diff --git a/apps/server/src/vcs/GitVcsDriverCore.test.ts b/apps/server/src/vcs/GitVcsDriverCore.test.ts
index 53d031a7413e8..92926daef17cd 100644
--- a/apps/server/src/vcs/GitVcsDriverCore.test.ts
+++ b/apps/server/src/vcs/GitVcsDriverCore.test.ts
@@ -1579,8 +1579,8 @@ it.effect("cancels a slow submodule checkout without reporting best-effort succe
     const spawner = ChildProcessSpawner.make((command) => {
       if (
         ChildProcess.isStandardCommand(command) &&
-        command.args[0] === "submodule" &&
-        command.args[1] === "update"
+        command.args.includes("submodule") &&
+        command.args.includes("update")
       ) {
         return Effect.acquireRelease(
           Effect.succeed(
@@ -4560,6 +4560,84 @@ it.layer(layerTest)("GitVcsDriver core integration", (it) => {
         }),
     );
 
+    it.effect.each([false, true])(
+      "checks out submodules in a new worktree with borrowing failure %s",
+      (failBorrowing) =>
+        Effect.gen(function* () {
+          const fileSystem = yield* FileSystem.FileSystem;
+          const pathService = yield* Path.Path;
+
+          // Git blocks file submodule transports (CVE-2022-39253) despite repo config; local fixtures need env permission.
+          const previousAllowedProtocol = process.env.GIT_ALLOW_PROTOCOL;
+          process.env.GIT_ALLOW_PROTOCOL = "file";
+          yield* Effect.addFinalizer(() =>
+            Effect.sync(() => {
+              if (previousAllowedProtocol === undefined) {
+                delete process.env.GIT_ALLOW_PROTOCOL;
+              } else {
+                process.env.GIT_ALLOW_PROTOCOL = previousAllowedProtocol;
+              }
+            }),
+          );
+
+          const submoduleRepo = yield* makeTmpDir("git-submodule-");
+          yield* initRepoWithCommit(submoduleRepo);
+          yield* writeTextFile(submoduleRepo, "SHARED.md", "# shared\n");
+          yield* git(submoduleRepo, ["add", "."]);
+          yield* git(submoduleRepo, ["commit", "-m", "shared"]);
+
+          const cwd = yield* makeTmpDir();
+          const { initialBranch } = yield* initRepoWithCommit(cwd);
+          yield* git(cwd, ["submodule", "add", submoduleRepo, "shared"]);
+          yield* git(cwd, ["commit", "-m", "add submodule"]);
+          // The remote still advertises its refs but can no longer serve objects, so the
+          // worktree can only populate the submodule from the source's `.git/modules`.
+          const remoteObjects = pathService.join(submoduleRepo, ".git", "objects");
+          if (!failBorrowing) {
+            yield* fileSystem.remove(remoteObjects, { recursive: true });
+            yield* fileSystem.makeDirectory(pathService.join(remoteObjects, "pack"), {
+              recursive: true,
+            });
+          }
+
+          const worktreePath = pathService.join(
+            yield* makeTmpDir("git-worktrees-"),
+            "submodule-worktree",
+          );
+          const delegate = yield* ChildProcessSpawner.ChildProcessSpawner;
+          let borrowingFailed = false;
+          const spawner = ChildProcessSpawner.make((command) => {
+            if (
+              failBorrowing &&
+              ChildProcess.isStandardCommand(command) &&
+              command.args.includes("--dissociate")
+            ) {
+              borrowingFailed = true;
+              return Effect.succeed(makeFailedHandle("error: unknown option 'dissociate'"));
+            }
+            return delegate.spawn(command);
+          });
+          const driver = yield* makeGitVcsDriverCore().pipe(
+            Effect.provideService(ChildProcessSpawner.ChildProcessSpawner, spawner),
+          );
+          yield* driver.createWorktree({
+            cwd,
+            path: worktreePath,
+            refName: initialBranch,
+            newRefName: "feature/submodules",
+          });
+
+          assert.equal(
+            yield* fileSystem.exists(pathService.join(worktreePath, "shared", "SHARED.md")),
+            true,
+          );
+          assert.equal(borrowingFailed, failBorrowing);
+          // The borrowed objects were copied, so the worktree survives the source losing them.
