diff --git a/builtin-merge-file.c b/builtin-merge-file.c
index 5b4f020e38..1e92510026 100644
--- a/builtin-merge-file.c
+++ b/builtin-merge-file.c
@@ -27,10 +27,8 @@ int cmd_merge_file(int argc, const char **argv, const char *prefix)
 		else if (!strcmp(argv[1], "-q") ||
 				!strcmp(argv[1], "--quiet"))
 			freopen("/dev/null", "w", stderr);
-		else if (!strcmp(argv[1], "--diff3")) {
+		else if (!strcmp(argv[1], "--diff3"))
 			merge_style = XDL_MERGE_DIFF3;
-			merge_level = XDL_MERGE_EAGER;
-		}
 		else
 			usage(merge_file_usage);
 		argc--;
diff --git a/xdiff/xmerge.c b/xdiff/xmerge.c
index 7dcd4055ae..d9737f04c2 100644
--- a/xdiff/xmerge.c
+++ b/xdiff/xmerge.c
@@ -392,6 +392,15 @@ static int xdl_do_merge(xdfenv_t *xe1, xdchange_t *xscr1, const char *name1,
 	int level = flags & XDL_MERGE_LEVEL_MASK;
 	int style = flags & XDL_MERGE_STYLE_MASK;
 
+	if (style == XDL_MERGE_DIFF3) {
+		/*
+		 * "diff3 -m" output does not make sense for anything
+		 * more aggressive than XDL_MERGE_EAGER.
+		 */
+		if (XDL_MERGE_EAGER < level)
+			level = XDL_MERGE_EAGER;
+	}
+
 	c = changes = NULL;
 
 	while (xscr1 && xscr2) {