diff --git a/.ado/ci.yml b/.ado/ci.yml
index d2205e029..f063bd252 100644
--- a/.ado/ci.yml
+++ b/.ado/ci.yml
@@ -67,7 +67,7 @@ jobs:
     
     - script: |
         cd $(Build.SourcesDirectory)/azure-quantum
-        pip install .[all]
+        pip install .[qiskit,cirq,qsharp,dev]
         pytest --cov-report term --cov=azure.quantum --junitxml test-output-azure-quantum.xml $(Build.SourcesDirectory)/azure-quantum
       displayName: Run azure-quantum unit tests
     
diff --git a/.ado/publish.yml b/.ado/publish.yml
index fd6f6338f..e77d77b79 100644
--- a/.ado/publish.yml
+++ b/.ado/publish.yml
@@ -117,7 +117,7 @@ extends:
 
         - script: |
             cd $(Build.SourcesDirectory)/azure-quantum
-            pip install .[all]
+            pip install .[qiskit,cirq,qsharp,dev]
             pytest --cov-report term --cov=azure.quantum --junitxml test-output-azure-quantum.xml $(Build.SourcesDirectory)/azure-quantum
           displayName: Run Unit-tests
 
diff --git a/azure-quantum/MANIFEST.in b/azure-quantum/MANIFEST.in
index 4baebbfe3..879ba3554 100644
--- a/azure-quantum/MANIFEST.in
+++ b/azure-quantum/MANIFEST.in
@@ -3,7 +3,6 @@ include *.py
 include *.md
 recursive-include  azure *.py
 exclude MANIFEST.in 
-exclude environment.yml
 recursive-exclude azure *.typed
 recursive-exclude eng *
 recursive-exclude tests *
diff --git a/azure-quantum/README.md b/azure-quantum/README.md
index 143167bfb..bcb346de4 100644
--- a/azure-quantum/README.md
+++ b/azure-quantum/README.md
@@ -79,6 +79,48 @@ result = job.get_results()
 
 You can find example Python scripts that use the Azure Quantum Python API in the [examples](https://github.com/microsoft/qdk-python/tree/main/azure-quantum/examples) directory.
 
+## Development Setup ##
+
+For developers who want to contribute to this package or run tests locally, follow these steps:
+
+### Prerequisites
+
+- Python 3.9 or later
+- Git
+- Powershell
+
+### Setting up the development environment
+
+1. Clone the repository:
+   ```bash
+   git clone https://github.com/microsoft/qdk-python.git
+   cd qdk-python/azure-quantum
+   ```
+
+2. Set up a virtual environment and install development dependencies:
+   ```powershell
+   # On Windows (PowerShell)
+   .\eng\Setup-Dev-Env.ps1
+   ```
+
+3. Run the tests:
+   ```bash
+   pytest tests/unit/
+   ```
+
+4. (Optional) Install additional provider dependencies:
+   ```bash
+   # For specific providers
+   pip install -e .[pulser,quil]
+   
+   # For all providers (requires Rust toolchain for PyQuil)
+   pip install -e .[all]
+   ```
+
+### Running Tests
+
+The development environment includes pytest for running unit tests. See [tests/README.md](tests/README.md) for detailed testing instructions.
+
 ## Contributing ##
 
 For details on contributing to this package, see the [contributing guide](https://github.com/microsoft/qdk-python/blob/main/CONTRIBUTING.md).
diff --git a/azure-quantum/eng/Record-Tests.ps1 b/azure-quantum/eng/Record-Tests.ps1
index 238dcff41..7fd31d2bf 100644
--- a/azure-quantum/eng/Record-Tests.ps1
+++ b/azure-quantum/eng/Record-Tests.ps1
@@ -20,7 +20,14 @@ try
 {
     Push-Location (Join-Path $PSScriptRoot "../tests/")
 
-    conda activate azurequantum
+    # Activate virtual environment if it exists
+    $VenvPath = "../venv"
+    if (Test-Path $VenvPath) {
+        Write-Host "Activating virtual environment..."
+        & "$VenvPath\Scripts\Activate.ps1"
+    } else {
+        Write-Warning "Virtual environment not found at $VenvPath. Please run Setup-Dev-Env.ps1 first."
+    }
 
     if ([string]::IsNullOrEmpty($TestFilter)) {
         pytest
diff --git a/azure-quantum/eng/Setup-Dev-Env.ps1 b/azure-quantum/eng/Setup-Dev-Env.ps1
index 918d95a58..d2b2d268d 100644
--- a/azure-quantum/eng/Setup-Dev-Env.ps1
+++ b/azure-quantum/eng/Setup-Dev-Env.ps1
@@ -7,11 +7,30 @@ try
 {
     Push-Location (Join-Path $PSScriptRoot "../")
  
