diff --git a/rust/Cargo.lock b/rust/Cargo.lock
--- a/rust/Cargo.lock
+++ b/rust/Cargo.lock
@@ -358,6 +358,7 @@ dependencies = [
  "format-bytes",
  "home",
  "im-rc",
+ "itertools",
  "lazy_static",
  "log",
  "memmap",
diff --git a/rust/hg-core/Cargo.toml b/rust/hg-core/Cargo.toml
--- a/rust/hg-core/Cargo.toml
+++ b/rust/hg-core/Cargo.toml
@@ -14,6 +14,7 @@ byteorder = "1.3.4"
 derive_more = "0.99"
 home = "0.5"
 im-rc = "15.0.*"
+itertools = "0.9"
 lazy_static = "1.4.0"
 rand = "0.7.3"
 rand_pcg = "0.2.1"
diff --git a/rust/hg-core/src/dirstate.rs b/rust/hg-core/src/dirstate.rs
--- a/rust/hg-core/src/dirstate.rs
+++ b/rust/hg-core/src/dirstate.rs
@@ -42,6 +42,19 @@ impl DirstateEntry {
     pub fn is_from_other_parent(&self) -> bool {
         self.state == EntryState::Normal && self.size == SIZE_FROM_OTHER_PARENT
     }
+
+    // TODO: other platforms
+    #[cfg(unix)]
+    pub fn mode_changed(
+        &self,
+        filesystem_metadata: &std::fs::Metadata,
+    ) -> bool {
+        use std::os::unix::fs::MetadataExt;
+        const EXEC_BIT_MASK: u32 = 0o100;
+        let dirstate_exec_bit = (self.mode as u32) & EXEC_BIT_MASK;
+        let fs_exec_bit = filesystem_metadata.mode() & EXEC_BIT_MASK;
+        dirstate_exec_bit != fs_exec_bit
+    }
 }
 
 #[derive(BytesCast)]
diff --git a/rust/hg-core/src/dirstate/status.rs b/rust/hg-core/src/dirstate/status.rs
--- a/rust/hg-core/src/dirstate/status.rs
+++ b/rust/hg-core/src/dirstate/status.rs
@@ -95,7 +95,7 @@ pub enum Dispatch {
 
 type IoResult<T> = std::io::Result<T>;
 
-/// `Box<dyn Trait>` is syntactic sugar for `Box<dyn Trait, 'static>`, so add
+/// `Box<dyn Trait>` is syntactic sugar for `Box<dyn Trait + 'static>`, so add
 /// an explicit lifetime here to not fight `'static` bounds "out of nowhere".
 pub type IgnoreFnType<'a> =
     Box<dyn for<'r> Fn(&'r HgPath) -> bool + Sync + 'a>;
@@ -255,7 +255,7 @@ pub struct StatusOptions {
     pub collect_traversed_dirs: bool,
 }
 
-#[derive(Debug)]
+#[derive(Debug, Default)]
 pub struct DirstateStatus<'a> {
     /// Tracked files whose contents have changed since the parent revision
     pub modified: Vec<HgPathCow<'a>>,
diff --git a/rust/hg-core/src/dirstate_tree/dirstate_map.rs b/rust/hg-core/src/dirstate_tree/dirstate_map.rs
--- a/rust/hg-core/src/dirstate_tree/dirstate_map.rs
+++ b/rust/hg-core/src/dirstate_tree/dirstate_map.rs
@@ -27,7 +27,7 @@ use crate::StatusOptions;
 pub struct DirstateMap {
     parents: Option<DirstateParents>,
     dirty_parents: bool,
-    root: ChildNodes,
+    pub(super) root: ChildNodes,
 
     /// Number of nodes anywhere in the tree that have `.entry.is_some()`.
     nodes_with_entry_count: usize,
@@ -42,17 +42,17 @@ pub struct DirstateMap {
 /// path, so comparing full paths gives the same result as comparing base
 /// names. However `BTreeMap` would waste time always re-comparing the same
 /// string prefix.
-type ChildNodes = BTreeMap<WithBasename<HgPathBuf>, Node>;
+pub(super) type ChildNodes = BTreeMap<WithBasename<HgPathBuf>, Node>;
 
 /// Represents a file or a directory
 #[derive(Default)]
-struct Node {
+pub(super) struct Node {
     /// `None` for directories
-    entry: Option<DirstateEntry>,
+    pub(super) entry: Option<DirstateEntry>,
 
