if (!strcmp(var, "diff.color")) {
                if (!value)
                        diff_use_color_default = 1; /* bool */
-               else if (!strcasecmp(value, "auto"))
-                       diff_use_color_default = isatty(1);
+               else if (!strcasecmp(value, "auto")) {
+                       diff_use_color_default = 0;
+                       if (isatty(1)) {
+                               char *term = getenv("TERM");
+                               if (term && strcmp(term, "dumb"))
+                                       diff_use_color_default = 1;
+                       }
+               }
                else if (!strcasecmp(value, "never"))
                        diff_use_color_default = 0;
                else if (!strcasecmp(value, "always"))