-    conda env create -f environment.yml
-    conda env update -f environment.yml --prune
-    conda activate azurequantum
+    # Create virtual environment if it doesn't exist
+    $VenvPath = "venv"
+    if (-not (Test-Path $VenvPath)) {
+        Write-Host "Creating virtual environment..."
+        python -m venv $VenvPath
+    }
 
-    pip install -e .[qiskit,cirq]
+    # Activate virtual environment
+    Write-Host "Activating virtual environment..."
+    & ".\$VenvPath\Scripts\Activate.ps1"
+
+    # Upgrade pip and install build tools
+    Write-Host "Upgrading pip and installing build tools..."
+    python -m pip install --upgrade pip setuptools wheel
+
+    # Install package in editable mode with optional dependencies
+    Write-Host "Installing package in editable mode..."
+    pip install -e .[qiskit,cirq,qsharp,dev]
+    
+    Write-Host ""
+    Write-Host "Development environment setup complete!"
+    Write-Host "To install additional optional dependencies later, run:"
+    Write-Host "  pip install -e .[pulser,quil]  # for specific providers"
+    Write-Host "  pip install -e .[all]                 # for all providers (requires Rust toolchain)"
 }
 finally
 {
diff --git a/azure-quantum/environment.yml b/azure-quantum/environment.yml
deleted file mode 100644
index 5942f90e4..000000000
--- a/azure-quantum/environment.yml
+++ /dev/null
@@ -1,11 +0,0 @@
-name: azurequantum
-channels:
-  - quantum-engineering
-  - conda-forge
-dependencies:
-  - python=3.9
-  - pip>=22.3.1
-  - pytest>=7.1.2
-  - pytest-regressions
-  - pip:
-    - -e .[all]
diff --git a/azure-quantum/requirements-dev.txt b/azure-quantum/requirements-dev.txt
index 6a92c4ebc..a25f55d04 100644
--- a/azure-quantum/requirements-dev.txt
+++ b/azure-quantum/requirements-dev.txt
@@ -1,3 +1,4 @@
+pytest>=7.1.2
 vcrpy>=4.3.1 # fixes https://github.com/kevin1024/vcrpy/issues/688
 azure-devtools>=1.2.0,<2.0
-graphviz>=0.20.1
\ No newline at end of file
+graphviz>=0.20.1
diff --git a/azure-quantum/tests.live/Install-Artifacts.ps1 b/azure-quantum/tests.live/Install-Artifacts.ps1
index e07717c72..911c52079 100644
--- a/azure-quantum/tests.live/Install-Artifacts.ps1
+++ b/azure-quantum/tests.live/Install-Artifacts.ps1
@@ -3,19 +3,16 @@
 
 <#
     .SYNOPSIS
-        Install-Artifacts: set up a Python environment using Anaconda
+        Install-Artifacts: set up a Python environment using virtual environments
 #>
 
 $PackageDir = Split-Path -parent $PSScriptRoot;
 $PackageName = $PackageDir | Split-Path -Leaf;
 $RootDir = Split-Path -parent $PackageDir;
-Import-Module (Join-Path $RootDir "build" "conda-utils.psm1");
-Import-Module (Join-Path $RootDir "build" "package-utils.psm1");
+Import-Module (Join-Path $RootDir "build" "venv-utils.psm1") -Force;
+Import-Module (Join-Path $RootDir "build" "package-utils.psm1") -Force;
 
-# Enable conda hook
-Enable-Conda
-
-NewCondaEnvForPackage -PackageName $PackageName
+New-VenvForPackage -PackageName $PackageName
 
 if (-not $Env:PYTHON_OUTDIR) {
     "" | Write-Host
@@ -23,7 +20,8 @@ if (-not $Env:PYTHON_OUTDIR) {
     "== We will install $PackageName from source." | Write-Host
     "" | Write-Host
 
