diff --git a/CHANGELOG.md b/CHANGELOG.md
index 4868bfa5e..4194964b7 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -26,6 +26,9 @@ to [Semantic Versioning](https://semver.org/spec/v2.0.0.html).
   `--color-words`, `--git`, `--stat`, `--summary`, `--types`, and external diff
   tools in file-by-file mode.
 
+* Color-words diff has gained [an option to display complex changes as separate
+  lines](docs/config.md#color-words-diff-options).
+
 * A tilde (`~`) at the start of the path will now be expanded to the user's home
   directory when configuring a `signing.key` for SSH commit signing.
   
diff --git a/cli/src/commit_templater.rs b/cli/src/commit_templater.rs
index 4eef2e9db..1883e1210 100644
--- a/cli/src/commit_templater.rs
+++ b/cli/src/commit_templater.rs
@@ -1345,8 +1345,10 @@ fn builtin_tree_diff_methods<'repo>() -> CommitTemplateBuildMethodFnMap<'repo, T
             let path_converter = language.path_converter;
             let template = (self_property, context_property)
                 .map(move |(diff, context)| {
+                    // TODO: load defaults from UserSettings?
                     let options = diff_util::ColorWordsOptions {
                         context: context.unwrap_or(diff_util::DEFAULT_CONTEXT_LINES),
+                        max_inline_alternation: None,
                     };
                     diff.into_formatted(move |formatter, store, tree_diff| {
                         diff_util::show_color_words_diff(
diff --git a/cli/src/config-schema.json b/cli/src/config-schema.json
index 953d3908a..073637e88 100644
--- a/cli/src/config-schema.json
+++ b/cli/src/config-schema.json
@@ -276,6 +276,22 @@
                 ]
             }
         },
+        "diff": {
+            "type": "object",
+            "description": "Builtin diff formats settings",
+            "properties": {
+                "color-words": {
+                    "type": "object",
+                    "description": "Options for color-words diffs",
+                    "properties": {
+                        "max-inline-alternation": {
+                            "type": "integer",
+                            "description": "Maximum number of removed/added word alternation to inline"
+                        }
+                    }
+                }
+            }
+        },
         "git": {
             "type": "object",
             "description": "Settings for git behavior (when using git backend)",
diff --git a/cli/src/config/misc.toml b/cli/src/config/misc.toml
index 85a9f18ff..a2a7f321a 100644
--- a/cli/src/config/misc.toml
+++ b/cli/src/config/misc.toml
@@ -5,6 +5,9 @@ amend = ["squash"]
 co = ["checkout"]
 unamend = ["unsquash"]
 
+[diff.color-words]
+max-inline-alternation = -1
+
 [ui]
 # TODO: delete ui.allow-filesets in jj 0.26+
 allow-filesets = true
diff --git a/cli/src/diff_util.rs b/cli/src/diff_util.rs
index 1fe336367..1b935cb80 100644
--- a/cli/src/diff_util.rs
+++ b/cli/src/diff_util.rs
@@ -407,15 +407,28 @@ fn collect_copied_sources<'a>(
 pub struct ColorWordsOptions {
     /// Number of context lines to show.
     pub context: usize,
+    /// Maximum number of removed/added word alternation to inline.
