Git: How to squash commits which have merge-commit in between?

You can rebase -i starting with commit 2's parent (that is, the commit on master that you branched from. You'll likely have to re-resolve conflicts when you get to the merge commit.

So if your history looks like

  * D commit 3 (HEAD)
  * M merge
 /|
| * C commit 2
* | B commit on master
|/
* A (master)

Start with git rebase -i A. You'll see a list of commits including both master and your_branch, but not the merge commit. pick the first one (B or C, depending on timing) and squash the rest.

You can use the tool I've created specifically for this task:

https://github.com/sheerun/git-squash

It's only necessary to merge master branch, and then run squashing command:

git merge master
git squash master