diff --git a/lib/srv/forward/sftp.go b/lib/srv/forward/sftp.go
index 9aa93da548491..f158ee9f1f853 100644
--- a/lib/srv/forward/sftp.go
+++ b/lib/srv/forward/sftp.go
@@ -211,6 +211,12 @@ func (h *proxyHandlers) Filelist(req *sftp.Request) (_ sftp.ListerAt, err error)
 	return lister, nil
 }
 
+// RealPath canonicalizes a path name, including resolving ".." and
+// following symlinks. Required to implement [sftp.RealPathFileLister].
+func (h *proxyHandlers) RealPath(path string) (string, error) {
+	return h.remoteFS.RealPath(path)
+}
+
 func (h *proxyHandlers) sendSFTPEvent(req *sftp.Request, reqErr error) {
 	wd, err := h.remoteFS.Getwd()
 	if err != nil {
diff --git a/lib/sshutils/sftp/http.go b/lib/sshutils/sftp/http.go
index 33f5bc60c0b9c..d657039d1d0ef 100644
--- a/lib/sshutils/sftp/http.go
+++ b/lib/sshutils/sftp/http.go
@@ -173,6 +173,10 @@ func (h *httpFS) Getwd() (string, error) {
 	return "", nil
 }
 
+func (h *httpFS) RealPath(path string) (string, error) {
+	return path, nil
+}
+
 type nopWriteCloser struct {
 	io.Writer
 }
diff --git a/lib/sshutils/sftp/local.go b/lib/sshutils/sftp/local.go
index 8496e87d95abc..d76c779edb1b8 100644
--- a/lib/sshutils/sftp/local.go
+++ b/lib/sshutils/sftp/local.go
@@ -142,3 +142,11 @@ func (l localFS) Readlink(name string) (string, error) {
 func (l localFS) Getwd() (string, error) {
 	return os.Getwd()
 }
+
+func (l localFS) RealPath(path string) (string, error) {
+	path, err := filepath.Abs(path)
+	if err != nil {
+		return "", err
+	}
+	return filepath.EvalSymlinks(path)
+}
diff --git a/lib/sshutils/sftp/sftp.go b/lib/sshutils/sftp/sftp.go
index 69b1146ba23e8..823dfce15b5ab 100644
--- a/lib/sshutils/sftp/sftp.go
+++ b/lib/sshutils/sftp/sftp.go
@@ -160,6 +160,9 @@ type FileSystem interface {
 	Readlink(name string) (string, error)
 	// Getwd gets the current working directory.
 	Getwd() (string, error)
+	// RealPath canonicalizes a path name, including resolving ".." and
+	// following symlinks.
+	RealPath(path string) (string, error)
 }
 
 // CreateUploadConfig returns a Config ready to upload files over SFTP.
@@ -548,7 +551,7 @@ func (c *Config) transfer(ctx context.Context) error {
 		}
 
 		if fi.IsDir() {
-			if err := c.transferDir(ctx, dstPath, matchedPaths[i], fi); err != nil {
+			if err := c.transferDir(ctx, dstPath, matchedPaths[i], fi, nil); err != nil {
 				return trace.Wrap(err)
 			}
 		} else {
@@ -562,10 +565,22 @@ func (c *Config) transfer(ctx context.Context) error {
 }
 
 // transferDir transfers a directory
-func (c *Config) transferDir(ctx context.Context, dstPath, srcPath string, srcFileInfo os.FileInfo) error {
+func (c *Config) transferDir(ctx context.Context, dstPath, srcPath string, srcFileInfo os.FileInfo, visited map[string]struct{}) error {
+	if visited == nil {
+		visited = make(map[string]struct{})
+	}
+	realSrcPath, err := c.srcFS.RealPath(srcPath)
+	if err != nil {
+		return trace.Wrap(err)
+	}
+	if _, ok := visited[realSrcPath]; ok {
+		c.Log.DebugContext(ctx, "symlink loop detected, directory will be skipped", "link", srcPath, "target", realSrcPath)
+		return nil
+	}
+	visited[realSrcPath] = struct{}{}
 	c.Log.DebugContext(ctx, "transferring contents of directory", "source_fs", c.srcFS.Type(), "source_path", srcPath, "dest_fs", c.dstFS.Type(), "dest_path", dstPath)
 
