diff --git a/runtime/doc/options.txt b/runtime/doc/options.txt
index d29d9c2676..e64ff1b12c 100644
--- a/runtime/doc/options.txt
+++ b/runtime/doc/options.txt
@@ -1875,7 +1875,7 @@ A jump table for the options with a short description can be found at |Q_op|.
 	security reasons.
 
 						*'dip'* *'diffopt'*
-'diffopt' 'dip'		string	(default "internal,filler")
+'diffopt' 'dip'		string	(default "internal,filler,closeoff")
 			global
 	Option settings for diff mode.  It can consist of the following items.
 	All are optional.  Items must be separated by a comma.
@@ -1932,6 +1932,12 @@ A jump table for the options with a short description can be found at |Q_op|.
 		vertical	Start diff mode with vertical splits (unless
 				explicitly specified otherwise).
 
+		closeoff	When a window is closed where 'diff' is set
+				and there is only one window remaining in the
+				same tab page with 'diff' set, execute
+				`:diffoff` in that window.  This undoes a
+				`:diffsplit` command.
+
 		hiddenoff	Do not use diff mode for a buffer when it
 				becomes hidden.
 
diff --git a/src/nvim/diff.c b/src/nvim/diff.c
index 0f916106a2..dccde01d29 100644
--- a/src/nvim/diff.c
+++ b/src/nvim/diff.c
@@ -44,7 +44,7 @@
 #include "nvim/os/shell.h"
 
 static int diff_busy = false;         // using diff structs, don't change them
-static int diff_need_update = false;  // ex_diffupdate needs to be called
+static bool diff_need_update = false;  // ex_diffupdate needs to be called
 
 // Flags obtained from the 'diffopt' option
 #define DIFF_FILLER     0x001   // display filler lines
@@ -57,8 +57,9 @@ static int diff_need_update = false;  // ex_diffupdate needs to be called
 #define DIFF_VERTICAL   0x080   // vertical splits
 #define DIFF_HIDDEN_OFF 0x100   // diffoff when hidden
 #define DIFF_INTERNAL   0x200   // use internal xdiff algorithm
+#define DIFF_CLOSE_OFF  0x400   // diffoff when closing window
 #define ALL_WHITE_DIFF (DIFF_IWHITE | DIFF_IWHITEALL | DIFF_IWHITEEOL)
-static int diff_flags = DIFF_INTERNAL | DIFF_FILLER;
+static int diff_flags = DIFF_INTERNAL | DIFF_FILLER | DIFF_CLOSE_OFF;
 
 static long diff_algorithm = 0;
 
@@ -1474,6 +1475,13 @@ void ex_diffoff(exarg_T *eap)
     diff_buf_clear();
   }
 
+  if (!diffwin) {
+    diff_need_update = false;
+    curtab->tp_diff_invalid = false;
+    curtab->tp_diff_update = false;
+    diff_clear(curtab);
+  }
+
   // Remove "hor" from from 'scrollopt' if there are no diff windows left.
   if (!diffwin && (vim_strchr(p_sbo, 'h') != NULL)) {
     do_cmdline_cmd("set sbo-=hor");
@@ -1714,6 +1722,7 @@ static void diff_copy_entry(diff_T *dprev, diff_T *dp, int idx_orig,
 ///
 /// @param tp
 void diff_clear(tabpage_T *tp)
+  FUNC_ATTR_NONNULL_ALL
 {
   diff_T *p;
   diff_T *next_p;
@@ -2143,6 +2152,9 @@ int diffopt_changed(void)
     } else if (STRNCMP(p, "hiddenoff", 9) == 0) {
       p += 9;
       diff_flags_new |= DIFF_HIDDEN_OFF;
+    } else if (STRNCMP(p, "closeoff", 8) == 0) {
+      p += 8;
+      diff_flags_new |= DIFF_CLOSE_OFF;
     } else if (STRNCMP(p, "indent-heuristic", 16) == 0) {
       p += 16;
       diff_indent_heuristic = XDF_INDENT_HEURISTIC;
@@ -2218,6 +2230,13 @@ bool diffopt_hiddenoff(void)
   return (diff_flags & DIFF_HIDDEN_OFF) != 0;
 }
 
