diff --git a/backend/src/hatchling/builders/utils.py b/backend/src/hatchling/builders/utils.py
index f462073b8..72a578907 100644
--- a/backend/src/hatchling/builders/utils.py
+++ b/backend/src/hatchling/builders/utils.py
@@ -2,6 +2,7 @@
 
 import os
 import shutil
+import stat
 from base64 import urlsafe_b64encode
 from typing import TYPE_CHECKING
 
@@ -19,11 +20,49 @@ def replace_file(src: str, dst: str) -> None:
         os.remove(src)
 
 
+def _is_dir_link(path: str) -> bool:
+    try:
+        st = os.lstat(path)
+    except OSError:
+        return False
+    if stat.S_ISLNK(st.st_mode):
+        return True
+    # Windows junctions are reparse points; ``os.path.islink`` is false for them
+    # on some Python versions.
+    file_attributes = getattr(st, "st_file_attributes", 0)
+    return bool(file_attributes & getattr(stat, "FILE_ATTRIBUTE_REPARSE_POINT", 0x400))
+
+
+def _is_inside_directory(root: str, path: str) -> bool:
+    try:
+        common = os.path.commonpath([root, path])
+    except ValueError:
+        return False
+    return os.path.normcase(common) == os.path.normcase(root)
+
+
 def safe_walk(path: str) -> Iterable[tuple[str, list[str], list[str]]]:
     seen = set()
+    walk_root = os.path.realpath(path)
+    walk_root_abs = os.path.abspath(path)
     for root, dirs, files in os.walk(path, followlinks=True):
-        stat = os.stat(root)
-        identifier = stat.st_dev, stat.st_ino
+        # Following an in-tree directory link records the target inode as seen.
+        # If the alias sorts first, the real directory is then skipped as a cycle.
+        if (
+            _is_dir_link(root)
+            and os.path.normcase(os.path.abspath(root)) != os.path.normcase(walk_root_abs)
+            and _is_inside_directory(walk_root, os.path.realpath(root))
+        ):
+            del dirs[:]
+            continue
+
+        try:
+            root_stat = os.stat(root)
+        except OSError:
+            del dirs[:]
+            continue
+
+        identifier = root_stat.st_dev, root_stat.st_ino
         if identifier in seen:
             del dirs[:]
             continue
diff --git a/tests/backend/builders/plugin/test_interface.py b/tests/backend/builders/plugin/test_interface.py
index 6af095444..a2a0a826d 100644
--- a/tests/backend/builders/plugin/test_interface.py
+++ b/tests/backend/builders/plugin/test_interface.py
@@ -166,6 +166,53 @@ def test_infinite_loop_prevention(self, temp_dir):
                 str(project_dir / "foo" / "bar.txt"),
             ]
 
+    def test_in_tree_dir_link_does_not_hide_real_directory(self, temp_dir):
+        """A directory link that sorts before its target must not drop the real package."""
+        project_dir = temp_dir / "project"
+        project_dir.ensure_dir_exists()
+
+        foo = project_dir / "foo"
+        foo.ensure_dir_exists()
+        (foo / "__init__.py").touch()
+        (foo / "pkg.py").touch()
+
+        bar = project_dir / "bar"
+        try:
+            bar.symlink_to(foo, target_is_directory=True)
+        except OSError as exc:
+            pytest.skip(f"directory symlink/junction not available: {exc}")
+
+        with project_dir.as_cwd():
+            config = {"tool": {"hatch": {"build": {"include": ["foo"]}}}}
+            builder = MockBuilder(str(project_dir), config=config)
+
+            relative_paths = sorted(f.relative_path.replace("\\", "/") for f in builder.recurse_included_files())
+
+        assert relative_paths == ["foo/__init__.py", "foo/pkg.py"]
+
+    def test_excluding_dir_link_keeps_real_directory(self, temp_dir):
+        """Excluding the alias must not exclude the real package."""
+        project_dir = temp_dir / "project"
+        project_dir.ensure_dir_exists()
+
+        foo = project_dir / "foo"
+        foo.ensure_dir_exists()
+        (foo / "__init__.py").touch()
+
+        bar = project_dir / "bar"
+        try:
+            bar.symlink_to(foo, target_is_directory=True)
+        except OSError as exc:
+            pytest.skip(f"directory symlink/junction not available: {exc}")
+
+        with project_dir.as_cwd():
+            config = {"tool": {"hatch": {"build": {"include": ["foo", "bar"], "exclude": ["bar"]}}}}
+            builder = MockBuilder(str(project_dir), config=config)
+
+            relative_paths = sorted(f.relative_path.replace("\\", "/") for f in builder.recurse_included_files())
+
+        assert relative_paths == ["foo/__init__.py"]
+
     def test_only_include(self, temp_dir):
         project_dir = temp_dir / "project"
         project_dir.ensure_dir_exists()