-    Install-PackageInEnv -PackageName "$PackageName[all]" -FromSource $True
+    $PackageWithExtras = "$PackageName[qiskit,cirq,qsharp,dev]"
+    Install-PackageInEnv -PackageName $PackageWithExtras -FromSource $True
 
     "" | Write-Host
     "== $PackageName installed from source. ==" | Write-Host
@@ -34,7 +32,8 @@ if (-not $Env:PYTHON_OUTDIR) {
     "== To use build artifacts, download the artifacts locally and point the variable to this folder." | Write-Warning
     "" | Write-Warning
     Exit 1
-} 
+}
+
 # this condition is used by the E2E Live test pipeline
 elseif ($Env:PICK_QDK_VERSION -eq "auto") {
     "== Installing latest published $PackageName package from PyPI..." | Write-Host
@@ -43,9 +42,9 @@ elseif ($Env:PICK_QDK_VERSION -eq "auto") {
     "== Preparing environment to use artifacts with version '$Env:PYTHON_VERSION' " | Write-Host
     "== from '$Env:PYTHON_OUTDIR'" | Write-Host
     if ($Env:PYTHON_VERSION) {
-        $NameAndVersion = "$PackageName[all]==$($Env:PYTHON_VERSION)"
+        $NameAndVersion = "$PackageName[qiskit,cirq,qsharp,dev]==$($Env:PYTHON_VERSION)"
     } else {
-        $NameAndVersion = "$PackageName[all]"
+        $NameAndVersion = "$PackageName[qiskit,cirq,qsharp,dev]"
     }
     
     Install-PackageInEnv -PackageName $NameAndVersion -FromSource $False -BuildArtifactPath $Env:PYTHON_OUTDIR
diff --git a/azure-quantum/tests.live/Run.ps1 b/azure-quantum/tests.live/Run.ps1
index ef9340f94..1873ee27d 100644
--- a/azure-quantum/tests.live/Run.ps1
+++ b/azure-quantum/tests.live/Run.ps1
@@ -18,7 +18,7 @@ Get-ChildItem env:AZURE*, env:*VERSION, env:*OUTDIR | ForEach-Object {
 $PackageDir = Split-Path -parent $PSScriptRoot;
 $PackageName = $PackageDir | Split-Path -Leaf;
 $RootDir = Split-Path -parent $PackageDir;
-Import-Module (Join-Path $RootDir "build" "conda-utils.psm1");
+Import-Module (Join-Path $RootDir "build" "venv-utils.psm1");
 Import-Module (Join-Path $RootDir "build" "package-utils.psm1");
 
 if ($True -eq $SkipInstall) {
@@ -27,24 +27,6 @@ if ($True -eq $SkipInstall) {
     & (Join-Path $PSScriptRoot Install-Artifacts.ps1)
 }
 
-Enable-Conda
-
-# Try activating the azurequantum conda environment
-if ([string]::IsNullOrEmpty($PackageName) -or ($PackageName -eq "azure-quantum")) {
-    try {
-      $EnvExists = conda env list | Select-String -Pattern "azurequantum " | Measure-Object | Select-Object -Exp Count
-      if ($EnvExists) {
-        conda activate azurequantum
-      }    
-    }
-    catch {
-      Write-Host "##[warning]Failed to active conda environment."
-    }
-}
-
-$EnvName = GetEnvName -PackageName $PackageName
-Use-CondaEnv $EnvName
-
 function PyTestMarkExpr() {
     param (
         [string[]] $AzureQuantumCapabilities
diff --git a/azure-quantum/tests/README.md b/azure-quantum/tests/README.md
index f999bfdb6..e62e766ca 100644
--- a/azure-quantum/tests/README.md
+++ b/azure-quantum/tests/README.md
@@ -2,7 +2,19 @@
 
 ## Environment Pre-reqs
 
-Refer to [the parent README](../README.md) for how to prepare the development environment before running the unit tests.
+Before running the unit tests, set up your development environment using the venv-based setup:
+
+### On Windows (PowerShell):
+```powershell
+.\eng\Setup-Dev-Env.ps1
+```
+
+This will install the package with common optional dependencies (qiskit, cirq, qsharp). To install additional provider dependencies, run:
+```powershell
+./venv/Scripts/activate        # Activate the virtual environment first
+pip install -e .[pulser,quil]   # for specific providers
+pip install -e .[all]           # for all providers (requires Rust toolchain)
+```
 
