diff --git a/src/bin/cargo/commands/package.rs b/src/bin/cargo/commands/package.rs
index 92383dfb1f9..166fddf3c39 100644
--- a/src/bin/cargo/commands/package.rs
+++ b/src/bin/cargo/commands/package.rs
@@ -23,7 +23,15 @@ pub fn cli() -> App {
         ))
         .arg(opt(
             "allow-dirty",
-            "Allow dirty working directories to be packaged",
+            "Allow dirty working directories to be packaged (deprecated, use include-dirty instead)",
+        ))
+        .arg(opt(
+            "include-dirty",
+            "Allow dirty files in working directories to be packaged",
+        ))
+        .arg(opt(
+            "include-untracked",
+            "Allow untracked files in working directories to be packaged",
         ))
         .arg_target_triple("Build for the target triple")
         .arg_target_dir()
@@ -42,7 +50,8 @@ pub fn exec(config: &mut Config, args: &ArgMatches<'_>) -> CliResult {
             verify: !args.is_present("no-verify"),
             list: args.is_present("list"),
             check_metadata: !args.is_present("no-metadata"),
-            allow_dirty: args.is_present("allow-dirty"),
+            include_dirty: args.is_present("allow-dirty") || args.is_present("include-dirty"),
+            include_untracked: args.is_present("include-untracked"),
             targets: args.targets(),
             jobs: args.jobs()?,
             cli_features: args.cli_features()?,
diff --git a/src/bin/cargo/commands/publish.rs b/src/bin/cargo/commands/publish.rs
index 83861e299c1..76f77a1779f 100644
--- a/src/bin/cargo/commands/publish.rs
+++ b/src/bin/cargo/commands/publish.rs
@@ -14,7 +14,15 @@ pub fn cli() -> App {
         ))
         .arg(opt(
             "allow-dirty",
-            "Allow dirty working directories to be packaged",
+            "Allow dirty working directories to be packaged (deprecated, use include-dirty instead)",
+        ))
+        .arg(opt(
+            "include-dirty",
+            "Allow dirty files in working directories to be packaged",
+        ))
+        .arg(opt(
+            "include-untracked",
+            "Allow dirty files in working directories to be packaged",
         ))
         .arg_target_triple("Build for the target triple")
         .arg_target_dir()
@@ -40,7 +48,8 @@ pub fn exec(config: &mut Config, args: &ArgMatches<'_>) -> CliResult {
             token: args.value_of("token").map(|s| s.to_string()),
             index,
             verify: !args.is_present("no-verify"),
-            allow_dirty: args.is_present("allow-dirty"),
+            include_dirty: args.is_present("allow-dirty") || args.is_present("include-dirty"),
+            include_untracked: args.is_present("include-untracked"),
             targets: args.targets(),
             jobs: args.jobs()?,
             dry_run: args.is_present("dry-run"),
diff --git a/src/cargo/ops/cargo_package.rs b/src/cargo/ops/cargo_package.rs
index 1056d73fdaa..79fb219daec 100644
--- a/src/cargo/ops/cargo_package.rs
+++ b/src/cargo/ops/cargo_package.rs
@@ -26,7 +26,8 @@ pub struct PackageOpts<'cfg> {
     pub config: &'cfg Config,
     pub list: bool,
     pub check_metadata: bool,
-    pub allow_dirty: bool,
+    pub include_dirty: bool,
+    pub include_untracked: bool,
     pub verify: bool,
     pub jobs: Option<u32>,
     pub targets: Vec<String>,
@@ -61,6 +62,24 @@ enum GeneratedFile {
     VcsInfo(String),
 }
 
+#[derive(PartialEq, Eq, Debug)]
+enum FileState {
+    Untracked,
+    Dirty,
+    SubmoduleDirtyAndUntracked,
+    Clean,
+}
+
+#[derive(Debug)]
+struct RepoState {
+    /// The ID indicating the current revision of the repo. This may be a hash
+    /// or other unique identifier for the VCS.
+    id: String,
+    /// List of all dirty files found in the repository. Files within a submodule
+    /// are represented simply by the submodule path.
+    dirty_files: Vec<(FileState, PathBuf)>,
+}
+
 pub fn package(ws: &Workspace<'_>, opts: &PackageOpts<'_>) -> CargoResult<Option<FileLock>> {
     if ws.root().join("Cargo.lock").exists() {
         // Make sure the Cargo.lock is up-to-date and valid.
@@ -84,17 +103,30 @@ pub fn package(ws: &Workspace<'_>, opts: &PackageOpts<'_>) -> CargoResult<Option
              the exclude list will be ignored",
         )?;
     }
-    let src_files = src.list_files(pkg)?;
+    let mut src_files = src.list_files(pkg)?;
 