+          yield* fileSystem.remove(pathService.join(cwd, ".git", "modules"), { recursive: true });
+          yield* git(pathService.join(worktreePath, "shared"), ["fsck", "--no-progress"]);
+        }),
+    );
+
     it.effect.each([
       ["recursive", false],
       ["recursive", true],
@@ -4605,8 +4683,8 @@ it.layer(layerTest)("GitVcsDriver core integration", (it) => {
           Effect.gen(function* () {
             if (
               ChildProcess.isStandardCommand(command) &&
-              command.args[0] === "submodule" &&
-              command.args[1] === "update"
+              command.args.includes("submodule") &&
+              command.args.includes("update")
             ) {
               yield* Deferred.succeed(updateStarted, undefined);
               yield* Deferred.await(releaseUpdate);
diff --git a/apps/server/src/vcs/GitVcsDriverCore.ts b/apps/server/src/vcs/GitVcsDriverCore.ts
index 4ace91f8017d2..6ae7de507fa08 100644
--- a/apps/server/src/vcs/GitVcsDriverCore.ts
+++ b/apps/server/src/vcs/GitVcsDriverCore.ts
@@ -4285,6 +4285,47 @@ export const makeGitVcsDriverCore = Effect.fn("makeGitVcsDriverCore")(function*
         yield* progress.onSubmodulesStarted();
       }
       const onSubmoduleLine = progress?.onSubmoduleLine;
+      const updateArgs = ["submodule", "update", "--init"];
+      if (submoduleMode.value === "recursive") updateArgs.push("--recursive");
+      const updateSubmodules = (args: ReadonlyArray<string>, env?: NodeJS.ProcessEnv) =>
+        runGit("GitVcsDriver.createWorktree.updateSubmodules", worktreePath, args, {
+          // Cloning scales with remote size; let it finish or be cancelled, like worktree add.
+          timeoutMs: null,
+          env: onSubmoduleLine ? { ...env, LANGUAGE: "C" } : env,
+          ...(onSubmoduleLine
+            ? { progress: { onStdoutLine: onSubmoduleLine, onStderrLine: onSubmoduleLine } }
+            : {}),
+        });
+      const borrowSubmodules = Effect.gen(function* () {
+        // Linked worktrees share the source object store; expose it as an alternate so Git
+        // can borrow from its modules. An empty primary store makes Git inspect the alternate;
+        // --dissociate copies borrowed objects before that temporary store is removed.
+        const sharedObjects = yield* runGitStdout(
+          "GitVcsDriver.createWorktree.objectsPath",
+          worktreePath,
+          ["rev-parse", "--git-path", "objects"],
+        );
+        const emptyObjects = yield* fileSystem.makeTempDirectoryScoped({
+          prefix: "t3code-submodule-objects-",
+        });
+        yield* updateSubmodules(
+          [
+            "-c",
+            "submodule.alternateLocation=superproject",
+            "-c",
+            "submodule.alternateErrorStrategy=ignore",
+            ...updateArgs,
+            "--dissociate",
+          ],
+          {
+            GIT_OBJECT_DIRECTORY: emptyObjects,
+            GIT_ALTERNATE_OBJECT_DIRECTORIES: path.resolve(worktreePath, sharedObjects.trim()),
+          },
+        );
+      }).pipe(
+        Effect.scoped,
+        Effect.catch(() => updateSubmodules(updateArgs)),
+      );
       // Registering submodule URLs writes the shared config; the clones that follow do not.
       yield* runGit(
         "GitVcsDriver.createWorktree.initSubmodules",
@@ -4292,25 +4333,7 @@ export const makeGitVcsDriverCore = Effect.fn("makeGitVcsDriverCore")(function*
         ["submodule", "init"],
         { writesSharedConfig: true },
       ).pipe(
-        Effect.andThen(
-          runGit(
-            "GitVcsDriver.createWorktree.updateSubmodules",
-            worktreePath,
-            submoduleMode.value === "recursive"
-              ? ["submodule", "update", "--init", "--recursive"]
-              : ["submodule", "update", "--init"],
-            {
-              // Cloning scales with remote size; let it finish or be cancelled, like worktree add.
-              timeoutMs: null,
-              ...(onSubmoduleLine
-                ? {
-                    env: { LANGUAGE: "C" },
-                    progress: { onStdoutLine: onSubmoduleLine, onStderrLine: onSubmoduleLine },
-                  }
-                : {}),
-            },
-          ),
-        ),
+        Effect.andThen(borrowSubmodules),
         Effect.matchEffect({
           onFailure: (cause) =>
             Effect.logWarning("worktree submodule checkout failed; submodules may be incomplete", {