diff --git a/git-merge-one-file.sh b/git-merge-one-file.sh
index fba4b0cb5f..c49e4c65af 100755
--- a/git-merge-one-file.sh
+++ b/git-merge-one-file.sh
@@ -23,6 +23,12 @@ case "${1:-.}${2:-.}${3:-.}" in
 "$1.." | "$1.$1" | "$1$1.")
 	if [ "$2" ]; then
 		echo "Removing $4"
+	else
+		# read-tree checked that index matches HEAD already,
+		# so we know we do not have this path tracked.
+		# there may be an unrelated working tree file here,
+		# which we should just leave unmolested.
+		exit 0
 	fi
 	if test -f "$4"; then
 		rm -f -- "$4" &&
@@ -34,8 +40,16 @@ case "${1:-.}${2:-.}${3:-.}" in
 #
 # Added in one.
 #
-".$2." | "..$3" )
+".$2.")
+	# the other side did not add and we added so there is nothing
+	# to be done.
+	;;
+"..$3")
 	echo "Adding $4"
+	test -f "$4" || {
+		echo "ERROR: untracked $4 is overwritten by the merge."
+		exit 1
+	}
 	git-update-index --add --cacheinfo "$6$7" "$2$3" "$4" &&
 		exec git-checkout-index -u -f -- "$4"
 	;;
diff --git a/merge-recursive.c b/merge-recursive.c
index c81048d7a7..cd2cc77bf4 100644
--- a/merge-recursive.c
+++ b/merge-recursive.c
@@ -98,7 +98,7 @@ static void output_commit_title(struct commit *commit)
 	if (commit->util)
 		printf("virtual %s\n", (char *)commit->util);
 	else {
-		printf("%s ", sha1_to_hex(commit->object.sha1));
+		printf("%s ", find_unique_abbrev(commit->object.sha1, DEFAULT_ABBREV));
 		if (parse_commit(commit) != 0)
 			printf("(bad commit)\n");
 		else {
@@ -427,8 +427,9 @@ static struct path_list *get_renames(struct tree *tree,
 	return renames;
 }
 
-int update_stages(const char *path, struct diff_filespec *o,
-		struct diff_filespec *a, struct diff_filespec *b, int clear)
+static int update_stages(const char *path, struct diff_filespec *o,
+			 struct diff_filespec *a, struct diff_filespec *b,
+			 int clear)
 {
 	int options = ADD_CACHE_OK_TO_ADD | ADD_CACHE_OK_TO_REPLACE;
 	if (clear)
@@ -468,10 +469,10 @@ static int remove_path(const char *name)
 	return ret;
 }
 
-int remove_file(int clean, const char *path)
+static int remove_file(int clean, const char *path, int no_wd)
 {
 	int update_cache = index_only || clean;
-	int update_working_directory = !index_only;
+	int update_working_directory = !index_only && !no_wd;
 
 	if (update_cache) {
 		if (!cache_dirty)
@@ -480,8 +481,7 @@ int remove_file(int clean, const char *path)
 		if (remove_file_from_cache(path))
 			return -1;
 	}
-	if (update_working_directory)
-	{
+	if (update_working_directory) {
 		unlink(path);
 		if (errno != ENOENT || errno != EISDIR)
 			return -1;
@@ -537,11 +537,11 @@ static void flush_buffer(int fd, const char *buf, unsigned long size)
 	}
 }
 
-void update_file_flags(const unsigned char *sha,
-		       unsigned mode,
-		       const char *path,
-		       int update_cache,
-		       int update_wd)
+static void update_file_flags(const unsigned char *sha,
+			      unsigned mode,
+			      const char *path,
+			      int update_cache,
+			      int update_wd)
 {
 	if (index_only)
 		update_wd = 0;
@@ -586,10 +586,10 @@ void update_file_flags(const unsigned char *sha,
 		add_cacheinfo(mode, sha, path, 0, update_wd, ADD_CACHE_OK_TO_ADD);
 }
 