     // Check (git) repository state, getting the current commit hash if not
-    // dirty.
-    let vcs_info = if !opts.allow_dirty {
-        // This will error if a dirty repo is found.
-        check_repo_state(pkg, &src_files, config)?
-            .map(|h| format!("{{\n  \"git\": {{\n    \"sha1\": \"{}\"\n  }}\n}}\n", h))
-    } else {
-        None
-    };
+    // dirty. check_repo_state will reror if a dirty repo is found.
+    let vcs_info =
+        if let Some(repo_state) = check_repo_state(pkg, &src_files, config, opts.include_dirty)? {
+            // If the user does not want to include untracked files, we must filter these
+            // out of the package list
+            if !opts.include_untracked {
+                src_files.retain(|src_file| {
+                    !repo_state
+                        .dirty_files
+                        .iter()
+                        .filter(|(state, _path)| *state == FileState::Untracked)
+                        .any(|(_, untracked_path)| src_file == untracked_path)
+                });
+            }
+            Some(format!(
+                "{{\n  \"git\": {{\n    \"sha1\": \"{}\"\n  }}\n}}\n",
+                repo_state.id
+            ))
+        } else {
+            None
+        };
 
     let ar_files = build_ar_list(ws, pkg, src_files, vcs_info)?;
 
@@ -356,7 +388,8 @@ fn check_repo_state(
     p: &Package,
     src_files: &[PathBuf],
     config: &Config,
-) -> CargoResult<Option<String>> {
+    include_dirty: bool,
+) -> CargoResult<Option<RepoState>> {
     if let Ok(repo) = git2::Repository::discover(p.root()) {
         if let Some(workdir) = repo.workdir() {
             debug!("found a git repo at {:?}", workdir);
@@ -368,7 +401,7 @@ fn check_repo_state(
                         "found (git) Cargo.toml at {:?} in workdir {:?}",
                         path, workdir
                     );
-                    return git(p, src_files, &repo);
+                    return git(p, src_files, &repo, include_dirty);
                 }
             }
             config.shell().verbose(|shell| {
@@ -389,66 +422,188 @@ fn check_repo_state(
     // directory is dirty or not, thus we have to assume that it's clean.
     return Ok(None);
 
+    /// Checks if a git status code indicates the file is in a dirty state. If
+    /// `include_untracked` is true, untracked files will be considered as part
+    /// of this check.
+    fn git_status_dirty_type(status: git2::Status) -> FileState {
+        // CURRENT files are never dirty
+        if status == git2::Status::CURRENT {
+            return FileState::Clean;
+        }
+
+        // We must explicitly check if this file's status indicates
+        // the file is tracked by git (https://github.com/rust-lang/cargo/issues/93988)
+        if status.intersects(
+            git2::Status::WT_NEW | git2::Status::WT_TYPECHANGE | git2::Status::WT_RENAMED,
+        ) {
+            FileState::Untracked
+        } else {
+            FileState::Dirty
+        }
+    }
+
     fn git(
         p: &Package,
         src_files: &[PathBuf],
         repo: &git2::Repository,
-    ) -> CargoResult<Option<String>> {
+        ignore_dirty: bool,
+    ) -> CargoResult<Option<RepoState>> {
         let workdir = repo.workdir().unwrap();
 
         let mut sub_repos = Vec::new();
         open_submodules(repo, &mut sub_repos)?;
         // Sort so that longest paths are first, to check nested submodules first.
         sub_repos.sort_unstable_by(|a, b| b.0.as_os_str().len().cmp(&a.0.as_os_str().len()));
-        let submodule_dirty = |path: &Path| -> bool {
+        let submodule_dirty = |path: &Path| -> FileState {
             sub_repos
                 .iter()
                 .filter(|(sub_path, _sub_repo)| path.starts_with(sub_path))
-                .any(|(sub_path, sub_repo)| {
+                .map(|(sub_path, sub_repo)| {
                     let relative = path.strip_prefix(sub_path).unwrap();
                     sub_repo
                         .status_file(relative)
-                        .map(|status| status != git2::Status::CURRENT)
-                        .unwrap_or(false)
+                        .map(|status| git_status_dirty_type(status))
+                        .unwrap_or(FileState::Clean)
+                })
+                .fold(FileState::Clean, |accum, single_state| {
+                    // If we're currently in a clean state, the state transition doesn't matter.
+                    if accum == FileState::Clean {
+                        return single_state;
+                    }
+
+                    // If this file is clean but the accumulated state is dirty, we ignore
+                    // this single file's state
+                    if single_state == FileState::Clean {
+                        return accum;
+                    }
+
+                    if accum != single_state {
+                        // If the accumulator is not clean and this file doesn't match,
+                        // we're in a state with mixed dirty and untracked files
+                        FileState::SubmoduleDirtyAndUntracked
+                    } else {
+                        // The current file state matches the accumlated state
+                        accum
+                    }
                 })
         };
 
