diff --git a/poetry.lock b/poetry.lock
index 953e0db8791..1fcec480052 100644
--- a/poetry.lock
+++ b/poetry.lock
@@ -1,4 +1,4 @@
-# This file is automatically @generated by Poetry 2.3.4 and should not be changed by hand.
+# This file is automatically @generated by Poetry 2.4.0.dev0 and should not be changed by hand.
 
 [[package]]
 name = "anyio"
@@ -616,7 +616,7 @@ version = "1.2.1"
 description = "Python Git Library"
 optional = false
 python-versions = ">=3.10"
-groups = ["main"]
+groups = ["main", "test"]
 files = [
     {file = "dulwich-1.2.1-cp310-cp310-macosx_10_12_x86_64.whl", hash = "sha256:e45a68da922a4abe8fd015ed020ec0123ee58176a6984a34d2a2c74c959e45d3"},
     {file = "dulwich-1.2.1-cp310-cp310-macosx_11_0_arm64.whl", hash = "sha256:e88fd960a9327d87556a3bad76ad84b6346d3a07409fe8f081877a775977c86b"},
@@ -2025,7 +2025,7 @@ files = [
     {file = "typing_extensions-4.15.0-py3-none-any.whl", hash = "sha256:f0fa19c6845758ab08074a0cfa8b7aecb71c999ca73d62883bc25cc018c4e548"},
     {file = "typing_extensions-4.15.0.tar.gz", hash = "sha256:0cea48d173cc12fa28ecabc3b837ea3cf6f38c6d1136f85cbaaf598984861466"},
 ]
-markers = {main = "python_version < \"3.13\"", dev = "python_version == \"3.10\"", github-actions = "python_version == \"3.10\"", test = "python_version == \"3.10\""}
+markers = {main = "python_version < \"3.13\"", dev = "python_version == \"3.10\"", github-actions = "python_version == \"3.10\"", test = "python_version < \"3.12\""}
 
 [[package]]
 name = "urllib3"
@@ -2267,4 +2267,4 @@ cffi = ["cffi (>=1.17,<2.0) ; platform_python_implementation != \"PyPy\" and pyt
 [metadata]
 lock-version = "2.1"
 python-versions = ">=3.10,<4.0"
-content-hash = "aaa48ef867f604f545182fae11b744abdf8c1f4b0d75b47647d598140666a4c3"
+content-hash = "8778d2a6e776baa5a18d89a4c3e8e78d5bafbdbcbbc66e1c179373d7eaa0a5ef"
diff --git a/pyproject.toml b/pyproject.toml
index a32ccb73f1a..e6df28664ff 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -79,6 +79,7 @@ pytest-cov = ">=4.0"
 pytest-mock = ">=3.9"
 pytest-randomly = ">=3.12"
 pytest-xdist = { version = ">=3.1", extras = ["psutil"] }
+dulwich = ">=1.2.1"
 
 [tool.poetry.group.typing.dependencies]
 mypy = ">=1.8.0"
diff --git a/tests/vcs/git/test_backend.py b/tests/vcs/git/test_backend.py
index 03c02d3ff72..f30c6cd0700 100644
--- a/tests/vcs/git/test_backend.py
+++ b/tests/vcs/git/test_backend.py
@@ -455,3 +455,79 @@ def test_clone_legacy_strips_ref_prefixes(
 
     mock_clone.assert_called_once()
     mock_checkout.assert_called_once_with(expected_checkout, target)
+
+
+@pytest.mark.skip_git_mock
+def test_clone_with_lfs_files(tmp_path: Path) -> None:
+    """Test cloning a repository with Git LFS files (issue #8723)."""
+    from dulwich import porcelain
+    from dulwich.lfs import LFSStore
+
+    # Create a source repository with LFS support
+    source_path = tmp_path / "source-repo"
+    source_path.mkdir()
+    repo = Repo.init(str(source_path))
+
+    # Set up LFS in the repository
+    lfs_dir = source_path / ".git" / "lfs"
+    lfs_dir.mkdir(parents=True)
+    lfs_store = LFSStore.create(str(lfs_dir))
+
+    # Configure .gitattributes to track large files with LFS
+    gitattributes = source_path / ".gitattributes"
+    gitattributes.write_text("*.bin filter=lfs diff=lfs merge=lfs -text\n")
+    porcelain.add(repo, str(gitattributes))
+
+    # Create a regular file
+    regular_file = source_path / "regular.txt"
+    regular_file.write_text("This is a regular file")
+    porcelain.add(repo, str(regular_file))
+
+    # Create an LFS file with a pointer
+    lfs_content = b"This is a large binary file content for LFS storage"
+    lfs_file = source_path / "large.bin"
+
+    # Store the actual content in LFS store and create pointer
+    lfs_object_id = lfs_store.write_object([lfs_content])
+    lfs_pointer = (
+        f"version https://git-lfs.github.com/spec/v1\n"
+        f"oid sha256:{lfs_object_id}\n"
+        f"size {len(lfs_content)}\n"
+    )
+    lfs_file.write_text(lfs_pointer)
+    porcelain.add(repo, str(lfs_file))
+
+    # Commit the files
+    porcelain.commit(
+        repo,
+        message=b"Add files with LFS support",
+        author=b"Test <test@example.com>",
+        committer=b"Test <test@example.com>",
+    )
+
+    # Clone the repository
+    source_root_dir = tmp_path / "clone-root"
+    source_root_dir.mkdir()
+    Git.clone(
+        url=source_path.as_uri(),
+        source_root=source_root_dir,
+        name="clone-test",
+    )
+
+    # Verify the clone succeeded
+    clone_dir = source_root_dir / "clone-test"
+    assert (clone_dir / ".git").is_dir()
+
+    # Verify regular file is present
+    assert (clone_dir / "regular.txt").exists()
+    assert (clone_dir / "regular.txt").read_text() == "This is a regular file"
+
+    # Verify .gitattributes is present
+    assert (clone_dir / ".gitattributes").exists()
+    assert "filter=lfs" in (clone_dir / ".gitattributes").read_text()
+
+    # Verify LFS file is present with actual content (not just pointer)
+    # The LFS system should automatically retrieve the actual content
+    assert (clone_dir / "large.bin").exists()
+    lfs_file_content = (clone_dir / "large.bin").read_bytes()
+    assert lfs_file_content == lfs_content