diff --git a/crates/terminal/src/terminal.rs b/crates/terminal/src/terminal.rs
index aee760e..6da3ae8 100644
--- a/crates/terminal/src/terminal.rs
+++ b/crates/terminal/src/terminal.rs
@@ -2596,6 +2596,12 @@ impl Terminal {
                     }
                 }
             }
+
+            // Ctrl/cmd-click opens links in mouse mode when this is enabled, so
+            // hovering with the modifier held has to highlight them as well.
+            if TerminalSettings::get_global(cx).open_links_in_mouse_mode {
+                self.schedule_find_hyperlink(e.modifiers, e.position, cx);
+            }
         } else {
             self.schedule_find_hyperlink(e.modifiers, e.position, cx);
         }
@@ -5507,6 +5513,71 @@ mod tests {
             });
         }
 
+        #[gpui::test]
+        async fn test_ctrl_hover_finds_hyperlink_in_mouse_mode(cx: &mut TestAppContext) {
+            let terminal = init_terminal_test(cx, b"Visit https://zed.dev/ for more\r\n");
+
+            terminal.update(cx, |terminal, cx| {
+                terminal.last_content.mode = Modes::MOUSE_REPORT_CLICK | Modes::MOUSE_MOTION;
+
+                terminal.mouse_move(
+                    &MouseMoveEvent {
+                        position: point(px(80.0), px(10.0)),
+                        pressed_button: None,
+                        modifiers: Modifiers::secondary_key(),
+                    },
+                    MouseInputMode::ReportToTerminal,
+                    cx,
+                );
+
+                assert!(
+                    any_event_matches!(terminal, InternalEvent::FindHyperlink(_, false)),
+                    "ctrl+hover must look up the hyperlink under the pointer in mouse mode"
+                );
+                let pty_writes = terminal.take_pty_write_log();
+                assert_eq!(
+                    pty_writes.len(),
+                    1,
+                    "the motion must still be reported to the app, got {pty_writes:?}"
+                );
+            });
+        }
+
+        #[gpui::test]
+        async fn test_ctrl_hover_in_mouse_mode_ignored_when_setting_disabled(
+            cx: &mut TestAppContext,
+        ) {
+            let terminal = init_terminal_test(cx, b"Visit https://zed.dev/ for more\r\n");
+
+            cx.update_global(|store: &mut settings::SettingsStore, cx| {
+                store.update_user_settings(cx, |settings| {
+                    settings
+                        .terminal
+                        .get_or_insert_default()
+                        .open_links_in_mouse_mode = Some(false);
+                });
+            });
+
+            terminal.update(cx, |terminal, cx| {
+                terminal.last_content.mode = Modes::MOUSE_REPORT_CLICK | Modes::MOUSE_MOTION;
+
+                terminal.mouse_move(
+                    &MouseMoveEvent {
+                        position: point(px(80.0), px(10.0)),
+                        pressed_button: None,
+                        modifiers: Modifiers::secondary_key(),
+                    },
+                    MouseInputMode::ReportToTerminal,
+                    cx,
+                );
+
+                assert!(
+                    !any_event_matches!(terminal, InternalEvent::FindHyperlink(_, _)),
+                    "with the setting disabled, ctrl+hover must not look up links in mouse mode"
+                );
+            });
+        }
+
         #[gpui::test]
         async fn test_hyperlink_ctrl_click_drag_outside_bounds(cx: &mut TestAppContext) {
             let terminal = init_terminal_test(