diff --git a/features/plugin-update.feature b/features/plugin-update.feature
index 7f7e1e5e..73577748 100644
--- a/features/plugin-update.feature
+++ b/features/plugin-update.feature
@@ -377,3 +377,36 @@ Feature: Update WordPress plugins
       """
       Success: Updated 2 of 2 plugins.
       """
+
+  @require-wp-5.2
+  Scenario: Skip plugin update when plugin directory is a VCS checkout
+    Given a WP install
+    And I run `wp plugin install wordpress-importer --version=0.5 --force`
+    And I run `wp plugin path wordpress-importer --dir`
+    And save STDOUT as {PLUGIN_DIR}
+
+    When I run `mkdir {PLUGIN_DIR}/.git`
+    And I try `wp plugin update wordpress-importer`
+    Then STDERR should contain:
+      """
+      Warning: wordpress-importer: Skipped update because a VCS checkout was detected. Use --include-vcs to override.
+      """
+    And STDERR should contain:
+      """
+      Error: No plugins updated.
+      """
+    And the return code should be 1
+
+  @require-wp-5.2
+  Scenario: Update plugin in VCS checkout when --include-vcs is set
+    Given a WP install
+    And I run `wp plugin install wordpress-importer --version=0.5 --force`
+    And I run `wp plugin path wordpress-importer --dir`
+    And save STDOUT as {PLUGIN_DIR}
+
+    When I run `mkdir {PLUGIN_DIR}/.git`
+    And I run `wp plugin update wordpress-importer --include-vcs`
+    Then STDOUT should contain:
+      """
+      Success: Updated 1 of 1 plugins.
+      """
diff --git a/features/theme-update.feature b/features/theme-update.feature
index a71fdb1a..09633781 100644
--- a/features/theme-update.feature
+++ b/features/theme-update.feature
@@ -257,3 +257,34 @@ Feature: Update WordPress themes
       """
       Success: Updated 2 of 2 themes.
       """
+
+  Scenario: Skip theme update when theme directory is a VCS checkout
+    Given a WP install
+    And I run `wp theme install twentytwelve --version=3.0 --force`
+    And I run `wp theme path twentytwelve --dir`
+    And save STDOUT as {THEME_DIR}
+
+    When I run `mkdir {THEME_DIR}/.git`
+    And I try `wp theme update twentytwelve`
+    Then STDERR should contain:
+      """
+      Warning: twentytwelve: Skipped update because a VCS checkout was detected. Use --include-vcs to override.
+      """
+    And STDERR should contain:
+      """
+      Error: No themes updated.
+      """
+    And the return code should be 1
+
+  Scenario: Update theme in VCS checkout when --include-vcs is set
+    Given a WP install
+    And I run `wp theme install twentytwelve --version=3.0 --force`
+    And I run `wp theme path twentytwelve --dir`
+    And save STDOUT as {THEME_DIR}
+
+    When I run `mkdir {THEME_DIR}/.git`
+    And I run `wp theme update twentytwelve --include-vcs`
+    Then STDOUT should contain:
+      """
+      Success: Updated 1 of 1 themes.
+      """
diff --git a/src/Plugin_Command.php b/src/Plugin_Command.php
index 1f6ec83e..29258459 100644
--- a/src/Plugin_Command.php
+++ b/src/Plugin_Command.php
@@ -840,6 +840,9 @@ protected function install_from_repo( $slug, $assoc_args ) {
 	 * [--auto-update-indicated]
 	 * : Only update plugins where the server response indicates an automatic update. Updates to the version indicated by the server, not necessarily the latest version. Cannot be used with `--version`, `--minor`, or `--patch`.
 	 *
+	 * [--include-vcs]
+	 * : Include plugins that are version-controlled with a VCS (e.g. git, svn, hg). Skipped by default.
+	 *
 	 * ## EXAMPLES
 	 *
 	 *     $ wp plugin update bbpress --version=dev
diff --git a/src/Theme_Command.php b/src/Theme_Command.php
index a087b202..6e42cf85 100644
--- a/src/Theme_Command.php
+++ b/src/Theme_Command.php
@@ -792,6 +792,9 @@ public function get( $args, $assoc_args ) {
 	 * [--auto-update-indicated]
 	 * : Only update themes where the server response indicates an automatic update. Updates to the version indicated by the server, not necessarily the latest version. Cannot be used with `--version`, `--minor`, or `--patch`.
 	 *
+	 * [--include-vcs]
+	 * : Include themes that are version-controlled with a VCS (e.g. git, svn, hg). Skipped by default.
+	 *
 	 * ## EXAMPLES
 	 *
 	 *     # Update multiple themes
diff --git a/src/WP_CLI/CommandWithUpgrade.php b/src/WP_CLI/CommandWithUpgrade.php
index 2dfc36cc..4cd20a4c 100755
--- a/src/WP_CLI/CommandWithUpgrade.php
+++ b/src/WP_CLI/CommandWithUpgrade.php
@@ -744,6 +744,30 @@ function ( $item ) {
 			}
 		}
 
+		// Skip VCS-controlled items unless --include-vcs is set.
+		if ( ! Utils\get_flag_value( $assoc_args, 'include-vcs', false ) && in_array( $this->item_type, [ 'plugin', 'theme' ], true ) ) {
+			if ( ! class_exists( 'WP_Automatic_Updater' ) ) {
+				if ( file_exists( ABSPATH . 'wp-admin/includes/class-wp-automatic-updater.php' ) ) {
+					require_once ABSPATH . 'wp-admin/includes/class-wp-automatic-updater.php';
+				} else {
+					require_once ABSPATH . 'wp-admin/includes/class-wp-upgrader.php';
+				}
+			}
+			$automatic_updater = new \WP_Automatic_Updater();
+			foreach ( $items_to_update as $item_key => $item_info ) {
+				if ( 'plugin' === $this->item_type ) {
+					$item_dir = WP_PLUGIN_DIR . '/' . dirname( $item_key );
+				} else {
+					$item_dir = get_theme_root( $item_key ) . '/' . $item_key;
+				}
+				if ( $automatic_updater->is_vcs_checkout( $item_dir ) ) {
+					WP_CLI::warning( "{$item_info['name']}: Skipped update because a VCS checkout was detected. Use --include-vcs to override." );
+					++$skipped;
+					unset( $items_to_update[ $item_key ] );
+				}
+			}
+		}
+
 		if ( Utils\get_flag_value( $assoc_args, 'dry-run' ) ) {
 			if ( empty( $items_to_update ) ) {
 				WP_CLI::log( "No {$this->item_type} updates available." );