diff --git a/builtin/mv.c b/builtin/mv.c
index 83a465ba83..2a38e2af46 100644
--- a/builtin/mv.c
+++ b/builtin/mv.c
@@ -13,12 +13,21 @@
 #include "string-list.h"
 #include "parse-options.h"
 #include "submodule.h"
+#include "entry.h"
 
 static const char * const builtin_mv_usage[] = {
 	N_("git mv [<options>] <source>... <destination>"),
 	NULL
 };
 
+enum update_mode {
+	BOTH = 0,
+	WORKING_DIRECTORY = (1 << 1),
+	INDEX = (1 << 2),
+	SPARSE = (1 << 3),
+	SKIP_WORKTREE_DIR = (1 << 4),
+};
+
 #define DUP_BASENAME 1
 #define KEEP_TRAILING_SLASH 2
 
@@ -115,6 +124,36 @@ static int index_range_of_same_dir(const char *src, int length,
 	return last - first;
 }
 
+/*
+ * Check if an out-of-cone directory should be in the index. Imagine this case
+ * that all the files under a directory are marked with 'CE_SKIP_WORKTREE' bit
+ * and thus the directory is sparsified.
+ *
+ * Return 0 if such directory exist (i.e. with any of its contained files not
+ * marked with CE_SKIP_WORKTREE, the directory would be present in working tree).
+ * Return 1 otherwise.
+ */
+static int check_dir_in_index(const char *name)
+{
+	const char *with_slash = add_slash(name);
+	int length = strlen(with_slash);
+
+	int pos = cache_name_pos(with_slash, length);
+	const struct cache_entry *ce;
+
+	if (pos < 0) {
+		pos = -pos - 1;
+		if (pos >= the_index.cache_nr)
+			return 1;
+		ce = active_cache[pos];
+		if (strncmp(with_slash, ce->name, length))
+			return 1;
+		if (ce_skip_worktree(ce))
+			return 0;
+	}
+	return 1;
+}
+
 int cmd_mv(int argc, const char **argv, const char *prefix)
 {
 	int i, flags, gitmodules_modified = 0;
@@ -129,7 +168,7 @@ int cmd_mv(int argc, const char **argv, const char *prefix)
 		OPT_END(),
 	};
 	const char **source, **destination, **dest_path, **submodule_gitfile;
-	enum update_mode { BOTH = 0, WORKING_DIRECTORY, INDEX, SPARSE } *modes;
+	enum update_mode *modes;
 	struct stat st;
 	struct string_list src_for_dst = STRING_LIST_INIT_NODUP;
 	struct lock_file lock_file = LOCK_INIT;
@@ -176,7 +215,7 @@ int cmd_mv(int argc, const char **argv, const char *prefix)
 	/* Checking */
 	for (i = 0; i < argc; i++) {
 		const char *src = source[i], *dst = destination[i];
-		int length, src_is_dir;
+		int length;
 		const char *bad = NULL;
 		int skip_sparse = 0;
 
@@ -185,54 +224,103 @@ int cmd_mv(int argc, const char **argv, const char *prefix)
 
 		length = strlen(src);
 		if (lstat(src, &st) < 0) {
-			/* only error if existence is expected. */
-			if (modes[i] != SPARSE)
+			int pos;
+			const struct cache_entry *ce;
+
+			pos = cache_name_pos(src, length);
+			if (pos < 0) {
+				const char *src_w_slash = add_slash(src);
+				if (!path_in_sparse_checkout(src_w_slash, &the_index) &&
+				    !check_dir_in_index(src)) {
+					modes[i] |= SKIP_WORKTREE_DIR;
+					goto dir_check;
+				}
+				/* only error if existence is expected. */
+				if (!(modes[i] & SPARSE))
+					bad = _("bad source");
+				goto act_on_entry;
+			}
+			ce = active_cache[pos];
+			if (!ce_skip_worktree(ce)) {
 				bad = _("bad source");
-		} else if (!strncmp(src, dst, length) &&
-				(dst[length] == 0 || dst[length] == '/')) {
+				goto act_on_entry;
+			}
+			if (!ignore_sparse) {
+				string_list_append(&only_match_skip_worktree, src);
+				goto act_on_entry;
+			}
+			/* Check if dst exists in index */
+			if (cache_name_pos(dst, strlen(dst)) < 0) {
+				modes[i] |= SPARSE;
+				goto act_on_entry;
+			}
+			if (!force) {
+				bad = _("destination exists");
+				goto act_on_entry;
+			}
+			modes[i] |= SPARSE;
+			goto act_on_entry;
+		}
+		if (!strncmp(src, dst, length) &&
+		    (dst[length] == 0 || dst[length] == '/')) {
 			bad = _("can not move directory into itself");
-		} else if ((src_is_dir = S_ISDIR(st.st_mode))
-				&& lstat(dst, &st) == 0)
+			goto act_on_entry;
+		}
+		if (S_ISDIR(st.st_mode)
+		    && lstat(dst, &st) == 0) {
 			bad = _("cannot move directory over file");
-		else if (src_is_dir) {
+			goto act_on_entry;
+		}
+
+dir_check:
+		if (S_ISDIR(st.st_mode)) {
+			int j, dst_len, n;
 			int first = cache_name_pos(src, length), last;
 
