diff --git a/t/lib-read-tree.sh b/t/lib-read-tree.sh
index abc2c6f57f..ef079afc46 100644
--- a/t/lib-read-tree.sh
+++ b/t/lib-read-tree.sh
@@ -5,39 +5,39 @@
 # write the index and that together with -u it doesn't touch the work tree.
 #
 read_tree_must_succeed () {
-    git ls-files -s >pre-dry-run &&
-    git read-tree -n "$@" &&
-    git ls-files -s >post-dry-run &&
-    test_cmp pre-dry-run post-dry-run &&
-    git read-tree "$@"
+	git ls-files -s >pre-dry-run &&
+	git read-tree -n "$@" &&
+	git ls-files -s >post-dry-run &&
+	test_cmp pre-dry-run post-dry-run &&
+	git read-tree "$@"
 }
 
 read_tree_must_fail () {
-    git ls-files -s >pre-dry-run &&
-    test_must_fail git read-tree -n "$@" &&
-    git ls-files -s >post-dry-run &&
-    test_cmp pre-dry-run post-dry-run &&
-    test_must_fail git read-tree "$@"
+	git ls-files -s >pre-dry-run &&
+	test_must_fail git read-tree -n "$@" &&
+	git ls-files -s >post-dry-run &&
+	test_cmp pre-dry-run post-dry-run &&
+	test_must_fail git read-tree "$@"
 }
 
 read_tree_u_must_succeed () {
-    git ls-files -s >pre-dry-run &&
-    git diff-files -p >pre-dry-run-wt &&
-    git read-tree -n "$@" &&
-    git ls-files -s >post-dry-run &&
-    git diff-files -p >post-dry-run-wt &&
-    test_cmp pre-dry-run post-dry-run &&
-    test_cmp pre-dry-run-wt post-dry-run-wt &&
-    git read-tree "$@"
+	git ls-files -s >pre-dry-run &&
+	git diff-files -p >pre-dry-run-wt &&
+	git read-tree -n "$@" &&
+	git ls-files -s >post-dry-run &&
+	git diff-files -p >post-dry-run-wt &&
+	test_cmp pre-dry-run post-dry-run &&
+	test_cmp pre-dry-run-wt post-dry-run-wt &&
+	git read-tree "$@"
 }
 
 read_tree_u_must_fail () {
-    git ls-files -s >pre-dry-run &&
-    git diff-files -p >pre-dry-run-wt &&
-    test_must_fail git read-tree -n "$@" &&
-    git ls-files -s >post-dry-run &&
-    git diff-files -p >post-dry-run-wt &&
-    test_cmp pre-dry-run post-dry-run &&
-    test_cmp pre-dry-run-wt post-dry-run-wt &&
-    test_must_fail git read-tree "$@"
+	git ls-files -s >pre-dry-run &&
+	git diff-files -p >pre-dry-run-wt &&
+	test_must_fail git read-tree -n "$@" &&
+	git ls-files -s >post-dry-run &&
+	git diff-files -p >post-dry-run-wt &&
+	test_cmp pre-dry-run post-dry-run &&
+	test_cmp pre-dry-run-wt post-dry-run-wt &&
+	test_must_fail git read-tree "$@"
 }
diff --git a/t/t1005-read-tree-reset.sh b/t/t1005-read-tree-reset.sh
index f53de79e56..074568500a 100755
--- a/t/t1005-read-tree-reset.sh
+++ b/t/t1005-read-tree-reset.sh
@@ -8,84 +8,99 @@ test_description='read-tree -u --reset'
 # two-tree test
 
 test_expect_success 'setup' '
-  git init &&
-  mkdir df &&
-  echo content >df/file &&
-  git add df/file &&
-  git commit -m one &&
-  git ls-files >expect &&
-  rm -rf df &&
-  echo content >df &&
-  git add df &&
-  echo content >new &&
-  git add new &&
-  git commit -m two
+	git init &&
+	mkdir df &&
+	echo content >df/file &&
+	git add df/file &&
+	git commit -m one &&
+	git ls-files >expect &&
+	rm -rf df &&
+	echo content >df &&
+	git add df &&
+	echo content >new &&
+	git add new &&
+	git commit -m two
 '
 
 test_expect_success 'reset should work' '
-  read_tree_u_must_succeed -u --reset HEAD^ &&
-  git ls-files >actual &&
-  test_cmp expect actual
+	read_tree_u_must_succeed -u --reset HEAD^ &&
+	git ls-files >actual &&
+	test_cmp expect actual
 '
 
