Index: subversion/tests/cmdline/depth_tests.py
===================================================================
--- subversion/tests/cmdline/depth_tests.py	(revision 26923)
+++ subversion/tests/cmdline/depth_tests.py	(working copy)
@@ -1294,6 +1294,50 @@
                                         '--depth=files', wc)
   svntest.actions.run_and_verify_svn(None, "Depth: +files", [], "info", wc)
 
+def depth_suppress_externals(sbox):
+  "ambient depth should suppress svn:externals"  # issue #2954
+  sbox.build()
+  wc_dir = sbox.wc_dir
+  C_path = os.path.join(wc_dir, 'A', 'C')
+  C_url = sbox.repo_url + "/A/C"
+  D_url = sbox.repo_url + "/A/D"
+
+  # Commit an svn:externals property on A/C/.
+  tmp_f = os.tempnam(wc_dir, 'tmp')
+  svntest.main.file_append(tmp_f, "D_ext %s\n" % D_url)
+  try:
+    svntest.actions.run_and_verify_svn(None, None, [],
+                                       '--username', svntest.main.wc_author,
+                                       '--password', svntest.main.wc_passwd,
+                                       'pset',
+                                       '-F', tmp_f, 'svn:externals', C_path)
+  finally:
+    os.remove(tmp_f)
+  expected_output = svntest.wc.State(wc_dir, {
+    'A/C' : Item(verb='Sending'),
+    })
+  expected_status = svntest.actions.get_virginal_state(wc_dir, 1)
+  expected_status.tweak('A/C', status='  ', wc_rev=2)
+  svntest.actions.run_and_verify_commit(wc_dir,
+                                        expected_output,
+                                        expected_status,
+                                        None,
+                                        None, None,
+                                        None, None, wc_dir)
+
+  # Remove the working copy, we're just going to check out $URL/A/C now.
+  svntest.main.safe_rmtree(wc_dir)
+
+  # Check out just A/C/ as the working copy, with --depth=immediates.
+  # The externals subdirectory 'D_ext' should not show up, and thus
+  # the checked-out directory should be empty.
+  expected_output = wc.State(wc_dir, { })
+  expected_disk = wc.State(wc_dir, { })
+  svntest.actions.run_and_verify_checkout(C_url, wc_dir,
+                                          expected_output, expected_disk,
+                                          None, None, None, None,
+                                          '--depth', 'files')
+
 #----------------------------------------------------------------------
 
 # list all tests here, starting with None:
@@ -1321,6 +1365,7 @@
               depth_immediates_receive_new_dir,
               add_tree_with_depth_files,
               upgrade_from_above,
+              depth_suppress_externals,
             ]
 
 if __name__ == "__main__":