diff --git a/t/t2500-untracked-overwriting.sh b/t/t2500-untracked-overwriting.sh
index 5ec66058cf..5c0bf4d21f 100755
--- a/t/t2500-untracked-overwriting.sh
+++ b/t/t2500-untracked-overwriting.sh
@@ -218,7 +218,7 @@ test_expect_success 'git am --abort and untracked dir vs. unmerged file' '
 	)
 '
 
-test_expect_failure 'git am --skip and untracked dir vs deleted file' '
+test_expect_success 'git am --skip and untracked dir vs deleted file' '
 	test_setup_sequencing am_skip_and_untracked &&
 	(
 		cd sequencing_am_skip_and_untracked &&
diff --git a/unpack-trees.c b/unpack-trees.c
index 821f532c85..48ca93a725 100644
--- a/unpack-trees.c
+++ b/unpack-trees.c
@@ -2409,7 +2409,10 @@ static int deleted_entry(const struct cache_entry *ce,
 		if (verify_absent(ce, ERROR_WOULD_LOSE_UNTRACKED_REMOVED, o))
 			return -1;
 		return 0;
+	} else if (verify_absent_if_directory(ce, ERROR_WOULD_LOSE_UNTRACKED_REMOVED, o)) {
+		return -1;
 	}
+
 	if (!(old->ce_flags & CE_CONFLICTED) && verify_uptodate(old, o))
 		return -1;
 	add_entry(o, ce, CE_REMOVE, 0);