diff --git a/gfx.c b/gfx.c
index 8c7a94febf..3dab6b132b 100644
--- a/gfx.c
+++ b/gfx.c
@@ -1654,6 +1654,9 @@ void DrawMouseCursor(void)
 	int w;
 	int h;
 
+	/* Redraw mouse cursor but only when it's inside the window */
+	if (!_cursor.in_window) return;
+
 	// Don't draw the mouse cursor if it's already drawn
 	if (_cursor.visible) {
 		if (!_cursor.dirty) return;
diff --git a/gfx.h b/gfx.h
index 66eb5eee1a..4e605a24e6 100644
--- a/gfx.h
+++ b/gfx.h
@@ -21,17 +21,18 @@ struct DrawPixelInfo {
 
 
 typedef struct CursorVars {
-	Point pos, size, offs, delta;
-	Point draw_pos, draw_size;
-	CursorID sprite;
+	Point pos, size, offs, delta; ///< position, size, offset from top-left, and movement
+	Point draw_pos, draw_size;    ///< position and size bounding-box for drawing
+	CursorID sprite; ///< current image of cursor
 
-	int wheel; // mouse wheel movement
-	const CursorID *animate_list, *animate_cur;
-	uint animate_timeout;
+	int wheel;       ///< mouse wheel movement
+	const CursorID *animate_list, *animate_cur; ///< in case of animated cursor, list of frames
+	uint animate_timeout;                       ///< current frame in list of animated cursor
 
-	bool visible;
-	bool dirty;
-	bool fix_at;
+	bool visible;    ///< cursor is visible
+	bool dirty;      ///< the rect occupied by the mouse is dirty (redraw)
+	bool fix_at;     ///< mouse is moving, but cursor is not (used for scrolling)
+	bool in_window;  ///< mouse inside this window, determines drawing logic
 } CursorVars;
 
 
diff --git a/openttd.c b/openttd.c
index bc928779fe..15b20e1405 100644
--- a/openttd.c
+++ b/openttd.c
@@ -450,6 +450,7 @@ int ttd_main(int argc, char* argv[])
 
 	// initialize the ingame console
 	IConsoleInit();
+	_cursor.in_window = true;
 	InitializeGUI();
 	IConsoleCmdExec("exec scripts/autoexec.scr 0");
 
diff --git a/video/sdl_v.c b/video/sdl_v.c
index 3b27c7ad61..d190237fb2 100644
--- a/video/sdl_v.c
+++ b/video/sdl_v.c
@@ -345,6 +345,15 @@ static int PollEvent(void)
 		}
 		break;
 
+	case SDL_ACTIVEEVENT:
+		if (ev.active.gain == 1) // mouse entered the window, enable cursor
+			_cursor.in_window = true;
+		else if (ev.active.gain == 0) {
+			UndrawMouseCursor(); // mouse left the window, undraw cursor
+			_cursor.in_window = false;
+		}
+		break;
+
 	case SDL_QUIT:
 		// do not ask to quit on the main screen
 		if (_game_mode != GM_MENU) {
diff --git a/video/win32_v.c b/video/win32_v.c
index 3ecda25287..aff4f2526c 100644
--- a/video/win32_v.c
+++ b/video/win32_v.c
@@ -184,9 +184,40 @@ int RedrawScreenDebug(void)
 }
 #endif
 
+/* Windows 95 will not have a WM_MOUSELEAVE message, so define it if
+ * needed. There is no such event as WM_MOUSEENTER, we just made this up :) */
+#define WM_MOUSEENTER WM_USER + 1
+#if !defined(WM_MOUSELEAVE)
+#define WM_MOUSELEAVE 0x02A3
+#endif
+#define TID_POLLMOUSE 1
+#define MOUSE_POLL_DELAY 75
+
+static void CALLBACK TrackMouseTimerProc(HWND hwnd, UINT msg, UINT event, DWORD time)
+{
+	RECT rc;
+	POINT pt;
+
+	/* Get the rectangle of our window and translate it to screen coordinates.
+	 * Compare this with the current screen coordinates of the mouse and if it
+	 * falls outside of the area or our window we have left the window. */
+	GetClientRect(hwnd, &rc);
+	MapWindowPoints(hwnd, HWND_DESKTOP, (LPPOINT)&rc, 2);
+	GetCursorPos(&pt);
+
+	if (!PtInRect(&rc, pt) || (WindowFromPoint(pt) != hwnd)) {
+		KillTimer(hwnd, event);
+		PostMessage(hwnd, WM_MOUSELEAVE, 0, 0L);
+	}
+}
+
 static LRESULT CALLBACK WndProcGdi(HWND hwnd, UINT msg, WPARAM wParam, LPARAM lParam)
 {
 	switch (msg) {
+	case WM_CREATE:
+		SetTimer(hwnd, TID_POLLMOUSE, MOUSE_POLL_DELAY, (TIMERPROC)TrackMouseTimerProc);
+		break;
+
 	case WM_PAINT: {
 		PAINTSTRUCT ps;
 		HDC dc,dc2;
@@ -259,11 +290,33 @@ static LRESULT CALLBACK WndProcGdi(HWND hwnd, UINT msg, WPARAM wParam, LPARAM lP
 		_right_button_down = false;
 		return 0;
 
+	case WM_MOUSEENTER:
+		printf("enter\n");
+		_cursor.in_window = true;
+		DrawMouseCursor();
+		break;
+
+	case WM_MOUSELEAVE:
+		printf("enter\n");
+		UndrawMouseCursor();
+		_cursor.in_window = false;
+		break;
+
 	case WM_MOUSEMOVE: {
 		int x = (int16)LOWORD(lParam);
 		int y = (int16)HIWORD(lParam);
 		POINT pt;
 
+		/* If the mouse was not in the window and it has moved it means it has
+		 * come into the window, so send a WM_MOUSEENTER message. Also start
+		 * tracking the mouse for exiting the window */
+		if (!_cursor.in_window) {
+			_cursor.in_window = true;
+			SetTimer(hwnd, TID_POLLMOUSE, MOUSE_POLL_DELAY, (TIMERPROC)TrackMouseTimerProc);
+
+			if (hwnd != GetCapture()) PostMessage(hwnd, WM_MOUSEENTER, 0, 0L);
+		}
+
 		if (_wnd.double_size) {
 			x /= 2;
 			y /= 2;