diff --git a/mod/lti/edit_form.php b/mod/lti/edit_form.php
index 8a7c8272a08..754608daa9c 100644
--- a/mod/lti/edit_form.php
+++ b/mod/lti/edit_form.php
@@ -102,14 +102,26 @@ class mod_lti_edit_types_form extends moodleform{
         $mform->setType('lti_customparameters', PARAM_TEXT);
         $mform->addHelpButton('lti_customparameters', 'custom', 'lti');
 
-        if (!$istool && !empty($this->_customdata->isadmin)) {
-            $mform->addElement('advcheckbox', 'lti_coursevisible', ' ', ' ' . get_string('show_in_course', 'lti'));
-            $mform->addHelpButton('lti_coursevisible', 'show_in_course', 'lti');
+        if (!empty($this->_customdata->isadmin)) {
+            $options = array(
+                LTI_COURSEVISIBLE_NO => get_string('show_in_course_no', 'lti'),
+                LTI_COURSEVISIBLE_PRECONFIGURED => get_string('show_in_course_preconfigured', 'lti'),
+                LTI_COURSEVISIBLE_ACTIVITYCHOOSER => get_string('show_in_course_activity_chooser', 'lti'),
+            );
+            if ($istool) {
+                // LTI2 tools can not be matched by URL, they have to be either in preconfigured tools or in activity chooser.
+                unset($options[LTI_COURSEVISIBLE_NO]);
+                $stringname = 'show_in_course_lti2';
+            } else {
+                $stringname = 'show_in_course_lti1';
+            }
+            $mform->addElement('select', 'lti_coursevisible', get_string($stringname, 'lti'), $options);
+            $mform->addHelpButton('lti_coursevisible', $stringname, 'lti');
             $mform->setDefault('lti_coursevisible', '1');
         } else {
-            $mform->addElement('hidden', 'lti_coursevisible', '1');
+            $mform->addElement('hidden', 'lti_coursevisible', LTI_COURSEVISIBLE_PRECONFIGURED);
         }
-        $mform->setType('lti_coursevisible', PARAM_BOOL);
+        $mform->setType('lti_coursevisible', PARAM_INT);
 
         $mform->addElement('hidden', 'typeid');
         $mform->setType('typeid', PARAM_INT);
diff --git a/mod/lti/lang/en/lti.php b/mod/lti/lang/en/lti.php
index 079dd9a97bb..e0d57ad2bdf 100644
--- a/mod/lti/lang/en/lti.php
+++ b/mod/lti/lang/en/lti.php
@@ -433,10 +433,15 @@ $string['share_roster_admin_help'] = 'Specify whether the tool can access the li
 $string['share_roster_help'] = 'Specify whether the tool can access the list of users enrolled in this course.
 
 Note that this setting may be overridden in the tool configuration.';
-$string['show_in_course'] = 'Show tool in activity chooser';
-$string['show_in_course_help'] = 'If ticked, this tool will be shown in the activity chooser for a teacher to select to add to a course. It will also be shown in the preconfigured tool dropdown menu when adding an external tool to a course.
+$string['show_in_course_activity_chooser'] = 'Show in activity chooser and as preconfigured tool';
+$string['show_in_course_lti1'] = 'Show when creating activities';
+$string['show_in_course_lti1_help'] = 'This tool can be shown in the activity chooser for a teacher to select to add to a course. It also can be shown in the preconfigured tool dropdown menu when adding an external tool to a course.
 