+    pub max_inline_alternation: Option<usize>,
 }
 
 impl ColorWordsOptions {
     fn from_settings_and_args(
-        _settings: &UserSettings,
+        settings: &UserSettings,
         args: &DiffFormatArgs,
     ) -> Result<Self, config::ConfigError> {
+        let config = settings.config();
+        let max_inline_alternation = {
+            let key = "diff.color-words.max-inline-alternation";
+            match config.get_int(key)? {
+                -1 => None, // unlimited
+                n => Some(usize::try_from(n).map_err(|err| {
+                    config::ConfigError::Message(format!("invalid {key}: {err}"))
+                })?),
+            }
+        };
         Ok(ColorWordsOptions {
             context: args.context.unwrap_or(DEFAULT_CONTEXT_LINES),
+            max_inline_alternation,
         })
     }
 }
@@ -467,13 +480,35 @@ fn show_color_words_diff_hunks(
                 )?;
             }
             DiffHunk::Different(contents) => {
-                let word_diff = Diff::by_word(&contents);
-                let mut diff_line_iter =
-                    DiffLineIterator::with_line_number(word_diff.hunks(), line_number);
-                for diff_line in diff_line_iter.by_ref() {
-                    show_color_words_diff_line(formatter, &diff_line)?;
+                let word_diff_hunks = Diff::by_word(&contents).hunks().collect_vec();
+                let can_inline = match options.max_inline_alternation {
+                    None => true,     // unlimited
+                    Some(0) => false, // no need to count alternation
+                    Some(max_num) => {
+                        let groups = split_diff_hunks_by_matching_newline(&word_diff_hunks);
+                        groups.map(count_diff_alternation).max().unwrap_or(0) <= max_num
+                    }
+                };
+                if can_inline {
+                    let mut diff_line_iter =
+                        DiffLineIterator::with_line_number(word_diff_hunks.iter(), line_number);
+                    for diff_line in diff_line_iter.by_ref() {
+                        show_color_words_diff_line(formatter, &diff_line)?;
+                    }
+                    line_number = diff_line_iter.next_line_number();
+                } else {
+                    let (left_lines, right_lines) = unzip_diff_hunks_to_lines(&word_diff_hunks);
+                    for tokens in &left_lines {
+                        show_color_words_line_number(formatter, Some(line_number.left), None)?;
+                        show_color_words_single_sided_line(formatter, tokens, "removed")?;
+                        line_number.left += 1;
+                    }
+                    for tokens in &right_lines {
+                        show_color_words_line_number(formatter, None, Some(line_number.right))?;
+                        show_color_words_single_sided_line(formatter, tokens, "added")?;
+                        line_number.right += 1;
+                    }
                 }
-                line_number = diff_line_iter.next_line_number();
             }
         }
     }
@@ -544,6 +579,7 @@ fn show_color_words_line_number(
     Ok(())
 }
 
+/// Prints `diff_line` which may contain tokens originating from both sides.
 fn show_color_words_diff_line(
     formatter: &mut dyn Formatter,
     diff_line: &DiffLine,
@@ -578,6 +614,56 @@ fn show_color_words_diff_line(
     Ok(())
 }
 
+/// Prints left/right-only line tokens with the given label.
+fn show_color_words_single_sided_line(
+    formatter: &mut dyn Formatter,
+    tokens: &[(DiffTokenType, &[u8])],
+    label: &str,
+) -> io::Result<()> {
+    formatter.with_label(label, |formatter| show_diff_line_tokens(formatter, tokens))?;
+    let (_, data) = tokens.last().expect("diff line must not be empty");
+    if !data.ends_with(b"\n") {
+        writeln!(formatter)?;
+    };
+    Ok(())
+}
+
+/// Counts number of diff-side alternation, ignoring matching hunks.
+///
+/// This function is meant to measure visual complexity of diff hunks. It's easy
+/// to read hunks containing some removed or added words, but is getting harder
+/// as more removes and adds interleaved.
+///
+/// For example,
+/// - `[matching]` -> 0
+/// - `[left]` -> 1
+/// - `[left, matching, left]` -> 1
+/// - `[matching, left, right, matching, right]` -> 2
+/// - `[left, right, matching, right, left]` -> 3
+fn count_diff_alternation(diff_hunks: &[DiffHunk]) -> usize {
+    diff_hunks
+        .iter()
+        .filter_map(|hunk| match hunk {
+            DiffHunk::Matching(_) => None,
+            DiffHunk::Different(contents) => Some(contents),
+        })
+        // Map non-empty diff side to index (0: left, 1: right)
+        .flat_map(|contents| contents.iter().positions(|content| !content.is_empty()))
+        // Omit e.g. left->(matching->)*left
+        .dedup()
+        .count()
+}
+
+/// Splits hunks into slices of contiguous changed lines.
+fn split_diff_hunks_by_matching_newline<'a, 'b>(
+    diff_hunks: &'a [DiffHunk<'b>],
+) -> impl Iterator<Item = &'a [DiffHunk<'b>]> {
+    diff_hunks.split_inclusive(|hunk| match hunk {
+        DiffHunk::Matching(content) => content.contains(&b'\n'),
+        DiffHunk::Different(_) => false,
+    })
+}
+
 struct FileContent {
     /// false if this file is likely text; true if it is likely binary.
     is_binary: bool,
diff --git a/cli/tests/test_diff_command.rs b/cli/tests/test_diff_command.rs
index 66f2b6024..76adc698e 100644
--- a/cli/tests/test_diff_command.rs
+++ b/cli/tests/test_diff_command.rs
@@ -12,6 +12,7 @@
 // See the License for the specific language governing permissions and
 // limitations under the License.
