diff --git a/Documentation/git-read-tree.txt b/Documentation/git-read-tree.txt
index 5fa8bab64c2..0222a27c5af 100644
--- a/Documentation/git-read-tree.txt
+++ b/Documentation/git-read-tree.txt
@@ -10,8 +10,7 @@ SYNOPSIS
 --------
 [verse]
 'git read-tree' [[-m [--trivial] [--aggressive] | --reset | --prefix=<prefix>]
-		[-u [--exclude-per-directory=<gitignore>] | -i]]
-		[--index-output=<file>] [--no-sparse-checkout]
+		[-u | -i]] [--index-output=<file>] [--no-sparse-checkout]
 		(--empty | <tree-ish1> [<tree-ish2> [<tree-ish3>]])
 
 
@@ -88,21 +87,6 @@ OPTIONS
 	The command will refuse to overwrite entries that already
 	existed in the original index file.
 
---exclude-per-directory=<gitignore>::
-	When running the command with `-u` and `-m` options, the
-	merge result may need to overwrite paths that are not
-	tracked in the current branch.  The command usually
-	refuses to proceed with the merge to avoid losing such a
-	path.  However this safety valve sometimes gets in the
-	way.  For example, it often happens that the other
-	branch added a file that used to be a generated file in
-	your branch, and the safety valve triggers when you try
-	to switch to that branch after you ran `make` but before
-	running `make clean` to remove the generated file.  This
-	option tells the command to read per-directory exclude
-	file (usually '.gitignore') and allows such an untracked
-	but explicitly ignored file to be overwritten.
-
 --index-output=<file>::
 	Instead of writing the results out to `$GIT_INDEX_FILE`,
 	write the resulting index in the named file.  While the
diff --git a/builtin/read-tree.c b/builtin/read-tree.c
index 96102c222bf..73cb957a69b 100644
--- a/builtin/read-tree.c
+++ b/builtin/read-tree.c
@@ -38,7 +38,7 @@ static int list_tree(struct object_id *oid)
 }
 
 static const char * const read_tree_usage[] = {
-	N_("git read-tree [(-m [--trivial] [--aggressive] | --reset | --prefix=<prefix>) [-u [--exclude-per-directory=<gitignore>] | -i]] [--no-sparse-checkout] [--index-output=<file>] (--empty | <tree-ish1> [<tree-ish2> [<tree-ish3>]])"),
+	N_("git read-tree [(-m [--trivial] [--aggressive] | --reset | --prefix=<prefix>) [-u | -i]] [--no-sparse-checkout] [--index-output=<file>] (--empty | <tree-ish1> [<tree-ish2> [<tree-ish3>]])"),
 	NULL
 };
 
@@ -53,24 +53,16 @@ static int index_output_cb(const struct option *opt, const char *arg,
 static int exclude_per_directory_cb(const struct option *opt, const char *arg,
 				    int unset)
 {
-	struct dir_struct *dir;
 	struct unpack_trees_options *opts;
 
 	BUG_ON_OPT_NEG(unset);
 
 	opts = (struct unpack_trees_options *)opt->value;
 
-	if (opts->dir)
-		die("more than one --exclude-per-directory given.");
-
-	dir = xcalloc(1, sizeof(*opts->dir));
-	dir->flags |= DIR_SHOW_IGNORED;
-	dir->exclude_per_dir = arg;
-	opts->dir = dir;
-	/* We do not need to nor want to do read-directory
-	 * here; we are merely interested in reusing the
-	 * per directory ignore stack mechanism.
-	 */
+	if (!opts->update)
+		die("--exclude-per-directory is meaningless unless -u");
+	if (strcmp(arg, ".gitignore"))
+		die("--exclude-per-directory argument must be .gitignore");
 	return 0;
 }
 
@@ -209,8 +201,11 @@ int cmd_read_tree(int argc, const char **argv, const char *cmd_prefix)
 	if ((opts.update || opts.index_only) && !opts.merge)
 		die("%s is meaningless without -m, --reset, or --prefix",
 		    opts.update ? "-u" : "-i");
-	if ((opts.dir && !opts.update))
-		die("--exclude-per-directory is meaningless unless -u");
+	if (opts.update && !opts.reset) {
+		CALLOC_ARRAY(opts.dir, 1);
+		opts.dir->flags |= DIR_SHOW_IGNORED;
+		setup_standard_excludes(opts.dir);
+	}
 	if (opts.merge && !opts.index_only)
 		setup_work_tree();
 
diff --git a/merge-recursive.c b/merge-recursive.c
index e594d4c3fa1..233d9f686ad 100644
--- a/merge-recursive.c
+++ b/merge-recursive.c
@@ -408,8 +408,13 @@ static int unpack_trees_start(struct merge_options *opt,
 	memset(&opt->priv->unpack_opts, 0, sizeof(opt->priv->unpack_opts));
 	if (opt->priv->call_depth)
 		opt->priv->unpack_opts.index_only = 1;
-	else
+	else {
 		opt->priv->unpack_opts.update = 1;
+		/* FIXME: should only do this if !overwrite_ignore */
+		CALLOC_ARRAY(opt->priv->unpack_opts.dir, 1);
+		opt->priv->unpack_opts.dir->flags |= DIR_SHOW_IGNORED;
+		setup_standard_excludes(opt->priv->unpack_opts.dir);
+	}
 	opt->priv->unpack_opts.merge = 1;
 	opt->priv->unpack_opts.head_idx = 2;
 	opt->priv->unpack_opts.fn = threeway_merge;
@@ -423,6 +428,10 @@ static int unpack_trees_start(struct merge_options *opt,
 	init_tree_desc_from_tree(t+2, merge);
 
 	rc = unpack_trees(3, t, &opt->priv->unpack_opts);
+	if (opt->priv->unpack_opts.dir) {
+		dir_clear(opt->priv->unpack_opts.dir);
+		FREE_AND_NULL(opt->priv->unpack_opts.dir);
+	}
 	cache_tree_free(&opt->repo->index->cache_tree);
 
 	/*
diff --git a/t/t1013-read-tree-submodule.sh b/t/t1013-read-tree-submodule.sh
index b6df7444c05..bfc90d4cf27 100755
--- a/t/t1013-read-tree-submodule.sh
+++ b/t/t1013-read-tree-submodule.sh
@@ -6,7 +6,6 @@ test_description='read-tree can handle submodules'
 . "$TEST_DIRECTORY"/lib-submodule-update.sh
 
 KNOWN_FAILURE_DIRECTORY_SUBMODULE_CONFLICTS=1
-KNOWN_FAILURE_SUBMODULE_OVERWRITE_IGNORED_UNTRACKED=1
 
 test_submodule_switch_recursing_with_args "read-tree -u -m"
 
