diff --git a/fish_pager.cpp b/fish_pager.cpp
index 822e2426f..f5307d304 100644
--- a/fish_pager.cpp
+++ b/fish_pager.cpp
@@ -199,14 +199,14 @@ struct comp_t
    This function translates from a highlight code to a specific color
    by check invironement variables
 */
-static int get_color( int highlight )
+static rgb_color_t get_color( int highlight )
 {
 	const wchar_t *val;
 
 	if( highlight < 0 )
-		return FISH_COLOR_NORMAL;
+		return rgb_color_t::normal();
 	if( highlight >= (4) )
-		return FISH_COLOR_NORMAL;
+		return rgb_color_t::normal();
 	
 	val = wgetenv( hightlight_var[highlight]);
 
@@ -217,10 +217,10 @@ static int get_color( int highlight )
 	
 	if( !val )
 	{
-		return FISH_COLOR_NORMAL;
+		return rgb_color_t::normal();
 	}
 	
-	return output_color_code( val, false );	
+	return parse_color( val, false );	
 }
 
 /**
@@ -424,9 +424,9 @@ static void completion_print_item( const wchar_t *prefix, comp_t *c, int width )
         const wcstring &comp = c->comp.at(i);
 		if( i != 0 )
 			written += print_max( L"  ", comp_width - written, 2 );
-		set_color( get_color(HIGHLIGHT_PAGER_PREFIX),FISH_COLOR_NORMAL );
+		set_color( get_color(HIGHLIGHT_PAGER_PREFIX),rgb_color_t::normal() );
 		written += print_max( prefix, comp_width - written, comp.empty()?0:1 );
-		set_color( get_color(HIGHLIGHT_PAGER_COMPLETION),FISH_COLOR_IGNORE );
+		set_color( get_color(HIGHLIGHT_PAGER_COMPLETION),rgb_color_t::ignore() );
 		written += print_max( comp.c_str(), comp_width - written, i!=(c->comp.size()-1) );
 	}
 
@@ -439,8 +439,7 @@ static void completion_print_item( const wchar_t *prefix, comp_t *c, int width )
 			writech( L' ');
 		}
 		written += print_max( L"(", 1, 0 );
-		set_color( get_color( HIGHLIGHT_PAGER_DESCRIPTION ),
-			   FISH_COLOR_IGNORE );
+		set_color( get_color( HIGHLIGHT_PAGER_DESCRIPTION ), rgb_color_t::ignore() );
 		written += print_max( c->desc.c_str(), desc_width, 0 );
 		written += print_max( L")", 1, 0 );
 	}
@@ -702,8 +701,7 @@ static int completion_try_print( int cols,
 				string_buffer_t msg;
 				sb_init( &msg );
 				
-				set_color( FISH_COLOR_BLACK,
-					   get_color(HIGHLIGHT_PAGER_PROGRESS) );
+				set_color( rgb_color_t::black(), get_color(HIGHLIGHT_PAGER_PROGRESS) );
 				sb_printf( &msg,
 					   _(L" %d to %d of %d"),
 					   pos,
@@ -715,7 +713,7 @@ static int completion_try_print( int cols,
 								
 				writestr((wchar_t *)msg.buff);
 				sb_destroy( &msg );
-				set_color( FISH_COLOR_NORMAL, FISH_COLOR_NORMAL );
+				set_color( rgb_color_t::normal(), rgb_color_t::normal() );
 				pager_flush();
 				int c = readch();
 
diff --git a/highlight.cpp b/highlight.cpp
index 84f72fd7b..6c4f38bee 100644
--- a/highlight.cpp
+++ b/highlight.cpp
@@ -166,6 +166,54 @@ static bool is_potential_path( const wcstring &cpath )
 	
 }
 
+rgb_color_t highlight_get_rgb_color( int highlight, bool is_background )
+{
+	size_t i;
+	int idx=0;
+	rgb_color_t result;
+
+	if( highlight < 0 )
+		return rgb_color_t::normal();
+	if( highlight > (1<<VAR_COUNT) )
+		return rgb_color_t::normal();
+	for( i=0; i<VAR_COUNT; i++ )
+	{
+		if( highlight & (1<<i ))
+		{
+			idx = i;
+			break;
+		}
+	}
+    
+	env_var_t val_wstr = env_get_string( highlight_var[idx]); 
+
+//	debug( 1, L"%d -> %d -> %ls", highlight, idx, val );	
+	
+	if (val_wstr.missing())
+		val_wstr = env_get_string( highlight_var[0]);
+	
+	if( ! val_wstr.missing() )
+		result = parse_color( val_wstr, is_background );
+	
+	if( highlight & HIGHLIGHT_VALID_PATH )
+	{
+		env_var_t val2_wstr =  env_get_string( L"fish_color_valid_path" );
+		const wcstring val2 = val2_wstr.missing() ? L"" : val2_wstr.c_str(); 
+
+		rgb_color_t result2 = parse_color( val2, is_background );
+		if( result == rgb_color_t::normal() )
+			result = result2;
+		else 
+		{
+			if( result2.is_bold() )
+				result.set_bold(true);
+			if( result2.is_underline() )
+				result.set_underline(true);
+		}
+		
+	}
+	return result;
+}
 
 
 int highlight_get_color( int highlight, bool is_background )
@@ -215,7 +263,6 @@ int highlight_get_color( int highlight, bool is_background )
 		
 	}
 	return result;
-	
 }
 
 /**
diff --git a/highlight.h b/highlight.h
index d55fa1913..73500d446 100644
--- a/highlight.h
+++ b/highlight.h
@@ -9,6 +9,7 @@
 
 #include "env.h"
 #include "util.h"
+#include "screen.h"
 
 /**
    Internal value representing highlighting of normal text
@@ -103,5 +104,6 @@ void highlight_universal( const wchar_t *buff, int *color, int pos, wcstring_lis
    FISH_COLOR_RED.
 */
 int highlight_get_color( int highlight, bool is_background );
+rgb_color_t highlight_get_rgb_color( int highlight, bool is_background );
 
 #endif
diff --git a/output.cpp b/output.cpp
index 18b0552e5..fce1105d8 100644
--- a/output.cpp
+++ b/output.cpp
@@ -126,6 +126,216 @@ int (*output_get_writer())(char)
 	return out;
 }
 
+void set_color(rgb_color_t c, rgb_color_t c2)
+{
+    ASSERT_IS_MAIN_THREAD();
+    
+    const rgb_color_t normal = rgb_color_t::normal();
+    static rgb_color_t last_color = rgb_color_t::normal();
+	static rgb_color_t last_color2 = rgb_color_t::normal();
+	static int was_bold=0;
+	static int was_underline=0;
+	int bg_set=0, last_bg_set=0;
+	char *fg = 0, *bg=0;
+
+	int is_bold = 0;
+	int is_underline = 0;
+
+	/*
+	  Test if we have at least basic support for setting fonts, colors
+	  and related bits - otherwise just give up...
+	*/
+	if( !exit_attribute_mode )
+	{
+		return;
+	}
+	
+
+	is_bold |= c.is_bold();
+	is_bold |= c2.is_bold();
+
+	is_underline |= c.is_underline();
+	is_underline |= c2.is_underline();
+
+	if( (set_a_foreground != 0) && (strlen( set_a_foreground) != 0 ) )
+	{
+		fg = set_a_foreground;
+		bg = set_a_background;
+	}
+	else if( (set_foreground != 0) && (strlen( set_foreground) != 0 ) )
+	{
+		fg = set_foreground;
+		bg = set_background;
+	}
+
+	if( c.is_reset() || c2.is_reset())
+	{
+		c = c2 = normal;
+		was_bold=0;
+		was_underline=0;
+		if( fg )
+		{
+			/*
+			  If we exit attibute mode, we must first set a color, or
+			  previously coloured text might lose it's
+			  color. Terminals are weird...
+			*/
+			writembs( tparm( fg, 0 ) );
+		}
+		writembs( exit_attribute_mode );
+		return;
+	}
+
+	if( was_bold && !is_bold )
+	{
+		/*
+		  Only way to exit bold mode is a reset of all attributes. 
+		*/
+		writembs( exit_attribute_mode );
+		last_color = normal;
+		last_color2 = normal;
+		was_bold=0;
+		was_underline=0;
+	}
+	
+	if( last_color2 != rgb_color_t::normal() &&
+		last_color2 != rgb_color_t::reset() &&
+		last_color2 != rgb_color_t::ignore() )
+	{
+		/*
+		  Background was set
+		*/
+		last_bg_set=1;
+	}
+
+	if( c2 != rgb_color_t::normal() &&
+		c2 != rgb_color_t::ignore() )
+	{
+		/*
+		  Background is set
+		*/
+		bg_set=1;
+        // PCA color fix
+		//c = (c2==FISH_COLOR_WHITE)?FISH_COLOR_BLACK:FISH_COLOR_WHITE;
+	}
+
+	if( (enter_bold_mode != 0) && (strlen(enter_bold_mode) > 0))
+	{
+		if(bg_set && !last_bg_set)
+		{
+			/*
+			  Background color changed and is set, so we enter bold
+			  mode to make reading easier. This means bold mode is
+			  _always_ on when the background color is set.
+			*/
+			writembs( enter_bold_mode );
+		}
+		if(!bg_set && last_bg_set)
+		{
+			/*
+			  Background color changed and is no longer set, so we