-void update_file(int clean,
-		const unsigned char *sha,
-		unsigned mode,
-		const char *path)
+static void update_file(int clean,
+			const unsigned char *sha,
+			unsigned mode,
+			const char *path)
 {
 	update_file_flags(sha, mode, path, index_only || clean, !index_only);
 }
@@ -724,13 +724,13 @@ static void conflict_rename_rename(struct rename *ren1,
 		dst_name1 = del[delp++] = unique_path(ren1_dst, branch1);
 		output("%s is a directory in %s adding as %s instead",
 		       ren1_dst, branch2, dst_name1);
-		remove_file(0, ren1_dst);
+		remove_file(0, ren1_dst, 0);
 	}
 	if (path_list_has_path(&current_directory_set, ren2_dst)) {
 		dst_name2 = del[delp++] = unique_path(ren2_dst, branch2);
 		output("%s is a directory in %s adding as %s instead",
 		       ren2_dst, branch1, dst_name2);
-		remove_file(0, ren2_dst);
+		remove_file(0, ren2_dst, 0);
 	}
 	update_stages(dst_name1, NULL, ren1->pair->two, NULL, 1);
 	update_stages(dst_name2, NULL, NULL, ren2->pair->two, 1);
@@ -743,7 +743,7 @@ static void conflict_rename_dir(struct rename *ren1,
 {
 	char *new_path = unique_path(ren1->pair->two->path, branch1);
 	output("Renaming %s to %s instead", ren1->pair->one->path, new_path);
-	remove_file(0, ren1->pair->two->path);
+	remove_file(0, ren1->pair->two->path, 0);
 	update_file(0, ren1->pair->two->sha1, ren1->pair->two->mode, new_path);
 	free(new_path);
 }
@@ -758,7 +758,7 @@ static void conflict_rename_rename_2(struct rename *ren1,
 	output("Renaming %s to %s and %s to %s instead",
 	       ren1->pair->one->path, new_path1,
 	       ren2->pair->one->path, new_path2);
-	remove_file(0, ren1->pair->two->path);
+	remove_file(0, ren1->pair->two->path, 0);
 	update_file(0, ren1->pair->two->sha1, ren1->pair->two->mode, new_path1);
 	update_file(0, ren2->pair->two->sha1, ren2->pair->two->mode, new_path2);
 	free(new_path2);
@@ -856,7 +856,7 @@ static int process_renames(struct path_list *a_renames,
 				conflict_rename_rename(ren1, branch1, ren2, branch2);
 			} else {
 				struct merge_file_info mfi;
-				remove_file(1, ren1_src);
+				remove_file(1, ren1_src, 1);
 				mfi = merge_file(ren1->pair->one,
 						 ren1->pair->two,
 						 ren2->pair->two,
@@ -889,7 +889,7 @@ static int process_renames(struct path_list *a_renames,
 			struct diff_filespec src_other, dst_other;
 			int try_merge, stage = a_renames == renames1 ? 3: 2;
 
-			remove_file(1, ren1_src);
+			remove_file(1, ren1_src, 1);
 
 			hashcpy(src_other.sha1, ren1->src_entry->stages[stage].sha);
 			src_other.mode = ren1->src_entry->stages[stage].mode;
@@ -1007,7 +1007,8 @@ static int process_entry(const char *path, struct stage_data *entry,
 			 * unchanged in the other */
 			if (a_sha)
 				output("Removing %s", path);
-			remove_file(1, path);
+			/* do not touch working file if it did not exist */
+			remove_file(1, path, !a_sha);
 		} else {
 			/* Deleted in one and changed in the other */
 			clean_merge = 0;
@@ -1054,7 +1055,7 @@ static int process_entry(const char *path, struct stage_data *entry,
 			output("CONFLICT (%s): There is a directory with name %s in %s. "
 			       "Adding %s as %s",
 			       conf, path, other_branch, path, new_path);
-			remove_file(0, path);
+			remove_file(0, path, 0);
 			update_file(0, sha, mode, new_path);
 		} else {
 			output("Adding %s", path);
@@ -1082,7 +1083,7 @@ static int process_entry(const char *path, struct stage_data *entry,
 			output("CONFLICT (add/add): File %s added non-identically "
 			       "in both branches. Adding as %s and %s instead.",
 			       path, new_path1, new_path2);
-			remove_file(0, path);
+			remove_file(0, path, 0);
 			update_file(0, a_sha, a_mode, new_path1);
 			update_file(0, b_sha, b_mode, new_path2);
 		}
@@ -1204,14 +1205,13 @@ static struct commit_list *reverse_commit_list(struct commit_list *list)
  * Merge the commits h1 and h2, return the resulting virtual
  * commit object and a flag indicating the cleaness of the merge.
  */
-static
-int merge(struct commit *h1,
-			  struct commit *h2,
-			  const char *branch1,
-			  const char *branch2,
-			  int call_depth /* =0 */,
-			  struct commit *ancestor /* =None */,
-			  struct commit **result)
+static int merge(struct commit *h1,
+		 struct commit *h2,
+		 const char *branch1,
+		 const char *branch2,
+		 int call_depth /* =0 */,
+		 struct commit *ancestor /* =None */,
+		 struct commit **result)
 {
 	struct commit_list *ca = NULL, *iter;
 	struct commit *merged_common_ancestors;
diff --git a/t/t1004-read-tree-m-u-wf.sh b/t/t1004-read-tree-m-u-wf.sh
new file mode 100755
index 0000000000..018fbea450
--- /dev/null
+++ b/t/t1004-read-tree-m-u-wf.sh
@@ -0,0 +1,53 @@
+#!/bin/sh
+
+test_description='read-tree -m -u checks working tree files'
+
+. ./test-lib.sh
+
+# two-tree test
+
+test_expect_success 'two-way setup' '
+
+	echo >file1 file one &&
+	echo >file2 file two &&
+	git update-index --add file1 file2 &&
+	git commit -m initial &&
+
+	git branch side &&
+	git tag -f branch-point &&
+
+	echo file2 is not tracked on the master anymore &&
+	rm -f file2 &&
+	git update-index --remove file2 &&
+	git commit -a -m "master removes file2"
+'
+
+test_expect_success 'two-way not clobbering' '
+
+	echo >file2 master creates untracked file2 &&
+	if err=`git read-tree -m -u master side 2>&1`
+	then
+		echo should have complained
+		false
+	else
+		echo "happy to see $err"
+	fi
+'
+
+# three-tree test
+
+test_expect_success 'three-way not complaining' '
+
+	rm -f file2 &&
+	git checkout side &&
+	echo >file3 file three &&
+	git update-index --add file3 &&
+	git commit -a -m "side adds file3" &&
+
+	git checkout master &&
+	echo >file2 file two is untracked on the master side &&
+
+	git-read-tree -m -u branch-point master side
+'
+
+test_done
diff --git a/t/t6022-merge-rename.sh b/t/t6022-merge-rename.sh
index 497ef36ad8..b608e202c1 100755
--- a/t/t6022-merge-rename.sh
+++ b/t/t6022-merge-rename.sh
@@ -42,15 +42,20 @@ O OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO
 EOF
 