+// Return true if 'diffopt' contains "closeoff".
+bool diffopt_closeoff(void)
+  FUNC_ATTR_PURE FUNC_ATTR_WARN_UNUSED_RESULT
+{
+  return (diff_flags & DIFF_CLOSE_OFF) != 0;
+}
+
 /// Find the difference within a changed line.
 ///
 /// @param  wp      window whose current buffer to check
diff --git a/src/nvim/options.lua b/src/nvim/options.lua
index e96b3f8e02..d20174466d 100644
--- a/src/nvim/options.lua
+++ b/src/nvim/options.lua
@@ -612,7 +612,7 @@ return {
       alloced=true,
       redraw={'current_window'},
       varname='p_dip',
-      defaults={if_true={vi="internal,filler"}}
+      defaults={if_true={vi="internal,filler,closeoff"}}
     },
     {
       full_name='digraph', abbreviation='dg',
diff --git a/src/nvim/testdir/test_diffmode.vim b/src/nvim/testdir/test_diffmode.vim
index 57b19aa817..21e0271bda 100644
--- a/src/nvim/testdir/test_diffmode.vim
+++ b/src/nvim/testdir/test_diffmode.vim
@@ -773,3 +773,28 @@ func Test_diff_of_diff()
   call StopVimInTerminal(buf)
   call delete('Xtest_diff_diff')
 endfunc
+
+func CloseoffSetup()
+  enew
+  call setline(1, ['one', 'two', 'three'])
+  diffthis
+  new
+  call setline(1, ['one', 'tow', 'three'])
+  diffthis
+  call assert_equal(1, &diff)
+  only!
+endfunc
+
+func Test_diff_closeoff()
+  " "closeoff" included by default: last diff win gets 'diff' reset'
+  call CloseoffSetup()
+  call assert_equal(0, &diff)
+  enew!
+
+  " "closeoff" excluded: last diff win keeps 'diff' set'
+  set diffopt-=closeoff
+  call CloseoffSetup()
+  call assert_equal(1, &diff)
+  diffoff!
+  enew!
+endfunc
diff --git a/src/nvim/window.c b/src/nvim/window.c
index 0531ad1938..2a7578e33c 100644
--- a/src/nvim/window.c
+++ b/src/nvim/window.c
@@ -2418,6 +2418,7 @@ int win_close(win_T *win, bool free_buf)
   bool help_window = false;
   tabpage_T   *prev_curtab = curtab;
   frame_T *win_frame = win->w_floating ? NULL : win->w_frame->fr_parent;
+  const bool had_diffmode = win->w_p_diff;
 
   if (last_window() && !win->w_floating) {
     EMSG(_("E444: Cannot close last window"));
@@ -2642,6 +2643,22 @@ int win_close(win_T *win, bool free_buf)
   if (help_window)
     restore_snapshot(SNAP_HELP_IDX, close_curwin);
 
+  // If the window had 'diff' set and now there is only one window left in
+  // the tab page with 'diff' set, and "closeoff" is in 'diffopt', then
+  // execute ":diffoff!".
+  if (diffopt_closeoff() && had_diffmode && curtab == prev_curtab) {
+    int diffcount = 0;
+
+    FOR_ALL_WINDOWS_IN_TAB(dwin, curtab) {
+      if (dwin->w_p_diff) {
+        diffcount++;
+      }
+    }
+    if (diffcount == 1) {
+      do_cmdline_cmd("diffoff!");
+    }
+  }
+
   curwin->w_pos_changed = true;
   redraw_all_later(NOT_VALID);
   return OK;