diff --git a/mercurial/color.py b/mercurial/color.py
--- a/mercurial/color.py
+++ b/mercurial/color.py
@@ -193,7 +193,14 @@ def _modesetup(ui):
         return 'debug'
 
     auto = (config == 'auto')
-    always = not auto and util.parsebool(config)
+    always = False
+    if not auto and util.parsebool(config):
+        # we want the config to behave like a boolean, "on" is actually auto
+        if ui.configsource('ui', 'color') == '--color':
+            always = True
+        else:
+            auto = True
+
     if not always and not auto:
         return None
 
diff --git a/mercurial/help/color.txt b/mercurial/help/color.txt
--- a/mercurial/help/color.txt
+++ b/mercurial/help/color.txt
@@ -5,15 +5,15 @@ in red, while the status command shows m
 other commands have analogous colors. It is possible to customize
 these colors.
 
-To enable color (default) use::
+To enable color (default) whenever possible use::
 
   [ui]
-  color = auto
+  color = yes
 
 To disable color use::
 
   [ui]
-  color = never
+  color = no
 
 See :hg:`help config.ui.color` for details.
 
diff --git a/mercurial/help/config.txt b/mercurial/help/config.txt
--- a/mercurial/help/config.txt
+++ b/mercurial/help/config.txt
@@ -1884,9 +1884,9 @@ User interface controls.
     By default, the first bundle advertised by the server is used.
 
 ``color``
-    When to colorize output. Possible value are Boolean, "always", "auto",
-    "never", or "debug". (default: "auto"). "auto" will use color
-    whenever it seems possible. See :hg:`help color` for details.
+    When to colorize output. Possible value are Boolean ("yes" or "no"), or
+    "debug". (default: "yes"). "yes" will use color whenever it seems possible.
+    See :hg:`help color` for details.
 
 ``commitsubrepos``
     Whether to commit modified subrepositories when committing the
diff --git a/tests/test-diff-color.t b/tests/test-diff-color.t
--- a/tests/test-diff-color.t
+++ b/tests/test-diff-color.t
@@ -3,6 +3,7 @@ Setup
   $ cat <<EOF >> $HGRCPATH
   > [ui]
   > color = always
+  > formatted = always
   > [color]
   > mode = ansi
   > EOF
@@ -49,6 +50,38 @@ default context
    a
    c
 
+(check that 'ui.color=yes' match '--color=auto')
+
+  $ hg diff --nodates --config ui.formatted=no
+  diff -r cf9f4ba66af2 a
+  --- a/a
+  +++ b/a
+  @@ -2,7 +2,7 @@
+   c
+   a
+   a
+  -b
+  +dd
+   a
+   a
+   c
+
+(check that 'ui.color=no' disable color)
+
+  $ hg diff --nodates --config ui.formatted=yes --config ui.color=no
+  diff -r cf9f4ba66af2 a
+  --- a/a
+  +++ b/a
+  @@ -2,7 +2,7 @@
+   c
+   a
+   a
+  -b
+  +dd
+   a
+   a
+   c
+
 --unified=2
 
   $ hg diff --nodates -U 2
diff --git a/tests/test-pager-legacy.t b/tests/test-pager-legacy.t
--- a/tests/test-pager-legacy.t
+++ b/tests/test-pager-legacy.t
@@ -161,6 +161,7 @@ even though stdout is no longer a tty.
   $ cat >> $HGRCPATH <<EOF
   > [ui]
   > color = yes
+  > formatted = yes
   > [color]
   > mode = ansi
   > EOF
diff --git a/tests/test-pager.t b/tests/test-pager.t
--- a/tests/test-pager.t
+++ b/tests/test-pager.t
@@ -142,6 +142,7 @@ even though stdout is no longer a tty.
   $ cat >> $HGRCPATH <<EOF
   > [ui]
   > color = yes
+  > formatted = yes
   > [color]
   > mode = ansi
   > EOF
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
@@ -1,6 +1,7 @@
   $ cat <<EOF >> $HGRCPATH
   > [ui]
   > color = always
+  > formatted = yes
   > [color]
   > mode = ansi
   > EOF