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diff --git a/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts b/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts
index 30b72f90a8e..21855f79a52 100644
--- a/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts
+++ b/src/vs/workbench/contrib/terminal/browser/xterm/xtermTerminal.ts
@@ -125,6 +125,7 @@ export class XtermTerminal extends DisposableStore implements IXtermTerminal {
letterSpacing: font.letterSpacing,
lineHeight: font.lineHeight,
minimumContrastRatio: config.minimumContrastRatio,
+ allowTransparency: true,
cursorBlink: config.cursorBlinking,
cursorStyle: config.cursorStyle === 'line' ? 'bar' : config.cursorStyle,
cursorWidth: config.cursorWidth,
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