diff --git a/diff-index.c b/diff-index.c
index 4a243b3624..86940123b3 100644
--- a/diff-index.c
+++ b/diff-index.c
@@ -23,9 +23,7 @@ int main(int argc, const char **argv)
 	for (i = 1; i < argc; i++) {
 		const char *arg = argv[i];
 			
-		if (!strcmp(arg, "-m"))
-			match_missing = 1; 
-		else if (!strcmp(arg, "--cached"))
+		if (!strcmp(arg, "--cached"))
 			cached = 1;
 		else
 			usage(diff_cache_usage);
@@ -37,5 +35,5 @@ int main(int argc, const char **argv)
 	if (!rev.pending_objects || rev.pending_objects->next ||
 	    rev.max_count != -1 || rev.min_age != -1 || rev.max_age != -1)
 		usage(diff_cache_usage);
-	return run_diff_index(&rev, cached, match_missing);
+	return run_diff_index(&rev, cached);
 }
diff --git a/diff-lib.c b/diff-lib.c
index 63da3b521d..2183b41b03 100644
--- a/diff-lib.c
+++ b/diff-lib.c
@@ -308,12 +308,20 @@ static void mark_merge_entries(void)
 	}
 }
 
-int run_diff_index(struct rev_info *revs, int cached, int match_missing)
+int run_diff_index(struct rev_info *revs, int cached)
 {
 	int ret;
 	struct object *ent;
 	struct tree *tree;
 	const char *tree_name;
+	int match_missing = 0;
+
+	/* 
+	 * Backward compatibility wart - "diff-index -m" does
+	 * not mean "do not ignore merges", but totally different.
+	 */
+	if (!revs->ignore_merges)
+		match_missing = 1;
 
 	if (read_cache() < 0) {
 		perror("read_cache");
diff --git a/diff.h b/diff.h
index 837d449f81..7150b90385 100644
--- a/diff.h
+++ b/diff.h
@@ -171,6 +171,6 @@ extern const char *diff_unique_abbrev(const unsigned char *, int);
 
 extern int run_diff_files(struct rev_info *revs, int silent_on_removed);
 
-extern int run_diff_index(struct rev_info *revs, int cached, int match_missing);
+extern int run_diff_index(struct rev_info *revs, int cached);
 
 #endif /* DIFF_H */