diff --git a/airflow-core/newsfragments/57069.significant.rst b/airflow-core/newsfragments/57069.significant.rst
new file mode 100644
index 0000000000000..a4d1c22bb7af8
--- /dev/null
+++ b/airflow-core/newsfragments/57069.significant.rst
@@ -0,0 +1,16 @@
+Git provider: Remove '.git' folder from versions in GitDagBundle
+
+A new option(``prune_dotgit_folder``) has been added to the GitDagBundle to remove ``.git`` from
+versioned bundles by default to reduce disk usage; set prune_dotgit_folder=False to keep
+repo metadata in the dag bundle's versions folders.
+
+* Types of change
+
+  * [ ] Dag changes
+  * [ ] Config changes
+  * [ ] API changes
+  * [ ] CLI changes
+  * [x] Behaviour changes
+  * [ ] Plugin changes
+  * [ ] Dependency changes
+  * [ ] Code interface changes
diff --git a/providers/git/docs/bundles/index.rst b/providers/git/docs/bundles/index.rst
index 4e9cb5dff2271..30e6ade89896b 100644
--- a/providers/git/docs/bundles/index.rst
+++ b/providers/git/docs/bundles/index.rst
@@ -35,6 +35,7 @@ Example of using the GitDagBundle:
              "subdir": "dags",
              "tracking_ref": "main",
              "refresh_interval": 3600
+             "prune_dotgit_folder": True
          }
      }
     ]'
diff --git a/providers/git/src/airflow/providers/git/bundles/git.py b/providers/git/src/airflow/providers/git/bundles/git.py
index 2bf1f9980ae63..3418092f0d7bc 100644
--- a/providers/git/src/airflow/providers/git/bundles/git.py
+++ b/providers/git/src/airflow/providers/git/bundles/git.py
@@ -45,6 +45,12 @@ class GitDagBundle(BaseDagBundle):
     :param subdir: Subdirectory within the repository where the DAGs are stored (Optional)
     :param git_conn_id: Connection ID for SSH/token based connection to the repository (Optional)
     :param repo_url: Explicit Git repository URL to override the connection's host. (Optional)
+    :param prune_dotgit_folder: Remove .git folder from the versions after cloning.
+
+        The per-version clone is not a full "git" copy (it makes use of git's `--local` ability
+        to share the object directory via hard links, but if you have a lot of current versions
+        running, or an especially large git repo leaving this as True will save some disk space
+        at the expense of `git` operations not working in the bundle that Tasks run from.
     """
 
     supports_versioning = True
@@ -56,6 +62,7 @@ def __init__(
         subdir: str | None = None,
         git_conn_id: str | None = None,
         repo_url: str | None = None,
+        prune_dotgit_folder: bool = True,
         **kwargs,
     ) -> None:
         super().__init__(**kwargs)
@@ -68,6 +75,7 @@ def __init__(
             self.repo_path = self.base_dir / "tracking_repo"
         self.git_conn_id = git_conn_id
         self.repo_url = repo_url
+        self.prune_dotgit_folder = prune_dotgit_folder
 
         self._log = log.bind(
             bundle_name=self.name,
@@ -115,6 +123,8 @@ def _initialize(self):
                     self.repo.remotes.origin.fetch()
                 self.repo.head.set_reference(str(self.repo.commit(self.version)))
                 self.repo.head.reset(index=True, working_tree=True)
+                if self.prune_dotgit_folder:
+                    shutil.rmtree(self.repo_path / ".git")
             else:
                 self.refresh()
             self.repo.close()
diff --git a/providers/git/tests/unit/git/bundles/test_git.py b/providers/git/tests/unit/git/bundles/test_git.py
index b6c110e35477b..824b85ed4b3c7 100644
--- a/providers/git/tests/unit/git/bundles/test_git.py
+++ b/providers/git/tests/unit/git/bundles/test_git.py
@@ -165,6 +165,7 @@ def test_get_specific_version(self, mock_githook, git_repo):
             git_conn_id=CONN_HTTPS,
             version=starting_commit.hexsha,
             tracking_ref=GIT_DEFAULT_BRANCH,
+            prune_dotgit_folder=False,
         )
         bundle.initialize()
 
@@ -196,6 +197,7 @@ def test_get_tag_version(self, mock_githook, git_repo):
             git_conn_id=CONN_HTTPS,
             version="test",
             tracking_ref=GIT_DEFAULT_BRANCH,
+            prune_dotgit_folder=False,
         )
         bundle.initialize()
         assert bundle.get_current_version() == starting_commit.hexsha
@@ -225,6 +227,47 @@ def test_get_latest(self, mock_githook, git_repo):
 
         assert_repo_is_closed(bundle)
 
+    @mock.patch("airflow.providers.git.bundles.git.GitHook")
+    def test_removes_git_dir_for_versioned_bundle_by_default(self, mock_githook, git_repo):
+        repo_path, repo = git_repo
+        mock_githook.return_value.repo_url = repo_path
+        starting_commit = repo.head.commit
+
+        bundle = GitDagBundle(
+            name="test",
+            git_conn_id=CONN_HTTPS,
+            version=starting_commit.hexsha,
+            tracking_ref=GIT_DEFAULT_BRANCH,
+        )
+        bundle.initialize()
+
+        assert not (bundle.repo_path / ".git").exists()
+
+        files_in_repo = {f.name for f in bundle.path.iterdir() if f.is_file()}
+        assert {"test_dag.py"} == files_in_repo
+
+        assert_repo_is_closed(bundle)
+
+    @mock.patch("airflow.providers.git.bundles.git.GitHook")
+    def test_keeps_git_dir_when_disabled(self, mock_githook, git_repo):
+        repo_path, repo = git_repo
+        mock_githook.return_value.repo_url = repo_path
+        starting_commit = repo.head.commit
+
+        bundle = GitDagBundle(
+            name="test",
+            git_conn_id=CONN_HTTPS,
+            version=starting_commit.hexsha,
+            tracking_ref=GIT_DEFAULT_BRANCH,
+            prune_dotgit_folder=False,
+        )
+        bundle.initialize()
+
+        assert (bundle.repo_path / ".git").exists()
+        assert bundle.get_current_version() == starting_commit.hexsha
+
+        assert_repo_is_closed(bundle)
+
     @pytest.mark.parametrize(
         "amend",
         [