diff --git a/hgext/largefiles/overrides.py b/hgext/largefiles/overrides.py
--- a/hgext/largefiles/overrides.py
+++ b/hgext/largefiles/overrides.py
@@ -1295,8 +1295,21 @@ def mergeupdate(orig, repo, node, branch
             unsure, s = lfdirstate.status(match_.always(repo.root,
                                                         repo.getcwd()),
                                           [], False, False, False)
-            for lfile in unsure + s.modified + s.added:
+            pctx = repo['.']
+            for lfile in unsure + s.modified:
+                lfileabs = repo.wvfs.join(lfile)
+                if not os.path.exists(lfileabs):
+                    continue
+                lfhash = lfutil.hashrepofile(repo, lfile)
+                standin = lfutil.standin(lfile)
+                lfutil.writestandin(repo, standin, lfhash,
+                                    lfutil.getexecutable(lfileabs))
+                if (standin in pctx and
+                    lfhash == lfutil.readstandin(repo, lfile, '.')):
+                    lfdirstate.normal(lfile)
+            for lfile in s.added:
                 lfutil.updatestandin(repo, lfutil.standin(lfile))
+            lfdirstate.write()
 
         if linearmerge:
             # Only call updatelfiles on the standins that have changed
diff --git a/tests/test-largefiles-update.t b/tests/test-largefiles-update.t
--- a/tests/test-largefiles-update.t
+++ b/tests/test-largefiles-update.t
@@ -25,6 +25,39 @@ directory (and ".hg/largefiles/dirstate"
   $ hg commit -m '#2'
   created new head
 
+Test that update also updates the lfdirstate of 'unsure' largefiles after
+hashing them:
+
+The previous operations will usually have left us with largefiles with a mtime
+within the same second as the dirstate was written.
+The lfdirstate entries will thus have been written with an invalidated/unset
+mtime to make sure further changes within the same second is detected.
+We will however occasionally be "lucky" and get a tick between writing
+largefiles and writing dirstate so we get valid lfdirstate timestamps. The
+following verification is thus disabled but can be verified manually.
+
+#if false
+  $ hg debugdirstate --large --nodate
+  n 644          7 unset               large1
+  n 644         13 unset               large2
+#endif
+
+Wait to make sure we get a tick so the mtime of the largefiles become valid.
+
+  $ sleep 1
+
+A linear merge will update standins before performing the actual merge. It will
+do a lfdirstate status walk and find 'unset'/'unsure' files, hash them, and
+update the corresponding standins.
+Verify that it actually marks the clean files as clean in lfdirstate so
+we don't have to hash them again next time we update.
+
+  $ hg up
+  0 files updated, 0 files merged, 0 files removed, 0 files unresolved
+  $ hg debugdirstate --large --nodate
+  n 644          7 set                 large1
+  n 644         13 set                 large2
+
 Test that lfdirstate keeps track of last modification of largefiles and
 prevents unnecessary hashing of content - also after linear/noop update