diff --git a/go.mod b/go.mod
index 7551d2918..16d3e13d6 100644
--- a/go.mod
+++ b/go.mod
@@ -29,7 +29,7 @@ require (
 	github.com/fluxcd/pkg/artifact v0.28.0
 	github.com/fluxcd/pkg/auth v0.66.0
 	github.com/fluxcd/pkg/cache v0.19.0
-	github.com/fluxcd/pkg/git v0.56.0
+	github.com/fluxcd/pkg/git v0.56.1-0.20261028083428-324a184807b0
 	github.com/fluxcd/pkg/gittestserver v0.33.0
 	github.com/fluxcd/pkg/helmtestserver v0.45.0
 	github.com/fluxcd/pkg/http/transport v0.9.0
diff --git a/go.sum b/go.sum
index c54d75d7d..40ad5cbe5 100644
--- a/go.sum
+++ b/go.sum
@@ -375,8 +375,8 @@ github.com/fluxcd/pkg/auth v0.66.0 h1:fNS6cf1WOVxVCdEKfCfDgbEgk2t3kzepaI1IKuiXuY
 github.com/fluxcd/pkg/auth v0.66.0/go.mod h1:eD0iXDzt4BCHVNoBoDkYCsD3+LD39WN/r1qaqsgPJWk=
 github.com/fluxcd/pkg/cache v0.19.0 h1:gcpASwfXLkaHTq8dv9AkXD+IvD54IfskRwGv3SDwC+E=
 github.com/fluxcd/pkg/cache v0.19.0/go.mod h1:HYfYegfUsGBIttmTDZDFa0xmbeba4wPyND1YKitXm0w=
-github.com/fluxcd/pkg/git v0.56.0 h1:DYsgOthnW0FtHAeosvJYQGCa/5PTbWwnDZdML7wt4YI=
-github.com/fluxcd/pkg/git v0.56.0/go.mod h1:C3dgIpk8DXkgAE3tjxzkg/d4f+8DqY6GXmWbEpTBTT4=
+github.com/fluxcd/pkg/git v0.56.1-0.20261028083428-324a184807b0 h1:7B7sAbfYZwRSjWk+c/IY2Yc1TsTBwIycnHUSVEzrVPk=
+github.com/fluxcd/pkg/git v0.56.1-0.20261028083428-324a184807b0/go.mod h1:C3dgIpk8DXkgAE3tjxzkg/d4f+8DqY6GXmWbEpTBTT4=
 github.com/fluxcd/pkg/gittestserver v0.33.0 h1:/MKs5Yf3w4BR91fJ4hH6W3E+saQYPDB3toViyDpQXpA=
 github.com/fluxcd/pkg/gittestserver v0.33.0/go.mod h1:l6PPC/CuAbHn1YHniEulzbU/UWuHHQQegJmWzuz/sz0=
 github.com/fluxcd/pkg/helmtestserver v0.45.0 h1:erSSj767Z3+LX1oq8Fuu1ybO1da0alg4PiIKW43yc3I=
diff --git a/internal/controller/gitrepository_symlink_test.go b/internal/controller/gitrepository_symlink_test.go
new file mode 100644
index 000000000..7d991c760
--- /dev/null
+++ b/internal/controller/gitrepository_symlink_test.go
@@ -0,0 +1,233 @@
+/*
+Copyright 2026 The Flux authors
+
+Licensed under the Apache License, Version 2.0 (the "License");
+you may not use this file except in compliance with the License.
+You may obtain a copy of the License at
+
+    http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing, software
+distributed under the License is distributed on an "AS IS" BASIS,
+WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+See the License for the specific language governing permissions and
+limitations under the License.
