diff --git a/image.c b/image.c
index dcc1edae0..cb73fe902 100644
--- a/image.c
+++ b/image.c
@@ -530,7 +530,7 @@ image_get_fallback_cell(__unused struct tty *tty, struct image *im, u_int x,
 void
 image_set_cell(struct grid_cell *gc, struct image *im, u_int x, u_int y)
 {
-	memcpy(gc, &grid_default_cell, sizeof *gc);
+	/* Keep the cell contents as the underlay for transparent pixels. */
 	gc->flags |= GRID_FLAG_IMAGE;
 	gc->image_id = im->id;
 	gc->image_x = x;
@@ -672,7 +672,9 @@ image_clear(struct screen_write_ctx *ctx, u_int id)
 				if (y >= gd->hsize)
 					image_redraw_area(ctx, x, y - gd->hsize,
 					    1, 1);
-				grid_set_cell(gd, x, y, &grid_default_cell);
+				gc.flags &= ~GRID_FLAG_IMAGE;
+				gc.image_id = gc.image_x = gc.image_y = 0;
+				grid_set_cell(gd, x, y, &gc);
 			}
 		}
 	}
@@ -810,8 +812,8 @@ image_write(struct screen_write_ctx *ctx, struct image *im, u_int bg)
 
 	for (y = 0; y < sy; y++) {
 		for (x = 0; x < sx; x++) {
+			grid_view_get_cell(gd, cx + x, cy + y, &gc);
 			image_set_cell(&gc, im, x, origin_y + y);
-			gc.bg = bg;
 			grid_view_set_cell(gd, cx + x, cy + y, &gc);
 		}
 	}
diff --git a/regress/image-support.sh b/regress/image-support.sh
index 079680792..aa19fa791 100755
--- a/regress/image-support.sh
+++ b/regress/image-support.sh
@@ -223,6 +223,18 @@ $TMUX capture-pane -pS0 -E3 >$TMP || exit 1
 [ -z "$(sed -n 2p $TMP)" ] || exit 1
 [ "$(sed -n 4p $TMP)" = "     @@" ] || exit 1
 
+# Image markers retain the cells beneath them. Deleting a transparent image
+# must reveal the original text rather than replacing it with spaces.
+PLACEMENT_WINDOW=$($TMUX2 new-window -dP -F '#{window_id}' "
+	printf 'XY'
+	printf '\033[H'
+	printf '\033_Ga=T,q=2,C=1,f=32,s=1,v=1,c=2,r=1,i=13,p=7;////AA==\033\\'
+	printf '\033_Ga=d,d=i,q=2,i=13,p=7\033\\'
+	sleep 10") || exit 1
+$TMUX2 select-window -t"$PLACEMENT_WINDOW" || exit 1
+sleep 1
+[ "$($TMUX2 capture-pane -pS0 -E0)" = "XY" ] || exit 1
+
 # A weighted median at the maximum channel level must still leave colours on
 # both sides of the split. This skewed black, grey and white image used to stop
 # palette generation after one colour instead of producing three.
diff --git a/tty-draw.c b/tty-draw.c
index 6e815cb54..ff3f6148c 100644
--- a/tty-draw.c
+++ b/tty-draw.c
@@ -29,7 +29,6 @@ enum tty_draw_line_state {
 	TTY_DRAW_LINE_NEW1,
 	TTY_DRAW_LINE_NEW2,
 	TTY_DRAW_LINE_EMPTY,
-	TTY_DRAW_LINE_IMAGE,
 	TTY_DRAW_LINE_SAME,
 	TTY_DRAW_LINE_DONE
 };
@@ -39,7 +38,6 @@ static const char* tty_draw_line_states[] = {
 	"NEW1",
 	"NEW2",
 	"EMPTY",
-	"IMAGE",
 	"SAME",
 	"DONE"
 };
@@ -132,7 +130,7 @@ tty_draw_line(struct tty *tty, struct screen *s, u_int px, u_int py, u_int nx,
 	struct grid_line	*gl;
 	u_int			 i, j, last_i, cx, ex, width;
 	u_int			 cellsize, bg;
-	int			 flags, empty, skip, wrapped = 0;
+	int			 flags, empty, wrapped = 0;
 	char			 buf[1000];
 	size_t			 len;
 	enum tty_draw_line_state current_state, next_state;
@@ -237,8 +235,6 @@ tty_draw_line(struct tty *tty, struct screen *s, u_int px, u_int py, u_int nx,
 	width = 0;
 	current_state = TTY_DRAW_LINE_FIRST;
 	for (;;) {
-		skip = 0;
-
 		/* Work out the next state. */
 		if (i == nx) {
 			/*
@@ -262,24 +258,22 @@ tty_draw_line(struct tty *tty, struct screen *s, u_int px, u_int py, u_int nx,
 				grid_view_get_cell(gd, px + i, py, &gc);
 
 #ifdef ENABLE_IMAGES
-				/* Text terminals render image blocks as ASCII. */
+				/*
+				 * Graphical terminals draw the saved cell underlay
+				 * before the image; text terminals use ASCII.
+				 */
 				if (gc.flags & GRID_FLAG_IMAGE) {
 					im = image_find(gc.image_id);
 					if (image_tty_is_graphical(tty)) {
 						memcpy(&image_gc, &gc,
 						    sizeof image_gc);
-						utf8_set(&image_gc.data, ' ');
-						image_gc.flags &=
-						    ~GRID_FLAG_IMAGE;
-						skip = 1;
+						image_gc.flags &= ~(GRID_FLAG_IMAGE|
+						    GRID_FLAG_SELECTED);
 					} else {
 						image_get_fallback_cell(tty, im,
 						    gc.image_x, gc.image_y, &gc,
 						    &image_gc, style_ctx);
 					}
-					if (skip)
-						image_gc.flags &=
-						    ~GRID_FLAG_SELECTED;
 					gcp = &image_gc;
 				} else
 					gcp = &gc;
@@ -288,12 +282,8 @@ tty_draw_line(struct tty *tty, struct screen *s, u_int px, u_int py, u_int nx,
 #endif
 
 				/* Work out empty cells. */
-				if (skip)
-					empty = 0;
-				else
-					empty = tty_draw_line_get_empty(gcp,
-					    &last, nx - i);
-				if (empty != 0 || skip)
+				empty = tty_draw_line_get_empty(gcp, &last, nx - i);
+				if (empty != 0)
 					;
 				else {
 					/* Update for codeset if needed. */
@@ -310,9 +300,7 @@ tty_draw_line(struct tty *tty, struct screen *s, u_int px, u_int py, u_int nx,
 			}
 
 			/* Work out the next state. */
-			if (skip)
-				next_state = TTY_DRAW_LINE_IMAGE;
-			else if (empty != 0)
+			if (empty != 0)
 				next_state = TTY_DRAW_LINE_EMPTY;
 			else if (current_state == TTY_DRAW_LINE_FIRST)
 				next_state = TTY_DRAW_LINE_SAME;
@@ -359,8 +347,7 @@ tty_draw_line(struct tty *tty, struct screen *s, u_int px, u_int py, u_int nx,
 		}
 
 		/* Append the cell if it is not empty and not padding. */
-		if (next_state != TTY_DRAW_LINE_EMPTY &&
-		    next_state != TTY_DRAW_LINE_IMAGE) {
+		if (next_state != TTY_DRAW_LINE_EMPTY) {
 			memcpy(buf + len, gcp->data.data, gcp->data.size);
 			len += gcp->data.size;
 			width += gcp->data.width;