Fix uploading of LFS tracked file through UI

app/services/lfs/file_transformer.rb

@@ -24,7 +24,7 @@ module Lfs
 
     def new_file(file_path, file_content, encoding: nil)
       if project.lfs_enabled? && lfs_file?(file_path)
-        file_content = Base64.decode64(file_content) if encoding == 'base64'
+        file_content = parse_file_content(file_content, encoding: encoding)
         lfs_pointer_file = Gitlab::Git::LfsPointerFile.new(file_content)
         lfs_object = create_lfs_object!(lfs_pointer_file, file_content)
 
@@ -66,5 +66,12 @@ module Lfs
     def link_lfs_object!(lfs_object)
       project.lfs_objects << lfs_object
     end
+
+    def parse_file_content(file_content, encoding: nil)
+      return file_content.read if file_content.respond_to?(:read)
+      return Base64.decode64(file_content) if encoding == 'base64'
+
+      file_content
+    end
   end
 end

changelogs/unreleased/61203-fix-lfs-ui-upload.yml

@@ -0,0 +1,5 @@
+---
+title: Fix uploading of LFS tracked file through UI
+merge_request: 28052
+author:
+type: fixed

spec/services/lfs/file_transformer_spec.rb

@@ -64,6 +64,25 @@ describe Lfs::FileTransformer do
         expect(result.encoding).to eq('text')
       end
 
+      context 'when an actual file is passed' do
+        let(:file) { Tempfile.new(file_path) }
+
+        before do
+          file.write(file_content)
+          file.rewind
+        end
+
+        after do
+          file.unlink
+        end
+
+        it "creates an LfsObject with the file's content" do
+          subject.new_file(file_path, file)
+
+          expect(LfsObject.last.file.read).to eq file_content
+        end
+      end
+
       context "when doesn't use LFS" do
         let(:file_path) { 'other.filetype' }