 ### Environment variables for Recording and Live-Tests
 
diff --git a/build/conda-utils.psm1 b/build/conda-utils.psm1
deleted file mode 100644
index 6f56c7995..000000000
--- a/build/conda-utils.psm1
+++ /dev/null
@@ -1,142 +0,0 @@
-# Copyright (c) Microsoft Corporation.
-# Licensed under the MIT License.
-
-<#
-    .SYNOPSIS
-        Includes utility cmdlets for working with conda both locally,
-        and in Azure Pipelines and other hosted environments.
-#>
-
-function Test-CondaEnabled {
-    <#
-        .SYNOPSIS
-            Tests if conda has been enabled for shell
-            use (e.g.: if conda activate will work).
-    #>
-
-    # The shell hook for conda creates a new cmdlet called
-    # Invoke-Conda that is then aliased to `conda`. If the
-    # full name (without an alias) is available, then the hook
-    # has been run already.
-    if ($null -ne (Get-Command Invoke-Conda -ErrorAction SilentlyContinue)) {
-        return $true;
-    }
-    return $false;
-}
-
-function Enable-Conda {
-    <#
-        .SYNOPSIS
-            Attempts to enable conda for shell usage, first using
-            the CONDA environment variable for the path, falling back
-            to PATH, and then failing.
-            If conda is already enabled, this cmdlet does nothing,
-            so that this cmdlet is idempotent.
-    #>
-
-    if (Test-CondaEnabled) { return $true; }
-
-    if ("$Env:CONDA" -ne "") {
-        # Try and run the shell hook from the path nominated
-        # by CONDA.
-
-        # On Windows, this is $Env:CONDA/Scripts/conda.exe, while on
-        # Linux and macOS, this is $Env:CONDA/bin/conda.
-
-        if ($IsWindows) {
-            $condaBin = Join-Path $Env:CONDA "Scripts" "conda.exe";
-        } else {
-            $condaBin = Join-Path $Env:CONDA "bin" "conda";
-        }
-
-        if ($null -eq (Get-Command $condaBin -ErrorAction SilentlyContinue)) {
-            Write-Error "##[error] conda binary was expected at $condaBin (CONDA = $Env:CONDA), but was not found.";
-            throw;
-        }
-
-        (& $condaBin shell.powershell hook) | Out-String | Invoke-Expression;
-    } else {
-        (conda shell.powershell hook) | Out-String | Invoke-Expression;
-    }
-}
-
-function Use-CondaEnv {
-    param (
-        [string] $EnvName
-    )
-    <#
-        .SYNOPSIS
-            Activates a conda environment, reporting the new configuration
-            after having done so. If conda has not already been enabled, this
-            cmdlet will enable it before activating.
-    #>
-
-    Enable-Conda
-    # NB: We use the PowerShell cmdlet created by the conda shell hook here
-    #     to avoid accidentally using the conda binary.
-    Enter-CondaEnvironment $EnvName
-    Write-Host "##[info]Activated Conda env: $(Get-PythonConfiguration | Out-String)"
-}
-
-function Install-Package() {
-    param(
-      [string] $EnvName,
-      [string] $PackageName,
-      [bool] $FromSource
-    )
-    # Activate env
-    Use-CondaEnv $EnvName
-    # Install package
-    if ($True -eq $FromSource) {
-      $ParentPath = Split-Path -parent $PSScriptRoot
-      $AbsPackageDir = Join-Path $ParentPath $PackageName
-      Write-Host "##[info]Install package $AbsPackageDir in development mode for env $EnvName"
-      pip install -e $AbsPackageDir
-    } else {
-      Write-Host "##[info]Install package $PackageName for env $EnvName"
-      pip install $PackageName
-    }
-}
-
-function Get-PythonConfiguration {
-    <#
-        .SYNOPSIS
-            Returns a table describing the current Python configuration,
-            useful for diagnostic purposes.
-    #>
-
-    $table = @{};
-
-    $python = (Get-Command python -ErrorAction SilentlyContinue);
-    if ($null -ne $python) {
-        $table["PythonLocation"] = $python.Source;
-        try {
-            $table["PythonVersion"] = & $python --version;
-        } catch { }
-    }
-
-    # If the CONDA environment variable is set, allow that to override
-    # the local PATH.
-    $conda = Get-Command conda -ErrorAction SilentlyContinue;
-
-    if ($null -ne $conda) {
-        $table["CondaLocation"] = $conda.Source;
-        try {
-            $table["CondaVersion"] = & $conda --version;
-        } catch { }
-    }
-
-    # If the conda hook has already been run, we can get some additional
-    # information for the table.
-    if (Test-CondaEnabled) {
-        try {
-            $env = Get-CondaEnvironment | Where-Object -Property Active;
-            if ($null -ne $env) {
-                $table["CondaEnvName"] = $env.Name;
-                $table["CondaEnvPath"] = $env.Path;
-            }
-        } catch { }
-    }
-
-    $table | Write-Output;
-}
\ No newline at end of file
diff --git a/build/package-utils.psm1 b/build/package-utils.psm1
index 0e96889e6..06e0243f3 100644
--- a/build/package-utils.psm1
+++ b/build/package-utils.psm1
@@ -1,168 +1,53 @@
+# Copyright (c) Microsoft Corporation.
+# Licensed under the MIT License.
 
