diff --git a/compat/fsmonitor/fsm-listen-win32.c b/compat/fsmonitor/fsm-listen-win32.c
index 5b928ab66e5..3f1b68267bd 100644
--- a/compat/fsmonitor/fsm-listen-win32.c
+++ b/compat/fsmonitor/fsm-listen-win32.c
@@ -25,6 +25,9 @@ struct one_watch
 	DWORD count;
 
 	struct strbuf path;
+	wchar_t wpath_longname[MAX_PATH + 1];
+	DWORD wpath_longname_len;
+
 	HANDLE hDir;
 	HANDLE hEvent;
 	OVERLAPPED overlapped;
@@ -34,6 +37,21 @@ struct one_watch
 	 * need to later call GetOverlappedResult() and possibly CancelIoEx().
 	 */
 	BOOL is_active;
+
+	/*
+	 * Are shortnames enabled on the containing drive?  This is
+	 * always true for "C:/" drives and usually never true for
+	 * other drives.
+	 *
+	 * We only set this for the worktree because we only need to
+	 * convert shortname paths to longname paths for items we send
+	 * to clients.  (We don't care about shortname expansion for
+	 * paths inside a GITDIR because we never send them to
+	 * clients.)
+	 */
+	BOOL has_shortnames;
+	BOOL has_tilda;
+	wchar_t dotgit_shortname[16]; /* for 8.3 name */
 };
 
 struct fsmonitor_daemon_backend_data
@@ -51,17 +69,18 @@ struct fsmonitor_daemon_backend_data
 };
 
 /*
- * Convert the WCHAR path from the notification into UTF8 and
- * then normalize it.
+ * Convert the WCHAR path from the event into UTF8 and normalize it.
+ *
+ * `wpath_len` is in WCHARS not bytes.
  */
-static int normalize_path_in_utf8(FILE_NOTIFY_INFORMATION *info,
+static int normalize_path_in_utf8(wchar_t *wpath, DWORD wpath_len,
 				  struct strbuf *normalized_path)
 {
 	int reserve;
 	int len = 0;
 
 	strbuf_reset(normalized_path);
-	if (!info->FileNameLength)
+	if (!wpath_len)
 		goto normalize;
 
 	/*
@@ -70,12 +89,12 @@ static int normalize_path_in_utf8(FILE_NOTIFY_INFORMATION *info,
 	 * sequence of 2 UTF8 characters.  That should let us
 	 * avoid ERROR_INSUFFICIENT_BUFFER 99.9+% of the time.
 	 */
-	reserve = info->FileNameLength + 1;
+	reserve = 2 * wpath_len + 1;
 	strbuf_grow(normalized_path, reserve);
 
 	for (;;) {
-		len = WideCharToMultiByte(CP_UTF8, 0, info->FileName,
-					  info->FileNameLength / sizeof(WCHAR),
+		len = WideCharToMultiByte(CP_UTF8, 0,
+					  wpath, wpath_len,
 					  normalized_path->buf,
 					  strbuf_avail(normalized_path) - 1,
 					  NULL, NULL);
@@ -83,9 +102,7 @@ static int normalize_path_in_utf8(FILE_NOTIFY_INFORMATION *info,
 			goto normalize;
 		if (GetLastError() != ERROR_INSUFFICIENT_BUFFER) {
 			error(_("[GLE %ld] could not convert path to UTF-8: '%.*ls'"),
-			      GetLastError(),
-			      (int)(info->FileNameLength / sizeof(WCHAR)),
-			      info->FileName);
+			      GetLastError(), (int)wpath_len, wpath);
 			return -1;
 		}
 
@@ -98,6 +115,152 @@ normalize:
 	return strbuf_normalize_path(normalized_path);
 }
 
