diff --git a/diff.c b/diff.c
index 108c1875775df2..a22d61a5c45803 100644
--- a/diff.c
+++ b/diff.c
@@ -4926,7 +4926,8 @@ void diff_setup_done(struct diff_options *options)
 	if (options->flags.follow_renames)
 		diff_check_follow_pathspec(&options->pathspec, 1);
 
-	if (!options->use_color || external_diff())
+	if (!options->use_color ||
+	    (options->flags.allow_external && external_diff()))
 		options->color_moved = 0;
 
 	if (options->filter_not) {
diff --git a/t/t4015-diff-whitespace.sh b/t/t4015-diff-whitespace.sh
index b443626afd7271..851cfe4f32cd8d 100755
--- a/t/t4015-diff-whitespace.sh
+++ b/t/t4015-diff-whitespace.sh
@@ -1184,6 +1184,15 @@ test_expect_success 'detect moved code, complete file' '
 	test_cmp expected actual
 '
 
+test_expect_success '--color-moved with --no-ext-diff' '
+	test_config color.diff.oldMoved "yellow" &&
+	test_config color.diff.newMoved "blue" &&
+	args="--color --color-moved=zebra --no-renames HEAD" &&
+	git diff $args >expect &&
+	git -c diff.external=echo diff --no-ext-diff $args >actual &&
+	test_cmp expect actual
+'
+
 test_expect_success 'detect malicious moved code, inside file' '
 	test_config color.diff.oldMoved "normal red" &&
 	test_config color.diff.newMoved "normal green" &&