diff --git a/NEWS.adoc b/NEWS.adoc
index d6a78f070..15280d6fa 100644
--- a/NEWS.adoc
+++ b/NEWS.adoc
@@ -6,7 +6,7 @@ master
 
 Bug fixes:
 
- - Fix parsing of `--no-prefix` argument.
+ - Fix various issues with `diff.noprefix` and `--no-prefix`.
 
 Improvements:
 
diff --git a/include/tig/git.h b/include/tig/git.h
index 91d140f45..55f73d3de 100644
--- a/include/tig/git.h
+++ b/include/tig/git.h
@@ -18,21 +18,21 @@
  * Argv-style git command macros.
  */
 
-#define GIT_DIFF_INITIAL(encoding_arg, cached_arg, context_arg, space_arg, old_name, new_name) \
+#define GIT_DIFF_INITIAL(encoding_arg, cached_arg, context_arg, prefix_arg, space_arg, old_name, new_name) \
 	"git", "diff", (encoding_arg), "--no-color", "--patch-with-stat", \
-		(cached_arg), (context_arg), (space_arg), "--", (old_name), (new_name), NULL
+		(cached_arg), (context_arg), (prefix_arg), (space_arg), "--", (old_name), (new_name), NULL
 
-#define GIT_DIFF_STAGED_INITIAL(encoding_arg, context_arg, space_arg, new_name) \
-	GIT_DIFF_INITIAL(encoding_arg, "--cached", context_arg, space_arg, "", new_name)
+#define GIT_DIFF_STAGED_INITIAL(encoding_arg, context_arg, prefix_arg, space_arg, new_name) \
+	GIT_DIFF_INITIAL(encoding_arg, "--cached", context_arg, prefix_arg, space_arg, "", new_name)
 
-#define GIT_DIFF_STAGED(encoding_arg, context_arg, space_arg, word_diff_arg, old_name, new_name) \
+#define GIT_DIFF_STAGED(encoding_arg, context_arg, prefix_arg, space_arg, word_diff_arg, old_name, new_name) \
 	"git", "diff-index", (encoding_arg), "--textconv", "--patch-with-stat", "-C", \
 		"--cached", "--diff-filter=ACDMRTXB", DIFF_ARGS, "%(cmdlineargs)", (context_arg), \
-		(space_arg), (word_diff_arg), "HEAD", "--", (old_name), (new_name), NULL
+		(prefix_arg), (space_arg), (word_diff_arg), "HEAD", "--", (old_name), (new_name), NULL
 
-#define GIT_DIFF_UNSTAGED(encoding_arg, context_arg, space_arg, word_diff_arg, old_name, new_name) \
+#define GIT_DIFF_UNSTAGED(encoding_arg, context_arg, prefix_arg, space_arg, word_diff_arg, old_name, new_name) \
 	"git", "diff-files", (encoding_arg), "--textconv", "--patch-with-stat", "-C", \
-		DIFF_ARGS, "%(cmdlineargs)", (context_arg), (space_arg), (word_diff_arg), \
+		DIFF_ARGS, "%(cmdlineargs)", (context_arg), (prefix_arg), (space_arg), (word_diff_arg), \
 		"--", (old_name), (new_name), NULL
 
 /* Don't show staged unmerged entries. */
@@ -43,12 +43,12 @@
 #define GIT_DIFF_UNSTAGED_FILES(output_arg) \
 	"git", "diff-files", (output_arg), "%(cmdlineargs)", NULL
 
-#define GIT_DIFF_BLAME(encoding_arg, context_arg, space_arg, word_diff_arg, new_name) \
+#define GIT_DIFF_BLAME(encoding_arg, context_arg, prefix_arg, space_arg, word_diff_arg, new_name) \
 	"git", "diff-files", (encoding_arg), "--textconv", "--patch-with-stat", "-C", \
-		(context_arg), (space_arg), (word_diff_arg), "--", (new_name), NULL
+		(context_arg), (prefix_arg), (space_arg), (word_diff_arg), "--", (new_name), NULL
 
-#define GIT_DIFF_BLAME_NO_PARENT(encoding_arg, context_arg, space_arg, new_name) \
-	GIT_DIFF_INITIAL(encoding_arg, "", context_arg, space_arg, "/dev/null", new_name)
+#define GIT_DIFF_BLAME_NO_PARENT(encoding_arg, context_arg, prefix_arg, space_arg, new_name) \
+	GIT_DIFF_INITIAL(encoding_arg, "", context_arg, prefix_arg, space_arg, "/dev/null", new_name)
 
