diff --git a/src/commands/compose.ts b/src/commands/compose.ts
index 2e907bf8ad..1b6facc2ec 100644
--- a/src/commands/compose.ts
+++ b/src/commands/compose.ts
@@ -46,7 +46,7 @@ async function compose(context: IActionContext, commands: ('up' | 'down')[], mes
                 detached,
                 build
             );
-            terminal.sendText(terminalCommand);
+            terminal.sendText(await rewriteCommandForNewCliIfNeeded(terminalCommand));
         } else {
             for (const item of selectedItems) {
                 const terminalCommand = await selectComposeCommand(
@@ -57,7 +57,7 @@ async function compose(context: IActionContext, commands: ('up' | 'down')[], mes
                     detached,
                     build
                 );
-                terminal.sendText(terminalCommand);
+                terminal.sendText(await rewriteCommandForNewCliIfNeeded(terminalCommand));
             }
         }
         terminal.show();
@@ -75,3 +75,12 @@ export async function composeDown(context: IActionContext, dockerComposeFileUri?
 export async function composeRestart(context: IActionContext, dockerComposeFileUri?: vscode.Uri, selectedComposeFileUris?: vscode.Uri[]): Promise<void> {
     return await compose(context, ['down', 'up'], localize('vscode-docker.commands.compose.chooseRestart', 'Choose Docker Compose file to restart'), dockerComposeFileUri, selectedComposeFileUris);
 }
+
+async function rewriteCommandForNewCliIfNeeded(command: string): Promise<string> {
+    if ((await ext.dockerContextManager.getCurrentContext()).Type === 'aci') {
+        // Replace 'docker-compose ' at the start of a string with 'docker compose ', and '--build' anywhere with ''
+        return command.replace(/^docker-compose /, 'docker compose ').replace(/--build/, '');
+    } else {
+        return command;
+    }
+}
diff --git a/src/docker/ContextManager.ts b/src/docker/ContextManager.ts
index 47f64a08ad..d1c8488b69 100644
--- a/src/docker/ContextManager.ts
+++ b/src/docker/ContextManager.ts
@@ -40,6 +40,7 @@ const defaultContext: Partial<DockerContext> = {
     Description: 'Current DOCKER_HOST based configuration',
 };
 
+// These contexts are used by external consumers (e.g. the "Remote - Containers" extension), and should NOT be changed
 type VSCodeContext = 'vscode-docker:aciContext' | 'vscode-docker:newSdkContext' | 'vscode-docker:newCliPresent';
 
 export interface ContextManager {