diff --git a/cli/src/merge_tools/external.rs b/cli/src/merge_tools/external.rs
index 96dcf8fda..a1d53374a 100644
--- a/cli/src/merge_tools/external.rs
+++ b/cli/src/merge_tools/external.rs
@@ -212,15 +212,18 @@ fn new_utf8_temp_dir(prefix: &str) -> io::Result<TempDir> {
 fn set_readonly_recursively(path: &Path) -> Result<(), std::io::Error> {
     // Directory permission is unchanged since files under readonly directory cannot
     // be removed.
-    if path.is_dir() {
+    let metadata = path.symlink_metadata()?;
+    if metadata.is_dir() {
         for entry in path.read_dir()? {
             set_readonly_recursively(&entry?.path())?;
         }
         Ok(())
-    } else {
-        let mut perms = std::fs::metadata(path)?.permissions();
+    } else if metadata.is_file() {
+        let mut perms = metadata.permissions();
         perms.set_readonly(true);
         std::fs::set_permissions(path, perms)
+    } else {
+        Ok(())
     }
 }
 
diff --git a/cli/tests/test_diff_command.rs b/cli/tests/test_diff_command.rs
index aae29a34a..2b76ca58e 100644
--- a/cli/tests/test_diff_command.rs
+++ b/cli/tests/test_diff_command.rs
@@ -756,6 +756,49 @@ fn test_diff_external_tool() {
     "###);
 }
 
+#[cfg(unix)]
+#[test]
+fn test_diff_external_tool_symlink() {
+    let mut test_env = TestEnvironment::default();
+    test_env.jj_cmd_ok(test_env.env_root(), &["init", "repo", "--git"]);
+    let repo_path = test_env.env_root().join("repo");
+
+    let external_file_path = test_env.env_root().join("external-file");
+    std::fs::write(&external_file_path, "").unwrap();
+    let external_file_permissions = external_file_path.symlink_metadata().unwrap().permissions();
+
+    std::os::unix::fs::symlink("non-existent1", repo_path.join("dead")).unwrap();
+    std::os::unix::fs::symlink(&external_file_path, repo_path.join("file")).unwrap();
+    test_env.jj_cmd_ok(&repo_path, &["new"]);
+    std::fs::remove_file(repo_path.join("dead")).unwrap();
+    std::os::unix::fs::symlink("non-existent2", repo_path.join("dead")).unwrap();
+    std::fs::remove_file(repo_path.join("file")).unwrap();
+    std::fs::write(repo_path.join("file"), "").unwrap();
+
+    let edit_script = test_env.set_up_fake_diff_editor();
+    std::fs::write(
+        &edit_script,
+        "print-files-before\0print --\0print-files-after",
+    )
+    .unwrap();
+
+    // Shouldn't try to change permission of symlinks
+    insta::assert_snapshot!(
+        test_env.jj_cmd_success(&repo_path, &["diff", "--tool=fake-diff-editor"]), @r###"
+    dead
+    file
+    --
+    dead
+    file
+    "###);
+
+    // External file should be intact
+    assert_eq!(
+        external_file_path.symlink_metadata().unwrap().permissions(),
+        external_file_permissions
+    );
+}
+
 #[test]
 fn test_diff_stat() {
     let test_env = TestEnvironment::default();