diff --git a/src/browser/ColorManager.ts b/src/browser/ColorManager.ts
index f11ef8fd..d91f6819 100644
--- a/src/browser/ColorManager.ts
+++ b/src/browser/ColorManager.ts
@@ -111,9 +111,14 @@ export class ColorManager implements IColorManager {
     this._updateRestoreColors();
   }
 
-  public onOptionsChange(key: string): void {
-    if (key === 'minimumContrastRatio') {
-      this._contrastCache.clear();
+  public onOptionsChange(key: string, value: any): void {
+    switch (key) {
+      case 'minimumContrastRatio':
+        this._contrastCache.clear();
+        break;
+      case 'allowTransparency':
+        this.allowTransparency = value;
+        break;
     }
   }
 
diff --git a/src/browser/Terminal.ts b/src/browser/Terminal.ts
index 83b66013..bd82325d 100644
--- a/src/browser/Terminal.ts
+++ b/src/browser/Terminal.ts
@@ -517,7 +517,7 @@ export class Terminal extends CoreTerminal implements ITerminal {
 
     this._theme = this.options.theme || this._theme;
     this._colorManager = new ColorManager(document, this.options.allowTransparency);
-    this.register(this.optionsService.onOptionChange(e => this._colorManager!.onOptionsChange(e)));
+    this.register(this.optionsService.onOptionChange(e => this._colorManager!.onOptionsChange(e, this.optionsService.rawOptions[e])));
     this._colorManager.setTheme(this._theme);
 
     this._characterJoinerService = this._instantiationService.createInstance(CharacterJoinerService);
diff --git a/src/browser/Types.d.ts b/src/browser/Types.d.ts
index 4e203ab7..41992a8b 100644
--- a/src/browser/Types.d.ts
+++ b/src/browser/Types.d.ts
@@ -110,7 +110,7 @@ export interface IBrowser {
 
 export interface IColorManager {
   colors: IColorSet;
-  onOptionsChange(key: string): void;
+  onOptionsChange(key: string, value: any): void;
 }
 
 export interface IColorSet {