 #define GIT_MAIN_LOG(encoding_arg, commit_order_arg, mainargs, diffargs, revargs, fileargs, show_notes_arg, pretty_arg) \
 	"git", "log", (encoding_arg), \
diff --git a/include/tig/options.h b/include/tig/options.h
index a17456a0c..22a9d93c8 100644
--- a/include/tig/options.h
+++ b/include/tig/options.h
@@ -199,6 +199,7 @@ const char *commit_order_arg_with_graph(enum graph_display graph_display);
 const char *log_custom_pretty_arg();
 const char *use_mailmap_arg();
 const char *diff_context_arg();
+const char *diff_prefix_arg();
 const char *word_diff_arg();
 const char *show_notes_arg();
 
diff --git a/src/blame.c b/src/blame.c
index a665c18cc..e99d35d17 100644
--- a/src/blame.c
+++ b/src/blame.c
@@ -431,6 +431,7 @@ blame_request(struct view *view, enum request request, struct line *line)
 			const char *diff_parent_argv[] = {
 				GIT_DIFF_BLAME(encoding_arg,
 					diff_context_arg(),
+					diff_prefix_arg(),
 					ignore_space_arg(),
 					word_diff_arg(),
 					blame->commit->filename)
@@ -438,6 +439,7 @@ blame_request(struct view *view, enum request request, struct line *line)
 			const char *diff_no_parent_argv[] = {
 				GIT_DIFF_BLAME_NO_PARENT(encoding_arg,
 					diff_context_arg(),
+					diff_prefix_arg(),
 					ignore_space_arg(),
 					blame->commit->filename)
 			};
diff --git a/src/diff.c b/src/diff.c
index 13c973d46..ce0b07a4b 100644
--- a/src/diff.c
+++ b/src/diff.c
@@ -28,9 +28,10 @@ diff_open(struct view *view, enum open_flags flags)
 	const char *diff_argv[] = {
 		"git", "show", encoding_arg, "--pretty=fuller", "--root",
 			"--patch-with-stat", use_mailmap_arg(),
-			show_notes_arg(), diff_context_arg(), ignore_space_arg(),
-			DIFF_ARGS, "%(cmdlineargs)", "--no-color", word_diff_arg(),
-			"%(commit)", "--", "%(fileargs)", NULL
+			show_notes_arg(), diff_context_arg(), diff_prefix_arg(),
+			ignore_space_arg(), DIFF_ARGS, "%(cmdlineargs)",
+			"--no-color", word_diff_arg(), "%(commit)", "--",
+			"%(fileargs)", NULL
 	};
 	enum status_code code;
 
diff --git a/src/options.c b/src/options.c
index 019318738..4ee8efc2c 100644
--- a/src/options.c
+++ b/src/options.c
@@ -140,6 +140,12 @@ diff_context_arg()
 	return opt_diff_context_arg;
 }
 
+const char *
+diff_prefix_arg()
+{
+	return opt_diff_noprefix ? "--no-prefix" : "--default-prefix";
+}
+
 const char *
 word_diff_arg()
 {
@@ -259,6 +265,18 @@ update_options_from_argv(const char *argv[])
 			continue;
 		}
 
+		if (!strcmp(flag, "--no-prefix")) {
+			opt_diff_noprefix = true;
+			mark_option_seen(&opt_diff_noprefix);
+			continue;
+		}
+
+		if (!strcmp(flag, "--default-prefix")) {
+			/* opt_diff_noprefix = false; */
+			mark_option_seen(&opt_diff_noprefix);
+			continue;
+		}
+
 		if (!strcmp(flag, "--word-diff=none")) {
 			/* opt_word_diff = false; */
 			mark_option_seen(&opt_word_diff);
@@ -278,12 +296,6 @@ update_options_from_argv(const char *argv[])
 			/* Keep the flag in argv. */
 		}
 
-		if (!strcmp(flag, "--no-prefix")) {
-			opt_diff_noprefix = true;
-			mark_option_seen(&opt_diff_noprefix);
-			/* Keep the flag in argv. */
-		}
-
 		argv[flags_pos++] = flag;
 	}
 
diff --git a/src/stage.c b/src/stage.c
index 348cea362..de355c5b4 100644
--- a/src/stage.c
+++ b/src/stage.c
@@ -205,6 +205,8 @@ stage_apply_chunk(struct view *view, struct line *chunk, struct line *single,
 	if (!diff_hdr)
 		return false;
 
