diff --git a/indra/newview/app_settings/settings.xml b/indra/newview/app_settings/settings.xml
index 8e6362d0ad..27e614e936 100644
--- a/indra/newview/app_settings/settings.xml
+++ b/indra/newview/app_settings/settings.xml
@@ -3326,7 +3326,7 @@
       <key>Type</key>
       <string>Boolean</string>
       <key>Value</key>
-      <integer>1</integer>
+      <integer>0</integer>
     </map>
     <key>FSCloseChatOnReturnOnlyForNearbyChatControl</key>
     <map>
diff --git a/indra/newview/fsnearbychatcontrol.cpp b/indra/newview/fsnearbychatcontrol.cpp
index 6b7a620fb3..786c3357be 100644
--- a/indra/newview/fsnearbychatcontrol.cpp
+++ b/indra/newview/fsnearbychatcontrol.cpp
@@ -243,18 +243,18 @@ void FSNearbyChatControl::autohide(bool after_send)
     if (isDefault())
     {
         const bool in_mouselook = gAgentCamera.cameraMouselook();
-        const bool closeChatOnReturn = gSavedSettings.getBOOL("CloseChatOnReturn") 
+        const bool show_interface_in_mouselook = gSavedSettings.getBOOL("FSShowInterfaceInMouselook");
+        const bool closeChatOnReturn = gSavedSettings.getBOOL("CloseChatOnReturn")
                          && !(!in_mouselook && gSavedSettings.getBOOL("FSCloseChatOnReturnInMouselook"));
         const bool autohideChatBar = gSavedSettings.getBOOL("AutohideChatBar");
-        bool hide_chatbar = false;
 
         if (closeChatOnReturn)
         {
             setFocus(false);
-            hide_chatbar = autohideChatBar;
         }
 
-        if (hide_chatbar || (!after_send && autohideChatBar))
+        if ((!after_send || closeChatOnReturn) &&
+            ((in_mouselook && !show_interface_in_mouselook) || autohideChatBar))
         {
             FSNearbyChat::instance().showDefaultChatBar(false);
         }