 
+use indoc::indoc;
 use itertools::Itertools;
 
 use crate::common::{escaped_fake_diff_editor_path, strip_last_line, TestEnvironment};
@@ -739,6 +740,507 @@ fn test_diff_hunks() {
     "###);
 }
 
+#[test]
+fn test_diff_color_words_inlining_threshold() {
+    let test_env = TestEnvironment::default();
+    test_env.jj_cmd_ok(test_env.env_root(), &["git", "init", "repo"]);
+    let repo_path = test_env.env_root().join("repo");
+
+    let render_diff = |max_alternation: i32, args: &[&str]| {
+        let config = format!("diff.color-words.max-inline-alternation={max_alternation}");
+        test_env.jj_cmd_success(
+            &repo_path,
+            &[&["diff", "--config-toml", &config], args].concat(),
+        )
+    };
+
+    let file1_path = "file1-single-line";
+    let file2_path = "file2-multiple-lines-in-single-hunk";
+    let file3_path = "file3-changes-across-lines";
+    std::fs::write(
+        repo_path.join(file1_path),
+        indoc! {"
+            == adds ==
+            a b c
+            == removes ==
+            a b c d e f g
+            == adds + removes ==
+            a b c d e
+            == adds + removes + adds ==
+            a b c d e
+            == adds + removes + adds + removes ==
+            a b c d e f g
+        "},
+    )
+    .unwrap();
+    std::fs::write(
+        repo_path.join(file2_path),
+        indoc! {"
+            == adds; removes; adds + removes ==
+            a b c
+            a b c d e f g
+            a b c d e
+            == adds + removes + adds; adds + removes + adds + removes ==
+            a b c d e
+            a b c d e f g
+        "},
+    )
+    .unwrap();
+    std::fs::write(
+        repo_path.join(file3_path),
+        indoc! {"
+            == adds ==
+            a b c
+            == removes ==
+            a b c d
+            e f g
+            == adds + removes ==
+            a b c
+            d e
+            == adds + removes + adds ==
+            a b c
+            d e
+            == adds + removes + adds + removes ==
+            a b
+            c d e f g
+        "},
+    )
+    .unwrap();
+    test_env.jj_cmd_ok(&repo_path, &["new"]);
+    std::fs::write(
+        repo_path.join(file1_path),
+        indoc! {"
+            == adds ==
+            a X b Y Z c
+            == removes ==
+            a c f
+            == adds + removes ==
+            a X b d
+            == adds + removes + adds ==
+            a X b d Y
+            == adds + removes + adds + removes ==
+            X a Y b d Z e
+        "},
+    )
+    .unwrap();
+    std::fs::write(
+        repo_path.join(file2_path),
+        indoc! {"
+            == adds; removes; adds + removes ==
+            a X b Y Z c
+            a c f
+            a X b d
+            == adds + removes + adds; adds + removes + adds + removes ==
+            a X b d Y
+            X a Y b d Z e
+        "},
+    )
+    .unwrap();
+    std::fs::write(
+        repo_path.join(file3_path),
+        indoc! {"
+            == adds ==
+            a X b
+            Y Z c
+            == removes ==
+            a c f
+            == adds + removes ==
+            a
+            X b d
+            == adds + removes + adds ==
+            a X b d
+            Y
+            == adds + removes + adds + removes ==
+            X a Y b d
+            Z e
+        "},
+    )
+    .unwrap();
+
+    // inline all by default
+    let stdout = test_env.jj_cmd_success(&repo_path, &["diff"]);
+    insta::assert_snapshot!(stdout, @r###"
+    Modified regular file file1-single-line:
+       1    1: == adds ==
+       2    2: a X b Y Z c
+       3    3: == removes ==
+       4    4: a b c d e f g
+       5    5: == adds + removes ==
+       6    6: a X b c d e
+       7    7: == adds + removes + adds ==
+       8    8: a X b c d eY
+       9    9: == adds + removes + adds + removes ==
+      10   10: X a Y b c d Z e f g
