diff --git a/git-submodule.sh b/git-submodule.sh
index 3d94a1407..61f3b72e3 100755
--- a/git-submodule.sh
+++ b/git-submodule.sh
@@ -149,8 +149,10 @@ module_clone()
 		die "$(eval_gettext "Clone of '\$url' into submodule path '\$path' failed")"
 	fi
 
-	a=$(cd "$gitdir" && pwd)/
-	b=$(cd "$path" && pwd)/
+	# We already are at the root of the work tree but cd_to_toplevel will
+	# resolve any symlinks that might be present in $PWD
+	a=$(cd_to_toplevel && cd "$gitdir" && pwd)/
+	b=$(cd_to_toplevel && cd "$path" && pwd)/
 	# normalize Windows-style absolute paths to POSIX-style absolute paths
 	case $a in [a-zA-Z]:/*) a=/${a%%:*}${a#*:} ;; esac
 	case $b in [a-zA-Z]:/*) b=/${b%%:*}${b#*:} ;; esac
diff --git a/t/t7406-submodule-update.sh b/t/t7406-submodule-update.sh
index dcb195b4c..ce61d4c0f 100755
--- a/t/t7406-submodule-update.sh
+++ b/t/t7406-submodule-update.sh
@@ -636,4 +636,17 @@ test_expect_success 'submodule update properly revives a moved submodule' '
 	)
 '
 
+test_expect_success SYMLINKS 'submodule update can handle symbolic links in pwd' '
+	mkdir -p linked/dir &&
+	ln -s linked/dir linkto &&
+	(
+		cd linkto &&
+		git clone "$TRASH_DIRECTORY"/super_update_r2 super &&
+		(
+			cd super &&
+			git submodule update --init --recursive
+		)
+	)
+'
+
 test_done