diff --git a/browser/app/profile/firefox.js b/browser/app/profile/firefox.js
index a03b6ce1806..c7f9e69305f 100644
--- a/browser/app/profile/firefox.js
+++ b/browser/app/profile/firefox.js
@@ -309,7 +309,8 @@ pref("browser.link.open_newwindow", 3);
 pref("browser.link.open_newwindow.restriction", 2);
 
 // Tabbed browser
-pref("browser.tabs.autoHide", false);
+pref("browser.tabs.autoHide", true);
+pref("browser.tabs.forceHide", false);
 pref("browser.tabs.warnOnClose", true);
 pref("browser.tabs.warnOnOpen", true);
 pref("browser.tabs.maxOpenBeforeWarn", 15);
diff --git a/browser/base/content/browser.js b/browser/base/content/browser.js
index 19649710fdc..e84fb05ed11 100644
--- a/browser/base/content/browser.js
+++ b/browser/base/content/browser.js
@@ -1313,6 +1313,7 @@ AutoHideTabbarPrefListener.prototype =
       catch (e) {
       }
       gBrowser.setStripVisibilityTo(aVisible);
+      gPrefService.setBoolPref("browser.tabs.forceHide", false);
     }
   }
 }
@@ -1635,7 +1636,8 @@ function BrowserOpenFileWindow()
   }
 }
 
-function BrowserCloseTabOrWindow() {
+function BrowserCloseTabOrWindow()
+{
 #ifdef XP_MACOSX
   // If we're not a browser window, just close the window
   if (window.location.href != getBrowserURL()) {
@@ -1644,8 +1646,23 @@ function BrowserCloseTabOrWindow() {
   }
 #endif
 
-  // If the current tab is the last one, this will close the window.
-  gBrowser.removeCurrentTab();
+  if (gBrowser.tabContainer.childNodes.length > 1) {
+    gBrowser.removeCurrentTab(); 
+    return;
+  }
+
+#ifndef XP_MACOSX
+  if (gBrowser.localName == "tabbrowser" && window.toolbar.visible &&
+      !gPrefService.getBoolPref("browser.tabs.autoHide")) {
+    // Replace the remaining tab with a blank one and focus the address bar
+    gBrowser.removeCurrentTab();
+    if (gURLBar)
+      setTimeout(function() { gURLBar.focus(); }, 0);
+    return;
+  }
+#endif
+
+  closeWindow(true);
 }
 
 function BrowserTryToCloseWindow()
diff --git a/browser/base/content/tabbrowser.xml b/browser/base/content/tabbrowser.xml
index f6efd1c1f54..640adbdace3 100644
--- a/browser/base/content/tabbrowser.xml
+++ b/browser/base/content/tabbrowser.xml
@@ -1217,6 +1217,8 @@
             if (this.mStrip.collapsed)
               this.setStripVisibilityTo(true);
 
+            this.mPrefs.setBoolPref("browser.tabs.forceHide", false);
+
             // wire up a progress listener for the new browser object.
             var position = this.mTabContainer.childNodes.length-1;
             var tabListener = this.mTabProgressListener(t, b, blank);
@@ -1402,31 +1404,40 @@
             if (aTab.localName != "tab")
               aTab = this.mCurrentTab;
 
-            if (aFireBeforeUnload) {
-              let ds = this.getBrowserForTab(aTab).docShell;
-              if (ds.contentViewer && !ds.contentViewer.permitUnload())
-                return null;
+            var l = this.mTabContainer.childNodes.length;
+            if (l == 1 && this.mPrefs.getBoolPref("browser.tabs.autoHide")) {
+              // hide the tab bar
+              this.mPrefs.setBoolPref("browser.tabs.forceHide", true);
+              this.setStripVisibilityTo(false);
+              return;
             }
 
-            var l = this.mTabContainer.childNodes.length;
-            if (l == 1) {
-              closeWindow(true);
-              return null;
+            if (aFireBeforeUnload) {
+              var ds = this.getBrowserForTab(aTab).docShell;
+              if (ds.contentViewer && !ds.contentViewer.permitUnload())
+                return;
             }
-            if (l == 2) {
+
+            // see notes in addTab
+            var _delayedUpdate = function(aTabContainer) {
+              aTabContainer.adjustTabstrip();
+              aTabContainer.mTabstrip._updateScrollButtonsDisabledState();
+            }
+            setTimeout(_delayedUpdate, 0, this.mTabContainer);
+
+            if (l == 1) {
+              // add a new blank tab to replace the one we're about to close
+              // (this ensures that the remaining tab is as good as new)
+              this.addTab("about:blank");
+              l++;
+            }
+            else if (l == 2) {
               var autohide = this.mPrefs.getBoolPref("browser.tabs.autoHide");
               var tabStripHide = !window.toolbar.visible;
               if (autohide || tabStripHide)
                 this.setStripVisibilityTo(false);
             }
 
-            // see notes in addTab
-            var _delayedUpdate = function (aTabContainer) {
-              aTabContainer.adjustTabstrip();
-              aTabContainer.mTabstrip._updateScrollButtonsDisabledState();
-            };
-            setTimeout(_delayedUpdate, 0, this.mTabContainer);
-
             // We're committed to closing the tab now.  
             // Dispatch a notification.
             // We dispatch it before any teardown so that event listeners can
@@ -1468,9 +1479,6 @@
         <parameter name="aTab"/>
         <body>
           <![CDATA[
-            if (!aTab)
-              return null;
-
             var browser = this.getBrowserForTab(aTab);
             var length = this.mTabs.length;
 
@@ -1660,8 +1668,9 @@
             if (!this.mAddProgressListenerWasCalled) {
               this.mAddProgressListenerWasCalled = true;
               var autoHide = this.mPrefs.getBoolPref("browser.tabs.autoHide");
+              var forceHide = this.mPrefs.getBoolPref("browser.tabs.forceHide");
               var tabStripHide = !window.toolbar.visible;
-              if (!autoHide && !tabStripHide)
+              if (!autoHide && !forceHide && !tabStripHide)
                 this.setStripVisibilityTo(true);
             }