diff --git a/builtin/commit.c b/builtin/commit.c
index 4e288bc5132dbc..ad188fea9ec552 100644
--- a/builtin/commit.c
+++ b/builtin/commit.c
@@ -1404,7 +1404,7 @@ int cmd_status(int argc, const char **argv, const char *prefix)
 
 static const char *implicit_ident_advice(void)
 {
-	char *user_config = expand_user_path("~/.gitconfig");
+	char *user_config = expand_user_path("~/.gitconfig", 0);
 	char *xdg_config = xdg_config_home("config");
 	int config_exists = file_exists(user_config) || file_exists(xdg_config);
 
diff --git a/builtin/config.c b/builtin/config.c
index 4f49a0edb9071f..3f7c8763d21764 100644
--- a/builtin/config.c
+++ b/builtin/config.c
@@ -502,7 +502,7 @@ int cmd_config(int argc, const char **argv, const char *prefix)
 	}
 
 	if (use_global_config) {
-		char *user_config = expand_user_path("~/.gitconfig");
+		char *user_config = expand_user_path("~/.gitconfig", 0);
 		char *xdg_config = xdg_config_home("config");
 
 		if (!user_config)
diff --git a/cache.h b/cache.h
index e5cc06987a5bf2..75cce814bd656b 100644
--- a/cache.h
+++ b/cache.h
@@ -1164,7 +1164,7 @@ typedef int create_file_fn(const char *path, void *cb);
 int raceproof_create_file(const char *path, create_file_fn fn, void *cb);
 
 int mkdir_in_gitdir(const char *path);
-extern char *expand_user_path(const char *path);
+extern char *expand_user_path(const char *path, int real_home);
 const char *enter_repo(const char *path, int strict);
 static inline int is_absolute_path(const char *path)
 {
diff --git a/config.c b/config.c
index aae6dcc34e34f0..0daaed338eabec 100644
--- a/config.c
+++ b/config.c
@@ -135,7 +135,7 @@ static int handle_path_include(const char *path, struct config_include_data *inc
 	if (!path)
 		return config_error_nonbool("include.path");
 
-	expanded = expand_user_path(path);
+	expanded = expand_user_path(path, 0);
 	if (!expanded)
 		return error("could not expand include path '%s'", path);
 	path = expanded;
@@ -177,7 +177,7 @@ static int prepare_include_condition_pattern(struct strbuf *pat)
 	char *expanded;
 	int prefix = 0;
 
-	expanded = expand_user_path(pat->buf);
+	expanded = expand_user_path(pat->buf, 1);
 	if (expanded) {
 		strbuf_reset(pat);
 		strbuf_addstr(pat, expanded);
@@ -191,7 +191,7 @@ static int prepare_include_condition_pattern(struct strbuf *pat)
 			return error(_("relative config include "
 				       "conditionals must come from files"));
 
-		strbuf_add_absolute_path(&path, cf->path);
+		strbuf_realpath(&path, cf->path, 1);
 		slash = find_last_dir_sep(path.buf);
 		if (!slash)
 			die("BUG: how is this possible?");
@@ -213,7 +213,7 @@ static int include_by_gitdir(const char *cond, size_t cond_len, int icase)
 	struct strbuf pattern = STRBUF_INIT;
 	int ret = 0, prefix;
 
-	strbuf_add_absolute_path(&text, get_git_dir());
+	strbuf_realpath(&text, get_git_dir(), 1);
 	strbuf_add(&pattern, cond, cond_len);
 	prefix = prepare_include_condition_pattern(&pattern);
 
@@ -965,7 +965,7 @@ int git_config_pathname(const char **dest, const char *var, const char *value)
 {
 	if (!value)
 		return config_error_nonbool(var);
-	*dest = expand_user_path(value);
+	*dest = expand_user_path(value, 0);
 	if (!*dest)
 		die(_("failed to expand user dir in: '%s'"), value);
 	return 0;
@@ -1515,7 +1515,7 @@ static int do_git_config_sequence(config_fn_t fn, void *data)
 {
 	int ret = 0;
 	char *xdg_config = xdg_config_home("config");
-	char *user_config = expand_user_path("~/.gitconfig");
+	char *user_config = expand_user_path("~/.gitconfig", 0);
 	char *repo_config = have_git_dir() ? git_pathdup("config") : NULL;
 