-    copy_source: Option<HgPathBuf>,
+    pub(super) copy_source: Option<HgPathBuf>,
 
-    children: ChildNodes,
+    pub(super) children: ChildNodes,
 
     /// How many (non-inclusive) descendants of this node are tracked files
     tracked_descendants_count: usize,
@@ -67,6 +67,10 @@ impl Node {
             false
         }
     }
+
+    pub(super) fn state(&self) -> Option<EntryState> {
+        self.entry.as_ref().map(|entry| entry.state)
+    }
 }
 
 /// `(full_path, entry, copy_source)`
diff --git a/rust/hg-core/src/dirstate_tree/status.rs b/rust/hg-core/src/dirstate_tree/status.rs
--- a/rust/hg-core/src/dirstate_tree/status.rs
+++ b/rust/hg-core/src/dirstate_tree/status.rs
@@ -1,17 +1,379 @@
+use crate::dirstate::status::IgnoreFnType;
+use crate::dirstate_tree::dirstate_map::ChildNodes;
 use crate::dirstate_tree::dirstate_map::DirstateMap;
+use crate::dirstate_tree::dirstate_map::Node;
+use crate::matchers::get_ignore_function;
 use crate::matchers::Matcher;
+use crate::utils::files::get_bytes_from_os_string;
+use crate::utils::hg_path::HgPath;
 use crate::DirstateStatus;
+use crate::EntryState;
+use crate::HgPathBuf;
 use crate::PatternFileWarning;
 use crate::StatusError;
 use crate::StatusOptions;
+use std::borrow::Cow;
+use std::io;
+use std::path::Path;
 use std::path::PathBuf;
 
