diff --git a/docs/internal.md b/docs/internal.md
index d6cd3cc7c0f..0884377fab3 100644
--- a/docs/internal.md
+++ b/docs/internal.md
@@ -102,6 +102,7 @@ Max file name length = 30
 The volume label is "cidata", as defined by [cloud-init NoCloud](https://cloudinit.readthedocs.io/en/latest/topics/datasources/nocloud.html).
 
 ### Environment variables
+- `LIMA_CIDATA_NAME`: the lima instance name
 - `LIMA_CIDATA_MNT`: the mount point of the disk. `/mnt/lima-cidata`.
 - `LIMA_CIDATA_USER`: the user name string
 - `LIMA_CIDATA_UID`: the numeric UID
diff --git a/pkg/cidata/cidata.TEMPLATE.d/boot/08-shell-prompt.sh b/pkg/cidata/cidata.TEMPLATE.d/boot/08-shell-prompt.sh
new file mode 100644
index 00000000000..d351f9f277e
--- /dev/null
+++ b/pkg/cidata/cidata.TEMPLATE.d/boot/08-shell-prompt.sh
@@ -0,0 +1,43 @@
+#!/bin/sh
+set -eux
+
+if [ "${LIMA_CIDATA_NAME}" = "default" ]; then
+
+	! grep -q "^# Lima PS1" "/home/${LIMA_CIDATA_USER}.linux/.bashrc" || exit 0
+
+	# Change the default shell prompt from "green" to "lime" (#BFFF00)
+
+	patch --forward -r - "/home/${LIMA_CIDATA_USER}.linux/.bashrc" <<'EOF'
+@@ -37,7 +37,11 @@
+ 
+ # set a fancy prompt (non-color, unless we know we "want" color)
+ case "$TERM" in
+-    xterm-color|*-256color) color_prompt=yes;;
++    xterm-color) color_prompt=yes;;
++    *-256color)  color_prompt=256;;
++esac
++case "$COLORTERM" in
++    truecolor) color_prompt=true;;
+ esac
+ 
+ # uncomment for a colored prompt, if the terminal has the capability; turned
+@@ -56,8 +60,13 @@
+     fi
+ fi
+ 
+-if [ "$color_prompt" = yes ]; then
+-    PS1='${debian_chroot:+($debian_chroot)}\[\033[01;32m\]\u@\h\[\033[00m\]:\[\033[01;34m\]\w\[\033[00m\]\$ '
++# Lima PS1: set color to lime
++if [ "$color_prompt" = true ]; then
++    PS1='${debian_chroot:+($debian_chroot)}\[\033[38;2;192;255;0m\]\u@\h\[\033[00m\]:\[\033[01;34m\]\w\[\033[00m\]\$ '
++elif [ "$color_prompt" = 256 ]; then
++    PS1='${debian_chroot:+($debian_chroot)}\[\033[38;5;154m\]\u@\h\[\033[00m\]:\[\033[01;34m\]\w\[\033[00m\]\$ '
++elif [ "$color_prompt" = yes ]; then
++    PS1='${debian_chroot:+($debian_chroot)}\[\033[01;92m\]\u@\h\[\033[00m\]:\[\033[01;34m\]\w\[\033[00m\]\$ '
+ else
+     PS1='${debian_chroot:+($debian_chroot)}\u@\h:\w\$ '
+ fi
+fi
+EOF
+
+fi
diff --git a/pkg/cidata/cidata.TEMPLATE.d/lima.env b/pkg/cidata/cidata.TEMPLATE.d/lima.env
index 3478dd03f9e..f36b8bcc31a 100644
--- a/pkg/cidata/cidata.TEMPLATE.d/lima.env
+++ b/pkg/cidata/cidata.TEMPLATE.d/lima.env
@@ -1,3 +1,4 @@
+LIMA_CIDATA_NAME={{ .Name }}
 LIMA_CIDATA_USER={{ .User }}
 LIMA_CIDATA_UID={{ .UID }}
 LIMA_CIDATA_MOUNTS={{ len .Mounts }}