diff --git a/indra/newview/app_settings/settings.xml b/indra/newview/app_settings/settings.xml
index d268b43e6..12a4cb890 100644
--- a/indra/newview/app_settings/settings.xml
+++ b/indra/newview/app_settings/settings.xml
@@ -940,6 +940,17 @@ This should be as low as possible, but too low may break functionality</string>
       <key>Value</key>
       <real>60.0</real>
     </map>
+    <key>NewIMsPerConversation</key>
+    <map>
+      <key>Comment</key>
+      <string>The New IMs button in the bottom left will show the count of unread conversations instead of the total count of unread IMs if this is true.</string>
+      <key>Persist</key>
+      <integer>1</integer>
+      <key>Type</key>
+      <string>Boolean</string>
+      <key>Value</key>
+      <boolean>0</boolean>
+    </map>
     <key>ResetFocusOnSelfClick</key>
 		<map>
 		<key>Comment</key>
diff --git a/indra/newview/lloverlaybar.cpp b/indra/newview/lloverlaybar.cpp
index 114bc56f1..07357d32a 100644
--- a/indra/newview/lloverlaybar.cpp
+++ b/indra/newview/lloverlaybar.cpp
@@ -46,6 +46,7 @@
 #include "llbutton.h"
 #include "llchatbar.h"
 #include "llfocusmgr.h"
+#include "llimpanel.h"
 #include "llimview.h"
 #include "llmediaremotectrl.h"
 #include "llpanelaudiovolume.h"
@@ -308,9 +309,22 @@ void LLOverlayBar::refresh()
 {
 	bool buttons_changed = FALSE;
 
-	if(LLButton* button = updateButtonVisiblity(mNewIM,gIMMgr->getIMReceived()))
+	if (LLButton* button = updateButtonVisiblity(mNewIM,gIMMgr->getIMReceived()))
 	{
-		int unread_count = gIMMgr->getIMUnreadCount();
+		int unread_count(0);
+		static const LLCachedControl<bool> per_conversation("NewIMsPerConversation");
+		if (per_conversation)
+		{
+			for(std::set<LLHandle<LLFloater> >::const_iterator it = gIMMgr->getIMFloaterHandles().begin(); it != gIMMgr->getIMFloaterHandles().end(); ++it)
+				if (LLFloaterIMPanel* im_floater = static_cast<LLFloaterIMPanel*>(it->get()))
+					if (im_floater->getParent() != gFloaterView && im_floater->getNumUnreadMessages()) // Only count docked IMs
+						++unread_count;
+		}
+		else
+		{
+			unread_count = gIMMgr->getIMUnreadCount();
+		}
+
 		if (unread_count > 0)
 		{
 			if (unread_count > 1)