Is it possible to detach the terminal window from VSCode?

I do not think it is possible to open the integrated terminal (or anything in the panel) in a new window directly. If you do not want to use an external terminal you could:

• make the terminal its' smallest possible size and maximize it using the "^" button (Image of the ^ button) on demand. You can also set a shortcut for workbench.action.toggleMaximizedPanel to achieve this more efficiently.

• create a new VSCode Window and only work with the panel / integrated terminal in the new window.

[Note: This answer is outdated. Now this is directly possible. See the following answers, including hitting Ctrl+k o ]

I suggest to simply not to use the built in terminal, but open a standalone one out of VS Code.
You can use any terminal you want.

Detached windows using the same workspace is not supported yet in Visual Studio Code. The highly upvoted feature request is at https://github.com/microsoft/vscode/issues/10121.

Since VsCode is kind of a electron application, its UI is a webpage rendered inside embedded chromium browser. See for yourself: Open menu Help / Toggle Developer tools.

So you're basically asking if you can pop out DIV of a web page and "open" it in another browser instance. This is not possible.