 test_expect_success 'reset should remove remnants from a failed merge' '
-  read_tree_u_must_succeed --reset -u HEAD &&
-  git ls-files -s >expect &&
-  sha1=$(git rev-parse :new) &&
-  (
-	echo "100644 $sha1 1	old"
-	echo "100644 $sha1 3	old"
-  ) | git update-index --index-info &&
-  >old &&
-  git ls-files -s &&
-  read_tree_u_must_succeed --reset -u HEAD &&
-  git ls-files -s >actual &&
-  ! test -f old
+	read_tree_u_must_succeed --reset -u HEAD &&
+	git ls-files -s >expect &&
+	sha1=$(git rev-parse :new) &&
+	(
+		echo "100644 $sha1 1	old"
+		echo "100644 $sha1 3	old"
+	) | git update-index --index-info &&
+	>old &&
+	git ls-files -s &&
+	read_tree_u_must_succeed --reset -u HEAD &&
+	git ls-files -s >actual &&
+	! test -f old
+'
+
+test_expect_success 'two-way reset should remove remnants too' '
+	read_tree_u_must_succeed --reset -u HEAD &&
+	git ls-files -s >expect &&
+	sha1=$(git rev-parse :new) &&
+	(
+		echo "100644 $sha1 1	old"
+		echo "100644 $sha1 3	old"
+	) | git update-index --index-info &&
+	>old &&
+	git ls-files -s &&
+	read_tree_u_must_succeed --reset -u HEAD HEAD &&
+	git ls-files -s >actual &&
+	! test -f old
 '
 
 test_expect_success 'Porcelain reset should remove remnants too' '
-  read_tree_u_must_succeed --reset -u HEAD &&
-  git ls-files -s >expect &&
-  sha1=$(git rev-parse :new) &&
-  (
-	echo "100644 $sha1 1	old"
-	echo "100644 $sha1 3	old"
-  ) | git update-index --index-info &&
-  >old &&
-  git ls-files -s &&
-  git reset --hard &&
-  git ls-files -s >actual &&
-  ! test -f old
+	read_tree_u_must_succeed --reset -u HEAD &&
+	git ls-files -s >expect &&
+	sha1=$(git rev-parse :new) &&
+	(
+		echo "100644 $sha1 1	old"
+		echo "100644 $sha1 3	old"
+	) | git update-index --index-info &&
+	>old &&
+	git ls-files -s &&
+	git reset --hard &&
+	git ls-files -s >actual &&
+	! test -f old
 '
 
 test_expect_success 'Porcelain checkout -f should remove remnants too' '
-  read_tree_u_must_succeed --reset -u HEAD &&
-  git ls-files -s >expect &&
-  sha1=$(git rev-parse :new) &&
-  (
-	echo "100644 $sha1 1	old"
-	echo "100644 $sha1 3	old"
-  ) | git update-index --index-info &&
-  >old &&
-  git ls-files -s &&
-  git checkout -f &&
-  git ls-files -s >actual &&
-  ! test -f old
+	read_tree_u_must_succeed --reset -u HEAD &&
+	git ls-files -s >expect &&
+	sha1=$(git rev-parse :new) &&
+	(
+		echo "100644 $sha1 1	old"
+		echo "100644 $sha1 3	old"
+	) | git update-index --index-info &&
+	>old &&
+	git ls-files -s &&
+	git checkout -f &&
+	git ls-files -s >actual &&
+	! test -f old
 '
 
 test_expect_success 'Porcelain checkout -f HEAD should remove remnants too' '
-  read_tree_u_must_succeed --reset -u HEAD &&
-  git ls-files -s >expect &&
-  sha1=$(git rev-parse :new) &&
-  (
-	echo "100644 $sha1 1	old"
-	echo "100644 $sha1 3	old"
-  ) | git update-index --index-info &&
-  >old &&
-  git ls-files -s &&
-  git checkout -f HEAD &&
-  git ls-files -s >actual &&
-  ! test -f old
+	read_tree_u_must_succeed --reset -u HEAD &&
+	git ls-files -s >expect &&
+	sha1=$(git rev-parse :new) &&
+	(
+		echo "100644 $sha1 1	old"
+		echo "100644 $sha1 3	old"
+	) | git update-index --index-info &&
+	>old &&
+	git ls-files -s &&
+	git checkout -f HEAD &&
+	git ls-files -s >actual &&
+	! test -f old
 '
 
 test_done
diff --git a/unpack-trees.c b/unpack-trees.c
index 35cb05e92b..ad3e9a04fe 100644
--- a/unpack-trees.c
+++ b/unpack-trees.c
@@ -1763,14 +1763,23 @@ int twoway_merge(const struct cache_entry * const *src,
 		newtree = NULL;
 
 	if (current) {
-		if ((!oldtree && !newtree) || /* 4 and 5 */
-		    (!oldtree && newtree &&
-		     same(current, newtree)) || /* 6 and 7 */
-		    (oldtree && newtree &&
-		     same(oldtree, newtree)) || /* 14 and 15 */
-		    (oldtree && newtree &&
-		     !same(oldtree, newtree) && /* 18 and 19 */
-		     same(current, newtree))) {
+		if (current->ce_flags & CE_CONFLICTED) {
+			if (same(oldtree, newtree) || o->reset) {
+				if (!newtree)
+					return deleted_entry(current, current, o);
+				else
+					return merged_entry(newtree, current, o);
+			}
+			return o->gently ? -1 : reject_merge(current, o);
+		}
+		else if ((!oldtree && !newtree) || /* 4 and 5 */
+			 (!oldtree && newtree &&
+			  same(current, newtree)) || /* 6 and 7 */
+			 (oldtree && newtree &&
+			  same(oldtree, newtree)) || /* 14 and 15 */
+			 (oldtree && newtree &&
+			  !same(oldtree, newtree) && /* 18 and 19 */
+			  same(current, newtree))) {
 			return keep_entry(current, o);
 		}
 		else if (oldtree && !newtree && same(current, oldtree)) {