diff --git a/diff-lib.c b/diff-lib.c
index ad5b6cac7b..2a82dac101 100644
--- a/diff-lib.c
+++ b/diff-lib.c
@@ -308,22 +308,6 @@ static int show_modified(struct rev_info *revs,
 	return 0;
 }
 
-/*
- * This turns all merge entries into "stage 3". That guarantees that
- * when we read in the new tree (into "stage 1"), we won't lose sight
- * of the fact that we had unmerged entries.
- */
-static void mark_merge_entries(void)
-{
-	int i;
-	for (i = 0; i < active_nr; i++) {
-		struct cache_entry *ce = active_cache[i];
-		if (!ce_stage(ce))
-			continue;
-		ce->ce_flags |= CE_STAGEMASK;
-	}
-}
-
 /*
  * This gets a mix of an existing index and a tree, one pathname entry
  * at a time. The index entry may be a single stage-0 one, but it could
@@ -435,8 +419,6 @@ int run_diff_index(struct rev_info *revs, int cached)
 	struct unpack_trees_options opts;
 	struct tree_desc t;
 
-	mark_merge_entries();
-
 	ent = revs->pending.objects[0].item;
 	tree_name = revs->pending.objects[0].name;
 	tree = parse_tree_indirect(ent->sha1);