diff --git a/clang-tools-extra/clangd/Config.h b/clang-tools-extra/clangd/Config.h
--- a/clang-tools-extra/clangd/Config.h
+++ b/clang-tools-extra/clangd/Config.h
@@ -57,11 +57,11 @@
         Edits;
   } CompileFlags;
 
-  enum class BackgroundPolicy { Build, Skip };
+  enum class BackgroundPolicy { Auto, Build, Skip };
   /// Controls background-index behavior.
   struct {
     /// Whether this TU should be indexed.
-    BackgroundPolicy Background = BackgroundPolicy::Build;
+    BackgroundPolicy Background = BackgroundPolicy::Auto;
     /// Describes an external index configuration. At most one of Server or File
     /// will be set at a time.
     struct {
diff --git a/clang-tools-extra/clangd/ConfigCompile.cpp b/clang-tools-extra/clangd/ConfigCompile.cpp
--- a/clang-tools-extra/clangd/ConfigCompile.cpp
+++ b/clang-tools-extra/clangd/ConfigCompile.cpp
@@ -302,10 +302,10 @@
           else
             C.Index.External.Server.emplace(std::move(**External.Server));
 
-          // Disable background indexing for the files under the mountpoint.
-          // Note that this will overwrite statements in any previous fragments
-          // (including the current one).
-          C.Index.Background = Config::BackgroundPolicy::Skip;
+          // Disable background indexing for the files under the mountpoint. If
+          // user didn't take any explicit actions.
+          if (C.Index.Background == Config::BackgroundPolicy::Auto)
+            C.Index.Background = Config::BackgroundPolicy::Skip;
         });
   }
 
diff --git a/clang-tools-extra/clangd/unittests/ConfigCompileTests.cpp b/clang-tools-extra/clangd/unittests/ConfigCompileTests.cpp
--- a/clang-tools-extra/clangd/unittests/ConfigCompileTests.cpp
+++ b/clang-tools-extra/clangd/unittests/ConfigCompileTests.cpp
@@ -117,7 +117,7 @@
   Frag = {};
   Frag.Index.Background.emplace("Foo");
   EXPECT_TRUE(compileAndApply());
-  EXPECT_EQ(Conf.Index.Background, Config::BackgroundPolicy::Build)
+  EXPECT_EQ(Conf.Index.Background, Config::BackgroundPolicy::Auto)
       << "by default";
   EXPECT_THAT(
       Diags.Diagnostics,
@@ -205,13 +205,27 @@
           DiagKind(llvm::SourceMgr::DK_Error))));
 }
 
-TEST_F(ConfigCompileTests, ExternalBlockDisablesBackgroundIndex) {
+TEST_F(ConfigCompileTests, ExternalBlockAndBackgroundIndex) {
   Parm.Path = "/foo/bar/baz.h";
-  Frag.Index.Background.emplace("Build");
-  Fragment::IndexBlock::ExternalBlock External;
-  External.File.emplace("/foo");
-  External.MountPoint.emplace("/foo/bar");
-  Frag.Index.External = std::move(External);
+  auto CreateFragWithBackground = [](llvm::StringRef Background) {
+    Fragment::IndexBlock::ExternalBlock External;
+    External.File.emplace("/foo");
+    External.MountPoint.emplace("/foo/bar");
+
+    Fragment Frag;
+    Frag.Index.External = std::move(External);
+    if (!Background.empty())
+      Frag.Index.Background.emplace(Background.str());
+    return Frag;
+  };
+
+  // Preserves when explicitly mentioned.
+  Frag = CreateFragWithBackground("Build");
+  compileAndApply();
+  EXPECT_EQ(Conf.Index.Background, Config::BackgroundPolicy::Build);
+
+  // Overwrites to Skip otherwise.
+  Frag = CreateFragWithBackground("");
   compileAndApply();
   EXPECT_EQ(Conf.Index.Background, Config::BackgroundPolicy::Skip);
 }