+			  exit bold mode
+			*/
+			writembs( exit_attribute_mode );
+			was_bold=0;
+			was_underline=0;
+			/*
+			  We don't know if exit_attribute_mode resets colors, so
+			  we set it to something known.
+			*/
+			if( fg )
+			{
+				writembs( tparm( fg, 0 ) );
+				last_color=rgb_color_t::black();
+			}
+		}
+	}
+
+	if( last_color != c )
+	{
+		if( c==rgb_color_t::normal() )
+		{
+			if( fg )
+			{
+				writembs( tparm( fg, 0 ) );
+			}
+			writembs( exit_attribute_mode );
+
+			last_color2 = rgb_color_t::normal();
+			was_bold=0;
+			was_underline=0;
+		}
+		else if( c.is_named() )
+		{
+			if( fg )
+			{
+				writembs( tparm( fg, c.name_index() ) );
+			}
+		}
+	}
+
+	last_color = c;
+
+	if( last_color2 != c2 )
+	{
+		if( c2 == rgb_color_t::normal() )
+		{
+			if( bg )
+			{
+				writembs( tparm( bg, 0 ) );
+			}
+
+			writembs( exit_attribute_mode );
+			if( ( last_color != rgb_color_t::normal() ) && fg )
+			{
+				if( fg )
+				{
+					writembs( tparm( fg, last_color.name_index() ) );
+				}
+			}
+			
+
+			was_bold=0;
+			was_underline=0;
+			last_color2 = c2;
+		}
+		else if ( c2.is_named() && c2 != normal)
+		{
+			if( bg )
+			{
+				writembs( tparm( bg, c2.name_index() ) );
+			}
+			last_color2 = c2;
+		}
+	}
+
+	/*
+	  Lastly, we set bold mode and underline mode correctly
+	*/
+	if( (enter_bold_mode != 0) && (strlen(enter_bold_mode) > 0) && !bg_set )
+	{
+		if( is_bold && !was_bold )
+		{
+			if( enter_bold_mode )
+			{
+				writembs( tparm( enter_bold_mode ) );
+			}
+		}
+		was_bold = is_bold;	
+	}
+
+	if( was_underline && !is_underline )
+	{
+		writembs( exit_underline_mode );		
+	}
+	
+	if( !was_underline && is_underline )
+	{
+		writembs( enter_underline_mode );		
+	}
+	was_underline = is_underline;
+	
+}
 
 void set_color( int c, int c2 )
 {
@@ -563,8 +773,42 @@ int output_color_code( const wcstring &val, bool is_background ) {
 		
 	}
 	
-	return color | (is_bold?FISH_COLOR_BOLD:0) | (is_underline?FISH_COLOR_UNDERLINE:0);
+	return color | (is_bold?FISH_COLOR_BOLD:0) | (is_underline?FISH_COLOR_UNDERLINE:0);	
+}
+
+rgb_color_t parse_color( const wcstring &val, bool is_background ) {
+    rgb_color_t result;
+    
+    int is_bold=0;
+	int is_underline=0;
+
+    wcstring_list_t el;
+	tokenize_variable_array( val, el );
 	
+	for(size_t j=0; j < el.size(); j++ ) {
+        const wcstring &next = el.at(j);
+        wcstring color_name;
+        if (is_background) {
+            // look for something like "--background=red"
+            const wcstring prefix = L"--background=";
+            if (string_prefixes_string(prefix, next)) {
+                color_name = wcstring(next, prefix.size());
+            }
+            
+        } else {
+            if (next == L"--bold" || next == L"-o")
+                is_bold = true;
+            else if (next == L"--underline" || next == L"-u")
+                is_underline = true;
+            else
+                color_name = next;
+        }
+        
+        if (! color_name.empty()) {
+            rgb_color_t::parse(color_name, result);
+        }
+    }
+    return result;
 }
 
 void output_set_term( const wchar_t *term )
diff --git a/output.h b/output.h
index 89254a38c..d1a1ad898 100644
--- a/output.h
+++ b/output.h
@@ -9,6 +9,7 @@
 #define FISH_OUTPUT_H
 