-pub fn status<'a>(
-    _dmap: &'a mut DirstateMap,
-    _matcher: &'a (dyn Matcher + Sync),
-    _root_dir: PathBuf,
-    _ignore_files: Vec<PathBuf>,
-    _options: StatusOptions,
-) -> Result<(DirstateStatus<'a>, Vec<PatternFileWarning>), StatusError> {
-    todo!()
+/// Returns the status of the working directory compared to its parent
+/// changeset.
+///
+/// This algorithm is based on traversing the filesystem tree (`fs` in function
+/// and variable names) and dirstate tree at the same time. The core of this
+/// traversal is the recursive `traverse_fs_directory_and_dirstate` function
+/// and its use of `itertools::merge_join_by`. When reaching a path that only
+/// exists in one of the two trees, depending on information requested by
+/// `options` we may need to traverse the remaining subtree.
+pub fn status<'tree>(
+    dmap: &'tree mut DirstateMap,
+    matcher: &(dyn Matcher + Sync),
+    root_dir: PathBuf,
+    ignore_files: Vec<PathBuf>,
+    options: StatusOptions,
+) -> Result<(DirstateStatus<'tree>, Vec<PatternFileWarning>), StatusError> {
+    let (ignore_fn, warnings): (IgnoreFnType, _) =
+        if options.list_ignored || options.list_unknown {
+            get_ignore_function(ignore_files, &root_dir)?
+        } else {
+            (Box::new(|&_| true), vec![])
+        };
+
+    let mut common = StatusCommon {
+        options,
+        matcher,
+        ignore_fn,
+        outcome: DirstateStatus::default(),
+    };
+    let is_at_repo_root = true;
+    let hg_path = HgPath::new("");
+    let has_ignored_ancestor = false;
+    common.traverse_fs_directory_and_dirstate(
+        has_ignored_ancestor,
+        &mut dmap.root,
+        hg_path,
+        &root_dir,
+        is_at_repo_root,
+    );
+    Ok((common.outcome, warnings))
+}
+
+/// Bag of random things needed by various parts of the algorithm. Reduces the
+/// number of parameters passed to functions.
+struct StatusCommon<'tree, 'a> {
+    options: StatusOptions,
+    matcher: &'a (dyn Matcher + Sync),
+    ignore_fn: IgnoreFnType<'a>,
+    outcome: DirstateStatus<'tree>,
 }
+
+impl<'tree, 'a> StatusCommon<'tree, 'a> {
+    fn traverse_fs_directory_and_dirstate(
+        &mut self,
+        has_ignored_ancestor: bool,
+        dirstate_nodes: &'tree mut ChildNodes,
+        directory_hg_path: &HgPath,
+        fs_path: &Path,
+        is_at_repo_root: bool,
+    ) {
+        // TODO: handle I/O errors
+        let mut fs_entries =
+            DirEntry::read_dir(fs_path, is_at_repo_root).unwrap();
+
+        // `merge_join_by` requires both its input iterators to be sorted:
+
+        // * `BTreeMap` iterates according to keys’ ordering by definition
+
+        // `sort_unstable_by_key` doesn’t allow keys borrowing from the value:
+        // https://github.com/rust-lang/rust/issues/34162
+        fs_entries.sort_unstable_by(|e1, e2| e1.base_name.cmp(&e2.base_name));
+
+        for pair in itertools::merge_join_by(
+            dirstate_nodes,
+            &fs_entries,
+            |(full_path, _node), fs_entry| {
+                full_path.base_name().cmp(&fs_entry.base_name)
+            },
+        ) {
+            use itertools::EitherOrBoth::*;
+            match pair {
+                Both((hg_path, dirstate_node), fs_entry) => {
+                    self.traverse_fs_and_dirstate(
+                        fs_entry,
+                        hg_path.full_path(),
+                        dirstate_node,
+                        has_ignored_ancestor,
+                    );
+                }
+                Left((hg_path, dirstate_node)) => self.traverse_dirstate_only(
+                    hg_path.full_path(),
+                    dirstate_node,
+                ),
+                Right(fs_entry) => self.traverse_fs_only(
+                    has_ignored_ancestor,
+                    directory_hg_path,
+                    fs_entry,
+                ),
+            }
+        }
+    }
+
+    fn traverse_fs_and_dirstate(
+        &mut self,
+        fs_entry: &DirEntry,
+        hg_path: &'tree HgPath,
+        dirstate_node: &'tree mut Node,
+        has_ignored_ancestor: bool,
+    ) {
+        if fs_entry.metadata.is_dir() {
+            if self.options.collect_traversed_dirs {
+                self.outcome.traversed.push(hg_path.into())
+            }
+            // If we previously had a file here, it was removed (with
+            // `hg rm` or similar) or deleted before it could be
+            // replaced by a directory.
+            self.mark_removed_or_deleted_if_file(
+                hg_path,
+                dirstate_node.state(),
+            );
+            let is_ignored = has_ignored_ancestor || (self.ignore_fn)(hg_path);
+            let is_at_repo_root = false;
+            self.traverse_fs_directory_and_dirstate(
+                is_ignored,
+                &mut dirstate_node.children,
+                hg_path,
+                &fs_entry.full_path,
+                is_at_repo_root,
+            );
+        } else {
+            if self.matcher.matches(hg_path) {
+                let full_path = Cow::from(hg_path);
+                if let Some(entry) = &dirstate_node.entry {
+                    match entry.state {
+                        EntryState::Added => {
+                            self.outcome.added.push(full_path)
+                        }
+                        EntryState::Removed => {
+                            self.outcome.removed.push(full_path)
+                        }
+                        EntryState::Merged => {
+                            self.outcome.modified.push(full_path)
+                        }
+                        EntryState::Normal => {
+                            self.handle_normal_file(
+                                full_path,
+                                dirstate_node,
+                                entry,
+                                fs_entry,
+                            );
+                        }
+                        // This variant is not used in DirstateMap
+                        // nodes
+                        EntryState::Unknown => unreachable!(),
+                    }
+                } else {
+                    // `node.entry.is_none()` indicates a "directory"
+                    // node, but the filesystem has a file
+                    self.mark_unknown_or_ignored(
+                        has_ignored_ancestor,
+                        full_path,
+                    )
+                }
+            }
+
+            for (child_hg_path, child_node) in &mut dirstate_node.children {
+                self.traverse_dirstate_only(
+                    child_hg_path.full_path(),
+                    child_node,
+                )
+            }
+        }
+    }
+
+    /// A file with `EntryState::Normal` in the dirstate was found in the
+    /// filesystem
+    fn handle_normal_file(
+        &mut self,
+        full_path: Cow<'tree, HgPath>,
+        dirstate_node: &Node,
+        entry: &crate::DirstateEntry,
