diff --git a/submodule.c b/submodule.c
index 5294cef641..b6dec70bd1 100644
--- a/submodule.c
+++ b/submodule.c
@@ -14,6 +14,15 @@ static struct string_list config_fetch_recurse_submodules_for_name;
 static struct string_list config_ignore_for_name;
 static int config_fetch_recurse_submodules = RECURSE_SUBMODULES_ON_DEMAND;
 static struct string_list changed_submodule_paths;
+/*
+ * The following flag is set if the .gitmodules file is unmerged. We then
+ * disable recursion for all submodules where .git/config doesn't have a
+ * matching config entry because we can't guess what might be configured in
+ * .gitmodules unless the user resolves the conflict. When a command line
+ * option is given (which always overrides configuration) this flag will be
+ * ignored.
+ */
+static int gitmodules_is_unmerged;
 
 static int add_submodule_odb(const char *path)
 {
@@ -63,6 +72,8 @@ void set_diffopt_flags_from_submodule_config(struct diff_options *diffopt,
 		ignore_option = unsorted_string_list_lookup(&config_ignore_for_name, path_option->util);
 		if (ignore_option)
 			handle_ignore_submodules_arg(diffopt, ignore_option->util);
+		else if (gitmodules_is_unmerged)
+			DIFF_OPT_SET(diffopt, IGNORE_SUBMODULES);
 	}
 }
 
@@ -82,9 +93,24 @@ void gitmodules_config(void)
 	const char *work_tree = get_git_work_tree();
 	if (work_tree) {
 		struct strbuf gitmodules_path = STRBUF_INIT;
+		int pos;
 		strbuf_addstr(&gitmodules_path, work_tree);
 		strbuf_addstr(&gitmodules_path, "/.gitmodules");
-		git_config_from_file(submodule_config, gitmodules_path.buf, NULL);
+		if (read_cache() < 0)
+			die("index file corrupt");
+		pos = cache_name_pos(".gitmodules", 11);
+		if (pos < 0) { /* .gitmodules not found or isn't merged */
+			pos = -1 - pos;
+			if (active_nr > pos) {  /* there is a .gitmodules */
+				const struct cache_entry *ce = active_cache[pos];
+				if (ce_namelen(ce) == 11 &&
+				    !memcmp(ce->name, ".gitmodules", 11))
+					gitmodules_is_unmerged = 1;
+			}
+		}
+
+		if (!gitmodules_is_unmerged)
+			git_config_from_file(submodule_config, gitmodules_path.buf, NULL);
 		strbuf_release(&gitmodules_path);
 	}
 }
@@ -434,7 +460,8 @@ int fetch_populated_submodules(int num_options, const char **options,
 					default_argv = "on-demand";
 				}
 			} else {
-				if (config_fetch_recurse_submodules == RECURSE_SUBMODULES_OFF)
+				if ((config_fetch_recurse_submodules == RECURSE_SUBMODULES_OFF) ||
+				    gitmodules_is_unmerged)
 					continue;
 				if (config_fetch_recurse_submodules == RECURSE_SUBMODULES_ON_DEMAND) {
 					if (!unsorted_string_list_lookup(&changed_submodule_paths, ce->name))
diff --git a/t/t7506-status-submodule.sh b/t/t7506-status-submodule.sh
index c2c53441ed..e80e6bb59c 100755
--- a/t/t7506-status-submodule.sh
+++ b/t/t7506-status-submodule.sh
@@ -196,7 +196,7 @@ AA .gitmodules
 A  sub1
 EOF
 
-test_expect_failure 'status with merge conflict in .gitmodules' '
+test_expect_success 'status with merge conflict in .gitmodules' '
 	git clone . super &&
 	test_create_repo_with_commit sub1 &&
 	test_tick &&
@@ -255,7 +255,7 @@ index badaa4c,44f999a..0000000
 ++>>>>>>> add_sub1
 EOF
 
-test_expect_failure 'diff with merge conflict in .gitmodules' '
+test_expect_success 'diff with merge conflict in .gitmodules' '
 	(
 		cd super &&
 		git diff >../diff_actual 2>&1
@@ -263,7 +263,7 @@ test_expect_failure 'diff with merge conflict in .gitmodules' '
 	test_cmp diff_actual diff_expect
 '
 
-test_expect_failure 'diff --submodule with merge conflict in .gitmodules' '
+test_expect_success 'diff --submodule with merge conflict in .gitmodules' '
 	(
 		cd super &&
 		git diff --submodule >../diff_submodule_actual 2>&1