diff --git a/build/ci/templates/steps/build.yml b/build/ci/templates/steps/build.yml
index eddba19a6d0e..fc953c7bfb60 100644
--- a/build/ci/templates/steps/build.yml
+++ b/build/ci/templates/steps/build.yml
@@ -30,7 +30,6 @@ steps:
       inputs:
           scriptSource: "filePath"
           scriptPath: "./pythonFiles/install_ptvsd.py"
-          arguments: "--ci"
           failOnStderr: true
 
     - bash: npm run clean
diff --git a/build/ci/templates/test_phases.yml b/build/ci/templates/test_phases.yml
index 96203ae7074f..5ba31254e8ea 100644
--- a/build/ci/templates/test_phases.yml
+++ b/build/ci/templates/test_phases.yml
@@ -143,7 +143,6 @@ steps:
     inputs:
         scriptSource: "filePath"
         scriptPath: "./pythonFiles/install_ptvsd.py"
-        arguments: "--ci"
         failOnStderr: true
     condition: and(eq(variables['NeedsPythonTestReqs'], 'true'), eq(variables['PythonVersion'], '3.7'))
 
diff --git a/news/2 Fixes/7814.md b/news/2 Fixes/7814.md
new file mode 100644
index 000000000000..d1c4d010394d
--- /dev/null
+++ b/news/2 Fixes/7814.md	
@@ -0,0 +1 @@
+Remove --ci flag from install_ptvsd.py to fix execution of "Setup" instructions from CONTRIBUTING.md.
diff --git a/pythonFiles/install_ptvsd.py b/pythonFiles/install_ptvsd.py
index 5521b4e8dd4d..383736bb7313 100644
--- a/pythonFiles/install_ptvsd.py
+++ b/pythonFiles/install_ptvsd.py
@@ -12,9 +12,7 @@
 
 
 def install_ptvsd():
-    # If we are in CI use the packaging module installed in PYTHONFILES.
-    if len(sys.argv) == 2 and sys.argv[1] == "--ci":
-        sys.path.insert(0, PYTHONFILES)
+    sys.path.insert(0, PYTHONFILES)
     from packaging.requirements import Requirement
 
     with open(REQUIREMENTS, "r", encoding="utf-8") as reqsfile: