diff --git a/builtin/reset.c b/builtin/reset.c
index 7b0d3169cf0424..4f9d23550e8acc 100644
--- a/builtin/reset.c
+++ b/builtin/reset.c
@@ -28,7 +28,6 @@
 #include "strbuf.h"
 #include "quote.h"
 #include "dir.h"
-#include "entry.h"
 
 #define REFRESH_INDEX_DELAY_WARNING_IN_MS (2 * 1000)
 
@@ -138,57 +137,39 @@ static void update_index_from_diff(struct diff_queue_struct *q,
 		struct diff_options *opt, void *data)
 {
 	int i;
-	int pos;
 	int intent_to_add = *(int *)data;
 
 	for (i = 0; i < q->nr; i++) {
+		int pos;
 		struct diff_filespec *one = q->queue[i]->one;
-		struct diff_filespec *two = q->queue[i]->two;
-		int is_missing = !(one->mode && !is_null_oid(&one->oid));
-		int was_missing = !two->mode && is_null_oid(&two->oid);
+		int is_in_reset_tree = one->mode && !is_null_oid(&one->oid);
 		struct cache_entry *ce;
-		struct cache_entry *ceBefore;
-		struct checkout state = CHECKOUT_INIT;
 
-		/*
-		 * When using the sparse-checkout feature the cache entries that are
-		 * added here will not have the skip-worktree bit set.
-		 * Without this code there is data that is lost because the files that
-		 * would normally be in the working directory are not there and show as
-		 * deleted for the next status or in the case of added files just disappear.
-		 * We need to create the previous version of the files in the working
-		 * directory so that they will have the right content and the next
-		 * status call will show modified or untracked files correctly.
-		 */
-		if (core_apply_sparse_checkout && !file_exists(two->path))
-		{
-			pos = cache_name_pos(two->path, strlen(two->path));
-			if ((pos >= 0 && ce_skip_worktree(active_cache[pos])) && (is_missing || !was_missing))
-			{
-				state.force = 1;
-				state.refresh_cache = 1;
-				state.istate = &the_index;
-				ceBefore = make_cache_entry(&the_index, two->mode, &two->oid, two->path,
-					0, 0);
-				if (!ceBefore)
-					die(_("make_cache_entry failed for path '%s'"),
-						two->path);
-
-				checkout_entry(ceBefore, &state, NULL, NULL);
-			}
-		}
-
-		if (is_missing && !intent_to_add) {
+		if (!is_in_reset_tree && !intent_to_add) {
 			remove_file_from_cache(one->path);
 			continue;
 		}
 
 		ce = make_cache_entry(&the_index, one->mode, &one->oid, one->path,
 				      0, 0);
+
+		/*
+		 * If the file 1) corresponds to an existing index entry with
+		 * skip-worktree set, or 2) does not exist in the index but is
+		 * outside the sparse checkout definition, add a skip-worktree bit
+		 * to the new index entry. Note that a sparse index will be expanded
+		 * if this entry is outside the sparse cone - this is necessary
+		 * to properly construct the reset sparse directory.
+		 */
+		pos = cache_name_pos(one->path, strlen(one->path));
+		if ((pos >= 0 && ce_skip_worktree(active_cache[pos])) ||
+		    (pos < 0 && !path_in_sparse_checkout(one->path, &the_index)))
+			ce->ce_flags |= CE_SKIP_WORKTREE;
+
 		if (!ce)
 			die(_("make_cache_entry failed for path '%s'"),
 			    one->path);
-		if (is_missing) {
+		if (!is_in_reset_tree) {
 			ce->ce_flags |= CE_INTENT_TO_ADD;
 			set_object_name_for_intent_to_add_entry(ce);
 		}
diff --git a/read-cache.c b/read-cache.c
index 9aaba14073672c..ebe88cd039dd1c 100644
--- a/read-cache.c
+++ b/read-cache.c
@@ -2405,7 +2405,8 @@ int do_read_index(struct index_state *istate, const char *path, int must_exist)
 	if (!istate->repo)
 		istate->repo = the_repository;
 	prepare_repo_settings(istate->repo);
-	if (istate->repo->settings.command_requires_full_index)
+	if (!istate->repo->settings.sparse_index ||
+	    istate->repo->settings.command_requires_full_index)
 		ensure_full_index(istate);
 
