diff --git a/builtin/stash.c b/builtin/stash.c
index 8f42360ca9..5512f4942c 100644
--- a/builtin/stash.c
+++ b/builtin/stash.c
@@ -313,6 +313,17 @@ static int reset_head(void)
 	return run_command(&cp);
 }
 
+static int is_path_a_directory(const char *path)
+{
+	/*
+	 * This function differs from abspath.c:is_directory() in that
+	 * here we use lstat() instead of stat(); we do not want to
+	 * follow symbolic links here.
+	 */
+	struct stat st;
+	return (!lstat(path, &st) && S_ISDIR(st.st_mode));
+}
+
 static void add_diff_to_buf(struct diff_queue_struct *q,
 			    struct diff_options *options,
 			    void *data)
@@ -320,6 +331,9 @@ static void add_diff_to_buf(struct diff_queue_struct *q,
 	int i;
 
 	for (i = 0; i < q->nr; i++) {
+		if (is_path_a_directory(q->queue[i]->one->path))
+			continue;
+
 		strbuf_addstr(data, q->queue[i]->one->path);
 
 		/* NUL-terminate: will be fed to update-index -z */
@@ -521,9 +535,6 @@ static int do_apply_stash(const char *prefix, struct stash_info *info,
 		}
 	}
 
-	if (info->has_u && restore_untracked(&info->u_tree))
-		return error(_("could not restore untracked files from stash"));
-
 	init_merge_options(&o, the_repository);
 
 	o.branch1 = "Updated upstream";
@@ -558,6 +569,9 @@ static int do_apply_stash(const char *prefix, struct stash_info *info,
 		unstage_changes_unless_new(&c_tree);
 	}
 
+	if (info->has_u && restore_untracked(&info->u_tree))
+		return error(_("could not restore untracked files from stash"));
+
 	if (!quiet) {
 		struct child_process cp = CHILD_PROCESS_INIT;
 
diff --git a/t/t3903-stash.sh b/t/t3903-stash.sh
index 873aa56e35..f0a82be9de 100755
--- a/t/t3903-stash.sh
+++ b/t/t3903-stash.sh
@@ -1307,4 +1307,62 @@ test_expect_success 'stash -c stash.useBuiltin=false warning ' '
 	test_must_be_empty err
 '
 
+test_expect_success 'git stash succeeds despite directory/file change' '
+	test_create_repo directory_file_switch_v1 &&
+	(
+		cd directory_file_switch_v1 &&
+		test_commit init &&
+
+		test_write_lines this file has some words >filler &&
+		git add filler &&
+		git commit -m filler &&
+
+		git rm filler &&
+		mkdir filler &&
+		echo contents >filler/file &&
+		git stash push
+	)
+'
+
+test_expect_success 'git stash can pop file -> directory saved changes' '
+	test_create_repo directory_file_switch_v2 &&
+	(
+		cd directory_file_switch_v2 &&
+		test_commit init &&
+
+		test_write_lines this file has some words >filler &&
+		git add filler &&
+		git commit -m filler &&
+
+		git rm filler &&
+		mkdir filler &&
+		echo contents >filler/file &&
+		cp filler/file expect &&
+		git stash push --include-untracked &&
+		git stash apply --index &&
+		test_cmp expect filler/file
+	)
+'
+
+test_expect_success 'git stash can pop directory -> file saved changes' '
+	test_create_repo directory_file_switch_v3 &&
+	(
+		cd directory_file_switch_v3 &&
+		test_commit init &&
+
+		mkdir filler &&
+		test_write_lines some words >filler/file1 &&
+		test_write_lines and stuff >filler/file2 &&
+		git add filler &&
+		git commit -m filler &&
+
+		git rm -rf filler &&
+		echo contents >filler &&
+		cp filler expect &&
+		git stash push --include-untracked &&
+		git stash apply --index &&
+		test_cmp expect filler
+	)
+'
+
 test_done