diff --git a/extension/extension.ts b/extension/extension.ts
index f8df845..2238e88 100644
--- a/extension/extension.ts
+++ b/extension/extension.ts
@@ -25,6 +25,7 @@ import { RpcServer } from './server/RpcServer';
 import { Mutex } from 'async-mutex';
 import { TelemetryReporter } from './telemetry';
 import { PythonEnvironmentManager } from './pyenv';
+import { setupWorkspaceWithPixi } from './utils/pixiSetup';
 
 /**
  * This class provides an entry point for the Mojo extension, managing the
@@ -85,6 +86,15 @@ Activating the Mojo Extension
         }),
       );
 
+      this.pushSubscription(
+        vscode.commands.registerCommand(
+          'mojo.init.pixi.project.nightly',
+          async () => {
+            await setupWorkspaceWithPixi(logger, this.pyenvManager);
+          },
+        ),
+      );
+
       // Initialize the formatter.
       this.pushSubscription(registerFormatter(this.pyenvManager, this.logger));
 
diff --git a/extension/pyenv.ts b/extension/pyenv.ts
index aa4d792..888f6bb 100644
--- a/extension/pyenv.ts
+++ b/extension/pyenv.ts
@@ -325,6 +325,13 @@ export class PythonEnvironmentManager extends DisposableContext {
     );
   }
 
+  /// Updates the active Python environment path if the provided path differs.
+  public setPythonEnv(path: string) {
+    if (path !== this.api?.environments.getActiveEnvironmentPath().path) {
+      this.api?.environments.updateActiveEnvironmentPath(path);
+    }
+  }
+
   /// Attempts to create a SDK from a home path. Returns undefined if creation failed.
   public async createSDKFromHomePath(
     kind: SDKKind,
diff --git a/extension/utils/pixiSetup.ts b/extension/utils/pixiSetup.ts
new file mode 100644
index 0000000..0d56bb3
--- /dev/null
+++ b/extension/utils/pixiSetup.ts
@@ -0,0 +1,143 @@
+import * as vscode from 'vscode';
+
+import { Logger } from './../logging';
+import { quote } from 'shell-quote';
+import { exec } from 'child_process';
+import { promisify } from 'util';
+import { PythonEnvironmentManager } from '../pyenv';
+
+const execAsync = promisify(exec);
+
+/**
+ * Sets up a workspace with Pixi package manager for Mojo development.
+ *
+ * This function performs the following steps:
+ * 1. Checks if Pixi is installed, installs it if missing
+ * 2. Initializes a Pixi project with Mojo-compatible channels if pixi.toml doesn't exist
+ * 3. Adds the Mojo package if not already present
+ * 4. Configures the Python environment to use Pixi's Python interpreter
+ *
+ * @param logger - Logger instance for debugging and tracking progress
+ * @param pyenvManager - Optional Python environment manager to configure the interpreter path
+ * @returns Promise that resolves when setup is complete
+ *
+ * @example
+ * ```typescript
+ * await setupWorkspaceWithPixi(logger, pyenvManager);
+ * ```
+ */
+export async function setupWorkspaceWithPixi(
+  logger: Logger,
+  pyenvManager?: PythonEnvironmentManager,
+): Promise<void> {
+  logger.debug('Init pixi project');
+
+  if ((await isPixiInstalled()) === false) {
+    logger.debug('Need to install pixi first');
+    await runTaskAndWait(
+      'curl -fsSL https://pixi.sh/install.sh | bash',
+      'Install Pixi',
+    );
+  }
+
+  if ((await vscode.workspace.findFiles('pixi.toml')).length === 0) {
+    await runTaskAndWait(
+      quote([
+        'pixi',
+        'init',
+        '-c',
+        'https://conda.modular.com/max-nightly/',
+        '-c',
+        'conda-forge',
+      ]),
+      'Pixi init',
+    );
+  }
+
+  if ((await vscode.workspace.findFiles('.pixi/**/mojo')).length === 0) {
+    await runTaskAndWait(quote(['pixi', 'add', 'mojo']), 'Adding Mojo');
+  }
+
+  const pythonInterpreterPaths =
+    await vscode.workspace.findFiles('.pixi/**/python');
+  if (pythonInterpreterPaths.length === 1) {
+    pyenvManager?.setPythonEnv(pythonInterpreterPaths[0].fsPath);
+  }
+}
+
+/**
+ * Checks if Pixi package manager is installed on the system.
+ *
+ * Attempts to execute `pixi --version` to verify installation.
+ *
+ * @returns Promise resolving to true if Pixi is installed, false otherwise
+ *
+ * @example
+ * ```typescript
+ * if (await isPixiInstalled()) {
+ *   console.log('Pixi is available');
+ * }
+ * ```
+ */
+async function isPixiInstalled(): Promise<boolean> {
+  try {
+    // Try to run pixie with a version or help flag
+    await execAsync('pixi --version', {
+      shell: '/bin/bash',
+      env: {
+        ...process.env,
+        PATH: `${process.env.HOME}/.pixi/bin:${process.env.PATH}`,
+      },
+    });
+    return true;
+  } catch (error) {
+    return false;
+  }
+}
+
+/**
+ * Executes a shell command as a VS Code task and waits for completion.
+ *
+ * Creates and runs a workspace-scoped shell task, monitoring it until completion.
+ * The task is visible in VS Code's task output panel.
+ *
+ * @param command - The shell command to execute
+ * @param name - Display name for the task in VS Code's task list
+ * @returns Promise resolving to true if the task succeeded (exit code 0), false otherwise
+ *
+ * @example
+ * ```typescript
+ * const success = await runTaskAndWait('npm install', 'Install Dependencies');
+ * if (success) {
+ *   console.log('Installation completed successfully');
+ * }
+ * ```
+ */
+async function runTaskAndWait(command: string, name: string): Promise<boolean> {
+  const env = {
+    ...process.env,
+    PATH: `${process.env.HOME}/.pixi/bin:${process.env.PATH}`,
+  };
+  const task = new vscode.Task(
+    { type: 'shell' },
+    vscode.TaskScope.Workspace,
+    name,
+    'Mojo Extension',
+    new vscode.ShellExecution(command, {
+      env: env,
+      executable: '/bin/bash', // Explicitly use bash
+      shellArgs: ['-c'],
+    }),
+  );
+
+  const execution = await vscode.tasks.executeTask(task);
+
+  return new Promise((resolve) => {
+    const disposable = vscode.tasks.onDidEndTaskProcess((e) => {
+      if (e.execution === execution) {
+        disposable.dispose();
+        resolve(e.exitCode === 0);
+      }
+    });
+  });
+}
diff --git a/package.json b/package.json
index cc34602..81fa6ca 100644
--- a/package.json
+++ b/package.json
@@ -194,6 +194,11 @@
         "command": "mojo.lsp.stopRecord",
         "title": "Stop recording requests and notifications sent to the Mojo language server."
       },
+      {
+        "category": "Mojo",
+        "command": "mojo.init.pixi.project.nightly",
+        "title": "Setup workspace with pixi (nightly)"
+      },
       {
         "category": "Developer",
         "command": "mojo.lsp.debug",