-	err := c.dstFS.Mkdir(dstPath)
+	err = c.dstFS.Mkdir(dstPath)
 	if err != nil && !errors.Is(err, os.ErrExist) {
 		return trace.Errorf("error creating %s directory %q: %w", c.dstFS.Type(), dstPath, err)
 	}
@@ -583,7 +598,7 @@ func (c *Config) transferDir(ctx context.Context, dstPath, srcPath string, srcFi
 		lSubPath := path.Join(srcPath, info.Name())
 
 		if info.IsDir() {
-			if err := c.transferDir(ctx, dstSubPath, lSubPath, info); err != nil {
+			if err := c.transferDir(ctx, dstSubPath, lSubPath, info, visited); err != nil {
 				return trace.Wrap(err)
 			}
 		} else {
diff --git a/lib/sshutils/sftp/sftp_test.go b/lib/sshutils/sftp/sftp_test.go
index 9df26071143c4..642497a34ba32 100644
--- a/lib/sshutils/sftp/sftp_test.go
+++ b/lib/sshutils/sftp/sftp_test.go
@@ -633,6 +633,82 @@ func TestCopyingSymlinkedFile(t *testing.T) {
 	checkTransfer(t, false, dstPath, linkPath)
 }
 
+type mockFS struct {
+	localFS
+	fileAccesses map[string]int
+}
+
+func (m *mockFS) Open(path string) (File, error) {
+	realPath, err := filepath.EvalSymlinks(path)
+	if err != nil {
+		return nil, trace.Wrap(err)
+	}
+	m.fileAccesses[realPath]++
+	return m.localFS.Open(path)
+}
+
+func TestRecursiveSymlinks(t *testing.T) {
+	// Create files and symlinks.
+	root := t.TempDir()
+	t.Chdir(root)
+	srcDir := filepath.Join(root, "a")
+	createDir(t, filepath.Join(srcDir, "b/c"))
+	fileA := "a/a.txt"
+	fileB := "a/b/b.txt"
+	fileC := "a/b/c/c.txt"
+	for _, file := range []string{fileA, fileB, fileC} {
+		createFile(t, filepath.Join(root, file))
+	}
+	require.NoError(t, os.Symlink(srcDir, filepath.Join(srcDir, "abs_link")))
+	require.NoError(t, os.Symlink("..", filepath.Join(srcDir, "b/rel_link")))
+
+	tests := []struct {
+		name   string
+		srcDir string
+	}{
+		{
+			name:   "absolute",
+			srcDir: srcDir,
+		},
+		{
+			name:   "relative",
+			srcDir: filepath.Base(srcDir),
+		},
+	}
+	for _, tc := range tests {
+		t.Run(tc.name, func(t *testing.T) {
+			// Perform the transfer.
+			dstDir := filepath.Join(root, "dst")
+			t.Cleanup(func() { os.RemoveAll(dstDir) })
+
+			cfg, err := CreateDownloadConfig(tc.srcDir, dstDir, Options{Recursive: true})
+			require.NoError(t, err)
+			// use all local filesystems to avoid SSH overhead
+			srcFS := &mockFS{fileAccesses: make(map[string]int)}
+			cfg.srcFS = srcFS
+			require.NoError(t, cfg.initFS(nil))
+			require.NoError(t, cfg.transfer(t.Context()))
+
+			// Check results. Don't use checkTransfer() as the directories will not have
+			// matching sizes (the symlinks that aren't copied over).
+			for _, file := range []string{fileA, fileB, fileC} {
+				srcFile, err := filepath.EvalSymlinks(filepath.Join(filepath.Dir(tc.srcDir), file))
+				require.NoError(t, err)
+				srcInfo, err := os.Stat(srcFile)
+				require.NoError(t, err)
+				dstFile, err := filepath.EvalSymlinks(filepath.Join(dstDir, file))
+				require.NoError(t, err)
+				dstInfo, err := os.Stat(dstFile)
+				require.NoError(t, err)
+				compareFiles(t, false, dstInfo, srcInfo, dstFile, srcFile)
+				// Check that the file was only opened once.
+				accesses := srcFS.fileAccesses[srcFile]
+				require.Equal(t, 1, accesses, "file %q was opened %d times", srcFile, accesses)
+			}
+		})
+	}
+}
+
 func TestHTTPUpload(t *testing.T) {
 	t.Parallel()
 
diff --git a/tool/teleport/common/sftp.go b/tool/teleport/common/sftp.go
index db73eb17e27fc..39de1e3432b13 100644
--- a/tool/teleport/common/sftp.go
+++ b/tool/teleport/common/sftp.go
@@ -30,6 +30,7 @@ import (
 	"os"
 	"os/user"
 	"path"
+	"path/filepath"
 	"strings"
 	"sync"
 	"time"
@@ -231,6 +232,12 @@ func (s *sftpHandler) Filelist(req *sftp.Request) (_ sftp.ListerAt, retErr error
 	return sftputils.HandleFilelist(req, nil /* local filesystem */)
 }
 
+// RealPath canonicalizes a path name, including resolving ".." and
+// following symlinks. Required to implement [sftp.RealPathFileLister].
+func (s *sftpHandler) RealPath(path string) (string, error) {
+	return filepath.EvalSymlinks(path)
+}
+
 func (s *sftpHandler) sendSFTPEvent(req *sftp.Request, reqErr error) {
 	wd, err := os.Getwd()
 	if err != nil {