+/*
+ * See if the worktree root directory has shortnames enabled.
+ * This will help us decide if we need to do an expensive shortname
+ * to longname conversion on every notification event.
+ *
+ * We do not want to create a file to test this, so we assume that the
+ * root directory contains a ".git" file or directory.  (Our caller
+ * only calls us for the worktree root, so this should be fine.)
+ *
+ * Remember the spelling of the shortname for ".git" if it exists.
+ */
+static void check_for_shortnames(struct one_watch *watch)
+{
+	wchar_t buf_in[MAX_PATH + 1];
+	wchar_t buf_out[MAX_PATH + 1];
+	wchar_t *last_slash = NULL;
+	wchar_t *last_bslash = NULL;
+	wchar_t *last;
+
+	/* build L"<wt-root-path>/.git" */
+	wcscpy(buf_in, watch->wpath_longname);
+	wcscpy(buf_in + watch->wpath_longname_len, L".git");
+
+	if (!GetShortPathNameW(buf_in, buf_out, MAX_PATH))
+		return;
+
+	last_slash = wcsrchr(buf_out, L'/');
+	last_bslash = wcsrchr(buf_out, L'\\');
+	if (last_slash > last_bslash)
+		last = last_slash + 1;
+	else if (last_bslash)
+		last = last_bslash + 1;
+	else
+		last = buf_out;
+
+	if (!wcscmp(last, L".git"))
+		return;
+
+	watch->has_shortnames = 1;
+	wcsncpy(watch->dotgit_shortname, last,
+		ARRAY_SIZE(watch->dotgit_shortname));
+
+	/*
+	 * The shortname for ".git" is usually of the form "GIT~1", so
+	 * we should be able to avoid shortname to longname mapping on
+	 * every notification event if the source string does not
+	 * contain a "~".
+	 *
+	 * However, the documentation for GetLongPathNameW() says
+	 * that there are filesystems that don't follow that pattern
+	 * and warns against this optimization.
+	 *
+	 * Lets test this.
+	 */
+	if (wcschr(watch->dotgit_shortname, L'~'))
+		watch->has_tilda = 1;
+}
+
+enum get_relative_result {
+	GRR_NO_CONVERSION_NEEDED,
+	GRR_HAVE_CONVERSION,
+	GRR_SHUTDOWN,
+};
+
+/*
+ * Info notification paths are relative to the root of the watch.
+ * If our CWD is still at the root, then we can use relative paths
+ * to convert from shortnames to longnames.  If our process has a
+ * different CWD, then we need to construct an absolute path, do
+ * the conversion, and then return the root-relative portion.
+ *
+ * We use the longname form of the root as our basis and assume that
+ * it already has a trailing slash.
+ *
+ * `wpath_len` is in WCHARS not bytes.
+ */
+static enum get_relative_result get_relative_longname(
+	struct one_watch *watch,
+	const wchar_t *wpath, DWORD wpath_len,
+	wchar_t *wpath_longname)
+{
+	wchar_t buf_in[2 * MAX_PATH + 1];
+	wchar_t buf_out[MAX_PATH + 1];
+	DWORD root_len;
+
+	/* Build L"<wt-root-path>/<event-rel-path>" */
+	root_len = watch->wpath_longname_len;
+	wcsncpy(buf_in, watch->wpath_longname, root_len);
+	wcsncpy(buf_in + root_len, wpath, wpath_len);
+	buf_in[root_len + wpath_len] = 0;
+
+	/*
+	 * We don't actually know if the source pathname is a
+	 * shortname or a longname.  This routine allows either to be
+	 * given as input.
+	 */
+	if (!GetLongPathNameW(buf_in, buf_out, MAX_PATH)) {
+		/*
+		 * The shortname to longname conversion can fail for
+		 * various reasons, for example if the file has been
+		 * deleted.  (That is, if we just received a
+		 * delete-file notification event and the file is
+		 * already gone, we can't ask the file system to
+		 * lookup the longname for it.  Likewise, for moves
+		 * and renames where we are given the old name.)
+		 *
+		 * Since deleting or moving a file or directory by its
+		 * shortname is rather obscure, I'm going ignore the
+		 * failure and ask the caller to report the original
+		 * relative path.  This seems kinder than failing here
+		 * and forcing a resync.  Besides, forcing a resync on
+		 * every file/directory delete would effectively
+		 * cripple monitoring.
+		 *
+		 * We might revisit this in the future.
+		 */
+		return GRR_NO_CONVERSION_NEEDED;
+	}
+
+	if (!wcscmp(buf_in, buf_out)) {
+		/*
+		 * The path does not have a shortname alias.
+		 */
+		return GRR_NO_CONVERSION_NEEDED;
+	}
+
+	if (wcsncmp(buf_in, buf_out, root_len)) {
+		/*
+		 * The spelling of the root directory portion of the computed
+		 * longname has changed.  This should not happen.  Basically,
+		 * it means that we don't know where (without recomputing the
+		 * longname of just the root directory) to split out the
+		 * relative path.  Since this should not happen, I'm just
+		 * going to let this fail and force a shutdown (because all
+		 * subsequent events are probably going to see the same
+		 * mismatch).
+		 */
+		return GRR_SHUTDOWN;
+	}
+
+	/* Return the worktree root-relative portion of the longname. */
+
+	wcscpy(wpath_longname, buf_out + root_len);
+	return GRR_HAVE_CONVERSION;
+}
+
 void fsm_listen__stop_async(struct fsmonitor_daemon_state *state)
 {
 	SetEvent(state->backend_data->hListener[LISTENER_SHUTDOWN]);
@@ -111,7 +274,9 @@ static struct one_watch *create_watch(struct fsmonitor_daemon_state *state,
 	DWORD share_mode =
 		FILE_SHARE_WRITE | FILE_SHARE_READ | FILE_SHARE_DELETE;
 	HANDLE hDir;
-	wchar_t wpath[MAX_PATH];
+	DWORD len_longname;
+	wchar_t wpath[MAX_PATH + 1];
+	wchar_t wpath_longname[MAX_PATH + 1];
 
