diff --git a/ptvsd/wrapper.py b/ptvsd/wrapper.py
index 4d9ffe95..149a2329 100644
--- a/ptvsd/wrapper.py
+++ b/ptvsd/wrapper.py
@@ -1055,12 +1055,12 @@ class VSCLifecycleMsgProcessor(VSCodeMessageProcessorBase):
 
     def handle_exiting(self, exitcode=None, wait=None):
         """Deal with the debuggee exiting."""
-        # Notify the editor that the "debuggee" (e.g. script, app) exited.
         with self._statelock:
             if self._exiting:
                 return
             self._exiting = True
 
+        # Notify the editor that the "debuggee" (e.g. script, app) exited.
         self.send_event('exited', exitCode=exitcode or 0)
 
         self._waiting = True
diff --git a/tests/resources/system_tests/test_wait_on_exit/waitonexit.py b/tests/resources/system_tests/test_wait_on_exit/waitonexit.py
new file mode 100644
index 00000000..8faa0568
--- /dev/null
+++ b/tests/resources/system_tests/test_wait_on_exit/waitonexit.py
@@ -0,0 +1,8 @@
+import os
+import sys
+
+normal_exit = os.getenv('PTVSD_NORMAL_EXIT', None)
+exit_code = 0 if normal_exit is not None else 20
+
+print('Ready')
+sys.exit(exit_code)
diff --git a/tests/system_tests/test_wait_on_exit.py b/tests/system_tests/test_wait_on_exit.py
new file mode 100644
index 00000000..376eee9f
--- /dev/null
+++ b/tests/system_tests/test_wait_on_exit.py
@@ -0,0 +1,124 @@
+import os
+import os.path
+import time
+
+from tests.helpers.resource import TestResources
+from . import (
+    lifecycle_handshake, LifecycleTestsBase, DebugInfo,
+)
+
+TEST_FILES = TestResources.from_module(__name__)
+
+
+class WaitOnExitTests(LifecycleTestsBase):
+    def _wait_for_output(self, session):
+        for _ in range(50):
+            time.sleep(0.1)
+            out = '\t'.join(e.body['output'] for e in
+                            self.find_events(session.received, 'output')
+                            if e.body['category'] == 'stdout')
+            if not out.find('Ready') == -1:
+                return True
+        return False
+
+    def run_test_wait_on_exit(self, debug_info, dbg_options, expect_timeout):
+        options = {'debugOptions': ['RedirectOutput'] + dbg_options}
+        launched = False
+        exception_occurred = False
+        try:
+            with self.start_debugging(debug_info) as dbg:
+                session = dbg.session
+                (_, req_launch_attach, _, _, _, _
+                 ) = lifecycle_handshake(session, debug_info.starttype,
+                                         options=options)
+                req_launch_attach.wait(timeout=2.0)
+
+                # wait for the test program initiate exit
+                self.assertTrue(self._wait_for_output(session))
+                launched = True
+        except Exception as ex:
+            dbg.adapter._proc.terminate()
+            if not launched:
+                raise
+            if not expect_timeout:
+                raise
+            exception_occurred = True
+            text = 'Timeout waiting for process to die'
+            self.assertTrue(ex.args[0].find(text) > -1)
+        self.assertEqual(expect_timeout, exception_occurred)
+
+
+class LaunchFileWaitOnExitTests(WaitOnExitTests):
+    def test_wait_on_normal_exit_enabled(self):
+        filename = TEST_FILES.resolve('waitonexit.py')
+        cwd = os.path.dirname(filename)
+        env = {'PTVSD_NORMAL_EXIT': 'True'}
+        debug_info = DebugInfo(filename=filename, cwd=cwd, env=env)
+        self.run_test_wait_on_exit(debug_info,
+                                   dbg_options=['WaitOnNormalExit'],
+                                   expect_timeout=True)
+
+    def test_wait_on_normal_exit_disabled(self):
+        filename = TEST_FILES.resolve('waitonexit.py')
+        cwd = os.path.dirname(filename)
+        env = {'PTVSD_NORMAL_EXIT': 'True'}
+        debug_info = DebugInfo(filename=filename, cwd=cwd, env=env)
+        self.run_test_wait_on_exit(debug_info,
+                                   dbg_options=[],
+                                   expect_timeout=False)
+
+    def test_wait_on_abnormal_exit_enabled(self):
+        filename = TEST_FILES.resolve('waitonexit.py')
+        cwd = os.path.dirname(filename)
+        debug_info = DebugInfo(filename=filename, cwd=cwd)
+        self.run_test_wait_on_exit(debug_info,
+                                   dbg_options=['WaitOnAbnormalExit'],
+                                   expect_timeout=True)
+
+    def test_wait_on_abnormal_exit_disabled(self):
+        filename = TEST_FILES.resolve('waitonexit.py')
+        cwd = os.path.dirname(filename)
+        debug_info = DebugInfo(filename=filename, cwd=cwd)
+        self.run_test_wait_on_exit(debug_info,
+                                   dbg_options=['WaitOnNormalExit'],
+                                   expect_timeout=False)
+
+
+class LaunchModuleWaitOnExitTests(WaitOnExitTests):
+    def test_wait_on_normal_exit_enabled(self):
+        module_name = 'waitonexit'
+        cwd = TEST_FILES.parent.root
+        env = TEST_FILES.env_with_py_path()
+        env['PTVSD_NORMAL_EXIT'] = 'True'
+        debug_info = DebugInfo(modulename=module_name, env=env, cwd=cwd)
+        self.run_test_wait_on_exit(debug_info,
+                                   dbg_options=['WaitOnNormalExit'],
+                                   expect_timeout=True)
+
+    def test_wait_on_normal_exit_disabled(self):
+        module_name = 'waitonexit'
+        cwd = TEST_FILES.parent.root
+        env = TEST_FILES.env_with_py_path()
+        env['PTVSD_NORMAL_EXIT'] = 'True'
+        debug_info = DebugInfo(modulename=module_name, env=env, cwd=cwd)
+        self.run_test_wait_on_exit(debug_info,
+                                   dbg_options=[],
+                                   expect_timeout=False)
+
+    def test_wait_on_abnormal_exit_enabled(self):
+        module_name = 'waitonexit'
+        cwd = TEST_FILES.parent.root
+        env = TEST_FILES.env_with_py_path()
+        debug_info = DebugInfo(modulename=module_name, env=env, cwd=cwd)
+        self.run_test_wait_on_exit(debug_info,
+                                   dbg_options=['WaitOnAbnormalExit'],
+                                   expect_timeout=True)
+
+    def test_wait_on_abnormal_exit_disabled(self):
+        module_name = 'waitonexit'
+        cwd = TEST_FILES.parent.root
+        env = TEST_FILES.env_with_py_path()
+        debug_info = DebugInfo(modulename=module_name, env=env, cwd=cwd)
+        self.run_test_wait_on_exit(debug_info,
+                                   dbg_options=['WaitOnNormalExit'],
+                                   expect_timeout=False)