diff --git a/setup.c b/setup.c
index 0d0a4abbe6..fa39219d6a 100644
--- a/setup.c
+++ b/setup.c
@@ -2858,6 +2858,9 @@ void create_repository(struct repository *repo,
 	struct repository_format repo_fmt = REPOSITORY_FORMAT_INIT;
 	struct strbuf err = STRBUF_INIT;
 
+	repo_clear(repo);
+	initialize_repository(repo);
+
 	if (real_git_dir) {
 		struct stat st;