diff --git a/swh/loader/mercurial/from_disk.py b/swh/loader/mercurial/from_disk.py
--- a/swh/loader/mercurial/from_disk.py
+++ b/swh/loader/mercurial/from_disk.py
@@ -79,6 +79,28 @@
         part = parts.pop(0)
         current_dir[part] = content
 
+    def update_file(self, path: bytes, content: Content) -> None:
+        """Update existing file content.
+
+        As directories already exists. there is no creation involved.
+        """
+        self[path] = content
+
+    def remove_file(self, path: bytes) -> None:
+        """Remove existing file and empty directories."""
+        del self[path]
+
+        # remove empty directories
+        parts = [part for part in path.split(os.path.sep.encode()) if part]
+        parts.pop()  # remove file name
+        current_dir = self
+        while parts:
+            name = parts.pop(0)
+            if len(current_dir[name]) == 0:
+                del current_dir[name]
+                break  # No need to check for subdirectory
+            current_dir = current_dir[name]
+
 
 class HgLoaderFromDisk(BaseLoader):
     """Load a mercurial repository from a local repository."""
@@ -116,6 +138,8 @@
 
         self._repo: Optional[hgutil.Repository] = None
         self.revision_nodeid_to_swhid: Dict[HgNodeId, Sha1Git] = {}
+        self.last_hg_nodeid = hgutil.NULLID
+        self.root = HgRootDirectory()
 
         # Cache the content hash across revisions to avoid recalculation.
         self.content_hash_cache: lrucachedict = lrucachedict(
@@ -385,13 +409,26 @@
             the swhid of the top level directory.
         """
         rev_ctx = self.repo[hg_nodeid]
+        prev_ctx = self.repo[self.last_hg_nodeid]
+
+        # TODO diff on parents
+        status = prev_ctx.status(rev_ctx)
+
+        for file_path in status.removed:
+            self.root.remove_file(file_path)
 
-        root = HgRootDirectory()
-        for file_path in rev_ctx.manifest():
+        for file_path in status.added:
             content = self.store_content(hg_nodeid, file_path)
-            root.add_file(file_path, content)
+            self.root.add_file(file_path, content)
+
+        for file_path in status.modified:
+            content = self.store_content(hg_nodeid, file_path)
+            self.root.update_file(file_path, content)
+
+        self.last_hg_nodeid = hg_nodeid
 
-        directories: List[Directory] = [root]
+        self.root.invalidate_hash()
+        directories: List[Directory] = [self.root]
         while directories:
             directory = directories.pop(0)
             self.storage.directory_add([directory.to_model()])
@@ -399,7 +436,7 @@
                 [item for item in directory.values() if isinstance(item, Directory)]
             )
 
-        return root.hash
+        return self.root.hash
 
 
 class HgArchiveLoaderFromDisk(HgLoaderFromDisk):