diff --git a/builtin/grep.c b/builtin/grep.c
index a5056f395a..bee0681393 100644
--- a/builtin/grep.c
+++ b/builtin/grep.c
@@ -410,7 +410,7 @@ static int grep_cache(struct grep_opt *opt,
 		      const struct pathspec *pathspec, int cached);
 static int grep_tree(struct grep_opt *opt, const struct pathspec *pathspec,
 		     struct tree_desc *tree, struct strbuf *base, int tn_len,
-		     int check_attr);
+		     int is_root_tree);
 
 static int grep_submodule(struct grep_opt *opt,
 			  const struct pathspec *pathspec,
@@ -508,6 +508,10 @@ static int grep_cache(struct grep_opt *opt,
 
 	for (nr = 0; nr < repo->index->cache_nr; nr++) {
 		const struct cache_entry *ce = repo->index->cache[nr];
+
+		if (ce_skip_worktree(ce))
+			continue;
+
 		strbuf_setlen(&name, name_base_len);
 		strbuf_addstr(&name, ce->name);
 
@@ -520,8 +524,7 @@ static int grep_cache(struct grep_opt *opt,
 			 * cache entry are identical, even if worktree file has
 			 * been modified, so use cache version instead
 			 */
-			if (cached || (ce->ce_flags & CE_VALID) ||
-			    ce_skip_worktree(ce)) {
+			if (cached || (ce->ce_flags & CE_VALID)) {
 				if (ce_stage(ce) || ce_intent_to_add(ce))
 					continue;
 				hit |= grep_oid(opt, &ce->oid, name.buf,
@@ -552,9 +555,76 @@ static int grep_cache(struct grep_opt *opt,
 	return hit;
 }
 
-static int grep_tree(struct grep_opt *opt, const struct pathspec *pathspec,
-		     struct tree_desc *tree, struct strbuf *base, int tn_len,
-		     int check_attr)
+static struct pattern_list *get_sparsity_patterns(struct repository *repo)
+{
+	struct pattern_list *patterns;
+	char *sparse_file;
+	int sparse_config, cone_config;
+
+	if (repo_config_get_bool(repo, "core.sparsecheckout", &sparse_config) ||
+	    !sparse_config) {
+		return NULL;
+	}
+
+	sparse_file = repo_git_path(repo, "info/sparse-checkout");
+	patterns = xcalloc(1, sizeof(*patterns));
+
+	if (repo_config_get_bool(repo, "core.sparsecheckoutcone", &cone_config))
+		cone_config = 0;
+	patterns->use_cone_patterns = cone_config;
+
+	if (add_patterns_from_file_to_list(sparse_file, "", 0, patterns, NULL)) {
+		if (file_exists(sparse_file)) {
+			warning(_("failed to load sparse-checkout file: '%s'"),
+				sparse_file);
+		}
+		free(sparse_file);
+		free(patterns);
+		return NULL;
+	}
+
+	free(sparse_file);
+	return patterns;
+}
+
+static int path_in_sparse_checkout(struct strbuf *path, int prefix_len,
+				   unsigned int entry_mode,
+				   struct index_state *istate,
+				   struct pattern_list *sparsity,
+				   enum pattern_match_result parent_match,
+				   enum pattern_match_result *match)
+{
+	int dtype = DT_UNKNOWN;
+	int is_dir = S_ISDIR(entry_mode);
+
+	if (parent_match == MATCHED_RECURSIVE) {
+		*match = parent_match;
+		return 1;
+	}
+
+	if (is_dir && !is_dir_sep(path->buf[path->len - 1]))
+		strbuf_addch(path, '/');
+
+	*match = path_matches_pattern_list(path->buf, path->len,
+					   path->buf + prefix_len, &dtype,
+					   sparsity, istate);
+	if (*match == UNDECIDED)
+		*match = parent_match;
+
+	if (is_dir)
+		strbuf_trim_trailing_dir_sep(path);
+
+	if (*match == NOT_MATCHED &&
+		(!is_dir || (is_dir && sparsity->use_cone_patterns)))
+	     return 0;
+
+	return 1;
+}
+
+static int do_grep_tree(struct grep_opt *opt, const struct pathspec *pathspec,
+			struct tree_desc *tree, struct strbuf *base, int tn_len,
+			int check_attr, struct pattern_list *sparsity,
+			enum pattern_match_result default_sparsity_match)
 {
 	struct repository *repo = opt->repo;
 	int hit = 0;
@@ -570,6 +640,7 @@ static int grep_tree(struct grep_opt *opt, const struct pathspec *pathspec,
 
 	while (tree_entry(tree, &entry)) {
 		int te_len = tree_entry_len(&entry);
+		enum pattern_match_result sparsity_match = 0;
 
 		if (match != all_entries_interesting) {
 			strbuf_addstr(&name, base->buf + tn_len);
@@ -586,6 +657,19 @@ static int grep_tree(struct grep_opt *opt, const struct pathspec *pathspec,
 
 		strbuf_add(base, entry.path, te_len);
 
