diff --git a/src/msw/bitmap.cpp b/src/msw/bitmap.cpp
index f724ee7001..f5fe48e148 100644
--- a/src/msw/bitmap.cpp
+++ b/src/msw/bitmap.cpp
@@ -55,6 +55,9 @@
     #define CLR_INVALID ((COLORREF)-1)
 #endif // no CLR_INVALID
 
+// ROP which doesn't have standard name
+#define DSTERASE 0x00220326     // dest = (NOT src) AND dest
+
 // ----------------------------------------------------------------------------
 // wxBitmapRefData
 // ----------------------------------------------------------------------------
@@ -513,7 +516,6 @@ bool wxBitmap::CopyFromIconOrCursor(const wxGDIImage& icon,
         // AND mask: 0 <= y <= h-1
         // XOR mask: h <= y <= 2*h-1
         // First we need to extract and store XOR mask from this bitmap.
-        // AND mask will be extracted later at creation of inverted mask.
         HBITMAP hbmp = ::CreateBitmap(w, h, 1, wxDisplayDepth(), NULL);
         if ( !hbmp )
         {
@@ -531,6 +533,18 @@ bool wxBitmap::CopyFromIconOrCursor(const wxGDIImage& icon,
             {
                 wxLogLastError(wxT("wxBitmap::CopyFromIconOrCursor - BitBlt"));
             }
+            // Prepare the AND mask to be compatible with wxBitmap mask
+            // by seting its bits to 0 wherever XOR mask (image) bits are set to 1.
+            // This is done in-place by applying the following ROP:
+            // dest = dest AND (NOT src) where dest=AND mask, src=XOR mask
+            //
+            // AND mask will be extracted later at creation of inverted mask.
+            if ( !::BitBlt((HDC)dcSrc, 0, 0, w, h,
+                           (HDC)dcSrc, 0, h,
+                           DSTERASE) )
+            {
+                wxLogLastError(wxT("wxBitmap::CopyFromIconOrCursor - BitBlt"));
+            }
         }
         refData->m_width = w;
         refData->m_height = h;
@@ -1908,6 +1922,21 @@ HICON wxBitmapToIconOrCursor(const wxBitmap& bmp,
     iconInfo.hbmMask = hbmpMask;
     iconInfo.hbmColor = GetHbitmapOf(bmp);
 
+    // black out the transparent area to preserve background colour, because
+    // Windows blits the original bitmap using SRCINVERT (XOR) after applying
+    // the mask to the dest rect.
+    {
+        MemoryHDC dcSrc, dcDst;
+        SelectInHDC selectMask(dcSrc, (HBITMAP)mask->GetMaskBitmap()),
+                    selectBitmap(dcDst, iconInfo.hbmColor);
+
+        if ( !::BitBlt(dcDst, 0, 0, bmp.GetWidth(), bmp.GetHeight(),
+                       dcSrc, 0, 0, SRCAND) )
+        {
+            wxLogLastError(wxT("BitBlt"));
+        }
+    }
+
     HICON hicon = ::CreateIconIndirect(&iconInfo);
 
     if ( !bmp.GetMask() && !bmp.HasAlpha() )