diff --git a/docs/api.md b/docs/api.md
index bbd378d3..15df687a 100644
--- a/docs/api.md
+++ b/docs/api.md
@@ -432,6 +432,7 @@ Overlay (composite) a image containing an alpha channel over the processed (resi
 
 * `gravity` is a String or an attribute of the `sharp.gravity` Object e.g. `sharp.gravity.north` at which to place the overlay, defaulting to `center`/`centre`.
 * `tile` is a Boolean, defaulting to `false`. When set to `true` repeats the overlay image across the entire image with the given `gravity`.
+* `cutout` is a Boolean, defaulting to `false`. When set to `true` applies only the alpha channel of the overlay image to the image to be overlaid, giving the appearance of one image being cut out of another.
 
 ```javascript
 sharp('input.png')
diff --git a/docs/changelog.md b/docs/changelog.md
index e46a82af..3ac8cd46 100644
--- a/docs/changelog.md
+++ b/docs/changelog.md
@@ -18,6 +18,10 @@ Requires libvips v8.3.1
   [#443](https://github.com/lovell/sharp/pull/443)
   [@lemnisk8](https://github.com/lemnisk8)
 
+* Add cutout option to overlayWith feature, applies only the alpha channel of the overlay image.
+  [#448](https://github.com/lovell/sharp/pull/448)
+  [@kleisauke](https://github.com/kleisauke)
+
 * Ensure scaling factors are calculated independently to prevent rounding errors.
   [#452](https://github.com/lovell/sharp/issues/452)
   [@puzrin](https://github.com/puzrin)