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
@@ -307,11 +307,12 @@
                 Left(dirstate_node) => {
                     self.traverse_dirstate_only(dirstate_node)?
                 }
-                Right(fs_entry) => self.traverse_fs_only(
-                    has_ignored_ancestor,
-                    directory_hg_path,
-                    fs_entry,
-                ),
+                Right(fs_entry) => {
+                    let hg_path = directory_hg_path.join(&fs_entry.base_name);
+                    let is_ignored =
+                        has_ignored_ancestor || (self.ignore_fn)(&hg_path);
+                    self.traverse_fs_only(is_ignored, hg_path, fs_entry);
+                }
             }
             Ok(is_fs_only)
         })
@@ -394,7 +395,9 @@
                 } else {
                     // `node.entry.is_none()` indicates a "directory"
                     // node, but the filesystem has a file
-                    self.mark_unknown_or_ignored(has_ignored_ancestor, hg_path)
+                    let is_ignored =
+                        has_ignored_ancestor || (self.ignore_fn)(&hg_path);
+                    self.mark_unknown_or_ignored(is_ignored, hg_path)
                 }
             }
 
@@ -586,16 +589,13 @@
     /// Something in the filesystem has no corresponding dirstate node
     fn traverse_fs_only(
         &self,
-        has_ignored_ancestor: bool,
-        directory_hg_path: &HgPath,
+        is_ignored: bool,
+        hg_path: HgPathBuf,
         fs_entry: &DirEntry,
     ) {
-        let hg_path = directory_hg_path.join(&fs_entry.base_name);
         let file_type = fs_entry.metadata.file_type();
         let file_or_symlink = file_type.is_file() || file_type.is_symlink();
         if file_type.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
@@ -612,9 +612,11 @@
                     is_at_repo_root,
                 ) {
                     children_fs_entries.par_iter().for_each(|child_fs_entry| {
+                        let child_hg_path =
+                            hg_path.join(&child_fs_entry.base_name);
                         self.traverse_fs_only(
-                            is_ignored,
-                            &hg_path,
+                            is_ignored || (self.ignore_fn)(&child_hg_path),
+                            child_hg_path,
                             child_fs_entry,
                         )
                     })
@@ -625,7 +627,7 @@
             }
         } else if file_or_symlink && self.matcher.matches(&hg_path) {
             self.mark_unknown_or_ignored(
-                has_ignored_ancestor,
+                is_ignored,
                 &BorrowedPath::InMemory(&hg_path),
             )
         }
@@ -633,10 +635,9 @@
 
     fn mark_unknown_or_ignored(
         &self,
-        has_ignored_ancestor: bool,
+        is_ignored: bool,
         hg_path: &BorrowedPath<'_, 'on_disk>,
     ) {
-        let is_ignored = has_ignored_ancestor || (self.ignore_fn)(&hg_path);
         if is_ignored {
             if self.options.list_ignored {
                 self.outcome