         let dirty = src_files
             .iter()
-            .filter(|file| {
+            .filter_map(|file| {
                 let relative = file.strip_prefix(workdir).unwrap();
-                if let Ok(status) = repo.status_file(relative) {
+                let file_state = if let Ok(status) = repo.status_file(relative) {
+                    // CURRENT indicates that the file is tracked by git and clean
                     if status == git2::Status::CURRENT {
-                        false
+                        FileState::Clean
                     } else if relative.file_name().and_then(|s| s.to_str()).unwrap_or("")
                         == "Cargo.lock"
                     {
                         // It is OK to include this file even if it is ignored.
-                        status != git2::Status::IGNORED
+                        if status != git2::Status::IGNORED {
+                            FileState::Clean
+                        } else {
+                            FileState::Dirty
+                        }
                     } else {
-                        true
+                        git_status_dirty_type(status)
                     }
                 } else {
                     submodule_dirty(file)
+                };
+
+                if matches!(file_state, FileState::Clean) {
+                    None
+                } else {
+                    Some((file_state, file.clone()))
                 }
             })
-            .map(|path| {
-                path.strip_prefix(p.root())
-                    .unwrap_or(path)
-                    .display()
-                    .to_string()
-            })
             .collect::<Vec<_>>();
-        if dirty.is_empty() {
+
+        // We may proceed with dirty files if, and only if, all of the files
+        // are untracked OR the use wishes to ignore dirty files. Untracked files
+        // should be filtered by the caller for their purposes, not us (see: https://github.com/rust-lang/cargo/issues/9398).
+        if dirty.is_empty()
+            || dirty.iter().all(|(state, _)| {
+                if ignore_dirty {
+                    matches!(state, FileState::Dirty | FileState::Untracked)
+                } else {
+                    *state == FileState::Untracked
+                }
+            })
+        {
             let rev_obj = repo.revparse_single("HEAD")?;
-            Ok(Some(rev_obj.id().to_string()))
+            Ok(Some(RepoState {
+                id: rev_obj.id().to_string(),
+                dirty_files: dirty,
+            }))
         } else {
+            // Map to the relative path here to make things easier when filtering
+            // out the different file states
+            let dirty: Vec<_> = dirty
+                .iter()
+                .map(|(state, file)| {
+                    let path = file
+                        .strip_prefix(p.root())
+                        .unwrap_or(file)
+                        .display()
+                        .to_string();
+                    (state, path)
+                })
+                .collect();
+
+            let untracked_files: Vec<_> = dirty
+                .iter()
+                .filter(|(state, _path)| matches!(state, FileState::Untracked))
+                .map(|(_, path)| path.as_ref())
+                .collect();
+
+            let dirty_files: Vec<_> = dirty
+                .iter()
+                .filter(|(state, _path)| matches!(state, FileState::Dirty))
+                .map(|(_, path)| path.as_ref())
+                .collect();
+
+            let untracked_and_dirty: Vec<_> = dirty
+                .iter()
+                .filter(|(state, _path)| matches!(state, FileState::SubmoduleDirtyAndUntracked))
+                .map(|(_, path)| path.as_ref())
+                .collect();
+
+            // The error message presented to the user should reflect what state the repo is in.
+            // Are there just dirty files? Are there just untracked files? Are there both?
+            let untracked_files_text = if untracked_files.is_empty() {
+                std::borrow::Cow::from("")
+            } else {
+                std::borrow::Cow::from(format!(
+                    "untracked files:\n\t{}\n\n",
+                    untracked_files.join("\n\t")
+                ))
+            };
+
+            let dirty_files_text = if dirty_files.is_empty() {
+                std::borrow::Cow::from("")
+            } else {
+                std::borrow::Cow::from(format!("dirty files:\n\t{}\n\n", dirty_files.join("\n\t")))
+            };
+
+            let untracked_and_dirty_text = if untracked_and_dirty.is_empty() {
+                std::borrow::Cow::from("")
+            } else {
+                std::borrow::Cow::from(format!(
+                    "submodules with untracked and dirty files:\n\t{}\n\n",
+                    untracked_and_dirty.join("\n\t")
+                ))
+            };
+
             anyhow::bail!(
                 "{} files in the working directory contain changes that were \
-                 not yet committed into git:\n\n{}\n\n\
-                 to proceed despite this and include the uncommitted changes, pass the `--allow-dirty` flag",
+                 not yet committed into git:\n\n{}{}{}\
+                 to proceed despite this and include the dirty files in your package, pass the `--include-dirty` flag",
                 dirty.len(),
-                dirty.join("\n")
+                dirty_files_text,
+                untracked_files_text,
+                untracked_and_dirty_text,
             )
         }
     }
diff --git a/src/cargo/ops/registry.rs b/src/cargo/ops/registry.rs
index 8797198fd49..47d73024336 100644
--- a/src/cargo/ops/registry.rs
+++ b/src/cargo/ops/registry.rs
@@ -48,7 +48,10 @@ pub struct PublishOpts<'cfg> {
     pub token: Option<String>,
     pub index: Option<String>,
     pub verify: bool,
-    pub allow_dirty: bool,
+    /// Include dirty files in the published package
+    pub include_dirty: bool,
+    /// Include untracked files in the published package
+    pub include_untracked: bool,
     pub jobs: Option<u32>,
     pub targets: Vec<String>,
     pub dry_run: bool,
@@ -108,7 +111,8 @@ pub fn publish(ws: &Workspace<'_>, opts: &PublishOpts<'_>) -> CargoResult<()> {
             verify: opts.verify,
             list: false,
             check_metadata: true,
-            allow_dirty: opts.allow_dirty,
+            include_dirty: opts.include_dirty,
+            include_untracked: opts.include_untracked,
             targets: opts.targets.clone(),
             jobs: opts.jobs,
             cli_features: opts.cli_features.clone(),
diff --git a/tests/testsuite/package.rs b/tests/testsuite/package.rs
index df4371c58f0..b6321204e59 100644
--- a/tests/testsuite/package.rs
+++ b/tests/testsuite/package.rs
@@ -563,9 +563,28 @@ fn no_duplicates_from_modified_tracked_files() {
     let p = git::new("all", |p| p.file("src/main.rs", "fn main() {}"));
     p.change_file("src/main.rs", r#"fn main() { println!("A change!"); }"#);
     p.cargo("build").run();
-    p.cargo("package --list --allow-dirty")
+    p.cargo("package --list --include-dirty")
+        .with_stdout(
+            "\
+Cargo.lock
+Cargo.toml
+Cargo.toml.orig
+src/main.rs
+",
+        )
+        .run();
+}
+
+#[cargo_test]
+fn no_untracked_files() {
+    let p = git::new("all", |p| p.file("src/main.rs", "fn main() {}"));
+    p.change_file("src/main.rs", r#"fn main() { println!("A change!"); }"#);
+    p.change_file("test.txt", r#"secret data pls don't read"#);
+    p.cargo("build").run();
+    p.cargo("package --list --include-dirty")
         .with_stdout(
             "\
+.cargo_vcs_info.json
 Cargo.lock
 Cargo.toml
 Cargo.toml.orig
@@ -575,6 +594,49 @@ src/main.rs
         .run();
 }
 
