diff --git a/t/t2501-cwd-empty.sh b/t/t2501-cwd-empty.sh
index 398908dfc9..5af1fec6fe 100755
--- a/t/t2501-cwd-empty.sh
+++ b/t/t2501-cwd-empty.sh
@@ -121,7 +121,7 @@ test_expect_success 'reset --hard does not clean cwd incidentally' '
 '
 
 test_expect_success 'reset --hard fails if cwd needs to be removed' '
-	test_required_dir_removal failure git reset --hard fd_conflict
+	test_required_dir_removal success git reset --hard fd_conflict
 '
 
 test_expect_success 'merge does not clean cwd incidentally' '
diff --git a/unpack-trees.c b/unpack-trees.c
index 6bc16f3a71..5852807d2f 100644
--- a/unpack-trees.c
+++ b/unpack-trees.c
@@ -2261,10 +2261,19 @@ static int verify_absent_1(const struct cache_entry *ce,
 	int len;
 	struct stat st;
 
-	if (o->index_only || !o->update ||
-	    o->reset == UNPACK_RESET_OVERWRITE_UNTRACKED)
+	if (o->index_only || !o->update)
 		return 0;
 
+	if (o->reset == UNPACK_RESET_OVERWRITE_UNTRACKED) {
+		/* Avoid nuking startup_info->original_cwd... */
+		if (startup_info->original_cwd &&
+		    !strcmp(startup_info->original_cwd, ce->name))
+			return add_rejected_path(o, ERROR_CWD_IN_THE_WAY,
+						 ce->name);
+		/* ...but nuke anything else. */
+		return 0;
+	}
+
 	len = check_leading_path(ce->name, ce_namelen(ce), 0);
 	if (!len)
 		return 0;