 #include <wchar.h>
+#include "screen.h"
 
 /**
    Constants for various colors as used by the set_color function. 
@@ -71,7 +72,8 @@ enum
 */
 
 
-void set_color( int c, int c2 );
+//void set_color( int c, int c2 );
+void set_color(rgb_color_t c, rgb_color_t c2);
 
 /**
    Write specified multibyte string
@@ -129,6 +131,7 @@ int write_escaped_str( const wchar_t *str, int max_len );
    Return the internal color code representing the specified color
 */
 int output_color_code( const wcstring &val, bool is_background );
+rgb_color_t parse_color( const wcstring &val, bool is_background );
 
 /**
    This is for writing process notification messages. Has to write to
diff --git a/reader.cpp b/reader.cpp
index b70c2ea73..1de988fe7 100644
--- a/reader.cpp
+++ b/reader.cpp
@@ -373,7 +373,7 @@ static int exit_forced;
 */
 static void term_donate()
 {
-	set_color(FISH_COLOR_NORMAL, FISH_COLOR_NORMAL);
+	set_color(rgb_color_t::normal(), rgb_color_t::normal());
 
 	while( 1 )
 	{
@@ -697,7 +697,7 @@ void reader_write_title()
 		}
 	}
 	proc_pop_interactive();		
-	set_color( FISH_COLOR_RESET, FISH_COLOR_RESET );
+	set_color( rgb_color_t::reset(), rgb_color_t::reset() );
 }
 
 /**
@@ -1708,7 +1708,7 @@ static void reader_interactive_destroy()
 {
 	kill_destroy();
 	writestr( L"\n" );
-	set_color( FISH_COLOR_RESET, FISH_COLOR_RESET );
+	set_color( rgb_color_t::reset(), rgb_color_t::reset() );
 	input_destroy();
 }
 
@@ -3300,7 +3300,7 @@ const wchar_t *reader_readline()
 			wperror(L"tcsetattr");
 		}
 		
-		set_color( FISH_COLOR_RESET, FISH_COLOR_RESET );
+		set_color( rgb_color_t::reset(), rgb_color_t::reset() );
 	}
 	
 	return finished ? data->command_line.c_str() : 0;
diff --git a/screen.cpp b/screen.cpp
index e74d4e8be..388d474b1 100644
--- a/screen.cpp
+++ b/screen.cpp
@@ -530,8 +530,8 @@ static void s_set_color( screen_t *s, buffer_t *b, int c )
 	s_writeb_buffer = b;
 	
     unsigned int uc = (unsigned int)c;
-	set_color( highlight_get_color( uc & 0xffff, false ),
-		   highlight_get_color( (uc>>16)&0xffff, true ) );
+	set_color( highlight_get_rgb_color( uc & 0xffff, false ),
+		   highlight_get_rgb_color( (uc>>16)&0xffff, true ) );
 	
 	output_set_writer( writer_old );
 	
diff --git a/screen.h b/screen.h
index 3d6eb72db..aa88be118 100644
--- a/screen.h
+++ b/screen.h
@@ -14,24 +14,166 @@
 