 git add A M &&
-git commit -m initial &&
+git commit -m "initial has A and M" &&
 git branch white &&
 git branch red &&
 git branch blue &&
+git branch yellow &&
 
 sed -e "/^g /s/.*/g : master changes a line/" <A >A+ &&
 mv A+ A &&
 git commit -a -m "master updates A" &&
 
+git checkout yellow &&
+rm -f M &&
+git commit -a -m "yellow removes M" &&
+
 git checkout white &&
 sed -e "/^g /s/.*/g : white changes a line/" <A >B &&
 sed -e "/^G /s/.*/G : colored branch changes a line/" <M >N &&
@@ -79,27 +84,27 @@ test_expect_success 'pull renaming branch into unrenaming one' \
 	git show-branch
 	git pull . white && {
 		echo "BAD: should have conflicted"
-		exit 1
+		return 1
 	}
 	git ls-files -s
 	test "$(git ls-files -u B | wc -l)" -eq 3 || {
 		echo "BAD: should have left stages for B"
-		exit 1	
+		return 1
 	}
 	test "$(git ls-files -s N | wc -l)" -eq 1 || {
 		echo "BAD: should have merged N"
-		exit 1	
+		return 1
 	}
 	sed -ne "/^g/{
 	p
 	q
 	}" B | grep master || {
 		echo "BAD: should have listed our change first"
-		exit 1
+		return 1
 	}
 	test "$(git diff white N | wc -l)" -eq 0 || {
 		echo "BAD: should have taken colored branch"
-		exit 1
+		return 1
 	}
 '
 
@@ -110,26 +115,26 @@ test_expect_success 'pull renaming branch into another renaming one' \
 	git checkout red
 	git pull . white && {
 		echo "BAD: should have conflicted"
-		exit 1
+		return 1
 	}
 	test "$(git ls-files -u B | wc -l)" -eq 3 || {
 		echo "BAD: should have left stages"
-		exit 1	
+		return 1
 	}
 	test "$(git ls-files -s N | wc -l)" -eq 1 || {
 		echo "BAD: should have merged N"
-		exit 1	
+		return 1
 	}
 	sed -ne "/^g/{
 	p
 	q
 	}" B | grep red || {
 		echo "BAD: should have listed our change first"
-		exit 1
+		return 1
 	}
 	test "$(git diff white N | wc -l)" -eq 0 || {
 		echo "BAD: should have taken colored branch"
-		exit 1
+		return 1
 	}
 '
 
@@ -139,26 +144,26 @@ test_expect_success 'pull unrenaming branch into renaming one' \
 	git show-branch
 	git pull . master && {
 		echo "BAD: should have conflicted"
-		exit 1
+		return 1
 	}
 	test "$(git ls-files -u B | wc -l)" -eq 3 || {
 		echo "BAD: should have left stages"
-		exit 1	
+		return 1
 	}
 	test "$(git ls-files -s N | wc -l)" -eq 1 || {
 		echo "BAD: should have merged N"
-		exit 1	
+		return 1
 	}
 	sed -ne "/^g/{
 	p
 	q
 	}" B | grep red || {
 		echo "BAD: should have listed our change first"
-		exit 1
+		return 1
 	}
 	test "$(git diff white N | wc -l)" -eq 0 || {
 		echo "BAD: should have taken colored branch"
-		exit 1
+		return 1
 	}
 '
 