 	if (xutftowcs_path(wpath, path) < 0) {
 		error(_("could not convert to wide characters: '%s'"), path);
@@ -128,6 +293,20 @@ static struct one_watch *create_watch(struct fsmonitor_daemon_state *state,
 		return NULL;
 	}
 
+	if (!GetLongPathNameW(wpath, wpath_longname, MAX_PATH)) {
+		error(_("[GLE %ld] could not get longname of '%s'"),
+		      GetLastError(), path);
+		CloseHandle(hDir);
+		return NULL;
+	}
+
+	len_longname = wcslen(wpath_longname);
+	if (wpath_longname[len_longname - 1] != L'/' &&
+	    wpath_longname[len_longname - 1] != L'\\') {
+		wpath_longname[len_longname++] = L'/';
+		wpath_longname[len_longname] = 0;
+	}
+
 	CALLOC_ARRAY(watch, 1);
 
 	watch->buf_len = sizeof(watch->buffer); /* assume full MAX_RDCW_BUF */
@@ -135,6 +314,9 @@ static struct one_watch *create_watch(struct fsmonitor_daemon_state *state,
 	strbuf_init(&watch->path, 0);
 	strbuf_addstr(&watch->path, path);
 
+	wcscpy(watch->wpath_longname, wpath_longname);
+	watch->wpath_longname_len = len_longname;
+
 	watch->hDir = hDir;
 	watch->hEvent = CreateEvent(NULL, TRUE, FALSE, NULL);
 
@@ -258,6 +440,62 @@ static void cancel_rdcw_watch(struct one_watch *watch)
 	watch->is_active = FALSE;
 }
 
+/*
+ * Process a single relative pathname event.
+ * Return 1 if we should shutdown.
+ */
+static int process_1_worktree_event(
+	struct string_list *cookie_list,
+	struct fsmonitor_batch **batch,
+	const struct strbuf *path,
+	enum fsmonitor_path_type t,
+	DWORD info_action)
+{
+	const char *slash;
+
+	switch (t) {
+	case IS_INSIDE_DOT_GIT_WITH_COOKIE_PREFIX:
+		/* special case cookie files within .git */
+
+		/* Use just the filename of the cookie file. */
+		slash = find_last_dir_sep(path->buf);
+		string_list_append(cookie_list,
+				   slash ? slash + 1 : path->buf);
+		break;
+
+	case IS_INSIDE_DOT_GIT:
+		/* ignore everything inside of "<worktree>/.git/" */
+		break;
+
+	case IS_DOT_GIT:
+		/* "<worktree>/.git" was deleted (or renamed away) */
+		if ((info_action == FILE_ACTION_REMOVED) ||
+		    (info_action == FILE_ACTION_RENAMED_OLD_NAME)) {
+			trace2_data_string("fsmonitor", NULL,
+					   "fsm-listen/dotgit",
+					   "removed");
+			return 1;
+		}
+		break;
+
+	case IS_WORKDIR_PATH:
+		/* queue normal pathname */
+		if (!*batch)
+			*batch = fsmonitor_batch__new();
+		fsmonitor_batch__add_path(*batch, path->buf);
+		break;
+
+	case IS_GITDIR:
+	case IS_INSIDE_GITDIR:
+	case IS_INSIDE_GITDIR_WITH_COOKIE_PREFIX:
+	default:
+		BUG("unexpected path classification '%d' for '%s'",
+		    t, path->buf);
+	}
+
+	return 0;
+}
+
 /*
  * Process filesystem events that happen anywhere (recursively) under the
  * <worktree> root directory.  For a normal working directory, this includes
@@ -274,6 +512,7 @@ static int process_worktree_events(struct fsmonitor_daemon_state *state)
 	struct string_list cookie_list = STRING_LIST_INIT_DUP;
 	struct fsmonitor_batch *batch = NULL;
 	const char *p = watch->buffer;
+	wchar_t wpath_longname[MAX_PATH + 1];
 
