This answer is similar to the top voted answer, but with an important distinction: a lot of the previous answers on this question focus on running Git Bash while my answer focuses on running WSL Bash.
Enable Windows Subsystem for Linux on your Windows 10 machine.
Open Visual Studio Code and press and hold Ctrl + ` to open the terminal.
Open the command palette using Ctrl + Shift + P.
Type - Select Default Shell
.
Select WSL Bash
(NOT Git Bash
) from the options.
+
icon in the terminal window. The new terminal now will be a WSL Bash terminal!