diff --git a/dir.c b/dir.c
index b9af87eca9..20457724c0 100644
--- a/dir.c
+++ b/dir.c
@@ -1585,6 +1585,7 @@ static enum path_treatment treat_one_path(struct dir_struct *dir,
 {
 	int exclude;
 	int has_path_in_index = !!index_file_exists(istate, path->buf, path->len, ignore_case);
+	enum path_treatment path_treatment;
 
 	if (dtype == DT_UNKNOWN)
 		dtype = get_dtype(de, istate, path->buf, path->len);
@@ -1631,8 +1632,23 @@ static enum path_treatment treat_one_path(struct dir_struct *dir,
 		return path_none;
 	case DT_DIR:
 		strbuf_addch(path, '/');
-		return treat_directory(dir, istate, untracked, path->buf, path->len,
-				       baselen, exclude, pathspec);
+		path_treatment = treat_directory(dir, istate, untracked,
+						 path->buf, path->len,
+						 baselen, exclude, pathspec);
+		/*
+		 * If 1) we only want to return directories that
+		 * match an exclude pattern and 2) this directory does
+		 * not match an exclude pattern but all of its
+		 * contents are excluded, then indicate that we should
+		 * recurse into this directory (instead of marking the
+		 * directory itself as an ignored path).
+		 */
+		if (!exclude &&
+		    path_treatment == path_excluded &&
+		    (dir->flags & DIR_SHOW_IGNORED_TOO) &&
+		    (dir->flags & DIR_SHOW_IGNORED_TOO_MODE_MATCHING))
+			return path_recurse;
+		return path_treatment;
 	case DT_REG:
 	case DT_LNK:
 		return exclude ? path_excluded : path_untracked;