+		if (sparsity) {
+			struct strbuf path = STRBUF_INIT;
+			strbuf_addstr(&path, base->buf + tn_len);
+
+			if (!path_in_sparse_checkout(&path, old_baselen - tn_len,
+						     entry.mode, repo->index,
+						     sparsity, default_sparsity_match,
+						     &sparsity_match)) {
+				strbuf_setlen(base, old_baselen);
+				continue;
+			}
+		}
+
 		if (S_ISREG(entry.mode)) {
 			hit |= grep_oid(opt, &entry.oid, base->buf, tn_len,
 					 check_attr ? base->buf + tn_len : NULL);
@@ -602,8 +686,8 @@ static int grep_tree(struct grep_opt *opt, const struct pathspec *pathspec,
 
 			strbuf_addch(base, '/');
 			init_tree_desc(&sub, data, size);
-			hit |= grep_tree(opt, pathspec, &sub, base, tn_len,
-					 check_attr);
+			hit |= do_grep_tree(opt, pathspec, &sub, base, tn_len,
+					    check_attr, sparsity, sparsity_match);
 			free(data);
 		} else if (recurse_submodules && S_ISGITLINK(entry.mode)) {
 			hit |= grep_submodule(opt, pathspec, &entry.oid,
@@ -621,6 +705,31 @@ static int grep_tree(struct grep_opt *opt, const struct pathspec *pathspec,
 	return hit;
 }
 
+/*
+ * Note: sparsity patterns and paths' attributes will only be considered if
+ * is_root_tree has true value. (Otherwise, we cannot properly perform pattern
+ * matching on paths.)
+ */
+static int grep_tree(struct grep_opt *opt, const struct pathspec *pathspec,
+		     struct tree_desc *tree, struct strbuf *base, int tn_len,
+		     int is_root_tree)
+{
+	struct pattern_list *patterns = NULL;
+	int ret;
+
+	if (is_root_tree)
+		patterns = get_sparsity_patterns(opt->repo);
+
+	ret = do_grep_tree(opt, pathspec, tree, base, tn_len, is_root_tree,
+			   patterns, 0);
+
+	if (patterns) {
+		clear_pattern_list(patterns);
+		free(patterns);
+	}
+	return ret;
+}
+
 static int grep_object(struct grep_opt *opt, const struct pathspec *pathspec,
 		       struct object *obj, const char *name, const char *path)
 {
diff --git a/t/t7011-skip-worktree-reading.sh b/t/t7011-skip-worktree-reading.sh
index 37525cae3a..26852586ac 100755
--- a/t/t7011-skip-worktree-reading.sh
+++ b/t/t7011-skip-worktree-reading.sh
@@ -109,15 +109,6 @@ test_expect_success 'ls-files --modified' '
 	test -z "$(git ls-files -m)"
 '
 
