diff -up gnome-terminal-3.18.1/src/terminal-screen.c.wayland-transparency gnome-terminal-3.18.1/src/terminal-screen.c
--- gnome-terminal-3.18.1/src/terminal-screen.c.wayland-transparency	2015-10-20 16:36:08.388459536 -0400
+++ gnome-terminal-3.18.1/src/terminal-screen.c	2015-10-20 16:40:49.236462437 -0400
@@ -137,6 +137,8 @@ static void terminal_screen_system_font_
 static gboolean terminal_screen_popup_menu (GtkWidget *widget);
 static gboolean terminal_screen_button_press (GtkWidget *widget,
                                               GdkEventButton *event);
+static void terminal_screen_hierarchy_changed (GtkWidget *widget,
+                                               GtkWidget *previous_toplevel);
 static gboolean terminal_screen_focus_in (GtkWidget *widget,
                                           GdkEventFocus *event);
 static gboolean terminal_screen_do_exec (TerminalScreen *screen,
@@ -461,6 +463,7 @@ terminal_screen_class_init (TerminalScre
   widget_class->drag_data_received = terminal_screen_drag_data_received;
   widget_class->button_press_event = terminal_screen_button_press;
   widget_class->popup_menu = terminal_screen_popup_menu;
+  widget_class->hierarchy_changed = terminal_screen_hierarchy_changed;
 
   terminal_class->child_exited = terminal_screen_child_exited;
   terminal_class->notification_received = terminal_screen_notification_received;
@@ -836,6 +839,30 @@ terminal_screen_profile_changed_cb (GSet
 }
 
 static void
+update_toplevel_transparency (TerminalScreen *screen)
+{
+  GtkWidget *widget = GTK_WIDGET (screen);
+  TerminalScreenPrivate *priv = screen->priv;
+  GSettings *profile = priv->profile;
+  GtkWidget *toplevel;
+
+  toplevel = gtk_widget_get_toplevel (widget);
+  if (toplevel != NULL && gtk_widget_is_toplevel (toplevel))
+    {
+      gboolean transparent = g_settings_get_boolean (profile, TERMINAL_PROFILE_USE_TRANSPARENT_BACKGROUND);
+      if (gtk_widget_get_app_paintable (toplevel) != transparent)
+        {
+          gtk_widget_set_app_paintable (toplevel, transparent);
+
+          /* The opaque region of the toplevel isn't updated until the toplevel is allocated;
+           * set_app_paintable() doesn't force an allocation, so do that manually.
+           */
+          gtk_widget_queue_resize (toplevel);
+        }
+    }
+}
+
+static void
 update_color_scheme (TerminalScreen *screen)
 {
   GtkWidget *widget = GTK_WIDGET (screen);
@@ -884,9 +911,7 @@ update_color_scheme (TerminalScreen *scr
                            colors, n_colors);
   vte_terminal_set_color_bold (VTE_TERMINAL (screen), boldp);
 
-  toplevel = gtk_widget_get_toplevel (GTK_WIDGET (screen));
-  if (toplevel != NULL && gtk_widget_is_toplevel (toplevel))
-    gtk_widget_set_app_paintable (toplevel, transparent);
+  update_toplevel_transparency (screen);
 }
 
 static void
@@ -1545,6 +1570,13 @@ terminal_screen_button_press (GtkWidget
   return FALSE;
 }
 
+static void
+terminal_screen_hierarchy_changed (GtkWidget *widget,
+                                   GtkWidget *previous_toplevel)
+{
+  update_toplevel_transparency (TERMINAL_SCREEN (widget));
+}
+
 static gboolean
 terminal_screen_focus_in (GtkWidget     *widget,
                           GdkEventFocus *event)
diff -up gnome-terminal-3.18.1/src/terminal-window.c.wayland-transparency gnome-terminal-3.18.1/src/terminal-window.c
--- gnome-terminal-3.18.1/src/terminal-window.c.wayland-transparency	2015-10-20 16:36:08.334460484 -0400
+++ gnome-terminal-3.18.1/src/terminal-window.c	2015-10-20 16:36:08.392459466 -0400
@@ -2235,14 +2235,19 @@ terminal_window_draw (GtkWidget *widget,
   if (gtk_widget_get_app_paintable (widget))
     {
       GtkStyleContext *context;
-      int width;
-      int height;
+
+      /* Get the *child* allocation, so we don't overwrite window borders */
+      GtkWidget *child = gtk_bin_get_child (GTK_BIN (widget));
+      GtkAllocation child_allocation;
+      gtk_widget_get_allocation (child, &child_allocation);
 
       context = gtk_widget_get_style_context (widget);
-      width = gtk_widget_get_allocated_width (widget);
-      height = gtk_widget_get_allocated_height (widget);
-      gtk_render_background (context, cr, 0, 0, width, height);
-      gtk_render_frame (context, cr, 0, 0, width, height);
+      gtk_render_background (context, cr,
+                             child_allocation.x, child_allocation.y,
+                             child_allocation.width, child_allocation.height);
+      gtk_render_frame (context, cr,
+                             child_allocation.x, child_allocation.y,
+                             child_allocation.width, child_allocation.height);
     }
 
   return GTK_WIDGET_CLASS (terminal_window_parent_class)->draw (widget, cr);