diff --git a/addons/xterm-addon-webgl/src/WebglRenderer.ts b/addons/xterm-addon-webgl/src/WebglRenderer.ts
index 6d84bd26..c42c0067 100644
--- a/addons/xterm-addon-webgl/src/WebglRenderer.ts
+++ b/addons/xterm-addon-webgl/src/WebglRenderer.ts
@@ -412,18 +412,32 @@ export class WebglRenderer extends Disposable implements IRenderer {
     // ahead of time in order to use the correct cache key
     if (bgOverride !== undefined) {
       // Non-RGB attributes from model + override + force RGB color mode
-      if (this._workColors.fg & FgFlags.INVERSE) {
-        bgOverride = (this._workColors.bg & ~Attributes.RGB_MASK) | (fgOverride !== undefined ? fgOverride : this._workColors.fg) | Attributes.CM_RGB;
-      } else {
-        bgOverride = (this._workColors.bg & ~Attributes.RGB_MASK) | bgOverride | Attributes.CM_RGB;
-      }
+      bgOverride = (this._workCell.bg & ~Attributes.RGB_MASK) | bgOverride | Attributes.CM_RGB;
     }
     if (fgOverride !== undefined) {
       // Non-RGB attributes from model + force disable inverse + override + force RGB color mode
-      if (this._workColors.fg & FgFlags.INVERSE) {
-        fgOverride = (this._workColors.fg & ~Attributes.RGB_MASK & ~FgFlags.INVERSE) | (bgOverride !== undefined ? bgOverride : this._workColors.bg) | Attributes.CM_RGB;
-      } else {
-        fgOverride = (this._workColors.fg & ~Attributes.RGB_MASK & ~FgFlags.INVERSE) | fgOverride | Attributes.CM_RGB;
+      fgOverride = (this._workCell.fg & ~Attributes.RGB_MASK & ~FgFlags.INVERSE) | fgOverride | Attributes.CM_RGB;
+    }
+
+    // Handle case where inverse was specified by only one of bgOverride or fgOverride was set,
+    // resolving the other inverse color and setting the inverse flag if needed.
+    if (this._workColors.fg & FgFlags.INVERSE) {
+      if (bgOverride !== undefined && fgOverride === undefined) {
+        // Resolve bg color type (default color has a different meaning in fg vs bg)
+        debugger;
+        if ((this._workColors.bg & Attributes.CM_MASK) === Attributes.CM_DEFAULT) {
+          fgOverride = (this._workColors.fg & ~(Attributes.RGB_MASK | FgFlags.INVERSE | Attributes.CM_MASK)) | ((this._colors.background.rgba >> 8 & 0xFFFFFF) & Attributes.RGB_MASK) | Attributes.CM_RGB;
+        } else {
+          fgOverride = (this._workColors.fg & ~(Attributes.RGB_MASK | FgFlags.INVERSE | Attributes.CM_MASK)) | this._workColors.bg & (Attributes.RGB_MASK | Attributes.CM_MASK);
+        }
+      }
+      if (bgOverride === undefined && fgOverride !== undefined) {
+        // Resolve bg color type (default color has a different meaning in fg vs bg)
+        if ((this._workColors.fg & Attributes.CM_MASK) === Attributes.CM_DEFAULT) {
+          bgOverride = (this._workColors.bg & ~(Attributes.RGB_MASK | Attributes.CM_MASK)) | ((this._colors.foreground.rgba >> 8 & 0xFFFFFF) & Attributes.RGB_MASK) | Attributes.CM_RGB;
+        } else {
+          bgOverride = (this._workColors.bg & ~(Attributes.RGB_MASK | Attributes.CM_MASK)) | this._workColors.fg & (Attributes.RGB_MASK | Attributes.CM_MASK);
+        }
       }
     }
 
diff --git a/addons/xterm-addon-webgl/test/WebglRenderer.api.ts b/addons/xterm-addon-webgl/test/WebglRenderer.api.ts
index 15359409..cec1e3b1 100644
--- a/addons/xterm-addon-webgl/test/WebglRenderer.api.ts
+++ b/addons/xterm-addon-webgl/test/WebglRenderer.api.ts
@@ -875,9 +875,9 @@ describe('WebGL Renderer Integration Tests', async () => {
     });
   });
 
-  describe.only('decoration color overrides', async () => {
+  describe('decoration color overrides', async () => {
     if (areTestsEnabled) {
-      before(async () => setupBrowser({ rendererType: 'dom', allowTransparency: true }));
+      before(async () => setupBrowser({ rendererType: 'dom' }));
       after(async () => browser.close());
       beforeEach(async () => page.evaluate(`window.term.reset()`));
     }
@@ -904,10 +904,24 @@ describe('WebGL Renderer Integration Tests', async () => {
           backgroundColor: '#0000ff'
         });
       `);
-      const data = `\\x1b[7m█\\x1b0m`;
+      const data = `\\x1b[7m█\\x1b[0m`;
       await writeSync(page, data);
       await pollFor(page, () => getCellColor(1, 1), [255, 0, 0, 255]);
     });
+    itWebgl('foregroundColor should ignore inverse (only fg on decoration)', async () => {
+      await page.evaluate(`
+        const marker = window.term.registerMarker(-window.term.buffer.active.cursorY);
+        window.term.registerDecoration({
+          marker,
+          width: 2,
+          foregroundColor: '#ff0000'
+        });
+      `);
+      const data = `\\x1b[7m█ \\x1b[0m`;
+      await writeSync(page, data);
+      await pollFor(page, () => getCellColor(1, 1), [255, 0, 0, 255]); // inverse foreground of '█' should be decoration fg override
+      await pollFor(page, () => getCellColor(2, 1), [255, 255, 255, 255]); // inverse background of ' ' should be default foreground
+    });
     itWebgl('backgroundColor', async () => {
       await page.evaluate(`
         const marker = window.term.registerMarker(-window.term.buffer.active.cursorY);
@@ -930,10 +944,24 @@ describe('WebGL Renderer Integration Tests', async () => {
           backgroundColor: '#0000ff'
         });
       `);
-      const data = `\\x1b[7m \\x1b0m`;
+      const data = `\\x1b[7m \\x1b[0m`;
       await writeSync(page, data);
       await pollFor(page, () => getCellColor(1, 1), [0, 0, 255, 255]);
     });
+    itWebgl('backgroundColor should ignore inverse (only bg on decoration)', async () => {
+      const data = `\\x1b[7m█ \\x1b[0m`;
+      await writeSync(page, data);
+      await page.evaluate(`
+        const marker = window.term.registerMarker(-window.term.buffer.active.cursorY);
+        window.term.registerDecoration({
+          marker,
+          width: 2,
+          backgroundColor: '#0000ff'
+        });
+      `);
+      await pollFor(page, () => getCellColor(1, 1), [0, 0, 0, 255]); // inverse foreground of '█' should be default
+      await pollFor(page, () => getCellColor(2, 1), [0, 0, 255, 255]); // inverse background of ' ' should be decoration bg override
+    });
   });
 });