diff --git a/gclient_scm.py b/gclient_scm.py
index 362c81b91..8bb1a20a3 100644
--- a/gclient_scm.py
+++ b/gclient_scm.py
@@ -559,6 +559,22 @@ class GitWrapper(SCMWrapper):
                    (e.returncode, e.stderr.decode('utf-8')))
       return True
 
+  def set_config(f):
+    def wrapper(*args):
+      return_val = f(*args)
+      if os.path.exists(os.path.join(args[0].checkout_path, '.git')):
+        # If diff.ignoreSubmodules is not already set, set it to `all`.
+        currentIgnore = subprocess2.capture(
+            ['git', 'config', '--get', 'diff.ignoreSubmodules'],
+            cwd=args[0].checkout_path).strip()
+        if not currentIgnore:
+          subprocess2.capture(['git', 'config', 'diff.ignoreSubmodules', 'all'],
+                              cwd=args[0].checkout_path).strip()
+      return return_val
+
+    return wrapper
+
+  @set_config
   def update(self, options, args, file_list):
     """Runs git to update or transparently checkout the working copy.
 
diff --git a/tests/gclient_scm_test.py b/tests/gclient_scm_test.py
index 8c8552083..06220ed8b 100755
--- a/tests/gclient_scm_test.py
+++ b/tests/gclient_scm_test.py
@@ -393,6 +393,8 @@ class ManagedGitWrapperTestCase(BaseGitWrapperTestCase):
     self.assertEqual(file_list, expected_file_list)
     self.assertEqual(scm.revinfo(options, (), None),
                       'a7142dc9f0009350b96a11f372b6ea658592aa95')
+    self.assertEqual(scm._Capture(['config', '--get', 'diff.ignoreSubmodules']),
+                     'all')
     sys.stdout.close()
 
   def testUpdateMerge(self):