diff --git a/builtin/diff.c b/builtin/diff.c
index dd8ce688ba..fa4683377e 100644
--- a/builtin/diff.c
+++ b/builtin/diff.c
@@ -437,6 +437,11 @@ int cmd_diff(int argc, const char **argv, const char *prefix)
 
 	prefix = setup_git_directory_gently(&nongit);
 
+	if (!nongit) {
+		prepare_repo_settings(the_repository);
+		the_repository->settings.command_requires_full_index = 0;
+	}
+
 	if (!no_index) {
 		/*
 		 * Treat git diff with at least one path outside of the
diff --git a/t/perf/p2000-sparse-operations.sh b/t/perf/p2000-sparse-operations.sh
index bfd332120c..5cf9462738 100755
--- a/t/perf/p2000-sparse-operations.sh
+++ b/t/perf/p2000-sparse-operations.sh
@@ -113,5 +113,7 @@ test_perf_on_all git checkout -f -
 test_perf_on_all git reset
 test_perf_on_all git reset --hard
 test_perf_on_all git reset -- does-not-exist
+test_perf_on_all git diff
+test_perf_on_all git diff --cached
 
 test_done
diff --git a/t/t1092-sparse-checkout-compatibility.sh b/t/t1092-sparse-checkout-compatibility.sh
index fea9942b90..e6885d2340 100755
--- a/t/t1092-sparse-checkout-compatibility.sh
+++ b/t/t1092-sparse-checkout-compatibility.sh
@@ -891,6 +891,52 @@ test_expect_success 'sparse-index is not expanded: merge conflict in cone' '
 	)
 '
 
+test_expect_success 'sparse index is not expanded: diff' '
+	init_repos &&
+
+	write_script edit-contents <<-\EOF &&
+	echo text >>$1
+	EOF
+
+	# Add file within cone
+	test_sparse_match git sparse-checkout set deep &&
+	run_on_all ../edit-contents deep/testfile &&
+	test_all_match git add deep/testfile &&
+	run_on_all ../edit-contents deep/testfile &&
+
+	test_all_match git diff &&
+	test_all_match git diff --cached &&
+	ensure_not_expanded diff &&
+	ensure_not_expanded diff --cached &&
+
+	# Add file outside cone
+	test_all_match git reset --hard &&
+	run_on_all mkdir newdirectory &&
+	run_on_all ../edit-contents newdirectory/testfile &&
+	test_sparse_match git sparse-checkout set newdirectory &&
+	test_all_match git add newdirectory/testfile &&
+	run_on_all ../edit-contents newdirectory/testfile &&
+	test_sparse_match git sparse-checkout set &&
+
+	test_all_match git diff &&
+	test_all_match git diff --cached &&
+	ensure_not_expanded diff &&
+	ensure_not_expanded diff --cached &&
+
+	# Merge conflict outside cone
+	# The sparse checkout will report a warning that is not in the
+	# full checkout, so we use `run_on_all` instead of
+	# `test_all_match`
+	run_on_all git reset --hard &&
+	test_all_match git checkout merge-left &&
+	test_all_match test_must_fail git merge merge-right &&
+
+	test_all_match git diff &&
+	test_all_match git diff --cached &&
+	ensure_not_expanded diff &&
+	ensure_not_expanded diff --cached
+'
+
 # NEEDSWORK: a sparse-checkout behaves differently from a full checkout
 # in this scenario, but it shouldn't.
 test_expect_success 'reset mixed and checkout orphan' '