 	current_parsing_scope = CONFIG_SCOPE_SYSTEM;
diff --git a/credential-cache.c b/credential-cache.c
index 3cbd4200190dd9..91550bfb0b3325 100644
--- a/credential-cache.c
+++ b/credential-cache.c
@@ -87,7 +87,7 @@ static char *get_socket_path(void)
 {
 	struct stat sb;
 	char *old_dir, *socket;
-	old_dir = expand_user_path("~/.git-credential-cache");
+	old_dir = expand_user_path("~/.git-credential-cache", 0);
 	if (old_dir && !stat(old_dir, &sb) && S_ISDIR(sb.st_mode))
 		socket = xstrfmt("%s/socket", old_dir);
 	else
diff --git a/credential-store.c b/credential-store.c
index 55ca1b13343199..ac295420dd0d03 100644
--- a/credential-store.c
+++ b/credential-store.c
@@ -168,7 +168,7 @@ int cmd_main(int argc, const char **argv)
 	if (file) {
 		string_list_append(&fns, file);
 	} else {
-		if ((file = expand_user_path("~/.git-credentials")))
+		if ((file = expand_user_path("~/.git-credentials", 0)))
 			string_list_append_nodup(&fns, file);
 		file = xdg_config_home("credentials");
 		if (file)
diff --git a/path.c b/path.c
index 302f9af2bd814e..c1cb1cf6273f4a 100644
--- a/path.c
+++ b/path.c
@@ -617,8 +617,10 @@ static struct passwd *getpw_str(const char *username, size_t len)
  * Return a string with ~ and ~user expanded via getpw*.  If buf != NULL,
  * then it is a newly allocated string. Returns NULL on getpw failure or
  * if path is NULL.
+ *
+ * If real_home is true, real_path($HOME) is used in the expansion.
  */
-char *expand_user_path(const char *path)
+char *expand_user_path(const char *path, int real_home)
 {
 	struct strbuf user_path = STRBUF_INIT;
 	const char *to_copy = path;
@@ -633,7 +635,10 @@ char *expand_user_path(const char *path)
 			const char *home = getenv("HOME");
 			if (!home)
 				goto return_null;
-			strbuf_addstr(&user_path, home);
+			if (real_home)
+				strbuf_addstr(&user_path, real_path(home));
+			else
+				strbuf_addstr(&user_path, home);
 #ifdef GIT_WINDOWS_NATIVE
 			convert_slashes(user_path.buf);
 #endif
@@ -702,7 +707,7 @@ const char *enter_repo(const char *path, int strict)
 		strbuf_add(&validated_path, path, len);
 
 		if (used_path.buf[0] == '~') {
-			char *newpath = expand_user_path(used_path.buf);
+			char *newpath = expand_user_path(used_path.buf, 0);
 			if (!newpath)
 				return NULL;
 			strbuf_attach(&used_path, newpath, strlen(newpath),
diff --git a/t/t1305-config-include.sh b/t/t1305-config-include.sh
index e8339393203c65..8fbc7a029f79b1 100755
--- a/t/t1305-config-include.sh
+++ b/t/t1305-config-include.sh
@@ -3,6 +3,16 @@
 test_description='test config file include directives'
 . ./test-lib.sh
 
+# Force setup_explicit_git_dir() to run until the end. This is needed
+# by some tests to make sure real_path() is called on $GIT_DIR. The
+# caller needs to make sure git commands are run from a subdirectory
+# though or real_path() will not be called.
+force_setup_explicit_git_dir() {
+    GIT_DIR="$(pwd)/.git"
+    GIT_WORK_TREE="$(pwd)"
+    export GIT_DIR GIT_WORK_TREE
+}
+
 test_expect_success 'include file by absolute path' '
 	echo "[test]one = 1" >one &&
 	echo "[include]path = \"$(pwd)/one\"" >.gitconfig &&
@@ -208,6 +218,50 @@ test_expect_success 'conditional include, both unanchored, icase' '
 	)
 '
 
+test_expect_success SYMLINKS 'conditional include, set up symlinked $HOME' '
+	mkdir real-home &&
+	ln -s real-home home &&
+	(
+		HOME="$TRASH_DIRECTORY/home" &&
+		export HOME &&
+		cd "$HOME" &&
+
+		git init foo &&
+		cd foo &&
+		mkdir sub
+	)
+'
+
+test_expect_success SYMLINKS 'conditional include, $HOME expansion with symlinks' '
+	(
+		HOME="$TRASH_DIRECTORY/home" &&
+		export HOME &&
+		cd "$HOME"/foo &&
+
+		echo "[includeIf \"gitdir:~/foo/\"]path=bar2" >>.git/config &&
+		echo "[test]two=2" >.git/bar2 &&
+		echo 2 >expect &&
+		force_setup_explicit_git_dir &&
+		git -C sub config test.two >actual &&
+		test_cmp expect actual
+	)
+'
+
+test_expect_success SYMLINKS 'conditional include, relative path with symlinks' '
+	echo "[includeIf \"gitdir:./foo/.git\"]path=bar4" >home/.gitconfig &&
+	echo "[test]four=4" >home/bar4 &&
+	(
+		HOME="$TRASH_DIRECTORY/home" &&
+		export HOME &&
+		cd "$HOME"/foo &&
+
+		echo 4 >expect &&
+		force_setup_explicit_git_dir &&
+		git -C sub config test.four >actual &&
+		test_cmp expect actual
+	)
+'
+
 test_expect_success 'include cycles are detected' '
 	cat >.gitconfig <<-\EOF &&
 	[test]value = gitconfig