diff --git a/macos/Sources/Features/Terminal/BaseTerminalController.swift b/macos/Sources/Features/Terminal/BaseTerminalController.swift
index 5d9d5d527..eca789d47 100644
--- a/macos/Sources/Features/Terminal/BaseTerminalController.swift
+++ b/macos/Sources/Features/Terminal/BaseTerminalController.swift
@@ -766,7 +766,8 @@ class BaseTerminalController: NSWindowController,
             ghostty,
             tree: newTree,
             position: notification.userInfo?[Notification.Name.ghosttySurfaceDragEndedNoTargetPointKey] as? NSPoint,
-            confirmUndo: false)
+            confirmUndo: false,
+            inheritBackgroundOpacityFrom: self as? TerminalController)
     }
 
     // MARK: Local Events
diff --git a/macos/Sources/Features/Terminal/TerminalController.swift b/macos/Sources/Features/Terminal/TerminalController.swift
index 56b0b40ad..066e9430c 100644
--- a/macos/Sources/Features/Terminal/TerminalController.swift
+++ b/macos/Sources/Features/Terminal/TerminalController.swift
@@ -230,6 +230,9 @@ class TerminalController: BaseTerminalController, TabGroupCloseCoordinator.Contr
         // Get our parent. Our parent is the one explicitly given to us,
         // otherwise the focused terminal, otherwise an arbitrary one.
         let parent: NSWindow? = explicitParent ?? preferredParent?.window
+        if let parentController = parent?.windowController as? TerminalController {
+            c.isBackgroundOpaque = parentController.isBackgroundOpaque
+        }
 
         if let parent, parent.styleMask.contains(.fullScreen) {
             // If our previous window was fullscreen then we want our new window to
@@ -313,8 +316,12 @@ class TerminalController: BaseTerminalController, TabGroupCloseCoordinator.Contr
         tree: SplitTree<Ghostty.SurfaceView>,
         position: NSPoint? = nil,
         confirmUndo: Bool = true,
+        inheritBackgroundOpacityFrom parentController: TerminalController? = nil
     ) -> TerminalController {
         let c = TerminalController.init(ghostty, withSurfaceTree: tree)
+        if let parentController {
+            c.isBackgroundOpaque = parentController.isBackgroundOpaque
+        }
 
         // Calculate the target frame based on the tree's view bounds
         let treeSize: CGSize? = tree.root?.viewBounds()
@@ -359,7 +366,11 @@ class TerminalController: BaseTerminalController, TabGroupCloseCoordinator.Contr
                     withTarget: ghostty,
                     expiresAfter: target.undoExpiration
                 ) { ghostty in
-                    _ = TerminalController.newWindow(ghostty, tree: tree)
+                    _ = TerminalController.newWindow(
+                        ghostty,
+                        tree: tree,
+                        inheritBackgroundOpacityFrom: parentController
+                    )
                 }
             }
         }
@@ -394,6 +405,7 @@ class TerminalController: BaseTerminalController, TabGroupCloseCoordinator.Contr
 
         // Create a new window and add it to the parent
         let controller = TerminalController.init(ghostty, withBaseConfig: baseConfig)
+        controller.isBackgroundOpaque = parentController.isBackgroundOpaque
         guard let window = controller.window else { return controller }
 
         // If the parent is miniaturized, then macOS exhibits really strange behaviors
@@ -491,6 +503,30 @@ class TerminalController: BaseTerminalController, TabGroupCloseCoordinator.Contr
         return controller
     }
 
+    override func toggleBackgroundOpacity() {
+        // Do nothing if config is already fully opaque
+        guard ghostty.config.backgroundOpacity < 1 else { return }
+
+        // Do nothing if in fullscreen (transparency doesn't apply in fullscreen)
+        guard let window, !window.styleMask.contains(.fullScreen) else { return }
+
+        let newValue = !isBackgroundOpaque
+        let controllers: [TerminalController]
+
+        if let tabGroup = window.tabGroup {
+            controllers = tabGroup.windows.compactMap {
+                $0.windowController as? TerminalController
+            }
+        } else {
+            controllers = [self]
+        }
+
+        for controller in controllers {
+            controller.isBackgroundOpaque = newValue
+            controller.syncAppearance()
+        }
+    }
+
     // MARK: - Methods
 
     @objc private func ghosttyConfigDidChange(_ notification: Notification) {