diff --git a/macos/Sources/Features/Terminal/TerminalController.swift b/macos/Sources/Features/Terminal/TerminalController.swift
index 81c74987b..698551f3e 100644
--- a/macos/Sources/Features/Terminal/TerminalController.swift
+++ b/macos/Sources/Features/Terminal/TerminalController.swift
@@ -94,6 +94,16 @@ class TerminalController: BaseTerminalController {
         }
     }
 
+
+    override func fullscreenDidChange() {
+        super.fullscreenDidChange()
+
+        // When our fullscreen state changes, we resync our appearance because some
+        // properties change when fullscreen or not.
+        guard let focusedSurface else { return }
+        syncAppearance(focusedSurface.derivedConfig)
+    }
+
     //MARK: - Methods
 
     @objc private func ghosttyConfigDidChange(_ notification: Notification) {
@@ -204,7 +214,13 @@ class TerminalController: BaseTerminalController {
         }
 
         // If we have window transparency then set it transparent. Otherwise set it opaque.
-        if (surfaceConfig.backgroundOpacity < 1) {
+
+        // Window transparency only takes effect if our window is not native fullscreen.
+        // In native fullscreen we disable transparency/opacity because the background
+        // becomes gray and widgets show through.
+        if (!window.styleMask.contains(.fullScreen) &&
+            surfaceConfig.backgroundOpacity < 1
+        ) {
             window.isOpaque = false
 
             // This is weird, but we don't use ".clear" because this creates a look that
diff --git a/src/config/Config.zig b/src/config/Config.zig
index 2dc732752..97ac19226 100644
--- a/src/config/Config.zig
+++ b/src/config/Config.zig
@@ -527,6 +527,10 @@ palette: Palette = .{},
 /// The opacity level (opposite of transparency) of the background. A value of
 /// 1 is fully opaque and a value of 0 is fully transparent. A value less than 0
 /// or greater than 1 will be clamped to the nearest valid value.
+///
+/// On macOS, background opacity is disabled when the terminal enters native
+/// fullscreen. This is because the background becomes gray and it can cause
+/// widgets to show through which isn't generally desirable.
 @"background-opacity": f64 = 1.0,
 
 /// A positive value enables blurring of the background when background-opacity