diff --git a/src/lib.rs b/src/lib.rs
index 9728245e..cd74186a 100644
--- a/src/lib.rs
+++ b/src/lib.rs
@@ -726,6 +726,13 @@ fn perform_reductions(
     }
 
     if opts.color_type_reduction {
+        // Perform a black alpha reduction before color type reductions
+        // This can allow reductions from alpha to indexed which may not have been possible otherwise
+        if !opts.alphas.is_empty() {
+            if let Some(reduced) = filtered_alpha_channel(&png, AlphaOptim::Black) {
+                png = Arc::new(reduced);
+            }
+        }
         if let Some(reduced) = reduce_color_type(&png, opts.grayscale_reduction) {
             png = Arc::new(reduced);
             eval.try_image(png.clone());
diff --git a/src/reduction/color.rs b/src/reduction/color.rs
index 5284c94e..2ada69de 100644
--- a/src/reduction/color.rs
+++ b/src/reduction/color.rs
@@ -3,7 +3,7 @@ use crate::headers::IhdrData;
 use crate::png::PngImage;
 use indexmap::IndexMap;
 use itertools::Itertools;
-use rgb::{FromSlice, RGB8, RGBA8};
+use rgb::{FromSlice, RGB8, RGBA, RGBA8};
 use rustc_hash::FxHasher;
 use std::hash::{BuildHasherDefault, Hash};
 
@@ -105,7 +105,7 @@ where
 }
 
 #[must_use]
-pub fn reduced_color_to_palette(png: &PngImage) -> Option<PngImage> {
+pub fn reduce_to_palette(png: &PngImage) -> Option<PngImage> {
     if png.ihdr.bit_depth != BitDepth::Eight {
         return None;
     }
@@ -131,6 +131,17 @@ pub fn reduced_color_to_palette(png: &PngImage) -> Option<PngImage> {
                 &mut palette,
                 &mut raw_data,
             )
+        } else if png.ihdr.color_type == ColorType::GrayscaleAlpha {
+            reduce_scanline_to_palette(
+                line.data.as_gray_alpha().iter().cloned().map(|px| RGBA {
+                    r: px.0,
+                    g: px.0,
+                    b: px.0,
+                    a: px.1,
+                }),
+                &mut palette,
+                &mut raw_data,
+            )
         } else {
             debug_assert_eq!(png.ihdr.color_type, ColorType::RGBA);
             reduce_scanline_to_palette(
diff --git a/src/reduction/mod.rs b/src/reduction/mod.rs
index 0c56b89c..b775f753 100644
--- a/src/reduction/mod.rs
+++ b/src/reduction/mod.rs
@@ -12,7 +12,7 @@ use crate::bit_depth::reduce_bit_depth_8_or_less;
 pub mod color;
 use crate::color::*;
 
-pub(crate) use crate::alpha::try_alpha_reductions;
+pub(crate) use crate::alpha::{filtered_alpha_channel, try_alpha_reductions};
 pub(crate) use crate::bit_depth::reduce_bit_depth;
 
 /// Attempt to reduce the number of colors in the palette
@@ -206,14 +206,14 @@ pub fn reduce_color_type(png: &PngImage, grayscale_reduction: bool) -> Option<Pn
         .or_else(|| reduced_alpha_channel(&reduced))
         {
             reduced = Cow::Owned(r);
-        } else if let Some(r) = reduced_color_to_palette(&reduced) {
+        } else if let Some(r) = reduce_to_palette(&reduced) {
             reduced = Cow::Owned(r);
             should_reduce_bit_depth = true;
         }
     }
 
     if reduced.ihdr.color_type == ColorType::GrayscaleAlpha {
-        if let Some(r) = reduced_alpha_channel(&reduced) {
+        if let Some(r) = reduced_alpha_channel(&reduced).or_else(|| reduce_to_palette(&reduced)) {
             reduced = Cow::Owned(r);
             should_reduce_bit_depth = true;
         }
@@ -225,7 +225,7 @@ pub fn reduce_color_type(png: &PngImage, grayscale_reduction: bool) -> Option<Pn
         } else {
             None
         }
-        .or_else(|| reduced_color_to_palette(&reduced))
+        .or_else(|| reduce_to_palette(&reduced))
         {
             reduced = Cow::Owned(r);
             should_reduce_bit_depth = true;
diff --git a/tests/files/issue-195.png b/tests/files/issue-195.png
new file mode 100644
index 00000000..283f14c4
Binary files /dev/null and b/tests/files/issue-195.png differ
diff --git a/tests/regression.rs b/tests/regression.rs
index 69b11463..6fb119ca 100644
--- a/tests/regression.rs
+++ b/tests/regression.rs
@@ -630,3 +630,15 @@ fn issue_182() {
         BitDepth::One,
     );
 }
+
+#[test]
+fn issue_195() {
+    test_it_converts(
+        "tests/files/issue-195.png",
+        None,
+        ColorType::RGBA,
+        BitDepth::Eight,
+        ColorType::Indexed,
+        BitDepth::Eight,
+    );
+}