diff --git a/dvc/repo/diff.py b/dvc/repo/diff.py
index 75a10877bd..2fa261683d 100644
--- a/dvc/repo/diff.py
+++ b/dvc/repo/diff.py
@@ -1,7 +1,11 @@
+import logging
 import os
 
 from dvc.repo import locked
 from dvc.tree.local import LocalTree
+from dvc.tree.repo import RepoTree
+
+logger = logging.getLogger(__name__)
 
 
 @locked
@@ -14,59 +18,20 @@ def diff(self, a_rev="HEAD", b_rev=None):
     `dvc diff` would be the same as `dvc diff HEAD`.
     """
 
-    def _paths_checksums():
-        """
-        A dictionary of checksums addressed by relpaths collected from
-        the current tree outputs.
-
-        To help distinguish between a directory and a file output,
-        the former one will come with a trailing slash in the path:
-
-            directory: "data/"
-            file:      "data"
-        """
-
-        def _to_path(output):
-            return (
-                str(output)
-                if not output.is_dir_checksum
-                else os.path.join(str(output), "")
-            )
-
-        on_working_tree = isinstance(self.tree, LocalTree)
-
-        def _to_checksum(output):
-            if on_working_tree:
-                return self.cache.local.tree.get_hash(output.path_info).value
-            return output.hash_info.value
-
-        def _exists(output):
-            if on_working_tree:
-                return output.exists
-            return True
-
-        return {
-            _to_path(output): _to_checksum(output)
-            for stage in self.stages
-            for output in stage.outs
-            if _exists(output)
-        }
-
     if self.scm.no_commits:
         return {}
 
-    working_tree = self.tree
-    a_tree = self.scm.get_tree(a_rev)
-    b_tree = self.scm.get_tree(b_rev) if b_rev else working_tree
-
-    try:
-        self.tree = a_tree
-        old = _paths_checksums()
+    b_rev = b_rev if b_rev else "workspace"
+    results = {}
+    for rev in self.brancher(revs=[a_rev, b_rev]):
+        if rev == "workspace" and rev != b_rev:
+            # brancher always returns workspace, but we only need to compute
+            # workspace paths/checksums if b_rev was None
+            continue
+        results[rev] = _paths_checksums(self)
 
-        self.tree = b_tree
-        new = _paths_checksums()
-    finally:
-        self.tree = working_tree
+    old = results[a_rev]
+    new = results[b_rev]
 
     # Compare paths between the old and new tree.
     # set() efficiently converts dict keys to a set
@@ -85,3 +50,57 @@ def _exists(output):
     }
 
     return ret if any(ret.values()) else {}
+
+
+def _paths_checksums(repo):
+    """
+    A dictionary of checksums addressed by relpaths collected from
+    the current tree outputs.
+
+    To help distinguish between a directory and a file output,
+    the former one will come with a trailing slash in the path:
+
+        directory: "data/"
+        file:      "data"
+    """
+
+    return dict(_output_paths(repo))
+
+
+def _output_paths(repo):
+    repo_tree = RepoTree(repo, stream=True)
+    on_working_tree = isinstance(repo.tree, LocalTree)
+
+    def _exists(output):
+        if on_working_tree:
+            return output.exists
+        return True
+
+    def _to_path(output):
+        return (
+            str(output)
+            if not output.is_dir_checksum
+            else os.path.join(str(output), "")
+        )
+
+    def _to_checksum(output):
+        if on_working_tree:
+            return repo.cache.local.tree.get_hash(output.path_info).value
+        return output.hash_info.value
+
+    for stage in repo.stages:
+        for output in stage.outs:
+            if _exists(output):
+                yield _to_path(output), _to_checksum(output)
+                if output.is_dir_checksum:
+                    yield from _dir_output_paths(repo_tree, output)
+
+
+def _dir_output_paths(repo_tree, output):
+    from dvc.config import NoRemoteError
+
+    try:
+        for fname in repo_tree.walk_files(output.path_info):
+            yield str(fname), repo_tree.get_hash(fname).value
+    except NoRemoteError:
+        logger.warning("dir cache entry for '%s' is missing", output)
diff --git a/dvc/tree/dvc.py b/dvc/tree/dvc.py
index 520ee42bcc..6cbc1efe6d 100644
--- a/dvc/tree/dvc.py
+++ b/dvc/tree/dvc.py
@@ -133,6 +133,9 @@ def check_isdir(self, path_info, outs):
             self._get_granular_checksum(path_info, out)
             return False
         except FileNotFoundError:
+            # path may be an untracked file from a dirty workspace
+            if self.repo.tree.isfile(path_info):
+                return False
             return True
 
