diff --git a/azure/durable_functions/__init__.py b/azure/durable_functions/__init__.py
index d950dde9..5923d93b 100644
--- a/azure/durable_functions/__init__.py
+++ b/azure/durable_functions/__init__.py
@@ -10,6 +10,50 @@
 from .models.DurableEntityContext import DurableEntityContext
 from .models.RetryOptions import RetryOptions
 from .models.TokenSource import ManagedIdentityTokenSource
+import json
+from pathlib import Path
+import sys
+
+
+def validate_extension_bundles():
+    """Throw an exception if host.json contains bundle-range V1.
+
+    Raises
+    ------
+        Exception: Exception prompting the user to update to bundles V2
+    """
+    # No need to validate if we're running tests
+    if "pytest" in sys.modules:
+        return
+
+    host_path = "host.json"
+    bundles_key = "extensionBundle"
+    version_key = "version"
+    host_file = Path(host_path)
+
+    if not host_file.exists():
+        # If it doesn't exist, we ignore it
+        return
+
+    with open(host_path) as f:
+        host_settings = json.loads(f.read())
+        try:
+            version_range = host_settings[bundles_key][version_key]
+        except Exception:
+            # If bundle info is not available, we ignore it.
+            # For example: it's possible the user is using a manual extension install
+            return
+        # We do a best-effort attempt to detect bundles V1
+        # This is the string hard-coded into the bundles V1 template in VSCode
+        if version_range == "[1.*, 2.0.0)":
+            message = "Durable Functions for Python does not support Bundles V1."\
+                " Please update to Bundles V2 in your `host.json`."\
+                " You can set extensionBundles version to be: [2.*, 3.0.0)"
+            raise Exception(message)
+
+
+# Validate that users are not in extension bundles V1
+validate_extension_bundles()
 
 __all__ = [
     'Orchestrator',
diff --git a/setup.py b/setup.py
index 00fa7268..f02d15ca 100644
--- a/setup.py
+++ b/setup.py
@@ -9,7 +9,7 @@
 from setuptools import setup, find_packages
 from distutils.command import build
 
-with open("README.md", "r") as fh:
+with open("README.md", "r",  encoding="utf8") as fh:
     long_description = fh.read()
 
 class BuildModule(build.build):