die_errno(_("renaming '%s' failed"), src);
                }
                if (submodule_gitfile[i]) {
-                       if (submodule_gitfile[i] != SUBMODULE_WITH_GITDIR)
-                               connect_work_tree_and_git_dir(dst, submodule_gitfile[i]);
                        if (!update_path_in_gitmodules(src, dst))
                                gitmodules_modified = 1;
+                       if (submodule_gitfile[i] != SUBMODULE_WITH_GITDIR)
+                               connect_work_tree_and_git_dir(dst,
+                                                             submodule_gitfile[i],
+                                                             1);
                }
 
                if (mode == WORKING_DIRECTORY)
 
                strbuf_reset(&sb);
        }
 
-       /* Connect module worktree and git dir */
-       connect_work_tree_and_git_dir(path, sm_gitdir);
+       connect_work_tree_and_git_dir(path, sm_gitdir, 0);
 
        p = git_pathdup_submodule(path, "config");
        if (!p)
 
 #include "varint.h"
 #include "ewah/ewok.h"
 #include "fsmonitor.h"
+#include "submodule-config.h"
 
 /*
  * Tells read_directory_recursive how a file or directory should be treated.
        untracked_cache_invalidate_path(istate, path);
 }
 
-/* Update gitfile and core.worktree setting to connect work tree and git dir */
-void connect_work_tree_and_git_dir(const char *work_tree_, const char *git_dir_)
+static void connect_wt_gitdir_in_nested(const char *sub_worktree,
+                                       const char *sub_gitdir)
+{
+       int i;
+       struct repository subrepo;
+       struct strbuf sub_wt = STRBUF_INIT;
+       struct strbuf sub_gd = STRBUF_INIT;
+
+       const struct submodule *sub;
+
+       /* If the submodule has no working tree, we can ignore it. */
+       if (repo_init(&subrepo, sub_gitdir, sub_worktree))
+               return;
+
+       if (repo_read_index(&subrepo) < 0)
+               die("index file corrupt in repo %s", subrepo.gitdir);
+
+       for (i = 0; i < subrepo.index->cache_nr; i++) {
+               const struct cache_entry *ce = subrepo.index->cache[i];
+
+               if (!S_ISGITLINK(ce->ce_mode))
+                       continue;
+
+               while (i + 1 < subrepo.index->cache_nr &&
+                      !strcmp(ce->name, subrepo.index->cache[i + 1]->name))
+                       /*
+                        * Skip entries with the same name in different stages
+                        * to make sure an entry is returned only once.
+                        */
+                       i++;
+
+               sub = submodule_from_path(&subrepo, &null_oid, ce->name);
+               if (!sub || !is_submodule_active(&subrepo, ce->name))
+                       /* .gitmodules broken or inactive sub */
+                       continue;
+
+               strbuf_reset(&sub_wt);
+               strbuf_reset(&sub_gd);
+               strbuf_addf(&sub_wt, "%s/%s", sub_worktree, sub->path);
+               strbuf_addf(&sub_gd, "%s/modules/%s", sub_gitdir, sub->name);
+
+               connect_work_tree_and_git_dir(sub_wt.buf, sub_gd.buf, 1);
+       }
+       strbuf_release(&sub_wt);
+       strbuf_release(&sub_gd);
+       repo_clear(&subrepo);
+}
+
+void connect_work_tree_and_git_dir(const char *work_tree_,
+                                  const char *git_dir_,
+                                  int recurse_into_nested)
 {
        struct strbuf gitfile_sb = STRBUF_INIT;
        struct strbuf cfg_sb = STRBUF_INIT;
        strbuf_release(&gitfile_sb);
        strbuf_release(&cfg_sb);
        strbuf_release(&rel_path);
+
+       if (recurse_into_nested)
+               connect_wt_gitdir_in_nested(work_tree, git_dir);
+
        free(work_tree);
        free(git_dir);
 }
                die_errno(_("could not migrate git directory from '%s' to '%s'"),
                        old_git_dir, new_git_dir);
 
-       connect_work_tree_and_git_dir(path, new_git_dir);
+       connect_work_tree_and_git_dir(path, new_git_dir, 0);
 }
 
 void write_untracked_extension(struct strbuf *out, struct untracked_cache *untracked);
 void add_untracked_cache(struct index_state *istate);
 void remove_untracked_cache(struct index_state *istate);
-extern void connect_work_tree_and_git_dir(const char *work_tree, const char *git_dir);
+
+/*
+ * Connect a worktree to a git directory by creating (or overwriting) a
+ * '.git' file containing the location of the git directory. In the git
+ * directory set the core.worktree setting to indicate where the worktree is.
+ * When `recurse_into_nested` is set, recurse into any nested submodules,
+ * connecting them as well.
+ */
+extern void connect_work_tree_and_git_dir(const char *work_tree,
+                                         const char *git_dir,
+                                         int recurse_into_nested);
 extern void relocate_gitdir(const char *path,
                            const char *old_git_dir,
                            const char *new_git_dir);
 
  * Initialize 'repo' based on the provided 'gitdir'.
  * Return 0 upon success and a non-zero value upon failure.
  */
-static int repo_init(struct repository *repo,
-                    const char *gitdir,
-                    const char *worktree)
+int repo_init(struct repository *repo,
+             const char *gitdir,
+             const char *worktree)
 {
        struct repository_format format;
        memset(repo, 0, sizeof(*repo));
 
 extern void repo_set_worktree(struct repository *repo, const char *path);
 extern void repo_set_hash_algo(struct repository *repo, int algo);
 extern void initialize_the_repository(void);
+extern int repo_init(struct repository *r,
+                    const char *gitdir,
+                    const char *worktree);
 extern int repo_submodule_init(struct repository *submodule,
                               struct repository *superproject,
                               const char *path);
 
                } else {
                        char *gitdir = xstrfmt("%s/modules/%s",
                                    get_git_common_dir(), sub->name);
-                       connect_work_tree_and_git_dir(path, gitdir);
+                       connect_work_tree_and_git_dir(path, gitdir, 0);
                        free(gitdir);
 
                        /* make sure the index is clean as well */
                if (old && (flags & SUBMODULE_MOVE_HEAD_FORCE)) {
                        char *gitdir = xstrfmt("%s/modules/%s",
                                    get_git_common_dir(), sub->name);
-                       connect_work_tree_and_git_dir(path, gitdir);
+                       connect_work_tree_and_git_dir(path, gitdir, 1);
                        free(gitdir);
                }
        }
                if (!sub)
                        die(_("could not lookup name for submodule '%s'"), path);
                connect_work_tree_and_git_dir(path,
-                       git_path("modules/%s", sub->name));
+                       git_path("modules/%s", sub->name), 0);
        } else {
                /* Is it already absorbed into the superprojects git dir? */
                char *real_sub_git_dir = real_pathdup(sub_git_dir, 1);
 
        test_cmp expect actual
 '
 
-test_expect_failure 'moving nested submodules' '
+test_expect_success 'moving nested submodules' '
        git commit -am "cleanup commit" &&
        mkdir sub_nested_nested &&
        (cd sub_nested_nested &&