+*/
+
+package controller
+
+import (
+	"context"
+	"io/fs"
+	"os"
+	"path/filepath"
+	"sort"
+	"strings"
+	"testing"
+	"time"
+
+	gogit "github.com/go-git/go-git/v5"
+	"github.com/go-git/go-git/v5/plumbing"
+	"github.com/go-git/go-git/v5/plumbing/filemode"
+	"github.com/go-git/go-git/v5/plumbing/object"
+	"github.com/go-git/go-git/v5/plumbing/storer"
+	. "github.com/onsi/gomega"
+	metav1 "k8s.io/apimachinery/pkg/apis/meta/v1"
+	fakeclient "sigs.k8s.io/controller-runtime/pkg/client/fake"
+
+	"github.com/fluxcd/pkg/git"
+	"github.com/fluxcd/pkg/gittestserver"
+	"github.com/fluxcd/pkg/runtime/events"
+	"github.com/fluxcd/pkg/runtime/patch"
+
+	sourcev1 "github.com/fluxcd/source-controller/api/v1"
+	sreconcile "github.com/fluxcd/source-controller/internal/reconcile"
+)
+
+// treeEntry is a file, or a symlink when link is set.
+type treeEntry struct {
+	content string
+	link    string
+}
+
+func TestGitRepositoryReconciler_reconcileSource_commitRemovesSymlink(t *testing.T) {
+	tests := []struct {
+		name   string
+		head   map[string]treeEntry
+		commit map[string]treeEntry
+	}{
+		{
+			// https://github.com/fluxcd/source-controller/issues/1921
+			name: "symlink deleted, target kept",
+			head: map[string]treeEntry{
+				"target.txt": {content: "target"},
+				"link.txt":   {link: "target.txt"},
+			},
+			commit: map[string]treeEntry{
+				"target.txt": {content: "target"},
+			},
+		},
+		{
+			name: "symlink replaced by file whose target is deleted",
+			head: map[string]treeEntry{
+				"deploy/_stacks/config.yaml": {content: "v2"},
+				"deploy/app/config.yaml":     {link: "../_stacks/config.yaml"},
+			},
+			commit: map[string]treeEntry{
+				"deploy/app/config.yaml": {content: "v1"},
+			},
+		},
+		{
+			name: "symlink to .git/config deleted",
+			head: map[string]treeEntry{
+				"app.yaml": {content: "app"},
+				"git.yaml": {link: ".git/config"},
+			},
+			commit: map[string]treeEntry{
+				"app.yaml": {content: "app"},
+			},
+		},
+	}
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			g := NewWithT(t)
+
+			server, err := gittestserver.NewTempGitServer()
+			g.Expect(err).NotTo(HaveOccurred())
+			defer os.RemoveAll(server.Root())
+			g.Expect(server.InitRepo("testdata/git/repository", git.DefaultBranch, "test.git")).To(Succeed())
+			g.Expect(server.StartHTTP()).To(Succeed())
+			defer server.StopHTTP()
+
+			remote, err := gogit.PlainOpen(filepath.Join(server.Root(), "test.git"))
+			g.Expect(err).NotTo(HaveOccurred())
+			setBranch(g, remote.Storer, git.DefaultBranch, tt.head)
+			commit := setBranch(g, remote.Storer, "commit", tt.commit)
+
+			obj := &sourcev1.GitRepository{
+				ObjectMeta: metav1.ObjectMeta{
+					GenerateName: "symlink-",
+					Generation:   1,
+				},
+				Spec: sourcev1.GitRepositorySpec{
+					Interval:  metav1.Duration{Duration: interval},
+					Timeout:   &metav1.Duration{Duration: timeout},
+					URL:       server.HTTPAddress() + "/test.git",
+					Reference: &sourcev1.GitRepositoryRef{Commit: commit.String()},
+				},
+			}
+
+			r := &GitRepositoryReconciler{
+				Client: fakeclient.NewClientBuilder().
+					WithScheme(testEnv.GetScheme()).
+					WithStatusSubresource(&sourcev1.GitRepository{}).
