diff --git a/src/lang/english.txt b/src/lang/english.txt
index 124f8e34f6..0f1fe723ac 100644
--- a/src/lang/english.txt
+++ b/src/lang/english.txt
@@ -2188,6 +2188,13 @@ STR_CONFIG_SETTING_ALLOW_TOWN_ROADS_HELPTEXT                    :Allow towns to
 STR_CONFIG_SETTING_ALLOW_TOWN_LEVEL_CROSSINGS                   :Towns are allowed to build level crossings: {STRING2}
 STR_CONFIG_SETTING_ALLOW_TOWN_LEVEL_CROSSINGS_HELPTEXT          :Enabling this setting allows towns to build level crossings
 
+STR_CONFIG_SETTING_TOWN_TUNNELS                                 :Towns are allowed to build tunnels: {STRING2}
+STR_CONFIG_SETTING_TOWN_TUNNELS_HELPTEXT                        :Under what conditions are towns allowed to build road tunnels
+###length 3
+STR_CONFIG_SETTING_TOWN_TUNNELS_FORBIDDEN                       :Forbidden
+STR_CONFIG_SETTING_TOWN_TUNNELS_ALLOWED_OBSTRUCTION             :Allowed only for small obstructions
+STR_CONFIG_SETTING_TOWN_TUNNELS_ALLOWED                         :Allowed
+
 STR_CONFIG_SETTING_NOISE_LEVEL                                  :Allow town controlled noise level for airports: {STRING2}
 STR_CONFIG_SETTING_NOISE_LEVEL_HELPTEXT                         :With this setting disabled, there can be two airports in each town. With this setting enabled, the number of airports in a town is limited by the noise acceptance of the town, which depends on population and airport size and distance
 
diff --git a/src/settings_gui.cpp b/src/settings_gui.cpp
index b9bf4e8339..300387a3e9 100644
--- a/src/settings_gui.cpp
+++ b/src/settings_gui.cpp
@@ -2191,6 +2191,7 @@ static SettingsContainer &GetSettingsTree()
 				towns->Add(new SettingEntry("economy.town_zone_calc_mode"));
 				towns->Add(new SettingEntry("economy.allow_town_roads"));
 				towns->Add(new SettingEntry("economy.allow_town_level_crossings"));
+				towns->Add(new SettingEntry("economy.town_build_tunnels"));
 				towns->Add(new SettingEntry("economy.found_town"));
 				towns->Add(new SettingEntry("economy.town_cargogen_mode"));
 				towns->Add(new SettingEntry("economy.town_cargo_scale_factor"));
diff --git a/src/settings_type.h b/src/settings_type.h
index 0bf57aabcb..54b6f43af0 100644
--- a/src/settings_type.h
+++ b/src/settings_type.h
@@ -688,6 +688,7 @@ struct EconomySettings {
 	uint   sharing_fee[4];                   ///< fees for infrastructure sharing for rail/road/water/air
 	bool   sharing_payment_in_debt;          ///< allow fee payment for companies with more loan than money (switch off to prevent MP exploits)
 	bool   allow_town_level_crossings;       ///< towns are allowed to build level crossings
+	TownTunnelMode town_build_tunnels;       ///< if/when towns are allowed to build road tunnels
 	int8   old_town_cargo_factor;            ///< old power-of-two multiplier for town (passenger, mail) generation. May be negative.
 	int16  town_cargo_scale_factor;          ///< scaled power-of-two multiplier for town (passenger, mail) generation. May be negative.
 	int16  industry_cargo_scale_factor;      ///< scaled power-of-two multiplier for primary industry generation. May be negative.
diff --git a/src/table/settings/settings.ini b/src/table/settings/settings.ini
index 496b0e3240..b31ba7a74a 100644
--- a/src/table/settings/settings.ini
+++ b/src/table/settings/settings.ini
@@ -935,6 +935,20 @@ def      = true
 str      = STR_CONFIG_SETTING_ALLOW_TOWN_LEVEL_CROSSINGS
 strhelp  = STR_CONFIG_SETTING_ALLOW_TOWN_LEVEL_CROSSINGS_HELPTEXT
 
+[SDT_VAR]
+var      = economy.town_build_tunnels
+type     = SLE_UINT8
+flags    = SF_GUI_DROPDOWN
+def      = TTM_ALLOWED
+min      = TTM_BEGIN
+max      = TTM_END - 1
+interval = 1
+str      = STR_CONFIG_SETTING_TOWN_TUNNELS
+strhelp  = STR_CONFIG_SETTING_TOWN_TUNNELS_HELPTEXT
+strval   = STR_CONFIG_SETTING_TOWN_TUNNELS_FORBIDDEN
+cat      = SC_BASIC
+patxname = ""economy.town_build_tunnels""
+
 [SDT_XREF]
 xref     = ""economy.old_town_cargo_factor""
 extver   = SlXvFeatureTest(XSLFTO_AND, XSLFI_CHILLPP)
diff --git a/src/town_cmd.cpp b/src/town_cmd.cpp
index fb15c43480..0d5269f947 100644
--- a/src/town_cmd.cpp
+++ b/src/town_cmd.cpp
@@ -1426,6 +1426,8 @@ static bool GrowTownWithTunnel(const Town *t, const TileIndex tile, const DiagDi
 {
 	assert(tunnel_dir < DIAGDIR_END);
 
+	if (_settings_game.economy.town_build_tunnels == TTM_FORBIDDEN) return false;
+
 	Slope slope = GetTileSlope(tile);
 
 	/* Only consider building a tunnel if the starting tile is sloped properly. */
@@ -1439,6 +1441,8 @@ static bool GrowTownWithTunnel(const Town *t, const TileIndex tile, const DiagDi
 
 	/* There are two conditions for building tunnels: Under a mountain and under an obstruction. */
 	if (CanRoadContinueIntoNextTile(t, tile, tunnel_dir)) {
+		if (_settings_game.economy.town_build_tunnels != TTM_ALLOWED) return false;
+
 		/* Only tunnel under a mountain if the slope is continuous for at least 4 tiles. We want tunneling to be a last resort for large hills. */
 		TileIndex slope_tile = tile;
 		for (uint8 tiles = 0; tiles < 4; tiles++) {
diff --git a/src/town_type.h b/src/town_type.h
index e2fba63bbd..3593d15712 100644
--- a/src/town_type.h
+++ b/src/town_type.h
@@ -130,4 +130,14 @@ struct TransportedCargoStat {
 	}
 };
 
+
+/** Town allow tunnel building setting values. It needs to be 8bits, because we save and load it as such */
+enum TownTunnelMode : byte {
+	TTM_BEGIN = 0,         ///< Used for iterations and limit testing
+	TTM_FORBIDDEN = 0,     ///< Forbidden
+	TTM_OBSTRUCTION_ONLY,  ///< Allowed only for tunnels under obstructions
+	TTM_ALLOWED,           ///< Allowed in all cases (including through hills)
+	TTM_END,               ///< Used for iterations and limit testing
+};
+
 #endif /* TOWN_TYPE_H */