@-file search does not index files in nested git repositories

@-file search does not index files in nested git repositories

Description

The @-file autocomplete search does not show files inside nested git repositories, even when respectGitignore: false is set in settings. Only the directory name of the nested repo appears in suggestions, but no files within it.

This might be a regression introduced in v2.0.72 with the "3x faster git repositories" optimization (CHANGELOG). Users in #14566 reported this issue started in v2.0.72.

Related issues: #8672, #14566

Verified Root Cause

We tested this by creating two identical directories side-by-side:

• test-with-git/ - contains .git/ directory (initialized git repo)
• test-without-git/ - regular directory without .git/

Both directories contain identical test-file.txt files.

Result:

• @test-without-git/test-file.txt ✅ appears in @ search
• @test-with-git/test-file.txt ❌ does NOT appear in @ search

This confirms that the presence of a .git directory causes Claude Code to treat the directory as a boundary and exclude its contents from file suggestions.

Current Behavior

When using @ to search for files:

• Files in the main repository: ✅ Visible
• Files in gitignored directories (e.g., notes/): ✅ Visible (with respectGitignore: false)
• Files in nested git repos (e.g., repos/backend/pom.xml): ❌ Not visible
• Directory names of nested repos (e.g., repos/backend): ✅ Visible, but can't see contents

Expected Behavior

The @-file search should index and show files inside nested git repositories, allowing users to search across their entire workspace regardless of git repository boundaries.

Reproduction Steps

1. Create a project structure with nested git repos:

project/
├── .git/
├── CLAUDE.md
├── notes/          # gitignored directory
│   └── daily.md
└── repos/          # contains nested git repos
    └── backend/    # separate git repo with .git/
        ├── .git/
        └── pom.xml

1. Set respectGitignore: false in .claude/settings.json
2. Start Claude Code and type @repos/backend/pom
3. Observe: No results found, even though pom.xml exists in that directory
4. Type @repos/backend/
5. Observe: Only directory paths are shown, no actual files within the nested repo

Environment

• Claude Code Version: 2.1.20
• Platform: macOS (Darwin 24.6.0)
• Installation: Homebrew
• Project Structure: Monorepo with nested git repositories (~10k files in nested repos)

Additional Context

Current Workaround

Using a custom fileSuggestion script in settings:

{
  "fileSuggestion": {
    "type": "command",
    "command": "${CLAUDE_PROJECT_DIR}/.claude/file-suggestion.sh"
  }
}

This works but requires maintaining custom scripts for file discovery.

Why This Matters

Many development workflows use nested git repositories for:

• Monorepos with multiple service repos checked out in subdirectories
• Development environments where multiple related projects are organized together
• Documentation repos alongside code repos

The current behavior forces users to either:

1. Use custom scripts (complex, maintenance burden)
2. Navigate to each nested repo separately (poor UX)
3. Use Glob/Grep tools instead of @ search (slower workflow)

Suggested Solution

If this is a regression from the v2.0.72 optimization, restore the pre-v2.0.72 behavior where nested git repos were indexed.

Alternatively, add a setting like indexNestedRepos: true to allow @-file search to traverse nested git repositories, or extend respectGitignore: false to also treat nested repos as regular directories.

Screenshots

Image showing the replication in the experiment
<img width="1413" height="307" alt="Image" src="https://github.com/user-attachments/assets/ebb9507d-f298-4482-9a22-f54313ebc9ea" />