diff --git a/package/libgit2/libgit2.hash b/package/libgit2/libgit2.hash
index 4dd6519ca3..1997c3ba8e 100644
--- a/package/libgit2/libgit2.hash
+++ b/package/libgit2/libgit2.hash
@@ -1,3 +1,3 @@
 # Locally calculated
-sha256  d25866a4ee275a64f65be2d9a663680a5cf1ed87b7ee4c534997562c828e500d  libgit2-1.6.4.tar.gz
+sha256  d9d0f84a86bf98b73e68997f5c1543cc5067d0ca9c7a5acaba3e8d117ecefef3  libgit2-1.7.0.tar.gz
 sha256  6f3c2cd59b057e366c1acc073b038135c52d77892bb33bd4d931c5369d3f062b  COPYING
diff --git a/package/libgit2/libgit2.mk b/package/libgit2/libgit2.mk
index 9ddf2374bb..93505f7d85 100644
--- a/package/libgit2/libgit2.mk
+++ b/package/libgit2/libgit2.mk
@@ -4,7 +4,7 @@
 #
 ################################################################################
 
-LIBGIT2_VERSION = 1.6.4
+LIBGIT2_VERSION = 1.7.0
 LIBGIT2_SITE = $(call github,libgit2,libgit2,v$(LIBGIT2_VERSION))
 LIBGIT2_LICENSE = \
 	GPL-2.0 with linking exception, \
@@ -12,7 +12,8 @@ LIBGIT2_LICENSE = \
 	BSD-3-Clause (sha256), \
 	wildmatch license (wildmatch), \
 	CC0-1.0 (xoroshiro256), \
-	BSD-2-Clause (basename_r)
+	BSD-2-Clause (basename_r), \
+	LGPL-2.1+ (libxdiff)
 LIBGIT2_LICENSE_FILES = COPYING
 LIBGIT2_CPE_ID_VENDOR = libgit2_project
 LIBGIT2_INSTALL_STAGING = YES
@@ -23,6 +24,7 @@ LIBGIT2_CONF_OPTS = \
 	-DREGEX_BACKEND=regcomp \
 	-DUSE_HTTP_PARSER=system \
 	-DUSE_NTLMCLIENT=OFF \
+	-DUSE_XDIFF=builtin \
 	-DUSE_THREADS=$(if $(BR2_TOOLCHAIN_HAS_THREADS),ON,OFF)
 
 LIBGIT2_SUPPORTS_IN_SOURCE_BUILD = NO