-test_expect_success 'grep with skip-worktree file' '
-	git update-index --no-skip-worktree 1 &&
-	echo test > 1 &&
-	git update-index 1 &&
-	git update-index --skip-worktree 1 &&
-	rm 1 &&
-	test "$(git grep --no-ext-grep test)" = "1:test"
-'
-
 echo ":000000 100644 $ZERO_OID $EMPTY_BLOB A	1" > expected
 test_expect_success 'diff-index does not examine skip-worktree absent entries' '
 	setup_absent &&
diff --git a/t/t7817-grep-sparse-checkout.sh b/t/t7817-grep-sparse-checkout.sh
new file mode 100755
index 0000000000..b3109e3479
--- /dev/null
+++ b/t/t7817-grep-sparse-checkout.sh
@@ -0,0 +1,195 @@
+#!/bin/sh
+
+test_description='grep in sparse checkout
+
+This test creates a repo with the following structure:
+
+.
+|-- a
+|-- b
+|-- dir
+|   `-- c
+|-- sub
+|   |-- A
+|   |   `-- a
+|   `-- B
+|       `-- b
+`-- sub2
+    `-- a
+
+Where the outer repository has non-cone mode sparsity patterns, sub is a
+submodule with cone mode sparsity patterns and sub2 is a submodule that is
+excluded by the superproject sparsity patterns. The resulting sparse checkout
+should leave the following structure in the working tree:
+
+.
+|-- a
+|-- sub
+|   `-- B
+|       `-- b
+`-- sub2
+    `-- a
+
+But note that sub2 should have the SKIP_WORKTREE bit set.
+'
+
+. ./test-lib.sh
+
+test_expect_success 'setup' '
+	echo "text" >a &&
+	echo "text" >b &&
+	mkdir dir &&
+	echo "text" >dir/c &&
+
+	git init sub &&
+	(
+		cd sub &&
+		mkdir A B &&
+		echo "text" >A/a &&
+		echo "text" >B/b &&
+		git add A B &&
+		git commit -m sub &&
+		git sparse-checkout init --cone &&
+		git sparse-checkout set B
+	) &&
+
+	git init sub2 &&
+	(
+		cd sub2 &&
+		echo "text" >a &&
+		git add a &&
+		git commit -m sub2
+	) &&
+
+	git submodule add ./sub &&
+	git submodule add ./sub2 &&
+	git add a b dir &&
+	git commit -m super &&
+	git sparse-checkout init --no-cone &&
+	git sparse-checkout set "/*" "!b" "!/*/" "sub" &&
+
+	git tag -am tag-to-commit tag-to-commit HEAD &&
+	tree=$(git rev-parse HEAD^{tree}) &&
+	git tag -am tag-to-tree tag-to-tree $tree &&
+
+	test_path_is_missing b &&
+	test_path_is_missing dir &&
+	test_path_is_missing sub/A &&
+	test_path_is_file a &&
+	test_path_is_file sub/B/b &&
+	test_path_is_file sub2/a
+'
+
+# The test below checks a special case: the sparsity patterns exclude '/b'
+# and sparse checkout is enabled, but the path exists in the working tree (e.g.
+# manually created after `git sparse-checkout init`). In this case, grep should
+# skip it.
+test_expect_success 'grep in working tree should honor sparse checkout' '
+	cat >expect <<-EOF &&
+	a:text
+	EOF
+	echo "new-text" >b &&
+	test_when_finished "rm b" &&
+	git grep "text" >actual &&
+	test_cmp expect actual
+'
+
+test_expect_success 'grep unmerged file despite not matching sparsity patterns' '
+	cat >expect <<-EOF &&
+	b:modified-b-in-branchX
+	b:modified-b-in-branchY
+	EOF
+	test_when_finished "test_might_fail git merge --abort && \
+			    git checkout master" &&
+
+	git sparse-checkout disable &&
+	git checkout -b branchY master &&
+	test_commit modified-b-in-branchY b &&
+	git checkout -b branchX master &&
+	test_commit modified-b-in-branchX b &&
+
+	git sparse-checkout init &&
+	test_path_is_missing b &&
+	test_must_fail git merge branchY &&
+	git grep "modified-b" >actual &&
+	test_cmp expect actual
+'
+
+test_expect_success 'grep --cached should honor sparse checkout' '
+	cat >expect <<-EOF &&
+	a:text
+	EOF
+	git grep --cached "text" >actual &&
+	test_cmp expect actual
+'
+
+test_expect_success 'grep <commit-ish> should honor sparse checkout' '
+	commit=$(git rev-parse HEAD) &&
+	cat >expect_commit <<-EOF &&
+	$commit:a:text
+	EOF
+	cat >expect_tag-to-commit <<-EOF &&
+	tag-to-commit:a:text
+	EOF
+	git grep "text" $commit >actual_commit &&
+	test_cmp expect_commit actual_commit &&
+	git grep "text" tag-to-commit >actual_tag-to-commit &&
+	test_cmp expect_tag-to-commit actual_tag-to-commit
+'
+
+test_expect_success 'grep <tree-ish> should ignore sparsity patterns' '
+	commit=$(git rev-parse HEAD) &&
+	tree=$(git rev-parse HEAD^{tree}) &&
+	cat >expect_tree <<-EOF &&
+	$tree:a:text
+	$tree:b:text
+	$tree:dir/c:text
+	EOF
+	cat >expect_tag-to-tree <<-EOF &&
+	tag-to-tree:a:text
+	tag-to-tree:b:text
+	tag-to-tree:dir/c:text
+	EOF
+	git grep "text" $tree >actual_tree &&
+	test_cmp expect_tree actual_tree &&
+	git grep "text" tag-to-tree >actual_tag-to-tree &&
+	test_cmp expect_tag-to-tree actual_tag-to-tree
+'
+
+# Note that sub2/ is present in the worktree but it is excluded by the sparsity
+# patterns, so grep should not recurse into it.
+test_expect_success 'grep --recurse-submodules should honor sparse checkout in submodule' '
+	cat >expect <<-EOF &&
+	a:text
+	sub/B/b:text
+	EOF
+	git grep --recurse-submodules "text" >actual &&
+	test_cmp expect actual
+'
+
+test_expect_success 'grep --recurse-submodules --cached should honor sparse checkout in submodule' '
+	cat >expect <<-EOF &&
+	a:text
+	sub/B/b:text
+	EOF
+	git grep --recurse-submodules --cached "text" >actual &&
+	test_cmp expect actual
+'
+
+test_expect_success 'grep --recurse-submodules <commit-ish> should honor sparse checkout in submodule' '
+	commit=$(git rev-parse HEAD) &&
+	cat >expect_commit <<-EOF &&
+	$commit:a:text
+	$commit:sub/B/b:text
+	EOF
+	cat >expect_tag-to-commit <<-EOF &&
+	tag-to-commit:a:text
+	tag-to-commit:sub/B/b:text
+	EOF
+	git grep --recurse-submodules "text" $commit >actual_commit &&
+	test_cmp expect_commit actual_commit &&
+	git grep --recurse-submodules "text" tag-to-commit >actual_tag-to-commit &&
+	test_cmp expect_tag-to-commit actual_tag-to-commit
+'
+
+test_done