+        fs_entry: &DirEntry,
+    ) {
+        // Keep the low 31 bits
+        fn truncate_u64(value: u64) -> i32 {
+            (value & 0x7FFF_FFFF) as i32
+        }
+        fn truncate_i64(value: i64) -> i32 {
+            (value & 0x7FFF_FFFF) as i32
+        }
+
+        let mode_changed = || {
+            self.options.check_exec && entry.mode_changed(&fs_entry.metadata)
+        };
+        let size_changed = entry.size != truncate_u64(fs_entry.metadata.len());
+        if entry.size >= 0
+            && size_changed
+            && fs_entry.metadata.file_type().is_symlink()
+        {
+            // issue6456: Size returned may be longer due to encryption
+            // on EXT-4 fscrypt. TODO maybe only do it on EXT4?
+            self.outcome.unsure.push(full_path)
+        } else if dirstate_node.copy_source.is_some()
+            || entry.is_from_other_parent()
+            || (entry.size >= 0 && (size_changed || mode_changed()))
+        {
+            self.outcome.modified.push(full_path)
+        } else {
+            let mtime = mtime_seconds(&fs_entry.metadata);
+            if truncate_i64(mtime) != entry.mtime
+                || mtime == self.options.last_normal_time
+            {
+                self.outcome.unsure.push(full_path)
+            } else if self.options.list_clean {
+                self.outcome.clean.push(full_path)
+            }
+        }
+    }
+
+    /// A node in the dirstate tree has no corresponding filesystem entry
+    fn traverse_dirstate_only(
+        &mut self,
+        hg_path: &'tree HgPath,
+        dirstate_node: &'tree mut Node,
+    ) {
+        self.mark_removed_or_deleted_if_file(hg_path, dirstate_node.state());
+        for (child_hg_path, child_node) in &mut dirstate_node.children {
+            self.traverse_dirstate_only(child_hg_path.full_path(), child_node)
+        }
+    }
+
+    /// A node in the dirstate tree has no corresponding *file* on the
+    /// filesystem
+    ///
+    /// Does nothing on a "directory" node
+    fn mark_removed_or_deleted_if_file(
+        &mut self,
+        hg_path: &'tree HgPath,
+        dirstate_node_state: Option<EntryState>,
+    ) {
+        if let Some(state) = dirstate_node_state {
+            if self.matcher.matches(hg_path) {
+                if let EntryState::Removed = state {
+                    self.outcome.removed.push(hg_path.into())
+                } else {
+                    self.outcome.deleted.push(hg_path.into())
+                }
+            }
+        }
+    }
+
+    /// Something in the filesystem has no corresponding dirstate node
+    fn traverse_fs_only(
+        &mut self,
+        has_ignored_ancestor: bool,
+        directory_hg_path: &HgPath,
+        fs_entry: &DirEntry,
+    ) {
+        let hg_path = directory_hg_path.join(&fs_entry.base_name);
+        if fs_entry.metadata.is_dir() {
+            let is_ignored =
+                has_ignored_ancestor || (self.ignore_fn)(&hg_path);
+            let traverse_children = if is_ignored {
+                // Descendants of an ignored directory are all ignored
+                self.options.list_ignored
+            } else {
+                // Descendants of an unknown directory may be either unknown or
+                // ignored
+                self.options.list_unknown || self.options.list_ignored
+            };
+            if traverse_children {
+                let is_at_repo_root = false;
+                // TODO: handle I/O errors
+                let children_fs_entries =
+                    DirEntry::read_dir(&fs_entry.full_path, is_at_repo_root)
+                        .unwrap();
+                for child_fs_entry in children_fs_entries {
+                    self.traverse_fs_only(
+                        is_ignored,
+                        &hg_path,
+                        &child_fs_entry,
+                    )
+                }
+            }
+            if self.options.collect_traversed_dirs {
+                self.outcome.traversed.push(hg_path.into())
+            }
+        } else if self.matcher.matches(&hg_path) {
+            self.mark_unknown_or_ignored(has_ignored_ancestor, hg_path.into())
+        }
+    }
+
+    fn mark_unknown_or_ignored(
+        &mut self,
+        has_ignored_ancestor: bool,
+        hg_path: Cow<'tree, HgPath>,
+    ) {
+        let is_ignored = has_ignored_ancestor || (self.ignore_fn)(&hg_path);
+        if is_ignored {
+            if self.options.list_ignored {
+                self.outcome.ignored.push(hg_path)
+            }
+        } else {
+            if self.options.list_unknown {
+                self.outcome.unknown.push(hg_path)
+            }
+        }
+    }
+}
+
+#[cfg(unix)] // TODO
+fn mtime_seconds(metadata: &std::fs::Metadata) -> i64 {
+    // Going through `Metadata::modified()` would be portable, but would take
+    // care to construct a `SystemTime` value with sub-second precision just
+    // for us to throw that away here.
+    use std::os::unix::fs::MetadataExt;
+    metadata.mtime()
+}
+
+struct DirEntry {
+    base_name: HgPathBuf,
+    full_path: PathBuf,
+    metadata: std::fs::Metadata,
+}
+
+impl DirEntry {
+    /// Returns **unsorted** entries in the given directory, with name and
+    /// metadata.
+    ///
+    /// If a `.hg` sub-directory is encountered:
+    ///
+    /// * At the repository root, ignore that sub-directory
+    /// * Elsewhere, we’re listing the content of a sub-repo. Return an empty
+    ///   list instead.
+    fn read_dir(path: &Path, is_at_repo_root: bool) -> io::Result<Vec<Self>> {
+        let mut results = Vec::new();
+        for entry in path.read_dir()? {
+            let entry = entry?;
+            let metadata = entry.metadata()?;
+            let name = get_bytes_from_os_string(entry.file_name());
+            // FIXME don't do this when cached
+            if name == b".hg" {
+                if is_at_repo_root {
+                    // Skip the repo’s own .hg (might be a symlink)
+                    continue;
+                } else if metadata.is_dir() {
+                    // A .hg sub-directory at another location means a subrepo,
+                    // skip it entirely.
+                    return Ok(Vec::new());
+                }
+            }
+            results.push(DirEntry {
+                base_name: name.into(),
+                full_path: entry.path(),
+                metadata,
+            })
+        }
+        Ok(results)
+    }
+}
diff --git a/rust/hg-core/src/utils/files.rs b/rust/hg-core/src/utils/files.rs
--- a/rust/hg-core/src/utils/files.rs
+++ b/rust/hg-core/src/utils/files.rs
@@ -17,7 +17,7 @@ use crate::utils::{
 use lazy_static::lazy_static;
 use same_file::is_same_file;
 use std::borrow::{Cow, ToOwned};
-use std::ffi::OsStr;
+use std::ffi::{OsStr, OsString};
 use std::fs::Metadata;
 use std::iter::FusedIterator;
 use std::ops::Deref;
@@ -53,6 +53,12 @@ pub fn get_bytes_from_os_str(str: impl A
     str.as_ref().as_bytes().to_vec()
 }
 