-			if (first >= 0)
+			if (first >= 0) {
 				prepare_move_submodule(src, first,
 						       submodule_gitfile + i);
-			else if (index_range_of_same_dir(src, length,
-							 &first, &last) < 1)
+				goto act_on_entry;
+			} else if (index_range_of_same_dir(src, length,
+							   &first, &last) < 1) {
 				bad = _("source directory is empty");
-			else { /* last - first >= 1 */
-				int j, dst_len, n;
-
-				modes[i] = WORKING_DIRECTORY;
-				n = argc + last - first;
-				REALLOC_ARRAY(source, n);
-				REALLOC_ARRAY(destination, n);
-				REALLOC_ARRAY(modes, n);
-				REALLOC_ARRAY(submodule_gitfile, n);
-
-				dst = add_slash(dst);
-				dst_len = strlen(dst);
-
-				for (j = 0; j < last - first; j++) {
-					const struct cache_entry *ce = active_cache[first + j];
-					const char *path = ce->name;
-					source[argc + j] = path;
-					destination[argc + j] =
-						prefix_path(dst, dst_len, path + length + 1);
-					modes[argc + j] = ce_skip_worktree(ce) ? SPARSE : INDEX;
-					submodule_gitfile[argc + j] = NULL;
-				}
-				argc += last - first;
+				goto act_on_entry;
 			}
-		} else if (!(ce = cache_file_exists(src, length, 0))) {
+
+			/* last - first >= 1 */
+			modes[i] |= WORKING_DIRECTORY;
+			n = argc + last - first;
+			REALLOC_ARRAY(source, n);
+			REALLOC_ARRAY(destination, n);
+			REALLOC_ARRAY(modes, n);
+			REALLOC_ARRAY(submodule_gitfile, n);
+
+			dst = add_slash(dst);
+			dst_len = strlen(dst);
+
+			for (j = 0; j < last - first; j++) {
+				const struct cache_entry *ce = active_cache[first + j];
+				const char *path = ce->name;
+				source[argc + j] = path;
+				destination[argc + j] =
+					prefix_path(dst, dst_len, path + length + 1);
+				memset(modes + argc + j, 0, sizeof(enum update_mode));
+				modes[argc + j] |= ce_skip_worktree(ce) ? SPARSE : INDEX;
+				submodule_gitfile[argc + j] = NULL;
+			}
+			argc += last - first;
+			goto act_on_entry;
+		}
+		if (!(ce = cache_file_exists(src, length, 0))) {
 			bad = _("not under version control");
-		} else if (ce_stage(ce)) {
+			goto act_on_entry;
+		}
+		if (ce_stage(ce)) {
 			bad = _("conflicted");
-		} else if (lstat(dst, &st) == 0 &&
-			 (!ignore_case || strcasecmp(src, dst))) {
+			goto act_on_entry;
+		}
+		if (lstat(dst, &st) == 0 &&
+		    (!ignore_case || strcasecmp(src, dst))) {
 			bad = _("destination exists");
 			if (force) {
 				/*
@@ -246,34 +334,40 @@ int cmd_mv(int argc, const char **argv, const char *prefix)
 				} else
 					bad = _("Cannot overwrite");
 			}
-		} else if (string_list_has_string(&src_for_dst, dst))
+			goto act_on_entry;
+		}
+		if (string_list_has_string(&src_for_dst, dst)) {
 			bad = _("multiple sources for the same target");
-		else if (is_dir_sep(dst[strlen(dst) - 1]))
+			goto act_on_entry;
+		}
+		if (is_dir_sep(dst[strlen(dst) - 1])) {
 			bad = _("destination directory does not exist");
-		else {
-			/*
-			 * We check if the paths are in the sparse-checkout
-			 * definition as a very final check, since that
-			 * allows us to point the user to the --sparse
-			 * option as a way to have a successful run.
-			 */
-			if (!ignore_sparse &&
-			    !path_in_sparse_checkout(src, &the_index)) {
-				string_list_append(&only_match_skip_worktree, src);
-				skip_sparse = 1;
-			}
-			if (!ignore_sparse &&
-			    !path_in_sparse_checkout(dst, &the_index)) {
-				string_list_append(&only_match_skip_worktree, dst);
-				skip_sparse = 1;
-			}
-
-			if (skip_sparse)
-				goto remove_entry;
-
-			string_list_insert(&src_for_dst, dst);
+			goto act_on_entry;
 		}
 
