) {
+            const normalizedVirtualenvsPath = path.normalize(virtualenvsPath);
+            isGlobalPoetryEnv = normalizedPrefix.startsWith(normalizedVirtualenvsPath);
+        } else {
+            // Fall back to checking the default location if we haven't cached the path yet
+            const homeDir = getUserHomeDir();
+            if (homeDir) {
+                const defaultPath = path.normalize(path.join(homeDir, '.cache', 'pypoetry', 'virtualenvs'));
+                isGlobalPoetryEnv = normalizedPrefix.startsWith(defaultPath);
+
+                // Try to get the actual path asynchronously for next time
+                getPoetryVirtualenvsPath(_poetry).catch((e) =>
+                    traceError(`Error getting Poetry virtualenvs path: ${e}`),
+                );
+            }
         }
     }
 

src/managers/poetry/poetryUtils.ts

@@ -0,0 +1,63 @@
+import assert from 'node:assert';
+import { isPoetryVirtualenvsInProject } from '../../../managers/poetry/poetryUtils';
+
+suite('isPoetryVirtualenvsInProject', () => {
+    let originalEnv: string | undefined;
+
+    setup(() => {
+        originalEnv = process.env.POETRY_VIRTUALENVS_IN_PROJECT;
+    });
+
+    teardown(() => {
+        if (originalEnv === undefined) {
+            delete process.env.POETRY_VIRTUALENVS_IN_PROJECT;
+        } else {
+            process.env.POETRY_VIRTUALENVS_IN_PROJECT = originalEnv;
+        }
+    });
+
+    test('should return false when env var is not set', () => {
+        delete process.env.POETRY_VIRTUALENVS_IN_PROJECT;
+        assert.strictEqual(isPoetryVirtualenvsInProject(), false);
+    });
+
+    test('should return true when env var is "true"', () => {
+        process.env.POETRY_VIRTUALENVS_IN_PROJECT = 'true';
+        assert.strictEqual(isPoetryVirtualenvsInProject(), true);
+    });
+
+    test('should return true when env var is "True" (case insensitive)', () => {
+        process.env.POETRY_VIRTUALENVS_IN_PROJECT = 'True';
+        assert.strictEqual(isPoetryVirtualenvsInProject(), true);
+    });
+
+    test('should return true when env var is "TRUE" (case insensitive)', () => {
+        process.env.POETRY_VIRTUALENVS_IN_PROJECT = 'TRUE';
+        assert.strictEqual(isPoetryVirtualenvsInProject(), true);
+    });
+
+    test('should return true when env var is "1"', () => {
+        process.env.POETRY_VIRTUALENVS_IN_PROJECT = '1';
+        assert.strictEqual(isPoetryVirtualenvsInProject(), true);
+    });
+
+    test('should return false when env var is "false"', () => {
+        process.env.POETRY_VIRTUALENVS_IN_PROJECT = 'false';
+        assert.strictEqual(isPoetryVirtualenvsInProject(), false);
+    });
+
+    test('should return false when env var is "0"', () => {
+        process.env.POETRY_VIRTUALENVS_IN_PROJECT = '0';
+        assert.strictEqual(isPoetryVirtualenvsInProject(), false);
+    });
+
+    test('should return false when env var is empty string', () => {
+        process.env.POETRY_VIRTUALENVS_IN_PROJECT = '';
+        assert.strictEqual(isPoetryVirtualenvsInProject(), false);
+    });
+
+    test('should return false when env var is arbitrary string', () => {
+        process.env.POETRY_VIRTUALENVS_IN_PROJECT = 'yes';
+        assert.strictEqual(isPoetryVirtualenvsInProject(), false);
+    });
+});