diff --git a/port/include/input.h b/port/include/input.h
index d09e1dbdf..b0a38298f 100644
--- a/port/include/input.h
+++ b/port/include/input.h
@@ -81,6 +81,12 @@ enum contkey {
 	CK_TOTAL_COUNT
 };
 
+enum mouselockmode {
+	MLOCK_OFF = 0,
+	MLOCK_ON = 1,
+	MLOCK_AUTO = 2
+};
+
 // returns bitmask of connected controllers or -1 if failed
 s32 inputInit(void);
 
@@ -201,8 +207,14 @@ void inputSetDefaultKeyBinds(s32 cidx, s32 n64mode);
 void inputClearLastKey(void);
 s32 inputGetLastKey(void);
 
-// get/set Input.MouseDefaultLocked
-s32 inputGetMouseDefaultLocked(void);
-void inputSetMouseDefaultLocked(s32 defaultLocked);
+// get/set Input.MouseLockMode
+s32 inputGetMouseLockMode(void);
+void inputSetMouseLockMode(s32 lockmode);
+
+// same as inputLockMouse but works only if mouse is enabled and lockmode == MLOCK_AUTO
+s32 inputAutoLockMouse(s32 wantlock);
+
+// show/hide mouse cursor; if mouse lock is on the cursor is always hidden
+void inputMouseShowCursor(s32 show);
 
 #endif
diff --git a/port/src/input.c b/port/src/input.c
index bf0ab413e..13f192b42 100644
--- a/port/src/input.c
+++ b/port/src/input.c
@@ -28,6 +28,9 @@
 #define WHEEL_UP_MASK SDL_BUTTON(VK_MOUSE_WHEEL_UP - VK_MOUSE_BEGIN + 1)
 #define WHEEL_DN_MASK SDL_BUTTON(VK_MOUSE_WHEEL_DN - VK_MOUSE_BEGIN + 1)
 
+#define CURSOR_HIDE_THRESHOLD 1
+#define CURSOR_HIDE_TIME 3000000 // us
+
 static SDL_GameController *pads[INPUT_MAX_CONTROLLERS];
 
 #define CONTROLLERCFG_DEFAULT { \
@@ -70,13 +73,16 @@ static s32 connectedMask = 0;
 static s32 numJoysticks = 0;
 
 static s32 mouseEnabled = 1;
-static s32 mouseLocked = 0;
-static s32 mouseDefaultLocked = 0;
 static s32 mouseX, mouseY;
 static s32 mouseDX, mouseDY;
 static u32 mouseButtons;
 static s32 mouseWheel = 0;
 
+static s32 mouseLocked = 0;
+static s32 mouseLockMode = MLOCK_AUTO;
+static u64 mouseCursorTime = 0;
+static s32 mouseShowCursor = 1;
+
 static f32 mouseSensX = 1.5f;
 static f32 mouseSensY = 1.5f;
 
@@ -672,7 +678,9 @@ s32 inputInit(void)
 		inputSetDefaultKeyBinds(i, 0);
 	}
 
-	inputLockMouse(mouseDefaultLocked);
+	if (mouseLockMode != MLOCK_AUTO) {
+		inputLockMouse(mouseLockMode);
+	}
 
 	// update the axis maps
 	// NOTE: by default sticks get swapped for 1.2: "right stick" here means left stick on your controller
@@ -803,6 +811,20 @@ static inline void inputUpdateMouse(void)
 
 	mouseX = mx;
 	mouseY = my;
+
+	// if MLOCK_AUTO is enabled, disable cursor if mouse is unlocked
+	// and we haven't moved it for a few seconds
+	if (mouseLockMode == MLOCK_AUTO && !mouseLocked) {
+		if (abs(mouseDX) > CURSOR_HIDE_THRESHOLD || abs(mouseDY) > CURSOR_HIDE_THRESHOLD) {
+			if (!mouseShowCursor) {
+				inputMouseShowCursor(1);
+			}
+		} else if (sysGetMicroseconds() > mouseCursorTime) {
+			if (mouseShowCursor) {
+				inputMouseShowCursor(0);
+			}
+		}
+	}
 }
 
 void inputUpdate(void)
@@ -1171,20 +1193,42 @@ s32 inputMouseIsEnabled(void)
 void inputMouseEnable(s32 enabled)
 {
 	mouseEnabled = !!enabled;
-	if (!mouseEnabled && mouseLocked) {
+	if (!mouseEnabled && mouseLockMode != MLOCK_ON && mouseLocked) {
 		inputLockMouse(0);
 	}
 }
 
-s32 inputGetMouseDefaultLocked(void)
+s32 inputAutoLockMouse(s32 wantlock)
+{
+	if (mouseEnabled && mouseLockMode == MLOCK_AUTO) {
+		inputLockMouse(wantlock);
+		return 1;
+	}
+	return 0;
+}
+
+void inputMouseShowCursor(s32 show)
 {
-	return mouseDefaultLocked;
+	mouseShowCursor = !!show;
+	SDL_ShowCursor(mouseShowCursor);
+	if (show) {
+		mouseCursorTime = sysGetMicroseconds() + CURSOR_HIDE_TIME;
+	}
 }
 