-Import-Module (Join-Path $PSScriptRoot "conda-utils.psm1");
+<#
+    .SYNOPSIS
+        PowerShell utilities for package management
+#>
 
-function PackagesList{
-    param(
-        [string] $PackageName
-    )
-    if ('' -eq $PackageName) {
-        # If no package dir is specified, find all packages that contain an environment.yml file
-        $parentPath = Split-Path -parent $PSScriptRoot
-        $PackageNames = Get-ChildItem -Path $parentPath -Recurse -Filter "environment.yml" | Select-Object -ExpandProperty Directory | Split-Path -Leaf
-        Write-Host "##[info]No PackageDir. Setting to default '$PackageNames'"
-    } else {
-        $PackageNames = @($PackageName)
-    }
-    return $PackageNames
-}
-
-function Install-Package() {
+function Install-PackageInEnv {
+    <#
+    .SYNOPSIS
+        Install a package in the current environment
+    .PARAMETER PackageName
+        The name of the package to install
+    .PARAMETER FromSource
+        Whether to install from source (editable install)
+    .PARAMETER BuildArtifactPath
+        Path to build artifacts (optional)
+    #>
     param(
-        [string] $EnvName,
+        [Parameter(Mandatory=$true)]
         [string] $PackageName,
-        [bool] $FromSource,
-        [string] $BuildArtifactPath
+        
+        [Parameter(Mandatory=$false)]
+        [bool] $FromSource = $false,
+        
+        [Parameter(Mandatory=$false)]
+        [string] $BuildArtifactPath = ""
     )
-    # Activate env
-    Use-CondaEnv $EnvName
-    # Show all installed packages
-    conda list
-    # Install package
-    if ($True -eq $FromSource) {
+    
+    if ($FromSource) {
+        Write-Host "Installing '$PackageName' from source (editable install)..."
         $ParentPath = Split-Path -parent $PSScriptRoot
         $AbsPackageName = Join-Path $ParentPath $PackageName
         Write-Host "##[info]Install package $AbsPackageName in development mode for env $EnvName"
         pip install -e $AbsPackageName
-    } elseif ("" -ne $BuildArtifactPath) {
-        Write-Host "##[info]Installing $PackageName from $BuildArtifactPath"
-        Push-Location $BuildArtifactPath
-            pip install $PackageName --pre --find-links $BuildArtifactPath
-            if ($LASTEXITCODE -ne 0) { throw "Error installing qsharp-core wheel" }
-        Pop-Location
+    } elseif (-not [string]::IsNullOrEmpty($BuildArtifactPath)) {
+        Write-Host "Installing '$PackageName' from build artifacts at '$BuildArtifactPath'..."
+        $WheelFiles = Get-ChildItem -Path $BuildArtifactPath -Filter "*.whl"
+        if ($WheelFiles.Count -gt 0) {
+            pip install $WheelFiles[0].FullName
+        } else {
+            Write-Warning "No wheel files found in '$BuildArtifactPath'. Installing from PyPI instead."
+            pip install $PackageName
+        }
     } else {
-        Write-Host "##[info]Install latest package $PackageName for env $EnvName from PyPI"
+        Write-Host "Installing '$PackageName' from PyPI..."
         pip install $PackageName
     }
 }
 