+#[cargo_test]
+fn include_untracked_files() {
+    let p = git::new("all", |p| p.file("src/main.rs", "fn main() {}"));
+    p.change_file("src/main.rs", r#"fn main() { println!("A change!"); }"#);
+    p.change_file("test.txt", r#"secret data pls don't read"#);
+    p.cargo("build").run();
+    p.cargo("package --list --include-dirty --include-untracked")
+        .with_stdout(
+            "\
+.cargo_vcs_info.json
+Cargo.lock
+Cargo.toml
+Cargo.toml.orig
+src/main.rs
+test.txt
+",
+        )
+        .run();
+}
+
+#[cargo_test]
+fn include_untracked_without_include_dirty_raises_error() {
+    let p = git::new("all", |p| p.file("src/main.rs", "fn main() {}"));
+    p.change_file("src/main.rs", r#"fn main() { println!("A change!"); }"#);
+    p.change_file("test.txt", r#"secret data pls don't read"#);
+    p.cargo("build").run();
+    p.cargo("package --list --include-untracked")
+        .with_stderr(
+            "\
+error: 2 files in the working directory contain changes that were not yet \
+committed into git:
+
+dirty files:
+\tsrc/main.rs
+
+untracked files:
+\ttest.txt
+
+to proceed despite this and include the dirty files in your package, pass the `--include-dirty` flag",
+        )
+        .run();
+}
+
 #[cargo_test]
 fn ignore_nested() {
     let cargo_toml = r#"