 	/*
 	 * If the kernel gets more events than will fit in the kernel
@@ -306,54 +545,63 @@ static int process_worktree_events(struct fsmonitor_daemon_state *state)
 	 */
 	for (;;) {
 		FILE_NOTIFY_INFORMATION *info = (void *)p;
-		const char *slash;
+		wchar_t *wpath = info->FileName;
+		DWORD wpath_len = info->FileNameLength / sizeof(WCHAR);
 		enum fsmonitor_path_type t;
+		enum get_relative_result grr;
+
+		if (watch->has_shortnames) {
+			if (!wcscmp(wpath, watch->dotgit_shortname)) {
+				/*
+				 * This event exactly matches the
+				 * spelling of the shortname of
+				 * ".git", so we can skip some steps.
+				 *
+				 * (This case is odd because the user
+				 * can "rm -rf GIT~1" and we cannot
+				 * use the filesystem to map it back
+				 * to ".git".)
+				 */
+				strbuf_reset(&path);
+				strbuf_addstr(&path, ".git");
+				t = IS_DOT_GIT;
+				goto process_it;
+			}
 
-		strbuf_reset(&path);
-		if (normalize_path_in_utf8(info, &path) == -1)
-			goto skip_this_path;
-
-		t = fsmonitor_classify_path_workdir_relative(path.buf);
-
-		switch (t) {
-		case IS_INSIDE_DOT_GIT_WITH_COOKIE_PREFIX:
-			/* special case cookie files within .git */
-
-			/* Use just the filename of the cookie file. */
-			slash = find_last_dir_sep(path.buf);
-			string_list_append(&cookie_list,
-					   slash ? slash + 1 : path.buf);
-			break;
-
-		case IS_INSIDE_DOT_GIT:
-			/* ignore everything inside of "<worktree>/.git/" */
-			break;
+			if (watch->has_tilda && !wcschr(wpath, L'~')) {
+				/*
+				 * Shortnames on this filesystem have tildas
+				 * and the notification path does not have
+				 * one, so we assume that it is a longname.
+				 */
+				goto normalize_it;
+			}
 
-		case IS_DOT_GIT:
-			/* "<worktree>/.git" was deleted (or renamed away) */
-			if ((info->Action == FILE_ACTION_REMOVED) ||
-			    (info->Action == FILE_ACTION_RENAMED_OLD_NAME)) {
-				trace2_data_string("fsmonitor", NULL,
-						   "fsm-listen/dotgit",
-						   "removed");
+			grr = get_relative_longname(watch, wpath, wpath_len,
+						    wpath_longname);
+			switch (grr) {
+			case GRR_NO_CONVERSION_NEEDED: /* use info buffer as is */
+				break;
+			case GRR_HAVE_CONVERSION:
+				wpath = wpath_longname;
+				wpath_len = wcslen(wpath);
+				break;
+			default:
+			case GRR_SHUTDOWN:
 				goto force_shutdown;
 			}
-			break;
+		}
 
-		case IS_WORKDIR_PATH:
-			/* queue normal pathname */
-			if (!batch)
-				batch = fsmonitor_batch__new();
-			fsmonitor_batch__add_path(batch, path.buf);
-			break;
+normalize_it:
+		if (normalize_path_in_utf8(wpath, wpath_len, &path) == -1)
+			goto skip_this_path;
 
-		case IS_GITDIR:
-		case IS_INSIDE_GITDIR:
-		case IS_INSIDE_GITDIR_WITH_COOKIE_PREFIX:
-		default:
-			BUG("unexpected path classification '%d' for '%s'",
-			    t, path.buf);
-		}
+		t = fsmonitor_classify_path_workdir_relative(path.buf);
+
+process_it:
+		if (process_1_worktree_event(&cookie_list, &batch, &path, t,
+					     info->Action))
+			goto force_shutdown;
 
 skip_this_path:
 		if (!info->NextEntryOffset)
@@ -382,6 +630,9 @@ force_shutdown:
  * Note that we DO NOT get filesystem events on the external <gitdir>
  * itself (it is not inside something that we are watching).  In particular,
  * we do not get an event if the external <gitdir> is deleted.
+ *
+ * Also, we do not care about shortnames within the external <gitdir>, since
+ * we never send these paths to clients.
  */
 static int process_gitdir_events(struct fsmonitor_daemon_state *state)
 {
@@ -403,8 +654,10 @@ static int process_gitdir_events(struct fsmonitor_daemon_state *state)
 		const char *slash;
 		enum fsmonitor_path_type t;
 
