diff --git a/GVFS/GVFS.FunctionalTests/Tests/GitCommands/CorruptionReproTests.cs b/GVFS/GVFS.FunctionalTests/Tests/GitCommands/CorruptionReproTests.cs
index 9e7eec0bb..4dade3f56 100644
--- a/GVFS/GVFS.FunctionalTests/Tests/GitCommands/CorruptionReproTests.cs
+++ b/GVFS/GVFS.FunctionalTests/Tests/GitCommands/CorruptionReproTests.cs
@@ -12,7 +12,10 @@
 namespace GVFS.FunctionalTests.Tests.GitCommands
 {
     /// <summary>
-    /// This class is used to reproduce corruption scenarios in the GVFS virtual projection.
+    /// Reproduces reported scenarios that corrupted the GVFS virtual projection or
+    /// gave results that did not match a normal git repo. Each test is a black-box
+    /// regression test: it runs the command sequence that exposed the problem and
+    /// compares the results with the control repo.
     /// </summary>
     [Category(Categories.GitCommands)]
     [TestFixtureSource(typeof(GitRepoTests), nameof(GitRepoTests.ValidateWorkingTree))]
@@ -76,6 +79,32 @@ public void ReproCherryPickRestoreCorruption()
             this.FilesShouldMatchCheckoutOfSourceBranch();
         }
 
+        /// <summary>
+        /// Regression test for a sequence of commands that a user ran and that
+        /// showed incorrect behavior: after "git blame" and "git reset --mixed",
+        /// GVFS did not report a changed file as modified. The control repo did.
+        ///
+        /// This is a black-box test. It does not assert why the behavior was wrong.
+        /// It only runs the same commands and compares the results with the
+        /// control repo. ResetMixedTests.ResetMixedClearsSkipWorktreeOnHydratedPlaceholder
+        /// asserts the conditions that cause the problem.
+        ///
+        /// The fix requires microsoft/git v2.55.0.vfs.0.3 or later.
+        ///
+        /// On the FunctionalTests/20201014 branch, Readme.md is the only file that
+        /// differs between HEAD and HEAD~1.
+        /// </summary>
+        [TestCase]
+        public void ReproResetMixedSkipWorktree()
+        {
+            this.ValidateGitCommand("blame Readme.md");
+            this.ValidateGitCommand("checkout -b tests/functional/ReproResetMixedSkipWorktree");
+
+            // Both repos must report Readme.md as modified.
+            this.ValidateGitCommand("reset HEAD~1");
+            this.ValidateGitCommand("ls-files -v Readme.md");
+        }
+
         /// <summary>
         /// Reproduction of a reported issue:
         /// Restoring a file after its parent directory was deleted fails with
diff --git a/GVFS/GVFS.FunctionalTests/Tests/GitCommands/ResetMixedTests.cs b/GVFS/GVFS.FunctionalTests/Tests/GitCommands/ResetMixedTests.cs
index 0f7740d90..af77ee6e4 100644
--- a/GVFS/GVFS.FunctionalTests/Tests/GitCommands/ResetMixedTests.cs
+++ b/GVFS/GVFS.FunctionalTests/Tests/GitCommands/ResetMixedTests.cs
@@ -1,6 +1,9 @@
 using GVFS.FunctionalTests.Properties;
 using GVFS.FunctionalTests.Should;
+using GVFS.FunctionalTests.Tools;
+using GVFS.Tests.Should;
 using NUnit.Framework;
+using System.IO;
 
 namespace GVFS.FunctionalTests.Tests.GitCommands
 {
@@ -30,6 +33,52 @@ public void ResetMixedAfterPrefetch()
             this.FilesShouldMatchCheckoutOfTargetBranch();
         }
 