-If left unticked, the tool configuration may be used if the correct launch URL is entered when adding an external tool to a course.';
+Alternatively, the tool configuration may not show up in the forms but only used if the correct launch URL is entered when adding an external tool to a course.';
+$string['show_in_course_lti2'] = 'Show when creating activities';
+$string['show_in_course_lti2_help'] = 'This tool can be shown in the activity chooser for a teacher to select to add to a course or in the preconfigured tool dropdown menu when adding an external tool to a course.';
+$string['show_in_course_no'] = 'Do not show, use for launch URL matching only';
+$string['show_in_course_preconfigured'] = 'Show as preconfigured tool when adding External tool';
 $string['size'] = 'Size parameters';
 $string['submission'] = 'Submission';
 $string['submissions'] = 'Submissions';
diff --git a/mod/lti/locallib.php b/mod/lti/locallib.php
index 85788fdebaf..75f7d8e9dfc 100644
--- a/mod/lti/locallib.php
+++ b/mod/lti/locallib.php
@@ -79,6 +79,10 @@ define('LTI_SETTING_NEVER', 0);
 define('LTI_SETTING_ALWAYS', 1);
 define('LTI_SETTING_DELEGATE', 2);
 
+define('LTI_COURSEVISIBLE_NO', 0);
+define('LTI_COURSEVISIBLE_PRECONFIGURED', 1);
+define('LTI_COURSEVISIBLE_ACTIVITYCHOOSER', 2);
+
 /**
  * Return the launch data required for opening the external tool.
  *
@@ -1088,19 +1092,26 @@ function lti_filter_tool_types(array $tools, $state) {
  * Returns all lti types visible in this course
  *
  * @param int $courseid The id of the course to retieve types for
+ * @param array $coursevisible options for 'coursevisible' field,
+ *        default [LTI_COURSEVISIBLE_PRECONFIGURED, LTI_COURSEVISIBLE_ACTIVITYCHOOSER]
  * @return stdClass[] All the lti types visible in the given course
  */
-function lti_get_lti_types_by_course($courseid) {
+function lti_get_lti_types_by_course($courseid, $coursevisible = null) {
     global $DB, $SITE;
 
+    if ($coursevisible === null) {
+        $coursevisible = [LTI_COURSEVISIBLE_PRECONFIGURED, LTI_COURSEVISIBLE_ACTIVITYCHOOSER];
+    }
+
+    list($coursevisiblesql, $coursevisparams) = $DB->get_in_or_equal($coursevisible, SQL_PARAMS_NAMED, 'coursevisible');
     $query = "SELECT *
                 FROM {lti_types}
-               WHERE coursevisible = 1
+               WHERE coursevisible $coursevisiblesql
                  AND (course = :siteid OR course = :courseid)
                  AND state = :active";
 
     return $DB->get_records_sql($query,
-        array('siteid' => $SITE->id, 'courseid' => $courseid, 'active' => LTI_TOOL_STATE_CONFIGURED));
+        array('siteid' => $SITE->id, 'courseid' => $courseid, 'active' => LTI_TOOL_STATE_CONFIGURED) + $coursevisparams);
 }
 
 /**
@@ -1132,7 +1143,7 @@ function lti_get_types_for_add_instance() {
 function lti_get_configured_types($courseid, $sectionreturn = 0) {
     global $OUTPUT;
     $types = array();
-    $admintypes = lti_get_lti_types_by_course($courseid);
+    $admintypes = lti_get_lti_types_by_course($courseid, [LTI_COURSEVISIBLE_ACTIVITYCHOOSER]);
 
     foreach ($admintypes as $ltitype) {
         $type           = new stdClass();
diff --git a/mod/lti/tests/behat/addtool.feature b/mod/lti/tests/behat/addtool.feature
index a7beb50d8e4..4ecc90bdd69 100644
--- a/mod/lti/tests/behat/addtool.feature
+++ b/mod/lti/tests/behat/addtool.feature
@@ -20,6 +20,7 @@ Feature: Add tools
     And I follow "Add preconfigured tool"
     And I set the following fields to these values:
       | Tool name | Teaching Tool 1 |
+      | Show when creating activities | Show in activity chooser and as preconfigured tool  |
     And I set the field "Tool base URL/cartridge URL" to local url "/mod/lti/tests/fixtures/tool_provider.html"
     And I press "Save changes"
     And I log out