 #include <vector>
 
+/* A type that represents a color */
+class rgb_color_t {
+    enum {
+        type_none,
+        type_named,
+        type_rgb,
+        type_reset,
+        type_ignore
+    };
+    unsigned char type;
+    union {
+        unsigned char name_idx; //0-10
+        unsigned char rgb[3];
+    } data;
+    unsigned flags;
+    
+    /* Try parsing an explicit color name like "magenta" */
+    bool try_parse_named(const wcstring &str) {
+        bzero(&data, sizeof data);
+        const struct {const wchar_t * name; unsigned char idx;} names[] = {
+            {L"black", 0},
+            {L"red", 1},
+            {L"green", 2},
+            {L"brown", 3},
+            {L"yellow", 3},
+            {L"blue", 4},
+            {L"magenta", 5},
+            {L"purple", 5},
+            {L"cyan", 6},
+            {L"white", 7},
+            {L"normal", 8}            
+        };
+        size_t max = sizeof names / sizeof *names;
+        for (size_t idx=0; idx < max; idx++) {
+            if (0 == wcscasecmp(str.c_str(), names[idx].name)) {
+                data.name_idx = names[idx].idx;
+                return true;
+            }
+        }
+        return false;
+    }
+    
+    static int parse_hex_digit(wchar_t x) {
+        switch (x) {
+            case L'0': return 0x0;
+            case L'1': return 0x1;
+            case L'2': return 0x2;
+            case L'3': return 0x3;
+            case L'4': return 0x4;
+            case L'5': return 0x5;
+            case L'6': return 0x6;
+            case L'7': return 0x7;
+            case L'8': return 0x8;
+            case L'9': return 0x9;
+            case L'a':case L'A': return 0xA;
+            case L'b':case L'B': return 0xB;
+            case L'c':case L'C': return 0xC;
+            case L'd':case L'D': return 0xD;
+            case L'e':case L'E': return 0xE;
+            case L'f':case L'F': return 0xF;
+            default: return -1;
+        }
+    }
+    
+    bool try_parse_rgb(const wcstring &name) {
+        bzero(&data, sizeof data);
+        /* We support the following style of rgb formats (case insensitive):
+            #FA3
+            #F3A035
+        */
+        size_t i;
+        if (name.size() == 4 && name.at(0) == L'#') {
+            // type #FA3
+            for (i=0; i < 3; i++) {
+                int val = parse_hex_digit(name.at(i));
+                if (val < 0) break;
+                data.rgb[i] = val*16+val;
+            }
+            return i == 3;
+        } else if (name.size() == 7 && name.at(0) == L'#') {
+            // type #F3A035
+            for (i=0; i < 6;) {
+                int hi = parse_hex_digit(name.at(i++));
+                int lo = parse_hex_digit(name.at(i++));
+                if (lo < 0 || hi < 0) break;
+                data.rgb[i] = hi*16+lo;
+            }
+            return i == 6;    
+        } else {
+            return false;
+        }
+    }
+    
+    static rgb_color_t named_color(unsigned char which)
+    {
+        rgb_color_t result(type_named);
+        result.data.name_idx = which;
+        return result;
+    }
+    
+    public:
+    
+    explicit rgb_color_t(unsigned char t = type_none) : type(t), data(), flags() {}
+    
+    static rgb_color_t normal() { return named_color(8); }    
+    static rgb_color_t white() { return named_color(7); }
+    static rgb_color_t black() { return named_color(0); }
+    static rgb_color_t reset() { return rgb_color_t(type_reset); }
+    static rgb_color_t ignore() { return rgb_color_t(type_ignore); }
+    
+    rgb_color_t(unsigned char r, unsigned char g, unsigned char b)
+    {
+        type = type_rgb;
+        data.rgb[0] = r;
+        data.rgb[1] = g;
+        data.rgb[2] = b;
+    }
+    
+    static bool parse(const wcstring &str, rgb_color_t &color) {
+        if (color.try_parse_named(str)) {
+            color.type = type_named;
+        } else if (color.try_parse_rgb(str)) {
+            color.type = type_rgb;
+        } else {
+            bzero(color.data.rgb, sizeof color.data.rgb);
+            color.type = type_none;
+        }
+        return color.type != type_none;
+    }
+    
+    unsigned char name_index() const {
+        assert(type == type_named);
+        return data.name_idx;
+    }
+    
+    bool is_bold() const { return flags & 1; }
+    void set_bold(bool x) { if (x) flags |= 1; else flags &= ~1; }
+    bool is_underline() const { return flags & 2; }
+    void set_underline(bool x) { if (x) flags |= 2; else flags &= ~2; }
+    
+    bool is_reset(void) const { return type == type_reset; }
+    bool is_ignore(void) const { return type == type_ignore; }
+    bool is_named(void) const { return type == type_named; }
+    
+    bool operator==(const rgb_color_t &other) const {
+        return type == other.type && ! memcmp(&data, &other.data, sizeof data);
+    }
+    
+    bool operator!=(const rgb_color_t &other) const {
+        return !(*this == other);
+    }
+
+};
+
 struct line_entry_t
 {
     wchar_t text;
     int color;
 };
 
-class rgb_color_t {
-    unsigned char rgb[3];
-    public:
-    
-    rgb_color_t(unsigned char r, unsigned char g, unsigned char b)
-    {
-        rgb[0] = r;
-        rgb[1] = g;
-        rgb[2] = b;
-    }
-};
-
 /**
    A class representing a single line of a screen.
 */
diff --git a/set_color.cpp b/set_color.cpp
index 61c6312f5..181ad9ab2 100644
--- a/set_color.cpp
+++ b/set_color.cpp
@@ -76,8 +76,7 @@ const char *col[]=
 	"cyan",
 	"white",
 	"normal"
-}
-;
+};
 
 const int col_idx[]=
 {
@@ -92,8 +91,7 @@ const int col_idx[]=
 	6,
 	7,
 	8
-}
-;
+};
 
 int translate_color( char *str )
 {