+					Build(),
+				Recorder:     events.NewFakeRecorder(32, false),
+				Storage:      testStorage,
+				patchOptions: getPatchOptions(gitRepositoryReadyCondition.Owned, "sc"),
+			}
+			g.Expect(r.Client.Create(context.TODO(), obj)).To(Succeed())
+			defer func() {
+				g.Expect(r.Client.Delete(context.TODO(), obj)).To(Succeed())
+			}()
+
+			dir := t.TempDir()
+			var c git.Commit
+			var includes artifactSet
+			sp := patch.NewSerialPatcher(obj, r.Client)
+			got, err := r.reconcileSource(context.TODO(), sp, obj, &c, &includes, dir)
+			g.Expect(err).NotTo(HaveOccurred())
+			g.Expect(got).To(Equal(sreconcile.ResultSuccess))
+			g.Expect(c.Hash.String()).To(Equal(commit.String()))
+
+			dir, err = filepath.EvalSymlinks(dir)
+			g.Expect(err).NotTo(HaveOccurred())
+			g.Expect(filepath.Join(dir, ".git", "config")).To(BeARegularFile())
+			g.Expect(readTree(g, dir)).To(Equal(tt.commit))
+		})
+	}
+}
+
+func readTree(g *WithT, dir string) map[string]treeEntry {
+	got := map[string]treeEntry{}
+	err := filepath.WalkDir(dir, func(p string, d fs.DirEntry, err error) error {
+		if err != nil {
+			return err
+		}
+		rel, err := filepath.Rel(dir, p)
+		if err != nil {
+			return err
+		}
+		if rel == ".git" {
+			return filepath.SkipDir
+		}
+		if d.IsDir() {
+			return nil
+		}
+		if d.Type()&fs.ModeSymlink != 0 {
+			target, err := os.Readlink(p)
+			if err != nil {
+				return err
+			}
+			got[filepath.ToSlash(rel)] = treeEntry{link: target}
+			return nil
+		}
+		b, err := os.ReadFile(p)
+		if err != nil {
+			return err
+		}
+		got[filepath.ToSlash(rel)] = treeEntry{content: string(b)}
+		return nil
+	})
+	g.Expect(err).NotTo(HaveOccurred())
+	return got
+}
+
+func setBranch(g *WithT, st storer.Storer, branch string, tree map[string]treeEntry) plumbing.Hash {
+	sig := object.Signature{Name: "test", Email: "test@example.com", When: time.Now()}
+	commit := &object.Commit{Author: sig, Committer: sig, Message: branch, TreeHash: writeTree(g, st, tree)}
+	obj := st.NewEncodedObject()
+	g.Expect(commit.Encode(obj)).To(Succeed())
+	hash, err := st.SetEncodedObject(obj)
+	g.Expect(err).NotTo(HaveOccurred())
+	g.Expect(st.SetReference(plumbing.NewHashReference(plumbing.NewBranchReferenceName(branch), hash))).To(Succeed())
+	return hash
+}
+
+func writeTree(g *WithT, st storer.Storer, tree map[string]treeEntry) plumbing.Hash {
+	subtrees := map[string]map[string]treeEntry{}
+	var entries []object.TreeEntry
+	for p, e := range tree {
+		if dir, rest, ok := strings.Cut(p, "/"); ok {
+			if subtrees[dir] == nil {
+				subtrees[dir] = map[string]treeEntry{}
+			}
+			subtrees[dir][rest] = e
+			continue
+		}
+		mode, data := filemode.Regular, e.content
+		if e.link != "" {
+			mode, data = filemode.Symlink, e.link
+		}
+		obj := st.NewEncodedObject()
+		obj.SetType(plumbing.BlobObject)
+		w, err := obj.Writer()
+		g.Expect(err).NotTo(HaveOccurred())
+		_, err = w.Write([]byte(data))
+		g.Expect(err).NotTo(HaveOccurred())
+		g.Expect(w.Close()).To(Succeed())
+		hash, err := st.SetEncodedObject(obj)
+		g.Expect(err).NotTo(HaveOccurred())
+		entries = append(entries, object.TreeEntry{Name: p, Mode: mode, Hash: hash})
+	}
+	for dir, sub := range subtrees {
+		entries = append(entries, object.TreeEntry{Name: dir, Mode: filemode.Dir, Hash: writeTree(g, st, sub)})
+	}
+	sort.Slice(entries, func(i, j int) bool { return entries[i].Name < entries[j].Name })
+	obj := st.NewEncodedObject()
+	g.Expect((&object.Tree{Entries: entries}).Encode(obj)).To(Succeed())
+	hash, err := st.SetEncodedObject(obj)
+	g.Expect(err).NotTo(HaveOccurred())
+	return hash
+}