-void inputSetMouseDefaultLocked(s32 defaultLocked)
+s32 inputGetMouseLockMode(void)
 {
-	mouseDefaultLocked = !!defaultLocked;
-	inputLockMouse(mouseDefaultLocked);
+	return mouseLockMode;
+}
+
+void inputSetMouseLockMode(s32 lockmode)
+{
+	mouseLockMode = lockmode;
+	if (lockmode == MLOCK_ON) {
+		inputLockMouse(1);
+	} else {
+		inputLockMouse(0);
+	}
 }
 
 const char *inputGetContKeyName(u32 ck)
@@ -1264,7 +1308,7 @@ s32 inputGetLastKey(void)
 PD_CONSTRUCTOR static void inputConfigInit(void)
 {
 	configRegisterInt("Input.MouseEnabled", &mouseEnabled, 0, 1);
-	configRegisterInt("Input.MouseDefaultLocked", &mouseDefaultLocked, 0, 1);
+	configRegisterInt("Input.MouseLockMode", &mouseLockMode, MLOCK_OFF, MLOCK_AUTO);
 	configRegisterFloat("Input.MouseSpeedX", &mouseSensX, -10.f, 10.f);
 	configRegisterFloat("Input.MouseSpeedY", &mouseSensY, -10.f, 10.f);
 	configRegisterInt("Input.FakeGamepads", &fakeControllers, 0, 4);
diff --git a/port/src/optionsmenu.c b/port/src/optionsmenu.c
index 92908711d..c3f2ae048 100644
--- a/port/src/optionsmenu.c
+++ b/port/src/optionsmenu.c
@@ -119,14 +119,25 @@ static MenuItemHandlerResult menuhandlerMouseAimLock(s32 operation, struct menui
 	return 0;
 }
 
-static MenuItemHandlerResult menuhandlerMouseDefaultLocked(s32 operation, struct menuitem *item, union handlerdata *data)
+static MenuItemHandlerResult menuhandlerMouseLockMode(s32 operation, struct menuitem *item, union handlerdata *data)
 {
+	static const char *opts[] = {
+		"Always Off",
+		"Always On",
+		"Auto"
+	};
+
 	switch (operation) {
-	case MENUOP_GET:
-		return inputGetMouseDefaultLocked();
+	case MENUOP_GETOPTIONCOUNT:
+		data->dropdown.value = ARRAYCOUNT(opts);
+		break;
+	case MENUOP_GETOPTIONTEXT:
+		return (intptr_t)opts[data->dropdown.value];
 	case MENUOP_SET:
-		inputSetMouseDefaultLocked(data->checkbox.value);
+		inputSetMouseLockMode(data->checkbox.value);
 		break;
+	case MENUOP_GETSELECTEDINDEX:
+		data->dropdown.value = inputGetMouseLockMode();
 	}
 
 	return 0;
@@ -274,12 +285,12 @@ struct menuitem g_ExtendedMouseMenuItems[] = {
 		menuhandlerMouseAimLock,
 	},
 	{
-		MENUITEMTYPE_CHECKBOX,
+		MENUITEMTYPE_DROPDOWN,
 		0,
 		MENUITEMFLAG_LITERAL_TEXT,
-		(uintptr_t)"Grab Mouse Input by Default",
+		(uintptr_t)"Mouse Lock Mode",
 		0,
-		menuhandlerMouseDefaultLocked,
+		menuhandlerMouseLockMode,
 	},
 	{
 		MENUITEMTYPE_CHECKBOX,
diff --git a/src/game/menu.c b/src/game/menu.c
index db2a30001..26c839f0a 100644
--- a/src/game/menu.c
+++ b/src/game/menu.c
@@ -3473,9 +3473,7 @@ void menuClose(void)
 	g_Menus[g_MpPlayerNum].openinhibit = 10;
 
 #ifndef PLATFORM_N64
-	if (inputMouseIsEnabled()) {
-		inputLockMouse(true);
-	}
+	inputAutoLockMouse(true);
 #endif
 
 	if (g_MenuData.root == MENUROOT_MPPAUSE) {
@@ -3589,9 +3587,7 @@ void menuPushRootDialog(struct menudialogdef *dialogdef, s32 root)
 	g_PlayersWithControl[g_Menus[g_MpPlayerNum].playernum] = false;
 
 #ifndef PLATFORM_N64
-	if (inputMouseIsEnabled()) {
-		inputLockMouse(false);
-	}
+	inputAutoLockMouse(false);
 #endif
 
 	func0f0f1494();
diff --git a/src/game/menustop.c b/src/game/menustop.c
index d86344a46..35b39372b 100644
--- a/src/game/menustop.c
+++ b/src/game/menustop.c
@@ -33,9 +33,7 @@
 void menuStop(void)
 {
 #ifndef PLATFORM_N64
-	if (inputMouseIsEnabled()) {
-		inputLockMouse(true);
-	}
+	inputAutoLockMouse(true);
 #endif
 
 	if (var80062944) {