diff --git a/diff-no-index.c b/diff-no-index.c
index 265709ba8c..0320605a84 100644
--- a/diff-no-index.c
+++ b/diff-no-index.c
@@ -97,8 +97,27 @@ static int queue_diff(struct diff_options *o,
 	if (get_mode(name1, &mode1) || get_mode(name2, &mode2))
 		return -1;
 
-	if (mode1 && mode2 && S_ISDIR(mode1) != S_ISDIR(mode2))
-		return error("file/directory conflict: %s, %s", name1, name2);
+	if (mode1 && mode2 && S_ISDIR(mode1) != S_ISDIR(mode2)) {
+		struct diff_filespec *d1, *d2;
+
+		if (S_ISDIR(mode1)) {
+			/* 2 is file that is created */
+			d1 = noindex_filespec(NULL, 0);
+			d2 = noindex_filespec(name2, mode2);
+			name2 = NULL;
+			mode2 = 0;
+		} else {
+			/* 1 is file that is deleted */
+			d1 = noindex_filespec(name1, mode1);
+			d2 = noindex_filespec(NULL, 0);
+			name1 = NULL;
+			mode1 = 0;
+		}
+		/* emit that file */
+		diff_queue(&diff_queued_diff, d1, d2);
+
+		/* and then let the entire directory be created or deleted */
+	}
 
 	if (S_ISDIR(mode1) || S_ISDIR(mode2)) {
 		struct strbuf buffer1 = STRBUF_INIT;
@@ -182,12 +201,50 @@ static int queue_diff(struct diff_options *o,
 	}
 }
 
+/* append basename of F to D */
+static void append_basename(struct strbuf *path, const char *dir, const char *file)
+{
+	const char *tail = strrchr(file, '/');
+
+	strbuf_addstr(path, dir);
+	while (path->len && path->buf[path->len - 1] == '/')
+		path->len--;
+	strbuf_addch(path, '/');
+	strbuf_addstr(path, tail ? tail + 1 : file);
+}
+
+/*
+ * DWIM "diff D F" into "diff D/F F" and "diff F D" into "diff F D/F"
+ * Note that we append the basename of F to D/, so "diff a/b/file D"
+ * becomes "diff a/b/file D/file", not "diff a/b/file D/a/b/file".
+ */
+static void fixup_paths(const char **path, struct strbuf *replacement)
+{
+	unsigned int isdir0, isdir1;
+
+	if (path[0] == file_from_standard_input ||
+	    path[1] == file_from_standard_input)
+		return;
+	isdir0 = is_directory(path[0]);
+	isdir1 = is_directory(path[1]);
+	if (isdir0 == isdir1)
+		return;
+	if (isdir0) {
+		append_basename(replacement, path[0], path[1]);
+		path[0] = replacement->buf;
+	} else {
+		append_basename(replacement, path[1], path[0]);
+		path[1] = replacement->buf;
+	}
+}
+
 void diff_no_index(struct rev_info *revs,
 		   int argc, const char **argv,
 		   const char *prefix)
 {
 	int i, prefixlen;
 	const char *paths[2];
+	struct strbuf replacement = STRBUF_INIT;
 
 	diff_setup(&revs->diffopt);
 	for (i = 1; i < argc - 2; ) {
@@ -217,6 +274,9 @@ void diff_no_index(struct rev_info *revs,
 			p = xstrdup(prefix_filename(prefix, prefixlen, p));
 		paths[i] = p;
 	}
+
+	fixup_paths(paths, &replacement);
+
 	revs->diffopt.skip_stat_unmatch = 1;
 	if (!revs->diffopt.output_format)
 		revs->diffopt.output_format = DIFF_FORMAT_PATCH;
@@ -235,6 +295,8 @@ void diff_no_index(struct rev_info *revs,
 	diffcore_std(&revs->diffopt);
 	diff_flush(&revs->diffopt);
 
+	strbuf_release(&replacement);
+
 	/*
 	 * The return code for --no-index imitates diff(1):
 	 * 0 = no changes, 1 = changes, else error
diff --git a/t/t4053-diff-no-index.sh b/t/t4053-diff-no-index.sh
index 075ece6db1..6eb83211b5 100755
--- a/t/t4053-diff-no-index.sh
+++ b/t/t4053-diff-no-index.sh
@@ -55,4 +55,38 @@ test_expect_success 'git diff --no-index executed outside repo gives correct err
 	)
 '
 
+test_expect_success 'diff D F and diff F D' '
+	(
+		cd repo &&
+		echo in-repo >a &&
+		echo non-repo >../non/git/a &&
+		mkdir sub &&
+		echo sub-repo >sub/a &&
+
+		test_must_fail git diff --no-index sub/a ../non/git/a >expect &&
+		test_must_fail git diff --no-index sub/a ../non/git/ >actual &&
+		test_cmp expect actual &&
+
+		test_must_fail git diff --no-index a ../non/git/a >expect &&
+		test_must_fail git diff --no-index a ../non/git/ >actual &&
+		test_cmp expect actual &&
+
+		test_must_fail git diff --no-index ../non/git/a a >expect &&
+		test_must_fail git diff --no-index ../non/git a >actual &&
+		test_cmp expect actual
+	)
+'
+
+test_expect_success 'turning a file into a directory' '
+	(
+		cd non/git &&
+		mkdir d e e/sub &&
+		echo 1 >d/sub &&
+		echo 2 >e/sub/file &&
+		printf "D\td/sub\nA\te/sub/file\n" >expect &&
+		test_must_fail git diff --no-index --name-status d e >actual &&
+		test_cmp expect actual
+	)
+'
+
 test_done