diff --git a/hgext/keyword.py b/hgext/keyword.py
--- a/hgext/keyword.py
+++ b/hgext/keyword.py
@@ -103,7 +103,7 @@ nokwcommands = ('add addremove annotate 
 # hg commands that trigger expansion only when writing to working dir,
 # not when reading filelog, and unexpand when reading from working dir
 restricted = ('merge kwexpand kwshrink record qrecord resolve transplant'
-              ' unshelve rebase graft')
+              ' unshelve rebase graft backout')
 
 # names of extensions using dorecord
 recordextensions = 'record'
diff --git a/tests/test-keyword.t b/tests/test-keyword.t
--- a/tests/test-keyword.t
+++ b/tests/test-keyword.t
@@ -1258,4 +1258,17 @@ Test restricted mode with graft
    $Xinfo$
   +xxxx
 
+Test restricted mode with backout
+
+  $ hg backout -q 11
+  $ hg diff a
+  diff -r 01a68de1003a a
+  --- a/a	Thu Jan 01 00:00:00 1970 +0000
+  +++ b/a	* (glob)
+  @@ -3,4 +3,3 @@
+   do not process $Id:
+   xxx $
+   $Xinfo$
+  -xxxx
+
   $ cd ..