diff --git a/Makefile b/Makefile
index 7cf146ba7b..29243c6e8b 100644
--- a/Makefile
+++ b/Makefile
@@ -318,7 +318,7 @@ LIB_OBJS = \
 	write_or_die.o trace.o list-objects.o grep.o match-trees.o \
 	alloc.o merge-file.o path-list.o help.o unpack-trees.o $(DIFF_OBJS) \
 	color.o wt-status.o archive-zip.o archive-tar.o shallow.o utf8.o \
-	convert.o attr.o decorate.o progress.o mailmap.o
+	convert.o attr.o decorate.o progress.o mailmap.o symlinks.o
 
 BUILTIN_OBJS = \
 	builtin-add.o \
diff --git a/builtin-apply.c b/builtin-apply.c
index f94d0dbf48..8b8705a6c0 100644
--- a/builtin-apply.c
+++ b/builtin-apply.c
@@ -2009,6 +2009,29 @@ static int apply_data(struct patch *patch, struct stat *st, struct cache_entry *
 	return 0;
 }
 
+static int check_to_create_blob(const char *new_name, int ok_if_exists)
+{
+	struct stat nst;
+	if (!lstat(new_name, &nst)) {
+		if (S_ISDIR(nst.st_mode) || ok_if_exists)
+			return 0;
+		/*
+		 * A leading component of new_name might be a symlink
+		 * that is going to be removed with this patch, but
+		 * still pointing at somewhere that has the path.
+		 * In such a case, path "new_name" does not exist as
+		 * far as git is concerned.
+		 */
+		if (has_symlink_leading_path(new_name, NULL))
+			return 0;
+
+		return error("%s: already exists in working directory", new_name);
+	}
+	else if ((errno != ENOENT) && (errno != ENOTDIR))
+		return error("%s: %s", new_name, strerror(errno));
+	return 0;
+}
+
 static int check_patch(struct patch *patch, struct patch *prev_patch)
 {
 	struct stat st;
@@ -2095,15 +2118,9 @@ static int check_patch(struct patch *patch, struct patch *prev_patch)
 		    !ok_if_exists)
 			return error("%s: already exists in index", new_name);
 		if (!cached) {
-			struct stat nst;
-			if (!lstat(new_name, &nst)) {
-				if (S_ISDIR(nst.st_mode) || ok_if_exists)
-					; /* ok */
-				else
-					return error("%s: already exists in working directory", new_name);
-			}
-			else if ((errno != ENOENT) && (errno != ENOTDIR))
-				return error("%s: %s", new_name, strerror(errno));
+			int err = check_to_create_blob(new_name, ok_if_exists);
+			if (err)
+				return err;
 		}
 		if (!patch->new_mode) {
 			if (0 < patch->is_new)
diff --git a/t/t4122-apply-symlink-inside.sh b/t/t4122-apply-symlink-inside.sh
new file mode 100755
index 0000000000..37c9a9f254
--- /dev/null
+++ b/t/t4122-apply-symlink-inside.sh
@@ -0,0 +1,57 @@
+#!/bin/sh
+
+test_description='apply to deeper directory without getting fooled with symlink'
+. ./test-lib.sh
+
+lecho () {
+	for l_
+	do
+		echo "$l_"
+	done
+}
+
+test_expect_success setup '
+
+	mkdir -p arch/i386/boot arch/x86_64 &&
+	lecho 1 2 3 4 5 >arch/i386/boot/Makefile &&
+	ln -s ../i386/boot arch/x86_64/boot &&
+	git add . &&
+	test_tick &&
+	git commit -m initial &&
+	git branch test &&
+
+	rm arch/x86_64/boot &&
+	mkdir arch/x86_64/boot &&
+	lecho 2 3 4 5 6 >arch/x86_64/boot/Makefile &&
+	git add . &&
+	test_tick &&
+	git commit -a -m second &&
+
+	git format-patch --binary -1 --stdout >test.patch
+
+'
+
+test_expect_success apply '
+
+	git checkout test &&
+	git reset --hard && #### checkout seems to be buggy
+	git diff --exit-code test &&
+	git diff --exit-code --cached test &&
+	git apply --index test.patch
+
+'
+
+test_expect_success 'check result' '
+
+	git diff --exit-code master &&
+	git diff --exit-code --cached master &&
+	test_tick &&
+	git commit -m replay &&
+	T1=$(git rev-parse "master^{tree}") &&
+	T2=$(git rev-parse "HEAD^{tree}") &&
+	test "z$T1" = "z$T2"
+
+'
+
+test_done
+