diff --git a/.github/workflows/test.yml b/.github/workflows/test.yml
index 4740daf6..b2effcec 100644
--- a/.github/workflows/test.yml
+++ b/.github/workflows/test.yml
@@ -136,6 +136,16 @@ jobs:
         run: __test__/verify-sparse-checkout-non-cone-mode.sh
 
       # LFS
+      # First check out without LFS so the reused worktree is left holding LFS
+      # pointer files; the `lfs: true` checkout below must then materialize them
+      # rather than leave the stale pointers in place (#270).
+      - name: Checkout LFS pointers (reused worktree setup)
+        uses: ./
+        with:
+          repository: actions/checkout # hardcoded, otherwise doesn't work from a fork
+          ref: test-data/v2/lfs
+          path: lfs
+          lfs: false
       - name: Checkout LFS
         uses: ./
         with:
diff --git a/__test__/git-auth-helper.test.ts b/__test__/git-auth-helper.test.ts
index 2c963b90..acbb0d21 100644
--- a/__test__/git-auth-helper.test.ts
+++ b/__test__/git-auth-helper.test.ts
@@ -1065,6 +1065,7 @@ async function setup(testName: string): Promise<void> {
     getWorkingDirectory: jest.fn(() => workspace),
     init: jest.fn(),
     isDetached: jest.fn(),
+    lfsCheckout: jest.fn(),
     lfsFetch: jest.fn(),
     lfsInstall: jest.fn(),
     log1: jest.fn(),
diff --git a/__test__/git-directory-helper.test.ts b/__test__/git-directory-helper.test.ts
index 4dd5fda6..10c5efd0 100644
--- a/__test__/git-directory-helper.test.ts
+++ b/__test__/git-directory-helper.test.ts
@@ -497,6 +497,7 @@ async function setup(testName: string): Promise<void> {
     getWorkingDirectory: jest.fn(() => repositoryPath),
     init: jest.fn(),
     isDetached: jest.fn(),
+    lfsCheckout: jest.fn(),
     lfsFetch: jest.fn(),
     lfsInstall: jest.fn(),
     log1: jest.fn(),
diff --git a/__test__/verify-lfs.sh b/__test__/verify-lfs.sh
index b0463f1b..60111872 100755
--- a/__test__/verify-lfs.sh
+++ b/__test__/verify-lfs.sh
@@ -9,3 +9,8 @@ if [ ! -f "./lfs/lfs-file.bin" ]; then
     echo "Expected lfs file does not exist"
     exit 1
 fi
+
+if head -n 1 "./lfs/lfs-file.bin" | grep -q "git-lfs.github.com/spec"; then
+    echo "Expected lfs file to be materialized, but it is still an LFS pointer"
+    exit 1
+fi
diff --git a/dist/index.js b/dist/index.js
index 06ae5d22..d1662876 100644
--- a/dist/index.js
+++ b/dist/index.js
@@ -35816,6 +35816,9 @@ class GitCommandManager {
         const output = await this.execGit(['rev-parse', '--symbolic-full-name', '--verify', '--quiet', 'HEAD'], true);
         return !output.stdout.trim().startsWith('refs/heads/');
     }
+    async lfsCheckout() {
+        await this.execGit(['lfs', 'checkout']);
+    }
     async lfsFetch(ref) {
         const args = ['lfs', 'fetch', 'origin', ref];
         const that = this;
@@ -41879,6 +41882,11 @@ async function getSource(settings) {
         startGroup('Checking out the ref');
         await git.checkout(checkoutInfo.ref, checkoutInfo.startPoint);
         endGroup();
+        if (settings.lfs && !settings.sparseCheckout) {
+            startGroup('Checking out LFS objects');
+            await git.lfsCheckout();
+            endGroup();
+        }
         // Submodules
         if (settings.submodules) {
             // Temporarily override global config
diff --git a/src/git-command-manager.ts b/src/git-command-manager.ts
index 84316589..51e81fe1 100644
--- a/src/git-command-manager.ts
+++ b/src/git-command-manager.ts
@@ -45,6 +45,7 @@ export interface IGitCommandManager {
   getWorkingDirectory(): string
   init(objectFormat?: string): Promise<void>
   isDetached(): Promise<boolean>
+  lfsCheckout(): Promise<void>
   lfsFetch(ref: string): Promise<void>
   lfsInstall(): Promise<void>
   log1(format?: string): Promise<string>
@@ -383,6 +384,10 @@ class GitCommandManager {
     return !output.stdout.trim().startsWith('refs/heads/')
   }
 
+  async lfsCheckout(): Promise<void> {
+    await this.execGit(['lfs', 'checkout'])
+  }
+
   async lfsFetch(ref: string): Promise<void> {
     const args = ['lfs', 'fetch', 'origin', ref]
 
diff --git a/src/git-source-provider.ts b/src/git-source-provider.ts
index b9c1d357..36f7f067 100644
--- a/src/git-source-provider.ts
+++ b/src/git-source-provider.ts
@@ -271,6 +271,12 @@ export async function getSource(settings: IGitSourceSettings): Promise<void> {
     await git.checkout(checkoutInfo.ref, checkoutInfo.startPoint)
     core.endGroup()
 
+    if (settings.lfs && !settings.sparseCheckout) {
+      core.startGroup('Checking out LFS objects')
+      await git.lfsCheckout()
+      core.endGroup()
+    }
+
     // Submodules
     if (settings.submodules) {
       // Temporarily override global config