     def isfile(self, path):  # pylint: disable=arguments-differ
@@ -258,10 +261,16 @@ def get_file_hash(self, path_info):
             raise OutputNotFoundError
         out = outs[0]
         if out.is_dir_checksum:
-            return HashInfo(
-                out.tree.PARAM_CHECKSUM,
-                self._get_granular_checksum(path_info, out),
-            )
+            try:
+                return HashInfo(
+                    out.tree.PARAM_CHECKSUM,
+                    self._get_granular_checksum(path_info, out),
+                )
+            except FileNotFoundError:
+                # path may be an untracked file from a dirty workspace
+                if self.repo.tree.isfile(path_info):
+                    return self.repo.tree.get_file_hash(path_info)
+                raise
         return out.hash_info
 
     def metadata(self, path_info):
diff --git a/tests/func/test_diff.py b/tests/func/test_diff.py
index 0cd45966d8..1eda16f7a4 100644
--- a/tests/func/test_diff.py
+++ b/tests/func/test_diff.py
@@ -43,7 +43,11 @@ def test_no_cache_entry(tmp_dir, scm, dvc):
     dir_checksum = "5fb6b29836c388e093ca0715c872fe2a.dir"
 
     assert dvc.diff() == {
-        "added": [{"path": os.path.join("dir", ""), "hash": dir_checksum}],
+        "added": [
+            {"path": os.path.join("dir", ""), "hash": dir_checksum},
+            {"path": os.path.join("dir", "1"), "hash": digest("1")},
+            {"path": os.path.join("dir", "2"), "hash": digest("2")},
+        ],
         "deleted": [],
         "modified": [
             {
@@ -125,13 +129,15 @@ def test_directories(tmp_dir, scm, dvc):
                 "path": os.path.join("dir", ""),
                 "hash": "5fb6b29836c388e093ca0715c872fe2a.dir",
             },
+            {"path": os.path.join("dir", "1"), "hash": digest("1")},
+            {"path": os.path.join("dir", "2"), "hash": digest("2")},
         ],
         "deleted": [],
         "modified": [],
     }
 
     assert dvc.diff(":/directory", ":/modify") == {
-        "added": [],
+        "added": [{"path": os.path.join("dir", "3"), "hash": digest("3")}],
         "deleted": [],
         "modified": [
             {
@@ -141,12 +147,18 @@ def test_directories(tmp_dir, scm, dvc):
                     "new": "9b5faf37366b3370fd98e3e60ca439c1.dir",
                 },
             },
+            {
+                "path": os.path.join("dir", "2"),
+                "hash": {"old": digest("2"), "new": digest("two")},
+            },
         ],
     }
 
     assert dvc.diff(":/modify", ":/delete") == {
         "added": [],
-        "deleted": [],
+        "deleted": [
+            {"path": os.path.join("dir", "2"), "hash": digest("two")},
+        ],
         "modified": [
             {
                 "path": os.path.join("dir", ""),
@@ -193,7 +205,11 @@ def test_diff_dirty(tmp_dir, scm, dvc):
 
     assert result == {
         "added": [
-            {"hash": "86d049de17c76ac44cdcac146042ec9b", "path": "new_file"}
+            {
+                "hash": digest("dir file 2 content"),
+                "path": os.path.join("dir", "dir_file2"),
+            },
+            {"hash": "86d049de17c76ac44cdcac146042ec9b", "path": "new_file"},
         ],
         "deleted": [
             {"hash": "7f0b6bb0b7e951b7fd2b2a4a326297e1", "path": "file"}