diff --git a/data/gsettings/com.gexperts.Tilix.gschema.xml b/data/gsettings/com.gexperts.Tilix.gschema.xml
index bcf4cff7..17341634 100644
--- a/data/gsettings/com.gexperts.Tilix.gschema.xml
+++ b/data/gsettings/com.gexperts.Tilix.gschema.xml
@@ -37,9 +37,10 @@
   <!-- Background Image Options -->
   <enum id='com.gexperts.Tilix.Background.Image.Mode'>
     <value nick='scale' value='0'/>
-    <value nick='tile' value='1'/>
-    <value nick='center' value='2'/>
-    <value nick='stretch' value='3'/>
+    <value nick='scale-fit' value='1'/>
+    <value nick='tile' value='2'/>
+    <value nick='center' value='3'/>
+    <value nick='stretch' value='4'/>
   </enum>
 
   <!-- Background Image Scaling Options, note these
diff --git a/source/gx/gtk/cairo.d b/source/gx/gtk/cairo.d
index 1de1d768..718b8b9b 100644
--- a/source/gx/gtk/cairo.d
+++ b/source/gx/gtk/cairo.d
@@ -111,7 +111,7 @@ Pixbuf getWidgetImage(Widget widget, double factor, int width, int height) {
     }
 }
 
-enum ImageLayoutMode {SCALE, TILE, CENTER, STRETCH};
+enum ImageLayoutMode {SCALE, SCALE_FIT, TILE, CENTER, STRETCH};
 
 ImageSurface renderImage(Pixbuf pb, bool alpha = false) {
     cairo_format_t format = alpha?cairo_format_t.ARGB32:cairo_format_t.RGB24;
@@ -172,6 +172,23 @@ void renderImage(Context cr, ImageSurface isSource, int outputWidth, int outputH
             cr.getSource().setFilter(scaleMode);
             cr.paint();
             break;
+        case ImageLayoutMode.SCALE_FIT:
+            // Emulate xfce4-terminal's "Scaled" behaviour -- scale the image
+            // such that it fills the dimension with the shortest length and
+            // fits both the x and y dimensions.
+            double xScale = to!double(outputWidth) / to!double(isSource.getWidth());
+            double yScale = to!double(outputHeight) / to!double(isSource.getHeight());
+            double scale = min(xScale, yScale);
+
+            double xOffset = (outputWidth - (isSource.getWidth() * scale)) / 2.0;
+            double yOffset = (outputHeight - (isSource.getHeight() * scale)) / 2.0;
+
+            cr.translate(xOffset, yOffset);
+            cr.scale(scale, scale);
+            cr.setSourceSurface(isSource, 0, 0);
+            cr.getSource().setFilter(scaleMode);
+            cr.paint();
+            break;
         case ImageLayoutMode.TILE:
             cr.setSourceSurface(isSource, 0, 0);
             cr.getSource().setExtend(cairo_extend_t.REPEAT);
diff --git a/source/gx/tilix/appwindow.d b/source/gx/tilix/appwindow.d
index ef5be892..f9bccbec 100644
--- a/source/gx/tilix/appwindow.d
+++ b/source/gx/tilix/appwindow.d
@@ -2034,6 +2034,9 @@ public:
             case SETTINGS_BACKGROUND_IMAGE_MODE_SCALE_VALUE:
                 mode = ImageLayoutMode.SCALE;
                 break;
+            case SETTINGS_BACKGROUND_IMAGE_MODE_SCALE_FIT_VALUE:
+                mode = ImageLayoutMode.SCALE_FIT;
+                break;
             case SETTINGS_BACKGROUND_IMAGE_MODE_TILE_VALUE:
                 mode = ImageLayoutMode.TILE;
                 break;
diff --git a/source/gx/tilix/prefeditor/prefdialog.d b/source/gx/tilix/prefeditor/prefdialog.d
index a5c3ce37..3f30e2e6 100644
--- a/source/gx/tilix/prefeditor/prefdialog.d
+++ b/source/gx/tilix/prefeditor/prefdialog.d
@@ -1199,7 +1199,7 @@ class AppearancePreferences: Box {
                 gsSettings.reset(SETTINGS_BACKGROUND_IMAGE_KEY);
             });
 
-            ComboBox cbImageMode = createNameValueCombo([_("Scale"), _("Tile"), _("Center"),_("Stretch")], SETTINGS_BACKGROUND_IMAGE_MODE_VALUES);
+            ComboBox cbImageMode = createNameValueCombo([_("Scale"), _("Scale (fit)"), _("Tile"), _("Center"),_("Stretch")], SETTINGS_BACKGROUND_IMAGE_MODE_VALUES);
             bh.bind(SETTINGS_BACKGROUND_IMAGE_MODE_KEY, cbImageMode, "active-id", GSettingsBindFlags.DEFAULT);
 
             // Background image settings only enabled if transparency is enabled
diff --git a/source/gx/tilix/preferences.d b/source/gx/tilix/preferences.d
index bf5dacd3..4abd8b6e 100644
--- a/source/gx/tilix/preferences.d
+++ b/source/gx/tilix/preferences.d
@@ -105,10 +105,11 @@ enum SETTINGS_BACKGROUND_IMAGE_KEY = "background-image";
 enum SETTINGS_BACKGROUND_IMAGE_SCALE_KEY = "background-image-scale";
 enum SETTINGS_BACKGROUND_IMAGE_MODE_KEY = "background-image-mode";
 enum SETTINGS_BACKGROUND_IMAGE_MODE_SCALE_VALUE = "scale";
+enum SETTINGS_BACKGROUND_IMAGE_MODE_SCALE_FIT_VALUE = "scale-fit";
 enum SETTINGS_BACKGROUND_IMAGE_MODE_TILE_VALUE = "tile";
 enum SETTINGS_BACKGROUND_IMAGE_MODE_CENTER_VALUE = "center";
 enum SETTINGS_BACKGROUND_IMAGE_MODE_STRETCH_VALUE = "stretch";
-immutable string[] SETTINGS_BACKGROUND_IMAGE_MODE_VALUES = [SETTINGS_BACKGROUND_IMAGE_MODE_SCALE_VALUE,SETTINGS_BACKGROUND_IMAGE_MODE_TILE_VALUE,SETTINGS_BACKGROUND_IMAGE_MODE_CENTER_VALUE,SETTINGS_BACKGROUND_IMAGE_MODE_STRETCH_VALUE];
+immutable string[] SETTINGS_BACKGROUND_IMAGE_MODE_VALUES = [SETTINGS_BACKGROUND_IMAGE_MODE_SCALE_VALUE,SETTINGS_BACKGROUND_IMAGE_MODE_SCALE_FIT_VALUE,SETTINGS_BACKGROUND_IMAGE_MODE_TILE_VALUE,SETTINGS_BACKGROUND_IMAGE_MODE_CENTER_VALUE,SETTINGS_BACKGROUND_IMAGE_MODE_STRETCH_VALUE];
 
 enum SETTINGS_SIDEBAR_RIGHT = "sidebar-on-right";
 enum SETTINGS_RECENT_SESSION_FILES_KEY = "recent-session-files";