+	if (opt_diff_noprefix)
+		apply_argv[argc++] = "-p0";
 	if (!revert)
 		apply_argv[argc++] = "--cached";
 	if (revert || stage_line_type == LINE_STAT_STAGED)
@@ -707,23 +709,25 @@ static enum status_code
 stage_open(struct view *view, enum open_flags flags)
 {
 	const char *no_head_diff_argv[] = {
-		GIT_DIFF_STAGED_INITIAL(encoding_arg, diff_context_arg(), ignore_space_arg(),
-			stage_status.new.name)
+		GIT_DIFF_STAGED_INITIAL(encoding_arg, diff_context_arg(), diff_prefix_arg(),
+			ignore_space_arg(), stage_status.new.name)
 	};
 	const char *index_show_argv[] = {
-		GIT_DIFF_STAGED(encoding_arg, diff_context_arg(), ignore_space_arg(),
-			word_diff_arg(), stage_status.old.name, stage_status.new.name)
+		GIT_DIFF_STAGED(encoding_arg, diff_context_arg(), diff_prefix_arg(),
+			ignore_space_arg(), word_diff_arg(), stage_status.old.name,
+			stage_status.new.name)
 	};
 	const char *files_show_argv[] = {
-		GIT_DIFF_UNSTAGED(encoding_arg, diff_context_arg(), ignore_space_arg(),
-			word_diff_arg(), stage_status.old.name, stage_status.new.name)
+		GIT_DIFF_UNSTAGED(encoding_arg, diff_context_arg(), diff_prefix_arg(),
+			ignore_space_arg(), word_diff_arg(), stage_status.old.name,
+			stage_status.new.name)
 	};
 	/* Diffs for unmerged entries are empty when passing the new
 	 * path, so leave out the new path. */
 	const char *files_unmerged_argv[] = {
 		"git", "diff-files", encoding_arg, "--textconv", "--patch-with-stat",
-			DIFF_ARGS, diff_context_arg(), ignore_space_arg(), "--",
-			stage_status.old.name, NULL
+			DIFF_ARGS, diff_context_arg(), diff_prefix_arg(),
+			ignore_space_arg(), "--", stage_status.old.name, NULL
 	};
 	static const char *file_argv[] = { repo.exec_dir, stage_status.new.name, NULL };
 	const char **argv = NULL;
diff --git a/src/stash.c b/src/stash.c
index ac7b9290a..7cf456f03 100644
--- a/src/stash.c
+++ b/src/stash.c
@@ -80,8 +80,9 @@ stash_request(struct view *view, enum request request, struct line *line)
 			const char *diff_argv[] = {
 				"git", "stash", "show", encoding_arg, "--pretty=fuller",
 					"--patch-with-stat", diff_context_arg(),
-					ignore_space_arg(), word_diff_arg(), DIFF_ARGS,
-					"--no-color", "%(stash)", NULL
+					diff_prefix_arg(), ignore_space_arg(),
+					word_diff_arg(), DIFF_ARGS, "--no-color",
+					"%(stash)", NULL
 			};
 
 			if (!argv_format(diff_view.env, &diff_view.argv, diff_argv, 0))
diff --git a/test/diff/editor-test b/test/diff/editor-test
index 96377abed..7b5c6ff24 100755
--- a/test/diff/editor-test
+++ b/test/diff/editor-test
@@ -258,8 +258,8 @@ test_case noprefix-conflict \
 ' << EOF
   1| diff --cc conflict-file
    | index 86c5a05,b4c3de6..0000000
-   | --- a/conflict-file
-   | +++ b/conflict-file
+   | --- conflict-file
+   | +++ conflict-file
   5| @@@ -1,1 -1,1 +1,5 @@@
    | ++<<<<<<< HEAD
    |  +c'
diff --git a/test/diff/submodule-editor-test b/test/diff/submodule-editor-test
index 89161c94c..ec7e5811f 100755
--- a/test/diff/submodule-editor-test
+++ b/test/diff/submodule-editor-test
@@ -288,8 +288,8 @@ test_case noprefix-conflict \
 ' << EOF
   1| diff --cc conflict-file
    | index 86c5a05,b4c3de6..0000000
-   | --- a/conflict-file
-   | +++ b/conflict-file
+   | --- conflict-file
+   | +++ conflict-file
   5| @@@ -1,1 -1,1 +1,5 @@@
    | ++<<<<<<< HEAD
    |  +c'
diff --git a/test/diff/worktree-editor-test b/test/diff/worktree-editor-test
index 2e71c347d..6abcb1c74 100755
--- a/test/diff/worktree-editor-test
+++ b/test/diff/worktree-editor-test
@@ -283,8 +283,8 @@ test_case noprefix-conflict \
 ' << EOF
   1| diff --cc conflict-file
    | index 86c5a05,b4c3de6..0000000
-   | --- a/conflict-file
-   | +++ b/conflict-file
+   | --- conflict-file
+   | +++ conflict-file
   5| @@@ -1,1 -1,1 +1,5 @@@
    | ++<<<<<<< HEAD
    |  +c'