diff --git a/python_files/tests/pytestadapter/.data/skip_test_fixture.py b/python_files/tests/pytestadapter/.data/skip_test_fixture.py
new file mode 100644
index 000000000000..3d354cae86ea
--- /dev/null
+++ b/python_files/tests/pytestadapter/.data/skip_test_fixture.py
@@ -0,0 +1,19 @@
+# Copyright (c) Microsoft Corporation. All rights reserved.
+# Licensed under the MIT License.
+
+import pytest
+
+
+@pytest.fixture
+def docker_client() -> object:
+    try:
+        # NOTE: Actually connect with the docker sdk
+        raise Exception("Docker client not available")
+    except Exception:
+        pytest.skip("Docker client not available")
+
+    return object()
+
+
+def test_docker_client(docker_client):
+    assert False
diff --git a/python_files/tests/pytestadapter/expected_execution_test_output.py b/python_files/tests/pytestadapter/expected_execution_test_output.py
index 8f378074343d..fa6743d0e112 100644
--- a/python_files/tests/pytestadapter/expected_execution_test_output.py
+++ b/python_files/tests/pytestadapter/expected_execution_test_output.py
@@ -734,3 +734,16 @@
         "subtest": None,
     },
 }
+
+skip_test_fixture_path = TEST_DATA_PATH / "skip_test_fixture.py"
+skip_test_fixture_execution_expected_output = {
+    get_absolute_test_id("skip_test_fixture.py::test_docker_client", skip_test_fixture_path): {
+        "test": get_absolute_test_id(
+            "skip_test_fixture.py::test_docker_client", skip_test_fixture_path
+        ),
+        "outcome": "skipped",
+        "message": None,
+        "traceback": None,
+        "subtest": None,
+    }
+}
diff --git a/python_files/tests/pytestadapter/test_execution.py b/python_files/tests/pytestadapter/test_execution.py
index 245b13cf5d46..27fd1160441b 100644
--- a/python_files/tests/pytestadapter/test_execution.py
+++ b/python_files/tests/pytestadapter/test_execution.py
@@ -194,6 +194,11 @@ def test_rootdir_specified():
             expected_execution_test_output.nested_describe_expected_execution_output,
             id="nested_describe_plugin",
         ),
+        pytest.param(
+            ["skip_test_fixture.py::test_docker_client"],
+            expected_execution_test_output.skip_test_fixture_execution_expected_output,
+            id="skip_test_fixture",
+        ),
     ],
 )
 def test_pytest_execution(test_ids, expected_const):
diff --git a/python_files/vscode_pytest/__init__.py b/python_files/vscode_pytest/__init__.py
index 59a1b75e9688..58d4b72fc46e 100644
--- a/python_files/vscode_pytest/__init__.py
+++ b/python_files/vscode_pytest/__init__.py
@@ -265,7 +265,7 @@ def pytest_report_teststatus(report, config):  # noqa: ARG001
     if SYMLINK_PATH:
         cwd = SYMLINK_PATH
 
-    if report.when == "call":
+    if report.when == "call" or (report.when == "setup" and report.skipped):
         traceback = None
         message = None
         report_value = "skipped"