@@ -168,35 +173,149 @@ test_expect_success 'pull conflicting renames' \
 	git show-branch
 	git pull . blue && {
 		echo "BAD: should have conflicted"
-		exit 1
+		return 1
 	}
 	test "$(git ls-files -u A | wc -l)" -eq 1 || {
 		echo "BAD: should have left a stage"
-		exit 1	
+		return 1
 	}
 	test "$(git ls-files -u B | wc -l)" -eq 1 || {
 		echo "BAD: should have left a stage"
-		exit 1	
+		return 1
 	}
 	test "$(git ls-files -u C | wc -l)" -eq 1 || {
 		echo "BAD: should have left a stage"
-		exit 1	
+		return 1
 	}
 	test "$(git ls-files -s N | wc -l)" -eq 1 || {
 		echo "BAD: should have merged N"
-		exit 1	
+		return 1
 	}
 	sed -ne "/^g/{
 	p
 	q
 	}" B | grep red || {
 		echo "BAD: should have listed our change first"
-		exit 1
+		return 1
 	}
 	test "$(git diff white N | wc -l)" -eq 0 || {
 		echo "BAD: should have taken colored branch"
-		exit 1
+		return 1
 	}
 '
 
+test_expect_success 'interference with untracked working tree file' '
+
+	git reset --hard
+	git show-branch
+	echo >A this file should not matter
+	git pull . white && {
+		echo "BAD: should have conflicted"
+		return 1
+	}
+	test -f A || {
+		echo "BAD: should have left A intact"
+		return 1
+	}
+'
+
+test_expect_success 'interference with untracked working tree file' '
+
+	git reset --hard
+	git checkout white
+	git show-branch
+	rm -f A
+	echo >A this file should not matter
+	git pull . red && {
+		echo "BAD: should have conflicted"
+		return 1
+	}
+	test -f A || {
+		echo "BAD: should have left A intact"
+		return 1
+	}
+'
+
+test_expect_success 'interference with untracked working tree file' '
+
+	git reset --hard
+	rm -f A M
+	git checkout -f master
+	git tag -f anchor
+	git show-branch
+	git pull . yellow || {
+		echo "BAD: should have cleanly merged"
+		return 1
+	}
+	test -f M && {
+		echo "BAD: should have removed M"
+		return 1
+	}
+	git reset --hard anchor
+'
+
+test_expect_success 'updated working tree file should prevent the merge' '
+
+	git reset --hard
+	rm -f A M
+	git checkout -f master
+	git tag -f anchor
+	git show-branch
+	echo >>M one line addition
+	cat M >M.saved
+	git pull . yellow && {
+		echo "BAD: should have complained"
+		return 1
+	}
+	diff M M.saved || {
+		echo "BAD: should have left M intact"
+		return 1
+	}
+	rm -f M.saved
+'
+
+test_expect_success 'updated working tree file should prevent the merge' '
+
+	git reset --hard
+	rm -f A M
+	git checkout -f master
+	git tag -f anchor
+	git show-branch
+	echo >>M one line addition
+	cat M >M.saved
+	git update-index M
+	git pull . yellow && {
+		echo "BAD: should have complained"
+		return 1
+	}
+	diff M M.saved || {
+		echo "BAD: should have left M intact"
+		return 1
+	}
+	rm -f M.saved
+'
+
+test_expect_success 'interference with untracked working tree file' '
+
+	git reset --hard
+	rm -f A M
+	git checkout -f yellow
+	git tag -f anchor
+	git show-branch
+	echo >M this file should not matter
+	git pull . master || {
+		echo "BAD: should have cleanly merged"
+		return 1
+	}
+	test -f M || {
+		echo "BAD: should have left M intact"
+		return 1
+	}
+	git ls-files -s | grep M && {
+		echo "BAD: M must be untracked in the result"
+		return 1
+	}
+	git reset --hard anchor
+'
+
 test_done
diff --git a/unpack-trees.c b/unpack-trees.c
index 3ac0289b3a..7cfd628d8e 100644
--- a/unpack-trees.c
+++ b/unpack-trees.c
@@ -642,7 +642,7 @@ int threeway_merge(struct cache_entry **stages,
 		    (remote_deleted && head && head_match)) {
 			if (index)
 				return deleted_entry(index, index, o);
-			else if (path)
+			else if (path && !head_deleted)
 				verify_absent(path, "removed", o);
 			return 0;
 		}
@@ -661,8 +661,6 @@ int threeway_merge(struct cache_entry **stages,
 	if (index) {
 		verify_uptodate(index, o);
 	}
-	else if (path)
-		verify_absent(path, "overwritten", o);
 
 	o->nontrivial_merge = 1;