+        /// <summary>
+        /// A mixed reset must clear skip-worktree on a hydrated placeholder whose
+        /// index entry the reset changes. A hydrated placeholder is on disk but is
+        /// not in ModifiedPaths, so it still has skip-worktree. The reset does not
+        /// update the working tree, so the file on disk no longer matches the index.
+        /// If skip-worktree stays set, git does not compare the file to the index,
+        /// and reset and status do not report it as modified.
+        ///
+        /// Placeholders that are not on disk do not have this problem, because git
+        /// writes them to disk and clears skip-worktree. For that reason, this test
+        /// asserts each precondition before the reset.
+        ///
+        /// The git side of this behavior requires microsoft/git v2.55.0.vfs.0.3 or later.
+        /// </summary>
+        [TestCase]
+        public void ResetMixedClearsSkipWorktreeOnHydratedPlaceholder()
+        {
+            string filePath = Path.Combine("Test_ConflictTests", "ModifiedFiles", "ChangeInTarget.txt");
+            string gitPath = filePath.Replace(Path.DirectorySeparatorChar, TestConstants.GitPathSeparator);
+
+            // Create local branches for both commits in both repos.
+            this.ValidateGitCommand("checkout " + GitRepoTests.ConflictSourceBranch);
+            this.ValidateGitCommand("checkout " + GitRepoTests.ConflictTargetBranch);
+
+            // Precondition: the reset changes the index entry for the file.
+            GitProcess.InvokeProcess(
+                this.ControlGitRepo.RootPath,
+                $"diff --quiet {GitRepoTests.ConflictSourceBranch} {GitRepoTests.ConflictTargetBranch} -- {gitPath}")
+                .ExitCode.ShouldEqual(1, $"{gitPath} must differ between the reset source and target");
+
+            // Precondition: the file is a hydrated placeholder. A read hydrates it
+            // but does not add it to ModifiedPaths, so skip-worktree stays set.
+            this.Enlistment.GetVirtualPathTo(filePath).ShouldBeAFile(this.FileSystem).WithContents();
+            GVFSHelpers.ModifiedPathsShouldNotContain(this.Enlistment, this.FileSystem, gitPath);
+            this.SkipWorktreeFlagShouldBe(gitPath, expectedFlag: 'S');
+
+            // The reset output and status must report the file as modified, as in the control repo.
+            this.ValidateGitCommand("reset --mixed " + GitRepoTests.ConflictSourceBranch);
+
+            // After the reset, skip-worktree is cleared, and GVFS adds the file to
+            // ModifiedPaths so that later git commands also compare it to the index.
+            this.SkipWorktreeFlagShouldBe(gitPath, expectedFlag: 'H');
+            GVFSHelpers.ModifiedPathsShouldContain(this.Enlistment, this.FileSystem, gitPath);
+            this.FileContentsShouldMatch(filePath);
+        }
+
         [TestCase]
         public void ResetMixedAndCheckoutNewBranch()
         {
@@ -108,5 +157,13 @@ protected override void CreateEnlistment()
             this.ControlGitRepo.Fetch(GitRepoTests.ConflictTargetBranch);
             this.ControlGitRepo.Fetch(GitRepoTests.ConflictSourceBranch);
         }
+
+        private void SkipWorktreeFlagShouldBe(string gitPath, char expectedFlag)
+        {
+            // "ls-files -v" prefixes each entry with a tag: "S" means skip-worktree is set, "H" means it is not.
+            ProcessResult result = GitProcess.InvokeProcess(this.Enlistment.RepoRoot, "ls-files -v -- " + gitPath);
+            result.ExitCode.ShouldEqual(0, result.Errors);
+            result.Output.Trim().ShouldEqual($"{expectedFlag} {gitPath}");
+        }
     }
 }
diff --git a/GVFS/GVFS.FunctionalTests/Tools/GitHelpers.cs b/GVFS/GVFS.FunctionalTests/Tools/GitHelpers.cs
index 8bdc74f17..48418452d 100644
--- a/GVFS/GVFS.FunctionalTests/Tools/GitHelpers.cs
+++ b/GVFS/GVFS.FunctionalTests/Tools/GitHelpers.cs
@@ -130,6 +130,11 @@ private static string FilterMessages(
             return input;
         }
 
+        /// <summary>
+        /// Runs a git command in the control repo and in the GVFS repo, and asserts
+        /// that the output and errors match. If the command is not "status", this
+        /// method then runs "status" in both repos and compares that output too.
+        /// </summary>
         public static void ValidateGitCommand(
             GVFSFunctionalTestEnlistment enlistment,
             ControlGitRepo controlGitRepo,