 	return istate->cache_nr;
diff --git a/t/t1092-sparse-checkout-compatibility.sh b/t/t1092-sparse-checkout-compatibility.sh
index f37e75ca34b538..83b64483363616 100755
--- a/t/t1092-sparse-checkout-compatibility.sh
+++ b/t/t1092-sparse-checkout-compatibility.sh
@@ -528,51 +528,17 @@ test_expect_success 'blame with pathspec outside sparse definition' '
 	test_sparse_match test_must_fail git blame deep/deeper2/deepest/a
 '
 
-# TODO: This behaves correctly in microsoft/git. Why?
 test_expect_success 'checkout and reset (mixed)' '
 	init_repos &&
 
 	test_all_match git checkout -b reset-test update-deep &&
 	test_all_match git reset deepest &&
-	test_all_match git reset update-folder1 &&
-	test_all_match git reset update-folder2
-'
-
-# NEEDSWORK: a sparse-checkout behaves differently from a full checkout
-# in this scenario, but it shouldn't.
-test_expect_success 'checkout and reset (mixed) [sparse]' '
-	init_repos &&
 
-	test_sparse_match git checkout -b reset-test update-deep &&
-	test_sparse_match git reset deepest &&
+	# Because skip-worktree is preserved, resetting to update-folder1
+	# will show worktree changes for full-checkout that are not present
+	# in sparse-checkout or sparse-index.
 	test_sparse_match git reset update-folder1 &&
-	test_sparse_match git reset update-folder2
-'
-
-# NEEDSWORK: with mixed reset, files with differences between HEAD and <commit>
-# will be added to the work tree even if outside the sparse checkout
-# definition, and even if the file is modified to a state of having no local
-# changes. The file is "re-ignored" if a hard reset is executed. We may want to
-# change this behavior in the future and enforce that files are not written
-# outside of the sparse checkout definition.
-test_expect_success 'checkout and mixed reset file tracking [sparse]' '
-	init_repos &&
-
-	test_all_match git checkout -b reset-test update-deep &&
-	test_all_match git reset update-folder1 &&
-	test_all_match git reset update-deep &&
-
-	# At this point, there are no changes in the working tree. However,
-	# folder1/a now exists locally (even though it is outside of the sparse
-	# paths).
-	run_on_sparse test_path_exists folder1 &&
-
-	run_on_all rm folder1/a &&
-	test_all_match git status --porcelain=v2 &&
-
-	test_all_match git reset --hard update-deep &&
-	run_on_sparse test_path_is_missing folder1 &&
-	test_path_exists full-checkout/folder1
+	run_on_sparse test_path_is_missing folder1
 '
 
 test_expect_success 'checkout and reset (merge)' '
@@ -629,31 +595,34 @@ test_expect_success 'reset with pathspecs inside sparse definition' '
 	test_all_match git status --porcelain=v2
 '
 
-test_expect_success 'reset with sparse directory pathspec outside definition' '
+# Although the working tree differs between full and sparse checkouts after
+# reset, the state of the index is the same.
+test_expect_success 'reset with pathspecs outside sparse definition' '
 	init_repos &&
+	test_all_match git checkout -b reset-test base &&
 
-	test_all_match git checkout -b reset-test update-deep &&
-	test_all_match git reset --hard update-folder1 &&
-	test_all_match git reset base -- folder1 &&
-	test_all_match git status --porcelain=v2
-'
-
-test_expect_success 'reset with pathspec match in sparse directory' '
-	init_repos &&
+	test_sparse_match git reset update-folder1 -- folder1 &&
+	git -C full-checkout reset update-folder1 -- folder1 &&
+	test_sparse_match git status --porcelain=v2 &&
+	test_all_match git rev-parse HEAD:folder1 &&
 
