diff --git a/t/t2007-checkout-symlink.sh b/t/t2007-checkout-symlink.sh
new file mode 100755
index 0000000..0526fce
--- /dev/null
+++ b/t/t2007-checkout-symlink.sh
@@ -0,0 +1,50 @@
+#!/bin/sh
+#
+# Copyright (c) 2007 Junio C Hamano
+
+test_description='git checkout to switch between branches with symlink<->dir'
+
+. ./test-lib.sh
+
+test_expect_success setup '
+
+	mkdir frotz &&
+	echo hello >frotz/filfre &&
+	git add frotz/filfre &&
+	test_tick &&
+	git commit -m "master has file frotz/filfre" &&
+
+	git branch side &&
+
+	echo goodbye >nitfol &&
+	git add nitfol
+	test_tick &&
+	git commit -m "master adds file nitfol" &&
+
+	git checkout side &&
+
+	git rm --cached frotz/filfre &&
+	mv frotz xyzzy &&
+	ln -s xyzzy frotz &&
+	git add xyzzy/filfre frotz &&
+	test_tick &&
+	git commit -m "side moves frotz/ to xyzzy/ and adds frotz->xyzzy/"
+
+'
+
+test_expect_success 'switch from symlink to dir' '
+
+	git checkout master
+
+'
+
+rm -fr frotz xyzzy nitfol &&
+git checkout -f master || exit
+
+test_expect_success 'switch from dir to symlink' '
+
+	git checkout side
+
+'
+
+test_done
diff --git a/unpack-trees.c b/unpack-trees.c
index cac2411..89dd279 100644
--- a/unpack-trees.c
+++ b/unpack-trees.c
@@ -495,6 +495,9 @@
 	if (o->index_only || o->reset || !o->update)
 		return;
 
+	if (has_symlink_leading_path(path, NULL))
+		return;
+
 	if (!lstat(path, &st)) {
 		int cnt;