-function GetEnvName {
-    param (
-        [string] $PackageName,
-        [string] $CondaEnvironmentSuffix
-    )
-    # The environment name is based on $PackageName, but
-    #   1. if the name includes the version via name==version, remove the version, 
-    #   2. add conda env suffix
-    #   3. remove "-" since its invalid
-    #   4. remove ".aio" and use the same environment as the non-async version
-    return ($PackageName.Split("[")[0].Split("=")[0] + $CondaEnvironmentSuffix).replace("-", "").replace(".aio", "")
-}
-
-function Install-PackageInEnv {
-    param (
-        [string] $PackageName,
-        [string] $CondaEnvironmentSuffix,
-        [bool] $FromSource,
-        [string] $BuildArtifactPath
-    )
-    $PackageNames = PackagesList -PackageName $PackageName
-    foreach ($PackageName in $PackageNames) {
-        $EnvName = GetEnvName -PackageName $PackageName -CondaEnvironmentSuffix $CondaEnvironmentSuffix
-        Install-Package -EnvName $EnvName -PackageName $PackageName -FromSource $FromSource -BuildArtifactPath $BuildArtifactPath
-    }
-}
-
-function New-CondaEnvironment {
-    param(
-        [string] $PackageName,
-        [string] $CondaEnvironmentSuffix
-    )
-    <#
-        .SYNOPSIS
-            Create Conda environment(s) for given package directories
-            Optionally, use CondaEnvironmentSuffix to specify a special environment file with name environment<CondaEnvironmentSuffix>.yml.
-            If PackageName is not specified, get all packages in the root directory.
-    #>
-
-    $PackageNames = PackagesList -PackageName $PackageName
-    foreach ($PackageName in $PackageNames) {
-        NewCondaEnvForPackage -PackageName $PackageName -CondaEnvironmentSuffix $CondaEnvironmentSuffix
-    }
-}
-
-function NewCondaEnvForPackage {
-    param(
-        [string] $PackageName,
-        [string] $CondaEnvironmentSuffix
-    )
-    <#
-        .SYNOPSIS
-            Create Conda environment(s) for given package directories
-            Optionally, use CondaEnvironmentSuffix to specify a special environment file with name environment<CondaEnvironmentSuffix>.yml.
-    #>
-
-    $parentPath = Split-Path -parent $PSScriptRoot
-    $EnvPath = Join-Path $parentPath $PackageName "environment$CondaEnvironmentSuffix.yml"
-    $EnvName = GetEnvName -PackageName $PackageName -CondaEnvironmentSuffix $CondaEnvironmentSuffix
-
-    # Check if environment already exists
-    $EnvExists = conda env list | Select-String -Pattern "$EnvName " | Measure-Object | Select-Object -Exp Count
-
-    # If it exists, skip creation
-    if ($EnvExists -eq "1") {
-        Write-Host "##[info]Skipping creating $EnvName; env already exists."
-
-    } else {
-        # If it does not exist, create conda environment
-        Write-Host "##[info]Build '$EnvPath' for Conda environment $EnvName"
-        conda env create --quiet --file $EnvPath
-    }
-}
-
-function New-Wheel() {
-    param(
-        [string] $EnvName,
-        [string] $Path,
-        [string] $OutDir
-    );
-
-    Push-Location $Path
-        # Set environment vars to be able to run conda activate
-        Write-Host "##[info]Pack wheel for env '$EnvName'"
-        # Activate env
-        Use-CondaEnv $EnvName
-        # Create package distribution
-        python setup.py bdist_wheel sdist --formats=gztar
-
-        if  ($LastExitCode -ne 0) {
-        Write-Host "##vso[task.logissue type=error;]Failed to build $Path."
-        $script:all_ok = $False
-        } else {
-            if ($OutDir -ne "") { 
-                Write-Host "##[info]Copying wheel to '$OutDir'"
-                Copy-Item "dist/*.whl" $OutDir/
-                Copy-Item "dist/*.tar.gz" $OutDir/
-            }
-        }
-    Pop-Location
-}
-
-
-function Invoke-Tests() {
-    param(
-        [string] $PackageName,
-        [string] $EnvName
-    )
-    $ParentPath = Split-Path -parent $PSScriptRoot
-    $AbsPackageDir = Join-Path $ParentPath $PackageName
-    "##[info]Test package $AbsPackageDir and run tests for env $EnvName" | Write-Host
-    # Activate env
-    Use-CondaEnv $EnvName | Write-Host
