diff --git a/t/t1093-virtualfilesystem.sh b/t/t1093-virtualfilesystem.sh
index cad13d680cb199..27e9f6423e4d9e 100755
--- a/t/t1093-virtualfilesystem.sh
+++ b/t/t1093-virtualfilesystem.sh
@@ -368,6 +368,58 @@ test_expect_success 'folder with same prefix as file' '
 	test_cmp expected actual
 '
 
+test_expect_success 'checkout skips lstat for deleted skip-worktree entries in VFS mode' '
+	# When switching branches, entries present in the old tree but absent
+	# in the new tree go through deleted_entry() -> verify_absent_if_directory().
+	# Without the CE_NEW_SKIP_WORKTREE propagation fix, the tree entry
+	# lacks that flag, so the fast-path fails and verify_absent_1() lstats
+	# the path. If a directory exists where the deleted file entry was
+	# (simulating a worst-case scenario), the lstat finds it and
+	# verify_clean_subdirectory() rejects the checkout due to untracked
+	# content inside.
+	#
+	# With the fix, CE_NEW_SKIP_WORKTREE is propagated and the fast-path
+	# succeeds — no lstat, no rejection, checkout completes.
+	#
+	# Set up two branches: main has dir1/ + dir2/, side has only dir1/
+	clean_repo &&
+
+	git -c core.virtualfilesystem= checkout -b side &&
+	git -c core.virtualfilesystem= rm -rf dir2 &&
+	git -c core.virtualfilesystem= commit -m "remove dir2" &&
+	git -c core.virtualfilesystem= checkout main &&
+
+	# Configure VFS hook that returns nothing (0% hydration)
+	write_script .git/hooks/virtualfilesystem <<-\EOF &&
+		printf ""
+	EOF
+
+	# Create a directory where the deleted file entry is, with
+	# untracked content inside. This would not happen with a real
+	# VFS because the VFS would report the file-to-directory change
+	# in the virtualfilesystem hook results, clearing skip-worktree.
+	# But it lets us verify that the lstat is not called: without
+	# the fix, verify_absent_1() lstats this path, finds a directory,
+	# and verify_clean_subdirectory() rejects the checkout because of
+	# the untracked file inside.
+	rm -f dir2/file1.txt &&
+	mkdir -p dir2/file1.txt &&
+	echo "untracked" >dir2/file1.txt/trap.txt &&
+
+	# Verify all entries are skip-worktree before checkout
+	git ls-files -v >actual &&
+	! grep "^H " actual &&
+
+	# Checkout to side branch. Without the fix this fails because
+	# verify_absent_1 finds untracked content in the directory at
+	# dir2/file1.txt. With the fix the lstat is skipped entirely.
+	git checkout side &&
+
+	# Clean up: return to main so subsequent tests have dir2/
+	rm -rf dir2/file1.txt &&
+	git -c core.virtualfilesystem= checkout main
+'
+
 test_expect_success MINGW,FSMONITOR_DAEMON 'virtualfilesystem hook disables built-in FSMonitor' '
 	clean_repo &&
 	test_config core.usebuiltinfsmonitor true &&
diff --git a/unpack-trees.c b/unpack-trees.c
index 4d897829419a3d..d05c4609defd69 100644
--- a/unpack-trees.c
+++ b/unpack-trees.c
@@ -2720,8 +2720,20 @@ static int deleted_entry(const struct cache_entry *ce,
 		if (verify_absent(ce, ERROR_WOULD_LOSE_UNTRACKED_REMOVED, o))
 			return -1;
 		return 0;
-	} else if (verify_absent_if_directory(ce, ERROR_WOULD_LOSE_UNTRACKED_REMOVED, o)) {
-		return -1;
+	} else {
+		/*
+		 * When core_virtualfilesystem is set, 'ce' may be a tree
+		 * entry from traverse_trees() that lacks CE_NEW_SKIP_WORKTREE
+		 * (only src_index entries get that flag from
+		 * mark_new_skip_worktree()). Propagate it from the index
+		 * entry so verify_absent_if_directory()'s fast-path works,
+		 * avoiding unnecessary lstats on virtualized paths.
+		 */
+		if (core_virtualfilesystem &&
+		    old->ce_flags & CE_NEW_SKIP_WORKTREE)
+			((struct cache_entry *)ce)->ce_flags |= CE_NEW_SKIP_WORKTREE;
+		if (verify_absent_if_directory(ce, ERROR_WOULD_LOSE_UNTRACKED_REMOVED, o))
+			return -1;
 	}
 
 	if (!(old->ce_flags & CE_CONFLICTED) && verify_uptodate(old, o))