diff --git a/cache.h b/cache.h
index e6c7f3307d..9222774e6c 100644
--- a/cache.h
+++ b/cache.h
@@ -468,6 +468,9 @@ extern int index_fd(unsigned char *sha1, int fd, struct stat *st, int write_obje
 extern int index_path(unsigned char *sha1, const char *path, struct stat *st, int write_object);
 extern void fill_stat_cache_info(struct cache_entry *ce, struct stat *st);
 
+/* "careful lstat()" */
+extern int check_path(const char *path, int len, struct stat *st);
+
 #define REFRESH_REALLY		0x0001	/* ignore_valid */
 #define REFRESH_UNMERGED	0x0002	/* allow unmerged */
 #define REFRESH_QUIET		0x0004	/* be quiet about it */
diff --git a/entry.c b/entry.c
index d3e86c722a..f276cf3b88 100644
--- a/entry.c
+++ b/entry.c
@@ -175,6 +175,19 @@ static int write_entry(struct cache_entry *ce, char *path, const struct checkout
 	return 0;
 }
 
+/*
+ * This is like 'lstat()', except it refuses to follow symlinks
+ * in the path.
+ */
+int check_path(const char *path, int len, struct stat *st)
+{
+	if (has_symlink_leading_path(path, len)) {
+		errno = ENOENT;
+		return -1;
+	}
+	return lstat(path, st);
+}
+
 int checkout_entry(struct cache_entry *ce, const struct checkout *state, char *topath)
 {
 	static char path[PATH_MAX + 1];
@@ -188,7 +201,7 @@ int checkout_entry(struct cache_entry *ce, const struct checkout *state, char *t
 	strcpy(path + len, ce->name);
 	len += ce_namelen(ce);
 
-	if (!lstat(path, &st)) {
+	if (!check_path(path, len, &st)) {
 		unsigned changed = ce_match_stat(ce, &st, CE_MATCH_IGNORE_VALID);
 		if (!changed)
 			return 0;
diff --git a/symlinks.c b/symlinks.c
index 4bdded39c5..7b0a86d357 100644
--- a/symlinks.c
+++ b/symlinks.c
@@ -91,6 +91,10 @@ static int lstat_cache(struct cache_def *cache, const char *name, int len,
 			longest_path_match(name, len, cache->path, cache->len,
 					   &previous_slash);
 		match_flags = cache->flags & track_flags & (FL_NOENT|FL_SYMLINK);
+
+		if (!(track_flags & FL_FULLPATH) && match_len == len)
+			match_len = last_slash = previous_slash;
+
 		if (match_flags && match_len == cache->len)
 			return match_flags;
 		/*
diff --git a/t/t6035-merge-dir-to-symlink.sh b/t/t6035-merge-dir-to-symlink.sh
new file mode 100755
index 0000000000..5b96fb0b37
--- /dev/null
+++ b/t/t6035-merge-dir-to-symlink.sh
@@ -0,0 +1,93 @@
+#!/bin/sh
+
+test_description='merging when a directory was replaced with a symlink'
+. ./test-lib.sh
+
+if ! test_have_prereq SYMLINKS
+then
+	say 'Symbolic links not supported, skipping tests.'
+	test_done
+fi
+
+test_expect_success 'create a commit where dir a/b changed to symlink' '
+	mkdir -p a/b/c a/b-2/c &&
+	> a/b/c/d &&
+	> a/b-2/c/d &&
+	> a/x &&
+	git add -A &&
+	git commit -m base &&
+	git tag start &&
+	rm -rf a/b &&
+	ln -s b-2 a/b &&
+	git add -A &&
+	git commit -m "dir to symlink"
+'
+
+test_expect_success 'keep a/b-2/c/d across checkout' '
+	git checkout HEAD^0 &&
+	git reset --hard master &&
+	git rm --cached a/b &&
+	git commit -m "untracked symlink remains" &&
+	 git checkout start^0 &&
+	 test -f a/b-2/c/d
+'
+
+test_expect_success 'checkout should not have deleted a/b-2/c/d' '
+	git checkout HEAD^0 &&
+	git reset --hard master &&
+	 git checkout start^0 &&
+	 test -f a/b-2/c/d
+'
+
+test_expect_success 'setup for merge test' '
+	git reset --hard &&
+	test -f a/b-2/c/d &&
+	echo x > a/x &&
+	git add a/x &&
+	git commit -m x &&
+	git tag baseline
+'
+
+test_expect_success 'do not lose a/b-2/c/d in merge (resolve)' '
+	git reset --hard &&
+	git checkout baseline^0 &&
+	git merge -s resolve master &&
+	test -h a/b &&
+	test -f a/b-2/c/d
+'
+
+test_expect_failure 'do not lose a/b-2/c/d in merge (recursive)' '
+	git reset --hard &&
+	git checkout baseline^0 &&
+	git merge -s recursive master &&
+	test -h a/b &&
+	test -f a/b-2/c/d
+'
+
+test_expect_success 'setup a merge where dir a/b-2 changed to symlink' '
+	git reset --hard &&
+	git checkout start^0 &&
+	rm -rf a/b-2 &&
+	ln -s b a/b-2 &&
+	git add -A &&
+	git commit -m "dir a/b-2 to symlink" &&
+	git tag test2
+'
+
+test_expect_failure 'merge should not have conflicts (resolve)' '
+	git reset --hard &&
+	git checkout baseline^0 &&
+	git merge -s resolve test2 &&
+	test -h a/b-2 &&
+	test -f a/b/c/d
+'
+
+test_expect_failure 'merge should not have conflicts (recursive)' '
+	git reset --hard &&
+	git checkout baseline^0 &&
+	git merge -s recursive test2 &&
+	test -h a/b-2 &&
+	test -f a/b/c/d
+'
+
+test_done