diff --git a/src/Buffer.test.ts b/src/Buffer.test.ts
index 99bd6d0fe5..1e2209155b 100644
--- a/src/Buffer.test.ts
+++ b/src/Buffer.test.ts
@@ -24,9 +24,9 @@ describe('Buffer', () => {
   });
 
   describe('constructor', () => {
-    it('should create a CircularList with max length equal to scrollback, for its lines', () => {
+    it('should create a CircularList with max length equal to rows + scrollback, for its lines', () => {
       assert.instanceOf(buffer.lines, CircularList);
-      assert.equal(buffer.lines.maxLength, terminal.options.scrollback);
+      assert.equal(buffer.lines.maxLength, terminal.rows + terminal.options.scrollback);
     });
     it('should set the Buffer\'s scrollBottom value equal to the terminal\'s rows -1', () => {
       assert.equal(buffer.scrollBottom, terminal.rows - 1);
diff --git a/src/Buffer.ts b/src/Buffer.ts
index eb346d5bc1..9d2222ff68 100644
--- a/src/Buffer.ts
+++ b/src/Buffer.ts
@@ -67,7 +67,7 @@ export class Buffer implements IBuffer {
     this.scrollBottom = 0;
     this.scrollTop = 0;
     this.tabs = {};
-    this._lines = new CircularList<LineData>(this._terminal.options.scrollback);
+    this._lines = new CircularList<LineData>(this._terminal.rows + this._terminal.options.scrollback);
     this.scrollBottom = this._terminal.rows - 1;
   }
 
diff --git a/src/BufferSet.ts b/src/BufferSet.ts
index 24d6c31462..9136c5fb49 100644
--- a/src/BufferSet.ts
+++ b/src/BufferSet.ts
@@ -76,6 +76,17 @@ export class BufferSet extends EventEmitter implements IBufferSet {
     this.emit('activate', this._alt);
   }
 
+  /**
+   * Refreshes the max length of the buffer set, this should be called whenever
+   * terminal rows or scrollback changes.
+   * @param rows The number of terminal rows.
+   */
+  public refreshMaxLength(rows: number): void {
+    this._normal.lines.maxLength = rows + this._terminal.options.scrollback;
+    // TODO: The alt buffer should never have scrollback, see https://github.com/sourcelair/xterm.js/issues/802
+    this._alt.lines.maxLength = rows + this._terminal.options.scrollback;
+  }
+
   /**
    * Resizes both normal and alt buffers, adjusting their data accordingly.
    * @param newCols The new number of columns.
@@ -84,5 +95,6 @@ export class BufferSet extends EventEmitter implements IBufferSet {
   public resize(newCols: number, newRows: number): void {
     this._normal.resize(newCols, newRows);
     this._alt.resize(newCols, newRows);
+    this.refreshMaxLength(newRows);
   }
 }
diff --git a/src/Terminal.ts b/src/Terminal.ts
index cd44e7fb76..2afb45023e 100644
--- a/src/Terminal.ts
+++ b/src/Terminal.ts
@@ -439,18 +439,10 @@ export class Terminal extends EventEmitter implements ITerminal, IInputHandlingT
     }
     switch (key) {
       case 'scrollback':
-        if (value < this.rows) {
-          let msg = 'Setting the scrollback value less than the number of rows ';
-
-          msg += `(${this.rows}) is not allowed.`;
-
-          console.warn(msg);
-          return;
-        }
-
         if (this.options[key] !== value) {
-          if (this.buffer.lines.length > value) {
-            const amountToTrim = this.buffer.lines.length - value;
+          const newBufferLength = this.rows + value;
+          if (this.buffer.lines.length > newBufferLength) {
+            const amountToTrim = this.buffer.lines.length - newBufferLength;
             const needsRefresh = (this.buffer.ydisp - amountToTrim < 0);
             this.buffer.lines.trimStart(amountToTrim);
             this.buffer.ybase = Math.max(this.buffer.ybase - amountToTrim, 0);
@@ -459,8 +451,6 @@ export class Terminal extends EventEmitter implements ITerminal, IInputHandlingT
               this.refresh(0, this.rows - 1);
             }
           }
-          this.buffer.lines.maxLength = value;
-          this.viewport.syncScrollArea();
         }
         break;
     }
@@ -473,6 +463,10 @@ export class Terminal extends EventEmitter implements ITerminal, IInputHandlingT
         this.element.classList.toggle(`xterm-cursor-style-underline`, value === 'underline');
         this.element.classList.toggle(`xterm-cursor-style-bar`, value === 'bar');
         break;
+      case 'scrollback':
+        this.buffers.refreshMaxLength(this.rows);
+        this.viewport.syncScrollArea();
+        break;
       case 'tabStopWidth': this.setupStops(); break;
     }
   }
@@ -1935,10 +1929,6 @@ export class Terminal extends EventEmitter implements ITerminal, IInputHandlingT
       return;
     }
 
-    if (y > this.getOption('scrollback')) {
-      this.setOption('scrollback', y);
-    }
-
     let line;
     let el;
     let i;
diff --git a/src/test/test.js b/src/test/test.js
index 5c4dd5f224..51d1644c54 100644
--- a/src/test/test.js
+++ b/src/test/test.js
@@ -44,16 +44,6 @@ describe('xterm.js', function() {
   });
 
   describe('setOption', function() {
-    let originalWarn;
-    let warnCallCount;
-    beforeEach(() => {
-      originalWarn = console.warn;
-      warnCallCount = 0;
-      console.warn = () => warnCallCount++;
-    });
-    afterEach(() => {
-      console.warn = originalWarn;
-    });
     it('should set the option correctly', function() {
       xterm.setOption('cursorBlink', true);
       assert.equal(xterm.cursorBlink, true);
@@ -63,12 +53,7 @@ describe('xterm.js', function() {
       assert.equal(xterm.options.cursorBlink, false);
     });
     it('should throw when setting a non-existant option', function() {
-      assert.throws(xterm.setOption.bind(xterm, 'fake', true));
-    });
-    it('should warn and do nothing when scrollback is less than number of rows', function() {
-      xterm.setOption('scrollback', xterm.rows - 1);
-      assert.equal(xterm.getOption('scrollback'), 1000);
-      assert.equal(warnCallCount, 1);
+      assert.throws(() => xterm.setOption('fake', true));
     });
   });
 
diff --git a/src/utils/CircularList.ts b/src/utils/CircularList.ts
index 373d78b053..23d6c33738 100644
--- a/src/utils/CircularList.ts
+++ b/src/utils/CircularList.ts
@@ -25,6 +25,9 @@ export class CircularList<T> extends EventEmitter implements ICircularList<T> {
   }
 
   public set maxLength(newMaxLength: number) {
+    if (this.maxLength === newMaxLength) {
+      return;
+    }
     // Reconstruct array, starting at index 0. Only transfer values from the
     // indexes 0 to length.
     let newArray = new Array<T>(newMaxLength);