diff --git a/builtin/checkout.c b/builtin/checkout.c
index 0fc4a42ae960be..5cb073afeb3ebd 100644
--- a/builtin/checkout.c
+++ b/builtin/checkout.c
@@ -181,6 +181,24 @@ static int update_some(const struct object_id *oid, struct strbuf *base,
 			discard_cache_entry(ce);
 			return 0;
 		}
+
+		/*
+		 * When a virtual filesystem is in use, preserve
+		 * skip-worktree from the existing index entry.
+		 * Without this, checkout_entry() would try to
+		 * unlink() and recreate the file on disk, but
+		 * virtual (projected) files have no physical NTFS
+		 * entry and the unlink fails with ENOENT, causing
+		 * the checkout to fail with exit code 255.
+		 *
+		 * Preserving skip-worktree lets the index update to
+		 * the new tree entry's OID while skipping the
+		 * working tree write.  The virtual filesystem
+		 * provider will serve the correct content from the
+		 * updated projection on next access.
+		 */
+		if (core_virtualfilesystem && ce_skip_worktree(old))
+			ce->ce_flags |= CE_SKIP_WORKTREE;
 	}
 
 	add_index_entry(the_repository->index, ce,
@@ -343,7 +361,18 @@ static void mark_ce_for_checkout_overlay(struct cache_entry *ce,
 					 const struct checkout_opts *opts)
 {
 	ce->ce_flags &= ~CE_MATCHED;
-	if (!opts->ignore_skipworktree && ce_skip_worktree(ce))
+	if (!opts->ignore_skipworktree && ce_skip_worktree(ce) &&
+	    !(core_virtualfilesystem && opts->source_tree &&
+	      (ce->ce_flags & CE_UPDATE)))
+		/*
+		 * Skip-worktree entries are normally excluded from
+		 * pathspec matching.  The exception is virtual
+		 * filesystem entries updated from a source tree
+		 * (CE_UPDATE set by update_some): those must still
+		 * match so report_path_error() does not reject them.
+		 * The actual worktree write is skipped later in
+		 * checkout_worktree() because skip-worktree is set.
+		 */
 		return;
 	if (opts->source_tree && !(ce->ce_flags & CE_UPDATE))
 		/*
@@ -421,6 +450,9 @@ static int checkout_worktree(const struct checkout_opts *opts,
 		struct cache_entry *ce = the_repository->index->cache[pos];
 		if (ce->ce_flags & CE_MATCHED) {
 			if (!ce_stage(ce)) {
+				if (core_virtualfilesystem &&
+				    ce_skip_worktree(ce))
+					continue;
 				errs |= checkout_entry(ce, &state,
 						       NULL, &nr_checkouts);
 				continue;
diff --git a/t/t1093-virtualfilesystem.sh b/t/t1093-virtualfilesystem.sh
index 31c1aa77c6712e..31620d0c9e90da 100755
--- a/t/t1093-virtualfilesystem.sh
+++ b/t/t1093-virtualfilesystem.sh
@@ -419,6 +419,59 @@ test_expect_success 'checkout skips lstat for deleted skip-worktree entries in V
 	git checkout side
 '
 
+test_expect_success 'checkout <tree> -- <path> preserves skip-worktree in VFS mode' '
+	# When "git checkout <tree> -- <path>" updates the index with a
+	# different version of a file, update_some() creates a replacement
+	# cache entry.  Without the fix, skip-worktree is cleared on the
+	# new entry, causing checkout_entry() to try unlink() + write on
+	# disk.  For virtual files with no physical NTFS entry, the unlink
+	# fails with ENOENT and the command exits 255.
+	#
+	# With the fix, skip-worktree is preserved from the old index
+	# entry when core_virtualfilesystem is set.  The index is updated
+	# to the tree entry OID, but checkout_entry() is skipped entirely.
+	clean_repo &&
+
+	test_when_finished "git -c core.virtualfilesystem= checkout main" &&
+
+	# Create a second commit with modified content
+	git -c core.virtualfilesystem= checkout -b checkout-path-test &&
+	echo "modified content" >dir1/file1.txt &&
+	git -c core.virtualfilesystem= add dir1/file1.txt &&
+	git -c core.virtualfilesystem= commit -m "modify dir1/file1.txt" &&
+
+	# Record the OIDs for verification
+	git rev-parse HEAD:dir1/file1.txt >expect_new_oid &&
+	git rev-parse HEAD~1:dir1/file1.txt >expect_old_oid &&
+
+	# Configure VFS hook that returns nothing (0% hydration).
+	# All entries keep skip-worktree set, simulating virtual files
+	# with no physical on-disk representation.
+	write_script .git/hooks/virtualfilesystem <<-\EOF &&
+		printf ""
+	EOF
+
+	# Remove the physical file to simulate a virtual placeholder.
+	# With the fix, checkout should update the index without
+	# touching the working tree (no file creation).
+	# Without the fix, checkout would clear skip-worktree and
+	# write the file to disk.
+	rm -f dir1/file1.txt &&
+
+	# Checkout the old version of the file from the parent commit.
+	git checkout HEAD~1 -- dir1/file1.txt &&
+
+	# Index should have the old (HEAD~1) OID
+	git ls-files -s dir1/file1.txt >actual_index &&
+	grep "$(cat expect_old_oid)" actual_index &&
+
+	# The file should NOT have been written to disk — the fix
+	# preserves skip-worktree so checkout_entry() is skipped.
+	# Without the fix, checkout clears skip-worktree and writes
+	# the file to disk.
+	test_path_is_missing dir1/file1.txt
+'
+
 test_expect_success MINGW,FSMONITOR_DAEMON 'virtualfilesystem hook disables built-in FSMonitor' '
 	clean_repo &&
 	test_config core.usebuiltinfsmonitor true &&