diff --git a/lib/src/tree_builder.rs b/lib/src/tree_builder.rs
index a665a10fe..64a0ffe81 100644
--- a/lib/src/tree_builder.rs
+++ b/lib/src/tree_builder.rs
@@ -93,7 +93,11 @@ impl TreeBuilder {
             if let Some((parent, basename)) = dir.split() {
                 let parent_tree = trees_to_write.get_mut(&parent).unwrap();
                 if tree.is_empty() {
-                    parent_tree.remove(basename);
+                    if let Some(TreeValue::Tree(_)) = parent_tree.value(basename) {
+                        parent_tree.remove(basename);
+                    } else {
+                        // Entry would have been replaced with file (see above)
+                    }
                 } else {
                     let tree_id = store.write_tree(&dir, &tree).unwrap();
                     parent_tree.set(basename.clone(), TreeValue::Tree(tree_id));
diff --git a/lib/tests/test_working_copy.rs b/lib/tests/test_working_copy.rs
index cbc4f9d4e..53dd7f4b7 100644
--- a/lib/tests/test_working_copy.rs
+++ b/lib/tests/test_working_copy.rs
@@ -315,7 +315,7 @@ fn test_tree_builder_file_directory_transition(use_git: bool) {
     testutils::write_normal_file(&mut tree_builder, &parent_path, "");
     let tree_id = tree_builder.write_tree();
     check_out_tree(&tree_id);
-    // TODO: assert!(parent_path.to_fs_path(&workspace_root).is_file());
+    assert!(parent_path.to_fs_path(&workspace_root).is_file());
     assert!(!child_path.to_fs_path(&workspace_root).exists());
 }