+    Modified regular file file2-multiple-lines-in-single-hunk:
+       1    1: == adds; removes; adds + removes ==
+       2    2: a X b Y Z c
+       3    3: a b c d e f g
+       4    4: a X b c d e
+       5    5: == adds + removes + adds; adds + removes + adds + removes ==
+       6    6: a X b c d eY
+       7    7: X a Y b c d Z e f g
+    Modified regular file file3-changes-across-lines:
+       1    1: == adds ==
+       2    2: a X b
+       2    3: Y Z c
+       3    4: == removes ==
+       4    5: a b c d
+       5    5: e f g
+       6    6: == adds + removes ==
+       7    7: a
+       7    8: X b c
+       8    8: d e
+       9    9: == adds + removes + adds ==
+      10   10: a X b c
+      11   10: d e
+      11   11: Y
+      12   12: == adds + removes + adds + removes ==
+      13   13: X a Y b
+      14   13: c d
+      14   14: Z e f g
+    "###);
+
+    // 0: no inlining
+    insta::assert_snapshot!(render_diff(0, &[]), @r###"
+    Modified regular file file1-single-line:
+       1    1: == adds ==
+       2     : a b c
+            2: a X b Y Z c
+       3    3: == removes ==
+       4     : a b c d e f g
+            4: a c f
+       5    5: == adds + removes ==
+       6     : a b c d e
+            6: a X b d
+       7    7: == adds + removes + adds ==
+       8     : a b c d e
+            8: a X b d Y
+       9    9: == adds + removes + adds + removes ==
+      10     : a b c d e f g
+           10: X a Y b d Z e
+    Modified regular file file2-multiple-lines-in-single-hunk:
+       1    1: == adds; removes; adds + removes ==
+       2     : a b c
+       3     : a b c d e f g
+       4     : a b c d e
+            2: a X b Y Z c
+            3: a c f
+            4: a X b d
+       5    5: == adds + removes + adds; adds + removes + adds + removes ==
+       6     : a b c d e
+       7     : a b c d e f g
+            6: a X b d Y
+            7: X a Y b d Z e
+    Modified regular file file3-changes-across-lines:
+       1    1: == adds ==
+       2     : a b c
+            2: a X b
+            3: Y Z c
+       3    4: == removes ==
+       4     : a b c d
+       5     : e f g
+            5: a c f
+       6    6: == adds + removes ==
+       7     : a b c
+       8     : d e
+            7: a
+            8: X b d
+       9    9: == adds + removes + adds ==
+      10     : a b c
+      11     : d e
+           10: a X b d
+           11: Y
+      12   12: == adds + removes + adds + removes ==
+      13     : a b
+      14     : c d e f g
+           13: X a Y b d
+           14: Z e
+    "###);
+
+    // 1: inline adds-only or removes-only lines
+    insta::assert_snapshot!(render_diff(1, &[]), @r###"
+    Modified regular file file1-single-line:
+       1    1: == adds ==
+       2    2: a X b Y Z c
+       3    3: == removes ==
+       4    4: a b c d e f g
+       5    5: == adds + removes ==
+       6     : a b c d e
+            6: a X b d
+       7    7: == adds + removes + adds ==
+       8     : a b c d e
+            8: a X b d Y
+       9    9: == adds + removes + adds + removes ==
+      10     : a b c d e f g
+           10: X a Y b d Z e
+    Modified regular file file2-multiple-lines-in-single-hunk:
+       1    1: == adds; removes; adds + removes ==
+       2     : a b c
+       3     : a b c d e f g
+       4     : a b c d e
+            2: a X b Y Z c
+            3: a c f
+            4: a X b d
+       5    5: == adds + removes + adds; adds + removes + adds + removes ==
+       6     : a b c d e
+       7     : a b c d e f g
+            6: a X b d Y
+            7: X a Y b d Z e
+    Modified regular file file3-changes-across-lines:
+       1    1: == adds ==
+       2    2: a X b
+       2    3: Y Z c
+       3    4: == removes ==
+       4    5: a b c d
+       5    5: e f g
+       6    6: == adds + removes ==
+       7     : a b c
+       8     : d e
+            7: a
+            8: X b d
+       9    9: == adds + removes + adds ==