-    # Install testing deps
-    python -m pip install --upgrade pip | Write-Host
-    pip install pytest pytest-azurepipelines pytest-cov | Write-Host
-    # Run tests
-    $PkgName = $PackageName.replace("-", ".")
-    pytest --cov-report term --cov=$PkgName --junitxml test-output-$PackageName.xml $AbsPackageDir | Write-Host
-    return ($LASTEXITCODE -eq 0)
-}
\ No newline at end of file
+# Export functions
+Export-ModuleMember -Function Install-PackageInEnv
\ No newline at end of file
diff --git a/build/venv-utils.psm1 b/build/venv-utils.psm1
new file mode 100644
index 000000000..911a5f708
--- /dev/null
+++ b/build/venv-utils.psm1
@@ -0,0 +1,114 @@
+# Copyright (c) Microsoft Corporation.
+# Licensed under the MIT License.
+
+<#
+    .SYNOPSIS
+        PowerShell utilities for managing Python virtual environments
+#>
+
+function Get-VenvName {
+    <#
+    .SYNOPSIS
+        Get the virtual environment name for a package
+    .PARAMETER PackageName
+        The name of the package
+    #>
+    param(
+        [Parameter(Mandatory=$true)]
+        [string] $PackageName
+    )
+    
+    if ([string]::IsNullOrEmpty($PackageName) -or ($PackageName -eq "azure-quantum")) {
+        return "venv"
+    }
+    return "venv-$PackageName"
+}
+
+function New-VenvForPackage {
+    <#
+    .SYNOPSIS
+        Create a new virtual environment for the specified package
+    .PARAMETER PackageName
+        The name of the package
+    #>
+    param(
+        [Parameter(Mandatory=$true)]
+        [string] $PackageName
+    )
+    
+    $VenvName = Get-VenvName -PackageName $PackageName
+    $VenvPath = Join-Path (Get-Location) $VenvName
+    
+    Write-Host "Creating virtual environment '$VenvName' at '$VenvPath'..."
+    
+    # Create virtual environment if it doesn't exist
+    if (-not (Test-Path $VenvPath)) {
+        python -m venv $VenvPath
+        Write-Host "Virtual environment '$VenvName' created successfully."
+    } else {
+        Write-Host "Virtual environment '$VenvName' already exists."
+    }
+    
+    # Activate the environment
+    Use-Venv -VenvName $VenvName
+    
+    # Upgrade pip
+    Write-Host "Upgrading pip..."
+    python -m pip install --upgrade pip setuptools wheel
+}
+
+function Use-Venv {
+    <#
+    .SYNOPSIS
+        Activate the specified virtual environment
+    .PARAMETER VenvName
+        The name of the virtual environment to activate
+    #>
+    param(
+        [Parameter(Mandatory=$true)]
+        [string] $VenvName
+    )
+    
+    $VenvPath = Join-Path (Get-Location) $VenvName
+    $ActivateScript = Join-Path $VenvPath "Scripts\Activate.ps1"
+    
+    if (Test-Path $ActivateScript) {
+        Write-Host "Activating virtual environment '$VenvName'..."
+        # Ensure prompt function exists to avoid activation errors
+        if (-not (Get-Command prompt -ErrorAction SilentlyContinue)) {
+            function prompt { "PS $($executionContext.SessionState.Path.CurrentLocation)$('>' * ($nestedPromptLevel + 1)) " }
+        }
+        & $ActivateScript
+    } else {
+        Write-Warning "Virtual environment '$VenvName' not found at '$VenvPath'. Trying to use current Python environment."
+    }
+}
+
+function Install-PackageInVenv {
+    <#
+    .SYNOPSIS
+        Install a package in the current virtual environment
+    .PARAMETER PackageName
+        The name of the package to install
+    .PARAMETER FromSource
+        Whether to install from source (editable install)
+    #>
+    param(
+        [Parameter(Mandatory=$true)]
+        [string] $PackageName,
+        
+        [Parameter(Mandatory=$false)]
+        [bool] $FromSource = $false
+    )
+    
+    if ($FromSource) {
+        Write-Host "Installing '$PackageName' from source (editable install)..."
+        pip install -e ".$PackageName"
+    } else {
+        Write-Host "Installing '$PackageName' from PyPI..."
+        pip install $PackageName
+    }
+}
+
+# Export functions
+Export-ModuleMember -Function Enable-Venv, Get-VenvName, New-VenvForPackage, Use-Venv, Install-PackageInVenv
\ No newline at end of file