diff --git a/mercurial/dirstate.py b/mercurial/dirstate.py
--- a/mercurial/dirstate.py
+++ b/mercurial/dirstate.py
@@ -492,11 +492,18 @@ class dirstate(object):
             nd = work.pop()
             if hasattr(match, 'dir'):
                 match.dir(nd)
+            skip = None
             if nd == '.':
                 nd = ''
-                entries = listdir(join(nd), stat=True)
             else:
-                entries = listdir(join(nd), stat=True, skip ='.hg')
+                skip = '.hg'
+            try:
+                entries = listdir(join(nd), stat=True, skip=skip)
+            except OSError, inst:
+                if inst.errno == errno.EACCES:
+                    fwarn(nd, inst.strerror)
+                    continue
+                raise
             for f, kind, st in entries:
                 nf = normalize(nd and (nd + "/" + f) or f, True)
                 if nf not in results:
diff --git a/tests/test-permissions b/tests/test-permissions
--- a/tests/test-permissions
+++ b/tests/test-permissions
@@ -16,3 +16,10 @@ hg commit -m "2" -d "1000000 0" 2>/dev/n
 chmod -w .
 hg diff --nodates
 chmod +w .
+
+chmod +w .hg/store/data/a.i
+mkdir dir
+touch dir/a
+hg status
+chmod -rx dir
+hg status
diff --git a/tests/test-permissions.out b/tests/test-permissions.out
--- a/tests/test-permissions.out
+++ b/tests/test-permissions.out
@@ -20,3 +20,7 @@ diff -r c1fab96507ef a
 @@ -1,1 +1,1 @@
 -foo
 +barber
+M a
+? dir/a
+dir: Permission denied
+M a