diff --git a/internal/wclayer/legacy.go b/internal/wclayer/legacy.go
index e73de48b00..499e8ae993 100644
--- a/internal/wclayer/legacy.go
+++ b/internal/wclayer/legacy.go
@@ -194,16 +194,30 @@ func (r *legacyLayerReader) reset() {
 
 func findBackupStreamSize(r io.Reader) (int64, error) {
 	br := winio.NewBackupStreamReader(r)
+	var size int64
 	for {
 		hdr, err := br.Next()
 		if err != nil {
 			if errors.Is(err, io.EOF) {
-				err = nil
+				// With no inline data, sparse blocks provide the logical size.
+				return size, nil
 			}
 			return 0, err
 		}
-		if hdr.Id == winio.BackupData {
-			return hdr.Size, nil
+		switch hdr.Id {
+		case winio.BackupData:
+			// Non-sparse files and sparse files with inline data carry their
+			// logical size in BackupData.
+			if hdr.Size > 0 || hdr.Attributes&winio.StreamSparseAttributes == 0 {
+				return hdr.Size, nil
+			}
+			// A sparse BackupData stream without inline data is followed by
+			// sparse blocks that describe its logical size.
+		case winio.BackupSparseBlock:
+			// The terminal zero-length block has an offset at logical EOF.
+			if end := hdr.Offset + hdr.Size; end > size {
+				size = end
+			}
 		}
 	}
 }
diff --git a/internal/wclayer/legacy_test.go b/internal/wclayer/legacy_test.go
index cd916f9bca..398fe6171e 100644
--- a/internal/wclayer/legacy_test.go
+++ b/internal/wclayer/legacy_test.go
@@ -9,6 +9,9 @@ import (
 	"os"
 	"path/filepath"
 	"testing"
+
+	winio "github.com/Microsoft/go-winio"
+	"golang.org/x/sys/windows"
 )
 
 // errWriter always fails writes, used to simulate a full disk (ENOSPC) when the
@@ -161,3 +164,118 @@ func Test_legacyLayerWriter_reset_ClosesFileOnSuccess(t *testing.T) {
 		t.Errorf("expected temp file to be removable after reset (handle closed), got: %v", err)
 	}
 }
+
+func setSparse(t *testing.T, f *os.File) {
+	t.Helper()
+	if err := windows.DeviceIoControl(windows.Handle(f.Fd()), windows.FSCTL_SET_SPARSE, nil, 0, nil, 0, nil, nil); err != nil {
+		t.Fatalf("set sparse: %v", err)
+	}
+}
+
+func TestFindBackupStreamSizeSparse(t *testing.T) {
+	//nolint:gosec // G306: test files do not need restrictive permissions
+	for name, setup := range map[string]func(*testing.T) string{
+		"normalFile": func(t *testing.T) string {
+			t.Helper()
+			path := filepath.Join(t.TempDir(), "foo")
+			if err := os.WriteFile(path, []byte("testing 1 2 3\n"), 0644); err != nil {
+				t.Fatal(err)
+			}
+			return path
+		},
+		"normalFileEmpty": func(t *testing.T) string {
+			t.Helper()
+			path := filepath.Join(t.TempDir(), "foo")
+			f, err := os.OpenFile(path, os.O_CREATE|os.O_WRONLY, 0644)
+			if err != nil {
+				t.Fatal(err)
+			}
+			f.Close()
+			return path
+		},
+		"sparseEmpty": func(t *testing.T) string {
+			t.Helper()
+			path := filepath.Join(t.TempDir(), "foo")
+			f, err := os.OpenFile(path, os.O_CREATE|os.O_WRONLY, 0644)
+			if err != nil {
+				t.Fatal(err)
+			}
+			defer f.Close()
+			setSparse(t, f)
+			return path
+		},
+		"sparseAllHoles": func(t *testing.T) string {
+			t.Helper()
+			path := filepath.Join(t.TempDir(), "foo")
+			f, err := os.OpenFile(path, os.O_CREATE|os.O_WRONLY, 0644)
+			if err != nil {
+				t.Fatal(err)
+			}
+			defer f.Close()
+			setSparse(t, f)
+			if err := f.Truncate(1048576); err != nil {
+				t.Fatal(err)
+			}
+			return path
+		},
+		"sparseOneRange": func(t *testing.T) string {
+			t.Helper()
+			path := filepath.Join(t.TempDir(), "foo")
+			f, err := os.OpenFile(path, os.O_CREATE|os.O_WRONLY, 0644)
+			if err != nil {
+				t.Fatal(err)
+			}
+			defer f.Close()
+			setSparse(t, f)
+			if _, err := f.WriteString("test sparse data"); err != nil {
+				t.Fatal(err)
+			}
+			return path
+		},
+		"sparseMultipleRanges": func(t *testing.T) string {
+			t.Helper()
+			path := filepath.Join(t.TempDir(), "foo")
+			f, err := os.OpenFile(path, os.O_CREATE|os.O_WRONLY, 0644)
+			if err != nil {
+				t.Fatal(err)
+			}
+			defer f.Close()
+			setSparse(t, f)
+			if _, err = f.Write([]byte("leading data\n")); err != nil {
+				t.Fatal(err)
+			}
+			if _, err = f.Seek(1048576, 0); err != nil {
+				t.Fatal(err)
+			}
+			if _, err = f.Write([]byte("trailing data\n")); err != nil {
+				t.Fatal(err)
+			}
+			return path
+		},
+	} {
+		t.Run(name, func(t *testing.T) {
+			path := setup(t)
+			f, err := os.Open(path)
+			if err != nil {
+				t.Fatal(err)
+			}
+			defer f.Close()
+
+			fi, err := f.Stat()
+			if err != nil {
+				t.Fatal(err)
+			}
+
+			br := winio.NewBackupFileReader(f, true)
+			defer br.Close()
+
+			size, err := findBackupStreamSize(br)
+			if err != nil {
+				t.Fatalf("findBackupStreamSize: %v", err)
+			}
+			if size != fi.Size() {
+				t.Errorf("findBackupStreamSize = %d, want logical size %d", size, fi.Size())
+			}
+		})
+	}
+}