diff --git a/src/nspawn/nspawn.c b/src/nspawn/nspawn.c
index a504279fa5..91bc8e8b0e 100644
--- a/src/nspawn/nspawn.c
+++ b/src/nspawn/nspawn.c
@@ -3582,9 +3582,9 @@ static int inner_child(
         /* LXC sets container=lxc, so follow the scheme here */
         envp[n_env++] = strjoina("container=", arg_container_service_name);
 
-        envp[n_env] = strv_find_prefix(environ, "TERM=");
-        if (envp[n_env])
-                n_env++;
+        /* Propagate $TERM unless we are invoked in pipe mode and stdin/stdout/stderr don't refer to a TTY */
+        const char *term = (arg_console_mode != CONSOLE_PIPE || on_tty()) ? strv_find_prefix(environ, "TERM=") : NULL;
+        envp[n_env++] = (char*) (term ?: "TERM=dumb");
 
         if (home || !uid_is_valid(arg_uid) || arg_uid == 0)
                 if (asprintf(envp + n_env++, "HOME=%s", home ?: "/root") < 0)