diff --git a/.gitattributes b/.gitattributes
index f77da2339b20f..14cb57c92c07d 100644
--- a/.gitattributes
+++ b/.gitattributes
@@ -78,10 +78,8 @@ environment.yml export-ignore
 setup.py export-ignore
 
 
-# GH 39321
-# csv_dir_path fixture checks the existence of the directory
-# exclude the whole directory to avoid running related tests in sdist
-pandas/tests/io/parser/data export-ignore
+# Exclude tests folder to decrease the package size
+pandas/tests export-ignore
 
 # Include cibw script in sdist since it's needed for building wheels
 scripts/cibw_before_build.sh -export-ignore
diff --git a/MANIFEST.in b/MANIFEST.in
index c59151f340545..30678e054da2b 100644
--- a/MANIFEST.in
+++ b/MANIFEST.in
@@ -4,6 +4,8 @@ prune doc/build
 graft LICENSES
 
 graft pandas
+# Exclude tests folder to decrease the package size
+prune pandas/tests
 
 global-exclude *.bz2
 global-exclude *.csv
@@ -54,11 +56,6 @@ global-exclude *.h
 global-exclude *.py[ocd]
 global-exclude *.pxi
 
-# GH 39321
-# csv_dir_path fixture checks the existence of the directory
-# exclude the whole directory to avoid running related tests in sdist
-prune pandas/tests/io/parser/data
-
 # Selectively re-add *.cxx files that were excluded above
 graft pandas/_libs/src
 graft pandas/_libs/include
diff --git a/doc/source/whatsnew/v3.0.0.rst b/doc/source/whatsnew/v3.0.0.rst
index 92c67865ae88f..68bb9ea6e5b0f 100644
--- a/doc/source/whatsnew/v3.0.0.rst
+++ b/doc/source/whatsnew/v3.0.0.rst
@@ -555,6 +555,7 @@ Other Removals
 - Removed the attribute ``dtypes`` from :class:`.DataFrameGroupBy` (:issue:`51997`)
 - Enforced deprecation of ``argmin``, ``argmax``, ``idxmin``, and ``idxmax`` returning a result when ``skipna=False`` and an NA value is encountered or all values are NA values; these operations will now raise in such cases (:issue:`33941`, :issue:`51276`)
 - Removed specifying ``include_groups=True`` in :class:`.DataFrameGroupBy.apply` and :class:`.Resampler.apply` (:issue:`7155`)
+- Removed ``pandas/tests`` folder in package distribution to decrease the package size (:issue:`60606`)
 
 .. ---------------------------------------------------------------------------
 .. _whatsnew_300.performance: