diff --git a/hgext/color.py b/hgext/color.py
--- a/hgext/color.py
+++ b/hgext/color.py
@@ -175,9 +175,6 @@ from mercurial import (
     cmdutil,
     color,
     commands,
-    dispatch,
-    extensions,
-    ui as uimod,
 )
 
 cmdtable = {}
@@ -188,15 +185,6 @@ command = cmdutil.command(cmdtable)
 # leave the attribute unspecified.
 testedwith = 'ships-with-hg-core'
 
-def uisetup(ui):
-    def colorcmd(orig, ui_, opts, cmd, cmdfunc):
-        mode = color._modesetup(ui_, opts['color'])
-        uimod.ui._colormode = mode
-        if mode and mode != 'debug':
-            color.configstyles(ui_)
-        return orig(ui_, opts, cmd, cmdfunc)
-    extensions.wrapfunction(dispatch, '_runcommand', colorcmd)
-
 def extsetup(ui):
     # change default color config
     for idx, entry in enumerate(commands.globalopts):
diff --git a/mercurial/color.py b/mercurial/color.py
--- a/mercurial/color.py
+++ b/mercurial/color.py
@@ -161,6 +161,17 @@ def _terminfosetup(ui, mode):
               "ECMA-48 color\n"))
         _terminfo_params.clear()
 
+def setup(ui, coloropts):
+    """configure color on a ui
+
+    The 'coloropts' argument is the value of the '--color' command line
+    argument. That function both set the colormode for the ui object and read
+    the configuration looking for custom colors and effect definitions."""
+    mode = _modesetup(ui, coloropts)
+    ui.__class__._colormode = mode
+    if mode and mode != 'debug':
+        configstyles(ui)
+
 def _modesetup(ui, coloropt):
     if ui.plain():
         return None
diff --git a/mercurial/dispatch.py b/mercurial/dispatch.py
--- a/mercurial/dispatch.py
+++ b/mercurial/dispatch.py
@@ -764,6 +764,10 @@ def _dispatch(req):
             for ui_ in uis:
                 ui_.insecureconnections = True
 
+        # setup color handling
+        for ui_ in uis:
+            color.setup(ui_, options['color'])
+
         if options['version']:
             return commands.version_(ui)
         if options['help']:
diff --git a/tests/test-status-color.t b/tests/test-status-color.t
--- a/tests/test-status-color.t
+++ b/tests/test-status-color.t
@@ -295,6 +295,7 @@ test unknown color
 
   $ hg --config color.status.modified=periwinkle status --color=always
   ignoring unknown color/effect 'periwinkle' (configured in color.status.modified)
+  ignoring unknown color/effect 'periwinkle' (configured in color.status.modified)
   M modified
   \x1b[0;32;1mA \x1b[0m\x1b[0;32;1madded\x1b[0m (esc)
   \x1b[0;32;1mA \x1b[0m\x1b[0;32;1mcopied\x1b[0m (esc)