Distilled from a question thread (which I found a little too confusing) on Stack Overflow. matli writes:

Just to make it clear, I have the following structure:

XYZ/
    .git/
    XY1/
    ABC/
    XY2

But I would like:

XYZ/
    .git/
    XY1/
    XY2/
ABC/
    .git/

See the original thread for details.

1. Backup XYZ. I use rsync, just to spread my risk around, but you can git clone if you prefer.

    rsync -ahz --progress XYZ/ XYZ.git.bak/
   

2. Create the repository you want to be ABC-only by cloning it from XYZ.

    git clone --no-hardlinks XYZ ABC
   

3. In ABC, remove all history outside the ABC hierarchy.

    git filter-branch --subdirectory-filter ABC HEAD -- --all
   

4. Clean up references…

    git remote rm origin
    git update-ref -d refs/original/refs/heads/master
   

5. …and then objects.

    git reset --hard
    git reflog expire --expire=now --all
    git gc --aggressive
    git prune
    git repack -ad
   

6. In XYZ, remove all history belonging to the ABC hierarchy.

    git filter-branch --index-filter "git rm -r -f --cached --ignore-unmatch ABC" --prune-empty HEAD
   

   Alternatively, if you’re not worried about ABC’s history cluttering up XYZ, just delete the ABC hierarchy and commit.

    git rm -rf ABC
    git commit
   

7. Clean up: repeat Step 5 in XYZ.