diff --git a/src/lang/english.txt b/src/lang/english.txt
index 08d7dc5b4b..c8e0d4276f 100644
--- a/src/lang/english.txt
+++ b/src/lang/english.txt
@@ -1918,6 +1918,8 @@ STR_CONFIG_SETTING_TOWN_CARGO_FACTOR                            :Town cargo gene
 STR_CONFIG_SETTING_TOWN_CARGO_FACTOR_HELPTEXT                   :Passenger, mail, and other town cargo production is scaled by approximately 2^factor (exponential)
 STR_CONFIG_SETTING_INDUSTRY_CARGO_FACTOR                        :Industry cargo generation factor (less < 0 < more): {STRING2}
 STR_CONFIG_SETTING_INDUSTRY_CARGO_FACTOR_HELPTEXT               :Primary industry cargo production is scaled by approximately 2^factor (exponential). This excludes tree-cutting industries.{}This is not guaranteed to be fully compatible with all industry NewGRFs.
+STR_CONFIG_SETTING_TOWN_ABOVE_HEIGHT                            :No towns above height level: {STRING2}
+STR_CONFIG_SETTING_TOWN_ABOVE_HEIGHT_HELPTEXT                   :No towns above the specified height level are built during map creation.
 
 STR_CONFIG_SETTING_EXTRA_TREE_PLACEMENT                         :In game placement of trees: {STRING2}
 STR_CONFIG_SETTING_EXTRA_TREE_PLACEMENT_HELPTEXT                :Control random appearance of trees during the game. This might affect industries which rely on tree growth, for example lumber mills
diff --git a/src/settings_gui.cpp b/src/settings_gui.cpp
index f5a8af3ce6..f9105263a6 100644
--- a/src/settings_gui.cpp
+++ b/src/settings_gui.cpp
@@ -2036,6 +2036,7 @@ static SettingsContainer &GetSettingsTree()
 			genworld->Add(new SettingEntry("economy.initial_city_size"));
 			genworld->Add(new SettingEntry("economy.town_layout"));
 			genworld->Add(new SettingEntry("economy.town_min_distance"));
+			genworld->Add(new SettingEntry("economy.max_town_heightlevel"));
 			genworld->Add(new SettingEntry("difficulty.industry_density"));
 			genworld->Add(new SettingEntry("gui.pause_on_newgame"));
 			genworld->Add(new SettingEntry("game_creation.ending_year"));
diff --git a/src/settings_type.h b/src/settings_type.h
index 1ad161930f..f41dc7724e 100644
--- a/src/settings_type.h
+++ b/src/settings_type.h
@@ -633,6 +633,7 @@ struct EconomySettings {
 	TownCargoGenMode town_cargogen_mode;     ///< algorithm for generating cargo from houses, @see TownCargoGenMode
 	bool   allow_town_roads;                 ///< towns are allowed to build roads (always allowed when generating world / in SE)
 	uint16  town_min_distance;               ///< minimum distance between towns
+	uint8  max_town_heightlevel;             ///< maximum height level for towns
 	TownFounding found_town;                 ///< town founding.
 	bool   station_noise_level;              ///< build new airports when the town noise level is still within accepted limits
 	uint16 town_noise_population[3];         ///< population to base decision on noise evaluation (@see town_council_tolerance)
diff --git a/src/table/settings.ini b/src/table/settings.ini
index 7c02b39b9b..9d8daed921 100644
--- a/src/table/settings.ini
+++ b/src/table/settings.ini
@@ -939,10 +939,24 @@ strhelp  = STR_CONFIG_SETTING_TOWN_CARGOGENMODE_HELPTEXT
 strval   = STR_CONFIG_SETTING_TOWN_CARGOGENMODE_ORIGINAL
 cat      = SC_ADVANCED
 
-;; economy.max_town_heightlevel
-[SDT_NULL]
-length   = 1
+[SDT_XREF]
 extver   = SlXvFeatureTest(XSLFTO_AND, XSLFI_JOKERPP)
+xref     = ""economy.max_town_heightlevel""
+
+[SDT_VAR]
+base     = GameSettings
+var      = economy.max_town_heightlevel
+type     = SLE_UINT8
+guiflags = SGF_NEWGAME_ONLY | SGF_SCENEDIT_TOO
+def      = MAX_MAP_HEIGHT_LIMIT
+min      = 4
+max      = MAX_MAP_HEIGHT_LIMIT
+interval = 1
+str      = STR_CONFIG_SETTING_TOWN_ABOVE_HEIGHT
+strhelp  = STR_CONFIG_SETTING_TOWN_ABOVE_HEIGHT_HELPTEXT
+strval   = STR_JUST_INT
+cat      = SC_BASIC
+patxname = ""max_town_heightlevel.economy.max_town_heightlevel""
 
 ; link graph
 
diff --git a/src/town_cmd.cpp b/src/town_cmd.cpp
index 854c88192e..45aca23d81 100644
--- a/src/town_cmd.cpp
+++ b/src/town_cmd.cpp
@@ -2118,6 +2118,11 @@ static CommandCost TownCanBePlacedHere(TileIndex tile)
 		return_cmd_error(STR_ERROR_TOO_CLOSE_TO_ANOTHER_TOWN);
 	}
 
+	/* Check max height level. */
+	if (GetTileZ(tile) > _settings_game.economy.max_town_heightlevel) {
+		return_cmd_error(STR_ERROR_SITE_UNSUITABLE);
+	}
+
 	/* Can only build on clear flat areas, possibly with trees. */
 	if ((!IsTileType(tile, MP_CLEAR) && !IsTileType(tile, MP_TREES)) || !IsTileFlat(tile)) {
 		return_cmd_error(STR_ERROR_SITE_UNSUITABLE);