+#[cfg(unix)]
+pub fn get_bytes_from_os_string(str: OsString) -> Vec<u8> {
+    use std::os::unix::ffi::OsStringExt;
+    str.into_vec()
+}
+
 /// An iterator over repository path yielding itself and its ancestors.
 #[derive(Copy, Clone, Debug)]
 pub struct Ancestors<'a> {
diff --git a/rust/hg-core/src/utils/hg_path.rs b/rust/hg-core/src/utils/hg_path.rs
--- a/rust/hg-core/src/utils/hg_path.rs
+++ b/rust/hg-core/src/utils/hg_path.rs
@@ -6,6 +6,7 @@
 // GNU General Public License version 2 or any later version.
 
 use std::borrow::Borrow;
+use std::borrow::Cow;
 use std::convert::TryFrom;
 use std::ffi::{OsStr, OsString};
 use std::fmt;
@@ -535,6 +536,24 @@ impl TryFrom<PathBuf> for HgPathBuf {
     }
 }
 
+impl From<HgPathBuf> for Cow<'_, HgPath> {
+    fn from(path: HgPathBuf) -> Self {
+        Cow::Owned(path)
+    }
+}
+
+impl<'a> From<&'a HgPath> for Cow<'a, HgPath> {
+    fn from(path: &'a HgPath) -> Self {
+        Cow::Borrowed(path)
+    }
+}
+
+impl<'a> From<&'a HgPathBuf> for Cow<'a, HgPath> {
+    fn from(path: &'a HgPathBuf) -> Self {
+        Cow::Borrowed(&**path)
+    }
+}
+
 #[cfg(test)]
 mod tests {
     use super::*;