+      10     : a b c
+      11     : d e
+           10: a X b d
+           11: Y
+      12   12: == adds + removes + adds + removes ==
+      13     : a b
+      14     : c d e f g
+           13: X a Y b d
+           14: Z e
+    "###);
+
+    // 2: inline up to adds + removes lines
+    insta::assert_snapshot!(render_diff(2, &[]), @r###"
+    Modified regular file file1-single-line:
+       1    1: == adds ==
+       2    2: a X b Y Z c
+       3    3: == removes ==
+       4    4: a b c d e f g
+       5    5: == adds + removes ==
+       6    6: a X b c d e
+       7    7: == adds + removes + adds ==
+       8     : a b c d e
+            8: a X b d Y
+       9    9: == adds + removes + adds + removes ==
+      10     : a b c d e f g
+           10: X a Y b d Z e
+    Modified regular file file2-multiple-lines-in-single-hunk:
+       1    1: == adds; removes; adds + removes ==
+       2    2: a X b Y Z c
+       3    3: a b c d e f g
+       4    4: a X b c d e
+       5    5: == adds + removes + adds; adds + removes + adds + removes ==
+       6     : a b c d e
+       7     : a b c d e f g
+            6: a X b d Y
+            7: X a Y b d Z e
+    Modified regular file file3-changes-across-lines:
+       1    1: == adds ==
+       2    2: a X b
+       2    3: Y Z c
+       3    4: == removes ==
+       4    5: a b c d
+       5    5: e f g
+       6    6: == adds + removes ==
+       7    7: a
+       7    8: X b c
+       8    8: d e
+       9    9: == adds + removes + adds ==
+      10     : a b c
+      11     : d e
+           10: a X b d
+           11: Y
+      12   12: == adds + removes + adds + removes ==
+      13     : a b
+      14     : c d e f g
+           13: X a Y b d
+           14: Z e
+    "###);
+
+    // 3: inline up to adds + removes + adds lines
+    insta::assert_snapshot!(render_diff(3, &[]), @r###"
+    Modified regular file file1-single-line:
+       1    1: == adds ==
+       2    2: a X b Y Z c
+       3    3: == removes ==
+       4    4: a b c d e f g
+       5    5: == adds + removes ==
+       6    6: a X b c d e
+       7    7: == adds + removes + adds ==
+       8    8: a X b c d eY
+       9    9: == adds + removes + adds + removes ==
+      10     : a b c d e f g
+           10: X a Y b d Z e
+    Modified regular file file2-multiple-lines-in-single-hunk:
+       1    1: == adds; removes; adds + removes ==
+       2    2: a X b Y Z c
+       3    3: a b c d e f g
+       4    4: a X b c d e
+       5    5: == adds + removes + adds; adds + removes + adds + removes ==
+       6     : a b c d e
+       7     : a b c d e f g
+            6: a X b d Y
+            7: X a Y b d Z e
+    Modified regular file file3-changes-across-lines:
+       1    1: == adds ==
+       2    2: a X b
+       2    3: Y Z c
+       3    4: == removes ==
+       4    5: a b c d
+       5    5: e f g
+       6    6: == adds + removes ==
+       7    7: a
+       7    8: X b c
+       8    8: d e
+       9    9: == adds + removes + adds ==
+      10   10: a X b c
+      11   10: d e
+      11   11: Y
+      12   12: == adds + removes + adds + removes ==
+      13     : a b
+      14     : c d e f g
+           13: X a Y b d
+           14: Z e
+    "###);
+
+    // 4: inline up to adds + removes + adds + removes lines
+    insta::assert_snapshot!(render_diff(4, &[]), @r###"
+    Modified regular file file1-single-line:
+       1    1: == adds ==
+       2    2: a X b Y Z c
+       3    3: == removes ==
+       4    4: a b c d e f g
+       5    5: == adds + removes ==
+       6    6: a X b c d e
+       7    7: == adds + removes + adds ==
+       8    8: a X b c d eY
+       9    9: == adds + removes + adds + removes ==
+      10   10: X a Y b c d Z e f g
+    Modified regular file file2-multiple-lines-in-single-hunk:
+       1    1: == adds; removes; adds + removes ==
+       2    2: a X b Y Z c
+       3    3: a b c d e f g
+       4    4: a X b c d e
