diff --git a/src/ansi_color.ml b/src/ansi_color.ml
index 9c928a0a..65a3fb85 100644
--- a/src/ansi_color.ml
+++ b/src/ansi_color.ml
@@ -150,14 +150,18 @@ let strip_colors_for_stderr s =
   else
     strip s
 
-(* We redirect the output of all commands, so by default the compiler will disable
-   colors. Since we support colors in the output of commands, we force it via OCAMLPARAM
-   if stderr supports colors. *)
-let setup_env_for_opam_colors = lazy(
+(* We redirect the output of all commands, so by default the various tools will disable
+   colors. Since we support colors in the output of commands, we force it via specific
+   environment variables if stderr supports colors. *)
+let setup_env_for_colors = lazy(
   if Lazy.force stderr_supports_colors then begin
-    match Sys.getenv "OPAMCOLOR" with
-    | exception Not_found -> Unix.putenv "OPAMCOLOR" "always"
-    | _ -> ()
+    let set var value =
+      match Sys.getenv  with
+      | exception Not_found -> Unix.putenv var value
+      | _ -> ()
+    in
+    set "OPAMCOLOR" "always";
+    set "OCAML_COLOR" "always";
   end
 )
 
diff --git a/src/ansi_color.mli b/src/ansi_color.mli
index 8a382134..59484e9a 100644
--- a/src/ansi_color.mli
+++ b/src/ansi_color.mli
@@ -2,7 +2,7 @@ val colorize : key:string -> string -> string
 
 val strip : string -> string
 val stderr_supports_colors : bool Lazy.t
-val setup_env_for_opam_colors : unit Lazy.t
+val setup_env_for_colors : unit Lazy.t
 
 (** Strip colors in [not (Lazy.force stderr_supports_colors)] *)
 val strip_colors_for_stderr : string -> string
diff --git a/src/context.ml b/src/context.ml
index e7030caa..d51f54de 100644
--- a/src/context.ml
+++ b/src/context.ml
@@ -264,11 +264,13 @@ let create ~(kind : Kind.t) ~path ~base_env ~env_extra ~name ~merlin ~use_findli
   let natdynlink_supported = Path.exists (Path.relative stdlib_dir "dynlink.cmxa") in
   let version = get "version" in
   let env,env_extra =
-    (* We redirect the output of all commands, so by default the compiler will disable
-       colors. Since we support colors in the output of commands, we force it via OCAMLPARAM
-       if stderr supports colors. *)
-    let ocaml_version = Scanf.sscanf version "%u.%u.%u" (fun a b c -> a, b, c) in
-    if Lazy.force Ansi_color.stderr_supports_colors && ocaml_version > (4, 02, 3) then
+    (* See comment in ansi_color.ml for setup_env_for_colors. For OCaml < 4.05,
+       OCAML_COLOR is not supported so we use OCAMLPARAM. OCaml 4.02 doesn't support
+       'color' in OCAMLPARAM, so we just don't force colors with 4.02. *)
+    let ocaml_version = Scanf.sscanf version "%u.%u" (fun a b -> a, b) in
+    if Lazy.force Ansi_color.stderr_supports_colors
+    && ocaml_version > (4, 02)
+    && ocaml_version < (4, 05) then
       let value =
         match get_env env "OCAMLPARAM" with
         | None -> "color=always,_"
@@ -369,7 +371,7 @@ let create ~(kind : Kind.t) ~path ~base_env ~env_extra ~name ~merlin ~use_findli
 let opam_config_var t var = opam_config_var ~env:t.env ~cache:t.opam_var_cache var
 
 let initial_env = lazy (
-  Lazy.force Ansi_color.setup_env_for_opam_colors;
+  Lazy.force Ansi_color.setup_env_for_colors;
   Unix.environment ())
 
 let default ?(merlin=true) ?(use_findlib=true) () =
diff --git a/src/future.ml b/src/future.ml
index 2e921fb3..cb2cc75e 100644
--- a/src/future.ml
+++ b/src/future.ml
@@ -620,7 +620,7 @@ module Scheduler = struct
       go_rec cwd log t
 
   let go ?(log=Log.no_log) t =
-    Lazy.force Ansi_color.setup_env_for_opam_colors;
+    Lazy.force Ansi_color.setup_env_for_colors;
     Log.info log ("Workspace root: " ^ !Clflags.workspace_root);
     let cwd = Sys.getcwd () in
     go_rec cwd log t