-		strbuf_reset(&path);
-		if (normalize_path_in_utf8(info, &path) == -1)
+		if (normalize_path_in_utf8(
+			    info->FileName,
+			    info->FileNameLength / sizeof(WCHAR),
+			    &path) == -1)
 			goto skip_this_path;
 
 		t = fsmonitor_classify_path_gitdir_relative(path.buf);
@@ -538,6 +791,8 @@ int fsm_listen__ctor(struct fsmonitor_daemon_state *state)
 	if (!data->watch_worktree)
 		goto failed;
 
+	check_for_shortnames(data->watch_worktree);
+
 	if (state->nr_paths_watching > 1) {
 		data->watch_gitdir = create_watch(state,
 						  state->path_gitdir_watch.buf);
diff --git a/t/t7527-builtin-fsmonitor.sh b/t/t7527-builtin-fsmonitor.sh
index bd0c952a116..1be21785162 100755
--- a/t/t7527-builtin-fsmonitor.sh
+++ b/t/t7527-builtin-fsmonitor.sh
@@ -166,6 +166,71 @@ test_expect_success 'implicit daemon stop (rename .git)' '
 	test_must_fail git -C test_implicit_2 fsmonitor--daemon status
 '
 
+# File systems on Windows may or may not have shortnames.
+# This is a volume-specific setting on modern systems.
+# "C:/" drives are required to have them enabled.  Other
+# hard drives default to disabled.
+#
+# This is a crude test to see if shortnames are enabled
+# on the volume containing the test directory.  It is
+# crude, but it does not require elevation like `fsutil`.
+#
+test_lazy_prereq SHORTNAMES '
+	mkdir .foo &&
+	test -d "FOO~1"
+'
+
+# Here we assume that the shortname of ".git" is "GIT~1".
+test_expect_success MINGW,SHORTNAMES 'implicit daemon stop (rename GIT~1)' '
+	test_when_finished "stop_daemon_delete_repo test_implicit_1s" &&
+
+	git init test_implicit_1s &&
+
+	start_daemon -C test_implicit_1s &&
+
+	# renaming the .git directory will implicitly stop the daemon.
+	# this moves {.git, GIT~1} to {.gitxyz, GITXYZ~1}.
+	# the rename-from FS Event will contain the shortname.
+	#
+	mv test_implicit_1s/GIT~1 test_implicit_1s/.gitxyz &&
+
+	sleep 1 &&
+	# put it back so that our status will not crawl out to our
+	# parent directory.
+	# this moves {.gitxyz, GITXYZ~1} to {.git, GIT~1}.
+	mv test_implicit_1s/.gitxyz test_implicit_1s/.git &&
+
+	test_must_fail git -C test_implicit_1s fsmonitor--daemon status
+'
+
+# Here we first create a file with LONGNAME of "GIT~1" before
+# we create the repo.  This will cause the shortname of ".git"
+# to be "GIT~2".
+test_expect_success MINGW,SHORTNAMES 'implicit daemon stop (rename GIT~2)' '
+	test_when_finished "stop_daemon_delete_repo test_implicit_1s2" &&
+
+	mkdir test_implicit_1s2 &&
+	echo HELLO >test_implicit_1s2/GIT~1 &&
+	git init test_implicit_1s2 &&
+
+	test_path_is_file test_implicit_1s2/GIT~1 &&
+	test_path_is_dir  test_implicit_1s2/GIT~2 &&
+
+	start_daemon -C test_implicit_1s2 &&
+
+	# renaming the .git directory will implicitly stop the daemon.
+	# the rename-from FS Event will contain the shortname.
+	#
+	mv test_implicit_1s2/GIT~2 test_implicit_1s2/.gitxyz &&
+
+	sleep 1 &&
+	# put it back so that our status will not crawl out to our
+	# parent directory.
+	mv test_implicit_1s2/.gitxyz test_implicit_1s2/.git &&
+
+	test_must_fail git -C test_implicit_1s2 fsmonitor--daemon status
+'
+
 test_expect_success 'cannot start multiple daemons' '
 	test_when_finished "stop_daemon_delete_repo test_multiple" &&
 