+       5    5: == adds + removes + adds; adds + removes + adds + removes ==
+       6    6: a X b c d eY
+       7    7: X a Y b c d Z e f g
+    Modified regular file file3-changes-across-lines:
+       1    1: == adds ==
+       2    2: a X b
+       2    3: Y Z c
+       3    4: == removes ==
+       4    5: a b c d
+       5    5: e f g
+       6    6: == adds + removes ==
+       7    7: a
+       7    8: X b c
+       8    8: d e
+       9    9: == adds + removes + adds ==
+      10   10: a X b c
+      11   10: d e
+      11   11: Y
+      12   12: == adds + removes + adds + removes ==
+      13   13: X a Y b
+      14   13: c d
+      14   14: Z e f g
+    "###);
+
+    // context words in added/removed lines should be labeled as such
+    insta::assert_snapshot!(render_diff(2, &["--color=always"]), @r###"
+    Modified regular file file1-single-line:
+       1    1: == adds ==
+       2    2: a X b Y Z c
+       3    3: == removes ==
+       4    4: a b c d e f g
+       5    5: == adds + removes ==
+       6    6: a X b c d e
+       7    7: == adds + removes + adds ==
+       8     : a b c d e
+            8: a X b d Y
+       9    9: == adds + removes + adds + removes ==
+      10     : a b c d e f g
+           10: X a Y b d Z e
+    Modified regular file file2-multiple-lines-in-single-hunk:
+       1    1: == adds; removes; adds + removes ==
+       2    2: a X b Y Z c
+       3    3: a b c d e f g
+       4    4: a X b c d e
+       5    5: == adds + removes + adds; adds + removes + adds + removes ==
+       6     : a b c d e
+       7     : a b c d e f g
+            6: a X b d Y
+            7: X a Y b d Z e
+    Modified regular file file3-changes-across-lines:
+       1    1: == adds ==
+       2    2: a X b
+       2    3: Y Z c
+       3    4: == removes ==
+       4    5: a b c d
+       5    5: e f g
+       6    6: == adds + removes ==
+       7    7: a
+       7    8: X b c
+       8    8: d e
+       9    9: == adds + removes + adds ==
+      10     : a b c
+      11     : d e
+           10: a X b d
+           11: Y
+      12   12: == adds + removes + adds + removes ==
+      13     : a b
+      14     : c d e f g
+           13: X a Y b d
+           14: Z e
+    "###);
+    insta::assert_snapshot!(render_diff(2, &["--color=debug"]), @r###"
+    <<diff header::Modified regular file file1-single-line:>>
+    <<diff removed line_number::   1>><<diff:: >><<diff added line_number::   1>><<diff::: == adds ==>>
+    <<diff removed line_number::   2>><<diff:: >><<diff added line_number::   2>><<diff::: a >><<diff added token::X >><<diff::b >><<diff added token::Y Z >><<diff::c>>
+    <<diff removed line_number::   3>><<diff:: >><<diff added line_number::   3>><<diff::: == removes ==>>
+    <<diff removed line_number::   4>><<diff:: >><<diff added line_number::   4>><<diff::: a >><<diff removed token::b >><<diff::c >><<diff removed token::d e >><<diff::f>><<diff removed token:: g>><<diff::>>
+    <<diff removed line_number::   5>><<diff:: >><<diff added line_number::   5>><<diff::: == adds + removes ==>>
+    <<diff removed line_number::   6>><<diff:: >><<diff added line_number::   6>><<diff::: a >><<diff added token::X >><<diff::b >><<diff removed token::c >><<diff::d>><<diff removed token:: e>><<diff::>>
+    <<diff removed line_number::   7>><<diff:: >><<diff added line_number::   7>><<diff::: == adds + removes + adds ==>>
+    <<diff removed line_number::   8>><<diff::     : >><<diff removed::a b >><<diff removed token::c >><<diff removed::d >><<diff removed token::e>><<diff removed::>>
+    <<diff::     >><<diff added line_number::   8>><<diff::: >><<diff added::a >><<diff added token::X >><<diff added::b d >><<diff added token::Y>><<diff added::>>
+    <<diff removed line_number::   9>><<diff:: >><<diff added line_number::   9>><<diff::: == adds + removes + adds + removes ==>>
