diff --git a/docs/config.md b/docs/config.md
index 0675cdab9..813407ac1 100644
--- a/docs/config.md
+++ b/docs/config.md
@@ -143,9 +143,18 @@ ui.diff.format = "git"
 
 ### Generating diffs by external command
 
-If `diff --tool <name>` argument is given, the external diff command will be
-called instead of the internal diff function. The command arguments can be
-specified as follows.
+If `ui.diff.tool` is set, the specified diff command will be called instead of
+the internal diff function.
+
+```toml
+# Use Difftastic by default
+ui.diff.tool = ["difft", "--color=always", "$left", "$right"]
+# Use tool named "<name>" (see below)
+ui.diff.tool = "<name>"
+```
+
+The external diff tool can also be enabled by `diff --tool <name>` argument.
+For the tool named `<name>`, command arguments can be configured as follows.
 
 ```toml
 [merge-tools.<name>]
diff --git a/src/config-schema.json b/src/config-schema.json
index a326b8a6c..e4e336301 100644
--- a/src/config-schema.json
+++ b/src/config-schema.json
@@ -82,6 +82,10 @@
                                 "summary"
                             ],
                             "default": "color-words"
+                        },
+                        "tool": {
+                            "type": "string",
+                            "description": "External tool for generating diffs"
                         }
                     }
                 },
diff --git a/src/diff_util.rs b/src/diff_util.rs
index 25a0424de..4aad8390b 100644
--- a/src/diff_util.rs
+++ b/src/diff_util.rs
@@ -122,6 +122,12 @@ fn diff_formats_from_args(
 
 fn default_diff_format(settings: &UserSettings) -> Result<DiffFormat, config::ConfigError> {
     let config = settings.config();
+    if let Some(args) = config.get("ui.diff.tool").optional()? {
+        // External "tool" overrides the internal "format" option.
+        let tool = merge_tools::get_tool_config_from_args(settings, &args)?
+            .unwrap_or_else(|| MergeTool::with_diff_args(&args));
+        return Ok(DiffFormat::Tool(Box::new(tool)));
+    }
     let name = if let Some(name) = config.get_string("ui.diff.format").optional()? {
         name
     } else if let Some(name) = config.get_string("diff.format").optional()? {
@@ -134,7 +140,6 @@ fn default_diff_format(settings: &UserSettings) -> Result<DiffFormat, config::Co
         "types" => Ok(DiffFormat::Types),
         "git" => Ok(DiffFormat::Git),
         "color-words" => Ok(DiffFormat::ColorWords),
-        // TODO: add configurable default for DiffFormat::Tool?
         _ => Err(config::ConfigError::Message(format!(
             "invalid diff format: {name}"
         ))),
diff --git a/src/merge_tools.rs b/src/merge_tools.rs
index 05440a8bf..3dd9da999 100644
--- a/src/merge_tools.rs
+++ b/src/merge_tools.rs
@@ -509,6 +509,10 @@ impl MergeTool {
         }
     }
 
+    pub fn with_diff_args(command_args: &CommandNameAndArgs) -> Self {
+        Self::with_args_inner(command_args, |tool| &mut tool.diff_args)
+    }
+
     pub fn with_edit_args(command_args: &CommandNameAndArgs) -> Self {
         Self::with_args_inner(command_args, |tool| &mut tool.edit_args)
     }
@@ -558,7 +562,7 @@ pub fn get_tool_config(
 
 /// Loads merge tool options from `[merge-tools.<name>]` if `args` is of
 /// unstructured string type.
-fn get_tool_config_from_args(
+pub fn get_tool_config_from_args(
     settings: &UserSettings,
     args: &CommandNameAndArgs,
 ) -> Result<Option<MergeTool>, ConfigError> {
diff --git a/tests/common/mod.rs b/tests/common/mod.rs
index 03e94e8a5..cb13e7852 100644
--- a/tests/common/mod.rs
+++ b/tests/common/mod.rs
@@ -250,11 +250,7 @@ impl TestEnvironment {
     /// Sets up the fake diff-editor to read an edit script from the returned
     /// path
     pub fn set_up_fake_diff_editor(&mut self) -> PathBuf {
-        let diff_editor_path = assert_cmd::cargo::cargo_bin("fake-diff-editor");
-        assert!(diff_editor_path.is_file());
-        // Simplified TOML escaping, hoping that there are no '"' or control characters
-        // in it
-        let escaped_diff_editor_path = diff_editor_path.to_str().unwrap().replace('\\', r"\\");
+        let escaped_diff_editor_path = escaped_fake_diff_editor_path();
         self.add_config(&format!(
             r###"
             ui.diff-editor = "fake-diff-editor"
@@ -301,3 +297,11 @@ pub fn get_stdout_string(assert: &assert_cmd::assert::Assert) -> String {
 pub fn get_stderr_string(assert: &assert_cmd::assert::Assert) -> String {
     String::from_utf8(assert.get_output().stderr.clone()).unwrap()
 }
+
+pub fn escaped_fake_diff_editor_path() -> String {
+    let diff_editor_path = assert_cmd::cargo::cargo_bin("fake-diff-editor");
+    assert!(diff_editor_path.is_file());
+    // Simplified TOML escaping, hoping that there are no '"' or control characters
+    // in it
+    diff_editor_path.to_str().unwrap().replace('\\', r"\\")
+}
diff --git a/tests/test_diff_command.rs b/tests/test_diff_command.rs
index f0ae184fa..923d1cd4c 100644
--- a/tests/test_diff_command.rs
+++ b/tests/test_diff_command.rs
@@ -647,6 +647,27 @@ fn test_diff_external_tool() {
     file3
     "###);
 
+    // Enabled by default, looks up the merge-tools table
+    let config = "--config-toml=ui.diff.tool='fake-diff-editor'";
+    insta::assert_snapshot!(test_env.jj_cmd_success(&repo_path, &["diff", config]), @r###"
+    file1
+    file2
+    --
+    file2
+    file3
+    "###);
+
+    // Inlined command arguments
+    let command = common::escaped_fake_diff_editor_path();
+    let config = format!(r#"--config-toml=ui.diff.tool=["{command}", "$right", "$left"]"#);
+    insta::assert_snapshot!(test_env.jj_cmd_success(&repo_path, &["diff", &config]), @r###"
+    file2
+    file3
+    --
+    file1
+    file2
+    "###);
+
     // Output of external diff tool shouldn't be escaped
     std::fs::write(&edit_script, "print \x1b[1;31mred").unwrap();
     insta::assert_snapshot!(