+		/*
+		 * We check if the paths are in the sparse-checkout
+		 * definition as a very final check, since that
+		 * allows us to point the user to the --sparse
+		 * option as a way to have a successful run.
+		 */
+		if (!ignore_sparse &&
+		    !path_in_sparse_checkout(src, &the_index)) {
+			string_list_append(&only_match_skip_worktree, src);
+			skip_sparse = 1;
+		}
+		if (!ignore_sparse &&
+		    !path_in_sparse_checkout(dst, &the_index)) {
+			string_list_append(&only_match_skip_worktree, dst);
+			skip_sparse = 1;
+		}
+
+		if (skip_sparse)
+			goto remove_entry;
+
+		string_list_insert(&src_for_dst, dst);
+
+act_on_entry:
 		if (!bad)
 			continue;
 		if (!ignore_errors)
@@ -304,11 +398,17 @@ remove_entry:
 		const char *src = source[i], *dst = destination[i];
 		enum update_mode mode = modes[i];
 		int pos;
+		struct checkout state = CHECKOUT_INIT;
+		state.istate = &the_index;
+
+		if (force)
+			state.force = 1;
 		if (show_only || verbose)
 			printf(_("Renaming %s to %s\n"), src, dst);
 		if (show_only)
 			continue;
-		if (mode != INDEX && mode != SPARSE && rename(src, dst) < 0) {
+		if (!(mode & (INDEX | SPARSE | SKIP_WORKTREE_DIR)) &&
+		    rename(src, dst) < 0) {
 			if (ignore_errors)
 				continue;
 			die_errno(_("renaming '%s' failed"), src);
@@ -322,12 +422,23 @@ remove_entry:
 							      1);
 		}
 
-		if (mode == WORKING_DIRECTORY)
+		if (mode & (WORKING_DIRECTORY | SKIP_WORKTREE_DIR))
 			continue;
 
 		pos = cache_name_pos(src, strlen(src));
 		assert(pos >= 0);
 		rename_cache_entry_at(pos, dst);
+
+		if ((mode & SPARSE) &&
+		    (path_in_sparse_checkout(dst, &the_index))) {
+			int dst_pos;
+
+			dst_pos = cache_name_pos(dst, strlen(dst));
+			active_cache[dst_pos]->ce_flags &= ~CE_SKIP_WORKTREE;
+
+			if (checkout_entry(active_cache[dst_pos], &state, NULL, NULL))
+				die(_("cannot checkout %s"), active_cache[dst_pos]->name);
+		}
 	}
 
 	if (gitmodules_modified)
diff --git a/t/t1092-sparse-checkout-compatibility.sh b/t/t1092-sparse-checkout-compatibility.sh
index f9f8c988bb..763c6cc684 100755
--- a/t/t1092-sparse-checkout-compatibility.sh
+++ b/t/t1092-sparse-checkout-compatibility.sh
@@ -1828,4 +1828,29 @@ test_expect_success 'checkout behaves oddly with df-conflict-2' '
 	test_cmp full-checkout-err sparse-index-err
 '
 
+test_expect_success 'mv directory from out-of-cone to in-cone' '
+	init_repos &&
+
+	# <source> as a sparse directory (or SKIP_WORKTREE_DIR without enabling
+	# sparse index).
+	test_all_match git mv --sparse folder1 deep &&
+	test_all_match git status --porcelain=v2 &&
+	test_sparse_match git ls-files -t &&
+	git -C sparse-checkout ls-files -t >actual &&
+	grep -e "H deep/folder1/0/0/0" actual &&
+	grep -e "H deep/folder1/0/1" actual &&
+	grep -e "H deep/folder1/a" actual &&
+
+	test_all_match git reset --hard &&
+
+	# <source> as a directory deeper than sparse index boundary (where
+	# sparse index will expand).
+	test_sparse_match git mv --sparse folder1/0 deep &&
+	test_sparse_match git status --porcelain=v2 &&
+	test_sparse_match git ls-files -t &&
+	git -C sparse-checkout ls-files -t >actual &&
+	grep -e "H deep/0/0/0" actual &&
+	grep -e "H deep/0/1" actual
+'
+
 test_done
diff --git a/t/t7002-mv-sparse-checkout.sh b/t/t7002-mv-sparse-checkout.sh
index f0f7cbfcdb..71fe29690f 100755
--- a/t/t7002-mv-sparse-checkout.sh
+++ b/t/t7002-mv-sparse-checkout.sh
@@ -4,6 +4,18 @@ test_description='git mv in sparse working trees'
 