+    <<diff removed line_number::  10>><<diff::     : >><<diff removed::a b >><<diff removed token::c >><<diff removed::d e>><<diff removed token:: f g>><<diff removed::>>
+    <<diff::     >><<diff added line_number::  10>><<diff::: >><<diff added token::X >><<diff added::a >><<diff added token::Y >><<diff added::b d >><<diff added token::Z >><<diff added::e>>
+    <<diff header::Modified regular file file2-multiple-lines-in-single-hunk:>>
+    <<diff removed line_number::   1>><<diff:: >><<diff added line_number::   1>><<diff::: == adds; removes; adds + removes ==>>
+    <<diff removed line_number::   2>><<diff:: >><<diff added line_number::   2>><<diff::: a >><<diff added token::X >><<diff::b >><<diff added token::Y Z >><<diff::c>>
+    <<diff removed line_number::   3>><<diff:: >><<diff added line_number::   3>><<diff::: a >><<diff removed token::b >><<diff::c >><<diff removed token::d e >><<diff::f>><<diff removed token:: g>><<diff::>>
+    <<diff removed line_number::   4>><<diff:: >><<diff added line_number::   4>><<diff::: a >><<diff added token::X >><<diff::b >><<diff removed token::c >><<diff::d>><<diff removed token:: e>><<diff::>>
+    <<diff removed line_number::   5>><<diff:: >><<diff added line_number::   5>><<diff::: == adds + removes + adds; adds + removes + adds + removes ==>>
+    <<diff removed line_number::   6>><<diff::     : >><<diff removed::a b >><<diff removed token::c >><<diff removed::d >><<diff removed token::e>><<diff removed::>>
+    <<diff removed line_number::   7>><<diff::     : >><<diff removed::a b >><<diff removed token::c >><<diff removed::d e>><<diff removed token:: f g>><<diff removed::>>
+    <<diff::     >><<diff added line_number::   6>><<diff::: >><<diff added::a >><<diff added token::X >><<diff added::b d >><<diff added token::Y>><<diff added::>>
+    <<diff::     >><<diff added line_number::   7>><<diff::: >><<diff added token::X >><<diff added::a >><<diff added token::Y >><<diff added::b d >><<diff added token::Z >><<diff added::e>>
+    <<diff header::Modified regular file file3-changes-across-lines:>>
+    <<diff removed line_number::   1>><<diff:: >><<diff added line_number::   1>><<diff::: == adds ==>>
+    <<diff removed line_number::   2>><<diff:: >><<diff added line_number::   2>><<diff::: a >><<diff added token::X >><<diff::b>><<diff added token::>>
+    <<diff removed line_number::   2>><<diff:: >><<diff added line_number::   3>><<diff::: >><<diff added token::Y Z>><<diff:: c>>
+    <<diff removed line_number::   3>><<diff:: >><<diff added line_number::   4>><<diff::: == removes ==>>
+    <<diff removed line_number::   4>><<diff:: >><<diff added line_number::   5>><<diff::: a >><<diff removed token::b >><<diff::c >><<diff removed token::d>>
+    <<diff removed line_number::   5>><<diff:: >><<diff added line_number::   5>><<diff::: >><<diff removed token::e >><<diff::f>><<diff removed token:: g>><<diff::>>
+    <<diff removed line_number::   6>><<diff:: >><<diff added line_number::   6>><<diff::: == adds + removes ==>>
+    <<diff removed line_number::   7>><<diff:: >><<diff added line_number::   7>><<diff::: a>><<diff added token::>>
+    <<diff removed line_number::   7>><<diff:: >><<diff added line_number::   8>><<diff::: >><<diff added token::X>><<diff:: b >><<diff removed token::c>>
+    <<diff removed line_number::   8>><<diff:: >><<diff added line_number::   8>><<diff::: d>><<diff removed token:: e>><<diff::>>
+    <<diff removed line_number::   9>><<diff:: >><<diff added line_number::   9>><<diff::: == adds + removes + adds ==>>
+    <<diff removed line_number::  10>><<diff::     : >><<diff removed::a b >><<diff removed token::c>>
+    <<diff removed line_number::  11>><<diff::     : >><<diff removed::d>><<diff removed token:: e>><<diff removed::>>
+    <<diff::     >><<diff added line_number::  10>><<diff::: >><<diff added::a >><<diff added token::X >><<diff added::b d>><<diff added token::>>
+    <<diff::     >><<diff added line_number::  11>><<diff::: >><<diff added token::Y>><<diff added::>>
