diff --git a/tests/func/test_checkout.py b/tests/func/test_checkout.py
index 1781aecda..3608d362f 100644
--- a/tests/func/test_checkout.py
+++ b/tests/func/test_checkout.py
@@ -744,3 +744,12 @@ def test_checkout_dir_compat(tmp_dir, dvc):
     remove("data")
     dvc.checkout()
     assert (tmp_dir / "data").read_text() == {"foo": "foo"}
+
+
+def test_checkout_cleanup_properly_on_untracked_nested_directories(tmp_dir, scm, dvc):
+    tmp_dir.dvc_gen({"datasets": {"dir1": {"file1": "file1"}}})
+    tmp_dir.gen({"datasets": {"dir2": {"dir3": {"file2": "file2"}}}})
+
+    dvc.checkout(force=True)
+
+    assert (tmp_dir / "datasets").read_text() == {"dir1": {"file1": "file1"}}