diff --git a/src/screen.c b/src/screen.c
index 5ab2e85..77a3c18 100644
--- a/src/screen.c
+++ b/src/screen.c
@@ -8127,7 +8127,7 @@
 			term_bg_color(aep->ae_u.cterm.bg_color - 1);
 		}
 
-		if (t_colors <= 1)
+		if (!IS_CTERM)
 		{
 		    if (aep->ae_u.term.start != NULL)
 			out_str(aep->ae_u.term.start);
diff --git a/src/testdir/test_highlight.vim b/src/testdir/test_highlight.vim
index f3d7d0f..0c4be7b 100644
--- a/src/testdir/test_highlight.vim
+++ b/src/testdir/test_highlight.vim
@@ -514,3 +514,17 @@
   bwipe!
   diffoff
 endfunc
+
+func Test_termguicolors()
+  if !exists('+termguicolors')
+    return
+  endif
+
+  " Basic test that setting 'termguicolors' works with one color.
+  set termguicolors
+  redraw
+  set t_Co=1
+  redraw
+  set t_Co=0
+  redraw
+endfunc
diff --git a/src/version.c b/src/version.c
index eabf6fb..23b0168 100644
--- a/src/version.c
+++ b/src/version.c
@@ -767,6 +767,8 @@
 static int included_patches[] =
 {   /* Add new patch number below this line */
 /**/
+    1600,
+/**/
     1599,
 /**/
     1598,