diff --git a/merge-recursive.c b/merge-recursive.c
index 6b812d67e3..22a12cfeba 100644
--- a/merge-recursive.c
+++ b/merge-recursive.c
@@ -764,7 +764,8 @@ static int dir_in_way(struct index_state *istate, const char *path,
 
 	strbuf_release(&dirpath);
 	return check_working_copy && !lstat(path, &st) && S_ISDIR(st.st_mode) &&
-		!(empty_ok && is_empty_dir(path));
+		!(empty_ok && is_empty_dir(path)) &&
+		!has_symlink_leading_path(path, strlen(path));
 }
 
 /*
diff --git a/t/t3030-merge-recursive.sh b/t/t3030-merge-recursive.sh
index ff641b348a..faa8892741 100755
--- a/t/t3030-merge-recursive.sh
+++ b/t/t3030-merge-recursive.sh
@@ -452,6 +452,34 @@ test_expect_success 'merge-recursive d/f conflict result' '
 
 '
 
+test_expect_success SYMLINKS 'dir in working tree with symlink ancestor does not produce d/f conflict' '
+	git init sym &&
+	(
+		cd sym &&
+		ln -s . foo &&
+		mkdir bar &&
+		>bar/file &&
+		git add foo bar/file &&
+		git commit -m "foo symlink" &&
+
+		git checkout -b branch1 &&
+		git commit --allow-empty -m "empty commit" &&
+
+		git checkout master &&
+		git rm foo &&
+		mkdir foo &&
+		>foo/bar &&
+		git add foo/bar &&
+		git commit -m "replace foo symlink with real foo dir and foo/bar file" &&
+
+		git checkout branch1 &&
+
+		git cherry-pick master &&
+		test_path_is_dir foo &&
+		test_path_is_file foo/bar
+	)
+'
+
 test_expect_success 'reset and 3-way merge' '
 
 	git reset --hard "$c2" &&