 . ./test-lib.sh
 
+setup_sparse_checkout () {
+	mkdir folder1 &&
+	touch folder1/file1 &&
+	git add folder1 &&
+	git sparse-checkout set --cone sub
+}
+
+cleanup_sparse_checkout () {
+	git sparse-checkout disable &&
+	git reset --hard
+}
+
 test_expect_success 'setup' "
 	mkdir -p sub/dir sub/dir2 &&
 	touch a b c sub/d sub/dir/e sub/dir2/e &&
@@ -196,6 +208,7 @@ test_expect_success 'can move files to non-sparse dir' '
 '
 
 test_expect_success 'refuse to move file to non-skip-worktree sparse path' '
+	test_when_finished "cleanup_sparse_checkout" &&
 	git reset --hard &&
 	git sparse-checkout init --no-cone &&
 	git sparse-checkout set a !/x y/ !x/y/z &&
@@ -206,4 +219,75 @@ test_expect_success 'refuse to move file to non-skip-worktree sparse path' '
 	test_cmp expect stderr
 '
 
+test_expect_success 'refuse to move out-of-cone directory without --sparse' '
+	test_when_finished "cleanup_sparse_checkout" &&
+	setup_sparse_checkout &&
+
+	test_must_fail git mv folder1 sub 2>stderr &&
+	cat sparse_error_header >expect &&
+	echo folder1/file1 >>expect &&
+	cat sparse_hint >>expect &&
+	test_cmp expect stderr
+'
+
+test_expect_success 'can move out-of-cone directory with --sparse' '
+	test_when_finished "cleanup_sparse_checkout" &&
+	setup_sparse_checkout &&
+
+	git mv --sparse folder1 sub 2>stderr &&
+	test_must_be_empty stderr &&
+
+	test_path_is_dir sub/folder1 &&
+	test_path_is_file sub/folder1/file1
+'
+
+test_expect_success 'refuse to move out-of-cone file without --sparse' '
+	test_when_finished "cleanup_sparse_checkout" &&
+	setup_sparse_checkout &&
+
+	test_must_fail git mv folder1/file1 sub 2>stderr &&
+	cat sparse_error_header >expect &&
+	echo folder1/file1 >>expect &&
+	cat sparse_hint >>expect &&
+	test_cmp expect stderr
+'
+
+test_expect_success 'can move out-of-cone file with --sparse' '
+	test_when_finished "cleanup_sparse_checkout" &&
+	setup_sparse_checkout &&
+
+	git mv --sparse folder1/file1 sub 2>stderr &&
+	test_must_be_empty stderr &&
+
+	test_path_is_file sub/file1
+'
+
+test_expect_success 'refuse to move sparse file to existing destination' '
+	test_when_finished "cleanup_sparse_checkout" &&
+	mkdir folder1 &&
+	touch folder1/file1 &&
+	touch sub/file1 &&
+	git add folder1 sub/file1 &&
+	git sparse-checkout set --cone sub &&
+
+	test_must_fail git mv --sparse folder1/file1 sub 2>stderr &&
+	echo "fatal: destination exists, source=folder1/file1, destination=sub/file1" >expect &&
+	test_cmp expect stderr
+'
+
+test_expect_success 'move sparse file to existing destination with --force and --sparse' '
+	test_when_finished "cleanup_sparse_checkout" &&
+	mkdir folder1 &&
+	touch folder1/file1 &&
+	touch sub/file1 &&
+	echo "overwrite" >folder1/file1 &&
+	git add folder1 sub/file1 &&
+	git sparse-checkout set --cone sub &&
+
+	git mv --sparse --force folder1/file1 sub 2>stderr &&
+	test_must_be_empty stderr &&
+	echo "overwrite" >expect &&
+	test_cmp expect sub/file1
+'
+
 test_done