diff --git a/gclient.py b/gclient.py
index 5e326dfc49..3c8ed83823 100755
--- a/gclient.py
+++ b/gclient.py
@@ -3347,6 +3347,11 @@ def CMDsetdep(parser, args):
   local_scope = gclient_eval.Exec(contents, options.deps_file,
                                   builtin_vars=builtin_vars)
 
+  # Create a set of all git submodules.
+  submodule_status = subprocess2.check_output(['git', 'submodule',
+                                               'status']).decode('utf-8')
+  git_modules = {l.split()[1] for l in submodule_status.splitlines()}
+
   for var in options.vars:
     name, _, value = var.partition('=')
     if not name or not value:
@@ -3370,7 +3375,26 @@ def CMDsetdep(parser, args):
             % (name, package))
       gclient_eval.SetCIPD(local_scope, name, package, value)
     else:
-      gclient_eval.SetRevision(local_scope, name, value)
+      # Update DEPS only when `git_dependencies` == DEPS or SYNC.
+      # git_dependencies is defaulted to DEPS when not set.
+      if 'git_dependencies' not in local_scope or local_scope[
+          'git_dependencies'] in (gclient_eval.DEPS, gclient_eval.SYNC):
+        gclient_eval.SetRevision(local_scope, name, value)
+
+      # Update git submodules when `git_dependencies` == SYNC or SUBMODULES.
+      if 'git_dependencies' in local_scope and local_scope[
+          'git_dependencies'] in (gclient_eval.SUBMODULES, gclient_eval.SYNC):
+        # gclient setdep should update the revision, i.e., the gitlink only
+        # when the submodule entry is already present within .gitmodules.
+        if name not in git_modules:
+          raise KeyError(
+              'Could not find any dependency called %s in .gitmodules.' % name)
+
+        # Update the gitlink for the submodule.
+        subprocess2.call([
+            'git', 'update-index', '--add', '--cacheinfo',
+            f'160000,{value},{name}'
+        ])
 
   with open(options.deps_file, 'wb') as f:
     f.write(gclient_eval.RenderDEPSFile(local_scope).encode('utf-8'))
diff --git a/tests/gclient_git_smoketest.py b/tests/gclient_git_smoketest.py
index a50086b0cd..c3b9c7b7b7 100755
--- a/tests/gclient_git_smoketest.py
+++ b/tests/gclient_git_smoketest.py
@@ -549,7 +549,8 @@ class GClientSmokeGIT(gclient_smoketest_base.GClientSmokeBase):
     self.assertEqual(out, output_json)
 
   def testSetDep(self):
-    fake_deps = os.path.join(self.root_dir, 'DEPS.fake')
+    self.gclient(['config', self.git_base + 'repo_1', '--name', 'src'])
+    fake_deps = os.path.join(self.git_base, 'repo_1', 'DEPS')
     with open(fake_deps, 'w') as f:
       f.write('\n'.join([
           'vars = { ',
@@ -565,8 +566,10 @@ class GClientSmokeGIT(gclient_smoketest_base.GClientSmokeBase):
       ]))
 
     self.gclient([
-        'setdep', '-r', 'foo@new_foo', '-r', 'bar@new_bar',
-        '--var', 'foo_var=new_val', '--deps-file', fake_deps])
+        'setdep', '-r', 'foo@new_foo', '-r', 'bar@new_bar', '--var',
+        'foo_var=new_val', '--deps-file', fake_deps
+    ],
+                 cwd=self.git_base + 'repo_1')
 
     with open(fake_deps) as f:
       contents = f.read().splitlines()
@@ -584,9 +587,51 @@ class GClientSmokeGIT(gclient_smoketest_base.GClientSmokeBase):
           '}',
     ], contents)
 
-  def testSetDep_BuiltinVariables(self):
+  def testSetDep_Submodules(self):
     self.gclient(['config', self.git_base + 'repo_1', '--name', 'src'])
-    fake_deps = os.path.join(self.root_dir, 'DEPS.fake')
+    fake_deps = os.path.join(self.git_base, 'repo_1', 'DEPS')
+    gitmodules = os.path.join(self.git_base, 'repo_1', '.gitmodules')
+    with open(fake_deps, 'w') as f:
+      f.write('\n'.join([
+          'git_dependencies = "SUBMODULES"',
+          'vars = { ',
+          '  "foo_var": "foo_val",',
+          '  "foo_rev": "foo_rev",',
+          '}',
+      ]))
+
+    with open(gitmodules, 'w') as f:
+      f.write('\n'.join(
+          ['[submodule "foo"]', '  url = https://foo', '  path = foo']))
+
+    subprocess2.call([
+        'git', 'update-index', '--add', '--cacheinfo',
+        '160000,aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa,foo'
+    ],
+                     cwd=self.git_base + 'repo_1')
+
+    self.gclient([
+        'setdep', '-r', 'foo@new_foo', '--var', 'foo_var=new_val',
+        '--deps-file', fake_deps
+    ],
+                 cwd=self.git_base + 'repo_1')
+
+    with open(fake_deps) as f:
+      contents = f.read().splitlines()
+
+    self.assertEqual([
+        'git_dependencies = "SUBMODULES"',
+        'vars = { ',
+        '  "foo_var": "new_val",',
+        '  "foo_rev": "foo_rev",',
+        '}',
+    ], contents)
+
+  def testSetDep_BuiltinVariables(self):
+    self.gclient(['config', self.git_base + 'repo_1', '--name', 'src'],
+                 cwd=self.git_base)
+
+    fake_deps = os.path.join(self.root_dir, 'DEPS')
     with open(fake_deps, 'w') as f:
       f.write('\n'.join([
           'vars = { ',
@@ -608,8 +653,10 @@ class GClientSmokeGIT(gclient_smoketest_base.GClientSmokeBase):
       ]))
 
     self.gclient([
-        'setdep', '-r', 'foo@new_foo', '-r', 'bar@new_bar',
-        '--var', 'foo_var=new_val', '--deps-file', fake_deps])
+        'setdep', '-r', 'foo@new_foo', '-r', 'bar@new_bar', '--var',
+        'foo_var=new_val', '--deps-file', fake_deps
+    ],
+                 cwd=self.git_base + 'repo_1')
 
     with open(fake_deps) as f:
       contents = f.read().splitlines()