+    <<diff removed line_number::  12>><<diff:: >><<diff added line_number::  12>><<diff::: == adds + removes + adds + removes ==>>
+    <<diff removed line_number::  13>><<diff::     : >><<diff removed::a b>><<diff removed token::>>
+    <<diff removed line_number::  14>><<diff::     : >><<diff removed token::c>><<diff removed:: d e>><<diff removed token:: f g>><<diff removed::>>
+    <<diff::     >><<diff added line_number::  13>><<diff::: >><<diff added token::X >><<diff added::a >><<diff added token::Y >><<diff added::b d>><<diff added token::>>
+    <<diff::     >><<diff added line_number::  14>><<diff::: >><<diff added token::Z>><<diff added:: e>>
+    "###);
+}
+
 #[test]
 fn test_diff_missing_newline() {
     let test_env = TestEnvironment::default();
@@ -892,6 +1394,89 @@ fn test_color_words_diff_missing_newline() {
        8     : h
        9     : I
     "###);
+
+    let stdout = test_env.jj_cmd_success(
+        &repo_path,
+        &[
+            "log",
+            "--config-toml=diff.color-words.max-inline-alternation=0",
+            "-Tdescription",
+            "-pr::@-",
+            "--no-graph",
+            "--reversed",
+        ],
+    );
+    insta::assert_snapshot!(stdout, @r###"
+    === Empty
+    Added regular file file1:
+        (empty)
+    === Add no newline
+    Modified regular file file1:
+            1: a
+            2: b
+            3: c
+            4: d
+            5: e
+            6: f
+            7: g
+            8: h
+            9: i
+    === Modify first line
+    Modified regular file file1:
+       1     : a
+            1: A
+       2    2: b
+       3    3: c
+       4    4: d
+        ...
+    === Modify middle line
+    Modified regular file file1:
+       1    1: A
+       2    2: b
+       3    3: c
+       4    4: d
+       5     : e
+            5: E
+       6    6: f
+       7    7: g
+       8    8: h
+       9    9: i
+    === Modify last line
+    Modified regular file file1:
+        ...
+       6    6: f
+       7    7: g
+       8    8: h
+       9     : i
+            9: I
+    === Append newline
+    Modified regular file file1:
+        ...
+       6    6: f
+       7    7: g
+       8    8: h
+       9     : I
+            9: I
+    === Remove newline
+    Modified regular file file1:
+        ...
+       6    6: f
+       7    7: g
+       8    8: h
+       9     : I
+            9: I
+    === Empty
+    Modified regular file file1:
+       1     : A
+       2     : b
+       3     : c
+       4     : d
+       5     : E
+       6     : f
+       7     : g
+       8     : h
+       9     : I
+    "###);
 }
 
 #[test]
diff --git a/docs/config.md b/docs/config.md
index 79adf6248..ae56ca74e 100644
--- a/docs/config.md
+++ b/docs/config.md
@@ -200,6 +200,29 @@ can override the default style with the following keys:
 ui.diff.format = "git"
 ```
 
+#### Color-words diff options
+
+In color-words diffs, changed words are displayed inline by default. Because
+it's difficult to read a diff line with many removed/added words, there's a
+threshold to switch to traditional separate-line format.
+
+* `max-inline-alternation`: Maximum number of removed/added word alternation to
+  inline. For example, `<added> ... <added>` sequence has 1 alternation, so the
+  line will be inline if `max-inline-alternation >= 1`. `<added> ... <removed>
+  ... <added>` sequence has 3 alternation.
+
+  * `0`: disable inlining, making `--color-words` more similar to `--git`
+  * `1`: inline removes-only or adds-only lines
+  * `2`, `3`, ..: inline up to `2`, `3`, .. alternation
+  * `-1`: inline all lines (default)
+
+  **This parameter is experimental.** The definition is subject to change.
+
+```toml
+[diff.color-words]
+max-inline-alternation = 3
+```
+
 ### Generating diffs by external command
 
 If `ui.diff.tool` is set, the specified diff command will be called instead of