diff --git a/builtin-grep.c b/builtin-grep.c
index 3c97c2c4d5..bebf15cd6f 100644
--- a/builtin-grep.c
+++ b/builtin-grep.c
@@ -404,7 +404,12 @@ static int grep_cache(struct grep_opt *opt, const char **paths, int cached)
 			continue;
 		if (!pathspec_matches(paths, ce->name))
 			continue;
-		if (cached) {
+		/*
+		 * If CE_VALID is on, we assume worktree file and its cache entry
+		 * are identical, even if worktree file has been modified, so use
+		 * cache version instead
+		 */
+		if (cached || (ce->ce_flags & CE_VALID)) {
 			if (ce_stage(ce))
 				continue;
 			hit |= grep_sha1(opt, ce->sha1, ce->name, 0);
diff --git a/t/t7002-grep.sh b/t/t7002-grep.sh
index 18fe6f2d57..c4938544d4 100755
--- a/t/t7002-grep.sh
+++ b/t/t7002-grep.sh
@@ -161,7 +161,14 @@ test_expect_success 'log grep (6)' '
 	git log --author=-0700  --pretty=tformat:%s >actual &&
 	>expect &&
 	test_cmp expect actual
+'
 
+test_expect_success 'grep with CE_VALID file' '
+	git update-index --assume-unchanged t/t &&
+	rm t/t &&
+	test "$(git grep --no-ext-grep t)" = "t/t:test" &&
+	git update-index --no-assume-unchanged t/t &&
+	git checkout t/t
 '
 
 test_done