-	test_all_match git checkout -b reset-test update-deep &&
-	test_all_match git reset --hard update-folder1 &&
-	test_all_match git reset base -- folder1/a &&
-	test_all_match git status --porcelain=v2
+	test_sparse_match git reset update-folder2 -- folder2/a &&
+	git -C full-checkout reset update-folder2 -- folder2/a &&
+	test_sparse_match git status --porcelain=v2 &&
+	test_all_match git rev-parse HEAD:folder2/a
 '
 
 test_expect_success 'reset with wildcard pathspec' '
 	init_repos &&
 
 	test_all_match git checkout -b reset-test update-deep &&
-	test_all_match git reset --hard update-folder1 &&
 	test_all_match git reset base -- \*/a &&
-	test_all_match git status --porcelain=v2
+	test_all_match git status --porcelain=v2 &&
+	test_all_match git rev-parse HEAD:folder1/a &&
+
+	test_all_match git reset base -- folder\* &&
+	test_all_match git status --porcelain=v2 &&
+	test_all_match git rev-parse HEAD:folder2
 '
 
 # NEEDSWORK: although update-index executes without error on files outside
diff --git a/t/t7102-reset.sh b/t/t7102-reset.sh
index 601b2bf97f0e7f..d05426062ec29d 100755
--- a/t/t7102-reset.sh
+++ b/t/t7102-reset.sh
@@ -472,6 +472,23 @@ test_expect_success '--mixed refreshes the index' '
 	test_cmp expect output
 '
 
+test_expect_success '--mixed preserves skip-worktree' '
+	echo 123 >>file2 &&
+	git add file2 &&
+	git update-index --skip-worktree file2 &&
+	git reset --mixed HEAD >output &&
+	test_must_be_empty output &&
+
+	cat >expect <<-\EOF &&
+	Unstaged changes after reset:
+	M	file2
+	EOF
+	git update-index --no-skip-worktree file2 &&
+	git add file2 &&
+	git reset --mixed HEAD >output &&
+	test_cmp expect output
+'
+
 test_expect_success 'resetting specific path that is unmerged' '
 	git rm --cached file2 &&
 	F1=$(git rev-parse HEAD:file1) &&
diff --git a/t/t7114-reset-sparse-checkout.sh b/t/t7114-reset-sparse-checkout.sh
deleted file mode 100755
index c46cbdb64e4ebc..00000000000000
--- a/t/t7114-reset-sparse-checkout.sh
+++ /dev/null
@@ -1,58 +0,0 @@
-#!/bin/sh
-
-test_description='reset when using a sparse-checkout'
-
-. ./test-lib.sh
-
-# reset using a sparse-checkout file
-
-test_expect_success 'setup' '
-	test_tick &&
-	echo "checkout file" >c &&
-	echo "modify file" >m &&
-	echo "delete file" >d &&
-	git add . &&
-	git commit -m "initial commit" &&
-	echo "added file" >a &&
-	echo "modification of a file" >m &&
-	git rm d &&
-	git add . &&
-	git commit -m "second commit" &&
-	git checkout -b endCommit
-'
-
-test_expect_success 'reset when there is a sparse-checkout' '
-	echo "/c" >.git/info/sparse-checkout &&
-	test_config core.sparsecheckout true &&
-	git checkout -B resetBranch &&
-	test_path_is_missing m &&
-	test_path_is_missing a &&
-	test_path_is_missing d &&
-	git reset HEAD~1 &&
-	test "checkout file" = "$(cat c)" &&
-	test "modification of a file" = "$(cat m)" &&
-	test "added file" = "$(cat a)" &&
-	test_path_is_missing d
-'
-
-test_expect_success 'reset after deleting file without skip-worktree bit' '
-	git checkout -f endCommit &&
-	git clean -xdf &&
-	echo "/c
-/m" >.git/info/sparse-checkout &&
-	test_config core.sparsecheckout true &&
-	git checkout -B resetAfterDelete &&
-	test_path_is_file m &&
-	test_path_is_missing a &&
-	test_path_is_missing d &&
-	rm -f m &&
-	git reset HEAD~1 &&
-	test "checkout file" = "$(cat c)" &&
-	test "added file" = "$(cat a)" &&
-	test_path_is_missing m &&
-	test_path_is_missing d
-'
-
-
-
-test_done