There are several ways to fix bad merge with Git with varying degree of success depending on what you try to achieve.
Get Rid of Previous Commit (Hard Reset and Rebase)
In my case, I wanted to delete the previous commit.
git reset --hard HEAD^
# Create a new branch at the commit you want to amend
git checkout -b temp_branch <commit_hash>
# Amend the commit
git rm <file>
git commit --amend --no-edit
# Rebase your previous branch onto this new commit, starting from the old-commit
git rebase --preserve-merges --onto temp_branch <old-commit> master
# Verify your changes
git diff master@{1}Undo Reset
This need to be done within a few days, before garbage collection kicks in (generally monthly with git default setting).
# After using `git reset --hard HEAD^`
git reflog
# Find the SHA1 to restore in the list and use it
git reset --hard $SHA1